EXHIBIT 10(E)
HARBOR FEDERAL SAVINGS BANK
OUTSIDE DIRECTORS' RECOGNITION AND RETENTION PLAN
EFFECTIVE: 1/6/94
HARBOR FEDERAL SAVINGS BANK
OUTSIDE DIRECTORS'
RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I.
ESTABLISHMENT OF THE PLAN AND TRUST
1.01. Harbor Federal Savings Bank (the "Company") hereby establishes
the Outside Directors' Recognition and Retention Plan (the "Plan") and Trust
(the "Trust") upon the terms and conditions hereinafter stated in this Outside
Directors' Recognition and Retention Plan and Trust Agreement (the "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.
1.03. The Trust hereby established shall be revocable by the Company.
1.04. The Trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of Subpart E, Part I, subchapter J., chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
1.05. The principal of the Trust, and any earnings thereof shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of Recipients and their Beneficiaries and general
creditors as herein set forth. Recipients and their Beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Agreement shall be mere
unsecured contractual rights of the Recipients and their Beneficiaries against
the Company. Any assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the event of
insolvency of the Company.
ARTICLE II.
PURPOSE OF THE PLAN
2.01. The purpose of the Plan is to retain non-employee directors of
experience and ability by providing such persons with a proprietary interest in
the Company as compensation for their contributions to the Company and its
Affiliates and as an incentive to make such contributions and to promote the
Company'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. "Affiliate" means the Company and those subsidiaries of the Company
which, with the consent of the Board, agree to participate in this Plan.
3.02. "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 Board and may be changed from time to time by similar
written notice to the Board. In the absence of a written designation, the
Beneficiary shall be the Recipient's surviving spouse, if any or if none, his
estate.
3.03. "Board" means the Board of Directors of the Company.
3.04. "Common Stock" means shares of the common stock, $.01 par value per
share, of the Company.
3.05. "Company" shall mean Harbor Federal Savings Bank.
3.06. "Director" means a member of the Board of Directors of the Company,
who is not also an employee of the Company.
3.07. "Disability" means any physical or mental impairment which would
constitute grounds for disability benefits under the Deferred Benefit plan
maintained by the Company if the Director was eligible to participate in such
Plan.
3.08. "Employee" means any person who is currently employed by the
Company or an Affiliate, including officers.
3.09. "Plan Shares" means shares of Common Stock held in the Trust and
issued or issuable to a Recipient pursuant to the Plan.
3.10. "Plan Share Award" means a right granted under this Plan to earn
Plan Shares.
3.11. "Plan Share Reserve" means the shares of Common Stock held by the
Trustee pursuant to Sections 5.03 and 5.04.
3.12. "Recipient" means a Director who receives a Plan Share Award under
the Plan.
3.13. "Retirement" means termination of service which would constitute
retirement under any tax qualified plan maintained by the Company or by reaching
age 65.
3.14. "Trustee" means that person(s) or entity nominated by 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 forth herein.
ARTICLE IV.
ADMINISTRATION OF THE PLAN
4.01. Role of the Board. The Plan shall be administered and interpreted
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by the Board in accordance with its terms. The interpretation and construction
by the Board of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Board shall have all of the powers
allocated to it in this and other Sections of the Plan.
4.02. Limitation on Liability. No member of the Board or the Trustee(s)
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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 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 Company
shall indemnify such member against expense (including attorneys' fees),
judgments, 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
Company and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
ARTICLE V.
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01. Xxxxxx and Timing of Contributions. The Board shall contribute to
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the Trust an amount sufficient to purchase the Plan Share Reserve, as defined
below, from the shares of Common Stock issued by the Company in connection with
the Company's reorganization to the mutual holding company structure and the
related common stock offering (the "Reorganization"). No contributions by
Directors shall be permitted.
5.02. Investment of Trust Assets;Creation of Plan Share Reserve.
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Upon the Reorganization, the Trustee shall invest all of the Trust's assets
exclusively in Common Stock except as otherwise provided below; provided,
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however, that the Trust shall not invest in more than 26,985 shares of Common
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Stock issued in the Reorganization (the "Plan Share Reserve"). Any earnings
received with respect to Common Stock held in the 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. To the extent that the Company makes
additional contributions to the Trust the "Trustee shall invest such
contributions in shares of Common Stock (subject to Section 8.02). The Trustee
may make such investments through private transactions, open market purchases
and directly from the Company.
5.03. Effect of Allocations, Returns and Forfeitures Upon Plan Share
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Reserves. Upon the allocation of Plan Share Awards under Section 6.02, or any
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decision of the Board to terminate the Plan and return Plan Shares to the
Company, 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 which
may not be earned because of a forfeiture by the Recipient pursuant to Section
7.01 shall be returned (added) to the Plan Share Reserve.
ARTICLE VI.
ELIGIBILITY; ALLOCATIONS
6.01. Eligibility. Directors of the Company and its Affiliates are
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eligible to receive Plan Share Awards.
6.02. The following Directors, if serving on the date of the
Reorganization, shall receive the indicated number of Plan Share Awards: Xx.
Xxxx, 5,715 shares, Xx. Xxxxxxxxx, 4,910 shares, and 4,090 shares to each of
Messrs. Xxxxxxx, Xxxxx, Xxxxxxxxx and Fee.
6.03. Form of Allocation. The recipients shall be notified in writing
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of the grant of a Plan Share Award. Such notice shall include 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 Board shall maintain records as to all grants of
Plan Share Awards under the Plan.
ARTICLE VII.
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01. Earning Plan Shares; Forfeitures.
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(a) General Rules. Plan Shares subject to an Award shall be
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earned by a Recipient at the rate of thirty-three and one third percent (33J%)
of the aggregate number of Shares covered by the Award at the end of each full
twelve months of consecutive service with the Company or an Affiliate after the
date of grant of the Award. If the service as a director of a Recipient is
terminated for any reason (except as specifically provided in Subsections (b)
and (c) below), the Recipient shall forfeit the right to earn any Shares subject
to the Award which have not theretofore been earned.
In determining the number of Plan Shares which are earned, fractional
shares shall be rounded down to the nearest whole number, provided that such
fractional shares shall be aggregated and earned, on the third anniversary of
the date of grant.
(b) Exception for Terminations Due to Death, Disability and
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Retirement. Notwithstanding the general rule contained in Section 7.01(a)
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above, Plan Shares subject to a Plan Share Award held by a Recipient whose
service as a Director with the Company or an Affiliate terminates due to death,
Disability or Retirement, shall be deemed earned as of the Recipients' last day
service as a Director with the Company or an Affiliate.
(c) Exception for Terminations After a Change in Control.
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Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Recipient whose service as a
Director of the Company or an Affiliate terminates following a Change in Control
of the Company, shall be deemed earned as of the Recipient's last day of service
as a Director with the Company or an Affiliate. A "Change in Control of the
Company" is defined as a Change in Control of a nature that: (i) would be
required to be reported in response to Item I 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 the Company within the meaning of the Change
in Bank Control Act and the Rules and Regulations promulgated by the Office of
Thrift Supervision (or its predecessor agency), as in effect on the date hereof;
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 representing 20% or more of the combined voting power of the
Company's outstanding securities; or (b) individuals who constitute the Board of
Directors of the Company on the date hereof (the "Incumbent Board") cease for
any reason to constitute at 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 whose nomination for election by the Company's stockholders
was approved by the same Nominating Board 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 merger, consolidation, or sale of all or
substantially all the assets of the Company in which the Company is not the
surviving institution occurs and which the Incumbent Board does not approve of
or consent to; or (d) a proxy statement soliciting proxies from stockholders of
the Company, by someone other than the current management of the Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company with one or more corporations as a result of which
the outstanding shares of the class of securities then subject to the Plan are
to be exchanged for or converted into cash or property or securities not issued
by the Company shall be distributed; or (e) a tender offer is made for 20% or
more of the voting securities of the Company.
(d) Revocation for Misconduct. Notwithstanding anything herein to
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the contrary, any previously awarded Plan Share Award (or portion thereof) shall
be immediately revoked, rescinded and terminated, to the extent Plan Shares have
not been earned by the Recipient, in the case of a Director who is discharged
from the service of the Company or an Affiliate for cause (as hereinafter
defined), or who is discovered after termination of service to have engaged in
conduct that would have justified termination for cause. "Cause" is defined as
personal dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties, or
the willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) which results in a material loss to the Company
or final cease and desist order.
7.02. Accrual of Dividends. Whenever Plan Shares are paid to a
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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 was granted 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.
7.03. Distribution of Plan Shares.
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(a) Timing of Distributions: General Rule. Except as provided in
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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.
(b) Timing: Exception for 10% Shareholders. Notwithstanding
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Subsection (a) above, no Plan Shares may be distributed prior to the date which
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 ten (10) percent 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 which is five (5) years from the effective date of
the Reorganization.
(c) Form of Distribution. All Plan Shares, together with any shares
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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 earning thereon) shall be
made in cash.
(d) Withholding. The Trustee may withhold from any payment or
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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
Company or Affiliate which 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
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granted, the Recipient shall be entitled to direct the Trustee as to the voting
of the Plan Shares which are covered by the Plan Share Award and which have not
yet been earned and distributed to him pursuant to Section 7.03, subject to
rules and procedures adopted by the Board 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 which have been awarded and voted.
ARTICLE VIII.
TRUST
8.01. Trust. The Trustee shall receive, hold, administer, invest
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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 Board pursuant to the
Plan.
8.02. Management of Trust. It is the intent of this Plan and Trust
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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 holding of monies in cash or cash equivalents is
necessary to meet the obligation 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 Company or an
Affiliate 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 Company), 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.
(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
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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 Board.
8.04. Earnings. All earnings, gains and losses with respect to
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Trust assets shall be allocated, in accordance with a reasonable procedure
adopted by the Board, 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
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and administration of this Plan, including those incurred by the Trustee, shall
be borne by the Company.
8.06. Insurance. The Company shall procure and maintain insurance
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at its expense to provide for the payment of benefits to the Trust in the event
of any loss that relates to the exercise of the Trustee's powers and the
discharge of the Trustee's duties hereunder.
ARTICLE IX.
MISCELLANEOUS
9.01. Adjustments for Capital Changes. In the event of any change in
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the outstanding shares of Common Stock of the Company 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 Company, the aggregate number of Plan Shares
available for issuance pursuant to the Plan shall automatically be adjusted as
shall 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.
9.02. Amendment and Termination of Plan. The Board may, by resolution,
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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 Company
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 earn 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 Board.
9.03. Non-Alienation. Benefits payable to Recipients and their
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Beneficiaries under this Agreement may not be anticipated, assigned (either at
law or in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
9.04. Employment Rights. Neither the Plan nor any grant of a Plan
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Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Board or the Board in connection with the Plan shall create any right on the
part of any Director to continue in the service of the Company or an Affiliate
thereof, or the Company.
9.05. Voting and Dividend Rights. No Recipient shall have any voting
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or dividend rights or other rights of a shareholder in respect of any Plan
Shares covered by a Plan Share Award, except as expressly provided in Sections
7.02 and 7.04 above, prior to the time said Plan Shares are actually distributed
to him.
9.06. Governing Law. The Plan and Trust shall be governed by the laws
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of the State of Florida.
9.07. Effective Date. This Plan is effective as of the effective
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date of the Reorganization. Following Reorganization, the Plan shall be
presented to shareholders of the Company for ratification for purposes of (i)
obtaining favorable treatment under Section 16(b) of the Securities Exchange Act
of 1934; and (ii) maintaining listing on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System; provided,
however, that the failure to obtain shareholder ratification will not affect the
validity of the Plan and the options thereunder.
9.08. Term of Plan. This Plan shall remain in effect until the
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earlier of (1) 21 years from the Effective Date; (2) termination by the Board;
or (3) 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.
IN WITNESS WHEREOF, the Company has caused this Trust Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, as of the 6th day of January, 1994.
HARBOR FEDERAL SAVINGS BANK
By: /s/
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Xxxxxxx X. Xxxxx, Xx.
President and Chief Executive Officer
Attest:
/s/
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Xxxxxxxxx Xxxxxx
IN WITNESS WHEREOF, I, Xxxxxxx X. Xxxxx, execute this agreement, as Trustee
accepting and binding myself to undertake and perform the obligations and duties
of the Trustee hereunder and consenting to the foregoing Plan and Trust
Agreement.
Signed: /s/
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Xxxxxxx X. Xxxxx
Trustee
Attest:
/s/
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Xxxxxxxxx Xxxxxx
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