**Exhibit10.5**

 

**LOWCOUNTRYNATIONAL BANK**

**DIRECTORDEFERRED****FEE****AGREEMENT**

 

THIS AGREEMENT is made this           dayof                       ,2005, by and between LOWCOUNTRY NATIONAL BANK, a nationally-charteredcommercial 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 ofDirectors, the Company is willing to provide to the Director a deferred feeopportunity. The Company will pay the Director’s benefits from the Company’sgeneral assets.

 

**AGREEMENT**

 

The Director and the Company agree as follows:

 

**Article 1Definitions**

 

Whenever used in this Agreement, the following words and phrases shallhave the meanings specified:

 

1.1                                 *“Change of Control”*means the transfer of shares of the Company’svoting common stock such that one entity or one person acquires (or is deemedto acquire when applying Section 318 of the Code) more than 50 percent ofthe Company’s outstanding voting common stock

 

1.2                                 *“Code”*means the Internal Revenue Code of 1986, asamended.

 

1.3                                 *“Deferral  Account”*means the Company’s accounting of the Director’s accumulated Deferralsplus accrued interest.

 

1.4                                 *“Deferrals”*means the amount of the Director’s Fees, whichthe Director elects to defer according to this Agreement.

 

1.5                                 *“Disability”*means, if the Director is covered by aCompany-sponsored disability policy, total disability as defined in such policywithout regard to any waiting period, If the Director is not covered by such apolicy, Disability means the Director suffering a sickness, accident or injurywhich, in the judgment of a physician who is satisfactory to the Company, preventsthe Director from performing substantially all of the Director’s normal dutiesfor the Company. As a condition to receiving any Disability benefits, theCompany may require the Director to submit to such physical or mentalevaluations and tests as the Company’s Board of Directors deems appropriate andreasonable.

 

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 Directorduring 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 Ageor Termination of Service.

 

1.11                           *“Plan Year”*means the calendar year.

 

1.12                           *“Return on Equity’’*means the Company’s after tax net income forthe quarter divided by the Company’s equity at the beginning of the quarter, asdetermined by the Company’s independent auditor based on financial statementsfor the pertinent year.

 

1.13                           *“Termination of Service”*means that the Director ceases to be a memberof 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 AccountBalance”*means the balancethat would have accumulated in the Director’s Deferral Account at NormalRetirement Age if it is assumed that the Director: (1) continued to defer Feesat the same rate that the Director had been deferring Fees on the date of theDirector’s Termination of Service; and (2) the Director reached Normal RetirementAge.

 

**Article 2****Deferral****Election**

 

2.1                                 *Initial Election.*The Director shall make an initial deferralelection under this Agreement by filing with the Company a signed Election Formwithin 30 days after the Effective Date of this Agreement. The Election Form shallset forth the amount of Fees to be deferred and shall be effective to deferonly Fees earned after the date the Election Form is received by the Company.

 

2.2                                 *Election Changes*

 

2.2.1                        *Generally.*******Upon****theCompany’s approval,**the Director may modify the amount of Fees to bedeferred annually by filing a new Election Form with the Company prior to thebeginning of the Plan Year in which the Fees are to be deferred. The modified deferralelection shall not be effective until the calendar year following the year inwhich 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 afamily member, divorce, sickness, injury, catastrophe or similar event outsidethe control of the Director occurs, the Director, by written instructions tothe Company, may reduce future deferrals under this Agreement.

 

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**Article 3****DeferralAccount**

 

3.1                                 *Establishing and Crediting.*The Company shall establisha Deferral Account on its books for the Director and shall credit to theDeferral Account the following amounts:

 

3.1.1                        *Deferrals.*The Fees deferred by the Director as of the time the Fees would haveotherwise been paid to the Director.

 

3.1.2                        *Interest. *At the end of each Plan Year under thisAgreement and immediately prior to the payment of any benefits, but only untilcommencement of the benefit payments under this Agreement, unless otherwisestated, interest is to be credited on the account balance at an annual rate,compounded quarterly, equal to seventy-five percent (75%) of the previousquarter’s Return on Equity, however, this amount shall not exceed twelvepercent (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 theDeferral Account balance.

 

3.3                                 *Accounting Device Only.*The Deferral Account is solely a device formeasuring amounts to be paid under this Agreement. The Deferral Account is nota trust fund of any kind. The Director is a general unsecured creditor of theCompany for the payment of benefits. The benefits represent the mere Companypromise to pay such benefits. The Director’s rights are not subject in anymanner 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 shallpay to the Director the benefit described in this Section 4.1 in lieu ofany other benefit under this Agreement.

 

4.1.1                        *Amount of Benefit.*The benefit under this Section 4.1 is the Deferral Account balanceat the Director’s Normal Retirement Date.

 

4.1.2                        *Payment of Benefit.*The Company shall pay the benefit to theDirector in a lump sum within 60 days following the Director’s NormalRetirement Date.

 

4.2                                 *Early Retirement Benefit.*Upon Termination of Service prior to theNormal Retirement Age for reasons other than death, Change of Control orDisability, the Company shall pay to the Director the benefit described in thisSection 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 balanceat the Director’s Termination of Service.

 

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4.2.2                        *Payment, of Benefit.*The Company shall pay the benefit to theDirector in a lump sum within 60 days following Termination of Service.

 

4.3                                 *Disability Benefit.*If the Director terminates service as aDirector due to Disability prior to Normal Retirement Age, the Company shallpay to the Director the benefit described in this Section 4.3 in lieu ofany other benefit under this Agreement.

 

4.3.1                        *Amount of Benefit.*The benefit under this Section 4.3 is the Deferral Account balanceat the Director’s Termination of Service.

 

4.3.2                        *Payment of Benefit.*The Company shall pay the benefit to theDirector in a lump stun within 60 days following Termination of Service.

 

4.4                                 *Change of Control Benefit.*Upon a Change of Control, followed by theDirector’s Termination of Service for reasons other than death, Disability orretirement, the Company shall pay to the Director the benefit described in thisSection 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 DeferralAccount Balance.

 

4.4.2                        *Payment of Benefit.*The Company shall pay the benefit to theDirector 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 anunforeseeable financial emergency as described in Section 2.2.2, theCompany shall distribute to the Director all or a portion of the DeferralAccount balance as determined by the Company, but in no event shall thedistribution be greater than is necessary to relieve the financial hardship.

 

**Article 5Death Benefits**

 

5.1                                 *Death During ActiveService.*If the Directordies while in the active service of the Company, the Company shall pay to theDirector’s beneficiary the benefit described in this Section 5.1 in lieuof any other benefit under this Agreement.

 

5.1.1                        *Amount of Benefit.*The benefit under this Section 5.1 is the Deferral Account balanceat the Director’s death.

 

5.1.2                        *Payment of Benefit.*The Company shall pay the benefit to theDirector in a lump sum within 60 days after the Director’s Termination ofService.

 

5.2                                 *Death During Payment of aBenefit.*If the Directordies after benefit payments have commenced under this Agreement but beforereceiving all such payments, the Company shall pay the remaining benefits tothe Director’s beneficiary at the same time and in the same amounts they wouldhave been paid to the Director had the Director survived.

 

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5.3                                 *Death After Termination ofService But Before Benefit Payments Commence.*If the Director is entitled to benefitpayments under this Agreement, but dies prior to the commencement of saidbenefit payments, the Company shall pay the benefit payments to the Director’sbeneficiary that the Director was entitled to prior to death except that thebenefit payments shall commence on the first day of the month following thedate of the Director’s death.

 

**Article 6Beneficiaries**

 

6.1                                 *Beneficiary Designations.*The Director shall designate a beneficiary byfiling a written designation with the Company. The Director may revoke ormodify the designation at any time by filing a new designation. However,designations will only be effective if signed by the Director and acknowledgedby the Company during the Director’s lifetime. The Director’s beneficiarydesignation shall be deemed automatically revoked if the beneficiarypredeceases the Director or if the Director names a spouse as beneficiary andthe marriage is subsequently dissolved.  If the Director dies without a valid beneficiary designation, allpayments shall be made to the Director’s estate.

 

6.2                                 *Facility of Payment.*If a benefit is payable to a minor, to aperson declared incompetent, or to a person incapable of handling thedisposition of his or her property, the Company may pay such benefit to theguardian, legal representative or person having the care or custody of suchminor, incompetent person or incapable person. The Company may require proof ofincompetence, minority or guardianship as it may deem appropriate prior todistribution of the benefit. Such distribution shall completely discharge theCompany from all liability with respect to such benefit.

 

**Article 7General Limitations**

 

7.1                                 *Termination for Cause.*Notwithstanding any provision of thisAgreement to the contrary, the Company shall not pay any benefit under thisAgreement that is in excess of the Director’s Deferrals (i.e., the interestearned on the Deferral Account) if the Company terminates the Director’sservice for:

 

(a)                                  Gross negligence or gross neglect of dutiesto the Company;

 

(b)                                 Commission of a felony or of a gross misdemeanorinvolving moral turpitude in connection with the Director’s service to theCompany; or

 

(c)                                  Fraud or willful violation of any law orsignificant Company policy committed in connection with the Director’s serviceand resulting in an adverse effect on the Company.

 

TheDirector’s Deferrals shall be paid to the Director in a lump sum within 60 daysfrom Termination of Service.

 

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7.2                                 *Suicide or Misstatement.*The Company shall not pay any benefit underthis Agreement exceeding the Deferral Account if the Director commits suicidewithin three years after the date of this Agreement. In addition, the Companyshall not pay any benefit under this Agreement if the Director has made anymaterial misstatement of fact on a resume provided to the Company, or on anyapplication for any benefits provided by the Company to the Director.

 

**Article 8Claims and Review Procedure**

 

8.1                                 *Claims Procedure.*Any person or entity who has not receivedbenefits under this Agreement that he or she believes should be paid (“claimant”)shall make a claim for such benefits as follows:

 

8.1.1                        *Initiation — Written Claim.*The claimant initiates a claim by submittingto the Company a written claim for the benefits.

 

8.1.2                        *Timing of Company Response.*The Company shall respond to such claimant within90 days after receiving the claim. If the Company determines that special circumstancesrequire additional time for processing the claim, the Company can extend theresponse period by an additional 90 days by notifying the claimant in writing,prior to the end of the initial 90-day period, that an additional period isrequired. The notice of extension must set forth the special circumstances andthe date by which the Company expects to render its decision.

 

8.1.3                        *Notice of Decision.*If the Company denies part or all of theclaim, the Company shall notify the claimant in writing of such denial. TheCompany shall write the notification in a manner calculated to be understood bythe claimant. The notification shall set forth;

 

(a)                                  The specific reasons for the denial,

 

(b)                                 A reference to the specific provisions of theAgreement on which the denial is based,

 

(c)                                  A description of any additional informationor material necessary for the claimant to perfect the claim and an explanationof why it is needed,

 

(d)                                 An explanation of the Agreement’s reviewprocedures and the time limits applicable to such procedures, and

 

(e)                                  A statement of the claimant’s right to bringa civil action under ER1SA Section 502(a) following an adverse benefitdetermination on review.

 

8.2                                 *Review Procedure.*If the Company denies part or all of theclaim, the claimant shall have the opportunity for a full and fair review bythe Company of the denial, as follows:

 

8.2.1                        *Initiation*— *Written Request.*Toinitiate the review, the claimant, within 60 days after receiving the Company’snotice of denial, must file with the Company a written request for review.

 

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8.2.2                        *Additional Submissions*— *InformationAccess.*The claimant shall then have the opportunity to submitwritten comments, documents, records and other information relating to theclaim. The Company shall also provide the claimant, upon request and free ofcharge, reasonable access to, and copies of, all documents, records and otherinformation relevant (as defined in applicable ERISA regulations) to the claimant’sclaim for benefits.

 

8.2.3                        *Considerations on Review.*In considering the review, the Company shall takeinto account all materials and information the claimant submits relating to theclaim, without regard to whether such information was submitted or consideredin the initial benefit determination.

 

8.2.4                        *Timing of Company Response.*The Company shall respond in writing to such claimantwithin 60 days after receiving the request for review. If the Company determinesthat special circumstances require additional time for processing the claim, theCompany can extend the response period by an additional 60 days by notifyingthe claimant in writing, prior to the end of the initial 60-day period, that anadditional period is required. The notice of extension must set forth thespecial circumstances and the date by which the Company expects to render itsdecision.

 

8.2.5                        *Notice of Decision.*The Company shall notify the claimant inwriting of its decision on review. The Company shall write the notification ina manner calculated to be understood by the claimant. The notification shallset forth:

 

(a)                                  The specific reasons for the denial,

 

(b)                                 A reference to the specific provisions of theAgreement on which the denial is based,

 

(c)                                  A statement that the claimant is entitled toreceive, upon request and free of charge, reasonable access to, and copies of,all documents, records and other information relevant (as defined in applicableERISA regulation) to the claimant’s claim for benefits, and

 

(d)                                 A statement of the claimant’s right to bringa civil action under ERISA Section 502(a).

 

**Article 9 Amendments and Termination**

 

This Agreement may be amended or terminated only by a written agreementsigned by the Company and the Director.

 

**Article 10 Miscellaneous**

 

10.1                           *Binding Effect.*This Agreement shall bind the Director andthe Company, and their beneficiaries, survivors, executors, administrators andtransferees.

 

10.2                           *No Guarantee of Service.*This Agreement is not a contract forservices. It does not give the Director the right to remain in the service ofthe Company, nor does it interfere with the

 

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shareholdersrights to replace the Director. It also does not require the Director to remainin the service of the Company nor interfere with the Director’s right toterminate 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 arerequired to be withheld from the benefits provided under this Agreement.

 

10.5                           *Applicable Law.*The Agreement and all rights hereunder shallbe governed by the laws of the State of South Carolina, except to the extentpreempted by the laws of the United States of America.

 

10.6                           *Unfunded Arrangement.*The Director and the Director’s beneficiaryare general unsecured creditors of the Company for the payment of benefitsunder this Agreement. The benefits represent the mere promise by the Company topay such benefits. The rights to benefits arc not subject in any manner toanticipation, alienation, sale, transfer, assignment, pledge, encumbrance,attachment, or garnishment by creditors. Any insurance on the Director’s lifeis a general asset of the Company to which the Director and the Director’sbeneficiary have no preferred or secured claim.

 

10.7                           *Reorganization*The Company shall not merge or consolidateinto or with another company, or reorganize, or sell substantially all of itsassets to another company, firm, or person unless such succeeding or continuingcompany, firm, or person agrees to assume and discharge the obligations of theCompany under this Agreement. Upon the occurrence of such event, the term “Company”as used in this Agreement shall be deemed to refer to the successor or survivorcompany.

 

10.8                           *Entire Agreement.*This Agreement constitutes the entireagreement 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 thanthose specifically set forth herein.

 

10.9                           *Administration. *The Company shall have powers which are necessary to administer thisAgreement, including but not limited to:

 

(a)                                  Interpreting the provisions of the Agreement;

 

(b)                                 Establishing and revising the method ofaccounting for the Agreement;

 

(c)                                  Maintaining a record of benefit payments; and

 

(d)                                 Establishing rules and prescribing any formsnecessary or desirable to administer the Agreement.

 

10.10                     *Named Fiduciary. *The Company shall be the named fiduciary and plan administrator underthe Agreement. The named fiduciary may delegate to others certain aspects

 

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ofthe management and operation responsibilities of the plan including the Serviceof advisors and the delegation of ministerial duties to qualified individuals.

 

IN WITNESS WHEREOF, the Director and a duly authorized Company officerhave signed this Agreement.

 

 
| **Director** | **Company**                  |
|--------------|------------------------------|
|         |                         |
| ** **   | **LOWCOUNTRY NATIONAL BANK** |
|         |                         |
|         |                         | **By** |   |
|         | **Title**                    |   |
|              |                              |  |  |  |

 

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**EXHIBIT 1**

**TO**

**LOWCOUNTRY NATIONAL BANK DIRECTORDEFERRED FEE AGREEMENT**

**Deferral Election**

 

Ielect to defer my Fees pursuant to this Director Deferred Fee Agreement withthe Company, as follows;

 
| **Amount of Deferral**                                                                                                                                            | ** ** | **Duration**                                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| [Initial and Complete one]                                                                                                                                        |       | [Initial One]                                                                                                                                                                                                                                                                 |
|                                                                                                                                                              |       |                                                                                                                                                                                                                                                                          |
|            I  elect to defer         %  of my Fees annually.  |       |            One  Year only                                                                                                                                                                                              |
|                                                                                                                                                              |       |                                                                                                                                                                                                                                                                          |
|            I  elect to defer $           of my Fees annually. |       |            For           [Insert  Number] Years                                                                                                                 |
|                                                                                                                                                              |       |                                                                                                                                                                                                                                                                          |
|            I  elect not to defer any of my Fees.                                                           |       |            Until  Termination of Service                                                                                                                                                                               |
|                                                                                                                                                              |       |                                                                                                                                                                                                                                                                          |
|                                                                                                                                                              |       |            Until                                  |
|                                                                                                                                                              |       |                                                                                                                                                                                                                                                                          |
|                                                                                                                                                              |       |            (date)                                                                                                                                                                                                      |

 

Uponthe Company’s approval, I understand that I nay change the amount and durationof my deferrals by filing a new election form with the Company; provided,however, that any subsequent election will not be effective until the calendaryear following the year in which the new election is received by the Company.

 

 
| Signature |   |   |
|-----------|--------|--------|
|      |   |   |
| Date      |   |   |
|           |        |        |  |

 

 

Receivedby the Company this                dayof                            ,20    .

 

 
| By     |   |   |
|--------|--------|--------|
|   |   |   |
| Title  |   |   |
|        |        |        |  |

 

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**BeneficiaryDesignation**

 

**LOWCOUNTRYNATIONAL BANKDIRECTOR DEFERRED FEE AGREEMENT**

 

Idesignate the following as beneficiary of benefits under this Agreement payablefollowing my death;

 

 
| Primary:    |   |
|-------------|--------|
|        |
|        |
|        |
| Contingent: |   |
|        |
|        |
|             |        |  |

 

 

**Note:****                  ****To name a trust asbeneficiary, please provide the name of the trustee(s) and the exactname and date of the trust agreement.**

 

Iunderstand that I may change these beneficiary designations by filing a newwritten designation with the Company. I further understand that thedesignations will be automatically revoked if the beneficiary predeceases me,or, if I have named my spouse as beneficiary and our marriage is subsequentlydissolved.

 

 
| Signature |   |   |
|-----------|--------|--------|
|      |   |   |
| Date      |   |   |
|           |        |        |  |

 

 

Acknowledgedby the Company this day of                 ,20    .

 

 
| By     |   |   |
|--------|--------|--------|
|   |   |   |
| Title  |   |   |
|        |        |        |  |

 

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