EXHIBIT 10.3
Proposed Form of Management Recognition and Development Plan
Empire Federal Bancorp, Inc.
1996 Management Recognition and Development Plan
1. Purpose; Definitions.
The purpose of the Plan is to increase the proprietary and vested
interest of the key Employees and Eligible Directors of the Company and its
Affiliates in the growth, development and financial success of the Bank by
granting them awards of Restricted Shares.
Whenever the following terms are used in the Plan, they shall have the
meaning specified below unless the context clearly indicated to the contrary.
"Affiliate" shall mean the Bank and any other "subsidiary" of the
Company as defined in Section 424(f) of the Code.
"Award" shall mean an award of Restricted Shares under the Plan.
"Bank" shall mean Empire Federal Savings Bank, Livingston, Montana, or
any successor thereto.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean an event deemed to occur if and when (a)
an offeror other than the Company purchases shares of the common stock of the
Company or the Bank pursuant to a tender or exchange offer for such shares, (b)
any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company or Bank representing twenty-five percent (25%) or more of the
combined voting power of the Company's or the Bank's then outstanding
securities, (c) the membership of the board of directors of the Company or the
Bank changes as the result of a contested election, such that individuals who
were directors at the beginning of any twenty-four (24) month period (whether
commencing before or after the date of adoption of this Plan) do not constitute
a majority of the Board at the end of such period, or (d) shareholders of the
Company or the Bank approve a merger, consolidation, sale or disposition of all
or substantially all of the Company's or the Bank's assets or a plan of partial
or complete liquidation. If any of the events enumerated in clauses (a) - (d)
occur, the Board shall determine the effective date of the change in control
resulting therefrom.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the committee of the Board designated by the
Board to administer the Plan.
"Company" shall mean Empire Federal Bancorp, Inc., a Delaware
corporation.
"Designated Beneficiary" shall have the meaning set forth in Section
2.2 hereof.
"Disability" shall have the meaning set forth in Section 22(e)(3) of
the Code. For purposes of the Plan, all determinations as to whether a
Participant has become disabled shall be made by a majority of the Board, a
majority upon the basis of such evidence as its deems necessary or desirable,
and shall be final and binding on all interested persons.
"Effective Date" shall have the meaning set forth in Section 5.1 hereof.
"Eligible Director" shall mean, on any date, a person who is serving as
a member of the Board but shall not include a person who is an Employee.
"Employee" shall mean any person who is currently employed by the Bank
or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Participant" shall mean an Employee or Eligible Director to whom an
award of Restricted Shares is granted pursuant to the Plan.
"Plan" shall mean this Empire Federal Bancorp, Inc. 1996 Management
Recognition and Development Plan, as hereinafter amended from time to time.
"Restricted Shares" shall mean Shares which are awarded to an Employee
or Eligible Director that are subject to the transfer and forfeitability
restrictions described in Section 4.2.
"Share" shall mean a share of the Company's common stock, par value
$.01 per share.
2. Administration.
2.1 Administration
The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and to adopt such rules for the administration,
interpretation and application of the Plan and Awards thereunder as are
consistent with its terms and provisions and to interpret, amend or revoke any
such rules. All actions taken and all interpretations and determinations made by
the Committee shall be binding upon all persons, including the Bank,
stockholders, Participants and Designated Beneficiaries. The Secretary of the
Company shall be authorized to implement the Plan in accordance with its terms,
and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the awards hereunder, and all members of the
Board shall be fully protected by the Company in respect to any such action,
determination or interpretation.
2.2 Designated Beneficiaries
If a Participant dies prior to receiving any payment due under the
Plan, such payment shall be made to his Designated Beneficiary. A Participant's
Designated Beneficiary shall be the beneficiary specifically designated by a
Participant in writing to receive amounts due the Participant in the event of
the Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's surviving
spouse or, if none, his estate.
3. Shares Subject To The Plan.
3.1 Shares Subject to the Plan
The maximum number of Shares that may be the subject of Awards under
this Plan shall be __________. The Company shall reserve such number of Shares
for the purposes of the Plan out of its authorized but unissued Shares or out of
Shares held in the Company's treasury, or partly out of each. In the event that
a trust is established in connection with the Plan pursuant to Section 5.4, the
Company may authorize the trustees of the trust to purchase Shares in the open
market with funds contributed by the Company and such shares shall be included
in the number of shares that may be the subject of Awards. In the event that
Restricted Shares are forfeited for any reason, such Shares shall thereafter
again be available for award pursuant to the Plan.
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3.2 Changes in the Company's Shares
In the event that the Committee shall determine that any
recapitalization, reorganization, merger, consolidation, stock split, spin-off,
combination, or exchange of Shares, or other similar corporate event affects the
Shares such that an adjustment is required in order to preserve the benefits or
potential benefits intended under this Plan, the Committee shall, in such manner
as it may deem equitable, adjust any or all of the number and kind of Shares
which thereafter may be awarded under the Plan, or the number and kind of Shares
subject to outstanding awards; provided, however, that the number of Shares
subject to any award shall always be a whole number.
4. Restricted Shares
4.1 Eligibility; Awards Under the Plan
(a) Eligibility. Employees (including officers and employee directors
of the Bank) and Eligible Directors shall be eligible to participate in the Plan
upon designation by the Committee. To the extent that Shares are available for
grant under the Plan, the Committee may determine which of the Employees and
Eligible Directors shall be granted an Award and the number of Restricted Shares
covered by each Award. In selecting those Employees to whom Awards will be
granted and the number of Shares covered by such Awards, the Committee shall
consider the position and responsibilities of the eligible Employees, the length
and value of their services to the Company and its Affiliates, the compensation
paid to the Employees and any other factors the Committee may deem relevant, and
the Committee may request the written recommendation of the chief executive
officer and other senior executive officers of the Company and its Affiliates.
(b) Limitation on Awards. Notwithstanding anything herein to the
contrary, if this plan is implemented within one year of the consummation of the
Bank's mutual-to-stock conversion, no Employee shall receive an Award covering
in excess of twenty five (25) percent, no Eligible Director shall receive in
excess of five (5) percent and Eligible Directors serving as of the Effective
Date shall not receive in excess of thirty (30) percent in the aggregate, of the
number of shares reserved for issuance under the Plan.
(c) Fractions of Shares. Whenever under the terms of the Plan a
fractional share would be required to be issued, the fractional share shall be
rounded up to the next full share.
4.2 Terms of Awards
The Restricted Shares awarded hereunder shall be awarded only pursuant
to a written agreement, which shall be executed by the Participant and a duly
authorized officer of the Company and which shall contain the following terms
and conditions:
(a) Acceptance of Award. An award of Restricted Shares must be accepted
by the Participant within a period of sixty (60) days (or such other period as
the Board may specify at grant) after the award date by the execution of a
Restricted Share award agreement in the form provided by the Company.
(b) Restrictions and Conditions. The Restricted Shares awarded to a
Participant pursuant to this Section 4 shall be subject to the following
restrictions and conditions:
(i) A Participant shall not be permitted to vote, sell,
transfer, pledge, assign or otherwise encumber Restricted Shares awarded under
the Plan prior to the date on which such shares vest in accordance with clause
(iii), except in accordance with the laws of descent and distribution.
(ii) On the date an Award of Restricted Shares vests in
accordance with clause (iii), a Participant (or his beneficiary) shall be
entitled to receive any cash dividends previously paid with respect to the
Restricted Shares, together with interest accrued thereon. Prior to such date,
cash dividends shall be held by the
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Company for the account of the Participant. Stock dividends, if any, issued with
respect to Resotected Shares shall be treated as additional Restricted Shares
that are subject to the same restrictions and other terms and conditions that
apply with respect to the Restricted Shares with respect to which such dividends
are paid.
(iii) Subject to the applicable provisions of the Restricted
Share award agreement and this Section, a Participant's interest in Shares shall
immediately become fully vested and nonforfeitable, and the restrictions set
forth in this Section 4.2 shall lapse (x) ratably over a five (5) year period
whereby twenty percent (20%) of the Award shall vest on each of the first
through the fifth anniversaries of the date of grant (y) upon the Participant's
death or Disability, or (z) upon a Change in Control (to the extent such
treatment is authorized or not prohibited by applicable law or regulations).
4.3 Stock Certificates
A stock certificate registered in the name of each Participant
receiving a Restricted Share award (or in the name of a trustee for the benefit
of each Participant) shall be issued in respect of such shares. Such certificate
shall bear whatever appropriate legend referring to the terms, conditions, and
restrictions applicable to such award as the Board shall determine. The Board
may, in its sole discretion, require that the stock certificates evidencing
Restricted Shares be held in custody by the Company (or in trust by a trustee)
until the restrictions thereon shall have lapsed.
5. Miscellaneous.
5.1 Shareholder Approval; Effective Date; Term
The Plan shall become effective only upon approval by a majority of the
Bank's shareholders at an annual or special meeting of shareholders of the
Company held not less than six (6) months after the date of consummation of the
Bank's mutual-to-stock conversion nor more than twelve (12) months after the
date of adoption of the Plan by the Board, and shall continue in effect until
the tenth anniversary of the Effective Date.
5.2 Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified,
suspends or terminated at any time or from time to time by the Board; provided,
however, that no amendment or modification shall be made without shareholder
approval if such approval is necessary to comply with any tax or regulatory
requirement.
From and after the Effective Date, neither the amendment, suspension
nor termination of the Plan shall, without the consent of the Participant, alter
or impair any rights or obligations under any award theretofore granted. No
awards may be granted during any period of suspension nor after termination or
expiration of the Plan.
5.3 Regulations and Other Approvals
(a) The obligation of the Company to deliver Shares with respect to any
award granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and the
obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Board.
(b) The Board may make such changes to the Plan as may be necessary or
appropriate to comply with the rules or requirements of any governmental
authority.
(c) Each award of Shares is subject to the requirement that, if at any
time the Board determines, in its sole discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any United States, state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, issuance of Shares,
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no Shares shall be issued, in whole or in part, unless listing, registration,
qualification, consent or approval has been effected or obtained free of any
conditions as acceptable to the Board.
(d) In the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act of 1933 or regulations thereunder, and the Board may require any
individual receiving Shares pursuant to the Plan, as a condition precedent to
receipt of such Shares, to represent to the Company in writing that the Shares
acquired by such individual are acquired for investment only and not with a view
to distribution. The certificate for any Shares acquired pursuant to the Plan
shall include any legend that the Board deems appropriate to reflect any
restrictions on transfer.
(e) At the time of grant of any award, the Board may provide in the
Restricted Share award agreement that any Shares received as a result of such
grant shall be subject to a right of first refusal in favor of the Company,
pursuant to which the Participant shall be required to offer to the Company any
Shares that he wishes to sell, with the price being the then fair market value
of such Shares, subject to such other terms and conditions as the Board may
specify in the award agreement.
(f) Rule 16b-3 Compliance. With respect to persons subject to Section
16 of the Exchange Act, transactions under this Plan are intended to comply with
all applicable terms and conditions of Rule 16b-3 and any successor provisions.
To the extent that any provision of the Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
5.4 Trust Arrangement
All benefits under the Plan represent an unsecured promise to pay by
the Company. The Plan shall be unfunded and the benefits hereunder shall be paid
only from the general assets of the Company resulting in the Participants having
no greater rights than the Company's general creditors; provided, however, that
nothing herein shall prevent or prohibit the Company from establishing a trust
or other arrangement for the purpose of providing for the payment of the
benefits payable under the Plan.
5.5 Governing Law
The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Montana
without giving effect to the choice of law principles thereof.
5.6 Titles; Construction
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan. The masculine pronoun
shall include the feminine and neuter and the singular shall include the plural,
when the context so indicates.
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