Exhibit 10.3
NEWPORT FEDERAL SAVINGS BANK
RETIREMENT PLAN FOR DIRECTORS
The Board of Directors of Newport Federal Savings Bank has adopted this
Retirement Plan for Directors, effective May 29, 1997, in order to provide
competitive compensation for its Directors, to attract, retain, and motivate its
Directors, and to encourage the long-term financial success of the Bank through
a performance-based benefit formula.
ARTICLE I
Definitions
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The following words and phrases, when used in the Plan with an initial
capital letter, shall have the meanings set forth below unless the context
clearly indicates otherwise.
"Account" shall mean a bookkeeping account maintained by the Bank in the
name of the Participant.
"Affiliate" shall mean any "parent corporation" or "subsidiary corporation"
of the Bank, as the terms are defined in Section 424(e) and (f), respectively,
of the Code.
"Bank" shall mean Newport Federal Savings Bank, 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 Bank 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 Bank.
"Change in Control" shall mean any of the following events:
(a) When the Bank 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 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 Bank before
such transaction cease to constitute a majority of the Board of Directors of the
Bank or any successor to the Bank, (ii) the Bank transfers substantially all of
its assets to another corporation
which is not an Affiliate of the Bank, (iii) the Bank 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 Bank or any committee
thereof, is or becomes the "beneficial owner", directly or indirectly, of
proxies of the Bank representing twenty-five percent (25%) or more of the
combined voting power of the Bank's members, or (v) the Bank 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 Bank.
(b) If the Bank 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
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. Notwithstanding the foregoing, the Company's ownership of
the Bank 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 Bank 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.
"Election Form" shall mean the form attached hereto as Exhibit "A".
"Employee" shall mean any person who is employed by the Bank.
"Participant" shall mean an individual who serves on the Board at some time
on or after the Effective Date.
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"Plan" shall mean this Newport Federal Savings Bank Directors' Retirement
Plan.
"Safe Performance Factor" shall be 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 expects to follow (and
shall be entitled to rely upon) in making this determination.
"Employee Director" shall mean Brad Snider, President of the Bank.
"Trust Agreement" shall mean that agreement entered into pursuant to the
terms hereof between the Bank and the Trustee, and "Trust" means the trust
created thereunder.
"Trustee" shall mean that 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 Director on the
Effective Date shall have his Account credited with an amount equal to the
product of $2,898 and his full years of service as a Director, up to 20 years,
prior to the Effective Date.
On each June 30 following the Effective Date, each Participant who is a
Non-Employee Director on such date and has 20 or fewer years of service shall
have his Account credited with an amount equal to the product of $2,898 and the
Safe Performance Factor.
Employee Director. The Account of the Employee Director shall be credited
on the Effective Date with an amount equal to $60,000, and his Account will be
credited with the product of $19,600 and the Safe Performance Factor on each
June 30 through June 30, 2006, that he continues to be employed by the Bank
thereafter.
Investment Return. Until distributed in accordance with 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
Bank on certificates of deposit having a term of one year. Notwithstanding the
foregoing, if the Bank converts to stock form, Participants may prospectively
elect between the return associated with such certificates of deposit and the
dividend-adjusted rate of return on the Bank's common stock (or that of its
holding company, if one exists).
Vesting. Amount credited to Participants' Accounts on the Effective Date
and thereafter shall be fully vested at all times.
Final Year Adjustments. In the event of the 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
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present value of all benefits which would have been credited to his Account if
he had otherwise remained employed by the Bank 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 Bank 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 subsequent payments being made by the last day of the first
quarter of each subsequent calendar year until the Participant has collected the
entire value 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 Bank to liability under
Section 280G of the Internal Revenue Code of 1986, as amended.
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 begun).
Elections. In order 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 collect 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.
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ARTICLE IV
Source of Benefits
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General Rule. Benefits shall constitute an unfunded, unsecured
promise by the Bank to provide such payments in the future, as and to the extent
such Benefits become payable. Benefits shall be paid from the general assets of
the Bank, and no person shall, by virtue of this Plan, have any interest in such
assets (other than as an unsecured creditor of the Bank). 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 Bank, provide the Trustee
with a schedule specifying the amounts payable to each Participant, and the time
for making such payments.
Change in Control. In the event of a Change in Control, the Bank
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.
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 Bank to a Participant,
whether in the form of fees, bonus, retirement income under employee benefit
plans sponsored or maintained by the Bank or otherwise. This Plan shall not be
deemed to constitute a contract of employment between the Bank 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 under this Plan and of their
Beneficiaries (if any) shall be solely those of unsecured creditors of the Bank.
If the Participant is removed and/or permanently prohibited from participating
in the conduct of the Bank'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 Bank under this Plan shall terminate, as of
the effective date of the order, but
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vested rights of the parties shall not be affected. If the Bank 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, 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
Bank: (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 the Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained 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 Bank or when
the Bank 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 Bank's affairs, the Bank'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 Bank 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.
ARTICLE VIII
Reorganization
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The Bank 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 Bank herein set forth. The Bank 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.
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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 Arkansas, 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).
ARTICLE XIII
Legal Fees
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In the event any dispute shall arise between a Participant and the
Bank 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 Bank, the Bank 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 Bank 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 Bank 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.
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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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