<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
HCB BANCSHARES, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________
<PAGE>
<PAGE>
[HCB BANCSHARES LETTERHEAD]
April 6, 1998
Dear Stockholder:
We invite you to attend a special meeting of stockholders
of HCB Bancshares, Inc. to be held at the Ouachita Electric Co-
Op Corporation, 700 Bradley Ferry Road, Camden, Arkansas, on
Tuesday, May 5, 1998 at 10:00 a.m., local time.
The attached notice and proxy statement describe the
formal business to be transacted at the meeting. The meeting
has been called to consider and vote upon approval of our
proposed stock option plan and management recognition plan. We
enclose a proxy statement and a proxy card. Our directors and
officers will be present at the meeting to respond to any
questions that our stockholders may have.
Our Board of Directors has determined that the matters to
be considered at the meeting are in the best interests of the
company and its stockholders. For the reasons set forth in the
proxy statement, the Board unanimously recommends a vote "FOR"
each matter to be considered.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE,
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE MEETING. Your vote
is important, regardless of the number of shares you own. This
will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the meeting.
On behalf of the Board of Directors and all our employees,
I wish to thank you for your continued support.
Sincerely,
/s/ Vida H. Lampkin
Vida H. Lampkin
Chairman of the Board, President
and Chief Executive Officer<PAGE>
<PAGE>
[LOGO]
HCB BANCSHARES, INC.
237 JACKSON STREET, S.W.
CAMDEN, ARKANSAS 71701-0878
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders (the "Special Meeting") of HCB Bancshares, Inc.
(the "Company") will be held at the Ouachita Electric Co-Op
Corporation, 700 Bradley Ferry Road, Camden, Arkansas, on
Tuesday, May 5, 1998 at 10:00 a.m., local time.
A Proxy Statement and Proxy Card for the Special Meeting
are enclosed.
The Special Meeting is for the purpose of considering and
acting upon the following matters:
1. Approval of the HCB Bancshares, Inc. 1998
Stock Option Plan;
2. Approval of the HCB Bancshares, Inc.
Management Recognition Plan; and
3. Such other business as may properly come
before the Special Meeting or any adjournment
thereof.
The Board of Directors is not aware of any other business
to come before the Special Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Special Meeting on the date specified above or on
any date or dates to which, by original or later adjournment,
the Special Meeting may be adjourned. Stockholders of record at
the close of business on March 20, 1998 are the stockholders
entitled to notice of and to vote at the Special Meeting and any
adjournment thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used
if you attend and vote at the Special Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paula J. Bergstrom
Paula J. Bergstrom
Secretary
Camden, Arkansas
April 6, 1998
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.<PAGE>
<PAGE>
[LOGO]
PROXY STATEMENT
OF
HCB BANCSHARES, INC.
237 JACKSON STREET, S.W.
CAMDEN, ARKANSAS 71701-0878
SPECIAL MEETING OF STOCKHOLDERS
MAY 5, 1998
GENERAL
This Proxy Statement is furnished to stockholders of HCB
Bancshares, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies
to be used at the Special Meeting of Stockholders (the "Special
Meeting") which will be held at the Ouachita Electric Co-Op
Corporation, 700 Bradley Ferry Road, Camden, Arkansas, on
Tuesday, May 5, 1998 at 10:00 a.m., local time, and at any
adjournment thereof. The accompanying Notice of Special Meeting
and Proxy Card and this Proxy Statement are being first mailed
to stockholders on or about April 6, 1998.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by such proxies will be voted at the Special Meeting
and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company, at the address shown
above, by filing of a later dated proxy prior to a vote being
taken on a particular proposal at the Special Meeting or by
attending the Special Meeting and voting in person.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED IN
FAVOR OF EACH OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT
TO BE CONSIDERED AT THE SPECIAL MEETING. The proxy confers
discretionary authority on the persons named therein to vote
with respect to the matters incident to the conduct of the
Special Meeting. Proxies marked as abstentions, and shares held
in street name which have been designated by brokers on proxies
as not voted, will not be counted as votes cast. An abstention
will have the same effect as a negative vote. Proxies marked as
abstentions or as broker non-votes will, however, be treated as
shares present for purposes of determining whether a quorum is
present.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
The securities entitled to vote at the Special Meeting
consist of the Company's common stock, par value $0.01 per share
(the "Common Stock"). Stockholders of record as of the close of
business on March 20, 1998 (the "Record Date") are entitled to
one vote for each share of Common Stock then held. As of the
Record Date, there were 2,645,000 shares of Common Stock issued
and outstanding. The presence, in person or by proxy, of at
least one-third of the total number of shares of Common Stock
outstanding and entitled to vote will be necessary to constitute
a quorum at the Special Meeting.<PAGE>
<PAGE>
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect
to such ownership pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The following table sets
forth information regarding the shares of Common Stock
beneficially owned as of the Record Date by persons who
beneficially own more than 5% of the Common Stock, each of the
Company's directors and all of the Company's directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AT PERCENT OF
RECORD DATE(1) CLASS (2)
-------------- -----------
<S> <C> <C>
HCB Bancshares, Inc. 211,600 (1) 8.00%
Employee Stock Ownership Plan Trust ("ESOP")
237 Jackson Street, S.W.
Camden, Arkansas 71701-0878
Friedman, Billings, Ramsey Group, Inc.
Friedman, Billings, Ramsey Group, Inc.
Voting Trust
Eric F. Billings
Emanuel J. Friedman
W. Russell Ramsey
1001 19th Street North
Arlington, VA 22209-1710 175,252 (2) 6.63
Vida H. Lampkin 25,000 .95
Cameron D. McKeel 9,500 .35
Roy Wayne Moseley 9,877 .37
Bruce D. Murry 5,922 .23
Carl E. Parker, Jr. 25,000 .95
Lula Sue Silliman 10,000 .37
Clifford Steelman 25,000 .95
All directors and executive officers of
the Company as a group (8 persons) 110,299 4.17
<FN>
________
(1) Represents unallocated shares held in a suspense account for future
allocation among participating employee accounts as the loan used to
purchase the shares is repaid. The ESOP trustee, First Commercial Trust
Company, N.A., Little Rock, Arkansas, votes all allocated shares in
accordance with instructions of the participants. Unallocated shares and
shares for which no instructions have been received, if any, are voted by
the ESOP trustee in the same ratio as participants direct the voting of
allocated shares or, in the absence of such direction, as directed by the
Company's Board of Directors.
(2) In their Schedule 13G, as amended, the reporting persons reported sole
voting and dispositive power over the reported shares through the
following subsidiaries: Friedman, Billings, Ramsey Investment
Management, Inc., FBR Fund Advisors, Inc. and Friedman, Billings, Ramsey
& Co., Inc.
</FN>
</TABLE>
2<PAGE>
<PAGE>
MANAGEMENT COMPENSATION
DIRECTOR COMPENSATION
Since January 1997, directors have received fees of $1,000
per month. This fee includes any committee meeting(s), as well
as service on the board of directors of one or more subsidiaries
of the Company. The Company's directors will be eligible to
receive awards under the Option Plan and MRP, if approved by the
Company's stockholders. See "Proposal I -- Approval of the HCB
Bancshares, Inc. 1998 Stock Option Plan" and "Proposal II --
Approval of the HCB Bancshares, Inc. Management Recognition
Plan."
The Board of Directors of HEARTLAND Community Bank (the
"Bank") adopted a directors' retirement plan, effective June 13,
1996, for directors who are or were members of the Board of
Directors at any time on or after the plan's effective date,
provided that an employee who becomes a director after June 30,
1996 will not become a participant unless the Board of Directors
adopts a specific resolution to that effect. On the effective
date of the plan, (1) the account of each participant who was a
director on the effective date (other than Directors Lampkin and
McKeel) was credited with an amount of $1,900 for each full year
of service as a director; (2) the account of Director Lampkin
was credited with an amount projected to provide her with an
annual retirement benefit, commencing at age 65 and continuing
for her lifetime, in an amount equal to the difference between
(i) 70% of her projected annual rate of pay at retirement, and
(ii) the annuity value of her accrued benefits under the Bank's
tax-qualified retirement plans plus her annual social security
benefit at age 65; and (3) the account of Director McKeel was
credited with an amount projected to provide him with an annual
retirement benefit, commencing at age 65 and continuing for a
period of ten years, in an amount equal to the difference
between (i) 40% of his projected annual rate of pay at
retirement, and (ii) the annuity value of his accrued benefits
under the Bank's tax-qualified retirement plans plus his annual
social security benefit at age 65.
On the first day of each calendar month after the effective
date, each participant who is a director on said date, with the
exception of Directors Lampkin and McKeel, will have his or her
account credited with an amount equal to the product of $158.33
and the Safe Performance Factor for the preceding fiscal year.
The Safe Performance Factor is determined annually based on the
Bank's return on equity, non-performing asset ratio, and
regulatory composite rating for the year as compared to targets
set for the fiscal year. In addition, each participant's
account will be credited with a rate of return, on any vested
amounts previously credited, equal to any appreciation or
depreciation determined according to the participant's election.
Amounts credited to the accounts of participants other than
Directors Lampkin and McKeel will be fully vested at all times.
The amounts credited to Director Lampkin and Director McKeel
will become vested at the rate of 1.18% for each full month of
service as a director, starting with 15% vested interest on
January 1, 1996, and becoming fully vested after 72 or more
months of service after January 1, 1996.
Upon a non-employee director's termination of service on the
Board due to death, disability, or mandatory retirement due to
age restrictions, the director's account will be credited with
an amount equal to the difference between $38,000 and the amount
previously credited to her or his account, exclusive of
investment returns. In the event of Director Lampkin's or
Director McKeel's disability or death prior to her or his
attainment of 50% vesting, the vested percentage on her or his
account will be increased to 50%. If Director Lampkin's or
Director McKeel's service on the Board is terminated for any
reason other than "just cause" following a change in control,
the vested percentage of her or his account will become 100%.
Distribution of account balances will be made in cash, over a
ten-year period, unless the participant elects to receive a lump
sum or annual installments over a period of less than ten years.
If a participant dies before receiving all benefits payable
under the plan, distribution will be made to her or his
beneficiary or, in the absence of a beneficiary, to her or his
estate, in a lump sum, unless the participant has elected to
have the distribution made in installments over a period of up
to ten years. Benefits under the Directors' Plan are non-
transferable. The Bank will pay all benefits in cash from its
general assets, and has established a trust in order to hold
assets with which to pay benefits. Trust assets will be subject
to the claims of the Bank's general creditors. In the event a
participant prevails over the Bank in a legal dispute as to the
terms or interpretation of the Directors' Plan, he or she will
be reimbursed for his or her legal and other expenses.
3<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth cash and noncash compensation
for the fiscal years ended June 30, 1997 and 1996 awarded to or
earned by Vida H. Lampkin, the Company's Chief Executive Officer
for services rendered in all capacities to the Company and its
subsidiaries.
<TABLE>
<CAPTION>
Annual Compensation
Fiscal --------------------- All Other
Year Salary Bonus Compensation (1)
------ ------ ----- ----------------
<S> <C> <C> <C>
1997 $90,000 $ -- $18,060
1996 76,000 905 15,763
<FN>
_________
(1) For fiscal 1997, includes director fees ($9,600), life,
health, dental and disability insurance ($5,238) and
matching contribution to defined contribution plan ($3,222);
does not include indirect compensation in the form of
certain perquisites and other personal benefits which did
not exceed 10% of salary and bonus.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
The Company and the Bank maintain separate employment
agreements (the "Employment Agreements") with Vida H. Lampkin,
President and Chief Executive Officer of the Bank and the
Company (the "Employee"). In such capacities, the Employee is
responsible for overseeing all operations of the Bank and the
Company, and for implementing the policies adopted by the Board
of Directors. Such Boards believe that the Employment
Agreements assure fair treatment of the Employee in relation to
her career with the Company and the Bank by assuring her of some
financial security.
The Employment Agreements provide for terms of three years
and an annual base salary of $90,000. On each anniversary date
of the Employment Agreements' effective date (the "Effective
Date"), the term of employment will be extended for an
additional one-year period beyond the then effective expiration
date, upon a determination by the Board of Directors that the
performance of the Employee has met the required performance
standards and that such Employment Agreements should be
extended. The Employment Agreements provide the Employee with a
salary review by the Boards of Directors not less often than
annually, as well as with inclusion in any discretionary bonus
plans, retirement and medical plans, customary fringe benefits,
vacation and sick leave. The Employment Agreements will
terminate upon the Employee's death, may terminate upon the
Employee's disability and are terminable by the Bank for "just
cause" (as defined in the Employment Agreements). In the event
of termination for "just cause," no severance benefits are
available. In the event of (i) the Employee's involuntary
termination of employment for any reason other than "just cause"
or (ii) the Employee's voluntary termination within 90 days of
the occurrence of a "good reason" (as defined in the Employment
Agreements), the Employee will be entitled to receive (a) her
salary up to the Employment Agreements' expiration date (the
"Expiration Date") plus an additional 12-month salary, (b) a put
option requiring the Bank or the Company to purchase Common
Stock held by the Employee to the extent that it is not readily
tradeable on an established securities market, and (c), at the
Employee's election, either cash in an amount equal to the cost
of benefits the Employee would have been eligible to participate
in through the Expiration Date or continued participation in the
benefits plans through the Expiration Date. If the Employment
Agreements are terminated due to the Employee's "disability" (as
defined in the Employment Agreements), the Employee will be
entitled to a continuation of her salary and benefits through
the date of such termination, including any period prior to the
establishment of the Employee's disability. In the event of the
Employee's death during the term of the Employment Agreements,
her estate will be entitled to receive her salary through the
last day of the calendar month in which the Employee's death
occurred. The Employee is able to voluntarily terminate her
Employment Agreements by providing 90 days' written notice to
the Boards of Directors of the Bank and the Company, in which
case the Employee is entitled to receive only her compensation,
vested rights and benefits up to the date of termination.
4<PAGE>
<PAGE>
In the event of (i) a "change in control," or (ii) the
Employee's termination for a reason other than just cause during
the "protected period (as defined in the Employment
Agreements)," the Employee will be paid within 10 days following
the later to occur of such events an amount equal to the
difference between (i) 2.99 times her "base amount," as defined
in Section 280G(b)(3) of the Internal Revenue Code, and (ii) the
sum of any other parachute payments, as defined under Section
280G(b)(2) of the Internal Revenue Code, that the Employee
receives on account of the change in control. "Change in
control" generally refers to (i) the acquisition, by any person
or entity, of the ownership or power to vote more than 25% of
the Bank's or Company's voting stock, (ii) the transfer by the
Bank of substantially all of its assets to a corporation which
is not an "affiliate" (as defined in the Employment Agreements),
(iii) a sale by the Bank or the Company of substantially all the
assets of an affiliate which accounts for 50% or more of the
controlled group's assets immediately prior to such sale, (iv)
the replacement of a majority of the existing board of directors
by the Bank or the Company in connection with an initial public
offering, tender offer, merger, exchange offer, business
combination, sale of assets or contested election, or (v) a
merger of the Bank or the Company which results in less than
seventy percent (70%) of the outstanding voting securities of
the resulting corporation being owned by former stockholders of
the Company or the Bank. The Employment Agreements provide that
within 10 business days of a change in control, the Bank shall
fund, or cause to be funded, a trust in the amount of 2.99 times
the Employee's base amount, that will be used to pay the
Employee amounts owed to her. The aggregate payments that would
be made to Mrs. Lampkin, assuming her termination of employment
under the foregoing circumstances at June 30, 1997, would have
been approximately $269,000. These provisions may have an anti-
takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. In the event that
the Employee prevails over the Company and the Bank in a legal
dispute as to the Employment Agreements, she will be reimbursed
for her legal and other expenses.
COMPENSATION COMMITTEE REPORT ON EMPLOYEE COMPENSATION
The Compensation Committee of the Board of Directors
consists of the non-employee directors, which for fiscal 1997
consisted of Directors Moseley, Murry, Parker, Silliman and
Steelman. This committee reviews the performance of the
executive officers of the Company and its subsidiaries and
recommends employee compensation structures and amounts to the
Board.
The Compensation Committee's compensation philosophy for
all employees, including executive officers, is to provide
competitive levels of compensation, integrate employees' pay
with the achievement of the Company's performance goals, reward
exceptional corporate performance, recognize individual
initiative and achievement and assist the Company in attracting
and retaining qualified employees. The committee expressly
endorses the position that equity ownership by employees is
beneficial in aligning employees' and stockholders' interests in
the enhancement of stockholder value.
Salaries are determined by evaluating the responsibilities
of each position and by reference to the competitive marketplace
for qualified employees, including with respect to executive
officers comparisons of salaries for comparable positions at
comparable companies within the banking industry. Annual salary
changes are determined by evaluating changes in compensation in
the marketplace, the performance of the company and the
responsibilities and performance of the employee.
For fiscal 1997, the base salaries of the chief executive
officer and other executive officers were established in
accordance with the foregoing policies. The chief executive
officer's salary was not substantially changed for fiscal 1997,
because it was raised in late fiscal 1996 based on a comparative
survey of chief executive officer compensation levels. The
salaries of the other executive officers also were not
substantially changed for fiscal 1997, principally due to the
fact that those officers' salaries were fully reviewed and
analyzed when they joined HEARTLAND Community Bank late in
fiscal 1996.
The Committee believes that stock related award plans are
an important element of compensation since they provide
executives with incentives linked to the performance of the
Common Stock. Accordingly, the Committee
5
<PAGE>
<PAGE>
recommended and the Board of Directors adopted the HCB
Bancshares, Inc. 1998 Stock Option Plan (the "Option Plan") and
the HCB Bancshares, Inc. Management Recognition Plan (the
"MRP"), each subject to stockholder approval at the Special
Meeting.
The Board of Directors adopted the Option Plan pursuant to
which directors, officers and employees may be granted options
to acquire up to 317,400 shares of the Common Stock, in the
aggregate. The Committee believes that an option plan can serve
as a means of providing key employees with the opportunity to
acquire a proprietary interest in the Company and to link their
interests with those of the Company's stockholders.
In addition, the Board of Directors adopted the MRP
pursuant to which directors, officers and employees may be
granted awards of up to 52,900 shares of the Common Stock, in
the aggregate. The purpose of the MRP is to reward and retain
personnel of experience and ability in key positions of
responsibility by providing such employees with a proprietary
interest in the Company as compensation for their past
contributions to the Company and the Bank and as an incentive to
make further contributions in the future.
For information with respect to the Option Plan, see
"Proposal I -- Approval of the HCB Bancshares, Inc. 1998 Stock
Option Plan," and for information with respect to the MRP, see
"Proposal II -- Approval of the HCB Bancshares, Inc. Management
Recognition Plan."
Roy Wayne Moseley
Bruce D. Murry
Carl E. Parker, Jr.
Lula Sue Silliman
Clifford Steelman
STOCK PERFORMANCE
The cumulative total return of the Company's Common Stock
from the commencement of trading on May 7, 1997 through June 30,
1997 (less than two months) was 2.0% compared with the
cumulative total returns of the CRSP Index for the Nasdaq Stock
Market (US Companies) of 9.2% and the CRSP Index for Nasdaq
Stocks of savings institutions (US Companies) of 13.0% over the
same period. Total cumulative return on the Common Stock or the
index equals the total increase in value since May 7, 1997,
assuming reinvestment of all dividends paid; total cumulative
return on the Common Stock does not include the 26.2% increase
in value on May 7, 1997 from the initial public offering price.
PROPOSAL I -- APPROVAL OF THE HCB BANCSHARES, INC.
1998 STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company is seeking
stockholder approval of the HCB Bancshares, Inc. 1998 Stock
Option Plan (the "Option Plan"). The Option Plan is attached
hereto as Exhibit A and should be consulted for additional
information. All statements made herein regarding the Option
Plan, which are only intended to summarize the Option Plan, are
qualified in their entirety by reference to the Option Plan.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests
of the Company by providing selected directors and employees of
the Company and its affiliates, including the Bank, with the
opportunity to acquire shares of Common Stock. By encouraging
such stock ownership, the Company seeks to attract, retain, and
motivate the best available personnel for positions of
substantial responsibility and to provide additional incentive
to directors and employees of the Company and its affiliates to
promote the success of the business of the Company.
6<PAGE>
<PAGE>
DESCRIPTION OF THE OPTION PLAN
Effective Date. The Option Plan is expected to be
formally adopted by the Board of Directors and thereby become
effective on April 16, 1998 (the "Effective Date"), although
the Option Plan's effectiveness will be contingent on its
approval by the Company's stockholders.
Administration. The Option Plan will be administered by a
committee (the "Committee"), appointed by the Board of
Directors, consisting of at least two directors of the Company
who are "non-employee directors" within the meaning of the
federal securities laws. The Committee will have discretionary
authority to select participants and grant options, to determine
the form and content of any options granted under the Option
Plan, to interpret the Option Plan, to prescribe, amend and
rescind rules and regulations relating to the Option Plan and to
make other decisions necessary or advisable in connection with
administering the Option Plan. All decisions, determinations
and interpretations of the Committee will be final and
conclusive on all persons affected thereby. Members of the
Committee will be indemnified to the full extent permissible
under the Company's governing instruments in connection with any
claims or other actions relating to any action taken under the
Option Plan. It is expected that the Committee will initially
consist of Directors Moseley, Murry, Parker, Silliman and
Steelman.
Eligible Persons. Under the Option Plan, the Committee
will have discretionary authority to grant stock options
("Options") to such employees and directors (including members
of the Committee) as the Committee shall designate. In
addition, the Option Plan specifies the automatic grants
described below (see "-- Automatic Grants" below). As of the
Record Date, the Company and its subsidiaries had 72 employees
and five non-employee directors who were eligible to participate
in the Option Plan.
Shares Available for Grants. The Option Plan reserves
317,400 shares of Common Stock for issuance upon the exercise of
Options. Such shares may be (i) authorized by unissued shares,
(ii) shares held in treasury, or (iii) shares held in a grantor
trust. In the event of any 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 receipt or
payment of consideration by the Company, the Committee will
adjust the number and kind of shares reserved for issuance under
the Option Plan and the exercise prices of such Options. If
Options expire, become unexercisable or are forfeited for any
reason without having been exercised, the shares of Common Stock
subject to such Options shall, unless the Option Plan shall have
been terminated, be available for the grant of additional
Options under the Option Plan.
Options; Exercise Price. Options may be either incentive
stock options ("ISOs") as defined in Section 422 of the Internal
Revenue Code, or options that are not ISOs ("Non-ISOs"). The
exercise price as to any Option may not be less than the fair
market value (determined under the Option Plan) of the optioned
shares on the date of grant. In the case of a participant who
owns more than 10% of the outstanding Common Stock on the date
of grant, such exercise price may not be less than 110% of fair
market value of the shares. As required by federal tax laws, to
the extent that the aggregate fair market value (determined when
an ISO is granted) of the Common Stock with respect to which
ISOs are exercisable by an optionee for the first time during
any calendar year (under all plans of the Company and of any
subsidiary) exceeds $100,000, the Options granted in excess of
$100,000 will be treated as Non-ISOs, and not as ISOs. The
exercise price of shares subject to any outstanding Option will
be proportionately adjusted upon the payment of a special large
and nonrecurring dividend that has the effect of a return of
capital to the stockholders, provided that the Committee did not
elect to pay the amount of such nonrecurring dividend to the
optionee upon exercise of the Option.
Automatic Grants. On the Effective Date, certain
employees and non-employee directors of the Company and the Bank
are expected to receive one-time grants of Options to purchase
shares of Common Stock at an exercise price per share equal to
its fair market value on that date (see " -- Proposed Stock
Option Grants" and "New Plan Benefits" below).
7<PAGE>
<PAGE>
Exercise of Options. The exercise of Options will be
subject to such terms and conditions as are established by the
Committee in a written agreement between the Committee and the
optionee. Unless the Committee specifically eliminates any
vesting requirement or imposes a different vesting schedule in
an agreement granting an Option, each Option grant shall be
vested and exercisable with respect to 25% of the shares subject
to the Option on the date of grant and shall become vested and
exercisable with respect to an additional 25% of the shares
subject to the Option on each of the next three annual
anniversary dates of the grant date; provided that no vesting
shall occur prior to stockholder approval of the Option Plan,
and further provided that no vesting shall occur on a particular
date in the event of the termination or interruption of the
optionee's continuous service as a director or employee of the
Company or an affiliate prior thereto. In the absence of
Committee action to the contrary, an otherwise unexpired Option
shall cease to be exercisable upon (i) an optionee's termination
of employment for "just cause" (as defined in the Option Plan),
(ii) the date that is one year after an optionee terminates
service for a reason other than just cause or death, or (iii)
the date that is two years after an optionee's death. Options
granted to non-employee directors will expire one year after a
director terminates continuous service as a director for any
reason other than death, but in no event later than the date on
which such Options would otherwise expire. In the event of a
director's death during the term of his or her directorship, the
Options shall become immediately exercisable and will expire two
years after his or her death. In the event of such director's
disability during his or her directorship, the director's Option
shall become immediately exercisable, and such Option may be
exercised within two years of the termination of directorship
due to disability, but not later than the date that the Option
would otherwise expire.
An optionee may exercise Options, subject to provisions
relative to their termination and limitations on their exercise,
only by (i) written notice of intent to exercise the Option with
respect to a specified number of shares of Common Stock, and
(ii) 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. 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 an optionee's exercise of
an Option, the Company may, in the discretion of the Committee,
pay the optionee a cash amount of up to the amount of any
dividends declared on the underlying shares between the date of
grant and the date of exercise of the Option.
Conditions on Issuance of Shares. The Committee will have
the discretionary authority to impose, in agreements, such
restrictions on shares of Common Stock issued pursuant to the
Option Plan 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. In addition, the Committee may not issue shares
unless the issuance complies with applicable securities laws,
and to that end may require that a participant make certain
representations or warranties.
Change in Control. The Option Plan provides that upon the
earlier of a "Change in Control" or the execution of an
agreement to effect a Change in Control, all Options shall
become fully exercisable, notwithstanding any other provision of
the Option Plan or any agreement with an optionee. For purposes
of the Option Plan, Change in Control means any one of the
following events: (1) the acquisition of ownership, holding or
power to vote more than 25% of the Bank's or the Company's
voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors,
(3) the acquisition of a controlling influence over the
management or policies of the Bank or the Company by any person
or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), (4) the
acquisition of control of the Bank or the Company within the
meaning of 12 C.F.R. Part 574 or its applicable equivalent, or
(5) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Company or the Bank
(the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing
Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director. In the case of subsections (1), (2), (3)
and (4) above, ownership or control of the Bank by the Company
itself shall not constitute a "Change in Control." For purposes
of defining Change in Control, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any
8<PAGE>
<PAGE>
other form of entity not specifically listed herein. The
decision of the Committee as to whether a Change in Control has
occurred shall be conclusive and binding.
Although these provisions are included in the Option Plan
primarily for the protection of an employee-optionee in the
event of a Change in Control of the Company, they may be
regarded as having a takeover defensive effect, which may reduce
the Company's vulnerability to hostile takeover attempts and
certain other transactions which have not been negotiated with
and approved by the Board of Directors.
Nontransferability. Optionees may transfer their Options
to family members or trusts under specified circumstances.
Options may not otherwise be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution. In
addition, Common Stock that is purchased upon the exercise of an
Option may not be sold within the six-month period following the
grant date of that Option, except in the event of the optionee's
death or disability, or such other event as the Board of
Directors may specifically deem appropriate.
Effect of Dissolution and Related Transactions. 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
Options, together with the exercise prices thereof, will 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. However, any such adjustment will
be made in such a manner as to not constitute a modification,
within the meaning of Section 424(h) of the Internal Revenue
Code, of outstanding ISOs.
Duration of the Option Plan and Grants. The Option Plan
has a term of 10 years from the Effective Date, after which date
no Options may be granted. The maximum term for an Option is 10
years from the date of grant, except that the maximum term of an
ISO may not exceed five years if the optionee owns more than 10%
of the Common Stock on the date of grant. The expiration of the
Option Plan, or its termination by the Committee, will not
affect any Option then outstanding.
Amendment and Termination of the Option Plan. The Board
of Directors of the Company may from time to time amend the
terms of the Option Plan and, with respect to any shares at the
time not subject to Options, suspend or terminate the Option
Plan. No amendment, suspension, or termination of the Option
Plan will, without the consent of any affected optionee, alter
or impair any rights or obligations under any Option previously
granted.
Financial Effects of Options. The Company will receive no
monetary consideration for the granting of Options under the
Option Plan. It will receive no monetary consideration other
than the exercise price for shares of Common Stock issued to
optionees upon the exercise of their Options. Under applicable
accounting standards, recognition of compensation expense is not
required when Options are granted at an exercise price equal to
or exceeding the fair market value of the Common Stock on the
date the Option is granted, but disclosure may be required in
financial statement footnotes regarding pro forma effects on
earnings and earnings per share of recognizing as a compensation
expense an estimate of the fair value of such stock-based
awards.
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the
grant of ISOs. If the optionee holds the shares purchased upon
exercise of an ISO for at least two years from the date the ISO
is granted, and for at least one year from the date the ISO is
exercised, any gain realized on the sale of the shares received
upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of
the ISO will be treated by the optionee as an item of tax
preference in the year of exercise for purposes of the
alternative minimum tax. If an optionee disposes of the shares
before the expiration of either of the two special holding
periods noted above, the disposition is a "disqualifying
disposition." In this event, the
9<PAGE>
<PAGE>
optionee will be required, at the time of the disposition of the
Common Stock, to treat the lesser of the gain realized or the
difference between the exercise price and the fair market value
of the Common Stock at the date of exercise as ordinary income
and the excess, if any, as capital gain.
The Company will not be entitled to any deduction for
federal income tax purposes as the result of the grant or
exercise of an ISO, regardless of whether or not the exercise of
the ISO results in liability to the optionee for alternative
minimum tax. However, if an optionee has ordinary income
taxable as compensation as a result of a disqualifying
disposition, the Company will be entitled to deduct an
equivalent amount.
Non-ISOs. In the case of a Non-ISO, an optionee will
recognize ordinary income upon the exercise of the Non-ISO in an
amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price (or, if
the optionee is subject to certain restrictions imposed by the
federal securities laws, upon the lapse of those restrictions
unless the optionee makes a special tax election within 30 days
after the date of exercise to have the general rule apply).
Upon a subsequent disposition of such shares, any amount
received by the optionee in excess of the fair market value of
the shares as of the exercise will be taxed as capital gain.
The Company will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as the
ordinary income recognized by the optionee in connection with
the exercise of a Non-ISO.
PROPOSED STOCK OPTION GRANTS
Set forth below is certain information as of the Record
Date relating to Options expected to be granted to the specified
individuals and groups of individuals on the Effective Date of
the Option Plan. All such Options (i) will be subject to the
terms and conditions described above, (ii) will be contingent
on, and not exercisable until, the Option Plan receives
stockholder approval and (iii) will automatically expire ten
years after the date of their grant. The exercise price for
these Options will be the fair market value of the Common Stock
on the date of grant.
Number of Shares
Subject to Options
------------------
Vida H. Lampkin, Chairman of the Board,
President and Chief Executive Officer 50,784
Cameron D. McKeel, Director and
Executive Vice President 47,612
Roy Wayne Moseley, Director 15,872
Bruce D. Murry, Director 15,872
Carl E. Parker, Jr., Director 15,872
Lula Sue Silliman, Director 15,872
Clifford Steelman, Director 15,872
William C. Lyon, Senior Vice President
and Chief Lending Officer 44,436
All current executive officers as a
group (3 persons) 142,832
All current directors who are not executive
officers as a group (5 persons) 79,360
All employees, including all current officers
who are not executive officers, as a group
(69 persons) 74,083
10<PAGE>
<PAGE>
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Option Plan
is desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the Option Plan in
order to satisfy the requirements of the Internal Revenue Code
for favorable tax treatment of ISOs and to satisfy the
requirements of the National Association of Securities Dealers
for national market system securities.
Stockholder approval of the Option Plan requires the
affirmative vote of the holders of a majority of the votes cast
at the Special Meeting. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" APPROVAL OF THE OPTION PLAN.
PROPOSAL II -- APPROVAL OF THE HCB BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
GENERAL
The Board of Directors of the Company is seeking
stockholder approval of the HCB Bancshares, Inc. Management
Recognition Plan (the "MRP"). A copy of the MRP is attached
hereto as Exhibit B, and should be consulted for additional
information. All statements made herein regarding the MRP,
which are only intended to summarize the MRP, are qualified in
their entirety by reference to the MRP.
PURPOSE OF THE MRP
The purpose of the MRP is to reward and retain personnel
of experience and ability in key positions of responsibility by
providing selected directors and employees of the Company, the
Bank and their affiliates with a proprietary interest in the
Company, with compensation for their past contributions to the
Company and the Bank, and with an incentive to make such
contributions in the future.
DESCRIPTION OF THE MRP
Effective Date. The MRP is expected to be formally
adopted by the Board of Directors and thereby become effective
on April 16, 1998 (the "Effective Date"), although the MRP's
effectiveness will be contingent upon its approval by the
Company's stockholders.
Administration. The MRP will be administered by an MRP
Committee consisting of not less than two directors appointed by
the Company's Board of Directors. Except as limited by the
express provisions of the MRP or by resolutions adopted by the
Board, the MRP Committee will have sole and complete authority
and discretion (1) to grant MRP awards to such employees as the
MRP Committee may select, (2) to determine the form and content
of MRP awards to be issued under the MRP, (3) to interpret the
MRP, (4) to prescribe, amend, and rescind rules and regulations
relating to the MRP, and (5) to make other determinations
necessary or advisable for the administration of the MRP. The
MRP provides that members of the MRP Committee shall be
indemnified and held harmless for actions taken under the MRP in
good faith and which he or she reasonably believed to be in the
best interests of the Company and its affiliates. It is
expected that the MRP Committee will initially consist of
Directors Moseley, Murry, Parker, Silliman and Steelman.
MRP Trust; Purchase Limitations. The assets of the MRP
will be held in a trust (the "MRP Trust"), as to which Directors
Moseley, Murry, Parker, Silliman and Steelman are expected to
act as trustees ("MRP Trustees") and thereby have the
responsibility to invest all funds contributed to the MRP Trust
by the Company or the Bank. With funds contributed by the
Company, the MRP Trust may purchase, in the aggregate, up to
52,900 shares of the Company's Common Stock. Such shares may be
newly issued shares, shares held in treasury, or shares held in
a grantor trust. The number of shares is the maximum that the
MRP Trust may purchase. In the event the MRP award is forfeited
for any reason or additional shares are purchased by the MRP
Trust associated with the MRP, the MRP Committee may make awards
with respect to such shares.
11<PAGE>
<PAGE>
Types of Awards; Eligible Persons. The MRP Committee has
the discretion to select directors and employees of the Company
and/or of the Bank who will receive discretionary MRP awards.
In addition, the MRP specifically provides for certain automatic
awards to certain employees and all non-employee directors (see
"New Plan Benefits" below).
Vesting. The vesting of MRP awards will be subject to such
terms and conditions as are established in a written notice from
the Committee to the award recipient. Unless the Committee
specifically imposes a different vesting schedule in a notice
granting an award, each award shall be vested with respect to
25% of the awarded shares on the date of the award and shall
become vested with respect to an additional 25% of the awarded
shares on each of the next three annual anniversary dates of the
award date; provided that no vesting shall occur prior to
stockholder approval of the MRP, and further provided that no
vesting shall occur on a particular date in the event of the
termination or interruption of the award recipient's continuous
service as a director or employee of the Company or an affiliate
prior thereto. Notwithstanding the foregoing, (i) all shares
subject to an award held by a participant whose service with the
Company or an affiliate terminates due to the participant's
death, disability (as defined in the MRP) or retirement at or
after age 70 will be deemed earned and 100% vested as of the
participant's last day of service with the Company or an
affiliate and (ii) all shares subject to an award held by a
participant will be deemed 100% vested as of the earlier date of
a change in control or the execution of an agreement to effect a
change in control.
Change in Control. For purposes of the MRP, Change in
Control shall mean any one of the following events: (1) the
acquisition of ownership, holding or power to vote more than 25%
of the Bank's or the Company's voting stock, (2) the acquisition
of the ability to control the election of a majority of the
Bank's or the Company's directors, (3) the acquisition of a
controlling influence over the management or policies of the
Bank or the Company by any person or by persons acting as a
"group" (within the meaning of Section 13(d) of 12 C.F.R. Part
574 or its applicable equivalent (except in the case of (1),
(2), (3) and (4) hereof, ownership or control of the Bank by the
Company itself shall not constitute a "Change of Control"), or
(5) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Company or the Bank
(the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing
Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be considered a
Continuing Director. For purposes of the definition of Change
in Control, the term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically
listed. The decision of the MRP Committee as to whether a
change in control has occurred shall be conclusive and binding.
Distributions of Shares; Voting. All unvested shares of
Common Stock held by the MRP Trust (whether or not subject to an
MRP award) shall be voted by the MRP Trustees in the same
proportion as the trustee of the Company's Employee Stock
Ownership Plan trust votes Common Stock held therein, and in the
absence of any such voting, shall be voted in the manner
directed by the Board of Directors. The MRP Trustees shall
distribute all shares, together with any shares representing
stock dividends, in the form of Common Stock. One share of
Common Stock shall be given for each share earned. However, no
shares may be distributed from the MRP Trust prior to the date
which is five years from the date of the Bank's conversion from
mutual to stock form to the extent the recipient would after
receipt of such shares own in excess of 10% of the issued and
outstanding shares of Common Stock, unless such action is
approved in advance by a majority vote of the disinterested
directors of the Company's Board of Directors. Any shares
remaining undistributed solely by reason of the operation of
this rule shall be distributed to the recipient on the date
which is five years from the date of the Bank's conversion to
stock form.
Dividends. Whenever shares of Common Stock are paid to an
award recipient or beneficiary thereof, such recipient or
beneficiary shall also be entitled to receive, with respect to
each share paid, an amount equal to any cash dividends
(including special large and nonrecurring dividends, including
one that has the effect of a return of capital to the Company's
stockholders) and a number of shares of Common Stock equal to
any stock dividends, declared and paid with respect to a share
of Common Stock between the date the relevant MRP award was
initially granted to such
12<PAGE>
<PAGE>
participant and the date the shares are being distributed.
There shall also be distributed an appropriate amount of net
earnings, if any, of the Trust with respect to any cash
dividends so paid out.
Deferral of Awards. The MRP provides that at any time
prior to April 30 of any year prior to the date on which a
participant becomes vested in any shares subject to his or her
award, a participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect to defer the receipt of all or a percentage of
the shares that would otherwise be transferred to the
participant upon the vesting of such award (the "Deferred
Shares"). MRP participants shall receive earnings on dividends
paid on Deferred Shares at a rate equal to the dividend-adjusted
total return on the Common Stock, as determined from time to
time by the MRP Committee in its sole discretion. The MRP
Trustees shall hold each Participant's Deferred Shares and
deferred earnings in the MRP Trust until distribution is
required pursuant to the participant's election.
Transferability. Participants may transfer their MRP
awards to family members or trusts under specified
circumstances. MRP awards and rights to shares held in the MRP
Trust are not otherwise transferable by participants in the MRP,
and during the lifetime of a participant, shares held in the MRP
Trust may only be earned by and paid to the participant.
Taxation. Participants will recognize compensation income
when their interest vests, or at an earlier date pursuant to a
participant's election to accelerate recognition pursuant to
Section 83(b) of the Internal Revenue Code.
Financial Effects of Awards. Neither the Company nor the
Bank will receive any monetary consideration for the granting of
awards under the MRP. Under applicable accounting standards,
when MRP awards are granted, the Company must recognize
compensation expense based on the fair market value of the
Common Stock on the date the MRP awards are granted, with such
amount being amortized over the expected vesting period for the
award.
Adjustments for Capital Changes. In the event of any
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 receipt or payment of consideration by the
Company, the MRP Committee will adjust both the number and kind
of shares of stock which may be purchased under the MRP and the
number and kind of shares of stock subject to outstanding MRP
awards. 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, all
outstanding MRP 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.
Amendment and Termination of the MRP. The Company's Board
of Directors may, by resolution, amend or terminate the MRP at
any time, provided that no amendment or termination of the MRP
will, without the written consent of any affected holders of an
MRP award, impair any rights or obligations under any MRP award
previously granted.
The power to amend or terminate includes the power to
direct the MRP Trustees to return to the Company all or any part
of the assets of the MRP Trust, including shares of Common Stock
held in the plan share reserve of the MRP. However, the
termination of the MRP Trust will not affect a participant's
right to earn outstanding MRP awards and to receive Common Stock
relating thereto, including earnings thereon, in accordance with
the terms of the MRP and the particular MRP award made to the
participant.
Duration of the MRP. The MRP and MRP Trust will remain in
effect until the earlier of (i) termination by the Company's
Board of Directors, or (ii) the distribution of all assets of
the MRP Trust. Termination of the MRP will not affect any MRP
awards previously granted, and such MRP awards will remain valid
and in effect until they have been earned and distributed from
the MRP Trust, or by their terms expire or are forfeited.
Proposed MRP Awards. For information relating to proposed
MRP awards, see "New Plan Benefits" below.
13<PAGE>
<PAGE>
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the MRP is
desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the MRP to satisfy
the requirements of the National Association of Securities
Dealers for national market system securities.
Approval of the MRP requires the affirmative vote of the
holders of a majority of the votes cast at the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
MRP.
NEW PLAN BENEFITS
The following table sets forth certain information
regarding benefits expected to be received under the Option Plan
and the MRP, subject to stockholder approval of the plans at the
Special Meeting. For additional information, including
information regarding vesting of awards, see "Proposal I --
Approval of the HCB Bancshares, Inc. 1998 Stock Option Plan" and
"Proposal II -- Approval of the HCB Bancshares, Inc. Management
Recognition Plan."
<TABLE>
<CAPTION>
Option Plan MRP
---------------------- ----------------------
Dollar Number Dollar Number
Name and Position Value ($)(1) of Units Value ($)(2) of Units
- ----------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Vida H. Lampkin, Chairman of the Board,
President and Chief Executive
Officer of the Company and the Bank $ -- 50,784 $195,054 13,224
All current executive officers as a
group (3 persons) -- 142,832 444,742 30,152
All current directors who are not
executive officers as a group
(5 persons) -- 79,360 194,995 13,220
All employees, including all current
officers who are not executive
officers, as a group (69 persons) -- 74,083 140,538 9,528
<FN>
__________
(1) Based on the fair market value of the Common Stock on the date of grant
less the exercise price: All Options will be granted at an exercise
price equal to the fair market value of the underlying shares of Common
Stock on the date of the grant.
(2) Based on the closing price of the underlying Common Stock of $14.75 per
share as quoted on the Nasdaq National Market System on March 30, 1998.
</FN>
</TABLE>
OTHER MATTERS
The Board of Directors is not aware of any business to
come before the Special Meeting other than those matters
described above in this proxy statement and matters incident to
the conduct of the Special Meeting. However, if any other
matters should properly come before the Special Meeting, it is
intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the determination of a
majority of the Board of Directors.
14<PAGE>
<PAGE>
MISCELLANEOUS
The cost of soliciting proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy
materials of the Company for the Annual Meeting of Stockholders
for the year ending June 30, 1998, any stockholder proposal to
take action at such meeting must be received at the Company's
main office at 237 Jackson Street, S.W., Camden, Arkansas 71701,
by no later than June 17, 1998. Any such proposals shall be
subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paula J. Bergstrom
Paula J. Bergstrom
Secretary
April 6, 1998
Camden, Arkansas
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING,
YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
15<PAGE>
<PAGE>
Exhibit A
HCB BANCSHARES, INC.
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select key Employees and Directors
of the Bank, the Company, and their Affiliates with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentives to Directors and
key Employees of the Company or any Affiliate to promote the
success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Bank" shall mean Heartland Community Bank.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Change in Control" shall mean any one of the
following events: (1) the acquisition of ownership, holding or
power to vote more than 25% of the Bank's or the Company's
voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors,
(3) the acquisition of a controlling influence over the
management or policies of the Bank or the Company by any person
or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), (4) the
acquisition of control of the Bank or the Company within the
meaning of 12 C.F.R. Part 574 or its applicable equivalent
(except in the case of (1), (2), (3) and (4) hereof, ownership
or control of the Bank by the Company itself shall not
constitute a "Change in Control"), or (5) during any period of
two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of
Directors of the Company or the Bank (the "Existing Board")
cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to
whether a change in control has occurred shall be conclusive and
binding.
(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 HCB Bancshares, Inc.
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(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.
(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 13 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 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
Option granted pursuant to this Plan.
(v) "Participant" shall mean any person who receives an
Option pursuant to the Plan.
(w) "Plan" shall mean this HCB Bancshares, Inc. 1998
Stock Option 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.
(z) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Option and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
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3. TERM OF THE PLAN AND OPTIONS.
(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 15 hereof. No Option shall be
granted under the Plan after ten years from the Effective Date.
(b) Term of Options. The term of each Option 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.
Except as otherwise required under Paragraph 10, the
aggregate number of Shares deliverable pursuant to Options shall
not exceed 317,400 Shares. Such Shares may either be authorized
but unissued Shares, Shares held in treasury, or Shares held in
a grantor trust created by the Company. If any Options 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 Options under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of at least
two Directors appointed by the Board. 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 Options, (ii) to
determine the form and content of Options 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 Option 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, (ii) the
number of Shares subject to, and the expiration date of, the
Option, (iii) the manner, time and rate (cumulative or
otherwise) of exercise or vesting of such Option, and (iv) the
restrictions, if any, to be placed upon such Option, or upon
Shares which may be issued upon exercise of such Option.
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 Options.
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(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 connection with the Plan or
any Option, 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. The Committee shall have the
discretion to make discretionary grants of Options to Employees
and Directors (including members of the Committee). In
addition, the Committee shall automatically make the awards
specified in Paragraphs 6(b) and 9 hereof.
(b) Automatic Grants to Employees. On the Effective
Date, each of the following Employees shall receive an Option 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)
----------- -----------------------------
Lampkin 50,784
McKeel 47,612
Lyon 44,436
Each Option granted on the Effective Date (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, (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, and (iv) shall be
an ISO to the extent it qualifies as such on the Effective Date.
(c) Special Rules for ISOs. The aggregate Market Value,
as of the date the Option is granted, of the Shares with respect
to which ISOs are exercisable for the first time by an Employee
during any calendar year (under all incentive stock option
plans, as defined in Section 422 of the Code, of the Company or
any present or future Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case 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
4<PAGE>
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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. Unless the Committee specifically
eliminates any vesting requirement or imposes a different
vesting schedule in an Agreement granting an Option, each Option
grant shall be vested and exercisable with respect to 25% of the
Optioned Shares on the date of grant and shall become vested and
exercisable with respect to an additional 25% of the Optioned
Shares on each of the next three annual anniversary dates of the
grant date; provided that no vesting shall occur prior to
stockholder approval pursuant to Paragraph 13 hereof, and
further provided that no vesting shall occur on a particular
date if the Participant's Continuous Service has ended prior
thereto. An Option may not be exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number of Shares with respect to which
the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid
registered or certified mail, addressed to the Treasurer of the
Company at its executive offices. Common Stock utilized in full
or partial payment of the Exercise Price for Options shall be
valued at its Market Value at the date of exercise, and may
consist of Shares subject to the Option being exercised. Upon a
Participant's exercise of an Option, the Company may, in the
discretion of the Committee, pay to the Participant a cash
amount up to but not exceeding the amount of dividends, if any,
declared on the underlying Shares between the date of grant and
the date of exercise of the Option.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within one year after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), 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.
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(d) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, Common Stock
that is purchased upon exercise of an Option may not be sold
within the six-month period following the grant date of that
Option, except in the event of the Participant's death or
disability, or such other event as the Board may specifically
deem appropriate.
9. AUTOMATIC GRANTS 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, a Non-ISO to purchase 15,872 Shares.
Such Non-ISOs shall have an Exercise Price per Share equal to
the Market Value of a Share on the date of grant, and be subject
to the terms of Paragraph 9(b) hereof.
(b) Terms of Exercise. Options received under the
provisions of Paragraph 9(a) shall (i) become exercisable
pursuant to the general rules set forth in Paragraph 8(a), and
(ii) may be exercised from time to time by written notice of
intent to exercise the Option with respect to all or a specified
number of the Optioned Shares, and 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. Upon a
Director's exercise of an Option, the Company may, in the
discretion of the Committee, pay to the Director a cash amount
up to but not exceeding the amount of dividends, if any,
declared on the underlying Shares between the date of grant and
the date of exercise of the Option. 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 18 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 for a reason other
than death, 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 Option 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 Option shall become immediately
exercisable, and such Option may be exercised within two years
of the termination of directorship due to Disability, but not
later than the date that the Option 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.
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10. CHANGE IN CONTROL; EFFECT OF CHANGES IN COMMON STOCK
SUBJECT TO THE PLAN.
(a) Change in Control. Upon the earlier of a Change in
Control or the execution of an agreement to effect a Change in
Control, all Options shall become fully exercisable,
notwithstanding any other provision of the Plan or any
Agreement.
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(b) 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 Options, and
the Exercise Price thereof, shall be proportionately adjusted
for any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(c) 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 Options, 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.
(d) 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.
(e) 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
Option before the adjustment was made.
(f) 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 Options or
reserved for issuance under the Plan.
(g) Certain Special Dividends. The Exercise Price of
shares subject to outstanding Options shall be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the
stockholders, except that this subparagraph (g) shall not apply
to any dividend which is paid to the Participant pursuant to
Paragraph 8(b) or 9(b) hereof.
11. NON-TRANSFERABILITY OF OPTIONS.
Options 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 Options may transfer such Options (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. Options 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 Options pursuant to this
Paragraph 11. Options which are transferred pursuant to this
Paragraph 11 shall be exercisable by the transferee according to
the same terms and conditions as applied to the Participant.
<PAGE>
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Option, and the Effective Date.
Notice of the determination shall be given to each Participant
to whom an Option is so granted within a reasonable time after
the date of such grant.
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13. EFFECTIVE DATE.
The Plan shall become effective upon adoption by the
Board, or on such later date as the Board may determine;
provided that the effectiveness of the Plan and any Option shall
be absolutely contingent upon the Plan's approval by a
favorable vote of stockholders owning at least a majority of the
total votes cast at a duly called meeting of the Company's
stockholders held in accordance with applicable laws, and no
Options shall become exercisable prior to approval of the Plan
by the stockholders of the Company.
14. MODIFICATION OF OPTIONS.
At any time, and from time to time, the Board may autho-
rize the Committee to direct execution of an instrument
providing for the modification of any outstanding Option,
provided no such modification shall confer on the holder of said
Option any right or benefit which could not be conferred on him
by the grant of a new Option at such time, or impair the Option
without the consent of the holder of the Option.
15. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Options, suspend or terminate the Plan. No amendment,
suspension or termination of the Plan shall, without the consent
of any affected holders of an Option, alter or impair any rights
or obligations under any Option theretofore granted.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Option 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, the
Company may require the person exercising the Option to make
such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal, or to establish repurchase rights, or to pay an
Optionee the in-the-money value of his Option in consideration
for its cancellation, or all of these restrictions.
17. 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.
18. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options 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
8<PAGE>
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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.
19. 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 Option
or, having received an Option, the right to again be granted an
Option. However, an Employee or Director who has been granted
an Option may, if otherwise eligible, be granted an additional
Option or Options.
20. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Arkansas, except to the extent
that federal law shall be deemed to apply.
9<PAGE>
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Exhibit B
HCB BANCSHARES, INC.
MANAGEMENT RECOGNITION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 The Company hereby establishes this Plan upon the
terms and conditions hereinafter stated.
1.02 Through acceptance of their appointment to the
Committee, each member of the Committee hereby accepts his or
her appointment hereunder upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and retain
personnel of experience and ability in key positions of
responsibility by providing Employees and Directors of the
Company, the Bank, and their Affiliates with a proprietary
interest in the Company, and as compensation for their past
contributions to the Bank, and as an incentive to make such
contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan
with an initial capital letter, shall have the meanings set
forth below unless the context clearly indicates otherwise.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the singular shall include the plural.
3.01 "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended.
3.02 "Bank" means Heartland Community Bank.
3.03 "Beneficiary" means the person or persons designated
by a Participant to receive any benefits payable under the Plan
in the event of such Participant's death. Such person or
persons shall be designated in writing on forms provided for
this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence
of a written designation, the Beneficiary shall be the
Participant's surviving spouse, if any, or if none, his estate.
3.04 "Board" means the Board of Directors of the Company.
3.05 "Change in Control" means any one of the following
events: (1) the acquisition of ownership, holding or power to
vote more than 25% of the Bank's or the Company's voting stock,
(2) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors, (3) the
acquisition of a controlling influence over the management or
policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), (4) the acquisition of control
of the Bank or the Company within the meaning of 12 C.F.R. Part
574 or its applicable equivalent (except in the case of (1),
(2), (3) and (4) hereof, ownership or control of the Bank by the
Company itself shall not constitute a "Change in Control"), or
(5) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board of Directors of the Company or the Bank
(the "Existing Board") cease
1<PAGE>
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for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, the term "person" refers to an
individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to
whether a change in control has occurred shall be conclusive and
binding.
3.06 "Committee" means the Management Recognition Plan
Committee appointed by the Board pursuant to Article IV hereof.
3.07 "Common Stock" means shares of the common stock of
the Company.
3.08 "Company" means HCB Bancshares, Inc.
3.09 "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
3.10 "Date of Conversion" means the date of the
conversion of the Bank from mutual to stock form.
3.11 "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
3.12 "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
3.13 "Effective Date" means the date on which the Plan
first becomes effective, as determined under Section 8.07
hereof.
3.14 "Employee" means any person who is employed by the
Company or an Affiliate.
3.15 "Non-Employee Director" shall have the meaning
provided in Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
3.16 "Participant" means an Employee or Director who
holds a Plan Share Award.
3.17 "Plan" means this HCB Bancshares, Inc. Management
Recognition Plan.
3.18 "Plan Shares" means shares of Common Stock held in
the Trust which are awarded or issuable to a Participant
pursuant to the Plan.
3.19 "Plan Share Award" means a right granted under this
Plan to receive Plan Shares.
3.20 "Plan Share Reserve" means the shares of Common
Stock held by the Trustee pursuant to Sections 5.02 and 5.03.
3.21 "Trust" and "Trust Agreement" mean that agreement
entered into pursuant to the terms hereof between the Company
and the Trustee, and "Trust" means the trust created thereunder.
2<PAGE>
<PAGE>
3.22 "Trustee" means the Company's Directors acting by
majority.
3.23 "Year of Service" shall mean a full twelve-month
period, measured from the date of a Plan Share Award and each
annual anniversary of that date, during which a Participant's
Continuous Service has not terminated for any reason.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 ROLE AND POWERS OF THE COMMITTEE. The Plan shall
be administered and interpreted by the Committee, which shall
consist of at least two Directors appointed by the Board. In
the absence at any time of a duly appointed Committee, the Plan
shall be administered by those members of the Board who are Non-
Employee Directors, and by the Board if there are less than
three Non-Employee Directors.
The Committee shall have all of the powers allocated to it
in this and other Sections of the Plan. Except as limited by
the express provisions of the Plan or by resolutions adopted by
the Board, the Committee shall have sole and complete authority
and discretion (i) to make Plan Share Awards to such Employees
as the Committee may select, (ii) to determine the form and
content of Plan Share Awards to be issued under the Plan, (iii)
to interpret the Plan, (iv) to prescribe, amend and rescind
rules and regulations relating to the Plan, and (v) to make
other determinations necessary or advisable for the
administration of the Plan. The Committee shall have and may
exercise such other power and authority as may be delegated to
it by the Board from time to time. Subject to Section 4.02, the
interpretation and construction by the Committee of any
provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Committee shall act
by vote or written consent of a majority of its members, and
shall report its actions and decisions with respect to the Plan
to the Board at appropriate times, but in no event less than one
time per calendar year. The Committee may recommend to the
Board one or more persons or entity to act as Trustee(s) in
accordance with the provisions of this Plan and the Trust.
4.02 ROLE OF THE BOARD. The members of the Committee
shall be appointed or approved by, and will serve at the
pleasure of, the Board. The Board may in its discretion from
time to time remove members from, or add members to, the
Committee. The Board shall have all of the powers allocated to
it in this and other Sections of the Plan, may take any action
under or with respect to the Plan which the Committee is
authorized to take, and may reverse or override any action taken
or decision made by the Committee under or with respect to the
Plan, provided, however, that the Board may not revoke any Plan
Share Award already made or impair a participant's vested rights
under a Plan Share Award.
4.03 LIMITATION ON LIABILITY. No member of the Board or
the Committee or the Trustee(s) shall be liable for any
determination made in good faith with respect to the Plan or any
Plan Shares or Plan Share Awards granted under it. If a member
of the Board or the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Company shall indemnify such member against expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Company and its
Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
<PAGE>
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall
determine the amounts (or the method of computing the amounts)
to be contributed by the Company to the Trust, provided that the
Bank may also make
3<PAGE>
<PAGE>
contributions to the Trust. Such amounts shall be paid to the
Trustee at the time of contribution. No contributions to the
Trust by Employees shall be permitted.
5.02 INVESTMENT OF TRUST ASSETS; MAXIMUM PLAN SHARE
AWARDS. The Trustee shall invest Trust assets only in
accordance with the Trust Agreement; provided that the Trust
shall not purchase, and Plan Share Awards shall not be made with
respect to more than 52,900 Shares. Such Shares may be newly
issued Shares, Shares held in Treasury, or Shares held in a
grantor trust.
5.03 EFFECT OF ALLOCATIONS, RETURNS AND FORFEITURES UPON
PLAN SHARE RESERVES. Upon the allocation of Plan Share Awards
under Section 6.02, the Plan Share Reserve shall be reduced by
the number of Shares subject to the awards so allocated. Any
Shares subject or attributable to an Award which may not be
earned because of a forfeiture by the Participant pursuant to
Section 7.01 shall be added to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 ELIGIBILITY. The Committee may make Plan Share
Awards only to Employees or Directors. In addition, the
Committee shall automatically make the Plan Share Awards
specified in Sections 6.04 and 6.05.
6.02 ALLOCATIONS. The Committee will determine which
Employees or Directors will be granted discretionary Plan Share
Awards, and the number of Shares covered by each Plan Share
Award, provided that in no event shall any awards be made which
would violate the governing instruments of the Bank or its
Affiliates or any applicable federal or state law or regulation.
In the event Plan Shares are forfeited for any reason or
additional shares of Common Stock are purchased by the Trustee,
the Committee may, from time to time, grant additional Plan
Share Awards from the forfeited or acquired Plan Shares.
6.03 FORM OF ALLOCATION. As promptly as practicable
after a determination is made pursuant to Section 6.02 that a
Plan Share Award is to be made, the Committee shall notify the
Participant in writing of the grant of the award and the number
of Plan Shares covered by the award. The date on which the
Committee so notifies the Participant shall be considered the
date of grant of the Plan Share Awards, and prior thereto the
Participant shall have no rights pursuant to the Plan Share
Awards. The Committee shall maintain records as to all grants
of Plan Share Awards under the Plan.
6.04 AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.
Notwithstanding any other provisions of this Plan, each Director
who is not an Employee but is a Director on the Effective Date
shall receive, on the Effective Date, a Plan Share Award for
2,644 Shares. Plan Share Awards received under the provisions
of this Section shall become vested and nonforfeitable according
to the general rules set forth in subsections (a) and (b) of
Section 7.01. Unless otherwise inapplicable or inconsistent
with the provisions of this Section, the Plan Share Awards to be
granted hereunder shall be subject to all other provisions of
this Plan.
6.05 AUTOMATIC GRANTS TO EMPLOYEES. On the Effective
Date, each of the following individuals shall receive a Plan
Share Award as to the number of Plan Shares listed below,
provided that such award shall not be made to an individual who
is not an Employee on the Effective Date:
Employee Shares Subject to Plan Share Award
-------- ----------------------------------
Lampkin 13,224
McKeel 10,580
Lyon 6,348
<PAGE>
Plan Share Awards received under the provisions of this
Section shall become vested and nonforfeitable according to the
general rules set forth in subsections (a) and (b) of Section
7.01. Unless otherwise inapplicable or
4<PAGE>
<PAGE>
inconsistent with the provisions of this Section, the Plan Share
Awards to be granted hereunder shall be subject to all other
provisions of this Plan.
6.06 ALLOCATIONS NOT REQUIRED. Notwithstanding anything
to the contrary in Sections 6.01 and 6.02, but subject to
Sections 6.04 and 6.05, no Employee or Director shall have any
right or entitlement to receive a Plan Share Award hereunder,
such awards being at the total discretion of the Committee, nor
shall any Employees or Directors as a group have such a right.
The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share
Reserve to the Company at any time, and cease issuing Plan Share
Awards.
ARTICLE VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Unless the Committee specifically
imposes a different vesting schedule in a notice granting a Plan
Share Award, each Plan Share Award shall be vested with respect
to 25% of the awarded Plan Shares on the date of the award and
shall become vested with respect to an additional 25% of the
awarded Plan Shares on each of the next three annual anniversary
dates of the award date; provided that no vesting shall occur
prior to stockholder approval pursuant to Section 8.07 hereof,
and further provided that no vesting shall occur on a particular
date if the Participant's Continuous Service has ended prior
thereto.
(b) ACCELERATION FOR TERMINATIONS DUE TO RETIREMENT,
DEATH, DISABILITY, OR CHANGE IN CONTROL. Notwithstanding the
general rule contained in Section 7.01(a) above: (i) all Plan
Shares subject to a Plan Share Award held by a Participant whose
service with the Company or an Affiliate terminates due to the
Participant's retirement at or after age 70, death, or
Disability shall be deemed earned and 100% vested as of the
Participant's last day of service with the Company or an
Affiliate, and (ii) all Plan Shares subject to a Plan Share
Award held by a Participant shall be deemed earned and 100%
vested as of the earlier of a Change in Control or, if earlier,
the execution of an agreement to effect a Change in Control.
(c) DISCRETIONARY ACCELERATION. Notwithstanding
Sections 7.01(a) and 7.01(b) above, the Committee may at any
time and for any lawful reason accelerate the vesting on all or
any part of a Participant's Plan Share Award.
7.02 ACCRUAL OF DIVIDENDS. Whenever Plan Shares are paid
to a Participant or Beneficiary under Section 7.03, such
Participant or Beneficiary shall also be entitled to receive,
with respect to each Plan Share paid, an amount equal to any
cash dividends (including special large and nonrecurring
dividends, including one that has the effect of a return of
capital to the Company's stockholders) and a number of shares of
Common Stock equal to any stock dividends, declared and paid
with respect to a share of Common Stock between the date the
relevant Plan Share Award was initially granted to such
Participant and the date the Plan Shares are being distributed.
There shall also be distributed an appropriate amount of net
earnings, if any, of the Trust with respect to any cash
dividends so paid out.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. Except as
provided in Subsections (c), and (d) below, the Trustee shall
distribute Plan Shares and accumulated cash from dividends and
interest to the Participant or his Beneficiary, as the case may
be, as soon as practicable after they have been earned. No
fractional shares shall be distributed.
(b) FORM OF DISTRIBUTION. The Trustee shall distribute
all Plan Shares, together with any shares representing stock
dividends, in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made
in cash.
5<PAGE>
<PAGE>
(c) WITHHOLDING. The Trustee shall withhold from any
cash payment made under this Plan sufficient amounts to cover
any applicable withholding and employment taxes, and if the
amount of such cash payment is not sufficient, the Trustee shall
require the Participant or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the
Plan Shares. The Trustee shall pay over to the Company or
Affiliate which employs or employed such Participant any such
amount withheld from or paid by the Participant or Beneficiary.
(d) TIMING: EXCEPTION FOR 10% SHAREHOLDERS.
Notwithstanding Subsections (a) and (b) above, no Plan Shares
may be distributed prior to the date which is five (5) years
from the Date of Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such
Shares own in excess of ten percent (10%) of the issued and
outstanding shares of Common Stock unless such action is
approved in advance by a majority vote of disinterested
directors of the Board. To the extent this limitation would
delay the date on which a Participant receives Plan Shares, the
Participant may elect to receive from the Trust, in lieu of such
Plan Shares, the cash equivalent thereof. Any Plan Shares
remaining undistributed solely by reason of the operation of
this Subsection (d) shall be distributed to the Participant or
his Beneficiary on the date which is five years from the Date of
Conversion.
(e) REGULATORY EXCEPTIONS. No Plan Shares shall be
distributed unless and until all of the requirements of all
applicable law and regulation shall have been fully complied
with, including the receipt of approval of the Plan by the
stockholders of the Company by such vote, if any, as may be
required by applicable law and regulations.
7.04 VOTING OF PLAN SHARES. All shares of Common Stock
held by the Trust (whether or not subject to a Plan Share Award)
shall be voted by the Trustee in the same proportion as the
trustee of the Company's Employee Stock Ownership Plan votes
Common Stock held in the trust associated therewith, and in the
absence of any such voting, shall be voted in the manner
directed by the Board.
7.05. DEFERRAL ELECTIONS BY PARTICIPANTS.
(a) ELECTIONS TO DEFER. At any time prior to April
30th of any year prior to the date on which a Participant
becomes vested in any shares subject to his or her Plan Share
Award, a Participant who is a member of a select group of
management or highly compensated employees (within the meaning
of the Employees' Retirement Income Security Act of 1973) may
irrevocably elect, on the form attached hereto as Exhibit "A"
(the "Election Form"), to defer the receipt of all or a
percentage of the Plan Shares that would otherwise be
transferred to the Participant upon the vesting of such award
(the "Deferred Shares").
(b) RECORDKEEPING; HOLDING OF DEFERRED SHARES. The
MRP Committee shall establish and maintain an individual account
in the name of each Participant who files an Election Form for
the purpose of tracking deferred earnings attributable to cash
dividends paid on Deferred Shares (the "Cash Account"). On the
last day of each fiscal year of the Company, the Committee shall
credit to the Participant's Cash Account earnings on the balance
of the Cash Account at a rate equal to the dividend-adjusted
total return on Common Stock, as determined from time to time by
the MRP Committee in its sole discretion. The Trustees shall
hold each Participant's Deferred Shares and Deferred Earnings in
the Trust until distribution is required pursuant to Section
7.05(c) hereof.
(c) DISTRIBUTIONS OF DEFERRED SHARES. The Trustee shall
distribute a Participant's Deferred Shares and Deferred Earnings
in accordance with the Participant's Election Form. All
distributions made by the Company and/or the Trustees pursuant
to elections made hereunder shall be subject to applicable
federal, state, and local tax withholding and to such other
deductions as shall at the time of such payment be required
under any income tax or other law, whether of the United States
or any other jurisdiction, and, in the case of payments to a
beneficiary, the delivery to the Committee and/or Trustees of
all necessary waivers, qualifications and other documentation.
Within 90 days after receiving notice of a Participant's death,
the Trustee shall distribute any balance of the Participant's
Deferred Shares and Deferred Earnings to the Participant's
designated beneficiary, if living, or if such designated
beneficiary is deceased or the Participant failed to designate a
beneficiary, to the Participant's estate. If, on the other
hand, a Participant's Continuous Service terminates for a reason
other than the Participant's death, Disability, early
retirement, or normal retirement, the Participant's Deferred
Shares and Deferred Earnings shall be distributed to the
Participant in a lump sum occurring as soon as reasonably
practicable. The distribution provisions of a Participant's
6<PAGE>
<PAGE>
Election Form shall become irrevocable on the date that occurs
(i) one year before the Participant's termination of Continuous
Service for a reason other than death, and (ii) on the
Participant's death if that terminates the Participant's
Continuous Service.
(d) HARDSHIP WITHDRAWALS. Notwithstanding any other
provision of the Plan or a Participant's Election Form, in the
event the Participant suffers an unforeseeable emergency
hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate
distribution of all or a portion of his Deferred Shares and
Deferred Earnings. The hardship must result from a sudden and
unexpected illness or accident of the Participant or a dependent
of the Participant, casualty loss of property, or other similar
conditions beyond the control of the Participant. Examples of
purposes which are not considered hardships include post-
secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the
hardship could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the
Participant's nonessential assets to the extent such liquidation
would not itself cause a severe financial hardship. The amount
of any distribution hereunder shall be limited to the amount
necessary to relieve the Participant's financial hardship. The
determination of whether a Participant has a qualifying hardship
and the amount which qualifies for distribution, if any, shall
be made by the Committee in its sole discretion. The Committee
may require evidence of the purpose and amount of the need, and
may establish such application or other procedures as it deems
appropriate.
(e) RIGHTS TO DEFERRED SHARES AND EARNINGS. A
Participant may not assign his or her claim to Deferred Shares
and Deferred Earnings during his or her lifetime, except in
accordance with Section 8.03 of this Plan. A Participant's right
to Deferred Shares and Deferred Earnings shall at all times
constitute an unsecured promise of the Company to pay benefits
as they come due. The right of the Participant or his or her
beneficiary to receive benefits hereunder shall be solely an
unsecured claim against the general assets of the Company.
Neither the Participant nor his or her beneficiary shall have
any claim against or rights in any specific assets or other fund
of the Company, and any assets in the Trust shall be deemed
general assets of the Company.
ARTICLE VIII
MISCELLANEOUS
8.01 ADJUSTMENTS FOR CAPITAL CHANGES.
(a) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number
and kind of shares which may be purchased under the Plan, and
the number and kind of shares subject to outstanding Plan Share
Awards, shall be proportionately adjusted for any increase,
decrease, change or exchange of shares of Common Stock for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) TRANSACTIONS IN WHICH THE COMPANY IS NOT THE
SURVIVING ENTITY. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Plan Share Awards shall be
adjusted for any change or exchange of shares of Common Stock
for a different number or kind of shares or other securities
which results from the Transaction.
(c) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Section, a Participant becomes entitled to
new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the shares pursuant to the
Plan Share Award before the adjustment was made. In addition,
the Committee shall have the discretionary authority to impose
on the Shares subject to Plan Share Awards to Employees such
restrictions as the Committee may deem appropriate or desirable,
including but not limited to a right of first refusal, or
repurchase option, or both of these restrictions.
7<PAGE>
<PAGE>
(d) OTHER ISSUANCES. Except as expressly provided in
this Section, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
shares of Common Stock or stock of another class, for cash or
property or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor,
shall not affect, and no adjustment shall be made with respect
to, the number or class of shares of Common Stock then subject
to Plan Share Awards or reserved for issuance under the Plan.
8.02 AMENDMENT AND TERMINATION OF PLAN. The Board may,
by resolution, at any time amend or terminate the Plan; provided
that no amendment or termination of the Plan shall, without the
written consent of a Participant, impair any rights or
obligations under a Plan Share Award theretofore granted to the
Participant.
The power to amend or terminate the Plan in accordance
with this Section 8.02 shall include the power to direct the
Trustee to return to the Company all or any part of the assets
of the Trust, including shares of Common Stock held in the Plan
Share Reserve. However, the termination of the Trust shall not
affect a Participant's right to earn Plan Share Awards and to
receive a distribution of Common Stock relating thereto,
including earnings thereon, in accordance with the terms of this
Plan and the grant by the Committee or the Board.
8.03 NONTRANSFERABILITY. Plan Share Awards may not be
sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding the foregoing, or any other
provision of this Plan, a Participant who holds Plan Share
Awards may transfer such awards to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Plan Share
Awards so transferred may thereafter be transferred only to the
Participant who originally received the grant or to an
individual or trust to whom the Participant could have initially
transferred the awards pursuant to this Section 8.03. Plan
Share Awards which are transferred pursuant to this Section 8.03
shall be exercisable by the transferee according to the same
terms and conditions as applied to the Participant.
8.04 NO EMPLOYMENT OR OTHER RIGHTS. Neither the Plan nor
any grant of a Plan Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express
or implied, on the part of any Employee or Director to continue
in the service of the Company, the Bank, or an Affiliate
thereof.
8.05 VOTING AND DIVIDEND RIGHTS. No Participant shall
have any voting or dividend rights or other rights of a
stockholder in respect of any Plan Shares covered by a Plan
Share Award prior to the time said Plan Shares are actually
distributed to him.
8.06 GOVERNING LAW. The Plan and Trust shall be governed
and construed under the laws of the State of Arkansas to the
extent not preempted by Federal law.
8.07 EFFECTIVE DATE. The Plan shall become effective
upon adoption by the Board, or on such later date as the Board
may determine; provided that the effectiveness of the Plan and
any Plan Share Award shall be absolutely contingent upon the
Plan's approval by a favorable vote of stockholders of the
Company who own at least a majority of the total votes cast at a
duly called meeting of the Company's stockholders held in
accordance with applicable laws.
8.08 TERM OF PLAN. This Plan shall remain in effect
until the earlier of (i) termination by the Board, or (ii) the
distribution of all assets of the Trust. Termination of the
Plan shall not affect any Plan Share Awards previously granted,
and such Awards shall remain valid and in effect until they have
been earned and paid, or by their terms expire or are forfeited.
8.09 TAX STATUS OF TRUST. It is intended that (i) the
Trust associated with the Plan be treated as a grantor trust of
the Company under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time, and (ii)
that in accordance with Revenue Procedure 92-65 (as the same may
be amended from time to time), Participants have the status of
general unsecured creditors of the Company, the Plan constitutes
a mere unfunded
8<PAGE>
<PAGE>
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).
9<PAGE>
<PAGE>
[ ]PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE HCB BANCSHARES, INC.
SPECIAL MEETING OF STOCKHOLDERS
MAY 5, 1998
The undersigned hereby appoints Vida H. Lampkin and Cameron D.
McKeel, with full powers of substitution, to act as proxies for
the undersigned, to vote all shares of common stock of HCB
Bancshares, Inc. (the "Company") which the undersigned is
entitled to vote at the Special Meeting of Stockholders (the
"Meeting"), to be held at the Ouachita Electric Co-Op
Corporation, 700 Bradley Ferry Road, Camden, Arkansas, on
Tuesday, May 5, 1998 at 10:00 a.m., local time, and at any and
all adjournments thereof, as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Approval of the HCB Bancshares,
Inc. 1998 Stock Option Plan [ ] [ ] [ ]
2. Approval of the HCB Bancshares,
Inc. Management Recognition Plan [ ] [ ] [ ]
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL
MEETING, INCLUDING MATTERS RELATED TO THE CONDUCT OF THE SPECIAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD
OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO MATTERS INCIDENT TO THE CONDUCT
OF THE SPECIAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Please be sure to sign and date this proxy in the box below
Date ______________________
___________________________ _________________________
Stockholders sign above Co-holder (if any) sign above
- --------------------- perforation ------------------------------
Detach above card, sign, date and mail in postage-paid envelope
enclosed.
HCB BANCSHARES, INC.
Should the abovesigned be present and elect to vote at the
special meeting or at any adjournment thereof, and after
notification to the Secretary of the Company at the special
meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The abovesigned acknowledges receipt from the Company prior to
the execution of this proxy of notice of the special meeting and
a proxy statement dated April 6, 1998.
Please sign exactly as your name appears on this proxy card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY TODAY
