Exhibit 10.3
Management Recognition and Retention Plan
ARGO FEDERAL SAVINGS BANK, FSB
AMENDED AND RESTATED
MANAGEMENT RECOGNITION PLAN AND TRUST
TABLE OF CONTENTS
GENERAL
1.1 Establishment and Purpose .................................... 1
1.2 Plan Administration, Trust Agreement ......................... 1
1.3 Affiliated Company ........................................... 1
1.4 Aggregate Account ............................................ 2
1.5 Argo Bancorp ................................................. 2
1.6 Beneficiary .................................................. 2
1.7 Company ...................................................... 2
1.8 Common Stock ................................................. 2
1.9 Board of Directors ........................................... 2
1.10 Disability Retirement ........................................ 2
1.11 Eligible Employee ............................................ 2
1.12 ERISA ........................................................ 2
1.13 Internal Revenue Code ........................................ 2
1.14 Key Employee ................................................. 2
1.15 Management Recognition Plan and Trust ........................ 3
1.16 Merger Conversion ............................................ 3
1.17 O.T.S. ....................................................... 3
1.18 Participant .................................................. 3
1.19 Plan Year .................................................... 3
1.20 Regular Accounting Date ...................................... 3
1.21 Retirement Date .............................................. 3
1.22 Stock Award .................................................. 3
1.23 Termination Date ............................................. 3
1.24 Trustee ...................................................... 3
1.25 Trust Fund ................................................... 3
1.26 Unallocated Shares Account ................................... 3
1.27 Year of Vested Service ....................................... 3
PARTICIPATION
2.1 Eligibility of Participation .................................. 4
2.2 Participation not Contract of Employment ..................... 4
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AWARD OF SHARES
3.1 Stock Awards ................................................. 4
3.2 Shares Subject to Plan ....................................... 5
3.3 Date of Grant ................................................ 5
PAYMENT OF ACCOUNT BALANCES
4.1 Fully Vested Benefits ........................................ 6
4.2 Partially Vested Benefits .................................... 7
4.3 Forfeitures .................................................. 7
4.4 Fractional Shares ............................................ 7
4.5 Designation of Beneficiaries ................................. 7
WITHHOLDING OF TAXES
5.1 Tax Withholding .............................................. 8
5.2 Supplemental Withholding Payment ............................. 8
DIVIDENDS AND VOTING RIGHTS
6.1 Payment of Dividends ......................................... 9
6.2 Voting Rights ................................................ 9
THE COMMITTEE
7.1 Membership and Authority ..................................... 9
7.2 Delegation by Committee ...................................... 10
7.3 Information to be Furnished to Committee ..................... 10
7.4 Committee's Decision Final ................................... 10
7.5 Remuneration and Expenses .................................... 11
7.6 Indemnification of Committee Member .......................... 11
7.7 Resignation or Removal of Committee Member ................... 11
7.8 Appointment of Successor Committee Members ................... 11
AMENDMENTS OF THE PLAN
8.1 Board of Directors ........................................... 11
PERMANENCY OF THE PLAN
9.1 Termination of Plan and Trust ................................ 11
9.2 Suspension of Plan ........................................... 12
RIGHTS, RESTRICTIONS AND OPTIONS ON COMMON STOCK
10.1 Distribution of Common Stock Under Federal Securities Law .... 12
10.2 Adjustments to Common Stock .................................. 13
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TRUST AGREEMENT
11.1 The Trust Fund ............................................... 13
11.2 General Powers ............................................... 14
11.3 Determination of "Value" ..................................... 15
11.4 Compensation and Expenses .................................... 15
11.5 Action by Trustee ............................................ 15
11.6 Exercise of Trustee's Duties ................................. 16
11.7 Limit of Trustee's Responsibility ............................ 16
11.8 Indemnification of Trustee by the Company .................... 16
11.9 Resignation .................................................. 16
11.10 Removal of Trustee and Appointment of Successor Trustee ...... 17
11.11 Duties of Resigning or Removed Trustee and of Successor
Trustees ..................................................... 17
11.12 Amendment .................................................... 17
11.13 Termination .................................................. 17
MISCELLANEOUS
12.1 Company Action ............................................... 17
12.2 Company Records .............................................. 17
12.3 No Guarantee of Interests .................................... 18
12.4 Evidence ..................................................... 18
12.5 Waiver of Notice ............................................. 18
12.6 Gender and Number ............................................ 18
12.7 Controlling Law .............................................. 18
12.8 Tax Status of Trust .......................................... 18
12.9 Approval ..................................................... 18
12.10 Compliance with Section 16 ................................... 18
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AMENDED AND RESTATED
ARGO FEDERAL SAVINGS BANK, FSB
MANAGEMENT RECOGNITION PLAN AND TRUST
SECTION 1
GENERAL
1.1 Establishment and Purpose.
(a) ARGO FEDERAL SAVINGS BANK, FSB ("Company") hereby establishes the
ARGO FEDERAL SAVINGS BANK, FSB MANAGEMENT RECOGNITION PLAN AND
TRUST ("Plan") effective on October 1, 1991 ("Effective Date").
Said Plan shall amend and restate in its entirety the Argo Federal
Savings Bank, FSB Management Recognition Plan and Trust adopted by
the Board of Directors of the Company on December 23, 1991,
effective as of the Effective Date, shall amend and restate in its
entirety and incorporate herein as amended and restated the
Management Recognition Plan and Trust Agreement adopted by the
Board of Directors on December 29, 1992, effective as of May 27,
1992, the closing date of the Merger Conversion, and shall amend
and restate in its entirety and incorporate herein as amended and
restated the plan adopted by the Board of Directors on March 20,
1995.
(b) The purpose of this Plan is to promote the interest of the Company,
Argo Bancorp, Inc. ("Argo Bancorp") and the stockholders of Argo
Bancorp by providing a method to reward those eligible employees
who hold key positions within the Company and have provided the
Company outstanding service with their experience and ability. This
Plan will reward these Key Employees by providing them an ownership
interest in Argo Bancorp to compensate them for their contributions
to the Company and provide an additional incentive to remain in the
employ of the Company and increase their personal interest in its
continued success and progress.
1.2 Plan Administration, Trust Agreement. The authority to control and
manage the operation and administration of the Plan shall be vested in a
Committee as described in Section 7.
All contributions made under the Plan will be held, managed and controlled by
a Trustee (the "Trustee") acting under the Trust which forms a part of the
Plan. The terms of the Trust are set forth in this document.
1.3 Affiliated Company shall mean (a) a member of a controlled group of
corporations of which Argo Bancorp is a member, or (b) an unincorporated
trade or business which is under common control with Argo Bancorp as
determined in accordance with Section 414(c) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations issued thereunder, or (c) any
organization (whether or not incorporated) which is a member of an affiliated
service group (as
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defined in Code Section 414(m)) which includes Argo Bancorp, and any other
entity required to be aggregated with Argo Bancorp pursuant to regulations
under Code Section 414(o). For purposes hereof, a "controlled group of
corporations" shall mean a controlled group of corporations as defined in
Code Section 1563(a), determined without regard to Code Section 1563(a)(4)
and (e)(3)(C). Unless the context clearly indicates otherwise, whenever
reference is made to Company, Affiliated Companies are included.
1.4 Aggregate Account means, with respect to each Participant, the value of
all non-vested Stock Awards held in Trust maintained on behalf of such
Participant including stock dividends and cash dividends received or interest
income earned on such cash dividends.
1.5 ARGO Bancorp shall refer to Argo Bancorp, Inc., the holding company of
Argo Federal Savings Bank, FSB.
1.6 Beneficiary means the person or persons to whom a deceased Participant's
benefits are payable under Section 4.5 of the Plan.
1.7 Company shall refer to Argo Federal Savings Bank, FSB.
1.8 Common Stock shall mean the common stock issued by Argo Bancorp.
1.9 Board of Directors shall refer to the members of the Board of Directors
of the Company.
1.10 Disability Retirement means the date the Participant is retired from the
employ of the Company or an Affiliated Company because of disability,
irrespective of his age. A Participant will be considered disabled for
purposes of the Plan if, on account of total and permanent physical or mental
disability, he no longer is capable of performing the duties assigned to him
by the Company or an Affiliated Company and if, in the opinion of a physician
who is mutually acceptable to the Participant and the Company, such total and
permanent disability is likely to continue for the remainder of the
Participant's life.
1.11 Eligible Employee shall mean officers or Key Employees of the Company or
an Affiliated Company.
1.12 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. This Plan, a non-qualified restricted Stock Award
plan, is not intended to be subject to ERISA.
1.13 Internal Revenue Code or Code shall mean the Internal Revenue Code of
1986, as amended from time to time. References to any section of the Internal
Revenue Code shall include any successor provision thereto.
1.14 Key Employee means an officer of the Company or Affiliated Company that
is involved in policy making decisions on behalf of the Company, Affiliated
Company or Argo Bancorp.
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1.15 Management Recognition Plan and Trust shall mean the plan adopted in
connection with the merger conversion which Plan is hereby merged into and
consolidated with the Plan.
1.16 Merger Conversion shall mean the conversion of Dolton-Riverdale Savings
and Loan Association (the "Association") from the mutual to the stock form of
organization and the merger of the Association with and into the Company.
1.17 O.T.S. shall mean the Office of Thrift Supervision.
1.18 Participant shall mean an Eligible Employee of the Company or an
Affiliated Company who has been granted Stock Awards.
1.19 Plan Year shall be the 12 month period beginning January 1 and ending
December 31.
1.20 Regular Accounting Date shall mean each September 30 in each Plan Year.
1.21 Retirement Date means the date the Participant retires pursuant to
"Normal Retirement" or "Early Retirement" under the 401(K) Plan for the
Company.
1.22 Stock Award shall mean the granting of an award of Common Stock to vest
over a period of time.
1.23 Termination date means the Participant's date of Normal Retirement,
Disability Retirement, death, resignation, or dismissal, as applicable to
such Participant.
1.24 Trustee shall mean American National Bank of Waukegan or such successor
thereto as shall be appointed by the Company.
1.25 Trust Fund shall mean all non-vested assets held under the Plan by the
Trustee as the same shall exist from time to time. Trust Fund shall also
include vested assets which have not yet been distributed to Participants.
1.26 Unallocated Shares Account shall mean an account within the Trust which
holds all shares of Common Stock subject to the Plan which have not yet been
granted to any participant.
1.27 Year of Vested Service means with respect to any Participant, each 12
month period beginning on the day after Date of Grant and all anniversaries
thereafter in which the Participant provides services to the Company or any
Affiliated Company as an employee.
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SECTION 2
PARTICIPATION
2.1 Eligibility of Participation. All officers and Key Employees of the
Company or an Affiliated Company are eligible to participate in the Plan.
Eligibility does not guarantee any employee the right to receive any Stock
Award hereunder. The Award of such shares are at the total discretion of the
Committee pursuant to Section 3.
2.2 Participation not Contract of Employment. The Plan does not constitute a
contract of employment, and participation in the Plan will not give any
employee the right to continue in the employ of the Company or to provide
services thereto nor shall participation in the Plan interfere in any way
with the right of the Company to terminate the employment of the Participant
or give any right or claim to any benefit under the terms of the Plan unless
such right or claim has specifically vested under the terms of the Plan.
SECTION 3
AWARD OF SHARES
3.1 Stock Awards.
(a) The Committee will determine which Eligible Employees referenced in
Section 2 will be granted Stock Awards and the number of shares of
Common Stock to be granted under the Stock Award.
(b) The Committee's decision will take into account the Participant's
position, responsibilities and value of services provided to the
Company or an Affiliated Company. In addition, the Committee will
take into account all other factors in its decision process which
it deems relevant. The Committee may request recommendations from
the Chief Executive Officer and other senior management members of
the Company.
(c) However, Stock Awards made by the Committee subsequent to June 1,
1995, to the Chief Executive Officer and the next four most highly
paid executive officers who are listed in the most current summary
compensation table in the proxy for the Annual Meeting of
Stockholders ("Named Executive Officers") are intended to be
Performance Based Compensation as defined in Section 162(m) of the
Code and therefore excluded from the determination under that
section of compensation for which no corporate deduction from income
is allowed. No Stock Award shall be made except upon successful
completion of the individual "Performance Goal" set within the Stock
Award to any Named Executive Officer.
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(d) The Performance Goal shall be the attainment by the Company of a
pre-established return on assets ("ROA"). The Performance Goal will
be set when the outcome of the Performance Goal is substantially
uncertain, as determined in accordance with Section 162(m) of the
Code. Successfully meeting the Performance Goal will result in the
granting of 100% of the Stock Award as set by the Committee for the
named Executive subject further to the general vesting provisions of
the Plan.
(e) The maximum number of shares granted under a Stock Award subject to
a Performance Goal is 4,000 individual Named Executive Officer. The
compensation resulting from such a Stock Award would be the fair
market value of the underlying shares at the time to the extent to
which they became vested.
(f) Once a Stock Award subject to a Performance Goal is granted, no
vesting of such Stock Award will occur until the Committee has
certified attainment of the Performance Goal. However, the period of
time for vesting of such Stock Awards shall be measured from the
Date of Grant after such certification. Any vesting which would have
occurred except for absence of a certification by the Committee will
vest on the next date that vesting would have otherwise occurred.
For example a Stock Award made on July 1, 19X1, with a Performance
Goal measured on June 30, 19X2 would, without the Performance Goal
have a portion of the Stock Award vest on December 31, 19X1 and
June 30, 19X2. However, because of the effect of the Performance
Goal, both of those portions of the Stock Award would vest on June
30, 19X2 if the Committee certified attainment of the Performance
Goal on that date.
(g) All stock Awards by the Committee shall be subject to review and
approval or rejection of the Board of Directors.
3.2 Shares Subject to Plan. The number of shares of Common Stock subject to
this Plan shall be 24,498. Such shares of Common Stock shall be placed in the
Trust's Unallocated Shares Account. Shares of Common Stock shall remain in
the unallocated shares Account until a Stock Award has been granted under
this Section 3 or returned to the Company pursuant to Section 9.
In the event shares of Common Stock are forfeited pursuant to Section 4.3,
the shares of Common Stock subject to such forfeiture shall be placed in the
Unallocated Shares Account and will be available for future awards by the
Committee pursuant to this Section 3.
3.3 Date of Grant. Date of Grant is the date on which the Board of Directors
approves the Stock Award. The Committee will notify the recipient of the
determination as soon as practicable after the Date of Grant at which time the
Participant and the Company shall execute a Stock Award Agreement outlining
the number of shares of Common Stock subject to the Stock Award and other
terms of the Stock Award. The Committee will notify the Trustee of the
granting of shares of Common Stock. Upon said notification, the Trustee shall
transfer shares of Common Stock equal to the number granted, from the
Unallocated Shares Account to an Aggregate Account for the benefit of the
Participant.
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Shares granted will remain in this separate Aggregate Account in Trust until
such time as the Participant's rights to the shares become vested pursuant to
Sections 4.1 and 4.2 or forfeiture pursuant to Section 4.3
SECTION 4
PAYMENT OF ACCOUNT BALANCES
4.1 Fully Vested Benefits.
(a) If a Participant retires on or after his Normal or Early Retirement
Date, dies while in the employ of the Company or an Affiliated
Company or becomes disabled in accordance with the Plan or in the
event of a Change in Control, as hereinafter defined, then the
Participant shall be fully vested in all benefits under this Plan,
regardless of the number of Years of Vested Service. The entire
balance in the Participant's Aggregate Account shall become
distributable to or for his benefit, or to or for the benefit of his
Beneficiary, as the case may be, in accordance with this Section 4.
(b) A "Change in Control" of the Company or Argo Bancorp means a "Change
in Control" of a nature that (i) would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a Change in Control of the Company or Argo Bancorp within
the meaning of the Home Owners Loan Act of 1933 and the Rules and
Regulations promulgated by the OTS (or its predecessor agency), as
in effect on the effective date of this Plan; or (iii) without
limitation such a Change in Control shall be deemed to have occurred
at such time as (a) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company or Argo Bancorp's
outstanding securities ordinarily having the right to vote at the
election of directors except for any securities of the Company
purchased by Argo Bancorp and any securities purchased by the
Company's employee stock benefit plans; or (b) individuals who
constitute the Board on the date hereof (the "Incumbent Board"),
cease for any reason to constitute a least a majority thereof,
provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three
quarters of the directors comprising the Incumbent Board, or who
nomination for election by Argo Bancorp's stockholders was approved
by the same Nominating Committee serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as though he
were a member of the Incumbent Board; or (c) a plan of
reorganization, a merger, consolidation, sale of all or
substantially all the assets of the Company or Argo Bancorp or
similar
6
transaction in which the Company or Argo Bancorp is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of Argo Bancorp, by someone other than the current
management of Argo Bancorp, seeking stockholder approval of a plan of
reorganization, merger or consolidation of Argo Bancorp or the
Company or similar transaction with one or more corporations as a
result of which the outstanding shares of the class of securities
then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the
Company or Argo Bancorp shall be distributed or (e) a tender offer
is made for 20% or more of the voting securities of the Company or
Argo Bancorp.
4.2 Partially Vested Benefits. After each Year of Vested Service, the
Trustee will distribute from the Trust, to the Participant, the shares of
Common Stock which have become vested. The Participant will vest in
thirty-three and one-third (33 1/3%) percent of the number of shares of
Common Stock granted on each 12 month anniversary of the Date of Grant.
However, with reference to any awards made subsequent to June 1, 1995, the
Participant will have a vested interest in 1/6th (plus or minus 16.66%) of
the number of shares of Common Stock granted in a particular Stock Award,
inuring to the Participant on the last day of each six-month period following
the Date of Grant until the vested interest reaches 100% of the shares of
Common Stock granted in such Stock Award. Pursuant to Section 6.1, the
Participant will also vest in stock and cash dividends paid on the shares and
any interest thereon between the date of grant and the date of vesting.
4.3 Forfeitures. Upon termination of employment, except for terminations
under Section 4.1, all non-vested shares of Common Stock will be forfeited.
Shares of Common Stock forfeited will be kept in Trust but moved to the
Unallocated Shares Account and will be available to be awarded to other
Participants at the Committee's discretion.
4.4 Fractional Shares. In calculating the number of shares of Common Stock
vested, fractional shares shall be rounded down to the nearest whole number.
4.5 Designation of Beneficiaries. Each Participant from time to time, by
signing a form furnished by the Committee, may designate any person or
persons (who may be designated concurrently, contingently or successively) to
whom his benefits under the Plan are to be paid if he dies before he
receives all of such benefits. A Beneficiary designation form will be
effective only when the form is filed in writing with the Committee while the
Participant is alive and will cancel all Beneficiary designation forms
previously signed and filed by the Participant.
If a Participant fails to designate a Beneficiary before his death as
provided above, or if the Beneficiary designated by a deceased Participant
dies before him, the Committee, in its discretion, may direct the Trustee to
make distribution of the Participant's benefits as follows:
(a) First, to the Participant's spouse;
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(b) Then, if there is no spouse,
(i) To or for the benefit of any one or more of his relatives by
adoption, blood or marriage, and in such proportions as the
Committee determines; or
(ii) To the legal representative or representatives of the estate of
the last to die of the Participant and his Designated Beneficiary.
SECTION 5
WITHHOLDING OF TAXES
5.1 Tax Withholding. The Trustee shall have the right to retain and withhold
from payment of the vested portion of the Stock distribution, the amount of
taxes required by any government to be withheld or otherwise be deducted and
paid with respect to such payment.
A Participant receiving shares of Common Stock may reimburse the Trustee for
any such taxes required to be withheld by the Trustee. The Trustee shall
remit to the Company any tax withheld. The Company will have the
responsibility of remitting the funds to the proper governmental agency.
Alternatively, the Participant may elect to have the above withholding taken
from any payroll compensation made to the Participant through the normal
administrative payroll systems of the Company.
5.2 Supplemental Withholding Payment. Upon the vesting of any part of a Stock
Award, for any reason, the Savings Bank shall make an additional payment to
the Participant ("Supplemental Withholding Payment"). The Supplemental
Withholding Payment shall be an amount equal to (i) all applicable
withholding for federal taxes, (ii) all applicable withholding for state,
local or other taxes, on the then vesting portion of the Stock Award, and
(iii) all applicable withholding on (i) and (ii) including withholding
applicable on stock dividends, cash dividends and any earnings thereon
associated with the then vesting portion of the Stock Award. Notwithstanding
the above, final determination of the appropriate amount of the Supplemental
Withholding Payment is the sold discretion of the Committee.
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SECTION 6
DIVIDENDS AND VOTING RIGHTS
6.1 Payment of Dividends. An amount equal to dividends declared and paid on
Stock Awards granted to a Participant but not yet vested will be held by the
Trustee in an interest bearing account for the benefit of the Participant.
When corresponding shares of Common Stock are vested and distributed, cash
dividends with any applicable interest earned will be paid out to the
Participant. These dividend payments are subject to withholding under Section
5.1.
Stock dividends paid on shares of Common Stock during the vesting period will
attach to the awarded shares and will vest when said shares are vested
pursuant to Section 4.
6.2 Voting Rights. After a Stock Award has been granted, the Participant
shall be entitled to direct the voting of the Common Stock subject to the
Stock Award and which have not yet been earned and distributed pursuant to
Section 4.2, subject to rules and procedures adopted by the Committee for this
purpose. With respect to all shares of Common Stock held by the Trust as to
which Participants are not entitled to direct, or have not directed, the
voting, the Committee shall direct the Trustee that such shares shall be
voted by the Trustee in the same proportion as the Common Stock Subject to
Stock Awards for which a direction from Participants have been received by
the Trustee was voted.
SECTION 7
THE COMMITTEE
7.1 Membership and Authority. The Committee referred to in Section 1.2 shall
consist of one or more members who shall be appointed by the Board of
Directors of the Company and such Committee shall be comprised solely of
Directors not otherwise employed by the Company, all of whom are
"disinterested directors" as that term is defined under Rule 16(b)-3 under
the Securities Exchange Act of 1934, as amended, promulgated by the
Securities and Exchange Commission and also who are "Outside Directors" as
defined under Section 162(m) of the Code. Except as otherwise specifically
provided in this Section 7, in controlling and managing the operation and
administration of the Plan, the Committee shall act by a majority of its
then members, by meeting or by writing filed without meeting, and shall have
the following powers, rights and duties in addition to those vested in it
elsewhere in the Plan:
(a) To award shares of Common Stock pursuant to Section 3 of the Plan
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(b) To adopt such rules of procedure and regulations as, in its opinion,
may be necessary for the proper and efficient administration of the
Plan and as are consistent with the provisions of the Plan.
(c) To enforce the Plan in accordance with its terms and with such
applicable rules and regulations as may be adopted by the Committee.
(d) To determine all questions arising under the Plan, including the
power to determine the rights or eligibility of employees or
Participants and their Benficiaries and their respective benefits,
and to remedy ambiguities, inconsistencies or omissions.
(e) To give such directions to the Trustee with respect to the Trust Fund
as may be provided in the Trust Agreement.
(f) To maintain and keep adequate records concerning the Plan and
concerning its proceedings and acts in such form and detail as the
Committee may decide.
(g) To direct all payments of benefits under the Plan. The certificate of
a majority of the members of the Committee that the Committee has
taken or authorized any action shall be conclusive in favor of any
person relying on the certificate.
(h) To set Performance Goals as set out in Section 3.1 as required, to
monitor attainment of such Performance Goals and to notify Named
Executives of the Committee's certification of their attainment.
7.2 Delegation by Committee. In exercising its authority to control and
manage the operation and administration of the Plan, the Committee may employ
agents and counsel (who may also be employed by the Company) and to delegate
to them such powers as the Committee deems desirable.
7.3 Information to be Furnished to Committee. The Company shall furnish the
Committee such data and information as may be required. The records of the
Company as to an employee's or Participant's period of employment,
termination of employment and the reason therefore, leave of absence and
compensation will be conclusive on all persons unless determined to be
incorrect.
7.4 Committee's Decision Final. To the extent permitted by law, any
interpretation of the Plan and any decision on any matter within the
discretion of the Committee made by the Committee in good faith is binding on
all persons. A misstatement or other mistake of fact shall be corrected when
it becomes known, and the Committee shall make such adjustment on account
thereof as it considers equitable and practicable.
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7.5 Remuneration and Expenses. No remuneration shall be paid to any Committee
member as such. However, the reasonable expenses of a Committee member
incurred in the performance of a Committee function shall be reimbursed by
the Company.
7.6 Indemnification of Committee Member. The Committee and the individual
members thereof shall be indemnified by the Company against any and all
liabilities, losses, costs, and expences (including fees and expenses)
whatsoever kind and nature which may be imposed on, incurred by or asserted
against the Committee or the members by reason of the performance of a
Committee function if the Committee or such members did not act dishonestly
or in willful or negligent violation of the law or regulations under which
such liability, loss, cost or expense arises.
7.7 Resignation or Removal of Committee Member. A Committee member may resign
at any time by giving ten (10) days advance written notice to the Company,
the Trustee and the other Committee members. The Company may remove a
Committee member by giving advance written notice to him, the Trustee and
other Committee members.
7.8 Appointment of Successor Committee Members. The Board of Directors may
fill any vacancy in the membership of the Committee and shall give prompt
written notice thereof to the other Committee members and the Trustee. While
there is a vacancy in the membership of the Committee, the remaining
Committee members shall have the same powers as the full Committee until the
vacancy is filled.
SECTION 8
AMENDMENTS OF THE PLAN
8.1 Board of Directors. The Board of Directors of the Company may amend the
Plan at any time pursuant to written resolutions adopted by such Board of
Directors. No such amendment, however, shall have the effect of reducing any
then nonforfeitable percentage of benefits of any Participant as computed in
accordance with the vesting schedule under Section 4 of the Plan.
SECTION 9
PERMANENCY OF THE PLAN
9.1 Termination of Plan and Trust. The Company contemplates that the Plan
shall be permanent and that it shall be able to continue to grant shares of
Common Stock under the Plan. Nevertheless, in recognition of the fact that
future conditions and circumstances cannot now be
11
entirely foreseen, the Company reserves the right to terminate either the
Plan or the Plan and the Trust by action of the Board of Directors.
The termination of this Plan shall not affect the rights of Participants
under Stock Awards theretofore granted to receive Common Stock under the Plan,
and, all such awards shall continue in force and operation after termination
of the Plan until which time the Participant receives the distributed shares
of Common Stock due to vesting or forfeits such shares of Common Stock
pursuant to Section 4.2.
Upon termination of the Plan and after all vesting and distributions of all
allocated shares, the Trust shall return and unallocated shares of Common
Stock and any unallocated dividends and interest earnings, if any, to the
Company.
Prior to termination, the Company shall have the right, at any time, to
request the Trustee to return to the Company any unallocated Common Stock
held in Trust.
9.2 Suspension of Plan. Due to the Company's status as an insured thrift
institution, which is subject to the regulatory oversight of such
governmental agencies as the OTS and the Federal Deposit Insurance
Corporation, the Company reserves the right to suspend the Plan in the event
the Company shall fail to maintain compliance with minimum capital tests
and/or requirements, as those requirements may be established by law,
regulation, guideline or agreement to which the Company is now, or hereafter
may be, subject.
SECTION 10
RIGHTS, RESTRICTIONS AND OPTIONS ON COMMON STOCK
10.1 Distribution of Common Stock Under Federal Securities Laws. If at the
time of any distribution hereunder of Common Stock to any Participant or his
Beneficiary, a Form S-8 Registration Statement in respect to those shares of
Common Stock not acquired by the Trust in the Merger Conversion or following
the Merger Conversion, or their issuance under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder, ("Act"), or
under any similar form of registration, is not then in effect with the
Securities and Exchange Commission ("SEC"), or if no other exemption under
the Act is available or a "no action" letter has not been issued by the SEC,
with respect to such securities (the "Unregistered Securities"), then:
(a) Investment Representation. At the time of any such distribution, the
distributee shall be deemed to have agreed, for himself and for his
heirs, personal or legal representatives, that he or such successors
in interest will represent and shall be deemed to have represented
that he or such successors will hold the Unregistered Securities
solely for investment and with no present intention to resell or
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distribute the same and the distributee, or such successors, as the
case may be, shall sign a certificate to such effect at the time of
any distribution, but the neglect or failure to execute such
certificate shall not be a limitation of the foregoing agreements
and representations.
(b) Legend on Certificates. At the time of the issuance of any
certificate or certificates representing the "Unregistered
Securities" to any distributee, or other persons, as a result of a
distribution under this Plan when there is no available exemption
under the Act, such certificate(s) shall have endorsed thereon a
legend reading substantially as follows:
"These shares are not registered under the Securities Act of 1933, as amended
("Act"). Said shares may not be transferred, assigned, hypothecated or
otherwise disposed of unless: (i) a Registration Statement has been filed and
becomes effective under the Act, or (ii) until the registration provisions of
the Act have otherwise been complied with, or (iii) in the opinion of counsel
for the Company such proposed transfer or other disposition will not violate
the registration provisions of the Act."
(c) Resubmissions. Any distributee, or any successor in interest, who is
notified by the Committee that counsel for the Company considers
said distributee or successor a statutory underwriter under the Act,
shall resubmit any share certificate or certificates issued
previously without the above legend to the Company, so that said
legend may be imposed thereon. Any such distributee or successor in
interest further agrees to comply with the provisions of said legend.
10.2 Adjustments to Common Stock. The aggregate number of shares of Common
Stock of the Company on which Stock Awards may be granted hereunder, and the
number of shares thereof covered by each Stock Award may all be appropriately
adjusted, as the Board of Directors may determine, for any increase or
decrease in the number of shares of Common Stock resulting from a subdivision
or consolidation of shares whether through reorganization, recapitalization,
stock split-up or combination of shares, or the payment of a stock dividend
or other increase or decrease in such shares effected without receipt of
consideration by Argo Bancorp.
SECTION 11
TRUST AGREEMENT
11.1 The Trust Fund. The Trust Fund as of any date means all property of
every kind then held by the Trustee.
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11.2 General Powers. As to the Trust Fund and the Plan, the Trustee shall
have the following powers, rights and duties in addition to those provided
elsewhere in this Trust Agreement, the Plan or by law:
(a) To adopt such rules of procedure and regulations as in his opinion may
be necessary for the proper administration of the Trust and as are
consistent with this Agreement and the Plan.
(b) To enforce the Trust and the rules and regulations adopted by the
Trustee.
(c) To determine questions arising under this Agreement, including the
power to remedy ambiguities, inconsistencies or omissions.
(d) To receive and hold all contributions paid to them under the Plan;
provided, however, that the Trustee shall have no duty to require
that contributions be made to him or to determine that the
contributions received by him comply with any resolution of the
Board of Directors of the Company.
(e) To have the authority and discretion to invest in Common Stock or
interest bearing savings accounts.
(f) To make payments or distributions from the Trust Fund in accordance
with the administration of the Plan and this Trust Agreement.
(g) To begin, maintain and defend any litigation necessary in connection
with the administration of the Plan or this Trust.
(h) To compromise, contest, arbitrate and abandon claims or demands.
(i) To have all rights of an individual owner, including the power to
give proxies to vote stocks and other voting securities, to join in
or oppose (alone or jointly with others) voting trusts, mergers,
consolidations, foreclosures, reorganizations and liquidations, or
other changes in the financial structure of any corporation, and to
exercise or sell stock subscription and conversion rights.
(j) To hold securities and other property in the name of a nominee, or in
any other form, with or without disclosing the Trust relationship.
(k) To determine on each Accounting Date, or as soon thereafter as
practicable, the then Net Worth of the Trust Fund, that is the fair
market value of all assets comprising the Trust Fund, less
liabilities, if any, other than liabilities to persons entitled to
benefits under the Plan.
(l) To furnish the Company an annual account or an account for such
other fiscal period as the Company may designate, or as may be
required under this
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Agreement or the Plan, showing the Net Worth of the Trust Fund at
the end of the period, all investments, receipts, disbursements and
other transactions made by the Trustee during the accounting period.
(m) To pay any estate, inheritance, income or other tax, charge or
assessment attributable to any benefit payable under the Plan out of
such benefit after giving the Company notice as far in advance as
practicable; to defer making payment of any such tax, charge or
assessment if they are indemnified to their satisfaction in the
premises; and to require before making any payment such release or
other document from any lawful taxing authority and such indemnity
from the intended payee as the Trustee considers necessary for their
protection.
(n) To employ reputable agents, attorneys, accountants, investment counsel
or other persons (who also may be employed by the Company) and to
delegate to them such powers as the Trustee considers desirable.
(o) To furnish the Company with such information in the Trustee's
possession as the Company may need for tax or other purposes.
(p) To perform any and all other acts in their judgment necessary or
appropriate for the proper and advantageous management, investment
and distribution of the Trust Fund and for the proper administration
of the Plan.
11.3 Determination of "Value". In determining the Net Worth of the Trust Fund
the Trustee shall use available current market prices or quotations when
available. Otherwise, the Trustee shall use such current market value as he
deems fair and reasonable and his judgment with reference thereto shall be
conclusive upon all persons. The Trustee, with direction from the Company,
shall select the overall method of accounting whether cash, accrual or a
hybrid. Once a method of accounting is established it shall be used
consistently until a change in the method of accounting is approved by the
Company and, if necessary, by the Internal Revenue Service.
11.4 Compensation and Expenses. Except as otherwise expressly provided herein
and in the Plan, all reasonable costs, charges and expenses incurred in the
administration of this Trust and the Plan, including compensation to the
agents, attorneys, accountants and other persons employed by the Trustee,
will be paid by the Company. Expenses incurred in connection with the sale,
investment and reinvestment of the Trust Fund (such as brokerage, postage,
express and insurance charges, and transfer taxes) shall be paid from the
Trust Fund unless paid by the Company.
11.5 Action by Trustee. During any period in which two or more Trustees are
acting, the following provisions apply where the context admits:
(a) The Trustee, by writing filed with the Company, may select a
secretary if he believes is advisable, who may, but need not be a
Trustee.
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(b) The Trustee qualified to act may act by meeting, or by writing
signed without meeting, and may execute any document relating to the
Trust Fund by signing one document or concurrent documents.
(c) The certificate of the secretary of the Trustees or of a majority of
the Trustees that they have taken or authorized any action shall be
conclusive in favor of any person relying on the certificate.
Notwithstanding the provisions of paragraph (b) of this Section 11.5
requiring that action be taken by a majority of the Trustees
qualified to act, the Trustees may allocate to any one or more
Trustees the responsibility for controlling and managing one or more
phases of the operation and administration of the Plan other than
the authority and discretion to manage and control the assets of the
Plan. The functions so allocated shall be identified in writing, and
the Trustee or Trustees to whom they are allocated shall have sole
responsibility for such functions. No allocation of responsibilities
shall be made pursuant to this subsection except upon the unanimous
vote of all Trustees then having the authority to act.
11.6 Exercise of Trustee's Duties. Subject to the provisions of this Section
11, the Trustee shall discharge his duties hereunder and under the Plan solely
in the interest of the Plan Participants and their Beneficiaries and
(a) For the exclusive purpose of:
(i) Providing benefits to Plan Participants and their
Beneficiaries; and
(ii) Defraying reasonable expenses of administering the Plan not
paid for by the Company.
(b) With the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like
character and with like aims.
11.7 Limit of Trustee's Responsibility. No power, duty or responsibility is
imposed on the Trustee by or under the Plan except as set forth in this Trust
Agreement.
11.8 Indemnification of Trustee by the Company. The Company hereby agrees to
indemnify the Trustee and to hold the Trustee harmless against any and all
liabilities, losses, costs or expenses (including legal fees and expenses) of
whatsoever king and nature which may be imposed on, incurred by or asserted
against the Trustee at any time by reason of Trustee's service under this
Trust Agreement if the Trustee did not act dishonestly or in willful or
negligent violation of the law or regulation under which such liability,
loss, cost or expense arises.
11.9 Resignation. A Trustee may resign at any time by giving thirty days
advance written notice to the Company.
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11.10 Removal of Trustee and Appointment of Successor Trustee. The Company
may remove any Trustee by written notice to that Trustee. The Company shall
fill a vacancy, however, arising in the office of Trustee as soon as
practicable by a writing filed with the person or corporation appointed to
fill the vacancy.
11.11 Duties of Resigning or Removed Trustee and of Successor Trustees. If
the Trustee resigns or is removed, he shall promptly furnish to the successor
Trustee and the Company an account of his administration of the Trust from
the date of his last account. Each successor Trustee shall succeed to the
title to the Trust Fund vested in his predecessor without the signing or
filing of any instrument, but a resigning or removed Trustee shall execute
all documents and do all acts necessary to vest such title of record in the
successor Trustee. Each successor Trustee shall have all the powers conferred
by this Trust Agreement and the Plan as if originally named Trustee. No
successor Trustee shall be personally liable for any act or failure to act of
a predecessor Trustee.
11.12 Amendment. This Trust Agreement may be amended from time to time by the
Company, except as follows:
(a) The duties and liabilities of the Trustee cannot be substantially
changed without his consent; and
(b) Under no condition shall any such amendment result in the return or
repayment to the Company of any part of the Trust Fund or the
income from it or result in the distribution of the Trust Fund for
the benefit of anyone other than Participants and their
Beneficiaries, except as provided in Section 4 and Section 9.
11.13 Termination. If the Plan is terminated, this Trust Agreement, including
all rights, titles, powers, duties, discretion and immunities imposed upon or
reserved to the Trustee and the Company nevertheless shall continue in effect
until all assets have been distributed by the Trustee in accordance with the
Plan.
SECTION 12
MISCELLANEOUS
12.1 Company Action. Except as may be specifically provided herein, any
action required or permitted to be taken by the Company may be taken on
behalf of the Company by any officer of the Company.
12.2 Company Records. Records of the Company as to an employee's or
Participant's period of employment, termination of employment and the reason
therefore, leaves of absence,
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reemployment and Compensation will be conclusive on all persons, unless
determined to be incorrect.
12.3 No Guarantee of Interests. None of the Trustee, the Company or the
Committee in any way guarantees the Trust Fund from loss or depreciation, nor
do they guarantee any payment to any person. The liability of the Trustee,
the Company and the Committee to make any payments hereunder is limited to
the available assets of the Trust Fund.
12.4 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
12.5 Waiver of Notice. Any notice required under the Plan may be waived by
the person entitled to notice.
12.6 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine and neuter genders, the plural shall
include singular, and the singular shall include the plural.
12.7 Controlling Law. The law of the State of domicile of the Company shall be
the controlling state law in all matters relating to the Plan and shall apply
to the extent that it is not preempted by the laws of the United States of
America.
12.8 Tax Status of Trust. The Trust herein created is designated as
constituting a part of a plan intended to be taxed as a grantor trust under
Subchapter J of the Internal Revenue Code, with the Company as grantor.
12.9 Approval. The Plan shall be presented to stockholders of Argo Bancorp
for ratification for purposes of obtaining favorable treatment under Section
16(b) of the Securities Exchange Act of 1934 and to qualify as performance
based compensation under Section 162(m) of the Code; provided, however, that
the failure to obtain stockholder ratification will not affect the validity
of the Plan and the Stock Awards thereunder.
12.10 Compliance with Section 16. If this Plan is qualified under 17 C.F.R.
Section 240.16b-3 of the Exchange Act Rules, with respect to persons subject
to Section 16 of the Exchange Act, transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act. To the extent any provision of the Plan fails to so
comply, it shall be deemed null and void, to the extent permitted by law.
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