GUARANTY FEDERAL SAVINGS BANK
RECOGNITION AND RETENTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Guaranty Federal Savings Bank ("Savings Bank") hereby establishes
this Recognition and Retention Plan ("Plan") upon the terms and conditions
hereinafter stated in this Recognition and Retention Plan and Trust Agreement
("Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain personnel of
experience and ability by providing such persons with a proprietary interest in
the Savings Bank as compensation for their contributions to the Savings Bank and
as an incentive to make such contributions and to promote the Savings Bank's
growth and profitability in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
3.01 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
3.02 "Board" means the board of directors of the Savings Bank.
3.03 "Committee" means a Committee of the Board consisting of all
Directors of the Savings Bank.
3.04 "Common Stock" means shares of the common stock of the Savings
Bank.
3.05 "Company" means Guaranty Federal Bancshares, M.H.C., the mutual
holding company of the Savings Bank.
3.06 "Director" means a director of the Savings Bank or the Company who
is not an Officer of the Savings Bank or the Company.
3.07 "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a participant to perform the work
customarily assigned to him. Additionally, a medical doctor selected or approved
by the Board must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears probable that
such Disability will be permanent during the remainder of said participant's
lifetime.
3.08 "Employee" means any person who is currently employed by the
Savings Bank or a subsidiary, including Officers.
3.09 "Minority Stock Offering" means one or more offerings of Common
Stock by the Savings Bank to persons other than the Company.
3.10 "Normal Retirement" means retirement at the date set forth in the
Savings Banks Retirement Plan, or any successor plan.
3.11 "Officer" means an executive officer of the Savings Bank which
includes the Chief Executive Officer, President, Executive Vice Presidents,
Senior Vice Presidents, Vice Presidents in charge of principal business
functions, the Secretary, the Treasurer and any other person performing similar
functions.
3.12 "Plan Shares" means shares of Common Stock held in the Trust and
issued or issuable to a Recipient pursuant to the Plan.
3.13 "Plan Share Award" means a right granted under this Plan to earn
Plan Shares.
3.14 "Plan Share Reserve" means the shares of Common Stock held by the
Trustee pursuant to Sections 5.03 and 5.04.
3.15 "Recipient" means an Employee, Officer or Director who receives a
Plan Share Award under the Plan.
3.16 "Reorganization" means the reorganization of Guaranty Federal
Savings and Loan Association of Springfield as a mutual holding company and the
establishment of the Savings Bank as its majority-owned subsidiary.
3.17 "Savings Bank" means Guaranty Federal Savings Bank.
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3.18 "Trustee" mans that person or entity nominated by the Committee
and approved by the Board pursuant to Sections 4.01 and 4.02 to hold legal title
to the Plan assets for the purposes set fort herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in this and other Sections of the Plan. The interpretation and construction by
the Committee of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Committee shall act by vote or written
consent of a majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. The Committee
shall report its actions and decisions with respect to the Plan to the Board at
appropriate times, but in no event less than one time per calendar year. The
Committee shall recommend to the Board one or more persons or entity to act as
Trustee in accordance with the provisions of this Plan and Trust and the terms
or Article VIII.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of, the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other Sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
except as proved in Section 7.01(d), the Board may not revoke any Plan Share
Award except in the event of revocation for Cause, or with respect to unearned
Plan Share Awards in the event a Recipient of a Plan Share Award voluntarily
terminates his employment or his directorship (as the case may be) with the
Savings Bank prior to retirement.
4.03 Limitation on Liability. No member of the Board or the Committee
or the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Plan Share Awards granted under it. If
a member of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of anything done or not done by him in such capacity under or with
respect to the Plan, the Savings Bank shall indemnify such member against
expense (including reasonable attorneys' fees), judgements, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Savings Bank and a
subsidiary and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
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ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the
Savings Bank to the Trust established under this Plan. Such amounts shall be
paid to the Trustees at the time of contribution. No contributions by Employees
or Directors shall be permitted.
5.02 Initial Investment. Any amounts held by the Trust prior to the
effective date of the Reorganization and the Minority Stock Offering shall be
invested by the Trustee in such interest-bearing account or accounts at the
Savings Bank as the Trustee shall determine to be appropriate.
5.03 Investment of Trust Assets upon the Reorganization; Creation of
Plan Share Reserve. Upon the consummation of the Reorganization and the Minority
Stock Offering, the Trustee shall invest all of the Trust's assets exclusively
in Common Stock except as otherwise provided below; provided, however, that the
Trust shall not invest in more than two percent (4%) of the shares of Common
Stock issued in connection with the Minority Stock Offering which shall
constitute the Plan Share Reserve. Any earnings received with respect to Common
Stock held in the Plan Share Reserve shall be held in an interest-bearing
account. Any earnings received with respect to Common Stock subject to a Plan
Share Award shall be held in an interest-bearing account on behalf of the
individual Recipient.
5.04 Effect of Allocations, Returns and Forfeitures upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Section 6.02, or the
decision of the Committee to return Plan Shares to the Savings Bank, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any shares subject to an Award that may not be earned
because of a forfeiture by the Recipient pursuant to Section 7.01 shall be
returned to the Plan Share Reserve.
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ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees Directors of the Savings Bank and a
subsidiary are eligible to receive Plan Share Awards.
6.02 Allocations. The Committee may determine which of the Employees
referenced in Section 6.01 will be granted Plan Share Awards and the number of
shares covered by each Award; provided, however, that the number of shares
covered by such Awards may not exceed the number of shares in the Plan Share
Reserve immediately prior to the grant of such Awards, and provided, further,
that in no event shall any Awards be made that will violate the Charter, Bylaws
or Plan of Reorganization and Stock Issuance of the Savings Bank or any
applicable federal or state law or regulation. In the event Plan Shares are
forfeited for any reason, the Committee, from time to time, may determine which
of the Recipients referenced in Section 6.01 will be granted additional Plan
Share Awards to be awarded from forfeited Plan Shares. In selecting those
Recipients to whom Plan Share Awards will be granted and the number of Plan
Shares covered by such Awards, the Committee shall consider the position and
responsibilities of the eligible Recipients, the length and value of their
services to the Savings Bank, the compensation paid to the Recipients and any
other factors the Committee may deem relevant.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 that a Plan Share Award has been
granted, the Committee shall notify the Recipient in writing of the grant of the
Award, the number of Plan Shares covered by the Award, and the terms upon which
the Plan Shares subject to the Award may be earned. The date on which the
Committee so notifies the Recipient shall be considered the date of grant of the
Plan Share Awards. The Committee shall maintain records as to all grants of Plan
Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary
in Sections 6.01 and 6.02, no Recipient shall have any right or entitlement to
receive a Plan Share Award hereunder, such Awards being at the total discretion
of the Committee and the Board, nor shall the salaried Recipients as a group
have such a right. The Committee, with the approval of the Board (or if so
directed by the Board), may return all Common Stock in the Plan Share Reserve to
the Savings Bank at any time, and cease issuing Plan Share Awards.
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ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically
state to the contrary at the time a Plan Share Award is granted, Plan Shares
subject to an Award shall be earned and non-forfeitable by a Recipient according
to the following schedule:
Years of Service Vested Interest
---------------- ---------------
Less than 1 0%
2 20%
3 20%
4 20%
5 20%
6 20%
(b) Exception for Termination Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a), Plan Shares
subject to a Plan Share Award held by a Recipient whose service as an Employee,
Officer or Director with the Savings Bank or a subsidiary terminates due to
death or disability, or any part thereof that has not theretofore been earned,
shall be deemed earned as of the Recipient's last day or service as an Employee,
Officer or Director with the Savings Bank or a subsidiary.
(c) Revocation for Cause. Notwithstanding anything hereinafter
to the contrary, the Board may be resolution immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Recipient, whether or not yet earned, in the case of an Employee, Officer or
Director who is discharged from the Savings Bank or a subsidiary for Cause (as
hereinafter defined), or who is discovered after termination of employment to
have engaged in conduct that would have justified termination for Cause. "Cause"
is defined as personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties, or
the wilful violation of any law, rule or regulation (other than traffic
violations or similar offenses) that results in a material loss to the Savings
Bank or a subsidiary, or a final cease-and-desist order.
7.02 Accrual of Dividends. Whenever Plan Shares are paid to a Recipient
or Beneficiary under Section 7.03, such Recipient or Beneficiary shall also be
entitled to receive, with respect to each Plan Share paid, an amount equal to
any cash dividends and a number of shares of Common Stock equal to any stock
dividends, declared and paid with respect to a share of Common Stock between the
date the relevant Plan Share Award became fully vested and the date the Plan
Shares are being distributed. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any cash dividends
so paid out.
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7.03 Distribution of Plan Shares.
(a) Timing of Distributions; General Rule. Except as provided
in subsection (b) below, Plan Shares shall be distributed to the Recipient or
his Beneficiary, as the case may be, as soon as practicable after they have been
earned. No fractional shares shall be distributed.
(b) Timing; Exception for Ten Percent (10%) Shareholders.
Notwithstanding subsection (a) above, no Plan Shares may be distributed prior to
the date that is five (5) years from the effective date of the Reorganization to
the extent the Recipient or Beneficiary, as the case may be, would after receipt
of such shares own in excess of then ten percent (10%) of the issued and
outstanding shares of Common Stock. Any Plan Shares remaining unpaid solely by
reason of the operation of this subsection (b) shall be paid to the Recipient or
his Beneficiary on the date that is five (5) years from the effective date of
the Reorganization.
(c) Form of Distribution. All Plan Shares, together with any
shares representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share earned and
payable. Payments representing accumulated cash dividends (and earnings thereon)
shall be made in cash.
(d) Withholding. The Trustee may withhold from any payment or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock to cover any applicable withholding and employment taxes, and if the
amount of such payment is insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be withheld as a
condition of delivering the Plan Shares. The Trustee shall pay over to the
Savings Bank or a subsidiary that employs or employed such Recipient any such
amount withheld from or paid by the Recipient or Beneficiary.
7.04 Voting of Plan Shares. After a Plan Share Award has been granted,
the Recipient shall be entitled to direct the Trustee as to the voting of the
Plan Shares that are covered by the Plan Share Award and that have not yet been
earned and distributed to him pursuant to Section 7.03, subject to rules and
procedures adopted by the Committee for this purpose. All shares of Common Stock
held by the Trust as to which Recipients are not entitled to direct, or have not
directed, the voting, shall be voted by the Trustee in the same proportion as
Plan Shares that have been awarded and voted.
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ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intent of this Plan and Trust that,
subject to the provisions of this Plan, the Trustee shall have complete
authority and discretion with respect to the management, control and investment
of the Trust, and that the Trustee shall invest all assets of the Trust, except
those attributable to cash dividends paid with respect to Plan Shares, in Common
Stock to the fullest extent practicable, and except to the extent that the
Trustee determines that the holdings of monies in cash or cash equivalents is
necessary to meet the obligations of the Trust. In performing their duties, the
Trustees shall have the power to do all things and execute such instruments as
may be deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust
assets in Common Stock without regard to any law now or hereafter in force
limiting investments for Trustees or other fiduciaries. The investment
authorized herein constitutes the only investment of the Trust, and in making
such investment, the Trustees are authorized to purchase Common Stock from the
Savings Bank or a subsidiary or from any other source, and such Common Stock so
purchased may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above in such deposit accounts, and certificates of deposit
(including those issued by the Savings Bank), obligations of the United States
government or its agencies or such other investments as shall be considered the
equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at
any time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words indicating
that such security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be in
the opinion of the Trustee reasonable for the proper operation of the Plan and
Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
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(g) To hire counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to
be distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in common
with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of court for the exercise of any power
herein contained, or give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Recipients or to the general account
of the Trust, depending on the nature and allocation of the assets generating
such earnings, gains and losses. In particular, any earnings on cash dividends
received with respect to shares of Common Stock shall be allocated to accounts
for Recipients, if such shares are the subject of outstanding Plan Share Awards,
or, otherwise to the Plan Share Reserve.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
borne by the Savings Bank.
8.06 Indemnification. The Savings Bank shall indemnify, defend and hold
the Trustee harmless against all claims, expenses and liabilities arising out of
or related to the exercise of the Trustee's powers and the discharge of their
duties hereunder, unless the same shall be due to their gross negligence or
willful misconduct.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. In the event of any change in the
outstanding shares of Common Stock of the Savings Bank by reason of any stock
dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other similar corporate
change, or other increase or decrease in such shares effected without receipt or
payment of consideration by the Savings Bank, the Committee shall adjust the
aggregate number of Plan Shares available for issuance pursuant to the Plan and
shall adjust the number of shares to which any Plan Share Award relates to
prevent dilution or enlargement of the rights granted to the Recipient under the
Plan.
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9.02 Amendment and Termination of Plan. The Board may, by resolution,
at any time amend or terminate the Plan and Trust. The power to amend or
terminate shall include the power to direct the Trustee to return to the Savings
Bank all or any part of the assets of the Trust, including shares of Common
Stock held in the Plan Share Reserve, as well as shares of Common Stock and
other assets subject to Plan Share Awards but not yet earned by the Employees to
whom they are allocated. However, the termination of the Trust shall not affect
a Recipient's right to earned Plan Share Awards and to the distribution of
Common Stock relating thereto, including earnings thereon, in accordance with
the terms of this Plan and the grant by the Committee or Board.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Recipient, and during the lifetime of the Recipient,
Plan Shares may only be earned by and paid to the Recipient who was notified in
writing of the Award by the Committee pursuant to Section 6.03.
9.04 Employment Rights. Neither the Plan nor any grant of a Plan Share
Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right on the
part of any Employee to continue in the employ of the Savings Bank or a
subsidiary thereof, or the Company.
9.05 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect to any Plan Shares
covered by a Plan Share Award, except as expressly provided in Sections 7.02 and
7.04, prior to the time said Plan Shares are actually distributed to such
Recipient.
9.06 Governing Law. The Plan and Trust and this Agreement shall be
governed by the laws of the State of Missouri.
9.07 Effective Date. This Plan is effective as of the date the Plan is
approved by the stockholders, other than the MHC, of the Savings Bank at a
properly called meeting of shareholders to be held no earlier than six months
following the effective date of the formation of the Savings Bank.
9.08 Term of Plan. This Plan shall remain in effect until the earlier
of (1) termination by the Board, or (2) the distribution of all assets of the
Trust. Termination of the Plan shall not affect any Plan Share Awards previously
granted, and such Awards shall remain valid and in effect until they have been
earned and paid, or by their terms expire or are forfeited.
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