EXHIBIT 10.4
First Federal Savings Bank of Colorado
1992 Management Recognition
Plan and Trust Agreement
Article I
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ESTABLISHMENT OF THE PLAN AND TRUST
1.01 First Federal Savings Bank of Colorado ("Savings Bank") hereby
establishes the Management Recognition Plan (the "Plan") and Trust (the "Trust")
upon the terms and conditions hereinafter stated in this Management Recognition
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.
Article II
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PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain personnel of
experience and ability in key positions of responsibility with the Savings Bank
and its subsidiaries, by providing such key employees of the Savings Bank and
its subsidiaries with an equity interest in the Savings Bank, as compensation
for their future professional contributions and service to the Savings Bank and
its subsidiaries.
Article III
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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
meaning as 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 the 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, Recipient's estate.
3.02 "Board" means the Board of Directors of the Savings Bank.
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3.03 "Committee" means the Management Recognition Plan Committee
appointed by the Board pursuant to Article IV hereof.
3.04 "Common Stock" means shares of the common stock, $1.00 par
value per share, of the Savings Bank.
3.05 "Employee" means any person who is employed by the Savings
Bank or a Subsidiary.
3.06 "Parent" shall mean the parent corporation of the Savings
Bank.
3.07 "Plan Shares" means shares of Common Stock held in the Trust
which are awarded or issuable to a Recipient pursuant to the Plan.
3.08 "Plan Share Award" means a right granted to an Employee under
this Plan to receive Plan Shares.
3.09 "Plan Share Reserve" means the shares of Common Stock held by
the Trustee pursuant to Sections 5.03 and 5.04.
3.10 "Recipient" means an Employee who receives a Plan Share Award
under the Plan.
3.11 "Savings Bank" means the First Federal Savings Bank of
Colorado.
3.12 "Subsidiary" means those subsidiaries of the Savings Bank
which, with the consent of the Board, agree to participate in this Plan.
3.13 "Trustee" or "Trustee Committee" means that person(s) 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 forth
herein.
Article IV
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ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three
non-employee members of the Board, which shall have all of the powers allocated
to it in this and other sections of the Plan. All persons designated as members
of the Committee shall be "disinterested persons" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("1934 Act"). 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
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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(s) in accordance with the
provision of this Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the
Trustee or Trustees 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 the Board may not revoke any Plan Share Award
already made except as provided in Section 7.01(b) herein. Members of the Board
who are eligible for or who have been granted Plan Share Awards may not vote on
any matters affecting the administration of the Plan or the grant of Plan Shares
or Plan Share Awards (although such members may be counted in determining the
existence of a quorum at any meeting of the Board during which actions taken).
Further, with respect to all actions taken by the Board in regard to the Plan,
such action shall be taken by a majority of the Board where such a majority of
the directors acting in the matter are "disinterested persons" within the
meaning of Rule 16b-3 promulgated under the 1934 Act.
4.03 Limitation on Liability. No member of the Board or the
Committee or the Trustee(s) shall be liable for any determination made in good
faith with respect to the Plan or any Plan Share Awards granted under it. If a
member of the Board or 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 any
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
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in the best interests of the Savings Bank
and its Subsidiaries and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
Article V
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CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of
the Savings Bank 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 Trustee at the time of
contribution. No contributions to the Trust by Employees shall be permitted.
5.02 Initial Investment. Any funds held by the Trust prior to the
issuance of stock of the Savings Bank as part of the reorganization transaction
of the Savings Bank shall be
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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 as part of Reorganization. Upon the
issuance of stock of the Savings Bank as part of the reorganization transaction
of the Savings Bank under a mutual holding company ("Reorganization"), the Trust
shall purchase Common Stock of the Savings Bank in an amount equal to up to 100%
of the Trust's assets, after providing for any required withholding as needed
for tax purposes, provided, however, that the Trust shall not purchase more than
3% of the aggregate shares of Common Stock to be issued at the time of the
Reorganization to parties other than the parent corporation of the Savings Bank.
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 which may not be earned
because of forfeiture by the Recipient pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
Article VI
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ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees of the Savings Bank and its
Subsidiaries are eligible to receive Plan Share Awards within the sole
discretion of the Committee.
6.02 Allocations. The Committee will determine which of the
Employees referenced in Section 6.01 above will be granted Plan Share Awards and
the number of Shares covered by each Award, effective upon the Reorganization,
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 which will violate the Charter, Bylaws or Plan of Reorganization of the
Savings Bank or its Subsidiaries or any applicable federal or state law or
regulation. In the event Shares are forfeited for any reason or additional
Shares are purchased by the Trustee, the Committee may, from time to time,
determine which of the Employees referenced in Section 6.01 above will be
granted additional Plan Share Awards to be awarded from forfeited Shares. In
selecting those Employees to whom Plan Share Awards will be granted and the
number of shares covered by such Awards, the Committee shall consider the
position duties and responsibilities of the eligible Employees, the value of
their services to the Savings Bank and its Subsidiaries, and any other factors
the Committee may deem relevant. All actions by the Committee shall be deemed
final, except to the extent that such actions are revoked by the Board.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 that a Plan Share Award is to be
made, the Committee shall notify the Recipient in writing of the grant of the
Award, the number of Plan Shares covered
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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 Employee 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 Employees as a group have such a
right. The Committee may, with the approval of the Board (or, if so directed by
the Board) return all Common Stock in the Plan Share Reserve to the Savings Bank
at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the contrary,
upon the Effective Date, a Plan Share Award consisting of 1,000 Plan Shares
shall be awarded to each director of the Savings Bank that is not otherwise an
Employee. Such Plan Share Award shall be earned and non-forfeitable at the rate
of one-fifth following one year after the Effective Date and an additional
one-fifth following each of the next four successive years, provided that such
director remains a member of the Board at such time. Further, such Plan Share
Award shall be immediately non-forfeitable in the event of the death or
disability of such director, or a change in control of the Savings Bank as
provided in Section 7.01(d) herein.
Article VII
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EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings 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 at the rate of
one-fifth of such Award following one year after granting of such Award, and an
additional one-fifth following each of the next four successive years; provided
that such Recipient remains an Employee during such period.
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board may, by 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 who is
discharged from the employ of 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, incompetence, willful misconduct, breach of
fiduciary duty involving personal profits, intentional failure to perform stated
duties, willful violation of a material provision of any law, rule or regulation
(other than traffic violations and similar offense), or a material violation of
a final cease-and-desist order or any other action which results in a
substantial financial loss to the Savings Bank or its Subsidiaries. A
determination of "Cause" shall be made by the Board within its sole discretion.
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(c) Exception for Terminations Due to Death or Disability. 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 employment with the Savings Bank or
a Subsidiary terminates due to death or disability (as determined by the
Committee), shall be deemed earned as of the Recipient's last day of employment
with the Savings Bank or Subsidiary and shall be distributed as soon a
practicable thereafter.
(d) Exception for Termination after a Change in Control. Notwithstanding
the general rule contained in Section 7.01 above, all Plan Shares subject to a
Plan Share Award held by a recipient shall be deemed to be immediately 100%
earned and non-forfeitable in the event of a "change in control" or "imminent
change in control" of the Savings Bank and shall be distributed as soon as
practicable thereafter. For purposes of this Plan, "change in control" shall
mean: (i) the execution of an agreement for the sale of all, or a material
portion, of the assets of the Savings Bank; (ii) the execution of an agreement
for a merger or recapitalization of the Savings Bank or any merger or
recapitalization whereby the Savings Bank is not the surviving entity; (iii) a
change of control of the Savings Bank, as otherwise defined or determined by the
Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the 1934 Act and the
rules and regulations promulgated thereunder) of twenty-five percent (25%) or
more of the outstanding voting securities of the Savings Bank by any person,
trust, entity or group. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. For purposes of this section, "imminent change in
control" shall refer to any offer or announcement, oral or written, by any
person or persons acting as a group, to acquire control of the Savings Bank. The
decision of the Committee as to whether a change in control or imminent change
in control has occurred shall be conclusive and binding.
7.02 Payment of Dividends. A holder of a Plan Share Award, whether
or not non-forfeitable, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant Plan Share
Award was initially granted to such Recipient and the date the Plan Shares are
distributed.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) 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) 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. Payments
representing cash dividends (and earning thereon) shall be made in cash.
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(c) Withholding. The Trustee may withhold from any cash payment made under
this Plan sufficient amounts to cover any applicable withholding and employment
taxes, and if the amount of such cash payment is not sufficient, 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 Subsidiary which employs or employed such
recipient any such amount withheld from or paid by the Recipient or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection (a)
above, no Plan Shares may be distributed prior to the date which is five (5)
years from the effective date of the Savings Bank's Reorganization under the
mutual holding company form to the extent the Recipient or Beneficiary, as the
case may be, would after receipt of such Shares own in excess of ten percent
(10%) of the issued and outstanding shares of Common Stock held by parties other
than Parent, unless such action is approved in advance by a majority vote of
disinterested directors of the Board. Any Plan Shares remaining undistributed
solely by reason of the operation of this Subsection (d) shall be distributed to
the Recipient or his Beneficiary on the date which is five years from the
effective date of the Savings Bank's Reorganization.
(e) Regulatory Exceptions. No Plan Shares shall be distributed, however,
unless and until all of the requirements of all applicable law and regulation
shall have been fully complied with, including the receipt of approval of the
Plan by the stockholders of the Savings Bank by such vote, if any, as may be
required by applicable law and regulations as determined by the Board.
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 which are covered by the Plan Share Award and which have not
yet been earned and distributed 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 of, shall be voted by the Trustee as directed by the
Committee.
Article VIII
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TRUST
8.02 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 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 not held in the Plan Share Reserve, 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
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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 the
Common Stock without regard to any law now or hereafter in force limiting
investments for Trustees or other fiduciaries. The investment authorized
herein may constitute the only investment of the Trust, and in making such
investment, the Trustees are authorized to purchase Common Stock from
Savings Bank or from any other source, and such Common Stock so purchased
may be outstanding, newly issued, or Treasury shares.
(b) To invest in 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.
(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.
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.
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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, except to the extent that such cash dividends are distributed to
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 shall be paid 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
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MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for issuance pursuant to the Plan Share Awards and the number
of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of shares or other capital
adjustment, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Savings Bank.
9.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time, amend or terminate the Plan. The power to amend or
terminate the Plan 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 Recipients 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 Committee or the
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. No
Recipient or Beneficiary shall have any right in or claim to any assets of the
Plan or Trust, nor shall the Savings Bank, or any Subsidiary be subject to any
claim for benefits hereunder.
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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,
either express or implied, on the part of any Employee to continue in the employ
of the Savings Bank, or a Subsidiary thereof.
9.05 Voting and Dividend Rights. No Recipient shall have any voting
or dividend rights of a stockholder with respect to 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 and
construed under the laws of the State of Colorado, except to the extent that
Federal Law shall be deemed applicable.
9.07 Effective Date. This Plan shall be as effective as of the
effective date of the Reorganization.
9.08 Term of Plan. This Plan shall remain in effect until the
earlier of (1) termination by the Board, (2) the distribution of all assets of
the Trust, or (3) 21 years from the Effective Date. Termination of the Plan
shall not effect 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.
9.09 Tax Status of Trust. It is intended that the trust established
hereby be treated as grantor trust of the Savings Bank under the provisions of
Section 671 et seq. of the Internal Revenue Code, as the same may be amended
from time to time.