<PAGE>
<PAGE>
Registration No. 333-______
As filed with the Securities and Exchange Commission on
January 11, 1999
________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________________________________
NORTH ARKANSAS BANCSHARES, INC.
- ------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 71-0800742
- ------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
200 OLIVIA DRIVE
NEWPORT, ARKANSAS 72112
- -------------------------------------------------------
(Address of Principal Executive Offices)
NORTH ARKANSAS BANCSHARES, INC. MANAGEMENT RECOGNITION PLAN
NORTH ARKANSAS BANCSHARES, INC. 1998 STOCK OPTION
AND INCENTIVE PLAN
----------------------------------------------------------
(Full Title of the Plans)
BRAD SNIDER, PRESIDENT
NORTH ARKANSAS BANCSHARES, INC.
200 OLIVIA DRIVE
NEWPORT, ARKANSAS 72112
---------------------------------------
(Name and Address of Agent For Service)
(870) 523-3611
- --------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent For Service)
COPIES TO:
GARY R. BRONSTEIN, ESQUIRE
J. MARK POERIO, ESQUIRE
JOAN S. GUILFOYLE, ESQUIRE
HOUSLEY KANTARIAN & BRONSTEIN, P.C.
1220 19TH STREET N.W., SUITE 700
WASHINGTON, D.C. 20036
(202) 822-9611
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================
Title Of Securities Amount Proposed Maximum Proposed Maximum Amount of
To Be To Be Offering Price Aggregate Offering Registration
Registered Registered (1) Per Share (2) Price (2) Fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 51,842 (2) $540,785 $151.00
================================================================================================
<FN>
(1) Maximum number of shares issuable under the North Arkansas Bancshares, Inc. Management
Recognition Plan (7,406 shares) and the North Arkansas Bancshares, Inc. 1998 Stock Option and
Incentive Plan (44,436 shares), as such amounts may be increased in accordance with said
plans in the event of a merger, consolidation, recapitalization or similar event
involving the Registrant.
(2) Under Rule 457(h) the registration fee may be calculated, inter alia, based upon the price at
which the options may be exercised. 51,842 shares are being registered hereby, of which
20,442 are under option at a weighted average exercise price of $9.75 per share ($199,310
in the aggregate). The remainder of such shares, which are not presently subject to
option (31,400 shares), are being registered based upon the average of the bid and asked
price of the common stock of the Registrant as reported on the OTC "Electronic Bulletin
Board" on January 11, 1999 of $10.875 per share ($341,475 in the aggregate). Therefore,
the total amount of the offering being registered herein is $540,785.
</FN>
/TABLE
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PART I
INFORMATION REQUIRED IN THE SECTION
10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
- ------
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
- ------ INFORMATION*
*Documents containing the information required by Part I of
this Registration Statement will be sent or given to
participants in the North Arkansas Bancshares, Inc. Management
Recognition Plan and the North Arkansas Bancshares, Inc. 1998
Stock Option and Incentive Plan (together, the "Plans") in
accordance with Rule 428(b)(1). In accordance with Note to Part
I of Form S-8, such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of
this Registration Statement or as prospectuses or prospectus
supplements.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- ------
North Arkansas Bancshares, Inc. (the "Company") is subject
to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "1934 Act") and, accordingly, files
periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the
Company filed with the Commission may be inspected and copies
may be obtained (at prescribed rates) at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web
site that contains reports, proxy and information statements and
other information regarding registrants that file electronically
with the Commission, including the Company. The address for the
Commission's Web site is "http://www.sec.gov".
The following documents are incorporated by reference in
this Registration Statement:
(a) The Company's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1998 (Commission File No. 0-23525).
(b) The Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998 (Commission File No. 0-23525).
(c) The description of the Company's securities contained
in the Form 8-A filed with the Commission on December 19, 1997.
ALL DOCUMENTS SUBSEQUENTLY FILED BY THE COMPANY PURSUANT TO
SECTIONS 13(A), 13(C), 14, AND 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, PRIOR TO THE FILING OF A POST-EFFECTIVE
AMENDMENT WHICH INDICATES THAT ALL SECURITIES OFFERED HAVE BEEN
SOLD OR WHICH DEREGISTERS ALL SECURITIES THEN REMAINING UNSOLD,
SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
REGISTRATION STATEMENT, AND TO BE A PART HEREOF FROM THE DATE OF
FILING OF SUCH DOCUMENTS.
ITEM 4. DESCRIPTION OF SECURITIES
- ------
Not applicable, as the Common Stock is registered under
Section 12 of the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
- -------
Not Applicable.
1<PAGE>
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF NEWPORT FEDERAL
SAVINGS BANK
Federal regulations clearly define areas for indemnity coverage
by Newport Federal Savings Bank (the "Bank"), as follows:
(a) Any person against whom any action is brought by reason
of the fact that such person is or was a director or officer of
the Bank shall be indemnified by the Bank for:
(i) Reasonable costs and expenses, including
reasonable attorney's fees, actually paid or incurred
by such person in connection with proceedings related
to the defense or settlement of such action;
(ii) Any amount for which such person becomes liable
by reason of any judgment in such action;
(iii) Reasonable costs and expenses, including
reasonable attorney's fees, actually paid or incurred
in any action to enforce his rights under this
section, if the person attains a final judgment in
favor of such person in such enforcement action.
(b) Indemnification provided for in subparagraph (a) shall
be made to such officer or director only if the requirements of
this subparagraph are met:
(i) The Bank shall make the indemnification provided
by subparagraph (a) in connection with any such action
which results in a final judgment on the merits in
favor of such officer or director.
(ii) The Bank shall make the indemnification provided
by subparagraph (a) in case of settlement of such
action, final judgment against such director or
officer or final judgment in favor of such director or
officer other than on the merits except in relation to
matters as to which he or she shall be adjudged to be
liable for negligence or misconduct in the performance
of his or her duty, only if a majority of
disinterested directors of the Bank determine that
such a director or officer was acting in good faith
within the scope of his or her employment or authority
as he or she could reasonably have perceived it under
the circumstances and for a purpose which he was
reasonably entitled to believe under the circumstances
was in the best interest of the Bank or their members
or stockholders.
(c) As used in this paragraph:
(i) "Action" means any action, suit or other judicial
or administrative proceeding, or threatened
proceeding, whether civil, criminal, or otherwise,
including any appeal or other proceeding for review;
(ii) "Court" includes, without limitation, any court
to which or in which any appeal or any proceeding for
review is brought;
(iii) "Final Judgment" means a judgment, decree, or
order which is appealable and as to which the period
for appeal has expired and no appeal has been taken;
(iv) "Settlement" includes the entry of a judgment by
consent or by confession or upon a plea of guilty or
of nolo contendere.
2<PAGE>
<PAGE>
Newport Federal Savings Bank has a directors and officers
liability policy providing for insurance against certain
liabilities incurred by directors and officers of Newport
Federal Savings Bank while serving in their capacities as such.
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF NORTH ARKANSAS
BANCSHARES, INC.
The Tennessee Business Corporation Act requires Tennessee
corporations such as the Company to indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred
by him, unless the corporation's charter provides otherwise.
The Tennessee Business Corporation Act also generally permits
Tennessee corporations to indemnify directors and officers in
the same manner as Article XIII of the Company's Charter
provides. In no event, however, may a Tennessee corporation
indemnify a director if a judgment or other final adjudication
adverse to the director establishes his liability: (i) for any
breach of the duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law; or (iii) for the approval of unlawful distributions.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
Pursuant to its Charter and Tennessee law, the Company is
permitted to purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent
of the Company. The Bank currently maintains such a policy and
it is intended that the Company will become a party to such
policy.
ARTICLE XIII
INDEMNIFICATION
(A) (1) Except as provided in Section (B) of this Article
XIII, the Corporation shall indemnify any director who is made a
party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or
investigative ("proceeding"), because he is or was a director
against liability incurred in such proceeding if: (a) he
conducted himself in good faith; (b) he reasonably believed, (i)
in the case of conduct in his official capacity with the
Corporation, that his conduct was in the Corporation's best
interests and (ii) in all other cases, that his conduct was at
least not opposed to its best interests; and (c) in the case of
any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful.
(2) The Corporation shall further indemnify any
director and any officer who is not a director who was wholly
successful, on the merits or otherwise, in the defense of any
proceedings to which he was a party because he is or was a
director or officer of the Corporation against reasonable
expenses incurred by him in connection with the proceeding.
(B) The Corporation shall not indemnify a director in
connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the
Corporation or in connection with any other proceeding charging
improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable
on the basis that personal benefit was improperly received by
him.
(C) The Corporation may pay for or reimburse the reasonable
expenses incurred by a director who is a party to a proceeding
in advance of final disposition of the proceeding if: (1) the
director furnishes the Corporation a written affirmation of his
good faith belief that he has met the standard of conduct set
forth in Subsection (A)(1) of this Article XIII; (2) he provides
the Corporation a written undertaking, executed personally or on
his behalf, to repay the advance if it is ultimately determined
that he is not entitled to indemnification; and (3) a
determination is made that the facts then known to those making
the determination would not preclude indemnification under this
Article XIII.
3<PAGE>
<PAGE>
(D) The Corporation may not indemnify a director under
Subsection (A)(1) of this Article XIII unless authorized in the
specific case after a determination has been made that
indemnification of the director is permissible in the
circumstances because he has met the standard set forth in
Subsection (A)(1) of this Article XIII. The determination shall
be made:
(1) By the board of directors by majority vote of a
quorum consisting of directors not at the time parties to
the proceeding;
(2) If a quorum cannot be obtained under Subsection
(1) of this Section (D), by majority vote of a committee
duly designated by the board of directors (in which
designation directors who are parties may participate),
consisting solely of two or more directors not at the time
parties to the proceeding;
(3) By independent special legal counsel;
(a) Selected by the board of directors or its
committee in the manner prescribed in Subsections (1) or (2)
of this Section (D);
(b) If a quorum of the board of directors
cannot be obtained under Subsection (1) of this Section (D)
and a committee cannot be designated under Subsection (2) of
this Section (D), selected by majority vote of the full
board of directors (in which selection directors who are
parties may participate); or
(4) By the shareholders, but shares owned by or voted
under the control of directors who are at the time parties
to the proceeding may not be voted on the determination.
(E) Authorization of indemnification under Subsection
(A)(1) of this Article XIII and evaluation that indemnification
is permissible under Subsection (A)(1) of this Article XIII
shall be made in the same manner as the determination that
indemnification is permissible, except that, if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses
shall be made by those entitled under Subsection (D)(3) of this
Article XIII to select counsel.
(F) The Corporation may indemnify and advance expenses to
an officer, employee or agent of the Corporation who is not a
director to the same extent as a director hereunder.
(G) The Corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer,
employee, or agent of the Corporation, or who, while a director,
officer, employee, or agent of the Corporation, is or was
serving at the request of the Corporation as a director,
officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, employee
benefit plan or other enterprise, against liability asserted
against or incurred by him in that capacity or arising from his
status as a director, officer, employee or agent, whether or not
the Corporation would have power to indemnify him against the
same liability hereunder.
(H) It is the intention of this Article XIII to provide for
indemnification of directors and officers to the fullest extent
permitted by the Tennessee Business Corporation Act, and this
Article XIII shall be interpreted accordingly. If this Article
XIII or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee, and
agent of the Corporation as to costs, charges, and expenses
(including attorneys' fees), judgments, fines, and amounts paid
in settlement with respect to any proceeding, including an
action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article XIII that
shall not have been invalidated and to the full extent permitted
by applicable law.
If the Tennessee Business Corporation Act is amended or other
Tennessee law is enacted to permit further or additional
indemnification of a director, officer, employee or agent of the
Corporation, then the indemnification of such director, officer,
employee or agent shall be to the fullest extent permitted by
the Tennessee Business Corporation Act, as so amended, or by
such other Tennessee law.
4
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<PAGE>
(I) The indemnification and advance payment of expenses
provided by this Article XIII shall not be exclusive of any
other rights to which a person may be entitled by law, bylaw,
agreement, vote of stockholders or disinterested directors, or
otherwise.
(J) The indemnification provided by this Article XIII shall
be deemed to be a contract between the Corporation and the
persons entitled to indemnification thereunder, and any repeal
or modification of this Article XVII shall not affect any rights
or obligations then existing with respect to any state of facts
then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought based in whole or in part upon
any such state of facts. The indemnification and advance
payment provided by this Article XIII shall continue as to a
person who has ceased to be a director or officer of the
Corporation and shall inure to his heirs, executors and
administrators.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
- ------
Not Applicable.
ITEM 8. EXHIBITS
- ------
For a list of all exhibits filed or included as part of this
Registration Statement, see "Index to Exhibits" at the end of
this Registration Statement.
ITEM 9. UNDERTAKINGS
- ------
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement --
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed
that which was registered) and any deviation from the
low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply
if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
5<PAGE>
<PAGE>
(c) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(d) If the registrant is a foreign private issuer, to
file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of
Regulation S-X at the start of any delayed offering or
throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act
need not be furnished, provided, that the registrant includes in
the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph and
other information necessary to ensure that all other information
in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with
respect to registration statements on Form F-3, a post-effective
amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or Rule 3-19
of this chapter if such financial statements and information are
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
2. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to deliver
or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report
to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not
set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information.
4. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
6<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Newport, State of
Arkansas, on December 31, 1998.
NORTH ARKANSAS BANCSHARES, INC.
By:/s/ Brad Snider
________________________________
Brad Snider, President and
Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned Directors of North Arkansas Bancshares,
Inc., hereby severally constitute and appoint Brad Snider, who
may act, with full power of substitution, our true and lawful
attorney and agent, to do any and all things in our names in the
capacities indicated below which said Brad Snider who may act,
may deem necessary or advisable to enable North Arkansas
Bancshares, Inc. to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with the
registration of North Arkansas Bancshares, Inc. common stock,
including specifically, but not limited to, power and authority
to sign for us in our names in the capacities indicated below,
the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby ratify and
confirm all that said Brad Snider shall do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Brad Snider President, Chief Executive December 31, 1998
- --------------------------- Officer and Director
Brad Snider (Principal Executive,
Accounting and Financial Officer)
/s/ John Minor Chairman of the Board December 31, 1998
- ---------------------------
John Minor
/s/ O.E. Guinn, Jr. Director December 31, 1998
- ---------------------------
O.E. Guinn, Jr.
/s/ Kaneaster Hodges, Jr. Director December 31, 1998
- ---------------------------
Kaneaster Hodges, Jr.
/s/ J. C. McMinn Director December 31, 1998
- ---------------------------
J.C. McMinn
/TABLE
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
5 Opinion of Housley Kantarian & Bronstein, P.C. as
to the validity of the Common Stock being
registered
23.1 Consent of Housley Kantarian & Bronstein, P.C.
(appears in their opinion filed as Exhibit 5)
23.2 Consent of KPMG LLP
24 Power of Attorney (contained in the signature
page to this registration statement)
99.1 North Arkansas Bancshares, Inc. Management
Recognition Plan and associated grantor trust
agreement
99.2 North Arkansas Bancshares, Inc. 1998 Stock Option
and Incentive Plan
99.3 Form of Stock Option Agreement to be entered into
with Optionees with respect to Incentive Stock
Options granted under the North Arkansas
Bancshares, Inc. 1998 Stock Option and Incentive
Plan
99.4 Form of Stock Option Agreement to be entered into
with Optionees with respect to Non-Incentive
Stock Options granted under the North Arkansas
Bancshares, Inc. 1998 Stock Option and Incentive
Plan
99.5 Form of Agreement to be entered into with
Optionees with respect to Stock Appreciation
Rights granted under the North Arkansas
Bancshares, Inc. 1998 Stock Option and
Incentive Plan
99.6 Notice of MRP Award
99.7 Memorandum concerning taxation of MRP Awards, and
associated election form
January 11, 1999
Board of Directors
North Arkansas Bancshares, Inc.
200 Olivia Drive
Newport, Arkansas 72112
Re: North Arkansas Bancshares, Inc. 1998 Stock Option and
Incentive Plan Registration Statement on Form S-8
-----------------------------------------------------
Gentlemen:
We have acted as special counsel to North Arkansas
Bancshares, Inc., a Tennessee corporation (the "Company"), in
connection with the preparation of the Registration Statement on
Form S-8 filed with the Securities and Exchange Commission (the
"Registration Statement") under the Securities Act of 1933, as
amended, relating to 51,842 shares of common stock, par value
$.01 per share (the "Common Stock") of the Company which may be
issued pursuant to the North Arkansas Bancshares, Inc. Managment
Recoginition Plan and the North Arkansas Bancshares, Inc. 1998
Stock Option and Incentive Plan (together, the "Plans"), all as
more fully described in the Registration Statement. You have
requested the opinion of this firm with respect to certain legal
aspects of the proposed offering.
We have examined such documents, records and matters of
law as we have deemed necessary for purposes of this opinion and
based thereon, we are of the opinion that the Common Stock when
issued pursuant to and in accordance with the terms of the Plans
will be legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement on Form S-8 and to
references to our firm included under the caption "Legal
Opinion" in the Prospectus which is part of the Registration
Statement.
Very truly yours,
Housley Kantarian & Bronstein, P.C.
By: /s/ J. Mark Poerio
-------------------------------
J. Mark Poerio, Esquire
[LETTERHEAD OF KPMG LLP]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
North Arkansas Bancshares, Inc.
We consent to incorporation by reference in the registration
statement (333-35985) on Form S-8 of North Bancshares, Inc. of
our report dated August 7, 1998, relating to the consolidated
statements of financial condition of North Arkansas Bancshares,
Inc. and subsidiary as of June 30, 1998 and 1997, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended, which report
appears in the June 30, 1998 annual report on Form 10-KSB of
North Arkansas Bancshares, Inc., and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
KPMG LLP
Little Rock, Arkansas
January 6, 1999
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 The Company hereby establishes this Plan upon the
terms and conditions hereinafter stated.
1.02 Through acceptance of their appointment to the
Committee, each member of the Committee hereby accepts his or
her appointment hereunder 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 in key positions of
responsibility by providing Employees and Directors of the
Company, the Bank, and their Affiliates with a proprietary
interest in the Company, and as compensation for their past
contributions to the Bank, and as an incentive to make such
contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan
with an initial capital letter, shall have the meanings set
forth below unless the context clearly indicates otherwise.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.
3.01 "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended.
3.02 "Bank" means Newport Federal Savings Bank.
3.03 "Beneficiary" means the person or persons designated
by a Participant to receive any benefits payable under the Plan
in the event of such Participant'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
Participant's surviving spouse, if any (or if none, his estate).
3.04 "Board" means the Board of Directors of the Company.
3.05 "Change in Control" means any one of the following
events: (1) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting stock,
(2) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors, (3) the
acquisition of a controlling influence over the management or
policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), (4) the acquisition of control
of the Bank or the Company within the meaning of 12 C.F.R. Part
574 or its applicable equivalent (except in the case of (1),
(2), (3) and (4) hereof, ownership or control of the Bank by the
Company itself shall not constitute a "Change in Control"), or
(5) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Company or the Bank
(the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing
Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director. For purposes of this subparagraph only,
the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate,
sole
<PAGE>
<PAGE>
proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision of
the Committee as to whether a change in control has occurred
shall be conclusive and binding.
3.06 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.07 "Common Stock" means shares of the common stock of
the Company.
3.08 "Company" means North Arkansas Bancshares, Inc.
3.09 "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
3.10 "Date of Conversion" means the date of the
conversion of the Bank from mutual to stock form.
3.11 "Director" means a member of the Board, and any
member of the board of directors of any Affiliate that the Board
has by resolution designated as being eligible for participation
in this Plan.
3.12 "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
3.13 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07
hereof.
3.14 "Employee" means any person who is employed by the
Company or an Affiliate.
3.15 "Non-Employee Director" shall have the meaning
provided in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
3.16 "Participant" means an Employee or Director who
holds a Plan Share Award.
3.17 "Plan" means this North Arkansas Bancshares, Inc.
Management Recognition Plan.
3.18 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant
pursuant to the Plan.
3.19 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.20 "Plan Share Reserve" means the shares of Common
Stock held by the Trustee pursuant to Sections 5.02 and 5.03.
3.21 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company
and the Trustee, and "Trust" means the trust created thereunder.
3.22 "Trustee" means that person(s) or entity appointed
by the Board pursuant to the Trust Agreement to hold legal title
to the Plan assets for the purposes set forth herein.
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<PAGE>
3.23 "Year of Service" shall mean a full twelve-month
period, measured from the date of a Plan Share Award and each
annual anniversary of that date, during which a Participant's
Continuous Service has not terminated for any reason.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE AND POWERS OF THE COMMITTEE. The Plan shall
be administered and interpreted by the Committee, which shall
consist of not less than two members of the Board who are Non-
Employee Directors. In the absence at any time of a duly
appointed Committee, the Plan shall be administered by those
members of the Board who are Non-Employee Directors, and by the
Board if there are less than two Non-Employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. Except as limited by
the express provisions of the Plan or by resolutions adopted by
the Board, the Committee shall have sole and complete authority
and discretion (i) to make Plan Share Awards to such Employees
as the Committee may select, (ii) to determine the form and
content of Plan Share Awards to be issued under the Plan, (iii)
to interpret the Plan, (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan, and (v) to make
other determinations necessary or advisable for the
administration of the Plan. The Committee shall have and may
exercise such other power and authority as may be delegated to
it by the Board from time to time. Subject to Section 4.02, 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, and
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 may recommend to the
Board one or more persons or entity to act as Trustee(s) in
accordance with the provisions of this Plan and the Trust.
4.02 ROLE OF THE BOARD. The members of the Committee
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. 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 or impair a participant's vested rights
under a Plan Share Award. 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 Non-Employee Directors.
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 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 Company shall indemnify such member against expenses
(including attorneys' 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 Company and its
Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
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<PAGE>
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 Company to the Trust, provided that the
Bank may also make contributions to the Trust. 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 INVESTMENT OF TRUST ASSETS; MAXIMUM PLAN SHARE
AWARDS. The Trustee shall invest Trust assets only in
accordance with the Trust Agreement; provided that the Trust
shall not purchase, and Plan Share Awards shall not be made with
respect to more than 7,406 Shares (with such number being
subject to adjustment pursuant to Section 8.01(a) hereof, and
increased to the extent necessary to permit the purchase of
Shares with any dividends accrued pursuant to Section 7.02
hereof). Such shares may be newly issued Shares, treasury
Shares, or Shares held in a grantor trust.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON
PLAN SHARE RESERVES. Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Shares subject to the Awards so allocated. Any
Shares subject or attributable to an Award which may not be
earned because of a forfeiture by the Participant pursuant to
Section 7.01 shall be added to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. The Committee may make Plan Share
Awards to Employees and Directors. In selecting those
individuals 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 individuals, the value of their services to the Company
and its Affiliates, and any other factors the Committee may deem
relevant.
6.02 ALLOCATIONS. The Committee will determine which
Employees and Directors will be granted discretionary Plan Share
Awards, and the number of Shares covered by each Plan Share
Award, provided that in no event shall any Awards be made which
will violate the governing instruments of the Bank or its
Affiliates or any applicable federal or state law or regulation.
In the event Plan Shares are forfeited for any reason or
additional shares of Common Stock are purchased by the Trustee,
the Committee may, from time to time, determine which of the
individuals referenced in Section 6.01 above will be granted
additional Plan Share Awards to be awarded from the forfeited or
acquired Plan Shares.
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
Participant 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 Participant 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 AUTOMATIC GRANTS TO DIRECTORS. On the Effective
Date, each of the following individuals shall receive a Plan
Share Award as to the number of Plan Shares listed below,
provided that such award shall not be made to an individual who
is not a Director on the Effective Date:
Director Shares Subject to Plan Share Award
-------- ----------------------------------
Brad Snider 1,852
O.E. Guinn, Jr. 518
Kaneaster Hodges, Jr. 518
John Minor 518
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<PAGE>
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a) and (b) of Section
7.01, and the Committee shall have no discretion to alter said
vesting requirements. Unless otherwise inapplicable or
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.05 ALLOCATIONS NOT REQUIRED. Notwithstanding anything
to the contrary in Sections 6.01 and 6.02, but subject to
Section 6.04, no Employee or Director shall have any right or
entitlement to receive a Plan Share Award hereunder, such Awards
being at the total discretion of the Committee, nor shall any
Employees or Directors 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 Company at any time, and cease issuing Plan Share
Awards.
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless the Committee specifically
eliminates any vesting requirement or imposes a different
vesting schedule, 33 1/3% of the Plan Shares subject to a Plan
Share Award shall be earned and become non-forfeitable by the
Participant upon the Effective Date and an additional 33 1/3% of
the Plan Shares subject to a Plan Share Award shall be earned
and become non-forfeitable upon the Participant's completion of
each of two Years of Service after the date of the Award.
(b) ACCELERATION FOR TERMINATIONS DUE TO RETIREMENT,
DEATH, DISABILITY, OR CHANGE IN CONTROL. Notwithstanding the
general rule contained in Section 7.01(a) above: (i) all Plan
Shares subject to a Plan Share Award held by a Participant whose
service with the Company or an Affiliate terminates due to the
Participant's retirement at or after age 65, death, or
Disability shall be deemed earned and 100% vested as of the
Participant's last day of service with the Company or an
Affiliate, and (ii) all Plan Shares subject to a Plan Share
Award held by a Participant shall be deemed earned and 100%
vested as of a Change in Control or, if earlier, the execution
of an agreement to effect a Change in Control.
7.02 ACCRUAL OF DIVIDENDS. Whenever Plan Shares are paid
to a Participant or Beneficiary under Section 7.03, such
Participant or Beneficiary shall also be entitled to receive,
with respect to each Plan Share paid, an amount equal to any
cash dividends (including special large and nonrecurring
dividends, including one that has the effect of a return of
capital to the Company's stockholders) 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 initially granted to such
Participant 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.
(a) TIMING OF DISTRIBUTIONS: General Rule. Except as
provided in subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant 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. The Trustee shall distribute
all Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
(c) WITHHOLDING. The Trustee shall 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
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<PAGE>
sufficient, the Trustee shall require the Participant 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 Participant any such amount withheld from or
paid by the Participant or Beneficiary.
(d) TIMING: EXCEPTION FOR 10% SHAREHOLDERS.
Notwithstanding subsections (a) and (b) above, no Plan Shares
may be distributed prior to the date which is five (5) years
from the Date of Conversion to the extent the Participant 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 unless such action is
approved in advance by a majority vote of non-employee directors
of the Board. To the extent this limitation would delay the
date on which a Participant receives Plan Shares, the
Participant may elect to receive from the Trust, in lieu of
vested Plan Shares, a cash amount equal to the fair market value
of such Plan Shares. Any Plan Shares remaining undistributed
solely by reason of the operation of this Subsection (d) shall
be distributed to the Participant or his Beneficiary on the date
which is five years from the Date of Conversion.
(e) REGULATORY EXCEPTIONS. No Plan Shares shall be
distributed 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 Company by such vote, if any, as may be
required by applicable law and regulations.
7.04 VOTING OF PLAN SHARES. All shares of Common Stock
held by the Trust (whether or not subject to a Plan Share Award)
shall be voted by the Trustee in the same proportion as the
trustee of the Company's Employee Stock Ownership Plan votes
Common Stock held in the trust associated therewith, and in the
absence of any such voting, shall be voted in the manner
directed by the Board.
7.05. DEFERRAL ELECTIONS BY PARTICIPANTS.
(a) ELECTIONS TO DEFER. At any time prior to December
31st of any year prior to the date on which a Participant
becomes vested in any shares subject to his or her Plan Share
Award, a Participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect, on the form attached hereto as Exhibit "A"
(the "Election Form"), to defer the receipt of all or a
percentage of the Plan Shares that would otherwise be
transferred to the Participant upon the vesting of such award
(the "Deferred Shares").
(b) RECORDKEEPING; HOLDING OF DEFERRED SHARES. The
MRP Committee shall establish and maintain an individual account
in the name of each Participant who files an Election Form for
the purpose of tracking deferred earnings attributable to cash
dividends paid on Deferred Shares (the "Cash Account"). On the
last day of each fiscal year of the Company, the Committee shall
credit to the Participant's Cash Account earnings on the balance
of the Cash Account at a rate equal to the dividend-adjusted
total return on Common Stock, as determined from time to time by
the MRP Committee in its sole discretion. The Trustees shall
hold each Participant's Deferred Shares and Deferred Earnings in
the Trust until distribution is required pursuant to the
election set forth in the Participant's Election Form.
(c) DISTRIBUTIONS OF DEFERRED SHARES. The Trustee shall
distribute a Participant's Deferred Shares and Deferred Earnings
in accordance with the Participant's Election Form. All
distributions made by the Company and/or the Trustees pursuant
to elections made hereunder shall be subject to applicable
federal, state, and local tax withholding and to such other
deductions as shall at the time of such payment be required
under any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to a
beneficiary, the delivery to the Committee and/or Trustees of
all necessary waivers, qualifications and other documentation.
Within 90 days after receiving notice of a Participant's death,
the Trustee shall distribute any balance of the Participant's
Deferred Shares and Deferred Earnings to the Participant's
designated beneficiary, if living, or if such designated
beneficiary is deceased or the Participant failed to designate a
beneficiary, to the Participant's estate. If, on the other
hand, a Participant's Continuous Service terminates for a reason
other than the Participant's death, Disability, early
retirement, or normal retirement, the Participant's Deferred
Shares and Deferred Earnings shall be distributed to the
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<PAGE>
Participant in a lump sum occurring as soon as reasonably
practicable. The distribution provisions of a Participant's
Election Form shall become irrevocable on the date that occurs
(i) one year before the Participant's termination of Continuous
Service for a reason other than death, and (ii) on the
Participant's death if that terminates the Participant's
Continuous Service.
(d) HARDSHIP WITHDRAWALS. Notwithstanding any other
provision of the Plan or a Participant's Election Form, in the
event the Participant suffers an unforeseeable emergency
hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate
distribution of all or a portion of his Deferred Shares and
Deferred Earnings. The hardship must result from a sudden and
unexpected illness or accident of the Participant or a dependent
of the Participant, casualty loss of property, or other similar
conditions beyond the control of the Participant. Examples of
purposes which are not considered hardships include post-
secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the
hardship could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the
Participant's nonessential assets to the extent such liquidation
would not itself cause a severe financial hardship. The amount
of any distribution hereunder shall be limited to the amount
necessary to relieve the Participant's financial hardship. The
determination of whether a Participant has a qualifying hardship
and the amount which qualifies for distribution, if any, shall
be made by the Committee in its sole discretion. The Committee
may require evidence of the purpose and amount of the need, and
may establish such application or other procedures as it deems
appropriate.
(e) RIGHTS TO DEFERRED SHARES AND EARNINGS. A
Participant may not assign his or her claim to Deferred Shares
and Deferred Earnings during his or her lifetime, except in
accordance with Section 8.03 of this Plan. A Participant's right
to Deferred Shares and Deferred Earnings shall at all times
constitute an unsecured promise of the Company to pay benefits
as they come due. The right of the Participant or his or her
beneficiary to receive benefits hereunder shall be solely an
unsecured claim against the general assets of the Company.
Neither the Participant nor his or her beneficiary shall have
any claim against or rights in any specific assets or other fund
of the Company, and any assets in the Trust shall be deemed
general assets of the Company.
ARTICLE VIII
MISCELLANEOUS
8.01 ADJUSTMENTS FOR CAPITAL CHANGES.
(A) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number
and kind of shares which may be purchased under the Plan, and
the number and kind of shares subject to outstanding Plan Share
Awards, shall be proportionately adjusted for any increase,
decrease, change or exchange of shares of Common Stock for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) TRANSACTIONS IN WHICH THE COMPANY IS NOT THE
SURVIVING ENTITY. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Plan Share Awards shall be
adjusted for any change or exchange of shares of Common Stock
for a different number or kind of shares or other securities
which results from the Transaction.
(c) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Section, a Participant becomes entitled to
new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the
Plan Share Award before the adjustment was made. In addition,
the Committee shall have the discretionary authority to impose
on the Shares
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<PAGE>
subject to Plan Share Awards to Employees such restrictions as
the Committee may deem appropriate or desirable, including but
not limited to a right of first refusal, or repurchase option,
or both of these restrictions.
(d) OTHER ISSUANCES. Except as expressly provided in
this Section, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
shares of Common Stock or stock of another class, for cash or
property or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor,
shall not affect, and no adjustment shall be made with respect
to, the number or class of shares of Common Stock then subject
to Plan Share Awards or reserved for issuance under the Plan.
8.02 AMENDMENT AND TERMINATION OF PLAN. The Board may,
by resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance
with this Section 8.02 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. However, the termination of the Trust shall not
affect a Participant's right to earn Plan Share Awards and to
receive a 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.
8.03 NONTRANSFERABILITY. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share
Awards may transfer such Awards to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Plan Share
Awards so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an
individual or trust to whom the Participant could have initially
transferred the Awards pursuant to this Section 8.03. Plan
Share Awards which are transferred pursuant to this Section 8.03
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
8.04 NO EMPLOYMENT OR OTHER 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 or Director to continue
in the service of the Company, the Bank, or an Affiliate
thereof.
8.05 VOTING AND DIVIDEND RIGHTS. No Participant shall
have any voting or dividend rights or other rights of a
stockholder in respect of any Plan Shares covered by a Plan
Share Award prior to the time said Plan Shares are actually
distributed to him.
8.06 GOVERNING LAW. The Plan and Trust shall be governed
and construed under the laws of the State of Arkansas to the
extent not preempted by Federal law.
8.07 EFFECTIVE DATE. The Plan shall become effective
December 19, 1998; provided that the effectiveness of the Plan
and any Plan Share Award shall be absolutely contingent upon the
Plan's approval by a favorable vote of stockholders of the
Company who own at least a majority of the total votes cast at a
duly called meeting of the Company's stockholders held in
accordance with applicable laws. In no event shall Plan Share
Awards be made within one year of the Date of Conversion.
<PAGE>
8.08 TERM OF PLAN. This Plan shall remain in effect
until the earlier of (i) termination by the Board, or (ii) 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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<PAGE>
8.09 TAX STATUS OF TRUST. It is intended that (i) the
Trust associated with the Plan be treated as a grantor trust of
the Company under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time, and (ii)
that in accordance with Revenue Procedure 92-65 (as the same may
be amended from time to time), Participants have the status of
general unsecured creditors of the Company, the Plan constitutes
a mere unfunded promise to make benefit payments in the future,
the Plan is unfunded for tax purposes and for purposes of Title
I of the Employee Retirement Income Security Act of 1974, as
amended, and the Trust has been and will continue to be
maintained in conformity with Revenue Procedure 92-64 (as the
same may be amended from time to time).
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<PAGE>
Exhibit "A"
NORTH ARKANSAS BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
___________________________
Deferral Election Agreement
___________________________
AGREEMENT, made this ___ day of __________, 199__, by and
between __________________ (the "Participant"), and North
Arkansas Bancshares, Inc. (the "Company").
WHEREAS, the Company has established the North Arkansas
Bancshares, Inc. Management Recognition Plan (the "Plan"), and
the Participant has received a Plan Share Award (the "Award")
for shares of common stock of the Company; and
WHEREAS, the Participant desires to defer receipt of
certain Awards and the earnings thereon to which Participant is
entitled upon the vesting of such Awards.
NOW THEREFORE, it is mutually agreed as follows:
1. The Participant, by the execution hereof, agrees to
participate in the Plan upon the terms and conditions set forth
therein, and, in accordance therewith, makes the following
elections:
a. The amount of Awards which the Participant hereby
elects to defer is as follows:
Number of Shares
Vesting Date Deferred
------------ ----------------
b. All amounts deferred pursuant to the Plan after the
date of this Agreement, shall be distributed beginning:
( ) the calendar year immediately following the year in
which the Participant ceases service with the Company.
( ) the later of the calendar year immediately
following the year in which the Participant ceases service with
the Company, or ____________, _________ (a specific date not
later than the year in which the Participant will attain 70
years of age).
( ) the year in which the Participant attains __ years
of age (an age not later than 70).
<PAGE>
<PAGE>
Management Recognition Plan Deferral Election
Page 2
c. The Participant hereby elects to have the amount
deferred after the date of this Agreement and any related
accumulated earnings distributed as follows:
( ) annually over a ten-year period.
( ) annually over a ______- year period (must be less
than ten years).
( ) in a lump sum.
2. Designation of Beneficiary. In the event of the
Participant's death before he or she has collected all of the
benefits payable under the Plan, the Participant hereby directs
that any remaining benefits be distributed to the beneficiary or
beneficiaries designated under subparagraphs a and b of this
paragraph 2 in the manner elected pursuant to paragraph 3
hereof:
a. Primary Beneficiary. The Participant hereby
designates the person(s) named below to be his or her primary
beneficiary and to receive the balance of any unpaid benefits
under the Plan.
<TABLE>
<CAPTION>
Name of Primary Percentage of
Beneficiary Mailing Address Death Benefit
- --------------- --------------- -------------
<S> <C> <C>
%
%
</TABLE>
b. Contingent Beneficiary. In the event that the
primary beneficiary or beneficiaries named above are not living
at the time of the Participant's death, the Participant hereby
designates the following person(s) to be his or her contingent
beneficiary for purposes of the Plan:
<TABLE>
<CAPTION>
Name of Contingent Percentage of
Beneficiary Mailing Address Death Benefit
- ------------------ --------------- -------------
<S> <C> <C>
%
%
</TABLE>
<PAGE>
<PAGE>
Management Recognition Plan Deferral Election
Page 3
3. The Participant elects to have his Plan benefits
distributed to his Beneficiary:
[ ] in one lump sum payment; or
[ ] in accordance with the elections made in
paragraphs 1(b) and 1(c) hereof (as though
the Participant had survived to collect all
benefits).
4. Except for the beneficiary designation made in
paragraph 2 hereof and the manner of payment to beneficiary in
paragraph 3 (which both may be revised at any time and from time
to time), the elections made herein shall be irrevocable with
respect to the time and method of payment of the amounts
deferred during the term of the Agreement. Any changes to the
elections made herein by said Participant will be limited to the
range of choices offered herein, shall be prospective only, and
shall have no effect whatsoever on Awards previously deferred or
the deemed future earnings on Plan Shares.
5. The Company agrees to make payment of the amount due
the Participant in accordance with the terms of the Plan and the
elections made by the Participant herein.
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands the day and year first above-written.
PARTICIPANT
Witnessed by:
_____________________________
Print Name: _________________ ____________________
Participant
NORTH ARKANSAS BANCSHARES, INC.
Witnessed by:
_____________________________
Print Name: _________________ ____________________
Its President
<PAGE>
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
GRANTOR TRUST AGREEMENT
PREAMBLE. This Grantor Trust Agreement (the "Trust
Agreement") made this 19th day of December 1998, by and between
North Arkansas Bancshares, Inc. and John Minor, Kaneaster
Hodges, Jr., and O.E. Guinn, Jr. (acting by majority, the
"Trustee").
WHEREAS, Newport Federal Savings Bank (the "Bank") has
established a grantor trust pursuant to a Grantor Trust
Agreement (the "Former Trust Agreement") associated with the
Newport Federal Savings Bank Directors' Retirement Plan (the
"Plan"); and
WHEREAS, the Company has assumed all rights and
obligations associated with the Former Trust Agreement and the
Plan; and
WHEREAS, the Company has established the North Arkansas
Bancshares, Inc. Management Recognition Plan (the "MRP") and the
North Arkansas Bancshares, Inc. 1998 Stock Option and Incentive
Plan (the "Option Plan"); and
WHEREAS, the Company has entered into, and may in the
future enter into, employee and severance agreements ("Executive
Agreements") with key employees; and
WHEREAS, the Company has incurred or expects to incur
liability under the terms of the Plan, MRP, Option Plan, and
Executive Agreements (collectively, the "Arrangements") with
respect to the benefits payable thereunder to individuals or
their estates (collectively, the "Beneficiaries"); and
WHEREAS, the Company wishes to establish this trust (the
"Trust") and to contribute to the Trust assets that shall be
held therein, subject to the claims of the Company's general
creditors in the event of Insolvency, as defined in Section 3(a)
hereof, until paid to Beneficiaries in such manner and at such
times as specified in the Arrangements; and
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Arrangements as unfunded plans
maintained for the purpose of providing deferred compensation to
a select group of management or highly compensated individuals
for purposes of Title I of the Employee Retirement Income
Security Act of 1974; and
WHEREAS, the Trust is intended to hold, at a minimum, a
number of shares of the Company's common stock ("Common Stock")
sufficient for (i) transfer to Beneficiaries as they exercise
stock options granted under the Option Plan, and (ii) transfers
to Beneficiaries upon vesting of shares under the MRP; and
<PAGE>
<PAGE>
WHEREAS, the Company desires to establish a fund,
consisting of the cash dividends that have accumulated from the
shares held in the Trust, for the payment of discretionary cash
bonuses to Beneficiaries other than those serving as the
Trustee; and
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Arrangements.
NOW, THEREFORE, the parties do hereby establish this Trust
and agree that the Trust shall be comprised, held and disposed
of as follows:
Section 1. Establishment of Trust
---------------------------------
(a) The principal of the trust shall be the principal and
any earnings thereon that were held in trust under the Former
Trust Agreement immediately before the effective date of this
Trust Agreement.
(b) The Trust shall be irrevocable.
(c) 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 (the "Code"), and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon,
shall be held separate and apart from other funds of the Company
and shall be used exclusively as herein set forth. Beneficiaries
shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under
the Arrangements and this Trust Agreement shall be mere
unsecured contractual rights of 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, as defined in Section 3(a)
herein.
(e) In their sole discretion, the Bank and the Company
may, separately or jointly, at any time, or from time to time,
make additional contributions of cash or other assets to the
Trustee to augment the principal of the Trust to be held,
administered and dispersed by the Trustee as provided for in
this Trust Agreement. Neither the Trustee nor any Beneficiary
shall have any right to compel such additional contributions.
(f) Upon a Change in Control within the meaning of
Section 13(e) hereof, the Company shall, as soon as possible but
in no event longer than ten business days after the Change in
Control, make an irrevocable contribution to this Trust in an
amount that is projected to provide the Trust with sufficient
assets to pay each Beneficiary the benefits to which he or she
is entitled pursuant to the Arrangements as in effect on the
date of the Change in Control.
2<PAGE>
<PAGE>
Section 2. Payments to Beneficiaries
------------------------------------
(a) Within 60 days after the end of each calendar year
beginning with 1998, the Company shall deliver to the Trustee a
schedule (the "Payment Schedule") that indicates the amounts
payable in respect of each Beneficiary, that provides a formula
or other instructions acceptable to the Trustee for determining
the amounts so payable, the form in which such amount is to be
paid (as provided for or available under the Arrangements), and
the time of commencement for payment of such amounts. Except as
otherwise provided herein, the Trustee shall make payments to
Beneficiaries in accordance with such Payment Schedule. The
Trustee shall make provisions for the reporting and withholding
of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the
terms of the Arrangements and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts
have been reported, withheld and paid by the Company. After a
Change in Control, the Trustee shall promptly make payments from
the Trust to each and every Beneficiary who provides the Trustee
with a notarized statement specifying the amount payable and
affirming that such amount has both become unconditionally
payable pursuant to one or more of the Arrangements and has not
been, and is not being, paid directly by the Company, or its
successor (which shall receive notice of such payments promptly
but only after the Trustee makes them).
(b) The entitlement of a Beneficiary to benefits under the
Arrangements shall be determined by the Company or such party as
may be designated under the Arrangements, and any claim for such
benefits shall be considered and reviewed under the procedures
set out in the Arrangements.
(c) The Company may make payment of benefits directly to
Beneficiaries as they become due under the terms of the
Arrangements. The Company shall notify the Trustee of its
decision to make payment of benefits directly prior to the time
amounts are payable to Beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the
terms of the Arrangements, the Company shall make the balance of
each such payment as it falls due. The Trustee shall notify the
Company where principal and earnings are insufficient under the
Payment Schedule.
Section 3. Trustee Responsibility Regarding Payments to
-------------------------------------------------------
Trust Beneficiary When Company Is Insolvent
- -------------------------------------------
(a) The Trustee shall cease payment of benefits to
Beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if
(i) the Company is unable to pay its debts as they become due,
(ii) the Company becomes subject to a pending proceeding as a
debtor under the United States Bankruptcy Code, (iii) the
Company is determined to be insolvent by the Office of Thrift
Supervision, or (iv) the Company is placed in receivership under
the Financial Institutions Reform, Recovery and Enforcement Act
of 1989.
3<PAGE>
<PAGE>
(b) At all times during the continuance of this Trust, as
provided in Section l(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of the
Company under federal and state law as set forth below.
(c) The Board of Directors and the Chief Executive Officer
of the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency. If a person claiming to be
a creditor of the Company alleges in writing to the Trustee that
the Company has become Insolvent, the Trustee shall determine
whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits
to Beneficiaries.
(1) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the Company or
a person claiming to be a creditor alleging that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the
Company is Insolvent. The Trustee may in all events rely on such
evidence concerning the Company's solvency as may be furnished
to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning the Company's
solvency.
(2) If at any time the Trustee has determined that
the Company is Insolvent, the Trustee shall discontinue payments
to Beneficiaries, shall liquidate the Trust's investment, if
any, in common stock of the Company or its holding company
("Common Stock"), and shall hold the assets of the Trust for the
benefit of the Company's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of
Beneficiaries as general creditors of the Company with respect
to benefits due under the Arrangements or otherwise.
(3) The Trustee shall resume the payment of benefits
to Beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Company
is not Insolvent (or is no longer Insolvent).
(d) If the Trustee discontinues the payment of benefits
from the Trust pursuant to Section 3(a) hereof and subsequently
resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all
payments due to Beneficiaries under the terms of the
Arrangements for the period of such discontinuance, provided
that there are sufficient assets to make such payments. The
aggregate amount of any payments to Beneficiaries by the Company
in lieu of the payments provided for hereunder during any such
period of discontinuance, shall be deducted from any payments
made by the Trustee hereunder.
Section 4. Payments to the Company
----------------------------------
Except as provided in Section 3 hereof, after the Trust
has become irrevocable, the Company shall have no right or power
to direct the Trustee to return to the Company or to divert to
others any of the Trust assets before all payment of benefits
have been made to Beneficiaries pursuant to the terms of the
Arrangements.
4<PAGE>
<PAGE>
Section 5. Investment Authority
-------------------------------
(a) The Trustee shall have complete discretion as to the
investment of Trust assets, provided that the Trustee (i) shall
to the maximum extent reasonably possible invest in securities
(including Common Stock or rights to acquire stock) issued by
the Company, and (ii) shall invest Trust assets in a manner
reasonably expected to provide the Trust with assets sufficient
to meet the Company's obligations under the Arrangements, and
(iii) shall follow any investment directions provided by the
Company prior to a Change in Control.
(b) All rights associated with assets of the Trust shall
be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or rest with
Beneficiaries, except that voting rights with respect to any
Common Stock held by the Trust will be exercised in accordance
with the terms of any Employee Stock Ownership Arrangements
adopted by the Company (and, otherwise, as directed by the
Company's Board of Directors). The Company shall have the right
at and from time to time in its sole discretion, to substitute
assets of equal fair market value for any assets held by the
Trust. This right is exercisable by the Company in a
nonfiduciary capacity without consent of any person in a
fiduciary capacity.
(c) Subject to applicable federal and state securities
laws, if for any reason the Trustee determines that it is
appropriate to sell shares of Common Stock, the Trustee shall
first offer to sell such shares to the following purchasers, in
order of priority: first, the Company; second, any benefit
Arrangements maintained by the Company; third, current Directors
of the Company; fourth, current officers of the Company; fifth,
members of the general public (through sales on the open
market).
Section 6. Disposition of Income
--------------------------------
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee
--------------------------------
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between the Company and the Trustee.
Within 60 days following each June 30 occurring after the
execution of this Agreement, and within 20 days after the
removal or resignation of the Trustee, the Trustee shall deliver
to the Company a written account of its administration of the
Trust during such year or during the period from the close of
the last preceding year to the date of such removal or
resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately),
and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal
or resignation, as the case may be.
5<PAGE>
<PAGE>
Section 8. Responsibility of Trustee
------------------------------------
(a) The Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by the
Company which is contemplated by, and in conformity with, the
terms of the Arrangements or this Trust Agreement and is given
in writing by the Company. In the event of a dispute between the
Company and a party, the Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation
arising in connection with this Trust, the Company agrees to
indemnify the Trustee against Trustee's costs, expenses and
liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments, except in those cases where the Trustee shall have
been found by a court of competent jurisdiction to have acted
with gross negligence or willful misconduct. If the Company does
not pay such costs, expenses and liabilities in a reasonably
timely manner, the Trustee may obtain payment from the Trust.
(c) The Trustee may consult with legal counsel with
respect to any of its duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, the Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor the Trustee, or to loan to any person the proceeds of
any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Code.
Section 9. Compensation and Expenses of Trustee
-----------------------------------------------
The Company shall pay all administrative expenses and the
Trustee's fees and expenses relating to the Arrangements and
this Trust. If not so paid, the fees and expenses shall be paid
from the Trust.
6<PAGE>
<PAGE>
Section 10. Resignation and Removal of Trustee
----------------------------------------------
The Trustee may resign at any time by written notice to
the Company, which resignation shall be effective 30 days after
the Company receives such notice (unless the Company and the
Trustee agree otherwise). The Trustee may be removed by the
Company on 30 days notice or upon shorter notice accepted by the
Trustee, but only if each Participant (and each Beneficiary in
pay status) consents in writing to such removal.
If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the
effective date or resignation or removal under this section. If
no such appointment has been made, the Trustee may apply to a
court of competent jurisdiction for appointment of a successor
or for instructions. All expenses of the Trustee in connection
with the proceeding shall be allowed as administrative expenses
of the Trust. Upon resignation or removal of the Trustee and
appointment of a successor trustee, all assets shall
subsequently be transferred to the successor trustee. The
transfer shall be completed within 60 days after receipt of
notice of resignation, removal or transfer, unless the Company
extends the time for such transfer.
Section 11. Appointment of Successor
------------------------------------
If the Trustee resigns or is removed in accordance with
Section 10 hereof, the Company may appoint any other party as a
successor to replace the Trustee upon such resignation or
removal. The appointment shall be effective when accepted in
writing by the new trustee, who shall have all of the rights and
powers of the former trustee, including ownership rights in the
Trust assets. The former trustee shall execute any instrument
necessary or reasonably requested by the Company or the
successor trustee to evidence the transfer. Notwithstanding the
foregoing, if the Trustee resigns or is removed following a
Change in Control, the Trustee that has resigned or is being
removed shall appoint as its successor a third party financial
institution that has trust powers, is independent of and
unrelated to the entity that has acquired or otherwise obtained
control of the Company, and is agreed to in writing by
Beneficiaries who are credited with at least 80% of the Trust's
assets.
A successor trustee need not examine the records and acts
of any prior trustee and may retain or dispose of existing Trust
assets, subject to Sections 7 and 8 hereof. The successor
trustee shall not be responsible for, and the Company shall
indemnify and defend the successor trustee from, any claim or
liability resulting from any action or inaction of any prior
trustee or from any other past event, or any condition existing
at the time it becomes successor trustee.
Section 12. Amendment or Termination
------------------------------------
(a) This Trust Agreement may be amended by a written
instrument executed by the Trustee and the Company, provided
that no such amendment shall either conflict with the terms of
the Arrangements, or make the Trust revocable.
7<PAGE>
<PAGE>
(b) Notwithstanding subsection (a) hereof, the provisions
of this Trust Agreement and the trust created thereby may not be
amended after the date a Change in Control occurs, without the
written consent of Beneficiaries who are credited with at least
80% of the Trust's assets.
(c) The Trust shall not terminate until the date on which
no Beneficiary is entitled to benefits pursuant to the terms
hereof or of the Arrangements. Upon termination of the Trust,
the Trustee shall return any assets remaining in the Trust to
the Company.
(d) The Company may terminate this Trust prior to the
payment of all benefits under the Arrangements only upon written
approval of the Beneficiaries entitled to payment of such
benefits; provided that the Trust shall automatically terminate
and all of its assets shall be distributed to Beneficiaries if
the Company's principal subsidiary receives a CAMEL rating of 4
or 5.
Section 13. Miscellaneous
-------------------------
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Beneficiaries under this Trust
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, except pursuant to the terms of the
Arrangements and this Trust Agreement.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas,
except to the extent preempted by federal law.
(d) The Trustee agrees to be bound by the terms of the
Arrangements, as in effect from time to time.
(e) "Change in Control" is defined in the MRP, and shall
be defined in the same manner for purposes of this Trust. Any
amendment to said Arrangements that modifies said definition
shall be deemed to apply with equal force, effect, and timing to
the definition of Change in Control for purposes of this Trust,
except that a modification that may adversely affect a
Beneficiary shall be ineffectual as to the Beneficiary unless he
or she consents in writing to be bound by the modification.
Section 14. Effective Date.
---------------------------
The effective date of this Trust Agreement shall be
December 19, 1998.
8<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Trust Agreement to be executed, and its
corporate seal affixed, and the Trustees have executed this
Trust Agreement, on the date identified in its opening
paragraph.
Attest: NORTH ARKANSAS BANCSHARES, INC.
/s/ Pamela L. Decker By: /s/ Brad Snider
------------------------------
Its President
Attest: TRUSTEE
/s/ Pamela L. Decker /s/ John Minor
____________________ ______________________________
John Minor
/s/ Pamela L. Decker /s/ Kaneaster Hodges, Jr.
____________________ ______________________________
Kaneaster Hodges, Jr.
/s/ Pamela L. Decker /s/ O.E. Guinn, Jr.
____________________ ______________________________
O.E. Guinn, Jr.
9
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select key Employees and Directors
of the Bank, the Company, and their Affiliates with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentives to Directors and
key Employees of the Company or any Affiliate to promote the
success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(d) "Bank" shall mean Newport Federal Savings Bank.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Change in Control" means any one of the
following events: (1) the acquisition of ownership, holding or
power to vote more than 25% of the Bank's or the Company's
voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors,
(3) the acquisition of a controlling influence over the
management or policies of the Bank or the Company by any person
or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), (4) the
acquisition of control of the Bank or the Company within the
meaning of 12 C.F.R. Part 574 or its applicable equivalent
(except in the case of (1), (2), (3) and (4) hereof, ownership
or control of the Bank by the Company itself shall not
constitute a "Change in Control"), or (5) during any period of
two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of
Directors of the Company or the Bank (the "Existing Board")
cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, 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. The decision of the Committee as to
whether a change in control has occurred shall be conclusive and
binding.
(g) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(h) "Committee" shall mean either the Stock Option
Committee appointed by the Board in accordance with Paragraph
5(a) hereof, or the Board, which may act independently as the
Committee.
(i) "Common Stock" shall mean the common stock of the
Company.
(j) "Company" shall mean North Arkansas Bancshares, Inc.
1<PAGE>
<PAGE>
(k) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company, in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
(l) "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
(m) "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
(n) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(o) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(p) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(q) "ISO" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(r) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(s) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(t) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(u) "Option" means an ISO and/or a Non-ISO.
(v) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(w) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(x) "Plan" shall mean this North Arkansas Bancshares,
Inc. 1998 Stock Option and Incentive Plan.
(y) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(z) "Share" shall mean one share of Common Stock.
(aa)"SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
(bb) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
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3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 16 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. Except as otherwise required under
Paragraph 11, the aggregate number of Shares deliverable
pursuant to Awards shall not exceed 44,436 Shares. Such Shares
may either be authorized but unissued Shares, Shares held in
treasury, or Shares held in a grantor trust. If any Awards
should expire, become unexercisable, or be forfeited for any
reason without having been exercised, the Optioned Shares shall,
unless the Plan shall have been terminated, be available for the
grant of additional Awards under the Plan.
(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted, but not the number of Shares
which the Company delivers or could deliver to an Employee or
individual upon exercise of an SAR, shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of Shares subject to the Option
shall be charged against the aggregate number of Shares
remaining available under the Plan. The Shares involved in an
Option as to which option rights have terminated by reason of
the exercise of a related SAR, as provided in Paragraph 10
hereof, shall not be available for the grant of further Options
under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of not less
than two (2) members of the Board who are Non-Employee
Directors. Members of the Committee shall serve at the pleasure
of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Board.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms of each such Agreement shall be in
accordance with the Plan, but each Agreement may include such
additional provisions and restrictions determined by the
Committee, in
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its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.
In particular, the Committee shall set forth in each Agreement
(i) the Exercise Price of an Option or SAR, (ii) the number of
Shares subject to the Award, and its expiration date, (iii) the
manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Award, and (iv) the restrictions, if any, to be
placed upon such Award, or upon Shares which may be issued upon
exercise of such Award. The Chairman of the Committee and such
other Directors and officers as shall be designated by the
Committee are hereby authorized to execute Agreements on behalf
of the Company and to cause them to be delivered to the
recipients of Awards.
(d) Effect of the Committee's Decisions. All deci-
sions, determinations and interpretations of the Committee shall
be final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Company in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Award, granted hereunder to the full extent provided for
under the Company's governing instruments with respect to the
indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. Employees and Directors shall be
eligible to receive Awards. In selecting those Employees and
Directors to whom 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
individuals, the value of their services to the Company and its
Affiliates, and any other factors the Committee may deem
relevant. Notwithstanding the foregoing, the Committee shall
automatically make the Awards specified in Paragraph 6(b)
hereof.
(b) Automatic Grants to Directors. On the Effective Date,
each of the following Directors shall receive an Option (in the
form of an ISO, to the extent permissible under the Code) to
purchase the number of Shares listed below, at an Exercise Price
per Share equal to the Market Value of a Share on the Effective
Date; provided that such grant shall not be made to a Director
whose Continuous Service terminates on or before the Effective
Date:
Participant Optioned Shares
Brad Snider 11,109
O.E. Guinn, Jr. 3,111
Kaneaster Hodges, Jr. 3,111
John Minor 3,111
With respect to each of the above-named Participants, the Option
granted to the Participant hereunder (i) shall vest in
accordance with the general rule set forth in Paragraph 8(a) of
the Plan, (ii) shall have a term of ten years from the Effective
Date, and (iii) shall be subject to the general rule set forth
in Paragraph 8(c) with respect to the effect of a Participant's
termination of Continuous Service on the Participant's right to
exercise his Options.
(c) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case Options granted in excess of such limitation shall be Non-
ISOs.
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7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Each Option granted on the Effective Date
shall be exercisable immediately. With respect to Options
granted after the Effective Date, the Committee shall have the
discretion to condition its exercisability on any events that
the Committee may set forth in the Agreement granting the
Option, provided that vesting shall accelerate to 100% upon a
Change in Control (or, if earlier, the execution of a written
agreement to effect a Change in Control). An Option may not be
exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise, and may
consist of Shares subject to the Option being exercised. Upon a
Participant's exercise of an Option, the Company may, in the
discretion of the Committee, pay to the Participant a cash
amount up to but not exceeding the amount of dividends, if any,
declared on the underlying Shares between the date of grant and
the date of exercise of the Option.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee or
Director and has maintained Continuous Service from the date of
the grant of the Option, or within one year after termination of
such Continuous Service (but not later than the date on which
the Option would otherwise expire, and the Participant must
exercise an ISO within three months after termination of
Continuous Service in order to preserve the Option as an ISO),
except if the Employee's or Director's Continuous Service
terminates by reason of --
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the
Employee's or Director's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar
offenses) or final cease-and-desist order), then the
Participant's rights to exercise such Option shall expire
on the date of such termination;
5
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<PAGE>
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within two years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution;
(3) Disability, then to the extent that the
Participant would have been entitled to exercise the
Option immediately prior to his or her Disability, such
Option may be exercised within one year from the date of
termination of employment due to Disability, but not later
than the date on which the Option would otherwise expire.
(d) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, common stock
of the Company that is purchased upon exercise of an Option or
SAR may not be sold within the six-month period following the
grant of that Option or SAR.
9. [Reserved for Future Use]
10. SARs (Stock Appreciation Rights)
(a) Granting of SARs. In its sole discretion, the
Committee may from time to time grant SARs to Employees either
in conjunction with, or independently of, any Options granted
under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option
terminates the SAR to the extent of the number of shares
purchased upon exercise of the Option and, correspondingly, the
exercise of the SAR terminates the Option to the extent of the
number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may
be an additional right wherein both the SAR and the Option may
be exercised. An SAR may not be granted in conjunction with an
ISO under circumstances in which the exercise of the SAR affects
the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the Market Value
of the Shares subject to the ISO at the time the SAR is
exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value
of the Shares subject to the ISO exceeds the Exercise
Price of the ISO.
(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the
Optioned Shares on the date of grant.
(c) Timing of Exercise. The provisions of Paragraph 8(c)
regarding the period of exercisability of Options are
incorporated by reference herein, and shall determine the period
of exercisability of SARs.
(d) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess
6
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<PAGE>
of (or, in the discretion of the Committee if provided in the
Agreement, a portion of) the excess of the then aggregate Market
Value of the number of Optioned Shares with respect to which the
Participant exercises the SAR, over the aggregate Exercise Price
of such number of Optioned Shares. This amount shall be payable
by the Company, in the discretion of the Committee, in cash or
in Shares valued at the then Market Value thereof, or any
combination thereof.
(e) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 8(b) as to
the procedure for exercising Options are incorporated by
reference, and shall determine the procedure for exercising
SARs.
11. Effect of Changes in Common Stock Subject to the
Plan.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards, together with the
Exercise Prices thereof, shall be equitably adjusted for any
change or exchange of Shares for a different number or kind of
shares or other securities which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
(f) Certain Special Dividends. The Exercise Price of
shares subject to outstanding Awards shall be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the
stockholders, except that this subparagraph (f) shall not apply
to any dividend which is paid to the Participant pursuant to
Paragraph 8(b) or 9(b) hereof.
12. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Awards may transfer such Awards (but not Incentive
Stock Options) to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of
one or more of these individuals. Awards so transferred may
thereafter be transferred only to the Participant who originally
received the grant or to an individual or trust to whom the
Participant could have initially transferred the Awards pursuant
to this
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Paragraph 12. Awards which are transferred pursuant to
this Paragraph 12 shall be exercisable by the transferee
according to the same terms and conditions as applied to the
Participant.
13. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Award, and the Effective Date. Notice
of the determination shall be given to each Participant to whom
an Award is so granted within a reasonable time after the date
of such grant.
14. EFFECTIVE DATE.
The Plan shall become effective December 19, 1998, provided
that the effectiveness of the Plan and any Option shall be
absolutely contingent upon the Plan's approval by a favorable
vote of stockholders owning at least a majority of the
total votes cast at a duly called meeting of the Company's
stockholders held in accordance with applicable laws. No Awards
may be made prior to approval of the Plan by the stockholders of
the Company.
15. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may autho-
rize the Committee to direct execution of an instrument
providing for the modification of any outstanding Award,
provided no such modification shall confer on the holder of said
Award any right or benefit which could not be conferred on him
by the grant of a new Award at such time, or impair the Award
without the consent of the holder of the Award.
16. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
17. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the
Company may require the person exercising the Option or SAR to
make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
18. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
8
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19. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount
required to be withheld. The value of the Shares to be
withheld, or delivered to the Company, shall be based on the
Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. As an alternative, the Company
may retain, or sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
20. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility
to participate or participation in the Plan create or be deemed
to create any legal or equitable right of the Employee,
Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations.
Except to the extent provided in Paragraphs 6(b) and 9(a), no
Employee or Director shall have a right to be granted an Award
or, having received an Award, the right to again be granted an
Award. However, an Employee or Director who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
21. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Arkansas, except to the extent
that federal law shall be deemed to apply.
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NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
_____________________________________
Agreement for Incentive Stock Options
_____________________________________
STOCK OPTION (the "Option") for a total of shares of Common
Stock, par value $.01 per share, of North Arkansas Bancshares,
Inc. (the "Company"), which Option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), is hereby granted to (the
"Optionee") at the price set forth herein, and in all respects
subject to the terms, definitions and provisions of the North
Arkansas Bancshares, Inc. 1998 Stock Option and Incentive Plan
(the "Plan") which was adopted by the Company and which is
incorporated by reference herein, receipt of which is hereby
acknowledged.
1. Exercise Price. The exercise price per share is $
, which equals 100% of the fair market value, as
determined by the Committee, of the Common Stock on the date of
grant of this Option.
2. Exercise of Option. This Option shall be
exercisable in accordance with the Plan and the following
provisions:
(i) Schedule of rights to exercise.
------------------------------
Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
- ----------------------------- ----------------------------
Upon Grant _____%
1 year but less than 2 years _____%
2 years but less than 3 years _____%
3 years but less than 4 years _____%
4 years but less than 5 years _____%
5 years or more _____%
_______________
*/ 110% in the case of an Optionee who owns shares representing
more than 10% of the outstanding common stock of the Company
on the date of grant of this Option.
<PAGE>
<PAGE>
ISO Agreement
Page 2
(ii) Method of Exercise. This Option shall be exercisable
by a written notice by the Optionee which shall:
(a) state the election to exercise the Option, the
number of shares with respect to which it is being
exercised, the person in whose name the stock certificate
or certificates for such shares of Common Stock is to be
registered, his address and Social Security Number (or if
more than one, the names, addresses and Social Security
Numbers of such persons);
(b) contain such representations and agreements as to
the holder's investment intent with respect to such shares
of Common Stock as may be satisfactory to the Company's
counsel;
(c) be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised
by any person or persons other than the Optionee, be
accompanied by proof, satisfactory to counsel for the
Company, of the right of such person or persons to
exercise the Option; and
(d) be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any shares with respect
to which the Option is being exercised shall be by cash, Common
Stock, or such combination of cash and Common Stock as the
Optionee elects. In addition, the Optionee may elect to pay for
all or part of the exercise price of the shares by having the
Company withhold a number of shares having a fair market value
equal to the exercise price. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised
shall be registered in the name of the person or persons
exercising the Option.
(iii) Restrictions on exercise. This Option may not be
exercised if the issuance of the shares upon such exercise would
constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to
the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and
warranty to the Company as may be required by any applicable law
or regulation.
3. Withholding. The Optionee hereby agrees that the
exercise of the Option or any installment thereof will not be
effective, and no shares will become transferable to the
Optionee, until the Optionee makes appropriate arrangements with
the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such
exercise.
<PAGE>
<PAGE>
ISO Agreement
Page 3
4. Non-transferability of Option. This Option may not
be transferred in any manner otherwise than by will or the laws
of descent or distribution. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
5. Term of Option. This Option may not be exercisable
for more than ten years from the date of grant of this
Option, as stated below, and may be exercised during such term
only in accordance with the Plan and the terms of this Option.
_________________
Date of Grant NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND
INCENTIVE PLAN COMMITTEE
By: ___________________________________
Authorized Member of the Committee
Witness: ______________________________
____________
**/ Five years in the case of an Optionee who owns shares
representing more than 10% of the outstanding common
stock of the Company on the date of grant of this Option.
<PAGE>
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
____________________________________
Form for Exercise of
Incentive Stock Options
_____________________________________
Treasurer
North Arkansas Bancshares, Inc.
200 Olivia Drive
Newport, Arkansas 72112
Re: North Arkansas Bancshares, Inc. 1998 Stock Option
and Incentive Plan
-------------------------------------------------
Dear Sir:
The undersigned elects to exercise the Incentive Stock
Option to purchase ____________ shares, par value $.01, of
Common Stock of North Arkansas Bancshares, Inc. under and
pursuant to a Stock Option Agreement dated ______________,
199_.
Delivered herewith is a certified or bank cashier's or
teller's check and/or shares of Common Stock, valued at the fair
market value of the stock on the date of exercise, as set forth
below.
$______ of cash or check
$______ in the form of _______ shares of Common
Stock, valued at $____ per share
$______ in the form of the Company's
withholding of _______ shares of Common
Stock, valued at $ ____ per share,
that are subject to this Option
$ Total
======
The name or names to be on the stock certificate or
certificates and the address and Social Security Number of such
person(s) is as follows:
Name __________________________________________________________
Address________________________________________________________
Social Security Number__________________________________________
_____________
Date
Very truly yours,
__________________________
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
__________________________________________
Agreement for Non-Incentive Stock Options
__________________________________________
STOCK OPTION (the "Option") for a total of ________ shares
of Common Stock, par value $.01 per share, of North Arkansas
Bancshares, Inc. (the "Company") is hereby granted to _________
(the "Optionee") at the price set forth herein, and in all
respects subject to the terms, definitions and provisions of the
North Arkansas Bancshares, Inc. 1998 Stock Option and Incentive
Plan (the "Plan") which has been adopted by the Company and
which is incorporated by reference herein, receipt of which is
hereby acknowledged. Such Stock Options do not comply with
Options granted under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
1. Exercise Price. The exercise price per share is
$_____, which equals 100% of the fair market value, as
determined by the Committee, of the Common Stock on the date of
grant of this Option.
2. Exercise of Option. This Option shall be exercisable
in accordance with the Plan and the following provisions:
(i) Schedule of rights to exercise.
------------------------------
Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
- ----------------------------- -----------------------------
Upon Grant ______%
1 year but less than 2 years ______%
2 years but less than 3 years ______%
3 years but less than 4 years ______%
4 years but less than 5 years ______%
5 years or more ______%
(ii) Method of Exercise. This Option shall be
exercisable by a written notice which shall:
(a) state the election to exercise the Option, the number
of shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates
for such
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Non-ISO Agreement
Page 2
shares of Common Stock is to be registered, his address and
Social Security Number (or if more than one, the names,
addresses and Social Security Numbers of such persons);
(b) contain such representations and agreements as to the
holders' investment intent with respect to such shares of
Common Stock as may be satisfactory to the Company's
counsel;
(c) be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised
by any person or persons other than the Optionee, be
accompanied by proof, satisfactory to counsel for the
Company, of the right of such person or persons to
exercise the Option; and
(d) be in writing and delivered in person or by certified
mail to the Treasurer of the Company.
Payment of the purchase price of any shares with respect
to which the Option is being exercised shall be by cash, Common
Stock, or such combination of cash and Common Stock as the
Optionee elects. In addition, the Optionee may elect to pay for
all or part of the exercise price of the shares by having the
Company withhold a number of shares having a fair market value
equal to the exercise price. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised
shall be registered in the name of the person or persons
exercising the Option.
(iii) Restrictions on exercise. The Option may not be
exercised if the issuance of the shares upon such exercise would
constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to
his exercise of this Option, the Company may require the person
exercising this Option to make any representation and warranty
to the Company as may be required by any applicable law or
regulation.
3. Withholding. The Optionee hereby agrees that the
exercise of the Option or any installment thereof will not be
effective, and no shares will become transferable to the
Optionee, until the Optionee makes appropriate arrangements with
the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such
exercise.
4. Non-transferability of Option. This Option may not
be transferred in any manner otherwise than by will or the laws
of descent or distribution. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors
and assigns of the Optionee. Notwithstanding any other terms
of this agreement, to the extent permissible under Rule 16b-3 of
the Securities Exchange Act of 1934, as amended, this Option may
be transferred to the Optionee's spouse, lineal ascendants,
lineal descendants, or to a duly established trust, provided
that such
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Non-ISO Agreement
Page 3
transferee shall be permitted to exercise this Option
subject to the same terms and conditions applicable to the
Optionee.
5. Term of Option. This Option may not be exercisable
for more than ten years from the date of grant of this Option,
as set forth below, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
_________________
Date of Grant NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND
INCENTIVE PLAN COMMITTEE
By: ___________________________________
Authorized Member of the Committee
Witness: ______________________________
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NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
_______________________________
Form for Exercise of
Non-Incentive Stock Options
_______________________________
Treasurer
North Arkansas Bancshares, Inc.
200 Olivia Drive
Newport, Arkansas 72112
Re: North Arkansas Bancshares, Inc. 1998 Stock Option
and Incentive Plan
-------------------------------------------------
Dear Sir:
The undersigned elects to exercise his Non-Incentive Stock
Option to purchase _________ shares, par value $.01, of Common
Stock of North Arkansas Bancshares, Inc. under and pursuant to
a Stock Option Agreement dated _______________, 199__.
Delivered herewith is a certified or bank cashier's or
tellers check and/or shares of Common Stock, valued at the fair
market value of the stock on the date of exercise, as set forth
below.
$_______ of cash or check
$_______ in the form of _______ shares of Common
Stock, valued at $____ per share
$_______ in the form of the Company's
withholding of _______ shares of Common
Stock, valued at $ ____ per share,
that are subject to this Option
$ Total
=======
The name or names to be on the stock certificate or
certificates and the address and Social Security Number of such
person is as follows:
Name __________________________________________________________
Address________________________________________________________
Social Security Number__________________________________________
_____________
Date
Very truly yours,
__________________________
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NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
____________________________________
Stock Appreciation Rights Agreement
Not In Tandem with Stock Option
____________________________________
On the date of grant specified below, the Stock Option
Committee of North Arkansas Bancshares, Inc. (the "Company")
hereby grants to ________________ (the "Optionee") a total of
_______ Stock Appreciation Rights (SARs), subject to the terms
and conditions set forth in the North Arkansas Bancshares, Inc.
1998 Stock Option and Incentive Plan (the "Plan") (a copy of
which is available to the Optionee upon request). The terms and
conditions of the Plan are incorporated herein by reference.
(a) The exercise price is $_________ for each share,
such price being 100% of the fair market value, as determined by
the Committee, of the Common Stock on the date of grant of this
option.
(b) The SAR shall be exercisable to the extent permitted
in the Plan.
(c) The SAR shall be accepted for surrender by the
Optionee in consideration for the payment by the Company of an
amount equal to the excess of the fair market value on the date
of exercise of the Shares of Common Stock subject to such SAR
over the exercise price specified in Paragraph (a) hereof.
(d) Payment hereunder shall be made in shares of Common
Stock or in cash as provided in the Plan.
(e) The SAR is nontransferable, except in accordance
with Section 12 of the Plan.
(f) The SAR may be exercised only in accordance with
Sections 8 and 12 of the Plan, and only when there is a positive
spread, i.e., when the market price of the Common Stock subject
to the SAR exceeds the exercise price of the SAR.
(g) In the event of any inconsistency or conflict
between this Agreement and the Plan, the Plan shall be
controlling and supercede any conflicting or inconsistent
provision of the Agreement.
NORTH ARKANSAS BANCSHARES, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
COMMITTEE
By: ___________________________
Date of Grant: ATTEST:
_____________ _______________________________
NORTH ARKANSAS BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN COMMITTEE
NOTICE OF AWARD
---------------
WHEREAS, the Board of Directors of North Arkansas
Bancshares, Inc. (the "Company") has previously adopted the
North Arkansas Bancshares, Inc. Management Recognition Plan (the
"Plan"); and
WHEREAS, the Board of Directors of the Company has
previously appointed Directors John Minor, Kaneaster Hodges Jr.,
and O.E. Guinn Jr. as members of the Management Recognition Plan
Committee (the "Committee") pursuant to the terms of the Plan,
and by resolution dated ______________ ___, 19__ the Committee
made awards under the Plan.
PLEASE TAKE NOTICE, that the following individual be
granted an award under the Plan ("Plan Share Award"), effective
_________________ ___, 19___:
Number of Shares Subject to
Recipient Plan Share Award
--------- ---------------------------
____________________ ____
AND BE IT FURTHER RESOLVED, that the Plan Share Award
specified herein shall be subject to the restrictions and other
provisions of Section 7.01 of the Plan.
Date of Notice:
_____________ ___, 199__
NORTH ARKANSAS BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
COMMITTEE
By: _________________________
Its Chairman
<PAGE>
M E M O R A N D U M
TO: Participants in the North Arkansas Bancshares, Inc.
(the "Company")
Management Recognition Plan
DATE: November 6, 1998
FROM: J. Mark Poerio, Esquire
RE: Taxation of MRP Awards
================================================================
* * * * * * * * * * * * * * * * * * * * * * * * * *
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
* * * * * * * * * * * * * * * * * * * * * * * * * *
This memorandum concerns the taxation of the awards that
will automatically occur under the Company's Management
Recognition Plan (the "MRP") upon its receipt of stockholder
approval. To facilitate your review, the discussion below is
divided as follows:
Part I: General Tax Principles and Application to the
MRP
Part II: Accelerated Taxation under Section 83(b)
Please understand that this memorandum is merely designed
to summarize the tax rules generally applicable to MRP awards.
We could provide individual tax advice to the recipients of MRP
awards ("Recipients"), should anyone desire assistance.
The deadline for making a Section 83(b) election is 30
days after the award date.
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Taxation of MRP Awards
Page 2
Part I:
General Tax Principles
Section 83 -- Generally. Section 83 of the Internal
Revenue Code (the "Code") controls the federal income taxation
of property that is transferred in connection with the
performance of services. In the absence of the Section 83(b)
election described in Part II, the recipient of restricted
property (such as an MRP award) recognizes income not on the
date of the award but
on the date that his or her interest vests. The amount of the
recipient's taxable income will equal the fair market value of
the restricted property when vesting occurs. Subsequent gain or
loss is treated as capital gain, with the amount that is
included in the recipient's ordinary income determining his or
her basis in the property.
Operation of the MRP. The Bank's MRP will generally work
as follows for Recipients who do not make Section 83(b)
elections:
Date Event
---- -----
Award Date Each Recipient will receive a "Notice
of MRP Award" that identifies the number
of shares subject to the award, and the
terms according to which vesting occurs.
Recipients will not receive shares of
the Company's common stock, or be
subject to federal income taxation as
the result of receiving an award.
Each Vesting Date The MRP trust will transfer to each
Recipient a number of unrestricted shares
equal to the number of shares that have
become vested, plusany dividends
attributable to those shares (provided
that the Recipient has not previously
terminated service).
Vesting will accelerate to 100% upon a Recipient's
termination of service due to retirement at or after age 65,
death or disability, or upon the earlier of a change in control
or the execution of an agreement to effect a change in control.
Special rules apply if a transfer of Common Stock would cause
the Recipient to own in excess of 10% of the Common Stock.
Tax Withholding. In the case of Recipients who are non-
employee directors, federal income tax withholding is not
required when their MRP awards give rise to taxable income. On
the other
_______________
1 This contrasts with the financial accounting treatment for
MRP awards (i.e., expense recognition is determined by the
fair market on the date of the award).<PAGE>
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Taxation of MRP Awards
Page 3
hand, Recipients who are employees must satisfy federal income
tax withholding not only at the time their MRP awards generate
taxable income, but also before they may receive shares of
Common Stock from the MRP trust.
IRS Reporting. In the case of an employee, the ordinary
income arising from the vesting of MRP awards and from the
payment of tax bonuses is reportable on Form W-2, in Box 11. In
the case of a non-employee director, such income is reportable
on Form 1099-MISC, in Box 7.
Part II:
Accelerated Taxation under Section 83(b)
Section 83(b) Generally. Within 30 days after receiving an
MRP Award, a Recipient may make a special, irrevocable election
under Code Section 83(b), and thereby accelerate ordinary income
taxation to the date that the property transfer occurred. The
amount of the Recipient's ordinary income will equal the fair
market value of the Common Stock subject to the MRP award as of
the date on which the award occurred. Subsequent gain (or loss,
if the award is forfeited or depreciates) would be long- or
short-term capital gain, not ordinary income.
Procedural Requirements. Section 83(b) elections must
include the information set forth in the form of Section 83(b)
election that we have attached hereto. Further, Section 83(b)
elections must be filed with the IRS Service Center where the
Recipient files his or her return (both within 30 days after the
transfer occurs, and as an attachment to his or her tax return
for the year to which the Section 83(b) election relates). A
copy of the Section 83(b) election must also be filed with the
Company.
Tax Caveat. In several recent private letter rulings
(which, while not binding precedent, are indicative of current
IRS policy), the Internal Revenue Service has taken the position
that, for purposes of Section 83 of the Code, no "transfer" of
property occurs when an individual receives an interest in an
employer's grantor trust. Because the trust associated with the
MRP is a grantor trust (by design, in order to secure deferred
taxation of awards), these rulings suggest that the IRS could
question whether Section 83(b) elections may be made with
respect to MRP awards. While we do not believe that this
theoretical possibility involves a substantial tax risk for
Recipients, each Recipient should contact his or her personal
tax counsel for independent advice about this issue.
Tax Reporting and Withholding. The rules described in Part
I would apply, as though vesting occurred on the date of the
Recipient's Section 83(b) election.
CONCLUSION
Whether or not a Recipient should make a Section 83(b)
election depends on a variety of factors, including the
Recipient's expectations as to (i) the short-term and long-term
future value of the Common Stock, (ii) the length of time the
Recipient is likely to hold the Common Stock, (iii) future tax
rates -- as to both income and capital gain, (iv) the risk of
forfeiture, and (v) the Recipient's ability to pay the taxes
associated with the MRP award.
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NORTH ARKANSAS BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
______________________________________________________________
Election to Include Value of Restricted Stock in Gross Income
in Year of Transfer Under Code Section 83(b)
______________________________________________________________
* * * * * * * * * * * * * * * * * * * * * * * * * *
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
* * * * * * * * * * * * * * * * * * * * * * * * * *
The undersigned hereby makes the election permitted under
Section 83(b) of the Internal Revenue Code of 1986, as amended,
with respect to the property described below, and supplies the
following information in accordance with the regulations
promulgated thereunder:
1. The name, address, and taxpayer identification or social
security number of the undersigned are:
Name: ________________________________
Address: ________________________________
________________________________
I.D. No. ________________________________
2. Description of the property with respect to which the
election is being made:
____________________(_____) shares of common stock, par
value $0.01 per share, of North Arkansas Bancshares,
Inc. (hereinafter, the "Common Stock").
3. The date on which the Common Stock was transferred is
______________ ___, 19__. The taxable year to which this
election relates is calendar year 19__.
4. The nature of the restrictions to which the Common Stock
is subject is as follows:
The Common Stock is forfeitable until it is earned in
accordance with Article VII of the North Arkansas
Bancshares, Inc. Management Recognition Plan (the
"Plan"). Generally, the Common Stock becomes earned
and nonforfeitable by the undersigned at the rate of
______% on the Plan award date and on each of the next
_________ annual anniversary dates thereof. For
special rules regarding the vesting of the
undersigned's interest in the Common Stock, see Section
7.01 of the Plan.
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Section 83(b) Election
Page 2 of 2
The Common Stock is non-transferable until the
undersigned's interest therein becomes vested and
nonforfeitable, pursuant to Section 8.03 of the Plan.
5. Fair market value:
The fair market value at the time of transfer
(determined without regard to any restrictions other
then restrictions which by their terms will never
lapse) of the stock with respect to which this election
is being made is $_____ per share.
6. Amount paid for Common Stock:
The amount paid by taxpayer for said Common Stock is
$0.00 per share.
7. Furnishing statement to employer:
A copy of this statement has been furnished to North
Arkansas Bancshares, Inc.
8. Notice:
Nothing contained herein shall be held to alter, vary
or affect any of the terms, provisions or conditions of
the Plan, or the award made thereunder to the
undersigned.
Dated: ____________ __, 199__.
______________________________
Taxpayer/Plan Participant
