<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission
on February 27, 1997.
Registration No. 333-_____
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_____________________________________________
HEARTLAND BANCSHARES, INC.
- ---------------------------------------------------------------
(Exact name of Registrant as Specified in Its Charter)
Illinois 37-1356594
- ---------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
318 South Park
Herrin, Illinois 62948-3604
(618) 942-7373
- -----------------------------------------------------------------
(Address of Principal Executive Offices)
Heartland Bancshares, Inc.
Management Recognition Plan
Heartland Bancshares, Inc.
1996 Stock Option and Incentive Plan
- -----------------------------------------------------------------
(Full Title of the Plan)
Howard S. Parris, Esquire
Daniel L. Hogans, Esquire
Housley Kantarian & Bronstein, P.C.
1220 19th Street N.W., Suite 700
Washington, D.C. 20036
- -----------------------------------------------------------------
(Name and Address of Agent For Service)
(202) 822-9611
- ----------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================
<S> <C> <C> <C> <C>
Title of each Proposed Maximum Proposed Maximum Amount of
class of Securities Amount to be Offering Price Aggregate Offering Registration
to be registered registered Per Share Price Fee
- ------------------------------------------------------------------------------------
Common Stock,
$.01 par value 122,762 (1) $ (2) $1,755,939.44 (2) $532.11
=====================================================================================
<FN>
(1) Maximum number of shares issuable under Heartland Bancshares, Inc.
Management Recognition Plan (35,075 shares) and Heartland Bancshares, Inc. 1996
Stock Option and Incentive Plan (87,687 shares), as such amounts may be
increased in accordance with said plan in the event of a merger, consolidation,
recapitalization or similar event involving the Registrant.
(2) Under Rule 457(h) the registration fee may be calculated, inter alia, based
upon the price at which the options may be exercised. 122,762 shares are being
registered hereby, of which 1,755,939.44 are under option at a weighted average
exercise price of $14.00 per share ($1,227,562.00 in the aggregate). The
remainder of such shares, which are not presently subject to option (35,079
shares), are being registered based upon the average of the bid and asked price
for the common stock of the Registrant as reported on the National Daily
Quotation System "Pink Sheet" on February 25, 1997 of $15.0625 per share
($528,377.44 in the aggregate). Therefore, the total amount of the offering
being registered herein is $1,755,939.44.
</FN>
</TABLE>
<PAGE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION
10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
- ------
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
- ------ INFORMATION*
*Documents containing the information required by Part I of
this Registration Statement will be sent or given to participants
in the Heartland Bancshares, Inc. Management Recognition Plan and
Heartland Bancshares, Inc. 1996 Stock Option and Incentive Plan
(together, the "Plans") in accordance with Rule 428(b)(1). In
accordance with Note to Part I of Form S-8, such documents are
not filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as
prospectuses or prospectus supplements.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- ------
Heartland Bancshares, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934
(the "1934 Act") and, accordingly, files periodic reports and
other information with the Commission. Reports, proxy statements
and other information concerning the Company filed with the
Commission may be inspected and copies may be obtained (at
prescribed rates) at the Commission's Public Reference Section,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy
and information statements and other information regarding
registrants that file electronically with the Commission,
including the Company. The address for the Commission's Web site
is "http://www.sec.gov".
The following documents are incorporated by reference in
this Registration Statement:
(a) The Company's prospectus dated April 12, 1996.
(b) The Company's Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1996 as filed with the Commission on
May 28, 1996 (Commission File No. 0-28442).
(c) The Company's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1996 as filed with the Commission on
August 13, 1996 (Commission File 0-28442).
(d) The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 as filed with the Commission on
November 13, 1996 (Commission File 0-28442).
(e) The description of the Company's securities
contained in the Form SB-2 filed with the Commission on January
31, 1996 (Commission File No. 33-798)
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTIONS
13(A), 13(C), 14, AND 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 AFTER THE DATE HEREOF AND PRIOR TO THE TERMINATION OF THE
OFFERING OF THE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE
("COMMON STOCK") SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE
IN THIS REGISTRATION STATEMENT, AND TO BE A PART HEREOF FROM THE
DATE OF FILING OF SUCH DOCUMENTS.
ITEM 4. DESCRIPTION OF SECURITIES
- ------
Not applicable, as the Common Stock is registered under
Section 12 of the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
- ------
Not Applicable.
<PAGE>
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------
Article XVII of the Company's Articles of Incorporation
sets forth circumstances under which directors, officers,
employees and agents may be indemnified against liability which
they may incur in their capacities as follows:
ARTICLE XVII
Indemnification
A. Persons. The Corporation shall indemnify, to the extent
provided in paragraphs B, D or F:
(1) any person who is or was a director, officer,
employee, or agent of the Corporation; and
(2) any person who serves or served at the
Corporation's request as a director, officer, employee,
agent, partner or trustee of another corporation,
partnership, joint venture, trust or other enterprise.
B. Extent -- Derivative Suits. In case of a threatened,
pending or completed action or suit by or in the right of the
Corporation against a person named in paragraph A by reason of
his holding a position named in paragraph A, the Corporation
shall indemnify him if he satisfies the standard in paragraph C,
for expenses (including attorneys' fees but excluding amounts
paid in settlement) actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit.
C. Standard -- Derivative Suits. In case of a threatened,
pending or completed action or suit by or in the right of the
Corporation, a person named in paragraph A shall be indemnified
only if:
(1) he is successful on the merits or otherwise; or
(2) he acted in good faith in the transaction which is
the subject of the suit or action, and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Corporation, including, but not limited
to, the taking of any and all actions in connection with
the Corporation's response to any tender offer or any offer
or proposal of another party to engage in a Business
Combination (as defined in Article XV) not approved by the
board of directors. However, he shall not be indemnified
in respect of any claim, issue or matter as to which he has
been adjudged to have been liable to the Corporation
unless, and only to the extent that, the court in which the
suit was brought shall determine, upon application, that
despite the adjudication but in view of all the
circumstances, he is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
D. Extent -- Nonderivative Suits. In case of a threatened,
pending or completed suit, action or proceeding (whether civil,
criminal, administrative or investigative), other than a suit by
or in the right of the Corporation, together hereafter referred
to as a nonderivative suit, against a person named in paragraph A
by reason of his holding a position named in paragraph A, the
Corporation shall indemnify him if he satisfies the standard in
paragraph E, for amounts actually and reasonably incurred by him
in connection with the nonderivative suit, including, but not
limited to (i) expenses (including attorneys' fees), (ii) amounts
paid in settlement, (iii) judgments, and (iv) fines.
E. Standard -- Nonderivative Suits. In case of a
nonderivative suit, a person named in paragraph A shall be
indemnified only if:
(1) he is successful on the merits or otherwise; or
<PAGE>
<PAGE>
(2) he acted in good faith in the transaction which is
the subject of the nonderivative suit and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Corporation, including, but not limited
to, the taking of any and all actions in connection with
the Corporation's response to any tender offer or any offer
or proposal of another party to engage in a Business
Combination (as defined in Article XV) not approved by the
board of directors and, with respect to any criminal action
or proceeding, he had no reasonable cause to believe his
conduct was unlawful. The termination of a nonderivative
suit by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent shall not, in
itself, create a presumption that the person failed to
satisfy the standard of this subparagraph E(2).
F. Determination That Standard Has Been Met. A
determination that the standard of paragraph C or E has been
satisfied may be made by a court, or, except as stated in
subparagraph C(2) (second sentence), the determination may be
made by:
(1) the board of directors by a majority vote of a
quorum consisting of directors of the Corporation who were
not parties to the action, suit or proceeding; or
(2) independent legal counsel (appointed by a quorum
of the disinterested directors of the Corporation) in a
written opinion; or
(3) the stockholders of the Corporation.
G. Proration. Anyone making a determination under
paragraph F may determine that a person has met the standard as
to some matters but not as to others, and may reasonably prorate
amounts to be indemnified.
H. Advance Payment. The Corporation shall pay in advance
any expenses (including attorneys' fees) which may become subject
to indemnification under paragraphs A through G if:
(1) the board of directors authorizes the specific
payment; and
(2) the person receiving the payment undertakes in
writing to repay the same if it is ultimately determined
that he is not entitled to indemnification by the
Corporation under paragraphs A through G.
I. Nonexclusive. The indemnification and advance payment
of expenses provided by paragraphs A through H shall not be
exclusive of any other rights to which a person may be entitled
by law, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
J. Continuation. The indemnification and advancement of
expenses provided by this Article XVII shall be deemed to be a
contract between the Corporation and the persons entitled to
indemnification thereunder, and any repeal or modification of
this Article XVII shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such state
of facts. The indemnification and advance payment provided by
paragraphs A through H shall continue as to a person who has
ceased to hold a position named in paragraph A and shall inure to
his heirs, executors and administrators.
K. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who holds or who has held any
position named in paragraph A, against any liability incurred by
him in any such position, or arising out of his status as such,
whether or not the Corporation would have power to indemnify him
against such liability under paragraphs A through H.
<PAGE>
<PAGE>
L. Intention and Savings Clause. It is the intention of
this Article XVII to provide for indemnification to the fullest
extent permitted by the Business Corporation Act of the State of
Illinois, and this Article XVII shall be interpreted accordingly.
If this Article XVII or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer,
employee, and agent of the Corporation as to costs, charges, and
expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement with respect to any action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative, including an action by or in the right of the
Corporation, to the full extent permitted by any applicable
portion of this Article XVII that shall not have been invalidated
and to the full extent permitted by applicable law. If the
Business Corporation Act of the State of Illinois is amended, or
other Illinois law is enacted, to permit further or additional
indemnification of the persons defined in this Article XVII.A,
then the indemnification of such persons shall be to the fullest
extent permitted by the Business Corporation Act of the State of
Illinois, as so amended, or such other Illinois law.
Section 8.75 of the Illinois Business Corporation Act
permits an Illinois corporation to indemnify directors, officers,
employees and agents of the Company to the same degree and in the
same circumstances as set forth in Article XVII of the Company's
Articles of Incorporation.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
- ------
Not Applicable.
ITEM 8. EXHIBITS
- ------
For a list of all exhibits filed or included as part of this
Registration Statement, see "Index to Exhibits" at the end of
this Registration Statement.
ITEM 9. UNDERTAKINGS
- ------
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement --
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the registration
statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
<PAGE>
(b) That, for the purpose of determining any liability
under the Securities Act of 1934, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(d) If the registrant is a foreign private issuer, to
file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of
Regulation S-X at the start of any delayed offering or throughout
a continuous offering.
2. The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to
deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X is not
set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
4. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Herrin, State of Illinois, on
February 10, 1997.
HEARTLAND BANCSHARES, INC.
By: /s/ Roger O. Hileman
----------------------------
Roger O. Hileman
President and Chief Executive
Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned Directors of Heartland Bancshares, Inc.,
hereby severally constitute and appoint Roger Hileman, with full
power of substitution, our true and lawful attorney and agent, to
do any and all things in our names in the capacities indicated
below which said Roger Hileman may deem necessary or advisable to
enable Heartland Bancshares, Inc. to comply with the Securities
Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in
connection with the registration of Heartland Bancshares, Inc.
common stock, including specifically, but not limited to, power
and authority to sign for us in our names in the capacities
indicated below, the registration statement and any and all
amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Roger Hileman shall do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ----------- ----- -----
<S> <C> <C>
/s/ Roger O. Hileman Director, President and February 10, 1997
- ------------------------- Chief Executive Officer
Roger O. Hileman (Principal Executive and
Financial and Accounting
Officer)
/s/ James C. Walker Chairman of the Board February 10, 1997
- -------------------------
James C. Walker
/s/ Paul R. Calcaterra Director February 10, 1997
- -------------------------
Paul R. Calcaterra
/s/ B. D. Cross Director February 10, 1997
- -------------------------
B. D. Cross
/s/ Charles Stevens Director February 10, 1997
- -------------------------
Charles Stevens
/s/ Randall A. Youngblood Director February 10, 1997
- -------------------------
Randall A. Youngblood
/TABLE
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
5 Opinion of Housley Kantarian & Bronstein, P.C. as
to the validity of the Common Stock being registered
23.1 Consent of Housley Kantarian & Bronstein, P.C.
(appears in their opinion filed as Exhibit 5)
23.2 Consent of Independent Certified Public Accountants
24 Power of Attorney (contained in the signature page to
this registration statement)
99.1 Heartland Bancshares, Inc. Management Recognition
Plan and associated trust agreement
99.2 Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan and 1997 Amendment
99.3 Form of Stock Option Agreement to be entered into
with Optionees with respect to Incentive Stock
Options granted under the Heartland Bancshares, Inc.
1996 Stock Option and Incentive Plan
99.4 Form of Stock Option Agreement to be entered into
with Optionees with respect to Non-Incentive Stock
Options granted under the Heartland Bancshares, Inc.
1996 Stock Option and Incentive Plan
99.5 Form of Agreement to be entered into with Optionees
with respect to Stock Appreciation Rights granted
under the Heartland Bancshares, Inc. 1996 Stock
Option and Incentive Plan
99.6 Notice of MRP Award
99.7 Memorandum concerning taxation of MRP Awards, and
associated election form
February 27, 1997
Board of Directors
Heartland Bancshares, Inc.
318 South Park
Herrin, Illinois 62948
Re: Registration Statement on Form S-8
------------------------------------------------------
Heartland Bancshares, Inc. Management Recognition Plan
and Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan
Dear Board Members:
We have acted as special counsel to Heartland Bancshares,
Inc., an Illinois Corporation (the "Company"), in connection with
the preparation of the Registration Statement on Form S-8 filed
with the Securities and Exchange Commission (the "Registration
Statement") under the Securities Act of 1933, as amended,
relating to 122,762 shares of common stock, par value $.01 per
share (the "Common Stock") of the Company which may be issued
pursuant to the Heartland Bancshares, Inc. Management Recognition
Plan and Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan (together, the "Plans"), all as more fully
described in the Registration Statement. You have requested the
opinion of this firm with respect to certain legal aspects of the
proposed offering.
We have examined such documents, records and matters of law
as we have deemed necessary for purposes of this opinion and
based thereon, we are of the opinion that the Common Stock when
issued pursuant to and in accordance with the terms of the Plans
will be legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement on Form S-8 and to
references to our firm included under the caption "Legal Opinion"
in the Prospectus which is part of the Registration Statement.
Very truly yours,
Housley Kantarian & Bronstein, P.C.
By: /s/ Howard S. Parris
--------------------------------
Howard S. Parris, Esquire
February 27, 1997
Board of Directors
Heartland Bancshares, Inc.
318 South Park
Herrin, Illinois 62948
Re: Registration Statement on Form S-8
------------------------------------------------------
Heartland Bancshares, Inc. Management Recognition Plan
and Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan
We consent to the incorporation by reference in this registration
statement of 122,762 shares of common stock on Form S-8 of our
reports dated February 26, 1996, on our audits of the
consolidated statements of financial condition of First Federal
Savings and Loan and Subsidiary as of December 31, 1995 and 1994
and the related consolidated statements of income, changes in
retained earnings, and cash flows, for the three years ended
December 31, 1995, which reports were included in the Heartland
Bancshares, Inc. prospectus dated April 12, 1996. We also
consent to the reference to our firm under the caption "Experts."
Gray Hunter Stenn, CPAs
Certified Public Accountants
HEARTLAND 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 National 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.<PAGE>
<PAGE>
3.05 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.06 "Common Stock" means shares of the common stock of
the Company.
3.07 "Company" means Heartland Bancshares, Inc.
3.08 "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.
3.09 "Date of Conversion" means the date of the
conversion of the Bank from mutual to stock form.
3.10 "Director" means a member of the Board.
3.11 "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.
3.12 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07 hereof.
3.13 "Employee" means any person who is employed by the
Company or an Affiliate.
3.14 "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.
3.15 "Participant" means an Employee or Director who holds
a Plan Share Award.
3.16 "Plan" means this Management Recognition Plan.
3.17 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant pursuant
to the Plan.
3.18 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.19 "Plan Share Reserve" means the shares of Common Stock
held by the Trustee pursuant to Sections 5.02 and 5.03.
Management Recognition Plan - Page 2 -<PAGE>
<PAGE>
3.20 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company and
the Trustee, and "Trust" means the trust created thereunder.
3.21 "Trustee" means that person(s) or entity appointed by
the Board pursuant to the Trust Agreement to hold legal title to
the Plan assets for the purposes set forth herein.
3.22 "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant's Continuous
Service has not terminated for any reason.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE AND POWERS OF THE COMMITTEE. The Plan shall be
administered and interpreted by the Committee, which shall
consist of not less than two members of the Board who are Non-
employee Directors. In the absence at any time of a duly
appointed Committee, the Plan shall be administered by those
members of the Board who are Non-employee Directors, and by the
Board if there are less than two Non-employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to make Plan Share Awards to such Employees as the
Committee may select, (ii) to determine the form and content of
Plan Share Awards to be issued under the Plan, (iii) to interpret
the Plan, (iv) to prescribe, amend and rescind rules and re-
gulations relating to the Plan, and (v) to make other deter-
minations 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.
Members of the Board who are eligible
Management Recognition Plan - Page 3 -<PAGE>
<PAGE>
for or who have been granted Plan Share Awards (other than
pursuant to Section 6.04) may not vote on any matters affecting
the administration of the Plan or the grant of Plan Shares or
Plan Share Awards (although such members may be counted in
determining the existence of a quorum at any meeting of the Board
during which actions with regard thereto are taken). Further,
with respect to all actions taken by the Board in regard to the
Plan, such action shall be taken by a majority of the Board where
such a majority of the directors acting in the matter are Non-
employee Directors.
4.03 LIMITATION ON LIABILITY. No member of the Board or
the Committee or the Trustee(s) shall be liable for any
determination made in good faith with respect to the Plan or any
Plan Shares or Plan Share Awards granted under it. If a member
of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Company shall indemnify such member against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably believed
to be in the best interests of the Company and its Affiliates
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
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. 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
four percent (4%) of the number of shares of Common Stock issued
on the Date of Conversion. Such Shares may either be authorized
but unissued Shares, Shares repurchased by the Plan or an
associated trust on the open market, or Shares held in treasury.
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.
Management Recognition Plan - Page 4 -<PAGE>
<PAGE>
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. Only Employees shall be eligible to
receive Plan Share Awards. In selecting those Employees to whom
Plan Share Awards will be granted and the number of shares
covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Employees,
the value of their services to the Company and its Affiliates,
and any other factors the Committee may deem relevant.
Notwithstanding the foregoing, (i) the Committee shall
automatically make the Plan Share Awards specified in Sections
6.04 and 6.05 hereof; and (ii) no Employee shall receive Plan
Share Awards relating to more than 25% of the Plan Shares
reserved under Section 5.02, and no non-Employee Director shall
receive Plan Share Awards relating to more than 5% of the Plan
Shares reserved under Section 5.02, with all non-Employee
Directors as a group receiving Plan Share Awards on the Effective
Date relating to no more than 30% of the Plan Shares reserved
under Section 5.02.
6.02 ALLOCATIONS. The Committee will determine which
Employees will be granted discretionary Plan Share Awards, and
the number of Shares covered by each Plan Share Award, provided
that in no event shall any Awards be made which will violate the
governing instruments of the Company or its Affiliates or any
applicable federal or state law or regulation. In the event Plan
Shares are forfeited for any reason or additional shares of
Common Stock are purchased by the Trustee, the Committee may,
from time to time, determine which of the Employees referenced in
Section 6.01 above will be granted additional Plan Share Awards
to be awarded from the forfeited or acquired Plan Shares.
6.03 FORM OF ALLOCATION. As promptly as practicable after
a determination is made pursuant to Section 6.02 that a Plan
Share Award is to be made, the Committee shall notify the
Participant in writing of the grant of the Award, the number of
Plan Shares covered by the Award, and the terms upon which the
Plan Shares subject to the Award may be earned. The date on
which the Committee so notifies the Participant shall be
considered the date of grant of the Plan Share Awards. The
Committee shall maintain records as to all grants of Plan Share
Awards under the Plan.
6.04 AUTOMATIC GRANTS TO 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 said date, a Plan Share Award for a number of
Shares equal to the lesser of five (5%) of the number of Plan
Shares which the Trust is authorized to purchase pursuant to
Section 5.02 of the Plan and the quotient obtained by dividing --
(i) 30 percent (30%) of the number of Plan Shares which
the Trust is authorized to purchase pursuant to
Section 5.02 of the Plan, by
(ii) the number of Directors entitled to receive Plan
Share Awards on the Effective Date, pursuant to this
Section 6.04.
Management Recognition Plan - Page 5 -<PAGE>
<PAGE>
Each Director who joins the Board after the Effective Date shall
receive, on said date, a Plan Share Award of two percent (2%) of
the number of Plan Shares which the Trust is authorized to
purchase pursuant to Section 5.02 of the Plan (or such lesser
number as are available hereunder for Plan Share Awards). Plan
Share Awards received under the provisions of this Section shall
become vested and nonforfeitable according to the general rules
set forth in subsections (a), and (b) of Section 7.01, and the
Committee shall have no discretion to alter or accelerate said
vesting requirements. Unless otherwise inapplicable or
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.05 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:
Percentage of Plan Shares Authorized
Employee for Purchase under Plan Subsection 5.02
-------- ---------------------------------------
Roger O. Hileman 25.0%
Christy L. Cripps 12.5%
Ronald D. Maddox 12.5%
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a) and (b) of Section
7.01, and the Committee shall have no discretion to alter said
vesting requirements. Unless otherwise inapplicable or
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.06 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.
Management Recognition Plan - Page 6 -<PAGE>
<PAGE>
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Twenty percent (20%) of the Plan Shares
subject to a Plan Share Award shall be earned and become non-
forfeitable by a Participant upon his or her completion of each
of five Years of Service.
(b) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY.
Notwithstanding the general rule contained in Section 7.01(a)
above, all Plan Shares subject to a Plan Share Award held by a
Participant whose service with the Company or an Affiliate
terminates due to the Participant's death or Disability, shall be
deemed earned as of the Participant's last day of service with
the Company or an Affiliate and shall be distributed as soon as
practicable thereafter.
(c) SIX-MONTH HOLDING PERIOD. In no event may Plan Shares
be sold within the six-month period following the date of the
underlying Plan Share Award, except in the event of the
Participant's death or Disability, or such other event as the
Board may specifically deem appropriate.
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 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 distributed. There shall also be distributed an
appropriate amount of net earnings, if any, of the Trust with
respect to any cash dividends paid pursuant to this Section 7.02.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: General Rule. Except as
provided in Subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant or his Beneficiary, as the case may
be, as soon as practicable after they have been earned. No
fractional shares shall be distributed.
(b) FORM OF DISTRIBUTION. The Trustee shall distribute all
Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
(c) WITHHOLDING. The Trustee shall withhold from any cash
payment made under this Plan sufficient amounts to cover any
applicable withholding and employment taxes, and if the
Management Recognition Plan - Page 7 -<PAGE>
<PAGE>
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 non-Employee Directors of the Board. To the
extent this limitation would delay the date on which a
Participant receives Plan Shares, the Participant may elect to
receive from the Trust, in lieu of 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.
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, recapitaliza-
tion, 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
Management Recognition Plan - Page 8 -<PAGE>
<PAGE>
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 such restrictions as the Committee
may deem appropriate or desirable, including but not limited to a
right of first refusal, or repurchase option, or both of these
restrictions.
(d) OTHER ISSUANCES. Except as expressly provided in
this Section, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
shares of Common Stock or stock of another class, for cash or
property or for labor or services either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, shall
not affect, and no adjustment shall be made with respect to, the
number or class of shares of Common Stock then subject to Plan
Share Awards or reserved for issuance under the Plan.
8.02 AMENDMENT AND TERMINATION OF PLAN. The Board may, by
resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance with
this Section 8.02 shall include the power to direct the Trustee
to return to the Company all or any part of the assets of the
Trust, including shares of Common Stock held in the Plan Share
Reserve. However, the termination of the Trust shall not affect
a Participant's right to earn Plan Share Awards and to receive a
distribution of Common Stock relating thereto, including earnings
thereon, in accordance with the terms of this Plan and the grant
by the Committee or the Board.
8.03 NONTRANSFERABILITY. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share Awards
may transfer such Awards to his or her spouse, lineal ascendants,
lineal descendants, or to a duly established trust for the
benefit of one or more of these individuals. Plan Share Awards
so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an individual
or trust to whom the Participant could have initially transferred
the Awards pursuant to this Section 8.03. Plan Share Awards
which are transferred pursuant to this Section 8.03 shall be
exercisable by the transferee according to the same terms and
conditions as applied to the Participant.
Management Recognition Plan - Page 9 -<PAGE>
<PAGE>
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 Illinois to the
extent not preempted by Federal law.
8.07 EFFECTIVE DATE. The Plan shall become effective
immediately upon its approval by a favorable vote of stockholders
of the Company who own at least a majority of the total votes
eligible to be cast at a duly called meeting of the Company's
stockholders held in accordance with applicable laws, provided
that the Plan shall not be submitted for such approval within the
six-month period after the Date of Conversion. In no event shall
Plan Share Awards be made prior to the Effective Date.
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 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).
Management Recognition Plan - Page 10 -
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<PAGE>
TRUST AGREEMENT
UNDER THE HEARTLAND BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
This Agreement made this 10th day of February, 1997 by and
between Heartland Bancshares, Inc. (the "Company") and James C.
Walker, Charles Stevens, B.D. Cross, Randall Youngblood, and Paul
R. Calcaterra (acting by majority, the "Trustee").
WHEREAS, the Company maintains the Heartland Bancshares,
Inc. Management Recognition Plan (the "Plan"); and
WHEREAS, the Company 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 in connection
with the conversion of Heartland National 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.
<PAGE>
<PAGE>
(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 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
MRP Trust Agreement - Page 2 -<PAGE>
<PAGE>
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.
(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).
MRP Trust Agreement - Page 3 -<PAGE>
<PAGE>
(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 four percent
(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.
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.
MRP Trust Agreement - Page 4 -<PAGE>
<PAGE>
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
MRP Trust Agreement - Page 5 -<PAGE>
<PAGE>
beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor the Trustee, or to loan to any
person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Code.
Section 9. Compensation and Expenses of Trustee.
-------------------------------------------------
The Company shall pay all administrative expenses and the
Trustee's fees and expenses relating to the 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.
MRP Trust Agreement - Page 6 -<PAGE>
<PAGE>
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.
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 Illinois, 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.
MRP Trust Agreement - Page 7 -<PAGE>
<PAGE>
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 10th day of February, 1997.
ATTEST: HEARTLAND BANCSHARES, INC.
/s/ Christy L. Cripps /s/ Roger O. Hileman
- --------------------- By ------------------------------
Its President
ATTEST:
/s/ Christy L. Cripps /s/ James C. Walker
- --------------------- -----------------------------
James C. Walker, Trustee
/s/ Christy L. Cripps /s/ Charles Stevens
- --------------------- -----------------------------
Charles Stevens, Trustee
/s/ Christy L. Cripps /s/ B.D. Cross
- --------------------- -----------------------------
B.D. Cross, Trustee
/s/ Christy L. Cripps /s/ Randall Youngblood
- --------------------- -----------------------------
Randall Youngblood, Trustee
/s/ Christy L. Cripps /s/ Paul R. Calcaterra
- --------------------- -----------------------------
Paul R. Calcaterra, Trustee
MRP Trust Agreement - Page 8 -
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Heartland Bancshares, Inc. 1996 Stock
Option and Incentive Plan (the "Plan") is to advance the
interests of the Company through providing select key Employees
and Directors of the Bank, the Company, and their Affiliates with
the opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentive to Directors and key
Employees of the Company or any Affiliate to promote the success
of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(d) "Bank" shall mean Heartland National Bank.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Committee" shall mean the Stock Option Committee
appointed by the Board in accordance with Paragraph 5(a) hereof.
(h) "Common Stock" shall mean the common stock of the
Company.
(i) "Company" shall mean Heartland Bancshares, Inc.
(j) "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.
<PAGE>
<PAGE>
(k) "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.
(l) "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.
(m) "Effective Date" shall mean the date specified in
Paragraph 14 hereof.
(n) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(o) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(p) "ISO" means an option to purchase Common Stock which
meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(q) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(r) "Non-employee Director" shall have the meaning
provided in Rule 16b-3.
(s) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(t) "Option" means an ISO and/or a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(v) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(w) "Plan" shall mean this 1996 Stock Option and
Incentive Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(y) "Share" shall mean one share of Common Stock.
1996 Stock Option and Incentive Plan - Page 2 -<PAGE>
<PAGE>
(z) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
(aa) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant's Continuous
Service has not terminated for any reason.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 16 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Awards. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. Except as otherwise required under
Section 11, the aggregate number of Shares deliverable pursuant
to Awards shall not exceed 87,687 Shares, which equals 10% of the
Shares issued by the Company in connection with the Bank's
conversion from mutual to stock form. Such Shares may either be
authorized but unissued Shares, Shares repurchased by the Plan or
an associated trust on the open market, or Shares held in
treasury. If any Awards should expire, become unexercisable, or
be forfeited for any reason without having been exercised, the
Optioned Shares shall, unless the Plan shall have been
terminated, be available for the grant of additional Awards under
the Plan.
(b) Special Rule for SARs. The number of Shares with
respect to which an SAR is granted, but not the number of Shares
which the Company delivers or could deliver to an Employee or
individual upon exercise of an SAR, shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and vice
versa, only the number of Shares subject to the Option shall be
charged against the aggregate number of Shares remaining
available under the Plan. The Shares involved in an Option as to
which option rights have terminated by reason of the exercise of
a related SAR, as provided in Paragraph 10 hereof, shall not be
available for the grant of further Options under the Plan.
1996 Stock Option and Incentive Plan - Page 3 -<PAGE>
<PAGE>
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of not less
than two (2) members of the Board who are Non-employee Directors.
Members of the Committee shall serve at the pleasure of the
Board. In the absence at any time of a duly appointed Committee,
the Plan shall be administered by those members of the Board who
are Non-employee Directors.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the form
of Agreements under the Plan, (iii) to interpret the Plan, (iv)
to prescribe, amend and rescind rules and regulations relating to
the Plan, and (v) to make other determinations necessary or
advisable for the administration of the Plan. The Committee
shall have and may exercise such other power and authority as may
be delegated to it by the Board from time to time. A majority of
the entire Committee shall constitute a quorum and the action of
a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of
the Committee without a meeting, shall be deemed the action of
the Committee.
(c) Agreement. Each Award shall be evidenced by a written
agreement containing such provisions as may be approved by the
Committee. Each such Agreement shall constitute a binding
contract between the Company and the Participant, and every
Participant, upon acceptance of such Agreement, shall be bound by
the terms and restrictions of the Plan and of such Agreement.
The terms of each such Agreement shall be in accordance with the
Plan, but each Agreement may include such additional provisions
and restrictions determined by the Committee, in its discretion,
provided that such additional provisions and restrictions are not
inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise
Price of an Option or SAR, (ii) the number of Shares subject to,
and the expiration date of, the Award, (iii) the manner, time and
rate (cumulative or otherwise) of exercise or vesting of such
Award, and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such
Award.
The Chairman of the Committee and such other Directors and
officers as shall be designated by the Committee are hereby
authorized to execute Agreements on behalf of the Company and to
cause them to be delivered to the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the Committee
shall be indemnified by the Company in connection with any claim,
action, suit or proceeding relating to any action taken or
failure to act under or in
1996 Stock Option and Incentive Plan - Page 4 -<PAGE>
<PAGE>
connection with the Plan or any Award, granted hereunder to the
full extent provided for under the Company's governing
instruments with respect to the indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. Only Employees shall be eligible to
receive Awards. In selecting those Employees to whom Awards will
be granted and the number of shares covered by such Awards, the
Committee shall consider the position, duties and
responsibilities of the eligible Employees, the value of their
services to the Company and its Affiliates, and any other factors
the Committee may deem relevant. Notwithstanding the foregoing,
the Committee shall automatically make the Awards specified in
Sections 6(b) and 9 hereof, and (ii) no Employee shall receive
Options to purchase more than 25% of the Shares reserved under
Paragraph 4(a), and no non-Employee Director shall receive
Options to purchase more than 5% of the Shares reserved under
Paragraph 4(a), with all non-Employee Directors as a group
receiving Options on the Effective Date to purchase no more than
30% of the Shares reserved under Paragraph 4(a).
(b) Automatic Grants to Employees. On the Effective Date,
each of the following Employees shall receive an Option (in the
form of an ISO, to the extent permissible under the Code) to
purchase the number of Shares listed below, at an Exercise Price
per Share equal to the Market Value of a Share on the Effective
Date; provided that such grant shall not be made to an Employee
whose Continuous Service terminates on or before the Effective
Date:
Percentage of Shares
Participant Reserved under Paragraph 4(a)
----------- -----------------------------
Christy L. Cripps 25%
Roger O. Hileman 25%
Ronald D. Maddox 25%
With respect to each of the above-named Participants, the
Option granted to the Participant hereunder (i) shall vest in
accordance with the general rule set forth in Paragraph 8(a) of
the Plan, (ii) shall have a term of ten years from the Effective
Date, and (iii) shall be subject to the general rule set forth in
Paragraph 8(c) with respect to the effect of a Participant's
termination of Continuous Service on the Participant's right to
exercise his Options.
(c) Special Rules for ISOs. The aggregate Market Value, as
of the date the Option is granted, of the Shares with respect to
which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option plans,
as defined in Section 422 of the Code, of the Company or any
present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may grant
Options in excess
1996 Stock Option and Incentive Plan - Page 5 -<PAGE>
<PAGE>
of the foregoing limitations, in which case such Options granted
in excess of such limitation shall be Options which are Non-ISOs.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In the
case of an Employee who owns Shares representing more than 10% of
the Company's outstanding Shares of Common Stock at the time an
ISO is granted, the Exercise Price shall not be less than 110% of
the Market Value of the Optioned Shares at the time the ISO is
granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average of
the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a national
securities exchange on the date in question, then the Market
Value per Share shall be the mean between the bid and asked price
on such date, or, if there is no bid and asked price on such
date, then on the next prior business day on which there was a
bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Each Option shall become exercisable with
respect to twenty percent (20%) of the Optioned Shares upon the
Participant's completion of each of five Years of Service,
provided that an Option shall become fully (100%) exercisable
immediately upon termination of the Participant's Continuous
Service due to the Participant's Disability or death. An Option
may not be exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of intent
to exercise the Option with respect to a specified number of
Shares, and (2) payment to the Company (contemporaneously with
delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which the
Option is then being exercised. Each such notice (and payment
where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at the Company's executive offices. Common Stock
utilized in full or partial payment of the Exercise Price for
Options shall be valued at its Market Value at the date of
exercise, and may consist of Shares subject to the Option being
exercised. Upon a Participant's exercise of an Option, the
Company shall pay the Participant a cash amount equal to any
dividends declared on the underlying Shares between the date of
grant and the date of exercise of the Option.
1996 Stock Option and Incentive Plan - Page 6 -<PAGE>
<PAGE>
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may be
exercised by a Participant only while he is an Employee and has
maintained Continuous Service from the date of the grant of the
Option, or within three months after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of -
(1) "Just Cause" which for purposes hereof shall have
the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the Employee's
personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-
desist order), then the Participant's rights to exercise
such Option shall expire on the date of such termination;
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option immediately
prior to his death, such Option of the deceased Participant
may be exercised within two years from the date of his
death (but not later than the date on which the Option
would otherwise expire) by the personal representatives of
his estate or person or persons to whom his rights under
such Option shall have passed by will or by laws of descent
and distribution;
(3) Disability, then to the extent that the
Participant would have been entitled to exercise the Option
immediately prior to his or her Disability, such Option may
be exercised within one year from the date of termination
of employment due to Disability, but not later than the
date on which the Option would otherwise expire.
(d) Effect of the Committee's Decisions. The Committee's
determination whether a Participant's Continuous Service has
ceased, and the effective date thereof, shall be final and
conclusive on all persons affected thereby.
(e) Six-Month Holding Period. Notwithstanding any other
provision of this Plan to the contrary, Common Stock that is
purchased upon exercise of an Option or SAR may not be sold
within the six-month period following the grant date of that
Option or SAR, except in the event of the Participant's death or
Disability, or such other event as the Board may specifically
deem appropriate.
9. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Automatic Grants. 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 said date,
Non-ISOs to purchase a number of Shares equal to the lesser of
five percent (5%) of the number of Shares reserved under
Paragraph 4(a) hereof, and the quotient obtained by dividing -
1996 Stock Option and Incentive Plan - Page 7 -<PAGE>
<PAGE>
(i) 30 percent (30%) of the number of Shares reserved
under Paragraph 4(a) hereof, by
(ii) the number of Directors entitled to receive an Option
on the Effective Date, pursuant to this Paragraph
9(a).
Such Non-ISOs shall have an Exercise Price per Share equal
to the Market Value of a Share on the date of grant. Each
Director who joins the Board after the Effective Date and who is
not then an Employee shall receive, on the date of joining the
Board, Non-ISOs to purchase 2% of the Shares reserved under
Paragraph 4(a) of the Plan, at an Exercise Price per Share equal
to its Market Value on the date of grant.
(b) Terms of Exercise. Options received under the
provisions of this Paragraph will become exercisable in
accordance with the general rule set forth in Paragraph 8(a)
hereof, and may be exercised from time to time by (a) written
notice of intent to exercise the Option with respect to all or a
specified number of the Optioned Shares, and (b) payment to the
Company (contemporaneously with the delivery of such notice), in
cash, in Common Stock, or a combination of cash and Common Stock,
of the amount of the Exercise Price for the number of the
Optioned Shares with respect to which the Option is then being
exercised. Each such notice and payment shall be delivered, or
mailed by prepaid registered or certified mail, addressed to the
Treasurer of the Company at the Company's executive offices. A
Director who exercises Options pursuant to this Paragraph may
satisfy all applicable federal, state and local income and
employment tax withholding obligations, in whole or in part, by
irrevocably electing to have the Company withhold shares of
Common Stock, or to deliver to the Company shares of Common Stock
that he already owns, having a value equal to the amount required
to be withheld; provided that to the extent not inconsistent
herewith, such election otherwise complies with those
requirements of Paragraphs 8 and 19 hereof.
Options granted under this Paragraph shall have a term of
ten years; provided that Options granted under this Paragraph
shall expire one year after the date on which a Director
terminates Continuous Service on the Board, but in no event later
than the date on which such Options would otherwise expire. In
the event of such Director's death during the term of his
directorship, Options granted under this Paragraph shall become
immediately exercisable, and may be exercised within two years
from the date of his death by the personal representatives of his
estate or person or persons to whom his rights under such Options
shall have passed by will or by laws of descent and distribution,
but in no event later than the date on which such Options would
otherwise expire. In the event of such Director's Disability
during his or her directorship, the Director's Options shall
become immediately exercisable, and such Options may be exercised
within one year of the termination of directorship due to
Disability, but not later than the date that the Options would
otherwise expire. Unless otherwise inapplicable or inconsistent
with the provisions of this Paragraph, the Options to be granted
to Directors hereunder shall be subject to all other provisions
of this Plan.
1996 Stock Option and Incentive Plan - Page 8 -<PAGE>
<PAGE>
(c) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
10. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the Committee
may from time to time grant SARs to Employees either in
conjunction with, or independently of, any Options granted under
the Plan. An SAR granted in conjunction with an Option may be an
alternative right wherein the exercise of the Option terminates
the SAR to the extent of the number of shares purchased upon
exercise of the Option and, correspondingly, the exercise of the
SAR terminates the Option to the extent of the number of Shares
with respect to which the SAR is exercised. Alternatively, an
SAR granted in conjunction with an Option may be an additional
right wherein both the SAR and the Option may be exercised. An
SAR may not be granted in conjunction with an ISO under
circumstances in which the exercise of the SAR affects the right
to exercise the ISO or vice versa, unless the SAR, by its terms,
meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the Market Value
of the Shares subject to the ISO at the time the SAR is
exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may be
exercised; and
(5) The SAR may be exercised only when the Market Value
of the Shares subject to the ISO exceeds the Exercise Price
of the ISO.
(b) Exercise Price. The Exercise Price as to any
particular SAR shall not be less than the Market Value of the
Optioned Shares on the date of grant.
(c) Timing of Exercise. Any election by a Participant
to exercise SARs shall be made during the period beginning on the
3rd business day following the release for publication of
quarterly or annual financial information and ending on the 12th
business day following such date. This condition shall be deemed
to be satisfied when the specified financial data is first made
publicly available. In no event, however, may an SAR be
exercised within the six-month period following the date of its
grant.
The provisions of Paragraph 8(c) regarding the period of
exercisability of Options are incorporated by reference herein,
and shall determine the period of exercisability of SARs.
1996 Stock Option and Incentive Plan - Page 9 -<PAGE>
<PAGE>
(d) Exercise of SARs. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares. This
amount shall be payable by the Company, in the discretion of the
Committee, in cash or in Shares valued at the then Market Value
thereof, or any combination thereof.
(e) Procedure for Exercising SARs. To the extent not
inconsistent herewith, the provisions of Paragraph 8(b) as to the
procedure for exercising Options are incorporated by reference,
and shall determine the procedure for exercising SARs.
11. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for any
increase, decrease, change or exchange of Shares for a different
number or kind of shares or other securities of the Company which
results from a merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up,
combination of shares, or similar event in which the number or
kind of shares is changed without the receipt or payment of
consideration by the Company.
(b) Transactions in which the Company is Not the Surviving
Entity. In the event of (i) the liquidation or dissolution of
the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of
all or substantially all of the Company's assets (any of the
foregoing to be referred to herein as a "Transaction"), all
outstanding Awards, together with the Exercise Prices thereof,
shall be equitably adjusted for any change or exchange of Shares
for a different number or kind of shares or other securities
which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant
to subparagraphs (a) or (b)(1) hereof shall be made in such a
manner as not to constitute a modification, within the meaning of
Section 424(h) of the Code, of outstanding ISOs.
(d) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
1996 Stock Option and Incentive Plan - Page 10 -<PAGE>
<PAGE>
(e) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, shall not affect, and
no adjustment shall be made with respect to, the number, class,
or Exercise Price of Shares then subject to Awards or reserved
for issuance under the Plan.
(f) Certain Special Dividends. The Exercise Price of
shares subject to outstanding Awards shall be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return to capital to the
stockholders, except that this subparagraph (f) shall not apply
to any dividend which is paid to the Participant pursuant to
Paragraph 8(b) or 9(b) hereof.
12. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by
the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant who
holds Awards may transfer such Awards (but not ISOs) to his or
her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these
individuals. Awards so transferred may thereafter be transferred
only to the Participant who originally received the grant or to
an individual or trust to whom the Participant could have
initially transferred the Awards pursuant to this Paragraph 12.
Awards which are transferred pursuant to this Paragraph 12 shall
be exercisable by the transferee according to the same terms and
conditions as applied to the Participant.
13. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the determina-
tion of granting such Award, and the Effective Date. Notice of
the determination shall be given to each Participant to whom an
Award is so granted within a reasonable time after the date of
such grant.
14. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by a favorable vote of stockholders owning at least a
majority of the total votes eligible to be cast at a duly called
meeting of the Company's stockholders held in accordance with
applicable laws, provided that the Plan shall not be submitted
for such approval within the six-month period after the Bank
completes its mutual-to-stock conversion and provided further
that the Plan's effectiveness shall be contingent on its approval
by the Office of Thrift Supervision. No Awards may be made prior
to approval of the Plan by the stockholders of the Company.
1996 Stock Option and Incentive Plan - Page 11 -<PAGE>
<PAGE>
15. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may authorize
the Committee to direct execution of an instrument providing for
the modification of any outstanding Award, provided no such
modification shall confer on the holder of said Award any right
or benefit which could not be conferred on him by the grant of a
new Award at such time, or impair the Award without the consent
of the holder of the Award.
16. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the Plan
and, with respect to any at the time not subject to Awards,
suspend or terminate the Plan.
No amendment, suspension or termination of the Plan shall,
without the consent of any affected holders of an Award, alter or
impair any rights or obligations under any Award theretofore
granted.
17. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of any
liability in respect of the non-issuance or sale of such Shares.
As a condition to the exercise of an Option or SAR, the Company
may require the person exercising the Option or SAR to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements
of federal or state securities laws.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such restrictions
on Shares as it may deem appropriate or desirable, including but
not limited to the authority to impose a right of first refusal
or to establish repurchase rights or both of these restrictions.
18. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
1996 Stock Option and Incentive Plan - Page 12 -<PAGE>
<PAGE>
19. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise of
Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount required
to be withheld. The value of the Shares to be withheld, or
delivered to the Company, shall be based on the Market Value of
the Shares on the date the amount of tax to be withheld is to be
determined. As an alternative, the Company may retain, or sell
without notice, a number of such Shares sufficient to cover the
amount required to be withheld.
20. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility to
participate or participation in the Plan create or be deemed to
create any legal or equitable right of the Employee, Director, or
any other party to continue service with the Company, the Bank,
or any Affiliate of such corporations. Except to the extent
provided in Paragraphs 6(b) and 9(a), no Employee or Director
shall have a right to be granted an Award or, having received an
Award, the right to again be granted an Award. However, an
Employee or Director who has been granted an Award may, if
otherwise eligible, be granted an additional Award or Awards.
21. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Illinois, except to the extent that
federal law shall be deemed to apply.
1996 Stock Option and Incentive Plan - Page 13 -
<PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
____________________________________
1997 Amendment
____________________________________
WHEREAS, Heartland Bancshares, Inc. (the "Company")
maintains the Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan (the "Plan"); and
WHEREAS, the Company has determined that said Plan should be
amended to eliminate the Company's obligation to pay cash amounts
upon the exercise of stock options equalling the dividends which
would have been paid on the underlying shares had they been
outstanding.
NOW, THEREFORE, pursuant to Paragraph 16 of the Plan, the
Plan is hereby amended as follows, effective immediately.
1. The fourth sentence of Paragraph 8(b) of the Plan is
amended in its entirety to provide as follows (with italics
highlighting new text):
Upon a Participant's exercise of an Option, the
Company shall, if provided by the Committee in the
Agreement underlying such Option, pay the Participant
a cash amount equal to any dividends declared on the
underlying Shares between the date of grant and the
date of exercise of the Option.
2. Nothing contained herein shall be held to alter, vary
or affect any of the terms, provisions, or conditions of the Plan
or any option agreement entered into thereunder, other than as
stated above.
WHEREFORE, on this ________ day of ___________, 1997, the Company
hereby executes this 1997 Amendment to the Plan.
HEARTLAND BANCSHARES, INC.
By _______________________________
Its President
_________________ Attest: ___________________ (Seal)
STOCK OPTION AGREEMENT
FOR INCENTIVE STOCK OPTIONS UNDER SECTION 422
OF THE INTERNAL REVENUE CODE
PURSUANT TO THE
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
STOCK OPTION for a total of _________ shares of Common
Stock, par value $.01 per share, of Heartland Bancshares, Inc.
(the "Company"), which Option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), is hereby granted to
_____________ (the "Optionee") at the price set forth herein,
and in all respects subject to the terms, definitions and
provisions of the Heartland Bancshares, Inc. 1996 Stock Option
and Incentive Plan (the "Plan") which was adopted by the Company
and which is incorporated by reference herein, receipt of which
is hereby acknowledged.
1. Option Price. The option price is $_______ for
each share, being 100% */ of the fair market value, as determined
by the Committee, of the Common Stock on the date of grant of
this Option.
2. Exercises of Option. This Option shall be exercisable
in accordance with provisions of the Plan as follows:
(i) Schedule of rights to exercise.
------------------------------
Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
- ----------------------------- ---------------------------
Upon Grant 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
_______________
*/ 110% in the case of an Optionee who owns shares representing
more than 10% of the outstanding common stock of the Company
on
the date of grant of this Option.<PAGE>
<PAGE>
ISO Agreement
Page 2
(ii) Method of Exercise. This Option shall be exercisable
by a written notice by the Optionee which shall:
(a) state the election to exercise the Option, the
number of shares with respect to which it is being
exercised, the person in whose name the stock
certificate or certificates for such shares of Common
Stock is to be registered, his address and Social
Security Number (or if more than one, the names,
addresses and Social Security Numbers of such persons);
(b) contain such representations and agreements as to
the holder's investment intent with respect to such
shares of Common Stock as may be satisfactory to the
Company's counsel;
(c) be signed by the person or persons entitled to
exercise the Option and, if the Option is being
exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such person or
persons to exercise the Option; and
(d) be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any shares with respect to
which the Option is being exercised shall be by cash, Common
Stock, or such combination of cash and Common Stock as the
Optionee elects. The certificate or certificates for shares of
Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the
Option.
(iii) Restrictions on exercise. This Option may not be
exercised if the issuance of the shares upon such exercise would
constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to
the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and
warranty to the Company as may be required by any applicable law
or regulation.
3. Withholding. The Optionee hereby agrees that the
exercise of the Option or any installment thereof will not be
effective, and no shares will become transferable to the
Optionee, until the Optionee makes appropriate arrangements with
the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such
exercise.
<PAGE>
<PAGE>
ISO Agreement
Page 3
4. Non-transferability of Option. This Option may not
be transferred in any manner otherwise than by will or the laws
of descent or distribution. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.
5. Term of Option. This Option may not be exercisable
for more than ten **/ years from the date of grant of this
Option, as stated below, and may be exercised during such term
only in accordance with the Plan and the terms of this Option.
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE
PLAN COMMITTEE
By _______________________________
__________________
Date of Grant Attest: ______________________ (Seal)
OPTIONEE
By _______________________________
Attest: ______________________ (Seal)
______________________
**/ Five years in the case of an Optionee who owns shares
representing more than 10% of the outstanding common stock
of the Company on the date of grant of this Option.
<PAGE>
<PAGE>
INCENTIVE STOCK OPTION EXERCISE FORM
PURSUANT TO THE
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
____________________
Date
Treasurer
Heartland Bancshares, Inc.
318 South Park
Herrin, Illinois 62948
Re: Heartland Bancshares, Inc. 1996 Stock Option and
Incentive Plan
------------------------------------------------
Dear Sir:
The undersigned elects to exercise the Incentive Stock
Option to purchase _________ shares, par value $.01 per share, of
Common Stock of Heartland Bancshares, Inc. under and pursuant to
a Stock Option Agreement dated ___________, 199___.
Delivered herewith is a certified or bank cashier's or
teller's check and/or shares of Common Stock, valued at the fair
market value of the stock on the date of exercise, as set forth
below.
$______ of cash or check
______ ____ shares of Common Stock,
valued at
$____ per share
$ Total
======
The name or names to be on the stock certificate or
certificates and the address and Social Security Number of such
person(s) is as follows:
Name___________________________________________________________
Address________________________________________________________
Social Security Number_________________________________________
Very truly yours,
_________________
STOCK OPTION AGREEMENT
FOR NON-INCENTIVE STOCK OPTIONS PURSUANT TO THE
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
STOCK OPTION for a total of ___________ shares of Common
Stock, par value $.01 per share, of Heartland Bancshares, Inc.
(the "Company") is hereby granted to _____________ (the
"Optionee") at the price set forth herein, and in all respects
subject to the terms, definitions and provisions of the Heartland
Bancshares, Inc. 1996 Stock Option and Incentive Plan (the
"Plan") which has been adopted by the Company and which is
incorporated by reference herein, receipt of which is hereby
acknowledged. Such Stock Options do not comply with Options
granted under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
1. Option Price. The option price is $____________ for
each share, being 100% of the fair market value, as determined by
the Committee, of the Common Stock on the date of grant of this
Option.
2. Exercise of Option. This Option shall be exercisable in
accordance with provisions of the Plan as follows:
(i) Schedule of rights to exercise.
------------------------------
Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
- ------------------------------ ---------------------------
Upon Grant 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or More 100%
<PAGE>
<PAGE>
Non-ISO
Page 2
(ii) Method of Exercise. This Option shall be exercisable
bya written notice which shall:
(a) state the election to exercise the Option, the
number of shares with respect to which it is being
exercised, the person in whose name the stock
certificate or certificates for such shares of Common
Stock is to be registered, his address and Social
Security Number (or if more than one, the names,
addresses and Social Security Numbers of such
persons);
(b) contain such representations and agreements as to
the holders' investment intent with respect to such
shares of Common Stock as may be satisfactory to the
Company's counsel;
(c) be signed by the person or persons entitled to
exercise the Option and, if the Option is being
exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such person
or persons to exercise the Option; and
(d) be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any shares with respect to
which the Option is being exercised shall be by cash, Common
Stock, or such combination of cash and Common Stock as the
Optionee elects. The certificate or certificates for shares of
Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the
Option.
(iii) Restrictions on exercise. The Option may not be
exercised if the issuance of the shares upon such exercise would
constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to
his exercise of this Option, the Company may require the person
exercising this Option to make any representation and warranty to
the Company as may be required by any applicable law or
regulation.
3. Withholding. The Optionee hereby agrees that the
exercise of the Option or any installment thereof will not be
effective, and no shares will become transferable to the
Optionee, until the Optionee makes appropriate arrangements with
the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such
exercise.
4. Non-transferability of Option. This Option may not
be transferred in any manner otherwise than by will or the laws
of descent or distribution. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and
assigns of the Optionee. Notwithstanding any other terms of this
agreement, to the extent permissible under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, this Option may be
transferred to the Optionee's spouse, lineal ascendants, lineal
descendants, or to a duly established trust, provided<PAGE>
<PAGE>
Non-ISO Agreement
Page 3
that such transferee shall be permitted to exercise this Option
subject to the same terms and conditions applicable to the
Optionee.
5. Term of Option. This Option may not be exercisable for
more than ten years from the date of grant of this Option, as set
forth below, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE
PLAN COMMITTEE
___________________ By ____________________________
Date of Grant
Attest _______________________ (Seal)
OPTIONEE
By ____________________________
Attest _______________________ (Seal)
<PAGE>
<PAGE>
NON-INCENTIVE STOCK OPTION EXERCISE FORM
PURSUANT TO THE
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
____________________
Date
Treasurer
Heartland Bancshares, Inc.
318 South Park
Herrin, Illinois 62948
Re: Heartland Bancshares, Inc.
------------------------------------
1996 Stock Option and Incentive Plan
Dear Sir:
The undersigned elects to exercise his Non-Incentive Stock
Option to purchase __________ shares, par value $.01 per share,
of Common Stock of Heartland Bancshares, Inc. under and pursuant
to a Stock Option Agreement dated ______________, 199__.
Delivered herewith is a certified or bank cashier's or
tellers check and/or shares of Common Stock, valued at the fair
market value of the stock on the date of exercise, as set forth
below.
$______ of cash or check
______ ____ shares of Common Stock,
valued at
$____ per share
$ Total
======
The name or names to be on the stock certificate or
certificates and the address and Social Security Number of such
person is as follows:
Name___________________________________________________________
Address________________________________________________________
Social Security Number_________________________________________
Very truly yours,
_________________
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
NOT IN TANDEM WITH STOCK OPTION
On the date of grant specified below, the Stock Option
Committee of Heartland National Bank (the "Company") hereby
grants to ________________ (the "Optionee") a total of _______
Stock Appreciation Rights (SARs), subject to the terms and
conditions set forth in the Heartland National Bank 1996 Stock
Option and Incentive Plan (the "Plan") (a copy of which is
available to the Optionee upon request). The terms and
conditions of the Plan are incorporated herein by reference.
(a) The exercise price is $____ for each share, such
price being 100% of the fair market value, as determined by the
Committee, of the Common Stock on the date of grant of this
option.
(b) The SAR shall be exercisable to the extent permitted
in the Plan.
(c) The SAR shall be accepted for surrender by the
Optionee in consideration for the payment by the Company of an
amount equal to the excess of the fair market value on the date
of exercise of the Shares of Common Stock subject to such SAR
over the exercise price specified in Paragraph (a) hereof.
(d) Payment hereunder shall be made in shares of Common
Stock or in cash as provided in the Plan.
(e) The SAR is nontransferable, except in accordance
with Section 12 of the Plan.
(f) The SAR may be exercised only in accordance with
Sections 8 and 10 of the Plan, and only when there is a positive
spread, i.e., when the market price of the Common Stock subject
to the SAR exceeds the exercise price of the SAR.
(g) In the event of any inconsistency or conflict
between this Agreement and the Plan, the Plan shall be
controlling and supercede any conflicting or inconsistent
provision of the Agreement.
HEARTLAND BANCSHARES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
COMMITTEE
By ____________________________
Date of Grant ATTEST:
_____________ _______________________________
HEARTLAND BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN COMMITTEE
NOTICE OF AWARD
---------------
WHEREAS, the Board of Directors of Heartland Bancshares,
Inc. (the "Company") has previously adopted the Heartland
Bancshares, Inc. Management Recognition Plan (the "Plan"); and
WHEREAS, the Board of Directors of the Company has
previously appointed Directors Walker, Stevens, Cross,
Youngblood, and Calcaterra as members of the Management
Recognition Plan Committee (the "Committee") pursuant to the
terms of the Plan.
PLEASE TAKE NOTICE, that the following individual be granted
an award under the Plan ("Plan Share Award"), effective
______________________:
Number of Shares Subject to
Recipient Plan Share Award
--------- ---------------------------
____________________ ____________
AND BE IT FURTHER RESOLVED, that the Plan Share Award
specified herein shall be subject to the restrictions and other
provisions of Section 7.01 of the Plan.
Date of Notice:
_____________, 199__
HEARTLAND BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
COMMITTEE
By: _________________________
Its Chairman
M E M O R A N D U M
TO: Participants in the Heartland Bancshares, Inc. (the
"Company") Management Recognition Plan
DATE: February __, 1997
FROM: Heartland Bancshares, Inc.
RE: Taxation of MRP Awards
==============================================================
* * * * * * * * * * * * * * * * * * * * * * * * *
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
* * * * * * * * * * * * * * * * * * * * * * * * *
This memorandum concerns the taxation of the awards that
will automatically occur under the Company's Management
Recognition Plan (the "MRP") upon its receipt of stockholder
approval. To facilitate your review, the discussion below is
divided as follows:
Part I: General Tax Principles and Application to the MRP
Part II: Accelerated Taxation under Section 83(b)
Please understand that this memorandum is merely designed to
summarize the tax rules generally applicable to MRP awards. We
could provide individual tax advice to the recipients of MRP
awards ("Participants"), should anyone desire assistance.
<PAGE>
<PAGE>
Taxation of MRP Awards
Page 2 of 4
The deadline for making a Section 83(b) election is 30 days
after the award date -- or February 27, 1997 with respect to
awards occurring on the MRP's receipt of stockholder approval.
PART I:
GENERAL TAX PRINCIPLES
Section 83 -- Generally. Section 83 of the Internal Revenue
Code (the "Code") controls the federal income taxation of
property that is transferred in connection with the performance
of services. In the absence of the Section 83(b) election
described in Part II, the recipient of restricted property (such
as an MRP award) recognizes income not on the date of the award
but on the date that his or her interest vests. The amount of
the recipient's taxable income will equal the fair market value
of the restricted property when vesting occurs. 1/ Subsequent
gain or loss is treated as capital gain, with the amount that is
included in the recipient's ordinary income determining his or
her basis in the property.
Operation of the MRP. The Company's MRP will generally work
as follows for Recipients who do not make Section 83(b)
elections:
Date Event
---- -----
Stockholder
Approval The MRP should provide a "Notice of the
MRP of Award" to each Recipient. The
notice will specify the number of shares
subject to the award.
Recipients will not receive shares of the
Company's common stock, or be subject to
federal income taxation as the result of
receiving an award.
The First Five
Anniversary
Dates of the MRP's
Receipt of Approval The MRP trusts will transfer to each
Recipient a number of unrestricted shares
equal to one-fifth of the number of shares
subject to the award, plus any dividends
attributable to those shares (provided
that the Recipient has not previously
terminated service).
As you may recall, vesting would accelerate to 100% upon a
Recipient's termination of service due to death or disability,
and that special rules apply if a transfer of Common Stock would
cause the Recipient to own in excess of 10% of the Common Stock.
_______________
1/ This contrasts with the financial accounting treatment for
MRP awards (i.e., expense recognition is determined by the fair
market on the date of the award).<PAGE>
<PAGE>
Taxation of MRP Awards
Page 3 of 4
Tax Withholding. In the case of Recipients who are non-
employee directors, federal income tax withholding is not
required when their MRP awards give rise to taxable income. On
the other hand, Recipients who are employees must satisfy federal
income tax withholding not only at the time their MRP awards
generate taxable income, but also before they may receive shares
of Common Stock from the MRP trust.
IRS Reporting. We understand that in the case of an
employee, the ordinary income arising from the vesting of MRP
awards and from the payment of tax bonuses is reportable on Form
W-2, in Box 11, and that in the case of a non-employee director,
such income is reportable on Form 1099-MISC, in Box 7.
PART II:
ACCELERATED TAXATION UNDER SECTION 83(B)
Section 83(b) Generally. Within 30 days after receiving an
MRP Award, a Recipient may make a special, irrevocable election
under Code Section 83(b), and thereby accelerate ordinary income
taxation to the date that the property transfer occurred. The
amount of the Recipient's ordinary income would equal the fair
market value of the Common Stock subject to the MRP award as of
the date on which the award occurred. Subsequent gain (or loss,
if the award is forfeited or depreciates) would be long- or
short-term capital gain, not ordinary income.
Procedural Requirements. Section 83(b) elections must
include the information set forth in the form of Section 83(b)
election that we have attached hereto. Further, Section 83(b)
elections must be filed with the IRS Service Center where the
Recipient files his or her return (both within 30 days after the
transfer occurs, and as an attachment to his or her tax return
for the year to which the Section 83(b) election relates). A
copy of the Section 83(b) election must also be filed with the
Company.
Tax Caveat. In several recent private letter rulings (which,
while not binding precedent, are indicative of current IRS
policy), the Internal Revenue Service has taken the position
that, for purposes of Section 83 of the Code, no "transfer" of
property occurs when an individual receives an interest in an
employer's grantor trust. Because the trust associated with the
MRP is a grantor trust (by design, in order to secure deferred
taxation of awards), these rulings suggest that the IRS could
question whether Section 83(b) elections may be made with respect
to MRP awards. While we do not believe that this theoretical
possibility involves a substantial tax risk for Recipients, each
Recipient should contact his or her personal tax counsel for
independent advice about this issue.
Tax Reporting and Withholding. The rules described in Part
I would apply, as though vesting occurred on the date of the
Recipient's Section 83(b) election.
<PAGE>
<PAGE>
Taxation of MRP Awards
Page 4 of 4
CONCLUSION
Whether or not a Recipient should make a Section 83(b)
election depends on a variety of factors, including the
Recipient's expectations as to (i) the short-term and long-term
future value of the Common Stock, (ii) the length of time the
Recipient is likely to hold the Common Stock, (iii) future tax
rates -- as to both income and capital gain, (iv) the risk of
forfeiture, and (v) the Recipient's ability to pay the taxes
associated with the MRP award.
<PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
_________________________________________________________________
Election to Include Value of Restricted Stock in Gross Income
in Year of Transfer Under Code Section 83(b)
_________________________________________________________________
* * * * * * * * * * * * * * * * * * * * * * * * *
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
* * * * * * * * * * * * * * * * * * * * * * * * *
The undersigned hereby makes the election permitted under
Section 83(b) of the Internal Revenue Code of 1986, as amended,
with respect to the property described below, and supplies the
following information in accordance with the regulations
promulgated thereunder:
1. The name, address, and taxpayer identification or social
security number of the undersigned are:
Name: ________________________________
Address:_______________________________
________________________________
I.D. No._______________________________
2. Description of the property with respect to which the
election is being made:
____________________( ) shares of common stock, par
value $.01 per share, of Heartland Bancshares, Inc.
(hereinafter, the "Common Stock").
3. The date on which the Common Stock was transferred is
______________ ___, 19__. The taxable year to which this
election relates is calendar year 19__.
4. The nature of the restrictions to which the Common Stock
is subject is as follows:
The Common Stock is forfeitable until it is earned in
accordance with Article VII of the Heartland
Bancshares, Inc. Management Recognition Plan (the
"Plan"). Generally, the Common Stock becomes earned
and nonforfeitable by the undersigned at the rate of
one-fifth per year of service. For special rules<PAGE>
<PAGE>
Section 83(b) Election
Page 2 of 2
regarding the vesting of the undersigned's interest in
the Common Stock, see Section 7.01 of the Plan.
The Common Stock is non-transferable until the
undersigned's interest therein becomes vested and
nonforfeitable, pursuant to Section 8.03 of the Plan.
5. Fair market value:
The fair market value at the time of transfer
(determined without regard to any restrictions other
then restrictions which by their terms will never
lapse) of the stock with respect to which this
election is being made is $_____ per share.
6. Amount paid for Common Stock:
The amount paid by taxpayer for said Common Stock is
$0.00 per share.
7. Furnishing statement to employer:
A copy of this statement has been furnished to
Heartland Bancshares, Inc..
8. Notice:
Nothing contained herein shall be held to alter, vary
or affect any of the terms, provisions or conditions
of the Plan, or the award made thereunder to the
undersigned.
Dated: ____________ __, 199__.
______________________________
Taxpayer/Plan Participant
