STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT ("Agreement"), dated the 29th day of August,
2001, is made by and between HCB Bancshares, Inc., an Oklahoma corporation
("HCBB"), on the one hand, and Stilwell Value Partners IV, L.P., Stilwell
Associates, L.P., Stilwell Value LLC, and Joseph Stilwell, (collectively, the
"Stilwell Group"), and _________________ ("Stilwell Director") on the other.
WHEREAS, HCBB, the Stilwell Group and the Stilwell Director have agreed
that it is in their mutual interests to enter into this Agreement as hereinafter
described.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, and agreements contained herein, and other good and valuable
consideration, the parties hereto mutually agree as follows:
1. Representations and Warranties of Stilwell Group. The Stilwell Group
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hereby represents and warrants to HCBB as follows:
a. The Stilwell Group has beneficial ownership of 150,850 shares of
common stock of HCBB and has full and complete authority to enter into this
Agreement and to bind the entire number of shares of the common stock of
HCBB which it holds, or may hold, including any shares purchased in the
future, to the terms of this Agreement. This Agreement constitutes a valid
and binding agreement of the Stilwell Group.
b. There are no arrangements, agreements or understandings between the
Stilwell Group and HCBB other than as set forth in this Agreement.
2. Representations and Warranties of HCBB. HCBB hereby represents and
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warrants to the Stilwell Group, as follows:
a. HCBB full has power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery of this
Agreement by HCBB has been duly authorized by the Board of Directors of
HCBB and requires no further Board of Directors or stockholder action. This
Agreement constitutes a valid and binding obligation of HCBB and the
performance of its terms does not constitute a violation of its certificate
of incorporation or by-laws.
b. There are no arrangements, agreements or understandings between the
Stilwell Group and HCBB other than as set forth in this Agreement.
3. Representations and Warranties of the Stilwell Director. The Stilwell
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Director hereby represents and warrants to HCBB as follows:
a. The Stilwell Director is a person who qualifies under all
applicable Office of Thrift Supervision regulations governing directors of
thrifts.
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b. The Stilwell Director meets the qualifications for service as a
director set forth in clauses (1), (2) and (3) of Section 14(b) of Article
III of HCBB's Bylaws and in clauses (1), (2) and (3) of Section 15(b) of
Article III of the Bylaws of HEARTLAND Community Bank.
c. No event has occurred with respect to the Stilwell Director that
would require disclosure in an HCBB report filed pursuant to the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, pursuant to Item 401(f) of Regulation S-K.
4. Stilwell Group's Prohibited Conduct. Unless this Agreement is
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terminated, for so long as HCBB meets the Financial Goal set forth in Paragraph
9 below and complies with the terms of this Agreement, no member of the Stilwell
Group or the Stilwell Director shall (a) solicit proxies, or participate in any
manner in the solicitation of proxies, from HCBB's stockholders to elect persons
to the Board of Directors or to approve shareholder proposals, or (b) make any
public statement critical of HCBB, its Board or management.
5. Operational Decisions. Unless this Agreement is terminated, for so long
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as HCBB meets the Financial Goal set forth in Paragraph 9 below and complies
with the terms of this Agreement, the Stilwell Group and the Stilwell Director
shall not in any way interfere with any operational decisions of HCBB.
6. Voting at Annual Meetings of Stockholders. Unless this Agreement is
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terminated, for so long as HCBB meets the Financial Goal set forth in Paragraph
9 below and complies with the terms of this Agreement, at all Annual Meetings of
Stockholders the Stilwell Group and the Stilwell Director shall vote all of the
shares of HCBB common stock beneficially owned by its members for each of HCBB's
nominees for election to the HCBB Board of Directors, for the ratification of
the appointment of HCBB's independent auditors and, in other matters, in
accordance with the recommendation of the HCBB Board of Directors.
7. HCBB's Independence. Unless this Agreement is terminated, for so long as
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HCBB meets the Financial Goal set forth in Paragraph 9 below and complies with
the terms of this Agreement, the Stilwell Group and the Stilwell Director shall
fully support the independence of HCBB and otherwise support the decisions made
by the Board of Directors.
8. Directorships and Committees. HCBB agrees that within seven (7) days
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after the Stilwell Director's execution of the Agreement, the Stilwell Director
will be appointed to the Board of Directors of HCBB and the Boards of Directors
of each of HCBB's wholly owned subsidiaries ("Subsidiaries"). (The Board of
Directors of HCBB or its Subsidiary may be referred to hereinafter individually
as the "Board", or collectively as the "Boards").
a. The Stilwell Director will be appointed to the Class of Directors
of HCBB whose terms expire at the 2003 Annual Meeting of Stockholders. The
procedure for the selection of the Stilwell Director shall be as follows:
The Stilwell Group will propose a director to HCBB ("Proposed Director").
If the Proposed Director is not reasonably determined by HCBB to be
qualified to sit as a director, Stilwell shall be entitled to propose
additional candidates to HCBB until HCBB approves a candidate as a Stilwell
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Director ("Additional Candidates"). HCBB will not unreasonably withhold
approval of the Proposed Director or any Additional Candidates. The
Stilwell Group SHALL SUBMIT THE NAME AND RESUME OF THE PROPOSED DIRECTOR
WITHIN THREE (3) DAYS FROM THE EXECUTION OF THIS AGREEMENT AND HCBB WILL
MAKE ITS DETERMINATION WITHIN TEN (10) DAYS THEREAFTER. IF HCBB WISHES TO
MEET THE PROPOSED DIRECTOR IN PERSON, THE STILWELL GROUP WILL MAKE THE
PROPOSED DIRECTOR AVAILABLE TO HCBB AT A MUTUALLY CONVENIENT DATE, WITHIN
SUCH TEN (10) DAYS. IF NECESSARY, THE PARTIES WILL FOLLOW THE SAME
TIMETABLE FOR ANY Additional Candidates, with the period beginning from the
time HCBB rejects the Proposed Director or previous Additional Candidate.
The Stilwell Director shall execute this Agreement upon his approval by
HCBB.
b. HCBB and its Subsidiaries agree to make all necessary amendments to
their by-laws or certificates of incorporation to enable the Stilwell
Director to sit on the Boards, including to expand the Boards and provide
that any residency requirements be inapplicable to the Stilwell Director.
c. The Stilwell Director will be entitled to receive the identical
compensation and benefits being paid to the two newest non-employee
directors of HCBB.
d. The Stilwell Group shall not provide, and the Stilwell Director
shall not accept, any incentive or compensation to the Stilwell Director
that would influence the Stilwell Director to recommend that HCBB enter
into a transaction for the sale of HCBB or to recommend any other
significant initiative affecting HCBB and its stockholders.
e. If the Stilwell Director resigns from any Board, is removed from
any Board for cause, if he is not renominated for election, or if he dies,
the Stilwell Group will be entitled to replace the Stilwell Director with
another individual ("Replacement Director"), who is reasonably determined
by the Board of HCBB to be qualified to serve and if the Replacement
Director is qualified, HCBB and the Subsidiaries shall take all action to
immediately appoint the Replacement Director to the respective Boards. The
Replacement Director will serve out the remaining term and be re-elected
and re-appointed to the Boards pursuant to Paragraph 7(g) below. The
Replacement Director will enjoy all of the rights and benefits of this
Agreement and shall be bound by its terms. If the Board of HCBB does not
appoint a Replacement Director, this agreement will be deemed terminated.
f. For so long as any Stilwell Director is a member of the Board of
Directors of HCBB and its Subsidiaries, he will be appointed to either the
Audit or Compensation Committees.
g. HCBB and its Board agree to nominate and support the Stilwell
Director or Replacement Director for re-election to the Board of HCBB at
the expiration of each of his terms, and he shall be re-appointed to the
Boards of the Subsidiaries so long as the Board of HCBB reasonably
determines that the Stilwell Director is qualified to serve. If the
Stilwell Director or the Replacement Director is not re-appointed, this
agreement will be deemed terminated.
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9. Financial Goal.
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a. HCBB agrees to adopt a target to achieve an ROE greater than the
"Average" for All Publicly Traded Thrifts (excluding MHC's) as published by
SNL Securities for the fiscal year beginning July 1, 2002, and every year
thereafter (the "Financial Goal"). If the Financial Goal set forth above is
not met, the Board of HCBB agrees to retain an investment banking firm to
help the Board evaluate alternatives to maximize shareholder value of HCBB.
b. HCBB agrees to retain an investment banking firm within sixty (60)
days after the execution of this agreement to assist HCBB in reviewing its
balance sheet including its securities portfolio and the merits of stock
repurchases including dutch auctions. The Board of HCBB will consider
substantially reducing its securities portfolio and conducting a dutch
auction(s) if it determines, after due consideration, that it would be in
the best interests of HCBB's stockholders.
10. Termination. This Agreement shall terminate and the Stilwell Director
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shall immediately tender his resignation from the Board of HCBB and each of its
subsidiaries, if requested by the Board of HCBB as a result of a majority vote
in favor of such resignation by the Board of HCBB, upon the earlier of (i) the
Stilwell Group having beneficial ownership of less than five percent of the
outstanding shares of common stock of HCBB; (ii) the closing of an acquisition
by ownership, holding or power to vote of more than 50% of HCBB's voting stock
by any party, other than the parties to this Agreement, which results from any
agreement executed by HCBB including any merger, acquisition or other type of
business combination, (iii) the dissolution, merger or any other transaction
which results in the failure of Stilwell Value Partners IV, L.P., Stilwell
Associates, L.P. or Stilwell Value LLC to exist as legal entities, (iv) the
death or incapacity of Joseph Stilwell; or (v) the fifth anniversary of the
execution of this Agreement.
11. Public Announcement. The parties shall disclose the existence of this
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Agreement within three (3) business days after its execution by the Stilwell
Group and HCBB. The parties will make separate disclosures, however, they will
coordinate the disclosures to occur on or about the same day. This Agreement
shall be attached to each party's disclosure. Before the disclosures are made,
the parties will share the contents with each other. Additional disclosures
identifying the Stilwell Director will be made by the parties after the Stilwell
Director executes this Agreement.
12. Remedies. HCBB, the Stilwell Group and the Stilwell Director
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acknowledge and agree that a breach or threatened breach by either party may
give rise to irreparable injury inadequately compensable in damages, and
accordingly each party shall be entitled to injunctive relief to prevent a
breach of the provisions hereof and to enforce specifically the terms and
provisions hereof in any state or federal court having jurisdiction, in addition
to any other remedy to which such aggrieved party may be entitled to at law or
in equity. In the event either party institutes any legal action to enforce such
party's rights under, or recover damages for breach of, this Agreement, the
prevailing party or parties in such action shall be entitled to recover from the
other party or parties all costs and expenses, including but not limited to
actual
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attorneys' fees, court costs, witness fees, disbursements and any other expenses
of litigation or negotiation incurred by such prevailing party or parties.
13. Notices. All notice requirements and other communications shall be
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deemed given when delivered or on the following business day after being sent by
overnight courier with a nationally recognized courier service such as Federal
Express, addressed to the Stilwell Group, the Stilwell Director and HCBB as
follows:
The Stilwell Group:
Mr. Joseph Stilwell
26 Broadway 23rd Floor
New York, New York 10004
With a copy to:
Spencer L. Schneider, Esq.
145 Hudson Street
New York, New York 10013
The Stilwell Director:
__________________________
__________________________
__________________________
With a copy to:
__________________________
__________________________
__________________________
HCBB:
Mr. Cameron D. McKeel
HCB Bancshares, Inc.
237 Jackson Street S.W.
Camden, Arkansas 71701-3941
With a Copy to:
Gary R. Bronstein, Esq.
Stradley Ronon Housley Kantarian & Bronstein, LLP
1220 19th Street, N.W, Suite 700
Washington, D.C. 20036
14. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties in connection therewith not referred
to herein.
15. Counterparts; Facsimile. This Agreement may be executed in any number
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of counterparts and by the parties hereto in separate counterparts, and
signature pages may be
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delivered by facsimile, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
16. Headings. The headings in this Agreement are for convenience of
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reference only and shall not limit or otherwise affect the meaning hereof.
17. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Oklahoma.
18. Severability. In the event one or more of the provisions of this
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Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
19. Successors and Assigns. This Agreement shall not be assignable by any
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of the parties to this Agreement, except the terms shall be applicable to a
Replacement Director.
20. Survival of Representations, Warranties and Agreements. All
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representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement.
21. Amendments. This Agreement may not be modified, amended, altered or
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supplemented except upon the execution and delivery of a written agreement
executed by all of the parties hereto.
22. Further Action. Each party agrees to execute any and all documents, and
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to do and perform any and all acts and things necessary or proper to effectuate
or further evidence the terms and provisions of this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HCB BANCSHARES, INC.
/s/ Vida H. Lampkin
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By: Vida H. Lampkin
Chairman of the Board
/s/ Cameron D. McKeel
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By: Cameron D. McKeel
Chief Executive Officer
STILWELL VALUE PARTNERS IV, L.P.
/s/ Joseph Stilwell
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By: STILWELL VALUE LLC
General Partner
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
STILWELL ASSOCIATES, L.P.
/s/ Joseph Stilwell
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By: STILWELL VALUE LLC
General Partner
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
STILWELL VALUE LLC
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
JOSEPH STILWELL
/s/ Joseph Stilwell
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Joseph Stilwell
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(Stilwell Director)
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