HCB BANCSHARES, INC.
237 JACKSON STREET
CAMDEN, ARKANSAS 71701-3941
(870) 836-6841
OFFER TO PURCHASE FOR CASH
UP TO 377,866 SHARES OF ITS
COMMON STOCK, PAR VALUE $0.01 PER SHARE
AT A PURCHASE PRICE NOT GREATER THAN $14.75
NOR LESS THAN $12.75 PER SHARE
____________________________
THE OFFER TO PURCHASE, PRO RATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2002
UNLESS THE OFFER TO PURCHASE IS EXTENDED
____________________________
Questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Information Agent/Dealer Manager at the address and telephone
number set forth on the back cover of this Offer to Purchase, and such copies
will be furnished promptly at HCB Bancshares' expense. Stockholders may also
contact their local broker, dealer, commercial bank or trust company for
assistance concerning this offer.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF HCB
BANCSHARES AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, THE RECOMMENDATION
AND THE OTHER INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY HCB BANCSHARES.
The Dealer Manager and Information Agent for this Offer is:
KEEFE, BRUYETTE & WOODS, INC.
The date of this offer to purchase is January 31, 2002
TABLE OF CONTENTS
Section PAGE
----
SUMMARY ................................................................... 1
1. NUMBER OF SHARES; PRO RATION...................................... 3
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES....................... 4
3. PROCEDURE FOR TENDERING SHARES.................................... 4
4. WITHDRAWAL RIGHTS................................................. 7
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.... 7
6. CONDITIONAL TENDER OF SHARES...................................... 8
7. CONDITIONS OF THE OFFER........................................... 9
8. PRICE RANGE OF SHARES; DIVIDENDS.................................. 10
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER................ 11
10. INFORMATION CONCERNING HCB BANCSHARES............................. 12
11. SOURCE AND AMOUNT OF FUNDS........................................ 18
12. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES.................................. 18
13. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER
THE EXCHANGE ACT................................................ 25
14. LEGAL MATTERS; REGULATORY APPROVALS............................... 25
15. FEDERAL INCOME TAX CONSEQUENCES................................... 25
16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS............... 28
17. SOLICITATION FEES AND EXPENSES.................................... 29
18. WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION....................... 29
To the Holders of Shares of Common Stock of HCB Bancshares, Inc.
SUMMARY
HCB Bancshares is inviting its stockholders to sell shares of its common
stock back to HCB Bancshares for cash. Set forth below are the material terms of
this offer:
o HCB Bancshares will agree to purchase up to 377,866 shares of its common
stock. See "Number of Shares; Pro Ration" on page 3 in this offer to
purchase.
o HCB Bancshares will purchase these shares within a price range from $12.75
to $14.75 per share, as determined by tendering stockholders. See "Number
of Shares; Pro Ration" on page 3 in this offer to purchase.
o Each stockholder must determine whether to sell stock, how much stock to
sell, and at what price the stockholder is willing to sell. If you wish to
sell without specifying a price, you may check the appropriate box on the
accompanying letter of transmittal and your shares will be considered to be
tendered at the purchase price determined by HCB Bancshares. See "Number of
Shares; Pro Ration" on page 3 and "Procedure for Tendering Shares" on page
4 of this offer to purchase and the letter of transmittal.
o We will pay the same purchase price for all shares we purchase. See "Number
of Shares; Pro Ration" on page 3 of this offer to purchase.
o On January 25, 2002, the closing price for the Shares on the Nasdaq
Small-Cap Market was $14.00 per share. We encourage you to obtain current
market quotations for HCB Bancshares common stock. See "Price Range of
Shares; Dividends" on page 10 of this offer to purchase. At December 31,
2001, the book value per share of HCB Bancshares common stock was $17.14.
See "Information Concerning HCB Bancshares" beginning on page 12 of this
offer to purchase.
o If more than 377,866 shares are tendered at or below the purchase price we
will first acquire shares held by persons who own less than 100 shares and
then will acquire shares from other tendering stockholders on a pro rata
basis. See "Number of Shares; Pro Ration" on page 3 and "Tenders by Holders
of Fewer Than 100 Shares" on page 4 of this offer to purchase.
o The offer is not conditioned upon any minimum number of shares being
tendered. The offer is, however, subject to other conditions. See
"Conditions of the Offer" on page 9 of this offer to purchase.
o You must properly complete and execute the letter of transmittal and it
must be received by the Depositary by 5:00 p.m. New York City time on March
1, 2002 in order to sell your shares to us in this offer. See "Procedure
for Tendering Shares" on page 4 of this offer to purchase.
o This offer is scheduled to expire at 5:00 p.m. New York City time on March
1, 2002. See "Number of Shares; Pro Ration" on page 3 of this offer to
purchase.
o We are permitted to extend the offering period by making a public
announcement. See "Extension of Tender Period; Termination; Amendments" on
page 28 of this offer to purchase.
o You may withdraw any shares you tender at any time before this offer
expires, which is currently scheduled to be March 1, 2002. After that time,
tenders will be irrevocable until March 29, 2002. After March 29, 2002, you
may withdraw any tendered shares that we have not accepted for purchase.
See "Withdrawal Rights" on page 7 of this offer to purchase.
o If you wish to withdraw your tender you must give written notice of the
withdrawal to the Depositary. The information required and method of
notification is different if you hold your shares directly or through a
broker. See "Withdrawal Rights" on page 7 of this offer to purchase.
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o Once we set the price, we will consider conditional tenders and pro
rations. Then, the Depositary will issue checks for all accepted tenders.
See "Acceptance for Payment of Shares and Payment of Purchase Price" on
page 7 of this offer to purchase.
o We expect to announce final results on any pro ration within seven trading
days following the expiration date. See "Acceptance for Payment of Shares
and Payment of Purchase Price" on page 7 of this offer to purchase.
o Stockholders who do not tender shares will increase their percentage
ownership in HCB Bancshares. This will include all but one of the executive
officers and all but one of the directors of HCB Bancshares and the
trustees for the HCB Bancshares, Inc. Employee Stock Ownership Plan Trust,
the HCB Bancshares, Inc. 1998 Stock Option Plan Trust, the HCB Bancshares,
Inc. Management Recognition Plan Trust, the Heartland Community Bank
Executive Officers' Grantor Trust and the Heartland Community Bank
Non-Employee Directors' Grantor Trust, who do not intend to tender any of
their shares. See "Purpose of the Offer; Certain Effects of the Offer" on
page 11 and "Interest of Directors and Officers; Transaction and
Arrangements Concerning Shares" on page 18 of this offer to purchase.
o Generally, a stockholder will be expected to recognize gain or loss on the
tendered shares equal to the difference between the cash paid by HCB
Bancshares and the stockholder's basis. See "Federal Income Tax
Consequences" on page 25 of this offer to purchase.
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1. NUMBER OF SHARES; PRO RATION
Upon the terms and subject to the conditions described herein and in the
letter of transmittal, we will purchase up to 377,866 shares (the "Shares") of
HCB Bancshares common stock, $0.01 par value per share (the "Common Stock") that
are validly tendered on or prior to the expiration date of this offer, and not
properly withdrawn in accordance with Section 4 of this offer to purchase, for
cash, at a price, determined in the manner set forth below, not greater than
$14.75 nor less than $12.75 per Share. The later of 5:00 p.m., New York City
time, on March 1, 2002, or the latest time and date to which this offer is
extended pursuant to Section 16 of this offer to purchase is referred to herein
as the "expiration date." If this offer is oversubscribed as described below,
only Shares tendered at or below the purchase price on or prior to the
expiration date will be eligible for pro ration. The pro ration period also
expires on the expiration date.
HCB Bancshares will determine the purchase price taking into consideration
the number of shares so tendered and the prices specified by tendering
stockholders. We will select the lowest purchase price that will enable us to
purchase 377,866 shares, or such lesser number of Shares as is validly tendered
and not withdrawn at prices not greater than $14.75 nor less than $12.75 per
share, pursuant to this offer. Subject to Section 16, we reserve the right to
purchase more than 377,866 Shares pursuant to this offer, but do not currently
plan to do so. This offer is not conditioned on any minimum number of Shares
being tendered. This offer is, however, subject to certain other conditions. See
Section 7.
In accordance with Instruction 5 of the letter of transmittal, each
stockholder who wishes to tender Shares must specify the price, not greater than
$14.75 nor less than $12.75 per share, at which the stockholder is willing to
have us purchase the Shares. As promptly as practicable following the expiration
date, we will determine the purchase price, not greater than $14.75 nor less
than $12.75 per share, that we will pay for Shares validly tendered and not
withdrawn pursuant to this offer, taking into account the number of Shares
tendered and the prices specified by tendering stockholders. All Shares
purchased pursuant to this offer will be purchased at the purchase price. All
Shares not purchased pursuant to this offer, including Shares tendered at prices
greater than the purchase price and Shares not purchased because of pro ration
or because they were conditionally tendered and not accepted for purchase, will
be returned to the tendering stockholders at our expense as promptly as
practicable following the expiration date.
Upon the terms and subject to the conditions of this offer, if 377,866 or
fewer Shares have been validly tendered at or below the purchase price and not
withdrawn on or prior to the expiration date, we will purchase all the Shares.
Upon the terms and subject to the conditions of this offer, if more than 377,866
Shares have been validly tendered at or below the purchase price and not
withdrawn on or prior to the expiration date, we will purchase Shares in the
following order of priority:
(a) first, all Shares validly tendered at or below the purchase
price and not withdrawn on or prior to the expiration date by or on
behalf of any stockholder who owned beneficially, as of the close of
business on January 25, 2002 and continues to own beneficially as of
the expiration date, an aggregate of fewer than 100 Shares and who
validly tenders all of such Shares, with partial and conditional
tenders not qualifying for this preference, and completes the box
captioned "Odd Lots" on the letter of transmittal; and
(b) then, after purchase of all of the foregoing Shares, subject
to the conditional tender provisions described in Section 6, all other
Shares validly tendered at or below the purchase price and not
withdrawn on or prior to the expiration date on a pro rata basis based
on the number of shares tendered by each tendering stockholder, with
appropriate adjustments to avoid purchases of fractional Shares.
If pro ration of tendered Shares is required, (i) because of the difficulty
in determining the number of Shares validly tendered, (ii) as a result of the
"odd lot" procedure described in Section 2, and (iii) as a result of the
conditional tender procedure described in Section 6, we do not expect that we
will be able to announce the final pro ration factor or to commence payment for
any Shares purchased pursuant to this offer until approximately seven Nasdaq
Small-Cap Market trading days after the expiration date. We will announce the
preliminary results of any pro ration by press release as promptly as
practicable after the expiration date. Holders of Shares may obtain such
preliminary information from the Dealer Manager/Information Agent. We expressly
reserve the right, in our sole discretion, at
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any time or from time to time, to extend the period of time during which this
offer is open by giving oral or written notice of such extension to the
Depositary and making a public announcement. See Section 16. There can be no
assurance, however, that we will exercise our right to extend this offer.
For purposes of this offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this offer to purchase, the related letter of transmittal and the
notice of guaranteed delivery are being mailed to record holders of Shares and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on our stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
Except to the extent that our purchase would result in the delisting of the
Shares on the Nasdaq Small-Cap Market, all Shares validly tendered at or below
the purchase price and not withdrawn on or prior to the expiration date by or on
behalf of any stockholder who owned beneficially, as of the close of business on
January 25, 2002, and continues to own beneficially as of the expiration date,
an aggregate of fewer than 100 Shares, will be accepted for purchase before pro
ration, if any, of other tendered Shares. Partial or conditional tenders will
not qualify for this preference, and it is not available to beneficial holders
of 100 or more Shares, even if the holders have separate stock certificates for
fewer than 100 Shares. By accepting this offer, a stockholder owning
beneficially fewer than 100 Shares will avoid the payment of brokerage
commissions and the applicable odd lot discount payable in a sale of such Shares
in a transaction effected on a securities exchange.
As of January 25, 2002, there were approximately 635 holders of record of
Shares. Approximately 223 of these holders of record held individually fewer
than 100 Shares and held in the aggregate approximately 7,820 Shares. Because of
the large number of Shares held in the names of brokers and nominees, we are
unable to estimate the number of beneficial owners of fewer than 100 Shares or
the aggregate number of Shares they own. Any stockholder wishing to tender all
of his or her Shares pursuant to this section should complete the box captioned
"Odd Lots" on the letter of transmittal.
3. PROCEDURE FOR TENDERING SHARES
To tender Shares validly pursuant to this offer, either (1) or (2) below
must occur:
(1) A properly completed and duly executed letter of transmittal or
facsimile thereof, together with any required signature guarantees and
any other documents required by the letter of transmittal, must be
received by the Depositary at its address set forth on the back cover
of this offer to purchase and either (i) certificates for the Shares
to be tendered must be received by the Depositary at such address or
(ii) the Shares must be delivered pursuant to the procedures for
book-entry transfer described below, and a confirmation of the
delivery received by the Depositary, in each case on or prior to the
expiration date.
(2) You must comply with the guaranteed delivery procedure set forth
below.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, IN ORDER TO
TENDER SHARES PURSUANT TO THIS OFFER, A STOCKHOLDER MUST INDICATE IN THE SECTION
CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON
THE LETTER OF TRANSMITTAL EITHER (I) THE PRICE, IN MULTIPLES OF $0.25, AT WHICH
THE SHARES ARE BEING TENDERED, OR (II) THAT THE SHARES ARE BEING TENDERED AT THE
PURCHASE PRICE DETERMINED BY HCB BANCSHARES IN ACCORDANCE WITH THE TERMS OF THIS
OFFER. FOR A TENDER OF SHARES TO BE VALID, A PRICE BOX, BUT ONLY ONE PRICE BOX,
ON EACH LETTER OF TRANSMITTAL MUST BE CHECKED.
STOCKHOLDERS WISHING TO TENDER SHARES AT MORE THAN ONE PRICE MUST COMPLETE
SEPARATE LETTERS OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES ARE BEING
TENDERED. THE SAME SHARES CANNOT BE TENDERED AT MORE THAN ONE PRICE.
4
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company, which is a book-entry transfer facility, for purposes
of this offer within two business days after the date of this offer, and any
financial institution that is a participant in the system of the book-entry
transfer facility may make delivery of Shares by causing the book-entry transfer
facility to transfer such Shares into the Depositary's account in accordance
with the procedures of the book-entry transfer facility. Although delivery of
Shares may be effected through book-entry transfer, either (1) or (2) below must
occur:
(1) A properly completed and duly executed letter of transmittal or a
manually signed copy thereof, or an agent's message, as defined below,
together with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the
Depositary at its address set forth on the back cover of this offer on
or prior to the expiration date.
(2) You must comply with the guaranteed delivery procedures set forth
below.
Delivery of required documents to the book-entry transfer facility in
accordance with its procedures does not constitute delivery to the Depositary
and will not constitute a valid tender.
The term "agent's message" means a message transmitted by the book-entry
transfer facility to, and received by, the Depositary and forming a part of a
book-entry confirmation, which states that the book-entry transfer facility has
received an express acknowledgment from the participant in the book-entry
transfer facility tendering the Shares, that the participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce the agreement against the participant.
Except as set forth below, all signatures on a letter of transmittal must
be guaranteed by a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc., or by a
commercial bank, a trust company, a savings bank, a savings and loan association
or a credit union which has membership in an approved signature guarantee
medallion program, each of the foregoing being referred to as an "eligible
institution." Signatures on a letter of transmittal need not be guaranteed if
(a) the letter of transmittal is signed by the registered holder of the Shares,
which term, for the purposes of this section, includes a participant in the
book-entry transfer facility whose name appears on a security position listing
as the holder of the Shares, tendered therewith and the holder has not completed
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the letter of transmittal or (b) the Shares are
tendered for the account of an eligible institution. See Instructions 1 and 6 of
the letter of transmittal.
Guaranteed Delivery. If you want to tender your Shares but your share
certificates are not immediately available or cannot be delivered to the
Depositary before the expiration date, the procedure for book-entry transfer
cannot be completed on a timely basis, or if time will not permit all required
documents to reach the Depositary before the expiration date, you can still
tender your Shares, if all of the following conditions are satisfied:
(1) the tender is made by or through an eligible institution;
(2) the Depositary receives by hand, mail, overnight courier or facsimile
transmission, before the expiration date, a properly completed and
duly executed Notice of Guaranteed Delivery in the form we have
provided with Offer to Purchase, specifying the price at which Shares
are being tendered, including (where required) signature guarantees by
an eligible institution in the form set forth in the Notice of
Guaranteed Delivery; and
(i) one of (a) the certificates for the Shares or (b) a confirmation
of receipt of the Shares pursuant to the procedure for book-entry
transfer described above,
(ii) one of (a) a properly completed and executed Letter of
Transmittal or a manually executed facsimile of it, including any
required signature guarantees, or (b) an Agent's Message as
described above in the case of a book-entry transfer; and
(iii) any other documents required by the Letter of Transmittal.
5
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 30%
OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING STOCKHOLDER
MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN STOCKHOLDERS,
AS DEFINED IN SECTION 15, MUST SUBMIT A PROPERLY COMPLETED FORM W-8, WHICH MAY
BE OBTAINED FROM THE DEPOSITARY, IN ORDER TO PREVENT BACKUP WITHHOLDING. IN
GENERAL, SUBJECT TO 30%, OR LOWER TREATY RATE, WITHHOLDING ON GROSS PAYMENTS
RECEIVED PURSUANT TO THE OFFER AS DISCUSSED IN SECTION 15, BACKUP WITHHOLDING
DOES NOT APPLY TO CORPORATIONS OR TO FOREIGN STOCKHOLDERS. FOR A DISCUSSION OF
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO TENDERING STOCKHOLDERS, SEE SECTION
15. EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR
REGARDING HIS, HER OR ITS QUALIFICATION FOR EXEMPTION FROM BACKUP WITHHOLDING
AND THE PROCEDURE FOR OBTAINING ANY APPLICABLE EXEMPTION.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended, for a person to tender Shares for his or her own
account unless the person so tendering (i) has a net long position equal to or
greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into, exercisable or exchangeable for the amount of
Shares tendered and will acquire such Shares for tender by conversion, exercise
or exchange of such other securities and (ii) will cause such Shares to be
delivered in accordance with the terms of this offer. Rule 14e-4 provides a
similar restriction applicable to the tender on behalf of another person. The
tender of Shares pursuant to any one of the procedures described above will
constitute the tendering stockholder's representation and warranty that (i) the
stockholder has a net long position in the Shares being tendered within the
meaning of Rule 14e-4 promulgated under the Exchange Act, and (ii) the tender of
such Shares complies with Rule 14e-4. Our acceptance for payment of Shares
tendered pursuant to this offer will constitute a binding agreement between the
tendering stockholder and us upon the terms and subject to the conditions of
this offer.
All questions as to the purchase price, the form of documents, the number
of Shares to be accepted and the validity, eligibility, including time of
receipt, and acceptance for payment of any tender of Shares will be determined
by us, in our sole discretion, which determination shall be final and binding on
all parties. We reserve the absolute right to reject any or all tenders of
Shares that we determine are not in proper form or the acceptance for payment of
or payment for Shares that may, in the opinion of our counsel, be unlawful. We
also reserve the absolute right to waive any defect or irregularity in any
tender of any particular Shares. None of HCB Bancshares, the Dealer
Manager/Information Agent, the Depositary or any other person is or will be
under any duty to give notice of any defect or irregularity in tenders, nor
shall any of them incur any liability for failure to give any such notice.
Lost or Destroyed Certificates. If your certificate(s) for part or all of
your Shares have been lost, stolen, misplaced or destroyed, indicate that fact
on the letter of transmittal, which should then be delivered to the Depositary
after being otherwise properly completed and duly executed. In addition, you
must complete the box captioned "Affidavit For Lost Stock Certificate(s)" on the
letter of transmittal. In such event, the Depositary will forward additional
documentation necessary to be completed in order to effectively replace such
lost or destroyed certificate(s). See Instruction 6 of the letter of
transmittal.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND
ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST BE DELIVERED TO
THE DEPOSITARY AND NOT TO HCB BANCSHARES. ANY SUCH DOCUMENTS DELIVERED TO US
WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT BE DEEMED TO BE
PROPERLY TENDERED.
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4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to this offer may be withdrawn at any time
prior to the expiration date. Thereafter, tenders are irrevocable, except that
they may be withdrawn after 12:00 midnight, New York City time, March 29,2002
unless previously accepted for payment by us as provided in this offer to
purchase. If we extend the period of time during which this offer is open, are
delayed in purchasing Shares or are unable to purchase Shares pursuant to this
offer for any reason, then, without prejudice to our rights under this offer,
the Depositary may, on our behalf, retain all Shares tendered, and the Shares
may not be withdrawn except as otherwise provided in this Section 4, subject to
Rule 13e-4(f)(5) under the Exchange Act, which provides that the issuer making
the tender offer shall either pay the consideration offered, or return the
tendered securities promptly after the termination or withdrawal of the tender
offer.
WITHDRAWAL OF SHARES HELD IN PHYSICAL FORM. Tenders of Shares made pursuant
to this offer may not be withdrawn after the expiration date, except that they
may be withdrawn after 12:00 midnight, New York City time, March 29, 2002 unless
accepted for payment by us as provided in this offer. For a withdrawal to be
effective prior to that time, a stockholder of Shares held in physical form must
provide a written, telegraphic or facsimile transmission notice of withdrawal to
the depositary at its address set forth on the back cover page of this offer
before the expiration date, which notice must contain: (A) the name of the
person who tendered the Shares; (B) a description of the Shares to be withdrawn;
(C) the certificate numbers shown on the particular certificates evidencing the
Shares; (D) the signature of the stockholder executed in the same manner as the
original signature on the letter of transmittal, including any signature
guarantee, if such original signature was guaranteed; and (E) if the Shares are
held by a new beneficial owner, evidence satisfactory to HCB Bancshares that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Shares. A purported notice of withdrawal which lacks any of the required
information will not be an effective withdrawal of a tender previously made.
WITHDRAWAL OF SHARES HELD WITH THE BOOK-ENTRY TRANSFER FACILITY. Tenders of
Shares made pursuant to this offer may not be withdrawn after the expiration
date, except that they may be withdrawn after 12:00 midnight, New York City
time, March 29, 2002 unless accepted for payment by HCB Bancshares as provided
in this offer. For a withdrawal to be effective prior to that time, a
stockholder of Shares held with the book-entry transfer facility must (i) call
his or her broker and instruct the broker to withdraw the tender of Shares by
debiting the depositary's account at the book-entry transfer facility for all
Shares to be withdrawn; and (ii) instruct the broker to provide a written,
telegraphic or facsimile transmission notice of withdrawal to the depositary on
or before the expiration date. The notice of withdrawal shall contain (A) the
name of the person who tendered the Shares; (B) a description of the Shares to
be withdrawn; and (C) if the Shares are held by a new beneficial owner, evidence
satisfactory to us that the person withdrawing the tender has succeeded to the
beneficial ownership of the Shares. A purported notice of withdrawal which lacks
any of the required information will not be an effective withdrawal of a tender
previously made.
Any permitted withdrawals of tenders of Shares may not be rescinded, and
any Shares so withdrawn will thereafter be deemed not validly tendered for
purposes of this offer; provided, however, that withdrawn Shares may be
re-tendered by following the procedures for tendering prior to the expiration
date.
All questions as to the form and validity, including time of receipt, of
any notice of withdrawal will be determined by us, in our sole discretion, which
determination shall be final and binding on all parties. None of HCB Bancshares,
the Dealer Manager/Information Agent, the Depositary or any other person is or
will be under any duty to give notification of any defect or irregularity in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of this offer and as promptly
as practicable after the expiration date, we will determine the purchase price,
taking into consideration the number of Shares tendered and the prices specified
by tendering stockholders, announce the purchase price, and, subject to the pro
ration and conditional tender provisions of this offer, accept for payment and
pay the purchase price for Shares validly tendered and not
7
withdrawn at or below the purchase price. Thereafter, payment for all Shares
validly tendered on or prior to the expiration date and accepted for payment
pursuant to this offer will be made by the Depositary by check as promptly as
practicable. In all cases, payment for Shares accepted for payment pursuant to
this offer will be made only after timely receipt by the Depositary of
certificates for such Shares, or of a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the book-entry transfer
facility, a properly completed and duly executed letter of transmittal or a
manually signed copy thereof, with any required signature guarantees, or in the
case of a book-entry delivery an agent's message, and any other required
documents.
For purposes of this offer, we shall be deemed to have accepted for
payment, and thereby purchased, subject to pro ration and conditional tenders,
Shares that are validly tendered and not withdrawn as, if and when we give oral
or written notice to the Depositary of our acceptance for payment of the Shares.
In the event of pro ration, we will determine the pro ration factor and pay for
those tendered Shares accepted for payment as soon as practicable after the
expiration date. However, we do not expect to be able to announce the final
results of any such pro ration until approximately seven Nasdaq Small-Cap Market
trading days after the expiration date. We will pay for Shares that we have
purchased pursuant to this offer by depositing the aggregate purchase price
therefor with the Depositary. The Depositary will act as agent for tendering
stockholders for the purpose of receiving payment from us and transmitting
payment to tendering stockholders. Under no circumstances will interest be paid
on amounts to be paid to tendering stockholders, regardless of any delay in
making such payment.
Certificates for all Shares not purchased, including all Shares tendered at
prices greater than the purchase price, Shares not purchased because of pro
ration and Shares that were conditionally tendered and not accepted, will be
returned, or, in the case of Shares tendered by book-entry transfer, the Shares
will be credited to an account maintained with the book-entry transfer facility
by the participant therein who so delivered the Shares, as promptly as
practicable following the expiration date without expense to the tendering
stockholder.
Payment for Shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered or if pro ration is required. See Section
1. In addition, if certain events occur, we may not be obligated to purchase
Shares pursuant to this offer. See Section 7.
We will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to us or our order pursuant to this offer.
However, payment of the purchase price to any person other than the registered
holder or registration in the name of any person other than the registered
holder of any Shares delivered, whether in certificated form or by book entry,
but not tendered or purchased, may result in additional stock transfer taxes.
Moreover, additional stock transfer taxes may also result if tendered Shares are
registered in the name of any person other than the person signing the letter of
transmittal, unless the person is signing in a representative or fiduciary
capacity. The amount of any such additional stock transfer taxes, whether
imposed on the registered holder or otherwise, payable on account of the
transfer to such person, will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Instruction 7 to the letter of transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL, OR, IN THE
CASE OF A FOREIGN INDIVIDUAL, A FORM W-8, MAY BE SUBJECT TO REQUIRED FEDERAL
INCOME TAX WITHHOLDING OF 30% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR
OTHER PAYEE PURSUANT TO THIS OFFER. SEE SECTION 3.
6. CONDITIONAL TENDER OF SHARES
Under certain circumstances and subject to the exceptions set forth in
Section 1, we may prorate the number of Shares purchased pursuant to this offer.
As discussed in Section 15, the number of Shares to be purchased from a
particular stockholder might affect the tax treatment of the purchase for the
stockholder and the stockholder's decision whether to tender. EACH STOCKHOLDER
IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. Accordingly, a stockholder
may tender Shares subject to the condition that a specified minimum number of
the stockholder's Shares tendered pursuant to a letter of transmittal or notice
of guaranteed delivery must be purchased if any Shares so tendered are
purchased. Any stockholder desiring to make a conditional tender must so
indicate in the box captioned "Conditional Tender" in the letter of transmittal
or notice of guaranteed delivery.
8
Any tendering stockholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of Shares to be
tendered. If the effect of accepting tenders on a pro rata basis would be to
reduce the number of Shares to be purchased from any stockholder, below the
minimum number so specified in the letter of transmittal or notice of guaranteed
delivery, the tender will automatically be regarded as withdrawn, except as
provided in the next paragraph, and all Shares tendered by the stockholder
pursuant to the applicable letter of transmittal or notice of guaranteed
delivery will be returned as promptly as practicable thereafter.
If conditional tenders, that would otherwise be regarded as withdrawn,
would cause the total number of Shares to be purchased to fall below 377,866,
then, to the extent feasible, we will select enough conditional tenders that
would otherwise have been withdrawn to permit us to purchase 377,866 Shares. In
selecting among these conditional tenders, we will select by lot and will limit
our purchase in each case to the minimum number of Shares designated by the
stockholder in the applicable letter of transmittal or notice of guaranteed
delivery as a condition to his or her tender.
7. CONDITIONS OF THE OFFER
Notwithstanding any other provision of this offer, we will not be required
to accept for payment or pay for any Shares tendered, and may terminate or amend
and may postpone the acceptance for payment of Shares tendered, subject to the
requirements of the Exchange Act for prompt payment for or return of Shares
tendered, if at any time after January 31, 2002 any of the following shall have
occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
that (i) challenges the acquisition of Shares pursuant to this offer or
otherwise in any manner relates to or affects this offer or (ii) in the
reasonable judgment of HCB Bancshares, could materially and adversely
affect the business, condition, financial or other, income, operations or
prospects of HCB Bancshares and our subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of HCB Bancshares or any of our subsidiaries or materially
impair this offer's contemplated benefits to us;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to this offer or HCB
Bancshares or any of our subsidiaries, by any legislative body, court,
authority, agency or tribunal which, in our sole judgment, would or might
directly or indirectly (i) make the acceptance for payment of, or payment
for, some or all of the Shares illegal or otherwise restrict or prohibit
consummation of this offer, (ii) delay or restrict our ability, or render
us unable, to accept for payment or pay for some or all of the Shares,
(iii) materially impair the contemplated benefits of this offer to us or
(iv) materially affect the business, condition, financial or other, income,
operations or prospects of HCB Bancshares and our subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of HCB Bancshares or any of our subsidiaries;
(c) it shall have been publicly disclosed or we shall have learned
that (i) any person or "group," within the meaning of Section 13(d)(3) of
the Exchange Act, has acquired or proposes to acquire beneficial ownership
of more than 5% of the outstanding Shares whether through the acquisition
of stock, the formation of a group, the grant of any option or right, or
otherwise, other than as disclosed in a Schedule 13D or 13G on file with
the SEC on January 31, 2002, or (ii) any person or group that on or prior
to January 31, 2002, had filed a Schedule 13D or 13G with the SEC
thereafter shall have acquired or shall propose to acquire, whether through
the acquisition of stock, the formation of a group, the grant of any option
or right, or otherwise, beneficial ownership of additional Shares
representing 2% or more of the outstanding Shares;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline in
the market price of the Shares or in the general level of market prices of
equity securities in the United States or abroad, (iii) any change in the
general political, market, economic or financial condition in the United
States or abroad that could have a material adverse effect on our business,
condition, financial or otherwise, income, operations,
9
prospects or ability to obtain financing generally or the trading in the
Shares, (iv) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on, or
any event which, in our reasonable judgment, might affect the extension of
credit by lending institutions in the United States, (v) the commencement
of a war, armed hostilities or other international or national calamity
directly or indirectly involving the United States or (vi) in the case of
any of the foregoing existing at the time of the commencement of this
offer, in our reasonable judgment, a material acceleration or worsening
thereof;
(e) a tender or exchange offer with respect to some or all of the
Shares, other than this offer, or a merger, acquisition or other business
combination proposal for HCB Bancshares, shall have been proposed,
announced or made by another person or group, within the meaning of Section
13(d) (3) of the Exchange Act;
(f) there shall have occurred any event or events that has resulted,
or may in the reasonable judgment of HCB Bancshares result, directly or
indirectly, in an actual or threatened change in the business, condition,
financial or other, income, operations, stock ownership or prospects of HCB
Bancshares and our subsidiaries; and, in the reasonable judgment of HCB
Bancshares, such event or events make it undesirable or inadvisable to
proceed with this offer or with such acceptance for payment.
The foregoing conditions are for the reasonable benefit of HCB Bancshares
and may be asserted by us regardless of the circumstances, including any action
or inaction by us, giving rise to any of these conditions, and any such
condition may be waived by us, in whole or in part, at any time and from time to
time in our reasonable discretion. The failure by HCB Bancshares at any time to
exercise any of the foregoing rights shall not be deemed a waiver of the right,
and each of these rights shall be deemed an ongoing right which may be asserted
at any time and from time to time. Any determination by us concerning the events
described above will be final and binding on all parties.
Acceptance of Shares validly tendered in this offer is subject to the
condition that, as of the expiration date of this offer, and after giving pro
forma effect to the acceptance of Shares validly tendered, HCB Bancshares would
continue to have at least 400 stockholders and the Shares would remain listed
for quotation on the Nasdaq Small-Cap Market. This condition may not be waived.
The Exchange Act requires that all conditions to this offer must be
satisfied or waived before the expiration date.
8. PRICE RANGE OF SHARES; DIVIDENDS
The following table sets forth for the periods indicated the high and low
sales prices, and dividends paid, for the Shares as reported on the Nasdaq
Small-Cap Market from November 22, 1999 to December 31, 2001, and through the
brokerage firm of Trident Securities (McDonald Investments) from July 1, 1999 to
November 21, 1999. As of January 25, 2002, HCB Bancshares had 1,889,329 Shares
issued and outstanding. Our fiscal year end is June 30.
Dividends
High Low Paid
---- --- ---------
Fiscal 2002
- -----------
1st Quarter $12.58 $11.90 $0.06
2nd Quarter 12.95 12.00 0.07
Fiscal 2001
- -----------
1st Quarter $ 7.38 $ 6.00 $0.06
2nd Quarter 9.25 7.19 0.06
3rd Quarter 8.88 8.31 0.06
4th Quarter 13.20 8.94 0.06
Fiscal 2000
- -----------
1st Quarter $ 9.63 $ 8.00 $0.06
2nd Quarter 9.63 7.00 0.06
3rd Quarter 8.00 5.75 0.06
4th Quarter 7.25 5.63 0.06
10
The stated high and low bid prices reflect inter-dealer prices, without
retail mark-up, markdown or commission, and may not represent actual
transactions.
On January 25, 2002, the closing price of the Shares on the Nasdaq
Small-Cap Market was $14.00 per share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
We believe that the purchase of Shares is an attractive use of a portion of
HCB Bancshares' available capital on behalf of our stockholders and is
consistent with our long-term goal of increasing stockholder value. We believe
we have adequate sources of capital to complete the share repurchase and pursue
business opportunities.
Our current capital base exceeds all applicable regulatory standards and
the amount of capital needed to support the banking business. After evaluating a
variety of alternatives to utilize more effectively our capital base and to
attempt to maximize stockholder value, our management and board of directors
believe that the purchase of Shares pursuant to this offer is a positive action
that is intended to accomplish the desired objectives. Other actions previously
employed, including periodic open market purchases of Shares and quarterly cash
dividends, have enhanced stockholder value, but capital remains at high levels,
and this affects our ability to produce desired returns for stockholders.
This offer is designed to restructure our balance sheet in order to
increase return on equity and earnings per share by reducing the amount of
equity and the number of Shares outstanding. At the current market price of our
Shares, we believe that the purchase of Shares pursuant to this offer is an
attractive use of funds. Following the purchase of up to 377,866 Shares pursuant
to this offer, we believe funds provided by earnings, combined with other
sources of liquidity, will be fully adequate to meet our funding needs for the
foreseeable future. Upon completion of this offer, we expect that HCB Bancshares
and our wholly owned subsidiary bank, HEARTLAND Community Bank, will continue to
maintain the highest regulatory standards for capital, which is designated as
"well capitalized" under the prompt corrective action scheme enacted by the
Federal Deposit Insurance Corporation Improvement Act of 1991.
This offer will enable stockholders who are considering the sale of all or
a portion of their Shares the opportunity to determine the price or prices, not
greater than $14.75 nor less than $12.75 per share, at which they are willing to
sell their Shares, and, if any Shares are sold pursuant to this offer, to sell
those Shares for cash without the usual transaction costs associated with
open-market sales. This offer may also give stockholders the opportunity to sell
Shares at prices greater than market prices prevailing prior to the announcement
of this offer. See Section 8. In addition, qualifying stockholders owning
beneficially fewer than 100 Shares, whose Shares are purchased pursuant to this
offer, not only will avoid the payment of brokerage commissions but will also
avoid any applicable odd lot discounts to the market price typically charged by
brokers for executing odd lot trades.
Stockholders who do not tender their Shares pursuant to this offer and
stockholders who otherwise retain an equity interest in HCB Bancshares as a
result of a partial tender of Shares or a pro ration pursuant to Section 1 of
this offer to purchase will continue to be owners of HCB Bancshares with the
attendant risks and rewards associated with owning the equity securities of HCB
Bancshares. As noted above, HCB Bancshares, following completion of this offer,
will maintain the highest regulatory capital ranking. Consequently, we believe
that stockholders will not be subject to materially greater risk as a result of
the reduction of the capital base.
Stockholders who determine not to accept this offer will realize a
proportionate increase in their relative equity interest in HCB Bancshares and,
thus, in HCB Bancshares' earnings and assets, subject to any risks resulting
from our purchase of Shares and our ability to issue additional equity
securities in the future. In addition, to the extent the purchase of Shares
pursuant to this offer results in a reduction of the number of stockholders of
record, our costs for services to stockholders may be reduced.
If fewer than 377,866 Shares are purchased pursuant to this offer, we may
repurchase the remainder of the Shares on the open market, in privately
negotiated transactions or otherwise. In the future, we may determine to
purchase additional Shares on the open market, in privately negotiated
transactions, through one or more tender offers or otherwise. Any purchases may
be on the same terms as, or on terms which are more or less favorable to
11
stockholders than, the terms of this offer. However, Rule 13e-4 under the
Exchange Act prohibits us and our affiliates from purchasing any Shares, other
than pursuant to this offer, until at least ten business days after the
expiration date of this offer. Any future purchases of Shares by HCB Bancshares
would depend on many factors, including the market price of the Shares, our
business and financial position, and general economic and market conditions.
Shares we acquire pursuant to this offer will be restored to the status of
authorized and unissued Shares, or placed in HCB Bancshares' treasury, and will
be available for us to issue without further stockholder action, except as
required by applicable law or the rules of the Nasdaq Small-Cap National Market
or any other securities exchange on which the Shares are listed, for purposes
including, but not limited to, the acquisition of other businesses, the raising
of additional capital for use in our business and the satisfaction of
obligations under existing or future employee benefit plans. We have no current
plans for reissuance of the Shares repurchased pursuant to this offer.
Neither HCB Bancshares nor our board of directors makes any recommendation
to any stockholder as to whether to tender all or any Shares. Each stockholder
must make his or her own decision whether to tender Shares and, if so, how many
Shares to tender and at what price. Directors, officers and employees of HCB
Bancshares who own Shares may participate in this offer on the same basis as our
other stockholders. We have been advised that one director and one executive
officer of HCB Bancshares intend to tender Shares pursuant to this offer; their
tender of Shares is not intended to be a reflection of their views of HCB
Bancshares or its long term prospects. We have also been advised that the HCB
Bancshares, Inc. Employee Stock Ownership Plan Trust, the HCB Bancshares, Inc.
1998 Stock Option Plan Trust, the HCB Bancshares, Inc. Management Recognition
Plan Trust, the Heartland Community Bank Executive Officers' Grantor Trust and
the Heartland Community Bank Non-Employee Directors' Grantor Trust do not intend
to tender any Shares pursuant to this offer.
10. INFORMATION CONCERNING HCB BANCSHARES
GENERAL
HCB Bancshares, Inc. was incorporated under the laws of the State of
Oklahoma in December 1996 at the direction of the Board of Directors of
HEARTLAND Community Bank (the "Bank") for the purpose of serving as a savings
institution holding company of the Bank, upon the acquisition of all of the
capital stock issued by the Bank upon its conversion from mutual to stock form,
which was completed on April 30, 1997 (the "Conversion").
Prior to the Conversion, HCB Bancshares did not engage in any material
operations. HCB Bancshares has had no significant assets other than the
outstanding capital stock of the Bank, a portion of the net proceeds of the
Conversion and notes receivable, one of which is from the Employee Stock
Ownership Plan ("ESOP"). HCB Bancshares' principal business is the business of
the Bank. At December 31, 2001, HCB Bancshares and the Bank, had consolidated
total assets of $284.3 million, deposits of $165.2 million, and stockholders'
equity of $30.5 million, or 10.7% of total assets.
The Bank currently operates through six full service-banking offices
located in Camden (2), Fordyce, Bryant, Sheridan and Monticello, Arkansas.
The Bank's principal business consists of attracting deposits from the
general public and investing those funds in loans collateralized by first
mortgages on existing owner-occupied single-family residences in the Bank's
primary market area, commercial and multi-family real estate loans and consumer
loans and commercial business loans. The Bank also maintains a substantial
investment portfolio of mortgage-related securities, nontaxable municipal
securities, and U.S. government and agency securities.
The Bank's net income is dependent primarily on its net interest income,
which is the difference between interest income earned on its loans and its
investment portfolio, and interest paid on customers' deposits and other
borrowings. The Bank's net income is also affected by the level of noninterest
income, such as service charges on customers' deposit accounts, net gains or
losses on the sale of loans and securities and other fees. In addition, net
income is affected by the level of noninterest expenses, which primarily
consists of employee compensation expenses, occupancy expense, and other
expenses.
12
The financial condition and results of operations of the Bank, and the
thrift and banking industries as a whole, are significantly affected by
prevailing economic conditions, competition and the monetary and fiscal policies
of governmental agencies. Lending activities are influenced by demand for and
supply of credit, competition among lenders and the level of interest rates in
the Bank's market area. The Bank's deposit flows and costs of funds are
influenced by prevailing market rates of interest, primarily on competing
investments, as well as account maturities and the levels of personal income and
savings in the Bank's market area.
As a federally chartered savings institution, the Bank is subject to
extensive regulation by the Office of Thrift Supervision ("OTS"). The Bank's
lending activities and other investments must comply with various federal
regulatory requirements, and the OTS periodically examines the Bank for
compliance with various regulatory requirements. The Bank's deposits are insured
up to the maximum limits by the Savings Association Insurance Fund ("SAIF")
administered by the Federal Deposit Insurance Corporation ("FDIC"). The FDIC
also has the authority to conduct special examinations. The Bank must file
reports with the OTS describing its activities and financial condition and is
also subject to certain reserve requirements promulgated by the Board of
Governors of the Federal Reserve System ("Federal Reserve Board").
HCB Bancshares' and the Bank's executive offices are located at 237 Jackson
Street, Camden, Arkansas 71701-3941, and its telephone number is (870) 836-6841.
RECENT DEVELOPMENTS
Comparison of Financial Condition at December 31, 2001 and June 30, 2001
The Company had consolidated total assets of $284.3 million and $287.6
million at December 31, 2001 and June 30, 2001, respectively. During the six
month period ended December 31, 2001 the Company experienced an increase in its
consolidated loan portfolio from $131.7 million at June 30, 2001, to $133.1
million at December 31, 2001. During this same period, investments and
mortgage-backed securities decreased from $120.1 million at June 30, 2001 to
$116.5 million at December 31, 2001. While investments and mortgage-backed
securities decreased $3.6 million for the six month period ended December 31,
2001, there were $11.8 million in paydowns, $5.1 million in sales of municipal
securities, offset with purchases of $13.0 million and a $0.3 million increase
in the market value of the securities.
Deposits increased from $161.3 million at June 30, 2001 to $165.2 million
at December 31, 2001. Although the Bank's level of deposits has been sufficient
to provide for adequate liquidity, the deposit market remains competitive. The
outstanding balances of FHLB borrowings decreased from $91.9 million at June 30,
2001, to $86.4 million at December 31, 2001.
Stockholders' equity amounted to $30.5 million at December 31, 2001, and
$31.9 million at June 30, 2001. The changes in equity were primarily due to net
income offset by the purchase of treasury stock. At December 31, 2001, the
Bank's regulatory capital exceeded all applicable regulatory capital
requirements.
Comparison of Results of Operations for the Six Months Ended December 31, 2001
and 2000
Net Income. Net income for the six months ended December 31, 2001 was
approximately $539,000 compared to net income of approximately $176,000 for the
six months ended December 31, 2000. Explanations of primary changes to income
and expense items follow.
Interest Income. Interest income for the six months ended December 31, 2001
decreased approximately $1,020,000 compared to the six months ended December 31,
2000. The decreases in interest income were due to decreases in both volume and
rates on loans and investments, offset by higher volumes of other interest
earning assets, primarily FHLB deposits.
The yield on earning assets decreased 59 basis points for the six months
ended December 31, 2001 compared to the six months ended December 31, 2000. The
decrease in was primarily due to lower yields on investments and
13
mortgage backed securities, followed by loans receivable, then other
interest-earning assets. If interest rates continue to be low, this trend can be
expected to continue as interest-earning assets reprice at lower market rates.
Interest Expense. Interest expense for the six months ended December 31,
2001 decreased approximately $1,503,000 compared to the six months ended
December 31, 2000. The decrease was primarily due to rate decreases in both
deposits and FHLB advances, volume decreases in FHLB advances, offset by volume
increases in deposits.
The cost of interest-bearing liabilities decreased 97 basis points for the
six months ended December 31, 2001 compared to the six months ended December 31,
2000. The decrease was primarily due to lower costs of deposits, lower costs and
volumes of FHLB advances, offset by higher volumes of deposits. If interest
rates continue to be low, this trend can be expected to continue as
interest-bearing liabilities reprice at lower market rates.
As a result of the above changes, net interest income for the six months
ended December 31, 2001 increased approximately $483,000 compared to the six
months ended December 31, 2000. The Company's net interest spread increased 38
basis points for the six months ended December 31, 2001 compared to the six
months ended December 31, 2000.
Provision for Loan and Investment Losses. The Bank made provisions for loan
losses of $130,000 for the six months ended December 31, 2001. This provision
reflects management's most recent review as of December 31, 2001. The allowance
for loan losses of $1.5 million represented 1.02 percent of total gross
outstanding loans at December 31, 2001, which compares to 0.99 percent at June
30, 2001. Nonperforming loans as of December 31, 2001, and June 30, 2001, as a
percent of total gross outstanding loans, were 2.21% and 0.81% respectively. The
increase was largely due to two loans to one borrower totaling $1.8 million, or
1.23% of total gross outstanding loans, which were over 90 days past due as of
December 31, 2001. These loans were transferred to nonaccrual as of December 31,
2001, which had the effect of reducing interest income for the six months ended
December 31, 2001, by approximately $67,000. Management is monitoring the loans
closely and while management feels the collection of both principal and interest
on the loans is highly likely, the timing of such payment is not certain.
In addition, the Bank made a net provision for investment loss of $29,000
for the six months ended December 31, 2001, increasing the Bank's allowance for
investment loss to $83,000 on two securities. As of December 31, 2001, the
deterioration affected the credit support and not the principal or interest of
the securities. However, if current trends continue, the credit support could be
depleted and the securities principal and interest will be affected.
Management evaluates the carrying value of the loan and investment
portfolios periodically and the allowance is adjusted if necessary. While
management uses the best information available to make evaluations, future
adjustments to the allowance may be necessary if conditions differ substantially
from the assumptions used in making the evaluations. In particular, management
recognizes that recent and planned changes in the amounts and types of lending
by the Bank will result in further growth of the Bank's loan loss allowance and
may justify further changes in the Bank's loan loss allowance policy in the
future. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize changes to the allowance based
upon their judgments and the information available to them at the time of their
examination.
Noninterest Income. Noninterest income is comprised primarily of service
charges on deposit accounts, and gains on the sales of loans. Noninterest income
for the six months ended December 31, 2001, was approximately $804,000 compared
to approximately $655,000 for the six months ended December 31, 2000. The
increase for the six month periods is primarily due to growth of the Bank's
checking accounts resulting in increased service charges, and increases in the
deposit account fee structure.
Noninterest Expense. The major components of noninterest expense are
salaries and employee benefits paid to or on behalf of the Company's employees
and directors, occupancy expense for ownership and maintenance of the Company's
buildings, furniture, and equipment, data processing expenses, advertising, and
professional fees paid to consultants, attorneys, and accountants. Total
noninterest expense for the six months ended December 31, 2001 was $3.51 million
compared to $3.44 million for the six months ended December 31, 2000.
14
Income Taxes. The effective income tax rate for the Company for the six
months ended December 31, 2001 and 2000 was (6.5%) and (371.1%), respectively.
Each rate includes both federal and Arkansas tax components. The variance in the
effective rate from the expected statutory rate is due primarily to tax exempt
interest.
The tax benefits discussed above are due primarily to increases in net
operating loss carryforwards for income tax reporting purposes. The
corresponding deferred tax asset totals approximately $1.5 million as of
December 31, 2001 and June 30, 2001, respectively. The recoverability of this
asset is entirely contingent upon the production of taxable income for income
tax reporting purposes. Management anticipates that the Company will produce
such income in the near future based on management's current forecasts of
earnings and management's tax and interest-rate risk planning strategy of
selling available for sale tax exempt securities and reinvesting the proceeds
into taxable income producing securities. The strategy does not anticipate
significant taxable gains on the sale of the tax exempt securities, but rather a
shift of nontaxable interest income to taxable interest income.
On November 2, 2001, HCB Bancshares dismissed Deloitte & Touche, LLP
("Deloitte") as its independent auditors. On November 9, 2001, HCB Bancshares
engaged BKD, LLP ("BKD") as its successor independent audit firm. The HCB
Bancshares dismissal of Deloitte and engagement of BKD was recommended by the
HCB Bancshares' Audit Committee and authorized and approved by HCB Bancshares'
Board of Directors on November 2, 2001.
Deloitte served as HCB Bancshares' independent accountants to audit HCB
Bancshares' three most recent fiscal year ends. Deloitte's reports on HCB
Bancshares' financial statements for each of those years (fiscal years ended
June 30, 2001, 2000 and 1999) did not contain an adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.
During HCB Bancshares' two most recent fiscal year ends (fiscal years ended
June 30, 2001 and 2000) and the subsequent interim period from July 1, 2001
through November 2, 2001, there were no disagreements with Deloitte on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Deloitte, would have caused Deloitte to make reference thereto
in their report on the financial statements for such years.
Summary Unaudited Historical Consolidated Financial Data and
Summary Unaudited Pro Forma Consolidated Financial Data
The following summary unaudited historical consolidated financial data has
been derived from the consolidated financial statements of HCB Bancshares. The
data should be read in conjunction with the consolidated financial statements
and notes thereto included in HCB Bancshares' Quarterly Report on Form 10-Q for
the quarter ended December 31, 2001. Copies of this report may be obtained as
described in Section 18 of this offer. The income statement data for the six
months ended December 31, 2000 and 2001 and the balance sheet data as of
December 31, 2001 have been derived from the unaudited condensed consolidated
financial statements of HCB Bancshares which, in the opinion of management,
include all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and results of operations for such
periods. Operating results for the six months ended December 31, 2001 are not
necessarily indicative of the results that may be expected for the entire year
ending June 30, 2002.
15
Balance Sheet Data:
Pro Forma as of
December 31, 2001 Assuming the
Repurchase of
-------------------------------------
Historical as of 377,866 Shares at 377,866 Shares at
December 31, $12.75 per $14.75 per
2001 Share Share
---------------- ---------------- -----------------
(In thousands, except share data)
ASSETS
Cash and cash equivalents .................................................. $ 17,079 $ 12,261 $ 11,505
Investment securities ...................................................... 116,547 116,547 116,547
Loans receivable, net ...................................................... 133,078 133,078 133,078
Other assets ............................................................... 17,568 17,568 17,568
---------- ---------- ----------
Total assets ............................................................ $ 284,272 $ 279,454 $ 278,698
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ................................................................... $ 165,248 $ 165,248 $ 165,248
Federal Home Loan Bank Advances ............................................ 86,381 86,381 86,381
Other liabilities .......................................................... 2,151 2,151 2,151
---------- ---------- ----------
Total liabilities ....................................................... 253,780 253,780 253,780
---------- ---------- ----------
Stockholders' equity:
Common stock, $.01 par value, 10,000,000 shares
authorized, 2,645,000 shares issued, 1,779,329 shares
outstanding at December 31, 2001 ........................................... 26 26 26
Additional paid-in capital ................................................. 25,894 25,894 25,894
Unearned ESOP shares ....................................................... (952) (952) (952)
Unearned MRP shares ........................................................ (135) (135) (135)
Accumulated other comprehensive income ..................................... 73 73 73
Retained earnings .......................................................... 14,562 14,562 14,562
Treasury stock, at cost 865,671 shares at December 31, 2001................. (8,976) (13,794) (14,550)
---------- ---------- ----------
Total stockholders' equity ................................................ 30,492 25,674 24,918
---------- ---------- ----------
Total liabilities and stockholders' equity .............................. $ 284,272 $ 279,454 $ 278,698
========== ========== ==========
Shares outstanding ......................................................... 1,889,329 1,511,463 1,511,463
16
Pro Forma for the
Historical Six Months Ended
for the Six Months Ended December 31, 2001
December 31, Assuming the Repurchase of
---------------------------- ------------------------------------
377,866 Shares at 377,866 Shares at
$12.75 per $14.75 per
2001 2000 Share Share
----------- ----------- ----------- -----------
(In thousands, except share data)
Income Statement Data:
Interest income ...................... $ 9,210 $ 10,230 $ 9,113 $ 9,092
Interest expense ..................... 5,835 7,338 5,835 5,835
----------- ----------- ----------- -----------
Net interest income ............... 3,375 2,892 3,278 3,257
Provision for loan and investment
losses ............................ 159 176 159 159
----------- ----------- ----------- -----------
Net interest income after provision
for loan and investment losses .. 3,216 2,716 3,119 3,098
Noninterest income ................... 804 655 804 804
Noninterest expense .................. 3,514 3,436 3,514 3,514
----------- ----------- ----------- -----------
Income before income taxes ........ 506 (65) 409 388
Income tax benefit ................ (33) (241) (66) (73)
----------- ----------- ----------- -----------
Net income ........................ $ 539 $ 176 $ 475 $ 461
=========== =========== =========== ===========
Selected Financial Ratios:
Earnings per share - basic ........... $ 0.31 $ 0.09 $ 0.35 $ 0.34
Earnings per share - diluted ......... $ 0.30 $ 0.09 $ 0.33 $ 0.32
Return on average equity ............. 3.36% 1.20% 3.48% 3.48%
Book value per share at end of
period ............................... $ 17.14 $ 16.50 $ 18.32 $ 17.78
Weighted average shares
outstanding - diluted ............. 1,802,986 1,890,871 1,425,120 1,425,120
HCB BANCSHARES, INC.
Notes to Unaudited Pro Forma Financial Information
(1) The pro forma financial information reflects the repurchase of 377,866
Shares at $12.75 and $14.75 per share, as appropriate.
(2) The balance sheet data gives effect to the purchase of Shares as of the
balance sheet date. The income statement data give effect to the purchase
of Shares as of the beginning of each period presented.
(3) No effect has been given to the cost incurred in connection with this
offer. These costs are not expected to be material and will be capitalized
as part of the cost of the Shares purchased.
(4) The book value per share calculation is based on the number of shares
disclosed in the balance sheet information (1,779,329 shares as of December
31, 2001, which treats the 110,000 shares held in the Stock Option Trust as
treasury shares).
17
11. SOURCE AND AMOUNT OF FUNDS
Assuming that we purchase the maximum of 377,866 Shares pursuant to this
offer at the highest price of $14.75 per share, the total amount required by us
to purchase these Shares will be $5.6 million, exclusive of fees and other
expenses. HCB Bancshares has sufficient cash available and will fund this
purchase solely through cash on hand. There are no alternative financing
arrangements or plans for the purchase of the Shares.
12. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES
As of January 25, 2002, HCB Bancshares had 1,889,329 Shares issued and
outstanding, including 203,631 Shares owned by the HCB Bancshares, Inc. Employee
Stock Ownership Plan Trust ("ESOP"), 110,000 Shares owned by the HCB Bancshares,
Inc. 1998 Stock Option Plan Trust (the "SOP Trust"), 21,329 Shares owned by the
HCB Bancshares, Inc. Management Recognition Plan Trust (the "MRP Trust"), 27,000
Shares owned by the HEARTLAND Community Bank Executive Officers' Grantor Trust
(the "EOG Trust") and 2,900 Shares owned by the HEARTLAND Community Bank
Non-Employee Directors' Grantor Trust (the "NDG Trust") and had reserved 250,170
Shares for issuance upon exercise of outstanding stock options. The 377,866
Shares that we are offering to purchase represent approximately 20% of the
outstanding Shares. As of January 30, 2002, our directors and executive officers
as a group, 10 persons, beneficially owned an aggregate of 350,617 Shares,
including 204,848 Shares covered by currently exercisable options, representing
approximately 17.67% of the outstanding Shares, assuming the exercise by such
persons of their currently exercisable options and that, to the extent
available, such shares are transferred upon the exercise of options to directors
and executive officers from the SOP Trust while the remaining shares are newly
issued. Directors, officers and employees of HCB Bancshares who own Shares may
participate in this offer on the same basis as our other stockholders. We have
been advised that Bruce D. Murry, a director, and William C. Lyon, an executive
officer, intend to tender 1,322 Shares and 4,761 Shares, respectively, pursuant
to this offer, at the purchase price determined by HCB Bancshares. Their tender
of Shares is not intended to be a reflection of their views of HCB Bancshares or
its long term prospects. We have been further advised that no other directors or
executive officers intend to tender Shares pursuant to this offer. As of January
30, 2002, the ESOP held 203,631 Shares, the SOP Trust held 110,000 Shares, the
MRP Trust held 21,329 Shares, the EOG Trust held 27,000 Shares, and the NDG
Trust held 2,900 Shares, representing approximately 10.78%, 5.82%, 1.13%, 1.43%
and 0.15%, respectively, of the outstanding Shares. We have been advised that
the respective trustees of the ESOP, the SOP Trust, the MRP Trust, the EOG Trust
and the NDG Trust do not intend to tender any Shares pursuant to this offer.
Assuming we purchase 377,866 Shares pursuant to this offer and Bruce D.
Murry and William C. Lyon tender Shares pursuant to this offer as anticipated,
then after the purchase of Shares pursuant to this offer, our executive officers
and directors as a group would own beneficially 344,534 Shares, representing
approximately 21.45% of the outstanding Shares, assuming the exercise by these
persons of their currently exercisable options and that, to the extent
available, such shares are transferred upon the exercise of options to directors
and executive officers from the SOP Trust while the remaining shares are newly
issued. In addition, assuming the respective trustees of the ESOP, the SOP
Trust, the MPR Trust, the EOG Trust and the NDG Trust do not tender any Shares
pursuant to the offer, the ESOP, the SOP Trust, the MRP Trust, the EOG Trust and
the NDG Trust would own approximately 13.47%, 7.28%, 1.41%, 1.79% and 0.19%,
respectively, of the outstanding Shares. Neither HCB Bancshares, nor any
subsidiary of HCB Bancshares nor, to the best of our knowledge, any of HCB
Bancshares' directors and executive officers, nor any affiliate of any of the
foregoing, had any transactions involving the Shares during the 60 days prior to
the date hereof.
Except for outstanding options to purchase Shares granted from time to time
over recent years to certain directors and employees, including executive
officers, of HCB Bancshares pursuant to our stock option plan, and except as
otherwise described below, neither HCB Bancshares nor, to the best of our
knowledge, any of our affiliates, directors or executive officers, or any of the
directors or executive officers of any of its affiliates, is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to this offer with respect to any securities
of HCB Bancshares including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations.
18
The following agreements, arrangements or understandings between HCB
Bancshares, its executive officers or directors and any other person exists with
respect to the Shares:
HCB BANCSHARES, INC. EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP"). The ESOP trustee
votes all allocated Shares in accordance with instructions of the participants.
Unallocated Shares and Shares for which no instructions have been received, if
any, are voted by the ESOP trustee in the same ratio as participants direct the
voting of allocated Shares or, in the absence of such direction, as directed by
HCB Bancshares' Board of Directors.
HCB BANCSHARES, INC. 1998 STOCK OPTION PLAN TRUST. The trustees of the SOP Trust
vote the Shares in the same ratio as the unallocated ESOP Shares are voted.
HCB BANCSHARES, INC. MANAGEMENT RECOGNITION PLAN TRUST. The trustees of the MRP
Trust vote the Shares in the same ratio as the unallocated ESOP Shares are
voted.
HEARTLAND COMMUNITY BANK EXECUTIVE OFFICERS' GRANTOR TRUST. The trustees of the
EOG Trust vote the Shares in the same ratio as the unallocated ESOP Shares are
voted.
HEARTLAND COMMUNITY BANK NON-EMPLOYEE DIRECTORS' GRANTOR TRUST. The trustees of
the NDG Trust vote the Shares in the same ratio as the unallocated ESOP Shares
are voted.
STANDSTILL AGREEMENT. On August 29, 2001, HCB Bancshares entered into a
Standstill Agreement (the "Standstill Agreement") with Stilwell Value Partners
IV, L.P., Stilwell Associates, L.P., Stilwell Value LLC and Joseph Stilwell
(collectively, the "Stilwell Group"), who own 150,850 shares of Common Stock,
representing 7.98% of HCB Bancshares' outstanding Common Stock as of January 30,
2002. The Standstill Agreement provides for a term of five (5) years. Under the
Standstill Agreement, HCB Bancshares agreed to expand its Board of Directors by
one member and to appoint to the Board a director to be proposed by Mr. Stilwell
and reasonably determined by HCB Bancshares to be qualified to serve as a
director. Pursuant to the Standstill Agreement, John G. Rich was appointed to
the class of directors of HCB Bancshares whose terms expire at the 2003 Annual
Meeting of Stockholders. Mr. Rich also serves on the Audit Committee of the
Board of Directors and on the Board of Directors of the Bank. Under the
Standstill Agreement, Mr. Rich is entitled to receive the identical compensation
and benefits paid to the two newest non-employee directors of HCB Bancshares and
agreed not to accept any incentive or compensation from the Stilwell Group that
would influence his recommendation that HCB Bancshares enter a transaction for
the sale of HCB Bancshares or any other significant initiative affecting HCB
Bancshares and its Stockholders. If Mr. Rich ceases to be a member of the Board
due to his resignation, removal for cause or death or because he is not
renominated for election, the Stilwell Group will be entitled to replace Mr.
Rich.
In addition, HCB Bancshares has agreed to adopt a target to achieve a
return on equity greater than the average for all publicly traded thrifts
(excluding mutual holding companies) as published by SNL Securities for the
fiscal year beginning July 1, 2002 and every year thereafter. So long as HCB
Bancshares is successful in meeting this target, the Stilwell Group has agreed
not to solicit proxies from stockholders to elect persons to the Board of
Directors or to approve shareholder proposals, interfere with the operational
decisions of HCB Bancshares, or make any public statement critical of HCB
Bancshares, its Board or management. In addition, so long as the return on
equity target is achieved, the Stilwell Group has agreed to fully support the
independence of HCB Bancshares and to vote its shares for the Board's nominees
for election to the Board of Directors and otherwise in accordance with the
recommendation of the Board of Directors. If HCB Bancshares fails to meet the
return on equity target, it has agreed to retain an investment banking firm to
help the Board evaluate alternatives to maximize shareholder value. The
Standstill Agreement terminates immediately if the Stilwell Group's beneficial
ownership falls below 5% of HCB Bancshares' outstanding Common Stock, Stilwell
Value Partners IV, L.P., Stilwell Associates, L.P. or Stilwell Value LLC fail to
exist as legal entities due to dissolution, merger or other transaction, the
death or incapacity of Joseph Stilwell or in the event of an acquisition of more
than 50% of HCB Bancshares' voting stock resulting from a merger or acquisition
transaction.
EMPLOYMENT AGREEMENTS. HCB Bancshares and the Bank maintain separate employment
agreements (the "Employment Agreements") with Cameron D. McKeel who as of
December 16, 1999 became President and Chief
19
Executive Officer of HCB Bancshares and Bank and Vida H. Lampkin, who served as
President and Chief Executive Officer of the Bank and HCB Bancshares until
December 16, 1999 and currently serves as Chairman of the Board (together, the
"Employees"). In such capacities, the Employees are responsible for overseeing
all operations of the Bank and HCB Bancshares, and for implementing the policies
adopted by the Board of Directors. Such Boards believe that the Employment
Agreements assure fair treatment of the Employees in relation to their careers
with HCB Bancshares and the Bank by assuring them of some financial security.
The Employment Agreements provide for terms of one year and an annual base
salary of $103,935 and $114,150 for Mr. McKeel and Mrs. Lampkin, respectively.
On each anniversary date of the Employment Agreements' effective date (the
"Effective Date"), the term of employment will be extended for an additional
one-year period beyond the then effective expiration date, upon a determination
by the Board of Directors that the performance of the Employee has met the
required performance standards and that the Employee's respective Employment
Agreement should be extended. The Employment Agreements provide each Employee
with a salary review by the Boards of Directors not less often than annually, as
well as with inclusion in any discretionary bonus plans, retirement and medical
plans, customary fringe benefits, vacation and sick leave. Each Employment
Agreement will terminate upon the Employee's death, may terminate upon the
Employee's disability and is terminable by the Bank for "just cause" (as defined
in the Employment Agreements). In the event of termination for "just cause," no
severance benefits are available. In the event of (i) the Employee's involuntary
termination of employment for any reason other than "just cause" or (ii) the
Employee's voluntary termination within 90 days of the occurrence of a "good
reason" (as defined in the Employment Agreements), the Employee will be entitled
to receive (a) his or her salary up to the Employment Agreements' expiration
date (the "Expiration Date") plus an additional 12-month salary, (b) a put
option requiring the Bank or HCB Bancshares to purchase Common Stock held by the
Employee to the extent that it is not readily tradable on an established
securities market, and (c), at the Employee's election, either cash in an amount
equal to the cost of benefits the Employee would have been eligible to
participate in through the Expiration Date or continued participation in the
benefits plans through the Expiration Date. If the Employment Agreements are
terminated due to the Employee's "disability" (as defined in the Employment
Agreements), the Employee will be entitled to a continuation of his or her
salary and benefits through the date of such termination, including any period
prior to the establishment of the Employee's disability. In the event of the
Employee's death during the term of the Employment Agreements, his or her estate
will be entitled to receive his or her salary through the last day of the
calendar month in which the Employee's death occurred. The Employee is able to
voluntarily terminate his or her Employment Agreements by providing 90 days'
written notice to the Boards of Directors of the Bank and HCB Bancshares, in
which case the Employee is entitled to receive only his or her compensation,
vested rights and benefits up to the date of termination.
In the event of (i) a "change in control," or (ii) the Employees'
termination for a reason other than just cause during the "protected period (as
defined in the Employment Agreements)," the Employees will be paid within 10
days following the later to occur of such events an amount equal to the
difference between (i) 2.99 times their "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any other parachute
payments, as defined under Section 280G(b)(2) of the Internal Revenue Code, that
the Employee receives on account of the change in control. "Change in control"
generally refers to (i) the acquisition, by any person or entity, of the
ownership or power to vote more than 25% of the Bank's or Company's voting
stock, (ii) the transfer by the Bank of substantially all of its assets to a
corporation which is not an "affiliate" (as defined in the Employment
Agreements), (iii) a sale by the Bank or HCB Bancshares of substantially all the
assets of an affiliate which accounts for 50% or more of the controlled group's
assets immediately prior to such sale, (iv) the replacement of a majority of the
existing board of directors by the Bank or HCB Bancshares in connection with an
initial public offering, tender offer, merger, exchange offer, business
combination, sale of assets or contested election, or (v) a merger of the Bank
or HCB Bancshares which results in less than seventy percent (70%) of the
outstanding voting securities of the resulting corporation being owned by former
stockholders of HCB Bancshares or the Bank. The Employment Agreements provide
that within 10 business days of a change in control, the Bank shall fund, or
cause to be funded, a trust in the amount of 2.99 times the Employee's base
amount, that will be used to pay the Employee amounts owed to the Employee. The
aggregate payments that would be made to the Employees, assuming their
termination of employment under the foregoing circumstances at June 30, 2001,
would have been approximately $318,630 and $348,637 for Mr. McKeel and Mrs.
Lampkin, respectively. These provisions may have an anti-takeover effect by
making it more expensive for a potential acquiror to obtain control of HCB
Bancshares. In the event that the Employee prevails
20
over HCB Bancshares and the Bank in a legal dispute as to the Employment
Agreements, the Employee will be reimbursed for his or her legal and other
expenses.
DIRECTORS' RETIREMENT PLAN. The Bank's Board of Directors adopted a
directors' retirement plan, effective June 13, 1996, for directors who are or
were members of the Board of Directors at any time on or after the plan's
effective date, provided that an employee who becomes a director after June 30,
1996 will not become a participant unless the Board of Directors adopts a
specific resolution to that effect. On the first day of each calendar month,
each participant who is a director on said date, with the exception of Directors
Lampkin and McKeel, has his or her account credited with an amount equal to the
product of $158.33 and the Safe Performance Factor for the preceding fiscal
year. With the exception of Directors Lampkin and McKeel, the aggregate
principal credits to a director's account may not exceed $38,000. The Safe
Performance Factor is between 0 and 1.2 and is determined annually by the Board
taking into consideration HCB Bancshares' performance as compared to targets set
for the fiscal year. In addition, each participant's account is credited with a
rate of return, on any vested amounts previously credited, equal to any
appreciation or depreciation determined according to the participant's
investment election. Amounts credited to the accounts of participants other than
Directors Lampkin and McKeel will be fully vested at all times. The amounts
credited to Director Lampkin and Director McKeel become vested at the rate of
1.18% for each full month of service as a director, starting with 15% vested
interest on January 1, 1996, and becoming fully vested after 72 or more months
of service after January 1, 1996.
Upon a non-employee director's termination of service on the Board due to
death, disability, or mandatory retirement due to age restrictions, the
director's account will be credited with an amount equal to the difference
between $38,000 and the amount previously credited to her or his account,
exclusive of investment returns. In the event of Director Lampkin's or Director
McKeel's disability or death prior to her or his attainment of 50% vesting, the
vested percentage on her or his account will be increased to 50%. If Director
Lampkin's or Director McKeel's service on the Board is terminated for any reason
other than "just cause" following a change in control, the vested percentage of
her or his account will become 100%. Distribution of account balances will be
made in cash, over a ten-year period, unless the participant elects to receive a
lump sum or annual installments over a period of less than ten years. If a
participant dies before receiving all benefits payable under the plan,
distribution will be made to her or his beneficiary or, in the absence of a
beneficiary, to her or his estate, in a lump sum, unless the participant has
elected to have the distribution made in installments over a period of up to ten
years. Benefits under the Directors' Plan are non-transferable. The Bank will
pay all benefits in cash from its general assets, and has established a trust in
order to hold assets with which to pay benefits. Trust assets will be subject to
the claims of the Bank's general creditors. In the event a participant prevails
over the Bank in a legal dispute as to the terms or interpretation of the
Directors' Plan, he or she will be reimbursed for his or her legal and other
expenses.
Except as disclosed in this offer, HCB Bancshares, its directors and
executive officers have no current plans or proposals which relate to or would
result in:
o the acquisition by any person of additional securities of HCB
Bancshares or the disposition of securities of HCB Bancshares;
o an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving HCB Bancshares or any of our
subsidiaries;
o a purchase, sale or transfer of a material amount of assets of HCB
Bancshares or any of our subsidiaries;
o any change in the present board of directors or management of HCB
Bancshares;
o any material change in the present dividend rate or policy, or
indebtedness or capitalization of HCB Bancshares;
o any other material change in HCB Bancshares' corporate structure or
business;
o any change in our certificate of incorporation or bylaws or any
actions which may impede the acquisition of control of HCB Bancshares
by any person;
21
o a class of equity security of HCB Bancshares being delisted from a
national securities exchange or ceasing to be authorized to be quoted
in an automated quotations system operated by the National Securities
Association;
o a class of equity securities of HCB Bancshares becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or
o the suspension of our obligation to file reports pursuant to Section
15(d) of the Exchange Act.
22
The following table sets forth as of January 25, 2002 certain information
regarding the Shares beneficially owned by HCB Bancshares and its directors and
executive officers.
Beneficial Owner Shares Beneficially Owned % of Total Shares Outstanding
---------------- ------------------------- -----------------------------
PLANS:
- -----
HCB Bancshares, Inc. Employee Stock 203,631(1) 10.78%
Ownership Plan
HCB Bancshares, Inc. 1998 110,000(2) 5.82
Stock Option Plan Trust
HCB Bancshares, Inc. Management 21,329(3) 1.13
Recognition Plan Trust
HEARTLAND Community Bank 27,000(4) 1.43
Executive Officers' Grantor Trust
HEARTLAND Community Bank Non-Employee 2,900(5) 0.15
Directors' Grantor Trust
DIRECTORS:
- ---------
Vida H. Lampkin 88,546(6) 4.69
Chairman of the Board
Cameron D. McKeel 66,584(7) 3.52
Director, President and
Chief Executive Officer
Bruce D. Murry 23,116(8) 1.22
Director
Clifford Steelman 42,194(9) 2.23
Director
F. Michael Akin 500 0.03
Director
Carl E. Parker, Jr. 45,194(10) 2.39
Director
John G. Rich 0(11) 0.00
Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
- -----------------------------------------
William C. Lyon 54,672(12) 2.89
Senior Vice President and Chief
Lending Officer
Scott A. Swain 7,660(13) 0.41
Senior Vice President and Chief
Financial Officer
Paula J. Bergstrom 22,151(14) 1.17
Senior Vice President
Administration and Secretary
23
<FN>
(1) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is repaid.
The ESOP trustee, Regions Bank, Little Rock, Arkansas, votes all allocated
shares in accordance with instructions of the participants. Unallocated
shares and shares for which no instructions have been received, if any, are
voted by the ESOP trustee in the same ratio as participants direct the
voting of allocated shares or, in the absence of such direction, as
directed by HCB Bancshares' Board of Directors. As of January 25, 2002,
76,671 shares had been allocated and 126,960 shares were unallocated.
(2) Such shares are voted by the trustees, Directors Akin, Murry, Parker and
Steelman, in the same ratio as the unallocated ESOP shares are voted.
(3) Such shares are voted by the trustees, Directors Akin, Murry, Parker and
Steelman, in the same ratio as the unallocated ESOP shares are voted.
(4) Such shares are voted by the trustees, Directors Akin, Murry, Parker and
Steelman, in the same ratio as the unallocated ESOP shares are voted.
(5) Such shares are voted by the trustees, Directors Akin, Murry, Parker and
Steelman, in the same ratio as the unallocated ESOP shares are voted.
(6) Includes 50,784 shares that Mrs. Lampkin has the right to acquire pursuant
to options exercisable within 60 days of January 25, 2002.
(7) Includes 47,612 shares that Mr. McKeel has the right to acquire pursuant to
options exercisable within 60 days of January 25, 2002.
(8) Includes 15,872 shares that Mr. Murry has the right to acquire pursuant to
options exercisable within 60 days of January 25, 2002.
(9) Includes 15,872 shares that Mr. Steelman has the right to acquire pursuant
to options exercisable within 60 days of January 25, 2002.
(10) Includes 15,872 shares that Mr. Parker has the right to acquire pursuant to
options exercisable within 60 days of January 25, 2002.
(11) Mr. Rich was appointed to the Board of Directors pursuant to the Standstill
Agreement as discussed above. Based upon a Schedule 13 D/A, filed October
23, 2001, filed jointly by Joseph Stilwell, Stilwell Value Partners IV,
L.P., Stilwell Associates, L.P. and Stilwell Value LLC (collectively, the
"Group"), the Group is the beneficial owner of 150,850 Shares. The Schedule
13 D/A reported that each member of the Group shared voting and investment
power with respect to all 150,850 Shares reported as beneficially owned.
(12) Includes 43,296 shares that Mr. Lyon has the right to acquire pursuant to
options exercisable within 60 days of January 25, 2002.
(13) Includes 6,660 shares that Mr. Swain has the right to acquire pursuant to
options exercisable within 60 days of January 25, 2002.
(14) Includes 8,880 shares that Ms. Bergstrom has the right to acquire pursuant
to options exercisable within 60 days of January 25, 2002.
</FN>
24
13. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES;
REGISTRATION UNDER THE EXCHANGE ACT
HCB Bancshares' purchase of Shares pursuant to this offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of stockholders. Nonetheless, we anticipate that there will be a
sufficient number of Shares outstanding and publicly traded following
consummation of this offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the Nasdaq Small-Cap Market, we believe that
following our purchase of Shares pursuant to this offer, our remaining Shares
will continue to qualify to be quoted on the Nasdaq Small-Cap Market.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. We believe
that, following the purchase of Shares pursuant to this offer, the Shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that we furnish certain information to our stockholders and the
SEC and comply with SEC's proxy rules in connection with meetings of our
stockholders.
14. LEGAL MATTERS; REGULATORY APPROVALS
We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our acquisition of
Shares as contemplated herein or of any approval or other action by, or any
filing with, any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by us as contemplated herein. Should any
approval or other action be required, we presently contemplate that the approval
or other action will be sought. We are unable to predict whether we may
determine that we are required to delay the acceptance for payment of or payment
for Shares tendered pursuant to this offer pending the outcome of any such
matter. There can be no assurance that any approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
the failure to obtain any approval or other action might not result in adverse
consequences to our business. Our obligations under this offer to accept for
payment and pay for Shares is subject to certain conditions. See Section 7.
15. FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following is a discussion of the material United States
federal income tax consequences to stockholders with respect to a sale of Shares
pursuant to this offer. The discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended, Treasury regulations, Internal
Revenue Service rulings and judicial decisions, all in effect as of the date
hereof and all of which are subject to change, possibly with retroactive effect,
by subsequent legislative, judicial or administrative action. The discussion
does not address all aspects of United States federal income taxation that may
be relevant to a particular stockholder in light of the stockholder's particular
circumstances or to certain types of holders subject to special treatment under
the United States federal income tax laws, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities or currencies, employee benefit plans or stockholders holding the
Shares as part of a conversion transaction, as part of a hedge or hedging
transaction, or as a position in a straddle for tax purposes. In addition, the
discussion below does not consider the effect of any foreign, state, local or
other tax laws that may be applicable to particular stockholders. The discussion
assumes that the Shares are held as "capital assets" within the meaning of
Section 1221 of the Internal Revenue Code. We have neither requested nor
obtained a written opinion of counsel or a ruling from the IRS with respect to
the tax matters discussed below.
EACH STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
PARTICULAR UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THAT STOCKHOLDER
TENDERING SHARES PURSUANT TO THE OFFER AND THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS AND RECENT CHANGES IN APPLICABLE TAX LAWS.
25
CHARACTERIZATION OF THE SURRENDER OF SHARES PURSUANT TO THE OFFER. The
surrender of Shares by a stockholder to HCB Bancshares pursuant to this offer
will be a taxable transaction for United States federal income tax purposes and
may also be a taxable transaction under applicable state, local and foreign tax
laws. The United States federal income tax consequences to a stockholder may
vary depending upon the stockholder's particular facts and circumstances. Under
Section 302 of the Internal Revenue Code, the surrender of Shares by a
stockholder to HCB Bancshares pursuant to this offer will be treated as a "sale
or exchange" of Shares for United States federal income tax purposes, rather
than as a distribution by HCB Bancshares with respect to the Shares held by the
tendering stockholder, if the receipt of cash upon surrender (i) is
"substantially disproportionate" with respect to the stockholder, (ii) results
in a "complete redemption" of the stockholder's interest in HCB Bancshares, or
(iii) is "not essentially equivalent to a dividend" with respect to the
stockholder, each as described below.
If any of the above three tests is satisfied, and the surrender of the
Shares is therefore treated as a "sale or exchange" of Shares for United States
federal income tax purposes, the tendering stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder and the stockholder's tax basis in the Shares surrendered pursuant
to this offer. Any gain or loss will be capital gain or loss, and will be
long-term capital gain or loss if the Shares have been held for more than one
year.
If none of the above three tests is satisfied, the tendering stockholder
will be treated as having received a distribution by HCB Bancshares with respect
to the stockholder's Shares in an amount equal to the cash received by the
stockholder pursuant to this offer. The distribution will be treated as a
dividend taxable as ordinary income to the extent of HCB Bancshares' current or
accumulated earnings and profits for tax purposes. The amount of the
distribution in excess of HCB Bancshares' current or accumulated earnings and
profits will be treated as a return of the stockholder's tax basis in the
Shares, and then as gain from the sale or exchange of the Shares. If a
stockholder is treated as having received a distribution by HCB Bancshares with
respect to his or her Shares, the stockholder's tax basis in his or her
remaining Shares will generally be adjusted to take into account the
stockholders' basis in the Shares tendered.
CONSTRUCTIVE OWNERSHIP. In determining whether any of the three tests under
Section 302 of the Internal Revenue Code is satisfied, stockholders must take
into account not only the Shares that are actually owned by the stockholder, but
also Shares that are constructively owned by the stockholder within the meaning
of Section 318 of the Internal Revenue Code. Under Section 318 of the Code, a
stockholder may constructively own Shares actually owned, and in some cases
constructively owned, by certain related individuals or entities and Shares that
the stockholder has the right to acquire by exercise of an option or by
conversion. Contemporaneous dispositions or acquisitions of Shares by a
stockholder and related individuals or entities may be deemed to be part of a
single integrated transaction and may be taken into account in determining
whether any of the three tests under Section 302 of the Internal Revenue Code
has been satisfied.
PRO RATION. Each stockholder should be aware that because pro ration may
occur in this offer, even if all the Shares actually and constructively owned by
a stockholder are tendered pursuant to this offer, fewer than all of these
Shares may be purchased by HCB Bancshares. Thus, pro ration may affect whether
the surrender by a stockholder pursuant to this offer will meet any of the three
tests under Section 302 of the Code. See Section 6 for information regarding
each stockholder's option to make a conditional tender of a minimum number of
Shares. A stockholder should consult his or her own tax advisor regarding
whether to make a conditional tender of a minimum number of Shares, and the
appropriate calculation thereof.
SECTION 302 TESTS. The receipt of cash by a stockholder will be
"substantially disproportionate" if the percentage of the outstanding Shares in
HCB Bancshares actually and constructively owned by the stockholder immediately
following the surrender of Shares pursuant to this offer is less than 80% of the
percentage of the outstanding Shares actually and constructively owned by the
stockholder immediately before the sale of Shares pursuant to this offer.
Stockholders should consult their tax advisors with respect to the application
of the "substantially disproportionate" test to their particular situation. The
receipt of cash by a stockholder will be a "complete redemption" if either (i)
the stockholder owns no Shares in HCB Bancshares either actually or
constructively immediately after the Shares are surrendered pursuant to this
offer, or (ii) the stockholder actually owns no Shares in HCB Bancshares
immediately after the surrender of Shares pursuant to this offer and, with
respect to Shares constructively owned by
26
the stockholder immediately after this offer, the stockholder is eligible to
waive, and effectively waives, constructive ownership of all such Shares under
procedures described in Section 302(c) of the Internal Revenue Code. A director,
officer or employee of HCB Bancshares is not eligible to waive constructive
ownership under the procedures described in Section 302(c) of the Internal
Revenue Code.
Even if the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, a
stockholder may nevertheless satisfy the "not essentially equivalent to a
dividend" test if the stockholder's surrender of Shares pursuant to this offer
results in a "meaningful reduction" in the stockholder's interest in HCB
Bancshares. Whether the receipt of cash by a stockholder will be "not
essentially equivalent to a dividend" will depend upon the individual
stockholder's facts and circumstances. The IRS has indicated in published
rulings that even a small reduction in the proportionate interest of a small
minority stockholder in a publicly held corporation who exercises no control
over corporate affairs may constitute such a "meaningful reduction."
Stockholders expecting to rely upon the "not essentially equivalent to a
dividend" test should consult their own tax advisors as to its application in
their particular situation.
CORPORATE STOCKHOLDER DIVIDEND TREATMENT. If a sale of Shares by a
corporate stockholder is treated as a dividend, the corporate stockholder may be
entitled to claim a deduction equal to 70% of the dividend under Section 243 of
the Internal Revenue Code, subject to applicable limitations. Corporate
stockholders should, however, consider the effect of Section 246(c) of the
Internal Revenue Code, which disallows the 70% dividends- received deduction
with respect to stock that is held for 45 days or less. For this purpose, the
length of time a taxpayer is deemed to have held stock may be reduced by periods
during which the taxpayer's risk of loss with respect to the stock is diminished
by reason of the existence of certain options or other transactions. Moreover,
under Section 246A of the Internal Revenue Code, if a corporate stockholder has
incurred indebtedness directly attributable to an investment in Shares, the 70%
dividends-received deduction may be reduced.
In addition, amounts received by a corporate stockholder pursuant to this
offer that are treated as a dividend may constitute an "extraordinary dividend""
under Section 1059 of the Internal Revenue Code. The "extraordinary dividend"
rules of the Internal Revenue Code are highly complicated. Accordingly, any
corporate shareholder that might have a dividend as a result of the sale of
Shares pursuant to this offer should review the "extraordinary dividend" rules
to determine the applicability and impact of such rules to it.
ADDITIONAL TAX CONSIDERATIONS. The distinction between long-term capital
gains and ordinary income is relevant because, in general, individuals currently
are subject to taxation at a reduced rate on their "net capital gain," which is
the excess of net long-term capital gains over net short-term capital losses,
for the year. Tax rates on long-term capital gain for individual shareholders
vary depending on the shareholders' income and holding period for the Shares. In
general, reduced tax rates apply to gains recognized by an individual from the
sale of capital assets held for more than one year, currently 20 percent or
less.
Stockholders are urged to consult their own tax advisors regarding any
possible impact on their obligation to make estimated tax payments as a result
of the recognition of any capital gain, or the receipt of any ordinary income,
caused by the surrender of any Shares to HCB Bancshares pursuant to this offer.
FOREIGN STOCKHOLDERS. HCB Bancshares will withhold United States federal
income tax at a rate of 30% from gross proceeds paid pursuant to this offer to a
foreign stockholder or his agent, unless we determine that a reduced rate of
withholding is applicable pursuant to a tax treaty or that an exemption from
withholding is applicable because the gross proceeds are effectively connected
with the conduct of a trade or business by the foreign stockholder within the
United States. For this purpose, a foreign stockholder is any stockholder that
is not (i) a citizen or resident of the United States, (ii) a domestic
corporation or domestic partnership, (iii) an estate the income of which from
sources without the United States is effectively connected with the conduct of a
trade or business within the United States, or (iv) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust, and one or more United States persons have the
authority to control all substantial decisions of the trust. Without definite
knowledge to the contrary, we will determine whether a stockholder is a foreign
stockholder by reference to the stockholder's address. A foreign stockholder may
be eligible to file for a refund of the tax or a portion of the tax if the
stockholder (i) meets the "complete redemption," "substantially
disproportionate" or "not essentially equivalent to a dividend" tests described
above, (ii) is entitled to a reduced rate
27
of withholding pursuant to a treaty and HCB Bancshares withheld at a higher
rate, or (iii) is otherwise able to establish that no tax or a reduced amount of
tax was due. In order to claim an exemption from withholding on the ground that
gross proceeds paid pursuant to this offer are effectively connected with the
conduct of a trade or business by a foreign stockholder within the United States
or that the foreign stockholder is entitled to the benefits of a tax treaty, the
foreign stockholder must deliver to the depositary, or other person who is
otherwise required to withhold United States tax, a properly executed statement
claiming such exemption or benefits. These statements may be obtained from the
depositary. Foreign stockholders are urged to consult their own tax advisors
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and the
refund procedures.
BACKUP WITHHOLDING. See Section 3 with respect to the application of the
United States federal income tax backup withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY
AND MAY NOT APPLY TO SHARES ACQUIRED IN CONNECTION WITH THE EXERCISE OF STOCK
OPTIONS OR PURSUANT TO OTHER COMPENSATION ARRANGEMENTS WITH HCB BANCSHARES. THE
TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG
OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO
INFORMATION IS PROVIDED HEREIN TO THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES TO THEM OF TENDERING SHARES PURSUANT TO THE OFFER AND
THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION RULES DESCRIBED ABOVE.
16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
HCB Bancshares expressly reserves the right, in our sole discretion and at
any time or from time to time, to extend the period of time during which this
offer is open by giving oral or written notice of the extension to the
depositary and making a public announcement thereof. There can be no assurance,
however, that the we will exercise our right to extend this offer. During any
extension, all Shares previously tendered will remain subject to this offer,
except to the extent that Shares may be withdrawn as set forth in Section 4. We
also expressly reserve the right, in our sole discretion, (i) to terminate this
offer and not accept for payment any Shares not previously accepted for payment
or, subject to Rule 13e-4(f)(5) under the Exchange Act which requires us either
to pay the consideration offered or to return the Shares tendered promptly after
the termination or withdrawal of this offer, to postpone payment for Shares upon
the occurrence of any of the conditions specified in Section 7 hereof, by giving
oral or written notice of such termination or postponement to the depositary and
making a public announcement thereof and (ii) at any time, or from time to time,
to amend this offer in any respect. Amendments to this offer may be effected by
public announcement. Without limiting the manner in which we may choose to make
public announcement of any extension, termination or amendment, we shall have no
obligation, except as otherwise required by applicable law, to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the Dow Jones News Service, except in the case of an
announcement of an extension of this offer, in which case we shall have no
obligation to publish, advertise or otherwise communicate the announcement other
than by issuing a notice of the extension by press release or other public
announcement, which notice shall be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date. Material changes to information previously provided to holders of the
Shares in this offer or in documents furnished subsequent thereto will be
disseminated to holders of Shares in compliance with Rule 13e-4(e)(3)
promulgated by the SEC under the Exchange Act. If we materially change the terms
of this offer or the information concerning this offer, or if we waive a
material condition of this offer, we will extend this offer to the extent
required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. Those
rules require that the minimum period during which an offer must remain open
following material changes in the terms of this offer or information concerning
this offer, other than a change in price, change in dealer's soliciting fee or
change in percentage of securities sought, will depend on the facts and
circumstances, including the relative materiality of the terms or information.
In a published release, the SEC has stated that in its view, an offer should
remain open for a minimum of five business days from the date that notice of a
material change is first published, sent or given. The offer will continue or be
extended for at least ten business days from the time we publish, send or give
to holders of Shares a notice that we will (a) increase or decrease the price we
will pay for Shares or the amount of the information agent/dealer manager's
soliciting fee or (b) increase, except for an increase not exceeding 2% of the
outstanding Shares, or decrease the number of Shares we seek.
28
17. SOLICITATION FEES AND EXPENSES
Keefe, Bruyette & Woods, will act as the Dealer Manager and Information
Agent for HCB Bancshares in connection with this offer. Keefe, Bruyette & Woods
as Information Agent, may contact stockholders by mail, telephone, facsimile,
telex, telegraph, other electronic means and personal interviews, and may
request brokers, dealers and other nominee stockholders to forward materials
relating to this offer to beneficial owners. HCB Bancshares has agreed to pay
Keefe, Bruyette & Woods an advisory fee of $25,000 and, upon acceptance for and
payment of Shares pursuant to this offer, a total of $.10 per share purchased by
HCB Bancshares pursuant to this offer. Keefe, Bruyette & Woods will also be
reimbursed for certain out-of-pocket expenses. Keefe will also be indemnified
against certain liabilities, including liabilities under the federal securities
laws, in connection with this offer.
Keefe, Bruyette & Woods has rendered, is currently rendering and may
continue to render various investment banking and other advisory services to HCB
Bancshares. It has received, and may continue to receive, customary compensation
from HCB Bancshares for these services.
We have retained Registrar and Transfer Company as Depositary in connection
with this offer. The Depositary will receive reasonable and customary
compensation for its services and will also be reimbursed for certain
out-of-pocket expenses. HCB Bancshares has agreed to indemnify the Depositary
against certain liabilities, including certain liabilities under the federal
securities laws, in connection with this offer. Neither the Information Agent
nor the Depositary has been retained to make solicitations or recommendations in
connection with this offer.
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Shares pursuant to this offer, other than the
fee of the Dealer Manager. HCB Bancshares will, upon request, reimburse brokers,
dealers, commercial banks and trust companies for reasonable and customary
handling and mailing expenses incurred by them in forwarding materials relating
to this offer to their customers.
18. WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
HCB Bancshares is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the SEC relating to our business, financial condition and other
matters. Certain information as of particular dates concerning our directors and
officers, their remuneration, options granted to them, the principal holders of
HCB Bancshares' securities and any material interest of these persons in
transactions with HCB Bancshares is filed with the SEC. We have also filed an
Issuer Tender offer Statement on Schedule TO with the SEC, which includes
certain additional information relating to this offer. These reports, as well as
such other material, may be inspected and copies may be obtained at the SEC's
public reference facilities at 450 Fifth Street, N.W., Washington, D.C., and
should also be available for inspection and copying at the regional offices of
the SEC located at 233 Broadway, New York, New York, 10279 and Suite 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
this material may be obtained by mail, upon payment of the SEC's customary fees,
from the SEC's Public Reference Section at 450 Fifth Street, N.W., Washington,
D.C. 20549. HCB Bancshares' Schedule TO may not be available at the SEC's
regional offices. The Securities and Exchange Commission also maintains an
internet address ("web site") that contains reports, proxy and information
statements and other information regarding registrants, including HCB
Bancshares, that file electronically with the Securities and Exchange
Commission. The address for this web site is "http://www.sec.gov."
The offer is being made to all holders of Shares. HCB Bancshares is not
aware of any state where the making of this offer is prohibited by
administrative or judicial action pursuant to a valid state statute. If we
become aware of any valid state statute prohibiting the making of this offer, we
will make a good faith effort to comply with the statute. If, after such good
faith effort, we cannot comply with the statute, this offer will not be made to,
nor will tenders be accepted from or on behalf of, holders of Shares in that
state. In those jurisdictions whose securities, blue sky or other laws require
this offer to be made by a licensed broker or dealer, this offer shall be deemed
to be made on behalf of HCB Bancshares by the Dealer Manager/Information Agent
or one or more registered brokers or dealers licensed under the laws of these
jurisdictions.
HCB BANCSHARES, INC.
January 31, 2002
29
The dealer manager and information agent for this offer is:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Telephone: (877) 298-6520 (toll free)
Any questions concerning tender procedures or requests for additional
copies of this offer, the letter of transmittal, notice of guaranteed delivery
or other tender offer materials may be directed to the Dealer
Manager/Information Agent.
The depositary for this Offer is:
REGISTRAR AND TRANSFER COMPANY
By Mail or By For Assistance: By Hand:
Overnight Courier: (800) 368-5948 c/o The Depository Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, NJ 07016-3572 55 Water Street, 1st Floor
New York, New York 10041-0099
By Facsimile:
(908) 497-2311
(For Eligible Institutions Only)
Any questions concerning tender procedures may be directed to the
Depositary at (800) 368-5948.
JANUARY 31, 2002
30
HCB BANCSHARES, INC.
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK OF
HCB BANCSHARES, INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 31,2002
DEPOSITARY: REGISTRAR AND TRANSFER COMPANY
By Mail or Overnight Courier: By Hand:
Registrar and Transfer Company c/o The Depository Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016-3572 55 Water Street, 1st Floor
New York, NY 10041-0099
For Assistance in Completing
This Letter of Transmittal: By Facsimile:
(800) 368-5948 (908) 497-2311
(For Eligible Institutions
Only)
- ----------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (See INSTRUCTIONS 3 AND 4.)
- ----------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Shares Tendered
(Please Fill in Exactly as Name(s) Appear(s) on Certificate(s)) (Attach Additional List, if Necessary)
- ----------------------------------------------------------------------------------------------------------------------------
Certificate Total Number of
Number(s)* Shares Represented Number of Shares
By Certificate(s)* Tendered**
- ----------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Total Shares:
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
</FN>
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MARCH 1, 2002, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
Delivery of documents to HCB Bancshares, Inc. or to the Book-Entry Transfer
Facility does not constitute a valid delivery. PLEASE DO NOT MAIL OR DELIVER ANY
SHARES TO HCB BANCSHARES, INC. DELIVERIES TO HCB BANCSHARES, INC. WILL NOT BE
FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
(BOX BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution __________________________________________________
Account No. ________________________ Transaction Code No. _____________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):_________________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________________
Name of Institution Which Guaranteed Delivery:__________________________________
Name of Tendering Institution___________________________________________________
Account No. ________________________ Transaction Code No. _____________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOST CERTIFICATES
____ I have lost my certificate(s) for ______ shares of Common Stock of HCB
Bancshares, Inc. and require assistance in obtaining a replacement
certificate. (See Instruction 13.)
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
To HCB Bancshares:
The undersigned hereby tenders to HCB Bancshares, Inc., an Oklahoma
corporation ("HCB Bancshares"), the above-described Shares of its Common Stock,
par value $0.01 per Share, at a price per Share hereinafter set forth, pursuant
to HCB Bancshares' Offer to Purchase up to 377,866 Shares, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated January 31,
2002, receipt of which is hereby acknowledged, and in this Letter of
Transmittal, which together constitute the "Offer."
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment, the undersigned hereby
sells, assigns and transfers to, or upon the order of, HCB Bancshares all right,
title and interest in and to all the Shares that are being tendered hereby or
orders the registration of the Shares tendered by book-entry transfer that are
purchased pursuant to the Offer to or upon the order of HCB Bancshares and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to the Shares, with full
power of substitution, such power of attorney being deemed to be an irrevocable
power coupled with an interest, to (a) deliver certificates for the Shares, or
transfer ownership of the Shares on the account books maintained by the
Book-Entry Transfer Facility, together, in any case, with all accompanying
evidences of transfer and authenticity, to or upon the order of HCB Bancshares
upon receipt by the Depositary, as the undersigned's agent, of the purchase
price with respect to the Shares, (b) present certificates for the Shares for
cancellation and transfer on the books of HCB Bancshares and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of the
Shares, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by HCB Bancshares, HCB Bancshares will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and the same will not be subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or HCB Bancshares to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby.
The undersigned hereby represents and warrants that the undersigned has
read and agrees to all of the terms of the Offer. All authority herein conferred
or agreed to be conferred shall not be affected by, and shall survive the death
or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 or 3 of the Offer to Purchase and in the
Instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, including the undersigned's representation and
warranty that (i) the undersigned has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of the Shares complies
with Rule 14e-4. HCB Bancshares' acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
undersigned and HCB Bancshares upon the terms and subject to the conditions of
the Offer.
The undersigned understands that HCB Bancshares will determine a single per
Share price, not greater than $14.75 nor less than $12.75 per Share, net to the
seller in cash, without interest thereon, that it will pay for Shares validly
tendered and not withdrawn pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering stockholders.
The undersigned understands that HCB Bancshares will select the lowest
purchase price that will enable it to purchase 377,866 Shares, or a lesser
number of Shares as are validly tendered and not withdrawn at prices not greater
than $14.75 nor less than $12.75 per Share, pursuant to the Offer. The
undersigned understands that all Shares properly tendered and not withdrawn at
prices at or below the purchase price will be purchased at the purchase price,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions of the Offer, including its proration and conditional tender
provisions, and that HCB Bancshares will return all other Shares, including
Shares tendered and not withdrawn at prices greater than the purchase price,
Shares not purchased because of proration and Shares that were conditionally
tendered and not accepted. The undersigned understands that tenders of Shares
pursuant to any one of the procedures described in Section 2 or 3 of the Offer
to Purchase and in the Instructions hereto will constitute an agreement between
the undersigned and HCB Bancshares upon the terms and subject to the conditions
of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, HCB Bancshares may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares purchased, and/or return
any Shares not tendered or not purchased, in the name(s) of the undersigned,
and, in the case of Shares tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
purchase price of any Shares purchased and/or any certificates for Shares not
tendered or not purchased, and accompanying documents, as appropriate, to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and/or return any Shares not tendered or not purchased in
the name(s) of, and mail said check and/or any certificates to, the person(s) so
indicated. The undersigned recognizes that HCB Bancshares has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from the
name of the registered holder(s) thereof if HCB Bancshares does not accept for
payment any of the Shares so tendered.
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PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
CHECK ONE BOX. IF MORE THAN ONE BOX IS CHECKED BELOW, OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES.
$12.75 [ ] $13.00 [ ] $13.25 [ ] $13.50 [ ] $13.75 [ ]
$14.00 [ ] $14.25 [ ] $14.50 [ ] $14.75 [ ]
If you do not wish to specify a purchase price, check the following box, in
which case you will be deemed to have tendered at the purchase price determined
by HCB Bancshares in accordance with the terms of the Offer. Persons checking
this box must not indicate the price per Share above.[ ]
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- --------------------------------------------------------------------------------
ODD LOTS (See Instruction 9)
This Section is to be completed ONLY if Shares are being tendered by or on
behalf of a person owning beneficially, as of the close of business on January
25, 2002, and who continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares. The undersigned either (check one box):
[ ] was the beneficial owner as of the close of business on January 25, 2002,
and continues to be the beneficial owner as of the Expiration Date, of an
aggregate of fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and (ii) believes, based upon representations
made to it by each beneficial owner, that the beneficial owner owned
beneficially as of the close of business on January 25, 2002, and continues
to own beneficially as of the Expiration Date, an aggregate of fewer than
100 Shares, and is tendering all of those Shares.
- --------------------------------------------------------------------------------
- -------------------------------------------------------- -------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 6, 7 and 8) (See Instructions 6, 7 and 8)
To be completed ONLY if the check for the purchase price To be completed ONLY if the check for the purchase
of Shares purchased and/or certificates for Shares not price of Shares purchased and/or certificates for
not tendered or not purchased are to be issued in the for Shares not tendered or not purchased are to
name of someone other than the the undersigned. be mailed to someone other than the undersigned
at an address other than that shown below the
undersigned's signature(s).
Issue [ ] check and/or [ ] certificate(s) to: Mail [ ] check and/or [ ] certificate(s) to:
Name___________________________________________________ Name_____________________________________________
(PLEASE PRINT) (PLEASE PRINT)
Address________________________________________________ Address__________________________________________
_______________________________________________________ _________________________________________________
_______________________________________________________ _________________________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
_______________________________________________________ _________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
IF SPECIAL PAYMENT INSTRUCTIONS ARE BEING GIVEN, PLEASE
IF SPECIAL PAYMENT INSTRUCTIONS ARE BEING GIVEN, REMEMBER TO HAVE YOUR SIGNATURE GUARANTEED.
PLEASE REMEMBER TO HAVE YOUR SIGNATURE GUARANTEED.
- -------------------------------------------------------- -------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
You may condition the tender of your Shares upon the purchase by HCB
Bancshares of a specified minimum number of the Shares you tendered. See Section
6 in the Offer to Purchase. Unless at least the minimum number of Shares
tendered by you is purchased by HCB Bancshares, none of the Shares tendered
hereby will be purchased. It is your responsibility to calculate the minimum
number of Shares, and you are urged to consult your tax advisor. Unless this box
has been completed and a minimum specified, the tender will be deemed
unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
____________ Shares
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- --------------------------------------------------------------------------------
IMPORTANT - SIGN HERE
(Please Complete Substitute Form W-9 Included in this Letter of Transmittal)
___________________________________________________________________________
(SIGNATURE(S) OF OWNER(S))
___________________________________________________________________________
___________________________________________________________________________
(PLEASE PRINT NAME(S))
Dated _______________________, 2002
Capacity (full title)________________________________________________________
Address______________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.__________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 6.)
GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 6)
Authorized Signature(s)_____________________ Address __________________________
Name and Title______________________________ __________________________________
(PLEASE PRINT)
Name of Firm________________________________ __________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number______________ Dated ____________, 2002
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INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures
on this Letter of Transmittal must be guaranteed by a firm that is an Eligible
Institution because it is a member of a registered national securities exchange
or the National Association of Securities Dealers, Inc., or by
a commercial bank, a trust company, a savings bank, a savings and loan
association or a credit union which has membership in an approved Signature
Guarantee Medallion Program. SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT
BE GUARANTEED (A) IF THIS LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED
HOLDER(S) OF THE SHARES (which term, for purposes of this document, shall
include any participant in the Book-Entry Transfer Facility whose name appears
in a security position listing as the owner of Shares) TENDERED HEREWITH AND
SUCH HOLDER(S) HAVE NOT COMPLETED THE BOX ENTITLED "SPECIAL PAYMENT
INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER
OF TRANSMITTAL or (b) if the Shares are tendered for the account of an Eligible
Institution. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY PROCEDURES.
This Letter of Transmittal or, in the case of a book-entry transfer, an agent's
message, as defined below, is to be used either if certificates are to be
forwarded herewith or if delivery of Shares is to be made by book-entry transfer
pursuant to the procedures set forth in Section 3 of the Offer to Purchase. If
you want to tender your Shares into this Offer but (1) your certificates are not
immediately available, (2) you cannot deliver all documents required by this
Letter of Transmittal to the Depositary before this Offer expires, or (3) you
cannot comply with the procedure for book-entry transfer on a timely basis, you
can still tender your Shares if you comply with the guaranteed delivery
procedure set forth below. See Section 3 of the Offer to Purchase. CERTIFICATES
FOR ALL PHYSICALLY DELIVERED SHARES, OR A CONFIRMATION OF A BOOK-ENTRY TRANSFER
INTO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY OF ALL SHARES
DELIVERED ELECTRONICALLY, AS WELL AS A PROPERLY COMPLETED AND DULY EXECUTED
LETTER OF TRANSMITTAL, OR A MANUALLY SIGNED COPY THEREOF, AND ANY OTHER
DOCUMENTS REQUIRED BY THIS LETTER OF TRANSMITTAL, MUST BE RECEIVED BY THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE FRONT PAGE OF THIS LETTER OF
TRANSMITTAL ON OR PRIOR TO THE EXPIRATION DATE, as defined in the Offer to
Purchase. The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of the book-entry confirmation, which states that the book-entry transfer
facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares, that such participant has
received and agrees to be bound by the terms of the Offer to Purchase and Letter
of Transmittal and that HCB Bancshares may enforce the agreement against the
participant.
GUARANTEED DELIVERY. If you wish to tender your Shares but your share
certificate(s) are not immediately available or cannot be delivered to the
Depositary before this Offer expires, the procedure for book-entry transfer
cannot be completed on a timely basis, or if time will not permit all required
documents to reach the Depositary before this Offer expires, your Shares may
still be tendered, if all of the following conditions are satisfied: (1) the
tender is made by or through an Eligible Institution; (2) the Depositary
receives by hand, mail, overnight courier or facsimile transmission, before the
Expiration Date, a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided with this Letter of Transmittal, specifying the
price at which shares are being tendered, including (where required) a signature
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery; and (3) all of the following are received by the Depositary
within three NASDAQ trading days after the date of receipt by the Depositary of
the Notice of Guaranteed Delivery: (i) one of (a) the certificates for the
Shares or (b) a confirmation of receipt of the Shares pursuant to the procedure
for book-entry transfer described in this Instruction 2; (ii) one of (a) a
properly completed and executed Letter of Transmittal or a manually executed
facsimile of it, including any required signature guarantees, or (b) an Agent's
Message of the type described in this Instruction 2 in the case of a book-entry
transfer; and (iii) any other documents required by this Letter of Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. DO NOT MAIL OR DELIVER TO HCB
BANCSHARES.
Except as specifically permitted by Section 6 of the Offer to Purchase, no
alternative or contingent tenders will be accepted. See Section 1 of the Offer
to Purchase. By executing this Letter of Transmittal, or a facsimile thereof,
the tendering stockholder waives any right to receive any notice of the
acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate
numbers and/or the number of Shares should be listed on a separate signed
schedule attached hereto.
4. PARTIAL TENDERS; NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER. If fewer than all the Shares represented by any certificate delivered
to the Depositary are to be tendered, fill in the number of Shares that are to
be tendered in the box entitled "Number of Shares Tendered." In this case, a new
certificate for the remainder of the Shares represented by the old certificate
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the "Special Payment Instructions" or "Special Delivery
Instructions" boxes on this Letter of Transmittal, as promptly as practicable
following the expiration or termination of the Offer. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. FOR SHARES TO BE
VALIDLY TENDERED, THE STOCKHOLDER MUST CHECK THE BOX INDICATING (1) THE PRICE
PER SHARE AT WHICH HE OR SHE IS TENDERING SHARES UNDER "PRICE (IN DOLLARS) PER
SHARE AT WHICH SHARES ARE BEING TENDERED" IN THIS LETTER OF TRANSMITTAL, OR (2)
THAT THE PERSON IS TENDERING SHARES AT THE PURCHASE PRICE DETERMINED BY HCB
BANCSHARES PURSUANT TO THE TERMS OF THE OFFERING UNDER THIS HEADING. Only one
box may be checked. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES. A stockholder wishing to tender portions of
his or her Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he or she wishes to tender each portion of
his or her Shares. The same Shares cannot be tendered, unless previously validly
withdrawn as provided in Section 4 of the Offer to Purchase, at more than one
price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this
Letter of Transmittal is signed by the registered holder(s) of the Shares
hereby, the signature(s) must correspond with the name(s) as written on the face
of the certificates without alteration, enlargement or any change whatsoever.
If any of the Shares hereby are held of record by two or more persons, all
persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
IF THIS LETTER OF TRANSMITTAL IS SIGNED BY THE REGISTERED HOLDER(S) OF THE
SHARES TENDERED HEREBY, NO ENDORSEMENTS OF CERTIFICATES OR SEPARATE STOCK POWERS
ARE REQUIRED UNLESS PAYMENT OF THE PURCHASE PRICE IS TO BE MADE TO, OR SHARES
NOT TENDERED OR NOT PURCHASED ARE TO BE REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE REGISTERED HOLDER(S). SIGNATURES ON ANY SUCH CERTIFICATES OR
STOCK POWERS MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. SEE INSTRUCTION 1.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, certificates evidencing the Shares
tendered hereby must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered holder(s) appear(s)
on the certificates for the Shares. Signature(s) on any certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
the person should so indicate when signing, and proper evidence satisfactory to
HCB Bancshares of the authority of the person so to act must be submitted.
7. STOCK TRANSFER TAXES. HCB Bancshares will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the purchase price is to be
made to, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered Shares
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes, whether imposed
on the registered holder(s), the other person or otherwise, payable on account
of the transfer to the person will be deducted from the purchase price unless
satisfactory evidence of the payment of
taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to
Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY TO
AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED
HEREBY.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, and/or any Shares
not tendered or not purchased are to be returned to, a person other than the
person(s) signing this Letter of Transmittal or if the check and/or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of Shares
Tendered," then the boxes captioned "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained by
the stockholder at the Book-Entry Transfer Facility from which the transfer was
made.
9. ODD LOTS. As described in the Offer to Purchase, if fewer than all Shares
validly tendered at or below the purchase price and not withdrawn on or prior to
the Expiration Date are to be purchased, the Shares purchased first will consist
of all Shares tendered by any stockholder who owned beneficially as of the close
of business on January 25, 2002, and continues to own beneficially as of the
Expiration Date, an aggregate of fewer than 100 Shares and who validly and
unconditionally tendered all the Shares at or below the purchase price,
including by not designating a purchase price as described above. Partial or
conditional tenders of Shares will not qualify for this preference. This
preference will not be available unless the box captioned "Odd Lots" in this
Letter of Transmittal is completed.
10. SUBSTITUTE FORM W-9 AND FORM W-8. THE TENDERING STOCKHOLDER IS REQUIRED TO
PROVIDE THE DEPOSITARY WITH EITHER A CORRECT TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9, WHICH IS PROVIDED UNDER "IMPORTANT TAX INFORMATION" BELOW,
OR A PROPERLY COMPLETED FORM W-8. FAILURE TO PROVIDE THE INFORMATION ON EITHER
SUBSTITUTE FORM W-9 OR FORM W-8 MAY SUBJECT THE TENDERING STOCKHOLDER TO 30%
FEDERAL INCOME TAX BACKUP WITHHOLDING ON THE PAYMENT OF THE PURCHASE PRICE. The
box in Part 2 of Substitute Form W-9 may be checked if the tendering stockholder
has not been issued a taxpayer identification number and has applied for a
number or intends to apply for a number in the near future. If the box in Part 2
is checked and the Depositary is not provided with a taxpayer identification
number by the time of payment, the Depositary will withhold 30% on all payments
of the purchase price thereafter until a taxpayer identification number is
provided to the Depositary.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for
assistance may be directed to the Information Agent/Dealer Manager at their
telephone number and address listed below. Requests for additional copies of the
Offer to Purchase, this Letter of Transmittal, Notice of Guaranteed Delivery or
other tender Offer materials may be directed to the Information Agent/Dealer
Manager and copies will be furnished promptly at HCB Bancshares' expense.
Stockholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
12. IRREGULARITIES. All questions as to the purchase price, the form of
documents, and the validity, eligibility, including time of receipt, and
acceptance of any tender of Shares will be determined by HCB Bancshares, in its
sole discretion, and its determination shall be final and binding. HCB
Bancshares reserves the absolute right to reject any or all tenders of Shares
that it determines are not in proper form or the acceptance for payment of or
payment for Shares that may, in the opinion of HCB Bancshares' counsel, be
unlawful. Except as otherwise provided in the Offer to Purchase, HCB Bancshares
also reserves the absolute right to waive any of the conditions to the Offer or
any defect or irregularity in any tender of Shares and HCB Bancshares'
interpretation of the terms and conditions of the Offer, including these
Instructions, shall be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as HCB
Bancshares shall determine. None of HCB Bancshares, the Information Agent/Dealer
Manager, the Depositary, or any other person shall be under any duty to give
notice of any defect or irregularity in tenders, nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
13. LOST CERTIFICATE(S) If the certificate(s) that a registered holder (or
transferee) wants to surrender has been lost or destroyed, that fact should be
indicated on the face of this Letter of Transmittal, which should then be
delivered to the Depositary after being otherwise properly completed and duly
executed. In addition, the box below, "Affidavit For Lost Stock Certificate(s)"
must be completed. In such event, the Depositary will forward additional
documentation necessary to be completed in order to effectively replace such
lost or destroyed certificate(s).
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AFFIDAVIT FOR LOST STOCK CERTIFICATE(S)
The undersigned hereby attests and certifies the following: That I am the
lawful owner of the stock certificate(s) listed on this Letter of Transmittal as
lost. That a search for the certificate(s) has been conducted and that these
certificate(s) cannot be located. That there certificate(s) have not been
endorsed, hypothecated, sold or had their ownership pledged or encumbered in any
form, whatsoever.
In requesting the replacement of this certificate(s), I hereby agree that:
If these certificate(s) are subsequently located, they will be tendered for
cancellation. That I indemnify, protect and hold harmless HCB BANCSHARES, INC.,
Seaboard Surety Company and Registrar and Transfer Company, and any other party
from and against all losses, expenses, costs and damages including legal fees
that may be subjected to these parties at any time in the future as a result of
the cancellation and replacement of the certificate(s). All rights accruing to
these partiers will not be limited by their negligence, breach of duty,
accident, or other obligation on the part of or by any officer or employee of
the parties.
I acknowledge that the certificate(s) will be replaced under an insurance
bond underwritten by Seaboard Surety Company. My check, payable to the Seaboard
Surety Company, to cover the premium of 1.5% of the market value of the stock is
enclosed. I further acknowledge that any filing of an insurance application with
materially false or misleading information is a fraudulent insurance act and may
be considered a crime.
Sign Here: _____________________________________
Co-Owner, if any: ______________________________ Date: ________________, 2002
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER OF TRANSMITTAL, OR A MANUALLY SIGNED COPY THEREOF,
TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are accepted
for payment is required to provide the Depositary, as payer, with the
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If the stockholder is an individual, the taxpayer identification number
is his or her social security number. For businesses and other entities, the
number is the employer identification number. If the Depositary is not provided
with the correct taxpayer identification number or properly completed Form W-8,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders, including, among others, all corporations and certain
foreign individuals and entities, are not subject to these backup withholding
and reporting requirements. In order for a noncorporate foreign stockholder to
qualify as an exempt recipient, that stockholder must complete and sign a Form
W-8, Certificate of Foreign Status, attesting to that stockholder's exempt
status. The Form W-8 can be obtained from the Depositary. Exempt stockholders,
other than noncorporate foreign stockholders, should furnish their taxpayer
identification number, write "Exempt" on the face of the Substitute Form W-9
below and sign, date and return the Substitute Form W-9 to the Depositary. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional Instructions.
If federal income tax backup withholding applies, the Depositary is required to
withhold 30% of any payments made to the stockholder. Backup withholding is not
an additional tax. Rather, the federal income tax liability of persons subject
to backup withholding will be reduced by the amount of the tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a stockholder with
respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct taxpayer identification
number by completing the Substitute Form W-9 included in this Letter of
Transmittal certifying that the taxpayer identification number provided on
Substitute Form W-9 is correct and that (1) the stockholder has not been
notified by the Internal Revenue Service that he or she is subject to federal
income tax backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified the stockholder that
he or she is no longer subject to federal income tax backup withholding. Foreign
stockholders must submit a properly completed Form W-8 in order to avoid the
applicable backup withholding; provided, however, that backup withholding will
not apply to foreign stockholders subject to 30%, or lower treaty rate,
withholding on gross payments received pursuant to the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security number or
employer identification number of the registered owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
PAYER'S NAME: HCB BANCSHARES, INC.
- -------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1-- PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION
Form W-9 NUMBER IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND
DATING BELOW. ______________________________
DEPARTMENT OF THE TREASURY (See Instruction 10) Social Security Number
INTERNAL REVENUE SERVICE Please fill in your name and address below. OR
PAYER'S REQUEST FOR TAXPAYER ______________________________
_____________________________________________________ Employer Identification Number:
IDENTIFICATION NUMBER AND Name
CERTIFICATION
___________________________________
_____________________________________________________
Address (number and street) Part 2:
Awaiting Taxpayer Identification
_____________________________________________________ Number [ ]
City, State and Zip Code
Taxpayer Identification Number
For Payees exempt from backup
withholding, see the Important
Tax Information above and
Guidelines for Certification
of Taxpayer Identification
Number of Substitute Form
W-9 enclosed herewith
and complete as instructed
herein.
- -------------------------------------------------------------------------------------------------------------------------------
Part 3 -- CERTIFICATION --UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this form is my correct
taxpayer identification number (or a taxpayer identification number has not been issued to me but I have mailed or
delivered an application to receive a taxpayer identification number or intend to do so in the near future), (2) I am not
subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS has notified
me that I am no longer subject to backup withholding, (3) all other information provided on this form is true, correct and
complete, and (4) I am a U.S. person (including a U.S. resident alien).
- -------------------------------------------------------------------------------------------------------------------------------
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications
required to avoid backup withholding.
- -------------------------------------------------------------------------------------------------------------------------------
SIGNATURE ____________________________________________________________ DATE ____________________________, 2002
- -------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out Item (2) in Part 3 above if you have been notified by the IRS that you are
currently subject to backup withholding because of under reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding, you received another notification
from the IRS stating that you are no longer subject to backup withholding, do not cross out Item (2).
- -------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 30% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 30% of all
payments of the purchase price made to me thereafter will be withheld until I
provide a number.
SIGNATURE ________________________________________ DATE _______________, 2002
- --------------------------------------------------------------------------------
The Information Agent/Dealer Manager:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
TOLL FREE: (877) 298-6520
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR. -
Social Security Numbers (SSNs) have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer Identification Numbers (EINs) have nine digits separated
by only one hyphen: i.e, 00-0000000. The table below will help determine the
number to give the payer.
GIVE THE NAME AND SOCIAL GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF
- ------------------------- -------------------- ------------------------- -------------------
1. An individual's account The individual 8. Sole proprietorship The owner (4)
account
2. Two or more individuals The actual owner of the 9. A valid trust, estate, The legal entity (Do not
(joint account) account, or if combined or pension trust furnish the identifying
funds, the first number of the personal
individual on the account representative or trustee
(1) unless the legal entity
itself is not designated in
the account title). (5)
3. Husband and wife (joint The actual owner of the 10. Corporate account The corporation
account) account or, if combined
funds, the first
individual on the account
(1)
4. Custodian account of a minor The minor (2) 11. Association, club, The organization
(Uniform Gift to Minors Act) religious, charitable,
educational or other
tax-exempt
organization account
5. Adult and minor The actual owner of the 12. Partnership account The partnership (6)
(joint account) account, or, if combined held in the name of the
funds, the first business
individual on the account
(1)
6. Account in the name of The ward, minor or 13. A broker or The broker or nominee
guardian or committee for a incompetent person (3) registered nominee
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee (1) 14. Account with the The public entity
savings trust account (grantor Department of
is also trustee) Agriculture in the name
b. So-called trust account The actual owner (1) of a public entity
that is not a legal or valid (such as a State or
trust under State law local government,
school district, or
prison) that receives
agricultural program
payments)
<FN>
_______________
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's SSN.
(4) Show the name of the owner but you may also enter your business or "doing
business as" name. You may use either your SSN or your EIN (if you have
one). This also applies to a single-member limited liability company that
is disregarded as an entity separate from its owner for federal purposes.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
(6) This also applies to a limited liability company (LLC) with at least two
members.
</FN>
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER. 3. Payments of interest not generally subject to
- ------------------ backup withholding include the following:
If you don't have a taxpayer identification number or
you don't know your number, obtain Form SS-5, o Payments of interest on obligations issued by
Application for a Social Security Number Card (for individuals. NOTE: You may be subject to backup
individuals), or Form SS-4, Application for Employer withholding if this interest is $600 or more and is
Identification Number (for business and all other paid in the course of the payer's trade or business
entities) at the local office of the Social Security and you have not provided your correct taxpayer
Administration or the Internal Revenue Service and apply identification number to the payer.
for a number.
o Payments of tax-exempt interest (including
PAYEES EXEMPT FROM BACKUP WITHHOLDING. exempt-interest dividends under Section 852
- ------------------------------------- of the Code).
1. Payees specifically exempted from backup withholding
on all payments include the following: o Payments described in Section 6049(b)(5) of
o A corporation. the Code to nonresident aliens.
o A financial institution.
o An organization exempt from tax under Section o Payments on tax-free covenant bonds Section 1451
under 501(a) of the Internal Revenue Code of 1986, as of the Code.
amended (the "Code"), an individual retirement account,
or a custodial account under Section 403(b)(7), if the o Payments made by certain foreign organizations.
account satisfies the requirements of Section 401(f)(2).
o The United States or any agency or instrumentality o Mortgage or student loan interest paid to you.
thereof.
o A State, the District of Columbia, a possession
of the United States, or any subdivision or Exempt payees described above should file Form W-9
instrumentality thereof. to avoid possible erroneous backup withholding. FILE
o A foreign government, a political subdivision of THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
a foreign government, or any agency or IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF
instrumentality thereof. THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS
o An international organization or any agency, or ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
instrumentality thereof. SIGN AND DATE THE FORM. IF YOU ARE NONRESIDENT ALIEN
o A dealer in securities or commodities required to OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING,
register in the United States, the District of FILE WITH THE PAYER A COMPLETED INTERNAL REVENUE
Columbia or a possession of the United States. FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
o A real estate investment trust.
o A common trust fund operated by a bank under
Section 584(a) of the Code.
o An exempt charitable remainder trust described in Certain payments other than interest dividends and
Section 664 of the Code and a non-exempt trust patronage dividends that are not subject to
described in Section 4947 of the Code. information reporting are also not subject to backup
o An entity registered at all times under the withholding. For details, see the regulations under
Investment Company Act of 1940. Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A,
o A foreign central bank of issue. and 6050N of the Code and the regulations promulgated
o A futures commission merchant registered with the thereunder.
Commodity Futures Trading Commission.
o Certain middlemen known in the investment
community as nominees or custodians. PRIVACY ACT NOTICE. - Section 6109 of the Code
---------------------
2. Payments of dividends and patronage dividends not requires you to give correct taxpayer identification
generally subject to backup withholding include the numbers to payers who must report the payments to the
following: IRS. The IRS uses the numbers for identification
o Payments to nonresident aliens subject to purposes. Payers must be given the numbers whether or not
withholding under Section 1441 of the Code. not recipients are required to file tax returns.
o Payments to partnerships not engaged in a trade Payers must generally withhold 30% of taxable interest,
or business in the United States and which have at dividend, and certain other payments to payee who does
a least one nonresident partner. not furnish a correct taxpayer identification number to
o Payments of patronage dividends where the amount a payer. Certain penalties may also apply.
received is not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
PENALTIES.
- ---------
(1) Penalty for Failure to Furnish Taxpayer (3) False Information With Respect to Withholding -
Identification Number - If you fail to furnish your If you make a false statement with no reasonable basis
correct taxpayer identification number to a payer,you are which results in no imposition of backup withholding,
subject to a penalty of $50 for each such failure unless you are subject to a penalty of $500. Falsifying
your failure is due to reasonable cause and not to certifications or affirmations may also subject you to
willful neglect. criminal penalties including fines and/or imprisonment.
(2) Failure to Report Certain Dividend and Interest
Payments - If you fail to include any portion of an FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT
includible payment for interest, dividends or patronage OR THE INTERNAL REVENUE SERVICE
dividends in gross income, such failure may result in
civil or criminal penalties.
NOT VALID UNLESS SIGNED BY AN ELIGIBLE INSTITUTION.
HCB BANCSHARES, INC.
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
OFFER TO PURCHASE FOR CASH UP TO 377,866 SHARES
OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT LESS THAN
$12.75 NOR IN EXCESS OF $14.75 PER SHARE
This form or a facsimile copy of it must be used to accept the Offer (as
defined below) if:
(a) certificates for common stock, par value $0.01 per share (the
"Shares"), of HCB Bancshares, Inc., an Oklahoma corporation, are not
immediately available; or
(b) the procedure for book-entry transfer cannot be completed on a timely
basis; or
(c) time will not permit the Letter of Transmittal or other required
documents to reach the Depositary before the Expiration Date (as
defined in Section 1 of the Offer to Purchase, as defined below).
This form or a facsimile of it, signed and properly completed, may be
delivered by hand, mail, telegram or facsimile transmission to the Depositary by
the Expiration Date. See "Section 3--Procedure for Tendering Shares" in the
Offer to Purchase.
DEPOSITARY:
REGISTRAR AND TRANSFER COMPANY
By Mail: Overnight Delivery:
Registrar and Transfer Company Registrar and Transfer Company
10 Commerce Drive 10 Commerce Drive
Cranford, NJ 07016-3572 Cranford, NJ 07016-3572
Attn: Reorganization Department Attn: Reorganization Department
By Hand:
c/o The Depository Trust Co.
Transfer Agent Drop
55 Water Street, 1st Floor
New York, NY 10041-0099
Investor Relations Telephone Number: (800) 368-5948
Facsimile Number: (908) 497-2311
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THOSE LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to HCB Bancshares, Inc., at the price per
Share indicated below, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated January 31, 2002 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with the Offer to Purchase constitute the "Offer"), receipt of which is hereby
acknowledged, ______________ Shares of common stock, par value $0.01 per share
(the "Shares"), pursuant to the guaranteed delivery procedure set forth under
"Section 3--Procedure for Tendering Shares" in the Offer to Purchase.
PLEASE CALL THE DEPOSITARY FOR ASSISTANCE IN COMPLETING THIS FORM TOLL FREE
AT (800) 368-5948.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED.
CHECK ONLY ONE BOX.
---
IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS
CHECKED (EXCEPT AS OTHERWISE PROVIDED HEREIN),
THERE IS NO VALID TENDER OF SHARES.
By checking one of the price boxes below, the undersigned hereby tenders Shares
at the price checked. If you do not wish to specify a purchase price, check the
following box, in which case you will be deemed to have tendered at the price
determined by HCB Bancshares in accordance with the terms of the Offer (persons
checking this box must not indicate the price per Share below).[ ]
Price (in dollars) per Share at which Shares are being tendered:
$12.75 [ ] $13.00 [ ] $13.25 [ ] $13.50 [ ] $13.75 [ ]
$14.00 [ ] $14.25 [ ] $14.50 [ ] $14.75 [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IF YOU OWN FEWER THAN 100 SHARES:
Complete ONLY if Shares are being tendered by or on behalf of a person
owning beneficially, as of the close of business on January 25, 2002 and who
continues to own beneficially as of the Expiration Date, an aggregate of fewer
than 100 Shares.
The undersigned either (check one):
[ ] was the beneficial owner(s), as of the close of business on January 25,
2002 of an aggregate of fewer than 100 Shares, all of which are being
tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee which
(a) (a) is tendering, for the beneficial owner(s) thereof, Shares with respect
to which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial owner(s),
that each such person was the beneficial owner, as of the close of business on
January 25, 2002, of an aggregate of fewer than 100 Shares and is tendering all
of such Shares.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDERS
You may condition the tender of your Shares upon the purchase by HCB
Bancshares of a specified minimum number of the Shares you tendered. See Section
6 of the Offer to Purchase. Unless at least the minimum number of Shares
tendered by you is purchased by HCB Bancshares, none of the Shares tendered will
be purchased. It is your responsibility to calculate the minimum number of
Shares and you are urged to consult your tax advisor. Unless this box has been
completed by specifying a minimum number of Shares, the tender will be deemed
unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
_____ Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Certificate Nos. (if available):
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Name(s):
___________________________________________________________________________
___________________________________________________________________________
(Please Print)
Address(es):
___________________________________________________________________________
___________________________________________________________________________
City State Zip Code
Area Code and
Telephone Number:__________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
___________________________________________________________________________
___________________________________________________________________________
Dated: __________________________, 2002
If Shares will be tendered by book-entry transfer, check box below:
[ ] The Depository Trust Company
Account Number:
___________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank, trust company, savings association or credit union having an
office or correspondent in the United States (each, an "Eligible Institution"),
hereby (i) represents that the undersigned has a net long position in Shares in
or equivalent securities within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, at least equal to the Shares
tendered, (ii) represents that such tender of Shares complies with Rule 14e-4
and (iii) guarantees that either the certificates representing the Shares
tendered hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (pursuant to the procedures set forth under "Section
3--Procedure for Tendering Shares" in the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantee and any other documents required
by the Letter of Transmittal, will be received by the Depositary at one of its
addresses set forth above within three Nasdaq trading days after the date of
receipt by the Depositary of this Notice of Guaranteed Delivery.
Name of Firm: ______________________________ ______________________________
Authorized Signature
Address:____________________________________ Name:_________________________
____________________________________________ Title:________________________
Zip Code:___________________________________
Area Code and
Telephone Number:_________________________ Dated:_________________, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------