EXHIBIT 10.5
SALIDA BUILDING & LOAN ASSOCIATION
LONG-TERM INCENTIVE PLAN
The Board of Directors of Salida Building & Loan Association adopted this
Long-Term Incentive Plan, effective June __, 1997, to recognize the
contributions of the Board of Directors to the growth, success and profitability
of the Association and to encourage the continued contributions of its Directors
to the Association's long-term financial success through a performance-based
incentive benefit plan.
ARTICLE I
DEFINITIONS
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The following words and phrases, when used in the Plan, shall have the
meanings set forth below unless the context clearly indicates otherwise.
"Account" shall mean a bookkeeping account maintained by the Association in
the name of the Participant.
"Affiliate" shall mean any "parent corporation" or "subsidiary corporation"
of the Association, as the terms are defined in Section 424(e) and (f),
respectively, of the Internal Revenue Code.
"Association" shall mean Salida Building & Loan Association, and any
successor to its interest.
"Beneficiary" shall mean the person or persons whom a Participant may
designate as the beneficiary of the Participant's Benefits under Articles II and
III. A Participant's election of a Beneficiary shall be made on the Election
Form, shall be revocable by the Participant during his lifetime, and shall be
effective only upon its delivery to an executive officer of the Association and
acceptance by the Board, which acceptance shall be presumed unless, within ten
business days of delivery of the Participant's election, the Board provides the
Participant with a written notice detailing the reasons for its rejection.
"Benefits" shall mean, collectively, the benefits payable under Articles II
and III of the Plan.
"Board" shall mean the Board of Directors of the Association.
"Change in Control" shall mean any of the following events:
(a) When the Association is in the "mutual" form of organization, a
"Change in Control" shall be deemed to have occurred if: (i) as a result of, or
in connection with, any
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exchange offer, merger or other business combination, sale of assets or
contested election, any combination of the foregoing transactions, or any
similar transaction, the persons who were Directors of the Association before
such transaction cease to constitute a majority of the Board of Directors of the
Association or any successor to the Association, (ii) the Association transfers
substantially all of its assets to another corporation which is not an Affiliate
of the Association, (iii) the Association sells substantially all of the assets
of an Affiliate which accounted for 50% or more of the controlled group's assets
immediately prior to such sale, (iv) any "person" including a "group",
exclusive of the Board of Directors of the Association or any committee thereof,
is or becomes the "beneficial owner", directly or indirectly, of proxies of the
Association representing twenty-five percent (25%) or more of the combined
voting power of the Association's members, or (v) the Association is merged or
consolidated with another corporation and, as a result of the merger or
consolidation, less than seventy percent (70%) of the outstanding proxies
relating to the surviving or resulting corporation are given, in the aggregate,
by the former members of the Association.
(b) If the Association shall be in the "stock" form of organization, a
"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 Association or the Holding Company thereof, (ii) the acquisition of
the ability to control the election of a majority of the Association's or the
Company's Directors, (iii) the acquisition of a controlling influence over the
management or policies of the Association 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 Association 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. Notwithstanding the foregoing, the Company's ownership of the
Association shall not of itself constitute a Change in Control for purposes of
the Agreement. 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.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
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occur solely by reason of a transaction in which the Association converts to the
stock form of organization, or creates an independent holding company in
connection therewith. The decision of the Board as to whether a Change in
Control has occurred shall be conclusive and binding.
"Director" shall mean a member of the Board.
"Effective Date" shall mean the date on which the Plan first becomes
effective, as referenced in the opening paragraph of this document.
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"Election Form" shall mean the form attached hereto as Exhibit "A".
"Employee" shall mean any person who is employed by the Association.
"Employee Directors" shall mean Lorin D. Smith and Scott G. Erchul.
"Participant" shall mean an individual who serves as a Director of the
Association on or after the Effective Date.
"Plan" shall mean the Salida Building & Loan Association Long-Term
Incentive Plan.
"Safe Performance Factor" shall mean a composite factor derived from an
assessment of specific operating characteristics as determined by the Board, in
its discretion, for each calendar year during the term of this Plan; provided
that said Safe Performance Factor shall in no event be less than 0 or more than
1.2. Attached as Exhibit "B" is the formula that the Board has adopted for the
purpose of making such determination.
"Trust" shall mean the trust created under the Trust Agreement.
"Trust Agreement" shall mean the agreement entered into between the
Association and the Trustee, pursuant to the terms hereof.
"Trustee" shall mean the person(s) or entity appointed by the Board
pursuant to the Trust Agreement to hold legal title to the Plan Assets for the
purposes set forth herein.
ARTICLE II
CREDITS TO ACCOUNTS
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Non-Employee Directors. Each Participant who is a Non-Employee Director on
the Effective Date shall have his Account credited with an amount equal to the
product of $2,846 and his full years of service as a Director prior to the
Effective Date.
On each June 30 following 1997, each Participant who is a Non-Employee
Director on such date shall have his Account credited with an additional amount
equal to the product of $2,846 and the Safe Performance Factor.
Employee Directors. The Accounts of Employee Directors Smith and Erchul
shall be credited on the Effective Date with an amount equal to $99,684 and
$32,049, respectively. An Employee Director's Account will be credited, on each
June 30 following 1997, which the Employee Director's 65/th/ birthday, with an
additional amount equal to the product of the Annual Credit set forth below and
the Safe Performance Factor, provided the Employee Director continues to be an
employee of the Association on such date.
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Director Annual Credit
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Smith $11,076
Erchul $ 5,342
Investment Return. Prior to distribution under the terms of the Plan, each
Participant's Account shall be credited with a rate of return, on any amounts
previously credited, equal to the highest rate of interest paid by the
Association on one-year certificates of deposit. Notwithstanding the foregoing,
if the Association converts to stock form, Participants may prospectively elect
between the return of such certificates of deposit and the dividend-adjusted
rate of return on the Association's common stock (or that of its holding
company, as applicable).
Vesting. Amounts credited to Participants' Accounts on the Effective Date
and thereafter shall be fully vested.
Final Year Adjustments. In the event of an Employee Director's disability
or death, his Account shall be credited with an amount equal to the difference
(if any) between (i) 50% of the present value of all benefits which would have
been credited to his Account if he had otherwise remained employed by the
Association to age 65, and (ii) the benefits which are actually credited to his
Account at the time of his termination. If the Employee Director's employment
terminates for any reason other than Just Cause in connection with or following
a Change in Control, his Account shall be credited with an amount equal to the
difference (if any) between (i) 100% of the present value of all benefits which
would have been credited to his Account if he had otherwise remained employed by
the Association to age 65, and (ii) the benefits which are actually credited to
his Account at the time of his termination, subject to applicable "golden
parachute" limitations under (S)280G of the Internal Revenue Code of 1986, as
amended.
ARTICLE III
DISTRIBUTION FROM ACCOUNTS; ELECTION FORMS
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General Rule. Account balances shall be paid, in cash, in ten equal annual
installments beginning during the first quarter of the calendar year which next
follows the calendar year in which the Participant ceases to be a Director for
any reason, with any subsequent payments being made by the last day of the first
quarter of each subsequent calendar year until the Participant has received the
entire amount of his Account. Notwithstanding the foregoing: (i) a Participant
may elect on his Election Form to have his Account paid in a single lump sum
distribution, or in annual payments over a period of less than ten years, and
(ii) to the extent required under federal banking law, the amounts otherwise
payable to a Participant shall be reduced to the extent that on the date of a
Participant's termination of employment, either (A) the present value of his
Benefits exceeds the limitations that are set forth in Regulatory Bulletin 27a
of the Office of Thrift Supervision, as in effect on the Effective Date, or (B)
such reduction is necessary to avoid subjecting the Association to liability
under Section 280G of the Internal Revenue Code of 1986, as amended.
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Death Benefits. If a Participant dies before receiving all Benefits
payable pursuant to the preceding paragraph, then the remaining balance of the
Participant's Account shall be distributed in a lump sum to the Participant's
designated Beneficiary (or estate, in the absence of a validly named or living
Beneficiary) not later than the first day of the second month following the date
of the Participant's death; provided that a Participant may specify on the
Election Form a distribution period that effectuates the annual installment
payments selected by the Participant (with payments made as though the
Participant survived to collect all benefits and retired on the date of his
death if payments had not previously commenced).
Elections. To be effective, a Participant's initial Election Form must be
submitted more than one year before the date on which the Participant first
becomes entitled to receive benefits from the Plan. Elections made pursuant to
this Article III shall be irrevocable, provided that beneficiary designations
made pursuant to executed Election Forms shall be revocable during the
Participant's lifetime and a Participant may, by submitting an effective
superseding Election Form at any time and from time to time, prospectively
change the designated Beneficiary and the manner of payment to a Beneficiary.
ARTICLE IV
SOURCE OF BENEFITS
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General Rule. Benefits shall constitute an unfunded, unsecured promise by
the Association to pay such payments in the future, as and to the extent such
Benefits become payable. Benefits shall be paid from the general assets of the
Association, and no person shall, by virtue of this Plan, have any interest in
such assets, other than as an unsecured creditor of the Association. For any
fiscal year during which a Trust is maintained, (i) the Trustee shall inform the
Board annually prior to the commencement of each fiscal year as to the manner in
which such Trust assets shall be invested, and (ii) the Board shall, as soon as
practicable after the end of each fiscal year of the Association, provide the
Trustee with a schedule specifying the amounts payable to each Participant, and
the date for making such payments.
Change in Control. In the event of a Change in Control, the Association
shall contribute to the Trust an amount sufficient to provide the Trust with
assets having an overall value equivalent to the value of the aggregate Account
balances under the Plan.
ARTICLE V
ASSIGNMENT
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Except as otherwise provided by this Plan, it is agreed that neither the
Participant nor his Beneficiary nor any other person or persons shall have any
right to commute, sell, assign, transfer, encumber and pledge or otherwise
convey the right to receive any Benefits hereunder, which Benefits and the
rights thereto are expressly declared to be nontransferable.
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ARTICLE VI
NO RETENTION OF SERVICES
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The Benefits payable under this Plan shall be independent of, and in
addition to, any other compensation payable by the Association to a Participant,
whether in the form of fees, bonus, retirement income under employee benefit
plans sponsored or maintained by the Association or otherwise. This Plan shall
not be deemed to constitute a contract of employment between the Association and
any Participant.
ARTICLE VII
RIGHTS OF DIRECTORS;
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TERMINATION OR SUSPENSION UNDER FEDERAL LAW
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The rights of the Participants and their Beneficiaries under this Plan
shall be (if any) solely those rights of unsecured creditors of the Association.
If the Participant is removed and/or permanently prohibited from participating
in the conduct of the Association's affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(4) or (g)(1)), all obligations of the Association under this Plan shall
terminate, as of the effective date of the order; vested rights of the parties
shall not be affected. If the Association is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Plan shall terminate as of the date
of default; however, the provisions of this Paragraph shall not affect the
vested rights of the parties.
All obligations under this Plan shall terminate, except to the extent that
continuation of this Plan is necessary for the continued operation of the
Association: (i) by the Director of the Office of Thrift Supervision ("Director
of OTS"), or his designee, at the time that the Federal Deposit Insurance
Corporation ("FDIC") or its successor enters into an agreement to provide
assistance to or on behalf of the Association under the authority set forth in
Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his designee, at
the time that the Director of the OTS, or his designee approves a supervisory
merger to resolve problems related to operation of the Association or when the
Association is determined by the Director of the OTS to be in an unsafe or
unsound condition. Such action shall not affect any vested rights of the
parties.
If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.
1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Participant from
participating in the conduct of the Association's affairs, the Association's
obligations under this Plan shall be suspended as of the date of such service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Association may in its discretion (i) pay the Participant all or
part of the compensation withheld while its contract obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
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ARTICLE VIII
REORGANIZATION
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The Association agrees that it will not merge or consolidate with any other
corporation or organization, or permit its business activities to be taken over
by any other organization, unless and until the succeeding or continuing
corporation or other organization shall expressly assume the rights and
obligations of the Association herein set forth. The Association further agrees
that it will not cease its business activities or terminate its existence, other
than as heretofore set forth in this Paragraph, without having made adequate
provision for the fulfillment of its obligation hereunder.
ARTICLE IX
AMENDMENT AND TERMINATION
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The Board may amend or terminate the Plan at any time, provided that no
such amendment or termination shall, without the written consent of an affected
Participant, alter or impair any vested rights of the Participant under the
Plan.
ARTICLE X
STATE LAW
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This Plan shall be construed and governed in all respects under and by the
laws of the State of Colorado, except to the extent preempted by federal law.
If any provision of this Plan shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.
ARTICLE XI
HEADINGS; GENDER
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Headings and subheadings in this Plan are inserted for convenience and
reference only and constitute no part of this Plan. This Plan shall be
construed, where required, so that the masculine gender includes the feminine.
ARTICLE XII
INTERPRETATION OF THE PLAN
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The Board shall have sole and absolute discretion to administer, construe,
and interpret the Plan, and the decisions of the Board shall be conclusive and
binding on all affected parties, unless such decisions are arbitrary and
capricious.
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ARTICLE XIII
LEGAL FEES
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In the event any dispute shall arise between a Participant and the
Association as to the terms or interpretation of this Plan, whether instituted
by formal legal proceedings or otherwise, including any action taken by a
Participant to enforce the terms of this Plan or in defending against any action
taken by the Association, the Association shall reimburse the Participant for
all costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions; provided that the Participant shall return such
amounts to the Association if he fails to obtain a final judgment by a court of
competent jurisdiction or obtain a settlement of such dispute, proceedings, or
actions substantially in his favor. Such reimbursements to a Participant shall
be paid within 10 days of the Participant furnishing to the Association written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Participant. Any such request
for reimbursement by a Participant shall be made no more frequently than at 30
day intervals.
ARTICLE XIV
DURATION OF PLAN
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Unless terminated earlier in accordance with Article IX, this Plan shall
remain in effect during the term of service of the Participants and until all
Benefits payable hereunder have been made.
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