NATIONAL COOPERATIVE BANK
EXECUTIVE LONG-TERM INCENTIVE PLAN
Introduction
The National Cooperative Bank Long-Term Incentive Plan (the
"Plan") is designed to foster and promote the long-term growth
and performance of the Bank by enhancing the Bank's ability to
attract and retain qualified and key employees and motivating key
employees through performance-based incentives. To achieve this
purpose, this Plan provides authority for the grant of
performance-based cash awards.
Article 1 - Definitions
1.1 Award. A performance-based cash award granted to a
Participant pursuant to Article 4.
1.2 Award Agreement. An agreement between the Bank and a
Participant that sets forth terms, conditions, and restrictions
applicable to an Award.
1.3 Bank. The National Consumer Cooperative Bank and its
direct and indirect subsidiaries.
1.4 Board of Directors. The Board of Directors of the
Bank.
1.5 Change in Control. A change in the ownership or
effective control of the Bank within the meaning of Section 280G
of the Code.
1.6 Code. The Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
1.7 Committee. The Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that
the Board of Directors authorizes to administer this Plan.
1.8 Disability. Medically determined physical or mental
impairment that would qualify a Participant for coverage under
the Bank's long-term disability program.
1.9 Measurement Period. A period of three consecutive
calendar years or any other period selected and established by
the Committee at the time the corresponding Award Agreements are
entered into.
1.10 Participant. Any person with whom an Award Agreement
has been entered into under this Plan.
1.11 Performance Goals. Performance goals established
pursuant to Article 4.2 upon which the payment of an Award to a
Participant is conditioned.
1.12 Retirement. Termination of employment with the Bank on
or after attainment of age 65.
1.13 Termination of Employment. A termination of employment
with the Bank (other than by reason of death, disability or
retirement).
Article 2 - Eligibility
All key employees of the Bank, including officers, are
eligible for the grant of Awards. The selection of key employees
to receive Awards will be within the discretion of the Committee.
Article 3 - Administration
3.1 Committee. The Committee will administer this Plan.
Upon the recommendation of the Chief Executive Officer, the
Committee will, subject to the terms of this Plan, have the
authority to (a) select the eligible employees who will be
entitled to receive Awards, (b) enter into Award Agreements, (c)
determine the amount of Awards that can be earned by employees,
(d) determine the terms, conditions, and restrictions applicable
to Awards, (e) adopt, alter, and repeal administrative rules and
practices governing this Plan, (f) interpret the terms and
provisions of this Plan and any Award Agreements entered into
under this Plan, (g) prescribe the form of any Award Agreement or
other instruments relating to Awards, and (h) otherwise supervise
the administration of this Plan. All decisions by the Committee
will be made with the approval of not less than a majority of its
members.
3.2 Delegation. The Committee may delegate any of its
authority to any other person or persons that it deems
appropriate.
3.3 Decisions Final. All decisions by the Committee, and
by any other person or persons to whom the Committee has
delegated authority, will be final and binding on all persons.
Article 4 - Award Agreements and Awards
4.1 Award Agreements and Awards.
(a) Designation of Participants. The Committee may,
in its discretion, designate any key employee of the Bank as a
Participant. Designation of an individual as a Participant for
any Measurement Period shall not require designation of such
individual as a Participant for any other Measurement Period, nor
shall designation of one individual as a Participant require
designation at any time of any other individual as a Participant.
(b) Award Agreements. Award Agreements shall be
entered into with Participants not later than 90 days after the
beginning of a Measurement Period, except that (i) in the case of
the initial Award Agreements, such agreements may be entered into
not later than 90 days after the approval of the Plan by the
Board of Directors, and (ii) if an employee becomes eligible to
participate in the Plan during a Measurement Period, the
Committee may enter into an Award Agreement with such employee on
such terms as the Committee shall prescribe that will entitle the
employee to an Award measured with reference to the remaining
portion of the Measurement Period. Each Award Agreement will
state the percentage of a Participant's base salary that a
Participant may be paid for the applicable Measurement Period.
The percentage of base salary may vary based on the degree to
which the target performance goals for the Measurement Period are
satisfied. The formula for determining the percentage of base
salary earned and the level of performance for a Measurement
Period shall be established in writing by the Committee at the
time the performance goals are determined. Once entered into, the
Committee will not have discretion to modify the terms of an
Award Agreement except as otherwise provided under this Plan.
(c) Payment of Awards. Not later than 90 days after
the end of the Measurement Period the Committee shall pay a
specified Award to each Participant with respect to that
Measurement Period. Prior to the payment of any Award, the
Committee must certify the degree of attainment of the applicable
performance goals. Payment shall be made in a lump sum or
deferred in accordance with Section 6.1 hereof.
4.2 Performance Goals. Not later than 90 days after the
beginning of a Measurement Period, or approval of the Plan by the
Board of Directors, whichever is later, the Committee will
establish in writing the target level of Performance Goals that
must be satisfied at the end of the Measurement Period. The
Committee also may, in its discretion, establish other levels of
Performance Goals, such as threshold or minimum levels and
superior or maximum levels, on which varying Awards will be
based. Performance Goals must be based on objective measures of
the Bank's performance. For any given Measurement Period, the
Committee may use more than one performance measure and assign a
weight to each performance measure to be taken into account in
determining the Award earned by a Participant for such
Measurement Period. Once established, the Committee will not
have discretion to modify the Performance Goals except as
otherwise provided under this Plan.
4.3 Forfeitability of the Award.
(a) General. Except as provided in Section 4.3(b) and
Article 7, a Participant must remain employed by the Bank until
the end of the applicable Measurement Period to be paid his or
her Award. If the Participant has a Termination of Employment
prior to the end of the applicable Measurement Period that is for
Cause or is involuntary, the Award shall be forfeited.
(b) Death, Disability or Retirement. In the event of
a Participant's death, Disability or Retirement before the end of
the applicable Measurement Period then the Participant or the
Participant's Designated Beneficiary shall be entitled to a
prorated Award for that Measurement Period, based on the ratio of
the number of full months the Participant was employed during the
Measurement Period to the total number of months in the
Measurement Period. For purposes of determining a Participant's
Award under this Section 4.3(b), it shall be assumed that (1) for
the remainder of the Measurement Period the Participant received
the same base salary he or she was receiving at the date of his
or her death, Disability or Retirement, and (2) regardless of the
actual level of performance achieved, the Bank has achieved the
target level of performance it established for the entire
Measurement Period. Payment of the Award under this Section
4.3(b), if any, will be made as soon as practicable after the end
of the calendar year in which the Participant's death, Disability
or Retirement occurs. Payment shall be made in cash.
Article 5 - Change of Control
5.1 Effect of Change of Control. In the event that a
Change of Control occurs, all conditions applicable to an Award
will be deemed to have been satisfied at the target level as of
the date of the Change in Control provided that, if the level of
Performance Goals that has already been achieved as of such date
exceeds the target level established for the entire Measurement
Period, all conditions applicable to the Award will be deemed to
have been satisfied at such higher level. Subject to Section
5.2, a Participant's Award shall be paid in cash as soon as
practicable after the Change of Control.
5.2 Limits on Payments in the Event of a Change of Control.
Notwithstanding anything else herein, to the extent a Participant
would be subject to the excise tax under Section 4999 of the Code
on the amounts in Section 5.1 and such other amounts or benefits
he received from the Bank required to be included in the
calculation of parachute payments for purposes of Sections 280G
and 4999 of the Code, the amounts otherwise payable under Section
5.1 shall be automatically reduced to an amount one dollar less
than that amount which, when combined with such other amounts and
benefits required to be included, would subject the Participant
to the excise tax under Section 4999 of the Code; provided,
however, such reduction will be made if, and only if, the
reduced amount received by the Participant would be greater than
the unreduced amount received by the Participant minus the excise
tax payable under Section 4999 of the Code on such unreduced
amount and other amounts and benefits received by the Participant
and required to be included in the calculation of a parachute
payment for purposes of Sections 280G and 4999 of the Code.
Article 6 - Deferral of Award Payment
6.1 Election to Defer Award Payment. Each Participant may
elect to defer all or a portion of his or her Award payment in
increments of 25 percent up to a maximum of 100 percent. Such
deferrals will be credited to a Deferred Compensation Account
maintained under the Bank's Deferred Compensation Plan. Any such
deferral will be credited to the Participant's existing Deferred
Compensation Account if an account already is maintained for the
Participant, and, if not, to a newly established Deferred
Compensation Account. The deferral shall be effected by
executing a Performance Base Cash Award Deferral Election Form as
set forth in Exhibit A to this Plan before January 1 of the last
calendar year in the Measurement Period.
6.2 Treatment of Deferred Amounts. Amounts which a
Participant elects to defer and which are credited to the
Participant's Deferred Compensation Account pursuant to Section
6.1 will be subject thereafter to the terms of the Bank's
Deferred Compensation Plan.
Article 7 - General
7.1 Nonassignability of Awards. No Award under the Plan
shall be subject to anticipation, sale, assignment, encumbrance
or transfer other than by will or the laws of interstate
succession.
7.2 Unsecured Interest. A Participant shall have no
interest in any fund or specified asset of the Bank. Any amounts
which are or may be set aside under the provisions of this Plan
shall continue for all purposes to be a part of the general
assets of the Bank, and no person or entity other than the Bank
shall, by virtue of the provisions of this Plan, have any
interest in such assets. No right to receive payments from the
Bank pursuant to this Plan shall be greater than the right of any
unsecured creditor of the Bank.
7.3 No Right or Obligation of Continued Employment.
Nothing contained in the Plan shall require the Bank or a related
company to continue to employ a Participant, nor shall the
Participant be required to remain in the employment of the Bank
or a related company.
7.4 Withholding. The Bank shall withhold all required
federal, state and local taxes from any Award.
7.5 Amendment and Termination of the Plan. The Plan may be
amended or terminated at any time by the Board or by the
Committee as delegated by the Board, provided that such
termination or amendment shall not, without the consent of the
Participant, affect such Participant's rights with respect to
Award Agreements previously entered into. With the consent of
the Participant affected, the Board, or by delegation of
authority by the Board, the Committee, may amend outstanding
Award Agreements in a manner not inconsistent with the Plan.
7.6 Binding on Successors. The obligations of the Bank
under the Plan shall be binding upon any organization which shall
succeed to all or substantially all of the assets of the Bank,
and the term "Bank," whenever used in the Plan, shall mean and
include any such organization after the succession.
7.7 References. In this Plan, unless there is something in
the subject or context inconsistent with such construction, words
importing the plural number shall be deemed to include the
singular number and vice versa; the masculine shall include the
feminine and vice versa; and the masculine or feminine shall
include the neuter and vice versa.
7.8 Applicable Law. The Plan shall be governed by and
construed in accordance with the laws of the District of
Columbia.
The foregoing is a true and correct copy of the National
Cooperative Bank Executive Long-Term Incentive Plan as approved
by the Board of Directors of the Bank as of the ________ day of
_______________, 1999.
NATIONAL CONSUMER COOPERATIVE BANK
By:______________________________
_____________________________
Secretary
[Corporate Seal]