HCB BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 The Company hereby establishes this Plan upon the
terms and conditions hereinafter stated.
1.02 Through acceptance of their appointment to the
Committee, each member of the Committee hereby accepts his or
her appointment hereunder upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain
personnel of experience and ability in key positions of
responsibility by providing Employees and Directors of the
Company, the Bank, and their Affiliates with a proprietary
interest in the Company, and as compensation for their past
contributions to the Bank, and as an incentive to make such
contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan
with an initial capital letter, shall have the meanings set
forth below unless the context clearly indicates otherwise.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.
3.01 "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended.
3.02 "Bank" means Heartland Community Bank.
3.03 "Beneficiary" means the person or persons designated
by a Participant to receive any benefits payable under the Plan
in the event of such Participant's death. Such person or
persons shall be designated in writing on forms provided for
this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence
of a written designation, the Beneficiary shall be the
Participant's surviving spouse, if any, or if none, his estate.
3.04 "Board" means the Board of Directors of the Company.
3.05 "Change in Control" means any one of the following
events: (1) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting stock,
(2) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors, (3) the
acquisition of a controlling influence over the management or
policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), (4) the acquisition of control
of the Bank or the Company within the meaning of 12 C.F.R. Part
574 or its applicable equivalent (except in the case of (1),
(2), (3) and (4) hereof, ownership or control of the Bank by the
Company itself shall not constitute a "Change in Control"), or
(5) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Company or the Bank
(the "Existing Board") cease
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for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to
whether a change in control has occurred shall be conclusive and
binding.
3.06 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.07 "Common Stock" means shares of the common stock of
the Company.
3.08 "Company" means HCB Bancshares, Inc.
3.09 "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
3.10 "Date of Conversion" means the date of the
conversion of the Bank from mutual to stock form.
3.11 "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
3.12 "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
3.13 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07
hereof.
3.14 "Employee" means any person who is employed by the
Company or an Affiliate.
3.15 "Non-Employee Director" shall have the meaning
provided in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
3.16 "Participant" means an Employee or Director who
holds a Plan Share Award.
3.17 "Plan" means this HCB Bancshares, Inc. Management
Recognition Plan.
3.18 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant
pursuant to the Plan.
3.19 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.20 "Plan Share Reserve" means the shares of Common
Stock held by the Trustee pursuant to Sections 5.02 and 5.03.
3.21 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company
and the Trustee, and "Trust" means the trust created thereunder.
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3.22 "Trustee" means the Company's Directors acting by
majority.
3.23 "Year of Service" shall mean a full twelve-month
period, measured from the date of a Plan Share Award and each
annual anniversary of that date, during which a Participant's
Continuous Service has not terminated for any reason.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE AND POWERS OF THE COMMITTEE. The Plan shall
be administered and interpreted by the Committee, which shall
consist of at least two Directors appointed by the Board. In
the absence at any time of a duly appointed Committee, the Plan
shall be administered by those members of the Board who are Non-
Employee Directors, and by the Board if there are less than
three Non-Employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. Except as limited by
the express provisions of the Plan or by resolutions adopted by
the Board, the Committee shall have sole and complete authority
and discretion (i) to make Plan Share Awards to such Employees
as the Committee may select, (ii) to determine the form and
content of Plan Share Awards to be issued under the Plan, (iii)
to interpret the Plan, (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan, and (v) to make
other determinations necessary or advisable for the
administration of the Plan. The Committee shall have and may
exercise such other power and authority as may be delegated to
it by the Board from time to time. Subject to Section 4.02, the
interpretation and construction by the Committee of any
provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Committee shall act
by vote or written consent of a majority of its members, and
shall report its actions and decisions with respect to the Plan
to the Board at appropriate times, but in no event less than one
time per calendar year. The Committee may recommend to the
Board one or more persons or entity to act as Trustee(s) in
accordance with the provisions of this Plan and the Trust.
4.02 ROLE OF THE BOARD. The members of the Committee
shall be appointed or approved by, and will serve at the
pleasure of, the Board. The Board may in its discretion from
time to time remove members from, or add members to, the
Committee. The Board shall have all of the powers allocated to
it in this and other Sections of the Plan, may take any action
under or with respect to the Plan which the Committee is
authorized to take, and may reverse or override any action taken
or decision made by the Committee under or with respect to the
Plan, provided, however, that the Board may not revoke any Plan
Share Award already made or impair a participant's vested rights
under a Plan Share Award.
4.03 LIMITATION ON LIABILITY. No member of the Board or
the Committee or the Trustee(s) shall be liable for any
determination made in good faith with respect to the Plan or any
Plan Shares or Plan Share Awards granted under it. If a member
of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Company shall indemnify such member against expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Company and its
Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall
determine the amounts (or the method of computing the amounts)
to be contributed by the Company to the Trust, provided that the
Bank may also make
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contributions to the Trust. Such amounts shall be paid to the
Trustee at the time of contribution. No contributions to the
Trust by Employees shall be permitted.
5.02 INVESTMENT OF TRUST ASSETS; MAXIMUM PLAN SHARE
AWARDS. The Trustee shall invest Trust assets only in
accordance with the Trust Agreement; provided that the Trust
shall not purchase, and Plan Share Awards shall not be made with
respect to more than 52,900 Shares. Such Shares may be newly
issued Shares, Shares held in Treasury, or Shares held in a
grantor trust.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON
PLAN SHARE RESERVES. Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Shares subject to the awards so allocated. Any
Shares subject or attributable to an Award which may not be
earned because of a forfeiture by the Participant pursuant to
Section 7.01 shall be added to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. The Committee may make Plan Share
Awards only to Employees or Directors. In addition, the
Committee shall automatically make the Plan Share Awards
specified in Sections 6.04 and 6.05.
6.02 ALLOCATIONS. The Committee will determine which
Employees or Directors will be granted discretionary Plan Share
Awards, and the number of Shares covered by each Plan Share
Award, provided that in no event shall any awards be made which
would violate the governing instruments of the Bank or its
Affiliates or any applicable federal or state law or regulation.
In the event Plan Shares are forfeited for any reason or
additional shares of Common Stock are purchased by the Trustee,
the Committee may, from time to time, grant additional Plan
Share Awards from the forfeited or acquired Plan Shares.
6.03 FORM OF ALLOCATION. As promptly as practicable
after a determination is made pursuant to Section 6.02 that a
Plan Share Award is to be made, the Committee shall notify the
Participant in writing of the grant of the award and the number
of Plan Shares covered by the award. The date on which the
Committee so notifies the Participant shall be considered the
date of grant of the Plan Share Awards, and prior thereto the
Participant shall have no rights pursuant to the Plan Share
Awards. The Committee shall maintain records as to all grants
of Plan Share Awards under the Plan.
6.04 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.
Notwithstanding any other provisions of this Plan, each Director
who is not an Employee but is a Director on the Effective Date
shall receive, on the Effective Date, a Plan Share Award for
2,644 Shares. Plan Share Awards received under the provisions
of this Section shall become vested and nonforfeitable according
to the general rules set forth in subsections (a) and (b) of
Section 7.01. Unless otherwise inapplicable or inconsistent
with the provisions of this Section, the Plan Share Awards to be
granted hereunder shall be subject to all other provisions of
this Plan.
6.05 AUTOMATIC GRANTS TO EMPLOYEES. On the Effective
Date, each of the following individuals shall receive a Plan
Share Award as to the number of Plan Shares listed below,
provided that such award shall not be made to an individual who
is not an Employee on the Effective Date:
Employee Shares Subject to Plan Share Award
-------- ----------------------------------
Lampkin 13,224
McKeel 10,580
Lyon 6,348
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a) and (b) of Section
7.01. Unless otherwise inapplicable or
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inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.06 ALLOCATIONS NOT REQUIRED. Notwithstanding anything
to the contrary in Sections 6.01 and 6.02, but subject to
Sections 6.04 and 6.05, no Employee or Director shall have any
right or entitlement to receive a Plan Share Award hereunder,
such awards being at the total discretion of the Committee, nor
shall any Employees or Directors as a group have such a right.
The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share
Reserve to the Company at any time, and cease issuing Plan Share
Awards.
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless the Committee specifically
imposes a different vesting schedule in a notice granting a Plan
Share Award, each Plan Share Award shall be vested with respect
to 25% of the awarded Plan Shares on the date of the award and
shall become vested with respect to an additional 25% of the
awarded Plan Shares on each of the next three annual anniversary
dates of the award date; provided that no vesting shall occur
prior to stockholder approval pursuant to Section 8.07 hereof,
and further provided that no vesting shall occur on a particular
date if the Participant's Continuous Service has ended prior
thereto.
(b) ACCELERATION FOR TERMINATIONS DUE TO RETIREMENT,
DEATH, DISABILITY, OR CHANGE IN CONTROL. Notwithstanding the
general rule contained in Section 7.01(a) above: (i) all Plan
Shares subject to a Plan Share Award held by a Participant whose
service with the Company or an Affiliate terminates due to the
Participant's retirement at or after age 70, death, or
Disability shall be deemed earned and 100% vested as of the
Participant's last day of service with the Company or an
Affiliate, and (ii) all Plan Shares subject to a Plan Share
Award held by a Participant shall be deemed earned and 100%
vested as of the earlier of a Change in Control or, if earlier,
the execution of an agreement to effect a Change in Control.
(c) DISCRETIONARY ACCELERATION. Notwithstanding
Sections 7.01(a) and 7.01(b) above, the Committee may at any
time and for any lawful reason accelerate the vesting on all or
any part of a Participant's Plan Share Award.
7.02 ACCRUAL OF DIVIDENDS. Whenever Plan Shares are paid
to a Participant or Beneficiary under Section 7.03, such
Participant or Beneficiary shall also be entitled to receive,
with respect to each Plan Share paid, an amount equal to any
cash dividends (including special large and nonrecurring
dividends, including one that has the effect of a return of
capital to the Company's stockholders) and a number of shares of
Common Stock equal to any stock dividends, declared and paid
with respect to a share of Common Stock between the date the
relevant Plan Share Award was initially granted to such
Participant and the date the Plan Shares are being distributed.
There shall also be distributed an appropriate amount of net
earnings, if any, of the Trust with respect to any cash
dividends so paid out.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. Except as
provided in Subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant or his Beneficiary, as the case may
be, as soon as practicable after they have been earned. No
fractional shares shall be distributed.
(b) FORM OF DISTRIBUTION. The Trustee shall distribute
all Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
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(c) WITHHOLDING. The Trustee shall withhold from any
cash payment made under this Plan sufficient amounts to cover
any applicable withholding and employment taxes, and if the
amount of such cash payment is not sufficient, the Trustee shall
require the Participant or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the
Plan Shares. The Trustee shall pay over to the Company or
Affiliate which employs or employed such Participant any such
amount withheld from or paid by the Participant or Beneficiary.
(d) TIMING: EXCEPTION FOR 10% SHAREHOLDERS.
Notwithstanding Subsections (a) and (b) above, no Plan Shares
may be distributed prior to the date which is five (5) years
from the Date of Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such
Shares own in excess of ten percent (10%) of the issued and
outstanding shares of Common Stock unless such action is
approved in advance by a majority vote of disinterested
directors of the Board. To the extent this limitation would
delay the date on which a Participant receives Plan Shares, the
Participant may elect to receive from the Trust, in lieu of such
Plan Shares, the cash equivalent thereof. Any Plan Shares
remaining undistributed solely by reason of the operation of
this Subsection (d) shall be distributed to the Participant or
his Beneficiary on the date which is five years from the Date of
Conversion.
(e) REGULATORY EXCEPTIONS. No Plan Shares shall be
distributed unless and until all of the requirements of all
applicable law and regulation shall have been fully complied
with, including the receipt of approval of the Plan by the
stockholders of the Company by such vote, if any, as may be
required by applicable law and regulations.
7.04 VOTING OF PLAN SHARES. All shares of Common Stock
held by the Trust (whether or not subject to a Plan Share Award)
shall be voted by the Trustee in the same proportion as the
trustee of the Company's Employee Stock Ownership Plan votes
Common Stock held in the trust associated therewith, and in the
absence of any such voting, shall be voted in the manner
directed by the Board.
7.05 DEFERRAL ELECTIONS BY PARTICIPANTS.
(a) ELECTIONS TO DEFER. At any time prior to April
30th of any year prior to the date on which a Participant
becomes vested in any shares subject to his or her Plan Share
Award, a Participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect, on the form attached hereto as Exhibit "A"
(the "Election Form"), to defer the receipt of all or a
percentage of the Plan Shares that would otherwise be
transferred to the Participant upon the vesting of such award
(the "Deferred Shares").
(b) RECORDKEEPING; HOLDING OF DEFERRED SHARES. The
MRP Committee shall establish and maintain an individual account
in the name of each Participant who files an Election Form for
the purpose of tracking deferred earnings attributable to cash
dividends paid on Deferred Shares (the "Cash Account"). On the
last day of each fiscal year of the Company, the Committee shall
credit to the Participant's Cash Account earnings on the balance
of the Cash Account at a rate equal to the dividend-adjusted
total return on Common Stock, as determined from time to time by
the MRP Committee in its sole discretion. The Trustees shall
hold each Participant's Deferred Shares and Deferred Earnings in
the Trust until distribution is required pursuant to Section
7.05(c) hereof.
(c) DISTRIBUTIONS OF DEFERRED SHARES. The Trustee shall
distribute a Participant's Deferred Shares and Deferred Earnings
in accordance with the Participant's Election Form. All
distributions made by the Company and/or the Trustees pursuant
to elections made hereunder shall be subject to applicable
federal, state, and local tax withholding and to such other
deductions as shall at the time of such payment be required
under any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to a
beneficiary, the delivery to the Committee and/or Trustees of
all necessary waivers, qualifications and other documentation.
Within 90 days after receiving notice of a Participant's death,
the Trustee shall distribute any balance of the Participant's
Deferred Shares and Deferred Earnings to the Participant's
designated beneficiary, if living, or if such designated
beneficiary is deceased or the Participant failed to designate a
beneficiary, to the Participant's estate. If, on the other
hand, a Participant's Continuous Service terminates for a reason
other than the Participant's death, Disability, early
retirement, or normal retirement, the Participant's Deferred
Shares and Deferred Earnings shall be distributed to the
Participant in a lump sum occurring as soon as reasonably
practicable. The distribution provisions of a Participant's
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Election Form shall become irrevocable on the date that occurs
(i) one year before the Participant's termination of Continuous
Service for a reason other than death, and (ii) on the
Participant's death if that terminates the Participant's
Continuous Service.
(d) HARDSHIP WITHDRAWALS. Notwithstanding any other
provision of the Plan or a Participant's Election Form, in the
event the Participant suffers an unforeseeable emergency
hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate
distribution of all or a portion of his Deferred Shares and
Deferred Earnings. The hardship must result from a sudden and
unexpected illness or accident of the Participant or a dependent
of the Participant, casualty loss of property, or other similar
conditions beyond the control of the Participant. Examples of
purposes which are not considered hardships include post-
secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the
hardship could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the
Participant's nonessential assets to the extent such liquidation
would not itself cause a severe financial hardship. The amount
of any distribution hereunder shall be limited to the amount
necessary to relieve the Participant's financial hardship. The
determination of whether a Participant has a qualifying hardship
and the amount which qualifies for distribution, if any, shall
be made by the Committee in its sole discretion. The Committee
may require evidence of the purpose and amount of the need, and
may establish such application or other procedures as it deems
appropriate.
(e) RIGHTS TO DEFERRED SHARES AND EARNINGS. A
Participant may not assign his or her claim to Deferred Shares
and Deferred Earnings during his or her lifetime, except in
accordance with Section 8.03 of this Plan. A Participant's right
to Deferred Shares and Deferred Earnings shall at all times
constitute an unsecured promise of the Company to pay benefits
as they come due. The right of the Participant or his or her
beneficiary to receive benefits hereunder shall be solely an
unsecured claim against the general assets of the Company.
Neither the Participant nor his or her beneficiary shall have
any claim against or rights in any specific assets or other fund
of the Company, and any assets in the Trust shall be deemed
general assets of the Company.
ARTICLE VIII
MISCELLANEOUS
8.01 ADJUSTMENTS FOR CAPITAL CHANGES.
(a) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number
and kind of shares which may be purchased under the Plan, and
the number and kind of shares subject to outstanding Plan Share
Awards, shall be proportionately adjusted for any increase,
decrease, change or exchange of shares of Common Stock for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) TRANSACTIONS IN WHICH THE COMPANY IS NOT THE
SURVIVING ENTITY. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Plan Share Awards shall be
adjusted for any change or exchange of shares of Common Stock
for a different number or kind of shares or other securities
which results from the Transaction.
(c) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Section, a Participant becomes entitled to
new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the
Plan Share Award before the adjustment was made. In addition,
the Committee shall have the discretionary authority to impose
on the Shares subject to Plan Share Awards to Employees such
restrictions as the Committee may deem appropriate or desirable,
including but not limited to a right of first refusal, or
repurchase option, or both of these restrictions.
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(d) OTHER ISSUANCES. Except as expressly provided in
this Section, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
shares of Common Stock or stock of another class, for cash or
property or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor,
shall not affect, and no adjustment shall be made with respect
to, the number or class of shares of Common Stock then subject
to Plan Share Awards or reserved for issuance under the Plan.
8.02 AMENDMENT AND TERMINATION OF PLAN. The Board may,
by resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance
with this Section 8.02 shall include the power to direct the
Trustee to return to the Company all or any part of the assets
of the Trust, including shares of Common Stock held in the Plan
Share Reserve. However, the termination of the Trust shall not
affect a Participant's right to earn Plan Share Awards and to
receive a distribution of Common Stock relating thereto,
including earnings thereon, in accordance with the terms of this
Plan and the grant by the Committee or the Board.
8.03 NONTRANSFERABILITY. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share
Awards may transfer such awards to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Plan Share
Awards so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an
individual or trust to whom the Participant could have initially
transferred the awards pursuant to this Section 8.03. Plan
Share Awards which are transferred pursuant to this Section 8.03
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
8.04 NO EMPLOYMENT OR OTHER RIGHTS. Neither the Plan nor
any grant of a Plan Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express
or implied, on the part of any Employee or Director to continue
in the service of the Company, the Bank, or an Affiliate
thereof.
8.05 VOTING AND DIVIDEND RIGHTS. No Participant shall
have any voting or dividend rights or other rights of a
stockholder in respect of any Plan Shares covered by a Plan
Share Award prior to the time said Plan Shares are actually
distributed to him.
8.06 GOVERNING LAW. The Plan and Trust shall be governed
and construed under the laws of the State of Arkansas to the
extent not preempted by Federal law.
8.07 EFFECTIVE DATE. The Plan shall become effective
upon adoption by the Board, or on such later date as the Board
may determine; provided that the effectiveness of the Plan and
any Plan Share Award shall be absolutely contingent upon the
Plan's approval by a favorable vote of stockholders of the
Company who own at least a majority of the total votes cast at a
duly called meeting of the Company's stockholders held in
accordance with applicable laws.
8.08 TERM OF PLAN. This Plan shall remain in effect
until the earlier of (i) termination by the Board, or (ii) the
distribution of all assets of the Trust. Termination of the
Plan shall not affect any Plan Share Awards previously granted,
and such Awards shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.
8.09 TAX STATUS OF TRUST. It is intended that (i) the
Trust associated with the Plan be treated as a grantor trust of
the Company under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time, and (ii)
that in accordance with Revenue Procedure 92-65 (as the same may
be amended from time to time), Participants have the status of
general unsecured creditors of the Company, the Plan constitutes
a mere unfunded
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promise to make benefit payments in the future, the Plan is
unfunded for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and
the Trust has been and will continue to be maintained in
conformity with Revenue Procedure 92-64 (as the same may be
amended from time to time).
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MRP EXHIBIT A
HCB BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
____________________________
Deferral Election Agreement
____________________________
AGREEMENT, made this ____ day of ________, 199_, by and
between __________________ (the "Participant"), and HCB
Bancshares, Inc. (the "Company").
WHEREAS, the Company has established the HCB Bancshares,
Inc. Management Recognition Plan (the "Plan"), and the
Participant is a recipient of Plan Share Awards (the "Awards")
for ________ shares of common stock of the Company, to be issued
to the Participant over a period of five years vesting 20% per
year as set forth in Section 7.01 of the Plan; and
WHEREAS, Participant desires to defer receipt of certain
Awards (and any earnings thereon) to which Participant is
entitled upon the vesting of such Awards;
NOW THEREFORE, it is mutually agreed as follows:
1. The Participant, by the execution hereof, agrees to
participate in the Plan upon the terms and conditions set forth
therein, and, in accordance therewith, makes the following
elections:
a. The amount of Awards which the Participant hereby
elects to defer is as follows:
Number of Shares
Vesting Date Deferred
------------ ----------------
b. All amounts deferred pursuant to the Plan after the
date of this Agreement, shall be distributed beginning:
( ) the calendar year immediately following the year in
which the Participant ceases service with the Company.
( ) the later of the calendar year immediately
following the year in which the Participant ceases service with
the Company, or ____________, 199_ (a specific date not later
than the year in which the Participant will attain 70 years of
age).
( ) the year in which the Participant attains 70 years
of age.
Management Recognition Plan Deferral Election
Page 2
d. The Participant hereby elects to have the amount
deferred after the date of this Agreement and any related
accumulated earnings distributed as follows:
( ) annually over a ten-year period.
( ) annually over a ______- year period (must be less
than ten years).
( ) in a lump sum.
e. All distributions made pursuant to the Plan and this
Agreement will be made in Plan Shares and in cash to the extent
of earnings on Plan Shares.
2. The Participant hereby designates _________________ to be
his or her beneficiary and to receive the balance of any unpaid
deferred compensation and related earnings.
3. Except for the beneficiary designation made in
paragraph 2 hereof (which may be revised at any time and from
time to time, the elections made herein shall be irrevocable
with respect to (i) the time and method of payment of the
amounts deferred during the term of the Agreement. Any changes
to the elections made herein by said Participant will be limited
to the range of choices offered herein, shall be prospective
only, and shall have no effect whatsoever on Awards previously
deferred or the deemed future earnings on Plan Shares.
4. The Company agrees to make payment of the amount due
the Participant in accordance with the terms of the Plan and the
elections made by the Participant herein.
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands the day and year first above-written.
PARTICIPANT
________________________
Signature
HCB BANCSHARES, INC.
By _____________________
Its__________________
HCB BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
_______________
Trust Agreement
_______________
This Agreement made this 1st day of May, 1998 by
and between HCB Bancshares, Inc. (the "Company") and Roy Wayne
Moseley, Bruce D. Murry, Carl E. Parker, Jr., Lula Sue Silliman,
and Clifford Steelman (acting by majority, the "Trustee").
WHEREAS, the Company maintains the HCB Bancshares, Inc.
Management Recognition Plan (the "Plan"), and has incurred or
expects to incur liability under the terms of the Plan with
respect to the individuals participating in the Plan
("Participants"); and
WHEREAS, the Company wishes to establish a trust (the
"Trust") and to contribute to the Trust assets that shall be
held therein, subject to the claims of the Company's general
creditors in the event of Insolvency, as defined in Section 3(a)
hereof, until paid to Participants and their beneficiaries in
such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plan as an unfunded plan maintained for
the purpose of providing deferred compensation for a select
group of management or highly compensated employees for purposes
of Title I of the Employee Retirement Income Security Act of
1974;
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plan;
NOW, THEREFORE, the parties do hereby establish this Trust
and agree that the Trust shall be comprised, held and disposed
of as follows:
Section 1. Establishment of Trust
----------------------------------
(a) The Company hereby deposits, or will shortly
hereafter deposit, with the Trustee in trust (i) a number of
shares of the Company's common stock ("Common Stock") equal to
four percent (4%) of the number of shares of Common Stock issued
by the Company in connection with the conversion of Heartland
Community Bank (the "Bank") from mutual to stock form, or (ii)
an amount expected to be sufficient to permit the Trust to
purchase said shares. Said shares or amount shall become the
initial principal of the Trust to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement.
(b) The Trust shall become irrevocable upon the
effective date of the Plan.
(c) The Trust is intended to be a grantor trust, of
which the Company is the grantor, within the meaning of subpart
E, part I, subchapter J, chapter 1, subtitle A of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings
thereon, shall be held separate and apart from other funds of
the Company and shall be used exclusively for the uses and
purposes of Participants and general creditors
1
as herein set forth. Participants and their beneficiaries shall
have no preferred claim on, or any beneficial ownership interest
in, any assets of the Trust. Any rights created under the Plan
and this Trust Agreement shall be mere unsecured contractual
rights of Participants and their beneficiaries against the
Company. Any assets held by the Trust will be subject to the
claims of the Company's general creditors under federal and
state law in the event of Insolvency, as defined in Section 3(a)
herein.
(e) The Company, in its sole discretion, may at any
time, or from time to time, make additional deposits of cash or
other property in trust with the Trustee to augment the
principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither the Trustee nor any
Participant or beneficiary shall have any right to compel such
additional deposits.
Section 2. Payments to Plan Participants and Their
Beneficiaries.
- --------------------------------------------------------
(a) The Company shall deliver to the Trustee a schedule
(the "Payment Schedule") that indicates the amounts payable in
respect of each Participant (and his or her beneficiaries), that
provides a formula or other instructions acceptable to the
Trustee for determining the amounts so payable, the form in
which such amount is to be paid (as provided for or available
under the Plan), and the time of commencement for payment of
such amounts. Except as otherwise provided herein, the Trustee
shall make payments to Participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make
provision for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported,
withheld and paid by the Company.
(b) The entitlement of a Participant or his or her
beneficiaries to benefits under the Plan shall be determined by
the Company or such party as it shall designate under the Plan,
and any claim for such benefits shall be considered and reviewed
under the procedures set out in the Plan.
(c) The Company may make payment of benefits directly to
Participants or their beneficiaries as they become due under the
terms of the Plan. The Company shall notify the Trustee of its
decision to make payment of benefits directly prior to the time
amounts are payable to Participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Plan, the Company shall make
the balance of each such payment as it falls due. The Trustee
shall notify the Company where principal and earnings are not
sufficient.
Section 3. Trustee Responsibility Regarding Payments to
Trust Beneficiary When Company Is Insolvent.
- -------------------------------------------------------------
(a) The Trustee shall cease payment of benefits to
Participants and their beneficiaries if the Company is
Insolvent. The Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) the Company is unable to
pay its debts as they become due, or (ii) the Company becomes
subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
(b) At all times during the continuance of this Trust,
as provided in Section 1(d) hereof, the principal and income of
the Trust shall be subject to claims of general creditors of the
Company under federal and state law as set forth below.
(c) The Board of Directors and the Chief Executive
Officer of the Company shall have the duty to inform the Trustee
in writing of the Company's Insolvency. If a person claiming to
be a creditor of the Company alleges in writing to the Trustee
that the Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits
to Participants or their beneficiaries.
2
(1) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the Company or
a person claiming to be a creditor alleging that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the
Company is Insolvent. The Trustee may in all events rely on
such evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the
Company's solvency.
(2) If at any time the Trustee has determined that
the Company is Insolvent, the Trustee shall discontinue payments
to Plan participants or their beneficiaries, shall liquidate the
Trust's investment in Common Stock, and shall hold the assets of
the Trust for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any
rights of Participants or their beneficiaries as general
creditors of the Company with respect to benefits due under the
Plan or otherwise.
(3) The Trustee shall resume the payment of
benefits to Participants or their beneficiaries in accordance
with Section 2 of this Trust Agreement only after the Trustee
has determined that the Company is not Insolvent (or is no
longer Insolvent).
(d) Provided that there are sufficient assets, if the
Trustee discontinues the payment of benefits from the Trust
pursuant to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants
or their beneficiaries under the terms of the Plan for the
period of such discontinuance, less the aggregate amount of any
payments made to Participants or their beneficiaries by the
Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
Section 4. Payments to the Company.
-----------------------------------
Except as provided in Section 3 hereof, after the Trust
has become irrevocable, the Company shall have no right or power
to direct the Trustee to return to the Company or to divert to
others any of the Trust assets before all payment of benefits
have been made to Plan Participants and their beneficiaries
pursuant to the terms of the Plan.
Section 5. Investment Authority.
--------------------------------
(a) The Trustee shall have sole discretion as to the
investment of Trust assets, except that to the extent reasonably
practicable, the Trustee shall invest all assets of the Trust in
Common Stock provided that the Trust shall not purchase from
time to time a number of shares of Common Stock exceeding 4% of
the shares of Common Stock issued in the Bank's mutual-to-stock
conversion.
(b) All rights associated with assets of the Trust shall
be exercised by the Trustee or the person designated by the
Trustee, and shall in no event be exercisable by or rest with
Participants, except that voting rights with respect to Common
Stock will be exercised in accordance with the terms of the
Plan.
(c) Subject to applicable federal and state securities
laws, if for any reason the Trustee will be selling shares of
Common Stock, the Trustee shall sell such shares by (i) giving
each Beneficiary 20 business days within which to purchase, at
fair market value, all or part of the shares of Common Stock
that the Trustee holds for the benefit of the Beneficiary, and
(ii) to the extent purchases by Beneficiaries are insufficient
to eliminate the Trusts' excess holdings of Common Stock, to
offer to sell, and to sell, all or any part of the excess shares
held by the Trust to the following purchasers, listed here by
order of priority: first, the Company; second, any benefit plan
maintained by the Company or the Bank; third, directors of the
Bank; fourth, officers of the Bank; fifth, members of the
general public.
3
Section 6. - Disposition of Income.
----------------------------------
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee.
---------------------------------
The Trustee shall keep accurate and detailed records of
all investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between the Company
and the Trustee. Within 60 days following the close of each
calendar year and within 20 days after the removal or
resignation of the Trustee, the Trustee shall deliver to the
Company a written account of its administration of the Trust
during such year or during the period from the close of the last
preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all
securities and investments purchased and sold with the cost or
net proceeds of such purchased and sold with the cost or net
proceeds of such purchases or sales (accrued interest paid or
receivable being shown separately), and showing all cash,
securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as
the case may be.
Section 8. Responsibility of Trustee.
-------------------------------------
(a) The Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by the
Company which is contemplated by, and in conformity, the terms
of the Plan or this Trust and is given in writing by the
Company. In the event of a dispute between the Company and a
party, the Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation
arising in connection with this Trust, the Company agrees to
indemnify the Trustee against Trustee's costs, expenses and
liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments, except in those cases where the Trustee shall have
been found by a court of competent jurisdiction to have acted
with gross negligence or willful misconduct. If the Company
does not pay such costs, expenses and liabilities in a
reasonably timely manner, the Trustee may obtain payment from
the Trust.
(c) The Trustee may consult with legal counsel with
respect to any of its duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(e) The Trustee shall have, without exclusion, all
powers conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, the Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor the Trustee, or to loan to any person the proceeds of
any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Code.
4
Section 9. Compensation and Expenses of Trustee.
------------------------------------------------
The Company shall pay all administrative expenses and the
Trustee's fees and expenses relating to the Plan and this Trust.
If not so paid, the fees and expenses shall be paid from the
Trust.
Section 10. Resignation and Removal of Trustee.
-----------------------------------------------
The Trustee (or any individual serving as one of the
trustees who act by majority as the Trustee) may resign at any
time by written notice to the Company, which resignation shall
be effective 30 days after the Company receives such notice
(unless the Company and the Trustee agree otherwise). The
Trustee (or any individual serving as one of the trustees who
act by majority as the Trustee) may be removed by the Company
on 30 days notice or upon shorter notice accepted by the
Trustee.
If the Trustee (or any individual serving as one of the
trustees who act by majority as the Trustee) resigns or is
removed, a successor shall be appointed, in accordance with
Section 11 hereof, by the effective date or resignation or
removal under this section. If no such appointment has been
made, the Trustee may apply to a court of competent jurisdiction
for appointment of a successor or for instructions. All
expenses of the Trustee in connection with the proceeding shall
be allowed as administrative expenses of the Trust. Upon
resignation or removal of the Trustee and appointment of a
successor trustee, all assets shall subsequently be transferred
to the successor trustee. The transfer shall be completed
within 60 days after receipt of notice of resignation, removal
or transfer, unless the Company extends the time limit.
Section 11. Appointment of Successor.
-------------------------------------
If the Trustee resigns or is removed in accordance with
Section 10 hereof, the Company may appoint any other party as a
successor to replace the Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by
the new trustee, who shall have all of the rights and powers of
the former trustee, including ownership rights in the Trust
assets. The former trustee shall execute any instrument
necessary or reasonably requested by the Company or the
successor trustee to evidence the transfer.
A successor trustee need not examine the records and acts
of any prior trustee and may retain or dispose of existing Trust
assets, subject to Sections 7 and 8 hereof. The successor
trustee shall not be responsible for, and the Company shall
indemnify and defend the successor trustee from, any claim or
liability resulting from any action or inaction of any prior
trustee or from any other past event, or any condition existing
at the time it becomes successor trustee.
Section 12. Amendment or Termination.
-------------------------------------
(a) This Trust Agreement may be amended by a written
instrument executed by the Trustee and the Company, provided
that no such amendment shall make the Trust revocable.
(b) The Trust shall not terminate until the date on
which Participants and their beneficiaries are no longer
entitled to benefits pursuant to the terms hereof. Upon
termination of the Trust, the Trustee shall return any assets
remaining in the Trust to the Company.
(c) Upon written approval of all Participants (or their
beneficiaries if they are then entitled to payment of benefits),
the Company may terminate this Trust prior to the time all
benefit payments under the Plan have been made. All assets in
the Trust at termination shall be returned to the Company.
5
Section 13. Miscellaneous.
--------------------------
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process, except pursuant
to the terms of the Plan.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas,
to the extent not preempted by federal law.
(d) The Trustee agrees to be bound by the terms of the
Plan, as in effect from time to time.
(e) The Trustee shall act by vote or written consent of
a majority of its duly-appointed members.
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Agreement to be executed, and its
corporate seal affixed, and the Trustees have executed this
Agreement, this 1st day of May, 1998.
ATTEST: HCB BANCSHARES, INC.
/s/ Paula J. Bergstrom By: /s/ Vida H. Lampkin
- ----------------------- ------------------------
Its President
ATTEST:
/s/ Paula J. Bergstrom /s/ Roy Wayne Moseley
- ----------------------- ------------------------
Roy Wayne Moseley
/s/ Paula J. Bergstrom /s/ Bruce D. Murry
- ----------------------- ------------------------
Bruce D. Murry
/s/ Paula J. Bergstrom /s/ Carl E. Parker, Jr.
- ----------------------- -----------------------
Carl E. Parker, Jr.
/s/ Paula J. Bergstrom /s/ Lula Sue Silliman
- ----------------------- -----------------------
Lula Sue Silliman
/s/ Paula J. Bergstrom /s/ Clifford Steelman
- ----------------------- -----------------------
Clifford Steelman
6