<PAGE>
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Registration No. 333-______
As filed with the Securities and Exchange Commission on
December 6, 1999
________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________________________
COOPERATIVE BANKSHARES, INC.
- ------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
NORTH CAROLINA 56-1886527
- ------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
____________________________________
(Address of Principal Executive Offices)
COOPERATIVE BANKSHARES, INC. 1998 STOCK OPTION
AND INCENTIVE PLAN
----------------------------------------------
(Full Title of the Plans)
FREDERICK WILLETTS, III, PRESIDENT
COOPERATIVE BANKSHARES, INC.
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
____________________________________
(Name and Address of Agent For Service)
(910) 343-0181
______________________________________________________
(Telephone Number, Including Area Code, of Agent For Service)
COPIES TO:
CYNTHIA R. CROSS, ESQUIRE
DANIEL L. HOGANS, ESQUIRE
HOUSLEY KANTARIAN & BRONSTEIN, P.C.
1220 19TH STREET N.W., SUITE 700
WASHINGTON, D.C. 20036
(202) 822-9611
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================
Title Of Securities Amount Proposed Maximum Proposed Maximum Amount Of
To Be To Be Offering Price Aggregate Offering Registration
Registered Registered Per Share Price Fee
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$1.00 par value 290,000 $10.875 $3,153,750 $876.75
===================================================================================
<FN>
(1) Maximum number of shares issuable under the Cooperative Bankshares, Inc. 1998
Stock Option and Incentive Plan (290,000 shares), as such amounts may be
increased in accordance with said plans in the event of a merger,
consolidation, recapitalization or similar event involving the Registrant.
(2) Under Rule 457(h) the registration fee may be calculated, inter alia, based upon
the average of the high and low selling prices of the common stock of the
Registrant as reported on the National Association of Securities Dealers
Automated Quotation, National Market on December 3, 1999 of $10.875 per share
($3,153,750 in the aggregate).
</FN>
</TABLE>
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PART I
INFORMATION REQUIRED IN THE SECTION
10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
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ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
- ------ INFORMATION*
*This Registration Statement relates to the registration
of 290,000 shares of Common Stock, $1.00 par value per share, of
Cooperative Bankshares, Inc. (the "Company") reserved for
issuance and delivery under the Cooperative Bankshares, Inc.
1998 Stock Option and Incentive Plan (the "Plan"). Documents
containing the information required by Part I of this
Registration Statement will be sent or given to participants in
the Plan in accordance with Rule 428(b)(1). In accordance with
Note to Part I of Form S-8, such documents are not filed with
the Securities and Exchange Commission (the "Commission") either
as part of this Registration Statement or as prospectuses or
prospectus supplements.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- ------
Cooperative Bankshares, Inc. (the "Company") is subject to
the informational requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") and, accordingly, files
periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the
Company filed with the Commission may be inspected and copies
may be obtained (at prescribed rates) at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web
site that contains reports, proxy and information statements and
other information regarding registrants that file electronically
with the Commission, including the Company. The address for the
Commission's Web site is "http://www.sec.gov".
The following documents are incorporated by reference in
this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (Commission File No. 0-
24626).
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999 (Commission File No. 0-24626).
(c) The Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 (Commission File No. 0-24626).
(d) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 (Commission File No. 0-24626)
(e) The Current Reports on Form 8-K for events dated
October 21, 1999, March 25, 1999 and January 28, 1999
(Commission File No. 0-24626).
(f) The description of the Company's Securities as
contained in the Company's Registration Statement on Form S-4
filed with the Commission on May 20, 1994 (Commission File No.
333-79206).
ALL DOCUMENTS SUBSEQUENTLY FILED BY THE COMPANY PURSUANT
TO SECTIONS 13(A), 13(C), 14, AND 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, AFTER THE DATE HEREOF AND
PRIOR TO THE TERMINATION OF THE OFFERING OF THE SHARES OF COMMON
STOCK, PAR VALUE $1.00 PER SHARE ("COMMON STOCK") SHALL BE
DEEMED TO BE INCORPORATED BY REFERENCE IN THIS REGISTRATION
STATEMENT, AND TO BE A PART HEREOF FROM THE DATE OF FILING OF
SUCH DOCUMENTS.
1
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ITEM 4. DESCRIPTION OF SECURITIES
- ------
Not applicable, as the Common Stock is registered under
Section 12 of the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
- ------
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------
In addition to and apart from the indemnification provided
for in the North Carolina Business Corporation Act, as from time
to time amended, the Company shall provide indemnification to
its directors as outlined in Article 8 of the Company's Articles
of Incorporation as stated below:
A. Indemnity. Any person who at any time serves or
has served as a director of the Corporation shall have a right
to be indemnified by the Corporation to the full extent allowed
by applicable law against liability and litigation expense
arising out of or connected with such status or activities in
such capacity. "Liability and litigation expense" shall include
costs and expenses of litigation (including reasonable attorneys
fees), judgments, fines and amounts paid in settlement which are
actually and reasonably incurred in connection with or as a
consequence of any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, including appeals. The Corporation shall not
indemnify any such person against any liability or litigation
expense unless such person reasonably believed (i) in the case
of conduct in his or her official capacity with the Corporation,
that his or her conduct was in the best interests of the
Corporation and (ii) in all other cases, that his or her conduct
was at least not opposed to the best interests of the
Corporation.
B. Determination of Right to Indemnity. Promptly
after the final disposition or termination of any matter which
involves liability or litigation expense as described in Section
A of this Article or at such earlier time as it sees fit, the
Corporation shall determine whether any person described in
Section A of this Article is entitled to indemnification
thereunder. Such determination shall be limited to the
following issues: (i) whether the persons to be indemnified are
persons described in Section A of this Article, (ii) whether the
liability or litigation expense incurred arose out of the status
or activities of such persons as described in Section A of this
Article, (iii) whether the liability was actually incurred and
litigation expense was actually and reasonably incurred, and
(iv) whether the liability and litigation expense were incurred
on account of activities which were at the time taken reasonably
believed by such person (a) in the case of conduct in his or her
official capacity with the Corporation, to be in the best
interests of the Corporation or (b) in all other cases, that his
or her conduct was at least not opposed to the best interests of
the Corporation. Such determination shall be made by a majority
vote of directors who were not parties to the action, suit or
proceeding (or, in connection with "threatened" actions, suits
or proceedings, who were not "threatened parties"). If at least
two such disinterested directors are not obtainable, or, even if
obtainable, if at least half of the number of disinterested
directors so direct, such determination shall be made by
independent legal counsel in written opinion.
C. Advance Expenses. (i) Subject to subsection
(ii) below, litigation expense incurred by a person
described in Section A of this Article in connection with a
matter described in Section A of this Article shall be paid by
the Corporation in advance of the final disposition of the
matter, if the Corporation receives an undertaking, dated, in
writing and signed by the person to be indemnified, to repay all
such sums if it is ultimately determined as provided in Section
B of this Article that such person is not entitled to be
indemnified by the Corporation. Requests for payments in
advance of final disposition or termination shall be submitted
in writing to the Corporation unless this requirement is waived
by the Corporation. Before the first such payment is made, the
Corporation shall have received the written undertaking referred
to herein and notice of the request for advance payment shall
have been given to the members of the board of directors.
2
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(ii) Notwithstanding the foregoing subsection (i),
no advance payment shall be made as to any
payment or portion of a payment for which the determination is
made that the person requesting payment will not be entitled to
indemnification. Such determination may be made only by a
majority vote of disinterested directors or by independent legal
counsel as next provided. If there are not at least two
disinterested directors, then notice of all requests for advance
payment shall be delivered for review to independent legal
counsel for the Corporation. Such counsel shall have the
authority to disapprove any advance payment or portion of a
payment for which it plainly and unavoidably appears that the
person requesting payment will not be entitled to
indemnification.
D. Settlements. The Corporation shall not be
obligated to indemnify persons described in Section A of this
Article for any amounts paid in settlement unless the
Corporation consents in writing to the settlement. The
Corporation shall not unreasonably withhold its consent to
proposed settlements. The Corporation's consent to a proposed
settlement shall not constitute an agreement by the Corporation
that any person is entitled to indemnification hereunder; the
Corporation shall waive the requirement of this Section for its
written consent as fairness and equity may require.
E. Application for Indemnity or Advances. (i) A
person described in Section A of this Article may apply to the
Corporation in writing for indemnification or to advance
expenses. Such application shall be addressed to the secretary,
or, in the absence of the secretary, to any officer of the
Corporation. The Corporation shall respond in writing to such
applications as follows: to a request for indemnity under
Section B of this Article, within ninety days after receipt of
the application; to a request for advance expenses under Section
C of this Article, within fifteen days after receipt of the
application.
(ii) The right to indemnification or advance expenses
provided herein shall be enforceable in any court of competent
jurisdiction. A legal action may be commenced if a claim for
indemnity or advance expenses is denied in whole or in part, or
upon the expiration of the time periods provided in the
preceding subsection (i). In any such action, the claimant
shall be entitled to prevail upon establishing that he or she is
entitled to indemnification or advance expenses but the
Corporation shall have the burden of establishing, as a defense,
that the liability or expense was incurred on account of
activities which were, at the time taken, known or believed
by the claimant to be clearly in conflict with the best
interests of the Corporation. In any such action, if the
claimant establishes the right to indemnification, he or she
shall also have the right to be indemnified against the
litigation expense (including a reasonable attorney's fee) of
such action.
F. Incidents of Right of Indemnification. The right
of indemnification provided herein shall not be deemed exclusive
of any other rights to which any persons seeking indemnity may
be entitled apart from the provisions of this Article, except
there shall be no right to indemnification as to any liability
or litigation expense for which such person is entitled to
receive payment under any insurance policy other than a
directors' and officers' liability insurance policy maintained
by the Corporation. Such right shall inure to the benefit of
the heirs and legal representatives of any persons entitled to
such right. Any person who at any time after the adoption of
this Article serves or has served in any status or capacity
described in Section A of this Article, shall be deemed to be
doing or to have done so in reliance upon, and as consideration
for, the right of indemnification provided herein. Any repeal or
modification of this Article shall not affect any rights or
obligations then existing. The right provided herein shall not
apply as to persons serving corporations that are hereafter
merged into or combined with the Corporation, except after the
effective date of such merger or combination and only as to
status and activities after such date.
G. Savings Clause. If this Article or any portion
hereof shall be invalidated on any ground by any court or agency
of competent jurisdiction, then the Corporation shall
nevertheless indemnify each person described in Section A of
this Article to the full extent permitted by the portion of
this Article that is not invalidated and also to the full extent
(not exceeding the benefits described herein) permitted or
required by other applicable law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
- ------
Not Applicable.
3
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ITEM 8. EXHIBITS
- ------
The exhibits scheduled to be filed or included as part of
this Registration Statement are as follows:
5.1 Opinion of Housley Kantarian & Bronstein, P.C. as to
the validity of the Common Stock being registered
23.1 Consent of Housley Kantarian & Bronstein, P.C. (appears
in their opinion filed as Exhibit 5.1)
23.2 Consent of PriceWaterhouseCoopers, L.L.P.
24 Power of Attorney (contained in signature page to
this registration statement)
99.1 Cooperative Bankshares, Inc. 1998 Stock Option and
Incentive Plan
99.2 1999 Amendment to Cooperative Bankshares, Inc. 1998
Stock Option and Incentive Plan
ITEM 9. UNDERTAKINGS
- ------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement --
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events which, individually or together, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any additional or changed
material information on to the plan of distribution;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is
on Form S-3 or S-8, and the information required to be
included in a post-effective amendment is incorporated by
reference from the periodic reports filed by the small
business issuer under the Securities Exchange Act of 1934.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end
of the offering.
(4) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement
4
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shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the small business issuer
pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of
Wilmington, State of North Carolina, on November 18, 1999.
COOPERATIVE BANKSHARES, INC.
By: /s/ Frederick Willetts, III
------------------------------
Frederick Willetts, III
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned Directors of Cooperative Bankshares,
Inc., hereby severally constitute and appoint Frederick
Willetts, III, who may act, with full power of substitution, our
true and lawful attorney and agent, to do any and all things in
our names in the capacities indicated below which said Frederick
Willetts, III, who may act, may deem necessary or advisable to
enable Cooperative Bankshares, Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in
connection with the registration of Cooperative Bankshares, Inc.
common stock, including specifically, but not limited to, power
and authority to sign for us in our names in the capacities
indicated below, the registration statement and any and all
amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Frederick Willetts, III,
shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Frederick Willetts, III President, Chief Executive November 18, 1999
- ---------------------------- Officer, and Chairman of
Frederick Willetts, III the Board of Directors
(Principal Executive Officer)
/s/ Edward E. Maready Senior Vice President and November 18, 1999
- ---------------------------- Treasurer (Principal Financial
Edward E. Maready and Accounting Officer)
/s/ Paul G. Burton Director November 18, 1999
- ----------------------------
Paul G. Burton
/s/ F. Peter Fensel, Jr. Director November 18, 1999
- ----------------------------
F. Peter Fensel, Jr.
/s/ James D. Hundley, M.D. Director November 18, 1999
- ----------------------------
James D. Hundley, M.D.
/s/ H. Thompson King, III Director November 18, 1999
- ----------------------------
H. Thompson King, III
/s/ R. Allen Rippy Director November 18, 1999
- ----------------------------
R. Allen Rippy
<PAGE>
/s/ O. Richard Wright, Jr. Director November 18, 1999
- ----------------------------
O. Richard Wright, Jr.
</TABLE>
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INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
5.1 Opinion of Housley Kantarian & Bronstein, P.C.
as to the validity of the Common Stock being
registered
23.1 Consent of Housley Kantarian & Bronstein, P.C.
(appears in their opinion filed as Exhibit 5.1)
23.2 Consent of PriceWaterhouseCoopers, L.L.P.
24 Power of Attorney (contained in the signature page
to this registration statement)
99.1 Cooperative Bankshares, Inc. 1998 Stock Option and
Incentive Plan
99.2 1999 Amendment to Cooperative Bankshares, Inc. 1998
Stock Option and Incentive Plan
December 6, 1999
Board of Directors
Cooperative Bankshares, Inc.
201 Market Street
Wilmington, North Carolina 28401
Re: Cooperative Bankshares, Inc. 1998 Stock Option and
Incentive Plan Registration Statement on Form S-8
---------------------------------------------------
Gentlemen:
We have acted as special counsel to Cooperative
Bankshares, Inc., a North Carolina corporation (the "Company"),
in connection with the preparation of the Registration Statement
on Form S-8 filed with the Securities and Exchange Commission
(the "Registration Statement") under the Securities Act of 1933,
as amended, relating to 290,000 shares of common stock, par
value $1.00 per share (the "Common Stock") of the Company which
may be issued pursuant to the Cooperative Bankshares, Inc. 1998
Stock Option and Incentive Plan (the "Plan"), all as more fully
described in the Registration Statement. You have requested the
opinion of this firm with respect to certain legal aspects of
the proposed offering.
We have examined such documents, records and matters of
law as we have deemed necessary for purposes of this opinion and
based thereon, we are of the opinion that the Common Stock when
issued pursuant to and in accordance with the terms of the Plans
will be legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement on Form S-8 and to
references to our firm included under the caption "Legal
Opinion" in the Prospectus which is part of the Registration
Statement.
Very truly yours,
Housley Kantarian & Bronstein, P.C.
By: /s/ Cynthia R. Cross
------------------------------
Cynthia R. Cross, Esquire
[LETTERHEAD OF PRICEWATERHOUSECOOPERS, L.L.P.]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
Cooperative Bankshares, Inc.
We consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated January
22, 1999, on our audits of the consolidated financial statements
of Cooperative Bankshares, Inc. and subsidiary as of December
31, 1998 and 1997, and for each of years in the three year
period ended December 31, 1998, which was included in
Cooperative Bankshares, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1998.
/s/ PriceWaterhouseCoopers, L.L.P.
------------------------------------
PriceWaterhouseCoopers, L.L.P.
Raleigh, North Carolina
Date: December 6, 1999
<PAGE>
COOPERATIVE BANKSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select key Employees and Directors
of the Bank, the Company, and their Affiliates with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentives to Directors and
key Employees of the Company or any Affiliate to promote the
success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(d) "Bank" shall mean Cooperative Bank for Savings,
Inc., SSB.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Change in Control" shall mean any one of the
following events: (i) the acquisition of ownership, holding or
power to vote more than 25% of the voting stock of the Bank or
the Company, (ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the
management or policies of the Bank or of the Company by any
person or by persons acting as a "group" (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934), or (iv)
during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Bank or of the Company
(the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing
Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director. For purposes of this paragraph only, the
term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(h) "Committee" shall mean the Stock Option Committee
under the Company's 1990 Stock Option Plan, provided that the
Board may at any time act as the Committee with respect to any
action the Committee may take pursuant to the Plan.
(i) "Common Stock" shall mean the common stock, $1.00
par value, of the Company.
(j) "Company" shall mean Cooperative Bankshares, Inc.
<PAGE>
<PAGE>
(k) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company, in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
(l) "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
(m) "Disability" shall have the meaning set forth in
Code Section 22(e)(3), as amended from time to time.
(n) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(o) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(p) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(q) "ISO" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(r) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(s) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(t) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(u) "Option" means an ISO and/or a Non-ISO.
(v) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(w) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(x) "Plan" shall mean this Cooperative Bankshares, Inc.
1998 Stock Option and Incentive Plan.
(y) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(z) "Share" shall mean one share of Common Stock.
(aa) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
(bb) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
-2-
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3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 16 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. Except as otherwise required under
Paragraph 11, the aggregate number of Shares deliverable
pursuant to Awards shall not exceed 290,000 Shares. Such Shares
may either be authorized but unissued Shares, Shares held in
treasury, or Shares held in a grantor trust created by the
Company. If any Awards should expire, become unexercisable, or
be forfeited for any reason without having been exercised, the
Optioned Shares shall, unless the Plan shall have been
terminated, be available for the grant of additional Awards
under the Plan.
(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted, but not the number of Shares
which the Company delivers or could deliver to an Employee or
individual upon exercise of an SAR, shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of Shares subject to the Option
shall be charged against the aggregate number of Shares
remaining available under the Plan. The Shares involved in an
Option as to which option rights have terminated by reason of
the exercise of a related SAR, as provided in Paragraph 9
hereof, shall not be available for the grant of further Options
under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Appointment of the Committee. The Plan shall be
administered by the Committee. Members of the Committee shall
serve at the pleasure of the Board. In the absence at any time
of a duly appointed Committee, the Plan shall be administered by
the Board.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms of each such Agreement shall be in
accordance with the Plan, but each Agreement may include such
additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms
of the Plan. In particular, the Committee shall set forth in
each Agreement (i) the Exercise Price of an Option or SAR, (ii)
the
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number of Shares subject to the Award, and its expiration
date, (iii) the manner, time, and rate (cumulative or otherwise)
of exercise or vesting of such Award, and (iv) the restrictions,
if any, to be placed upon such Award, or upon Shares which may
be issued upon exercise of such Award. The Chairman of the
Committee and such other Directors and officers as shall be
designated by the Committee are hereby authorized to execute
Agreements on behalf of the Company and to cause them to be
delivered to the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Company in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Award, granted hereunder to the full extent provided for
under the Company's governing instruments with respect to the
indemnification of Directors.
6. ELIGIBILITY FOR AWARDS.
(a) General Rule. The Committee shall have the
discretion to grant Awards to Employees and Directors (including
members of the Committee). In selecting those Employees and
Directors to whom Awards will be granted and the number of
shares covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Employees
and Directors, the value of their services to the Company and
its Affiliates, and any other factors the Committee may deem
relevant.
(b) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case Options granted in excess of such limitation shall be Non-
ISOs.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
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8. EXERCISE OF OPTIONS.
(a) Generally. The Committee shall specify in each
Agreement the period of years over which the underlying Option
shall become exercisable. Notwithstanding the foregoing, an
Option shall become fully (100%) exercisable immediately upon
termination of the Participant's Continuous Service due to
Disability, death, retirement at or after age 65, or upon a
Change in Control or execution of an agreement to effect a
Change in Control.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise, and may
consist of Shares subject to the Option being exercised.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee or a
Director and has maintained Continuous Service from the date of
the grant of the Option, or within one year after termination of
such Continuous Service (but not later than the date on which
the Option would otherwise expire), except if the Participant's
Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the
Participant's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Participant's rights to
exercise such Option shall expire on the date of such
termination; or
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within two years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution.
(d) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, Common Stock
that is purchased upon exercise of an Option or SAR may not be
sold within the six-month period following the grant of that
Option or SAR.
9. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant SARs either in conjunction
with, or independently of, any Options granted under the Plan.
An SAR granted in conjunction with an Option may be an
alternative right wherein the exercise of the Option terminates
the SAR to the extent of the number of shares purchased upon
exercise of the Option and, correspondingly, the exercise of the
SAR terminates
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the Option to the extent of the number of Shares with respect to
which the SAR is exercised. Alternatively, an SAR granted in
conjunction with an Option may be an additional right wherein
both the SAR and the Option may be exercised. An SAR may not be
granted in conjunction with an ISO under circumstances in which
the exercise of the SAR affects the right to exercise the ISO or
vice versa, unless the SAR, by its terms, meets all of the
following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the
Market Value of the Shares subject to the ISO
at the time the SAR is exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may
be exercised; and
(5) The SAR may be exercised only when the Market
Value of the Shares subject to the ISO exceeds
the Exercise Price of the ISO.
(b) Terms of SAR Awards. The provisions of Paragraphs 7
and 8 are incorporated by reference herein, and shall (to the
extent not inconsistent with this Paragraph) determine the terms
of SARs.
(c) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares.
This amount shall be payable by the Company, in the discretion
of the Committee, in cash or in Shares valued at the then Market
Value thereof, or any combination thereof.
10. CHANGE IN CONTROL.
The provisions of any Award which provides for its exercise
or vesting in installments shall immediately and permanently
lapse on the date of a Change in Control or execution of an
agreement to effect a Change in Control. Consequently, all
Options and SARs shall become immediately exercisable and fully
vested on the date of the Change in Control. With respect to
Options, at the time of a Change in Control, the Participant
shall, at the discretion of the Committee, be entitled to
receive cash in an amount equal to the excess of the Market
Value of the Common Stock subject to such Option over the
Exercise Price of such Shares, in exchange for the cancellation
of such Options by the Participant.
11. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
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(b) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards, together with the
Exercise Prices thereof, shall be equitably adjusted for any
change or exchange of Shares for a different number or kind of
shares or other securities which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
12. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Awards may transfer such Awards (but not ISOs) to his
or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these
individuals. Awards so transferred may thereafter be
transferred only to the Participant who originally received the
grant or to an individual or trust to whom the Participant could
have initially transferred the Awards pursuant to this Paragraph
12. Awards which are transferred pursuant to this Paragraph 12
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
13. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Award, and the Effective Date. Notice
of the determination shall be given to each Participant to whom
an Award is so granted within a reasonable time after the date
of such grant.
14. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by a favorable vote of stockholders owning at least a
majority of the total votes cast at a duly called meeting of the
Company's stockholders held in accordance with applicable laws.
Any Awards made prior to approval of the Plan by the
stockholders of the Company shall be contingent on such
approval, and may not be exercised until and unless such
approval is received.
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15. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may
authorize the Committee to direct execution of an instrument
providing for the modification of any outstanding Award,
provided no such modification shall confer on the holder of said
Award any right or benefit which could not be conferred on him
by the grant of a new Award at such time, or impair the Award
without the consent of the holder of the Award.
16. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
17. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the
Company may require the person exercising the Option or SAR to
make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
18. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
19. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount
required to be withheld. The value of the Shares to be
withheld, or delivered to the Company, shall be based on the
Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. As an alternative, the Company
may retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
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20. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility
to participate or participation in the Plan create or be deemed
to create any legal or equitable right of the Employee,
Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations. No
Employee or Director shall have a right to be granted an Award
or, having received an Award, the right to again be granted an
Award. However, an Employee or Director who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
21. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of North Carolina, except to the
extent that federal law shall be deemed to apply.
<PAGE>
COOPERATIVE BANKSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
_____________________
1999 Amendment
_____________________
WHEREAS, Cooperative Bankshares, Inc. (the "Company")
maintains the Cooperative Bankshares, Inc. 1998 Stock Option and
Incentive Plan (the "Plan") and the Company's Board of Directors
(the "Board") desires to amend the Plan in order to address
certain financial considerations; and
WHEREAS, Paragraph 16 of the Plan authorizes the Board to
amend the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows,
effective immediately:
1. Paragraph 8(b) of the Plan shall be amended in its
entirety to provide as follows:
A Participant may exercise Options, subject to
provisions relative to its termination and
limitations on its exercise, only by (1) written
notice of intent to exercise the Option with respect
to a specified number of Shares, and (2) payment to
the Company (contemporaneously with delivery of such
notice) in cash, in Common Stock owned for more than
six months, or a combination of cash and Common
Stock owned for more than six months, of the amount
of the Exercise Price for the number of Shares with
respect to which the Option is then being exercised.
Each such notice (and payment where required) shall
be delivered, or mailed by prepaid registered or
certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock
owned for more than six months utilized in full or
partial payment of the Exercise Price for Options
shall be valued at its Market Value at the date of
exercise.
2. Paragraph 19 of the Plan shall be amended by adding
the following sentence after the third sentence thereof:
The amount of the withholding requirement shall be
the applicable statutory minimum federal, state or
local income tax with respect to the award on the
date that the amount of tax is to be withheld.
3. Paragraph 8(e) is amended by adding the phrase
"except as determined by the Committee" at the end thereof.
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4. Nothing contained herein shall be held to alter,
vary or affect any of the terms, provisions, or conditions of
the Plan or any Option entered into thereunder, other than as
stated above.
WHEREFORE, on this 18th day of November, 1999, the
Company hereby executes this 1999 Amendment to the Plan.
COOPERATIVE BANKSHARES, INC.
By /s/ Frederick Willetts, III
____________________________
Its President
November 18, 1999 Attest: /s/ Daniel W. Eller (Seal)
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