MNB Bancshares, Inc.
800 Poyntz Avenue
Manhattan, Kansas 66502
(785) 565-2000
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1998
To the stockholders of
MNB BANCSHARES, INC.
The Annual Meeting of the Stockholders of MNB Bancshares,
Inc., a Delaware corporation (the "Company"), will be held
at the Kansas State University Student Union, 17th and
Anderson Avenue, Manhattan, Kansas, 66506, on Monday, May
18, 1998, at 2:00 p.m., local time, for the following
purposes:
1. to elect three (3) Class III directors for a term of
three years.
2. to amend the Certificate of Incorporation of the Company
to increase the authorized common stock to 3,000,000 shares.
3. to approve the MNB Bancshares, Inc. 1998 Stock Incentive
Plan.
4. to approve the appointment of KPMG Peat Marwick LLP as
independent public accountants for the Company for the
fiscal year ending December 31, 1998.
5. to transact such other business as may properly be
brought before the meeting and any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on
April 3, 1998, as the record date for the determination of
stockholders entitled to notice of, and to vote at, the
meeting.
By order of the Board of Directors
/s/Patrick L. Alexander
President and Chief Executive Officer
Manhattan, Kansas
April 17, 1998
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of MNB Bancshares,
Inc. (the "Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held at the Kansas State
University Student Union, 17th and Anderson Avenue,
Manhattan, Kansas, 66506, on Monday, May 18, 1998, at 2:00
p.m., local time, and at any adjournments or postponements
thereof.
The Board of Directors would like to have all stockholders
represented at the meeting. If you do not expect to be
present, please sign and return your proxy card in the
enclosed self-addressed, stamped envelope. You have the
power to revoke your proxy at any time before it is voted,
by giving written notice to the Secretary of the Company,
provided such written notice is received by the Secretary
prior to the annual meeting or any adjournments or
postponements thereof, by submitting a later dated proxy or
by attending the annual meeting and choosing to vote in
person. The giving of a proxy will not affect your right to
vote in person if you attend the meeting.
The Company's principal executive office is located at 800 Poyntz Avenue,
Manhattan, Kansas and its mailing address is P.O. Box 308, Manhattan,
Kansas 66505. This Proxy Statement and the accompanying proxy card are
being mailed to stockholders on or about April 17, 1998. The 1997 Annual
Report of the Company, which includes consolidated financial
statements of the Company and its subsidiary, is enclosed.
The Company is the holding company for Security National
Bank, Manhattan, Kansas (the "Bank"). In addition to its
main office in Manhattan, the Bank also has branch offices
in Topeka, Auburn, Osage City and Beloit, Kansas.
Only holders of record of the Company's Common Stock at the
close of business on April 3, 1998, will be entitled to vote
at the annual meeting or any adjournments or postponements
of such meeting. On April 3, 1998, the Company had
1,288,476 shares of Common Stock, par value $0.01 per share,
issued and outstanding. In the election of directors, and
for all other matters to be voted upon at the annual
meeting, each issued and outstanding share is entitled to
one vote.
All shares of Common Stock represented at the annual meeting
by properly executed proxies received prior to or at the
annual meeting, and not revoked, will be voted at the annual
meeting in accordance with the instructions thereon. If no
instructions are indicated, properly executed proxies will
be voted for the nominees and for adoption of the proposals
set forth in this Proxy Statement.
A majority of the shares of the Common Stock, present in
person or represented by proxy, shall constitute a quorum
for purposes of the annual meeting. Abstentions and broker
non-votes will be counted for purposes of determining a
quorum. Directors shall be elected by a plurality of the
votes present in person or represented by proxy at the
meeting and entitled to vote. Approval of the amendment to
the Company's Certificate of Incorporation requires the
approval of a majority of the outstanding shares of Common
Stock. In all other matters, the affirmative vote of a
majority of shares required to constitute a quorum and
voting on the subject matter shall be required to constitute
stockholder approval. Abstentions will be counted as votes
against a proposal and broker non-votes will have no effect
on the vote.
ELECTION OF DIRECTORS
At the Annual Meeting of the Stockholders to be held on May
18, 1998, the stockholders will be entitled to elect three
(3) Class III directors for a term expiring in 2001. The
directors of the Company are divided into three classes
having staggered terms of three years. The nominees for
election as Class III directors are incumbent directors.
The Company has no knowledge that any of the nominees will
refuse or be unable to serve, but if any of the nominees
becomes unavailable for election, the holders of the proxies
reserve the right to substitute another person of their
choice as a nominee when voting at the meeting. Set forth
below is information concerning the nominees for election
and for the other persons whose terms of office will
continue after the meeting, including the age, year first
elected a director and business experience during the
previous five years as of April 3, 1998. The three
nominees, if elected at the Annual Meeting of Stockholders,
will serve as Class III directors for a three year term
expiring in 2001. The Board of Directors recommends you
vote your shares FOR the nominees.
<TABLE>
<CAPTION>
NOMINEES
<S> <C> <C> <C>
Name Age Position with the Director Since
Company and the Bank
CLASS III
(Term Expires 2001)
Brent A. Bowman 48 Chairman of the Board
of the Company and the
Bank 1987
Charles D. Green 72 Director of the Company
and the Bank 1957
Vernon C. Larson 74 Director of the Company
and the Bank 1974
CONTINUING DIRECTORS
CLASS I
(Term Expires 1999)
Patrick L. Alexander 45 President, Chief Executive
Officer and Director of
the Company and the Bank 1990
Joseph L. Downey 61 Director of the Company
and the Bank 1996
Rolla W. Goodyear 40 Director of the Company
and the Bank 1995
Jerry R. Pettle 59 Director of the Company
and the Bank 1978
CLASS II
(Term Expires 2000)
Susan E. Roepke 58 Director, Vice President,
Secretary and Treasurer of
the Company and Director,
Senior Vice President and
Cashier of the Bank 1997
Donald J. Wissman 60 Director of the Company and
the Bank 1994
</TABLE>
All of the Company's directors will hold office for the
terms indicated, or until their earlier death, resignation,
removal or disqualification, and until their respective
successors are duly elected and qualified, and all executive
officers hold office for a term of one year. There are no
arrangements or understandings between any of the directors,
executive officers or any other person pursuant to which any
of the Company's directors or executive officers have been
selected for their respective positions, except that the
Company and the Bank have entered into an employment
contract with Mr. Alexander. No director is related to any
other director or executive officer of the Company or the
Bank by blood, marriage or adoption, except that Mr.
Goodyear is the brother-in-law of Mr. William F. Caton, who
is a director of the Bank.
The business experience of each nominee and continuing
director for the past five years is as follows:
Patrick L. Alexander became President and Chief Executive
Officer of the Manhattan Federal Savings and Loan
Association (the predecessor-in-interest to the Bank) in 1990,
and became the President and Chief Executive Officer of the
Company and the Bank on August 28, 1992 and January 5, 1993,
respectively. From 1986 to 1990, Mr. Alexander served as
President of the Kansas State Bank of Manhattan, Manhattan,
Kansas. Mr. Alexander serves as a member of the Board of
Directors of the Big Lakes Foundation, Inc. Mr. Alexander
serves on the Economic Development Committee for the
Manhattan Chamber of Commerce.
Brent A. Bowman has been President of Brent Bowman and
Associates Architects, P.A., an architectural firm in
Manhattan, Kansas, since 1979. Mr. Bowman serves on the
Manhattan Historic District Review Board.
Joseph L. Downey has been a director of Dow Chemical Co.
since 1989 and a Dow Senior Consultant since 1995 after
having served in a variety of executive positions with that
company, including Senior Vice President from 1991 to 1994.
Rolla W. Goodyear was the Chairman of the Board of Auburn
Security Bancshares, Inc. and President and Chief Executive
Officer of Security State Bank from 1983 until its
acquisition by the Company in April 1995. Mr. Goodyear
served as President of the Auburn branch of the Bank from
January, 1996 through July, 1997. In August, 1997, Mr.
Goodyear joined Financial Institutions Technology, dba
Suntell, as Chief Financial Officer.
Charles D. Green is a former partner in the Manhattan,
Kansas law firm of Arthur, Green, Arthur, Conderman &
Stutzman from 1950 to July 1, 1993. Mr. Green formerly
served as a director of the Commerce Bank, N.A., a wholly-
owned subsidiary of CBI-Central Kansas, Inc., which is a
wholly owned subsidiary of Commerce Bancshares, Inc., Kansas
City, Missouri.
Vernon C. Larson was the Assistant Provost and Director of
International Programs at Kansas State University,
Manhattan, Kansas from 1962 until his retirement in 1991.
Jerry R. Pettle is a dentist who has practiced with Dental
Associates of Manhattan, P.A., in Manhattan, Kansas, since
1970. Dr. Pettle serves on the Board of Directors of the
Manhattan Medical Center and is an examiner for the Kansas
Dental Board. Dr. Pettle is a past member of the Board of
Directors of the Friends of the Konza Prairie and a past
member of the Kansas State University Foundation.
Susan E. Roepke became Vice President of the Company on
August 28, 1992 and Senior Vice President, Secretary and
Cashier of the Bank on January 5, 1993. She was elected
Secretary of the Association in 1992 and became Vice
President/Operations Division of the Association in 1991,
and had been Treasurer of the Association since 1970. She
held these positions with the Association until the
Conversion in 1993.
Donald J. Wissman is President of the Grain Industry
Alliance, a consortium of Kansas State University, American
Institute of Baking, DPRA Incorporated and the USDA Grain
Marketing and Production Research Center. He was Chairman
of DPRA from 1987 to 1998, an independent
environmental/economic research firm headquartered in
Manhattan, Kansas. Dr. Wissman was with DPRA since 1965,
having served in a variety of positions, including Senior
Vice President and Senior Economist. He is a past Chairman
and Director of the Manhattan Chamber of Commerce, past
Director of Kansas State University Research Foundation and
a Director of the mid American Commercialization
Corporation.
Board Committees and Meetings
There presently are two committees of the Board of Directors
of the Company, a Stock Option Committee which administers
the Company's Stock Option Plan and an Audit Committee. The
full Board of Directors considers nominations to the Board,
and will consider nominations made by stockholders if such
nominations are in writing and otherwise comply with Section
3.1 of the Company's bylaws. The Board of Directors of the
Bank has an Executive Committee, and a Directors' Loan
Committee.
The Executive Committee consists of Directors Bowman
(Chairman), Alexander, Roepke, Wissman and Mr. William F.
Caton, a director of the Bank. The Executive Committee has
authority to perform policy reviews, oversee and direct
compensation and personnel functions, monitor marketing and
CRA activities, review and approve the budget and
asset/liability position and undertake other organizational
issues and planning discussions as deemed appropriate. The
committee meets monthly on a regularly scheduled basis and
more frequently if necessary. During 1997 the committee met
12 times.
The Directors' Loan Committee consists of Directors Green
(Chairman), Alexander, Downey, Goodyear, Larson and Pettle.
The Directors' Loan Committee is responsible for policy
review and oversight of the loan and investment functions.
It has the authority to approve loans in excess of the
Officers' Loan Committee lending authority up to legal
lending limits, subject to certain exceptions which apply to
certain levels of unsecured and insider loans which must be
approved by the entire Board of Directors. The committee
reviews the loan loss reserve for adequacy and reviews in
detail lending and investment activities. The committee
meets monthly on a regularly scheduled basis and more
frequently if necessary. During 1997 the committee met 14
times.
The Audit Committee consists of Directors Pettle (Chairman),
Bowman, Larson, Wissman and Mr. William F. Caton, a director
of the Bank. The Audit Committee is responsible for
overseeing the internal and external audit functions. It
approves internal audit staffing, salaries and programs.
The Internal Auditor reports directly to the committee on
audit and compliance matters. The committee also reviews
and approves the scope of the annual external audit and
consults with the independent auditors regarding the results
of their auditing procedures. The committee normally meets
quarterly. During 1997 the committee met 4 times.
The Stock Option Committee consists of Directors Bowman
(Chairman) Pettle and Wissman. The Stock Option Committee
administers the Stock Option Plan and has the authority,
among other things, to select the employees to whom options
will be granted, to determine the terms of each option, to
interpret the provisions of the Stock Option Plan and to
make all determinations that it may deem necessary or
advisable for the administration of the Stock Option Plan.
During 1997 the committee did not meet.
A total of 12 regularly scheduled and special meetings were
held by the Board of Directors of the Company during 1997.
During 1997, all directors attended at least 75 percent of
the meetings of the Board and the committees on which they
serve.
Directors of the Company receive no fees for attendance at
regularly scheduled meetings of the Board of Directors of
the Company and they receive $100 for attendance at special
meetings. Directors of the Bank receive fees of $400 per
month plus $100 per meeting for attendance at regularly
scheduled meetings of the Board of Directors of the Bank and
$100 per month for attendance at regularly scheduled
meetings of committees, except that Mr. Alexander and Mrs.
Roepke do not receive additional amounts for attendance at
committee meetings.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation paid or granted to the Company's Chief
Executive Officer for the past three fiscal years. None of
the remaining executive officers of the Company or the Bank
had an aggregate salary and bonus which exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
Securities
Name and Underlying All other
Principal Year ended Options/ Compensation
Position December 31 Salary($)(1) Bonus($) SARs(3) ($)(2)
Patrick L. 1997 $119,957 $32,045 --- $12,975
Alexander 1996 114,993 30,473 --- 13,105
President/ 1995 108,648 18,000 --- 12,994
CEO
1. Includes amounts deferred.
2. Represents contributions made to the MNB Bancshares,
Inc. Employee Stock Ownership Plan (the "ESOP"), of which
the 1997 contributions have not yet been determined, and
also includes premium payments for an insurance policy
purchased for disability and death benefit available to all
employees. The contribution to the ESOP was $11,880 for
1995, $11,919 for 1996, and is expected to be approximately
$12,000 for 1997.
</TABLE>
<TABLE>
<CAPTION>
The following table sets forth certain information
concerning the number and value of stock options at December
31, 1997 held by the Chief Executive Officer.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares
Acquired on Value Exer- Unexer- Exer- Unexer-
Name Exercise(#) Realized cisable cisable cisable cisable
<S> <C> <C> <C> <C> <C> <C>
Patrick L.
Alexander 6,240 $56,232 31,786(1) --- $286,440 $---
(1) Includes options resulting from stock dividends paid by
the Company.
Employment Agreement In January, 1993 the Company and the
Bank entered into an employment agreement with Patrick L.
Alexander. The employment agreement initially provided for
an initial base salary of $94,605, which may be increased
but not decreased, and an initial term of three years, with
one year extensions thereafter unless the agreement has been
terminated or the Company or Mr. Alexander has provided a
notice of non-renewal prior thereto. Notwithstanding any
such notice, the term of the agreement will be extended to
three years upon any change in control of the Company or the
Bank, as defined in the agreement. The employment agreement
will terminate upon the death or disability of Mr.
Alexander, in the event of certain regulatory actions or
upon notice by either the Company or Mr. Alexander, with or
without cause. The employment agreement will be suspended
in the event of a regulatory suspension of Mr. Alexander's
employment. In the event of termination of Mr. Alexander's
employment due to disability or without cause, the Company
will be obligated to pay or to provide to him, as
applicable, continued salary and benefits until the earlier
of the expiration of the term of the agreement or his death.
In the event Mr. Alexander's employment discontinues
following a change in control of the Company or the Bank,
the successor to the Company or the Bank is obligated to
make a lump sum payment to him equal to three times his then
annual salary and to continue benefits until the earlier of
three years or his death. For purposes of the employment
agreement, Mr. Alexander's employment will be considered
terminated following a change in control in the event his
right to retain his position with the Bank or to exercise
fully the authority, duties and responsibilities of such
position is changed or terminated. The employment agreement
includes a covenant which will limit the ability of Mr.
Alexander to compete with the Bank in an area encompassing a
fifty mile radius from the Bank's main office for a period
of one year following the termination of his employment with
the Bank. The geographic area covered by this provision
constitutes a portion of the Bank's primary service area.
The Executive Committee has furnished the following report
on executive compensation. The incorporation by reference
of this Proxy Statement into any document filed with the
Securities and Exchange Commission by the Company shall not
be deemed to include the report unless the report is
specifically stated to be incorporated by reference into
such document.
Executive Committee Report on Executive Compensation
The Executive Committee of the Board of Directors of the
Bank is composed of five directors and is responsible for
recommendations to the Board of Directors of the Company for
compensation of executive officers of the Bank and the
Company. At this time no separate salary is paid to the
officers of the Company. In determining compensation, the
following factors are generally taken into consideration:
1. The performance of the executive officers in achieving
the short and long term goals of the Company.
2. Payment of compensation commensurate with the ability
and expertise of the executive officers.
3. Attempt to structure compensation packages so that they
are competitive with similar companies.
The committee considers the foregoing factors, as well as
others, in determining compensation. There is no assigned
weight given to any of these factors.
Additionally, the Executive Committee considers various
benefits, such as the ESOP and the Stock Option Plan,
together with perquisites in determining compensation. The
committee believes that the benefits provided through the
stock based plans more closely tie the compensation of the
officers to the interests of the stockholders and provide
significant additional performance incentives for the
officers which directly benefit the stockholders through an
increase in the stock value.
Annually, the Executive Committee evaluates four primary
areas of performance in determining Mr. Alexander's level of
compensation. These areas are: long-range strategic
planning and implementation; Company financial performance;
Company compliance with regulatory requirements and
relations with regulatory agencies; and effectiveness of
managing relationships with stockholders and the Board of
Directors. When evaluating the financial performance of the
Company, the committee considers profitability, asset growth
and risk management. The primary evaluation criteria are
considered to be essential to the long-term viability of the
Company and are given equal weight in the evaluation.
Finally, the committee reviews compensation packages of peer
institutions to ensure that Mr. Alexander's compensation is
competitive and commensurate with his level of performance.
The 1997 compensation of Mr. Alexander was based upon the
factors described above and his substantial experience and
length of service with the organization. During 1997, Mr.
Alexander successfully headed the Company's acquisition
program, which included planning, analysis, contacting a
number of financial institutions and completing the
acquisition of Freedom Bancshares, Inc. The Executive
Committee also considered the continuing additional duties
required in completing the transition of the Bank from a
mutual savings association to a commercial bank which is a
stock institution. Mr. Alexander did not participate in any
decisions pertaining to his compensation.
Members of the Executive Committee are:
Brent A. Bowman, Chairman
Patrick L. Alexander
Susan E. Roepke
Donald J. Wissman
William F. Caton
Performance Graph
The incorporation by reference of this Proxy Statement into
any document filed with the Securities and Exchange
Commission by the Company shall not be deemed to include the
following performance graph and related information unless
the graph and related information are specifically stated to
be incorporated by reference into the document.
The following graph shows a five year comparison of
cumulative total returns for the Company, the Nasdaq Stock
Market (U.S. Companies) and the Nasdaq Bank Stocks index.
The Common Stock of the Company was first listed for
quotation on the Nasdaq National Market System on January 6,
1993.
</TABLE>
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON JANUARY 6, 1993
*Total return assumes reinvestment of dividends
1/6/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
MNB Bancshares, Inc. $100 $123 $156 $190 $230 $274
Nasdaq Market - U.S. $100 $114 $111 $157 $194 $238
Nasdaq Bank Stocks $100 $114 $113 $169 $223 $377
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSThe following table sets
forth certain information regarding the Company's Common Stock beneficially
owned on April 3, 1998 with respect to all persons known to the Company to be
the beneficial owner of more than five percent of the Company's Common Stock,
each director and nominee, each executive officer named in the Summary
Compensation Table and all directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
Name of Individual and Amount and Nature of Percent of
Number of Persons in Group Beneficial Ownership(1) Class
<S> <C> <C>
First Manhattan Co. 94,096(2) 7.3%
437 Madison Avenue
New York, New York 10022
MNB Bancshares, Inc. 109,700(3) 8.5%
Employee Stock Ownership Plan
800 Poyntz Avenue
Manhattan, Kansas 66502
Jack Goldstein 89,368(4) 6.9%
555 Poyntz Avenue
Manhattan, Kansas 66502
Patrick L. Alexander 96,095(5) 7.3%
2801 Brad Lane
Manhattan, Kansas 66502
Mr. Rolla Goodyear 110,140(6) 8.6%
8840 Hanover
Auburn, Kansas 66402
Susan E. Roepke 99,905(7) 7.7%
2600 Sumac Drive
Manhattan, Kansas 66502
Directors
Brent A. Bowman 4,964(8) *
Joseph L. Downey 6,098 *
Charles D. Green 26,844(8) 2.1%
Vernon C. Larson 9,064(9) *
Jerry R. Pettle 14,688 1.1%
Donald J. Wissman 3,546(10) *
All directors and executive
officers as a group (12 persons) 436,418(11) 32.0%
*Less than 1%.
1. The information contained in this column is based upon
information furnished to the Company by the persons named
above and the members of the designated group. The nature
of beneficial ownership for shares shown in this column is
sole voting and investment power, except as set forth in the
footnotes below. Inclusion of shares in this table shall
not be deemed to be an admission of beneficial ownership of
such shares. Amounts shown include shares issued pursuant
to a stock dividends paid by the Company and the two-for-one
stock split declared in January of 1998.
2. Pursuant to an Amendment dated February 9, 1998, to a
Schedule 13D filed by First Manhattan Co.
3. Includes 49,982 shares which have been allocated to
participants' accounts under the Company's ESOP.
4. Pursuant to a Schedule 13D dated November 1, 1996.
5. Includes 4,502 shares held in an IRA of which the power
to vote such shares is shared with the IRA administrator and
39,742 shares over which voting and investment power is
shared with his spouse. Also includes 31,786 shares
presently obtainable through the exercise of options granted
under the Company's Stock Option Plan, over which shares Mr.
Alexander has no voting and sole investment power.
6. Includes 2,128 shares held by Mr. Goodyear's spouse,
over which shares Mr. Goodyear has no voting or investment
power.
7. This includes 18,914 shares held in
an Investment Retirement Account ("IRA"), of which the power
to vote such shares is shared with the IRA administrator,
30,166 shares held by her spouse and over which Ms. Roepke
has shared voting and investment power and 16,166 shares
presently obtainable through the exercise of options granted
under the Company's Stock Option Plan, over which shares Ms.
Roepke has no voting and sole investment power.
8. Includes an aggregate of 2,536 shares presently
obtainable through the exercise of options granted under the
Company's Stock Option Plan for each named individual, over
which shares each such person has no voting and sole
investment power.
9. Represents 9,064 shares held jointly with his spouse and
over which Mr. Larson has shared voting and investment
power.
10. Includes 1,460 shares held by his spouse and over which
Mr. Wissman has shared voting and investment power.
11. Includes an aggregate of 76,628 shares presently
obtainable through the exercise of options granted under the
Company's Stock Option Plan.
Section 16(a) of the Securities Exchange Act of 1934
requires that the Company's executive officers, directors
and persons who own more than 10% of the Company's Common
Stock file reports of ownership and changes in ownership
with the Securities and Exchange Commission and with the
exchange on which the Company's shares of Common Stock are
traded. Such persons are also required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such
forms, the Company is not aware that any of its directors,
executive officers or 10% stockholders failed to comply with
the filing requirements of Section 16(a) during the period
commencing January 1, 1997 through December 31, 1997.
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Bank and their
associates were customers of and had transactions with the
Company and the Bank during 1997. Additional transactions
are expected to take place in the future. All outstanding
loans, commitments to loan, and certificates of deposit and
depository relationships, in the opinion of management, were
made in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions
with other persons and did not involve more than the normal
risk of collectibility or present other unfavorable
features.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has unanimously
approved an amendment (the "Amendment") to Article IV of the
Company's Certificate of Incorporation (the "Certificate")
that would increase the number of authorized shares of the
Company's Common Stock, $.01 par value per share, from
1,500,000 shares to 3,000,000 shares. As of April 3, 1998,
the Company had 1,288,476 shares of Common Stock issued and
outstanding following a two-for-one stock split effected in
February, 1998.
The Board of Directors has proposed adoption of the
Amendment for several reasons, including those set forth
below. First, the Amendment will provide additional shares
of Common Stock following the effectuation of the stock
split in February. As a result of the stock split, the
number of shares of Common Stock owned by each of the
Company's stockholders as of the record date for the stock
split doubled, and each such share then had approximately
half of the per share value of Common Stock prior to the
stock split. The decrease in the per share value of Common
Stock has lead to a commensurate decrease in the per share
market price, thus making an investment in Common Stock by
existing or potential stockholders of the Company more
readily possible. Following the stock split, only 211,524
shares of authorized and unissued (and unreserved) Common
Stock remained for future issuance by the Company.
Second, the additional shares authorized by the Amendment
will provide management with enough shares of Common Stock
to enter into certain transactions involving the use of
Common Stock that may be advisable from time to time. Such
transactions could include, but are not limited to, the
acquisition by the Company of additional branch locations,
subsidiaries or bank or thrift holding companies. Although
no such transactions are planned for the immediate future,
management and the Board of Directors believe that it is in
the Company's best interests to have available a sufficient
number of authorized shares of Common Stock if such
transactions become advisable.
Third, the additional shares of Common Stock authorized by
the Amendment could be used to raise additional working
capital for the Company or the Bank. The Board of Directors
does not currently have any plans to raise capital through
the issuance of additional shares or otherwise, but these
shares would be available for that purpose.
The increase in the number of shares of Common Stock
authorized by the Amendment will allow for the possibility
of substantial dilution of the voting power of current
stockholders of the Company, although no dilution occurred
as a direct result of the stock split. The degree of any
such dilution which would occur following the issuance of
any additional shares of Common Stock, including any newly
authorized Common Stock, would depend upon the number of
shares of Common Stock that are actually issued in the
future, which number cannot be determined at this time.
Issuance of a large number of such shares could
significantly dilute the voting power of existing
stockholders.
The existence of a substantial number of authorized and
unissued shares of Common Stock could also impede an attempt
to acquire control of the Company because the Company would
have the ability to issue additional shares of Common Stock
in response to any such attempt. The Company is not aware
of any such attempt to acquire control at this time, and no
decision has been made as to whether any or all newly
authorized but unissued shares of Common Stock would be
issued in response to any such attempt.
To be approved by the Company's stockholders, the Amendment
must receive the affirmative vote of a majority of the
outstanding shares of Common Stock.
The Board of Directors recommends that you vote your shares
FOR the Amendment.
PROPOSAL TO ADOPT STOCK INCENTIVE PLAN
On January 21, 1998, the Board of Directors unanimously
adopted resolutions approving the MNB Bancshares, Inc. 1998
Stock Incentive Plan (the "Incentive Plan"), subject to
stockholder approval, to promote equity ownership of the
Company by directors of the Company and selected officers
and employees of the Bank, to increase their proprietary
interest in the success of the Company, and to encourage
them to remain in the employ of the Company.
Administration
The Incentive Plan is to be administered by the MNB
Bancshares, Inc. Stock Option Plan Administrative
Committee which is composed of three non-employee
directors appointed by the Board of Directors (the
"Stock Option Committee"). The Stock Option Committee
will have the authority, subject to approval by the Board of
Directors, to select the employees to whom awards may be
granted, to determine the terms of each award, to interpret
the provisions of the Incentive Plan and to make all other
determinations that it may deem necessary or advisable for
the administration of the Incentive Plan.
The Incentive Plan provides for the grant of "incentive
stock options," as defined under Section 422(b) of the
Internal Revenue Code of 1986, as amended, options that do
not so qualify (referred to herein as "nonstatutory
options"), restricted stock and stock appreciation rights
("SARs"), as determined in each individual case by the Stock
Option Committee. The Board of Directors has reserved
100,000 shares of Common Stock for issuance under the
Incentive Plan. In general, if any award (including an award
granted to a non-employee director) granted under the
Incentive Plan expires, terminates, is forfeited or is
canceled for any reason, the shares of Common Stock
allocable to such award may again be made subject to an
award granted under the Incentive Plan.
Awards
Directors of the Company and key policy-making employees of
the Bank are eligible to receive grants under the Incentive
Plan. Directors may receive nonstatutory options based upon
a formula. Employee awards may be granted subject to a
vesting requirement and in any event will become fully
vested upon a merger or change of control of the Company.
The exercise price of incentive stock options granted under
the Incentive Plan must at least equal the fair market value
of the Common Stock subject to the option (determined as
provided in the plan) on the date the option is granted. The
exercise price of nonstatutory options and SARs will be
determined by the Stock Option Committee.
An incentive stock option granted under the Incentive Plan
to an employee owning more than 10% of the total combined
voting power of all classes of capital stock of the Company
is subject to the further restriction that such option must
have an exercise price of at least 110% of the fair market
value of the shares of Common Stock issuable upon exercise
of the option (determined as of the date the option is
granted) and may not have an exercise term of more than five
years. Incentive stock options are also subject to the
further restriction that the aggregate fair market value
(determined as of the date of grant) of Common Stock as to
which any such incentive stock option first becomes
exercisable in any calendar year, is limited to $100,000. To
the extent options covering more than $100,000 worth of
Common Stock first become exercisable in any one calendar
year, the excess will be nonstatutory options. For purposes
of determining which, if any, options have been granted in
excess of the $100,000 limit, options will be considered to
become exercisable in the order granted.
Each director and key employee eligible to participate in
the Incentive Plan will be notified by the Stock Option
Committee. To receive an award under the Incentive Plan, an
award agreement must be executed which specifies the type of
award to be granted, the number of shares of Common Stock
(if any) to which the award relates, the terms and
conditions of the award and the date granted. In the case of
an award of options, the award agreement will also specify
the price at which the shares of Common Stock subject to the
option may be purchased, the date(s) on which the option
becomes exercisable and whether the option is an incentive
stock option or a nonstatutory option.
The full exercise price for all shares of Common Stock
purchased upon the exercise of options granted under the
Incentive Plan must be paid by cash, personal check,
personal note, award surrender or Common Stock owned at the
time of exercise. Incentive stock options granted to
employees under the Incentive Plan may remain outstanding
and exercisable for ten years from the date of grant or
until the expiration of ninety days (or such lesser period
as the Stock Option Committee may determine) from the
date on which the person to whom they were granted ceases to
be employed by the Company. Nonstatutory options and SARs granted
under the Incentive Plan remain outstanding and
exercisable for such period as the Stock Option Committee
may determine.
No awards have been made by the Stock Option Committee
pursuant to the Stock Incentive Plan at this time.
Income Tax
Incentive stock options granted under the Incentive Plan
have certain advantageous tax attributes to the recipient
under the income tax laws. No taxable income is recognized
by the option holder for income tax purposes at the time of
the grant or exercise of an incentive stock option, although
neither is there any income tax deduction available to the
Company as a result of such a grant or exercise. Any gain or
loss recognized by an option holder on the later disposition
of shares of Common Stock acquired pursuant to the exercise
of an incentive stock option generally will be treated as
capital gain or loss if such disposition does not occur
prior to one year after the date of exercise of the option, or
two years after the date the option was granted.
As in the case of incentive stock options, the grant of
nonstatutory stock options, restricted stock or SARs will
not result in taxable income for income tax purposes to the
recipient of the awards, nor will the Company be entitled to
an income tax deduction. Upon the exercise of nonstatutory
stock options or SARs, or the lapse of restrictions on
restricted stock, the award holder will generally recognize
ordinary income for income tax purposes equal to the
difference between the exercise price and the fair market
value of the shares of Common Stock acquired or deemed
acquired on the date of exercise, and the Company will be
entitled to an income tax deduction in the amount of the
ordinary income recognized by the option holder. In general,
any gain or loss realized by the option holder on the
subsequent disposition of such shares will be a capital gain
or loss.
Amendment and Termination
The Stock Incentive Plan expires ten years after its
adoption, unless sooner terminated by the Board of
Directors. The Board of Directors has authority to amend the
Stock Incentive Plan in such manner as it deems advisable,
except that the Board of Directors is not permitted without
stockholder approval to amend the plan in a manner which
would prevent the grant of incentive stock options or
increase the number of shares of Common Stock available. The
Incentive Plan provides for appropriate adjustment, as
determined by the Stock Option Committee, in the number
and kind of shares subject to unexercised options, in the
event of any change in the outstanding shares of Common
Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization,
merger or similar event.
Required Affirmative Vote
The affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy at the
1998 Annual Meeting is required to approve the Incentive
Plan.
The Board of Directors unanimously recommends a vote FOR the
proposed Incentive Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
Stockholders will be asked to approve the appointment of
KPMG Peat Marwick LLP as the Company's independent public
accountants for the year ending December 31, 1998. A
proposal will be presented at the annual meeting to ratify
the appointment of KPMG Peat Marwick LLP. If the
appointment of KPMG Peat Marwick LLP is not ratified, the
matter of the appointment of independent public accountants
will be considered by the Board of Directors.
Representatives of KPMG Peat Marwick LLP are expected to be
present at the meeting and will be given the opportunity to
make a statement if they desire to do so and will be
available to respond to appropriate questions.
The Board of Directors unanimously recommends a vote FOR
this appointment.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal which a stockholder of the Company wishes to
have included in the proxy materials of the Company relating
to the next annual meeting of stockholders of the Company,
which is scheduled to be held in May 1999, must be received
at the principal executive offices of the Company (MNB
Bancshares, Inc., 800 Poyntz Avenue, Manhattan, Kansas
66502, attention: Mr. Patrick L. Alexander, President) no
later than December 18, 1998, and must otherwise comply with
the notice and other provisions of the Company's Bylaws.
GENERAL
Your proxy is solicited by the Board of Directors and the
cost of solicitation will be paid by the Company. In
addition to the solicitation of proxies by use of the mails,
officers, directors and regular employees of the Company or
the Bank, acting on the Company's behalf, may solicit
proxies by telephone, telegraph or personal interview. The
Company will, at its expense, upon the receipt of a request
from brokers and other custodians, nominees and fiduciaries,
forward proxy soliciting material to the beneficial owners
of shares held of record by such persons.
OTHER BUSINESS
It is not anticipated that any action will be asked of the
stockholders other than that set forth above, but if other
matters properly are brought before the meeting, the persons
named in the proxy will vote in accordance with their best
judgment.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice in items (1),
(2), (3) or (4) on the proxy card, the shares of such
stockholder shall be voted (FOR) in each instance.
REPORT ON FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON
REPRESENTING THAT HE OR SHE WAS A BENEFICIAL OWNER OF THE
COMPANY'S COMMON STOCK AS OF THE RECORD DATE FOR THE
MEETING, UPON WRITTEN REQUEST, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K. SUCH WRITTEN REQUEST SHOULD BE
SENT TO MR. PATRICK L. ALEXANDER, MNB BANCSHARES, INC., P.O.
BOX 308, MANHATTAN, KANSAS 66505.
By order of the Board of Directors
/s/Patrick L. Alexander
President and Chief
Executive Officer
Manhattan, Kansas
April 17, 1998
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
PROXY FOR COMMON SHARES ON BEHALF OF BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF THE STOCKHOLDERS OF MNB BANCSHARES, INC.
TO BE HELD MAY 18, 1998
The undersigned hereby appoints Patrick L. Alexander and
Brent A. Bowman, or either of them acting in the absence of
the other, with power of substitution, attorneys and
proxies, for and in the name and place of the undersigned,
to vote the number of shares of Common Stock that the
undersigned would be entitled to vote if then personally
present at the Annual Meeting of the Stockholders of MNB
Bancshares, Inc., to be held at the Kansas State University
Student Union, 17th and Anderson Avenue, Manhattan, Kansas
66506, on Monday, May 18, 1998, at 2:00 p.m., local time, or
any adjournments or postponements thereof, upon the matters
set forth in the Notice of Annual Meeting and Proxy
Statement, receipt of which is hereby acknowledged, as
follows:
1. ELECTION OF DIRECTORS:
FOR all nominees listed below (except as marked to the contrary below)
WITHHOLD AUTHORITYto vote for all nominees listed
below(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST BELOW.)Class III (term expires 2001): Brent A. Bowman,
Charles D. Green and Vernon C. Larson
2. AMEND THE CERTIFICATE OF INCORPORATION OF THE COMPANY
TO INCREASE THE AUTHORIZED COMMON STOCK TO 3,000,000 SHARES:
For ____ Against ____ Abstain _____
3. APPROVE THE MNB BANCSHARES, INC. 1998 STOCK INCENTIVE
PLAN:
For ____ Against ____ Abstain _____
4. APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING
DECEMBER 31, 1998:
For ____ Against _____ Abstain _____
5. In accordance with their discretion, upon all other
matters that may properly come before said meeting and any
adjournment or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED UNDER PROPOSAL 1 AND FOR PROPOSALS 2, 3 and
4.
Dated: ________________________, 1998
Signature(s)_____________________________
_________________________________________
NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR
NAMES APPEAR ABOVE. ALL JOINT OWNERS OF SHARES SHOULD SIGN.
STATE FULL TITLE WHEN SIGNING AS EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE
ENCLOSED ENVELOPE.
EXHIBIT A
MNB BANCSHARES, INC.
STOCK INCENTIVE PLAN
1. Purpose of the Plan
The MNB BANCSHARES, INC., 1998 STOCK INCENTIVE PLAN (hereinafter
referred to as the "Plan") is intended to provide a means whereby directors,
employees, consultants and advisors of MNB BANCSHARES, INC., and its
Related Corporations may sustain a sense of proprietorship and personal
involvement in the continued development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company, thereby advancing the interests of the Company and
its shareholders. Accordingly, the Company may permit certain directors,
employees, consultants and advisors to acquire Shares or otherwise
participate in the financial success of the Company, on the terms and
conditions established herein.
2. Definitions
The following terms shall be defined as set forth below:
(a) Board. Shall mean the Board of Directors of the Company.
(b) Cause. Shall mean the commitment of fraud, the misappropriation of
or intentional material damage to the property or business of the Company,
the substantial failure to fulfill the duties and responsibilities of a
regular position and/or comply with Company policies, rules or regulations,
or the conviction of a felony.
(c) Change of Control. Shall mean:
(i) the consummation of the acquisition by any person (as such term is
defined in Section 13(d) or 14(d) of the '34 Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the '34 Act) of fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Company other than through the receipt of Shares
pursuant to the Plan; or
(ii) the individuals who, as of the date hereof, are members of the Board
cease for any reason to constitute a majority of the Board, unless the
election, or nomination for election by the stockholders of the Company, of
any new director was approved by a vote of a majority of the Board, and such
new director shall, for purposes of this Agreement, be considered as a
member of the Board; or
(iii) approval by stockholders of the Company of: (1) a merger or
consolidation if the stockholders, immediately before such merger or
consolidation, do not, as a result of such merger or consolidation, own,
directly or indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity resulting from
such merger or consolidation in substantially the same proportion as their
ownership of the combined voting power of the voting securities of the
Company outstanding immediately before such merger or consolidation; or
(2) a complete liquidation or dissolution or an agreement for the sale or
other disposition of all or substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because fifty percent (50%) or more of the combined voting power
of the then outstanding securities of the Company are acquired by: (1) a
trustee or other fiduciary holding securities under one or more employee
benefit plans maintained for employees of the Company; or (2) any corporation
which, immediately prior to such acquisition, is owned directly or indirectly
by the stockholders of the Company in the same proportion as their ownership
of stock of the Company immediately prior to such acquisition.
(d) Code. Shall mean the Internal Revenue Code of 1986, and any amendments
thereto.
(e) Committee. Shall mean a committee appointed by the Board in accordance
with Section 3 hereof.
(f) Company. Shall mean MNB Bancshares, Inc.
(g) Compete. Shall mean within a period of one (1) year after the
termination of service, the direct or indirect competition with the business
of the Company and its Related Corporations, including, but not by way of
limitation, the direct or indirect owning, managing, operating, controlling,
financing or serving as an officer, employee, director or consultant to, or
by soliciting or inducing, or attempting to solicit or induce, any employee
or agent of the Company or a Related Corporation to terminate employment and
become employed by any person, firm, partnership, corporation, trust or other
entity which owns or operates, a business similar to that of the Company and
its Related Corporations, within the counties in which the Company and its
Related Corporations is operating, except with the express prior
written consent of the Company.
(h) Disability. Shall mean a physical or mental disability (within the
meaning of Section 22(e)(3) of the Code) which impairs the individual's
ability to substantially perform his or her current duties for a period of
at least twelve (12) consecutive months, as determined by the Committee.
(i) ERISA. Shall mean the Employee Retirement Income Security Act of 1974,
and any amendment thereto.
(j) Incentive Stock Option. Shall mean an award under the Plan that satisfies
the general requirements of Code Section 422, namely: (i) grantees must be
employees; (ii) the exercise price may not be less than the fair market value
of the underlying Shares at the date of grant; (iii) no more than $100,000
worth of Shares may become exercisable in any year; (iv) the maximum duration
of an award may be ten (10) years; (v) awards must be exercised within three
(3) months after termination of employment, except in the event of Disability
or death; and (vi) Shares received upon exercise must be retained for the
greater of two (2) years from the date of grant or one (1) year from the
date of exercise.
(k) Nonqualified Options. Shall mean an option award under the Plan that
is not an Incentive Stock Option.
(l) Related Corporation. Shall mean Security National Bank and any
corporation which would be a parent or subsidiary corporation with respect
to the Company as defined in Section 424(e) or
(f), respectively, of the Code.
(m) Retirement. Shall have the same meaning as is provided under the MNB
Bancshares, Inc. Employee Stock Ownership Plan, and shall mean termination of
service, other than for Cause, after attainment of age sixty (60) for
directors, consultants and advisors.
(n) Restricted Stock. Shall mean an award of Shares under the Plan that are
restricted as to transfer and subject to forfeiture.
(o) Rule 16b-3. Shall mean Rule 16b-3 promulgated under the '34 Act, and any
amendments thereto.
(p) Shares. Shall mean common stock of the Company.
(q) Stock Appreciation Rights. Shall mean rights entitling the grantee to
receive the appreciation in the market value of a stated number of Shares.
(r) '33 Act. Shall mean the Securities Act of 1933, and any amendments
thereto.
(s) '34 Act. Shall mean the Securities Exchange Act of 1934, and any
amendments thereto.
3. Administration of the Plan
The Plan shall be administered by the Board, or a Committee appointed by the
Board. The Board, or the appointed Committee, shall have sole authority to:
(a) select the directors, employees, consultants and advisors to whom
awards shall be granted under the Plan;
(b) establish the amount and conditions of each such award;
(c) prescribe any legend to be affixed to certificates representing such
awards;
(d) interpret the Plan; and
(e) adopt such rules, regulations, forms and agreements, not inconsistent
with the provisions of the Plan, as it may deem advisable to carry out the
Plan.
All decisions made by the Board, or the Committee, in administering the
Plan shall be final.
4. Shares Subject to the Plan
The aggregate number of Shares that may be obtained by directors, employees,
consultants and advisors under the Plan shall be 100,000 Shares. Any Shares
that remain unissued at the termination of the Plan shall cease to be subject
to the Plan, but until termination of the Plan, the Company shall at all
times make available sufficient Shares to meet the requirements of the Plan.
5. Stock Options
(a) Type of Options. The Company may issue options that constitute Incentive
Stock Options to employees and Nonqualified Options to directors, employees,
consultants and advisors under the Plan. The grant of each option shall be
confirmed by a stock option agreement that shall be executed by the Company
and the optionee as soon as practicable after such grant. The stock option
agreement shall expressly state or incorporate by reference the provisions of
the Plan and state whether the option is an Incentive Option or a
Nonqualified Option.
(b) Terms of Options. Except as provided in Subparagraphs (c) and (d) below,
each option granted under the Plan shall be subject to the terms and conditions
set forth by the Board in the stock option agreement including, but not
limited to, option price and option term.
(c) Additional Terms Applicable to All Options. Each option shall be
subject to the following terms and conditions:
(i) Written Notice. An option may be exercised only by giving written
notice to the Company specifying the number of Shares to be purchased.
(ii) Method of Exercise. The aggregate option price may be paid in any
one or a combination of cash, personal check, Shares already owned or Plan
awards which the optionee has an immediate right to exercise, as provided by
the Board.
(iii) Term of Option. An option shall be exercisable as provided under the
Plan or by the Board.
(iv) Disability or Death of Optionee. If an optionee terminates service
due to Retirement, Disability or death prior to exercise in full of any
options, he or she or his or her beneficiary, executor, administrator or
personal representative shall have the right to exercise the options within
a period of twelve (12) months after the date of such termination to the
extent that the right was exercisable at the date of such termination as
provided in the stock option agreement, or as may otherwise be provided
by the Board.
(v) Transferability. No option may be transferred, assigned or encumbered
by an optionee, except: (A) by will or the laws of descent and distribution;
(B) by gifting for the benefit of descendants for estate planning purposes;
or (C) pursuant to a certified domestic relations order.
(d) Additional Terms Applicable to Incentive Options. Each Incentive
Option shall be subject to the following terms and conditions:
(i) Option Price. The option price per Share shall be 100% of the fair
market value of a Share on the date the option is granted. Notwithstanding
the preceding sentence, the option price per Share granted to an individual
who, at the time such option is granted, owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company
(hereinafter referred to as a "10% Shareholder") shall not be less than 110%
of the fair market value of a Share on the date the option is granted.
(ii) Term of Option. No option may be exercised more than ten (10) years
after the date of grant. No option granted to a 10% Shareholder may be
exercised more than five (5) years after the date of grant. Notwithstanding
any other provisions hereof, no option may be exercised more than three (3)
months after the optionee terminates employment with the Company, except in
the event of death or Disability as provided under Subparagraph (c)(iv) above.
(iii) Annual Exercise Limit. The aggregate fair market value of Shares
which first become exercisable during any calendar year shall not exceed
$100,000. For purposes of the preceding sentence, the fair market value of
each Share shall be determined on the date the option with respect to such
Share is granted.
(iv) Transferability. No option may be transferred, assigned or encumbered
by an optionee, except by will or the laws of descent and distribution, and
during the optionee's lifetime an option may only be exercised by him or her.
6. Restricted Stock Awards
(a) Grants. Restricted Stock Awards ("RSAs") under the Plan shall be
evidenced by restricted stock agreements in such form and consistent with
the Plan as the Board shall approve from time to time.
(b) Restriction Period. RSAs awarded under the Plan shall be subject to
such terms, conditions, and restrictions, including without limitation:
prohibitions against transfer; substantial risks of forfeiture; attainment
of performance objectives; repurchase by the Company or right of first
refusal for such period or periods as shall be determined by the Board at
the time of grant. The Board shall have the power to permit, in its
discretion, anacceleration of the expiration of the applicable restriction
period with respect to any part or all of the RSAs awarded to a grantee.
(c) Restrictions Upon Transfer. RSAs awarded, and the right to vote
underlying Shares and to receive dividends thereon, may not be sold,
assigned, transferred, exchanged, pledged, hypothecated, or otherwise
encumbered during the restriction period applicable to such Shares, except:
(i) by will or the laws of descent and distribution; (ii) by gifting for the
benefit of descendants for estate planning purposes; or (iii) pursuant to a
certified domestic relations order. Subject to the foregoing, and except as
otherwise provided in the Plan, the grantee shall have all the other rights
of a stockholder including, but not limited to, the right to receive
dividends and the right to vote such Shares.
(d) Certificates. Each certificate issued in respect of RSAs awarded to a
grantee shall be deposited with the Company, or its designee, and shall bear
the following legend:
"This certificate and the shares represented hereby are subject to the
terms and conditions (including forfeiture and restrictions against transfer)
contained in the MNB Bancshares, Inc. 1998 Stock Incentive Plan and an
Agreement entered into by the registered owner. Release from such terms and
conditions shall be obtained only in accordance with the provisions of the
Plan and Agreement, a copy of each of which is on file in the office of the
Secretary of said Company."
(e) Lapse of Restrictions. The Agreement shall specify the terms and
conditions upon which any restrictions upon Shares awarded under the Plan
shall lapse, as determined by the Board. Upon the lapse of such
restrictions, Shares, free of the foregoing restrictive legend, shall be
issued to the grantee or his or her legal representative.
(f) Termination Prior to Lapse of Restrictions. In the event of a grantee's
termination of service prior to the lapse of restrictions applicable to any
RSAs awarded to such grantee, all Shares as to which there still remain
restrictions shall be forfeited by such grantee without payment of any
consideration to the grantee, and neither the grantee nor any successors,
heirs, assigns, or personal representatives of such grantee shall thereafter
have any further rights or interest in such Shares or certificates.
7. Stock Appreciation Rights
(a) Grants. Stock Appreciation Rights ("SARs") may be granted separately
or in tandem with or by reference to an option granted prior to or
simultaneously with the grant of such rights, to such eligible directors,
employees, consultants and advisors as may be selected by the Board.
(b) Terms of Grant. SARs may be granted in tandem with or with reference
to a related option, in which event the grantee may elect to exercise either
the option or the SAR, but not both, as to the same Share subject to the
option and the SAR, or the SAR may be granted independently of a related
option. SARs shall not be transferable, except: (i) by will or the laws of
descent and distribution; (ii) by gifting for the benefit of descendants
for estate planning purposes; or (iii) pursuant to a certified domestic
relations order.
(c) Payment on Exercise. Upon exercise of a SAR, the grantee shall be paid
the excess of the then fair market value of the number of Shares to which the
SAR relates over the fair market value of such number of Shares at the date
of grant of the SAR or of the related option, as the case may be. Such
excess shall be paid in cash or in Shares having a fair market value equal
to such excess or in such combination thereof as the Board shall determine.
8. Amendment or Termination of the Plan
The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, but (except as provided in Section 13 hereof) no amendment
shall be made without approval of the stockholders of the Company which
shall: (i) materially increase the aggregate number of Shares with respect
to which Incentive Stock Option awards may be made under the Plan; or (ii)
change the class of persons eligible to receive Incentive Stock Option awards
under the Plan; provided, however, that no amendment, suspension or
termination shall impair the rights of any individual, without his or her
consent, in any award theretofore made pursuant to the Plan.
9. Term of Plan
The Plan shall be effective upon the date of its adoption by the Board;
provided that, Incentive Options may be granted only if the Plan is approved
by the shareholders within twelve (12) months before or after the date of
adoption. Unless sooner terminated under the provisions of Section 9,
Shares and SARs shall not be granted under the Plan after the expiration of
ten (10) years from the effective date of the Plan. However, awards may be
exercisable after the end of the term of the Plan.
10. Rights as Shareholder
Upon delivery of any Share to a director, employee, consultant or advisor,
such person shall have all of the rights of a shareholder of the Company
with respect to such Share, including the right to vote such Share and to
receive all dividends or other distributions paid with respect to such Share.
11. Merger or Consolidation
In the event the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, the surviving corporation
may agree to exchange options and SARs issued under this Plan for options
and SARs (with the same aggregate option price) to acquire and participate
in that number of shares in the surviving corporation that have a fair
market value equal to the fair market value (determined on the date of such
merger or consolidation) of Shares that the grantee is entitled to acquire
and participate in under this Plan on the date of such merger or
consolidation. In the event of a Change of Control, options, Restricted
Stock and SARs shall become immediately and fully exercisable.
12. Changes in Capital and Corporate Structure
The aggregate number of Shares and interests awarded and which may be
awarded under the Plan shall be adjusted to reflect a change in the
outstanding Shares of the Company by reason of a recapitalization,
reclassification, reorganization, stock split, reverse stock split,
combination of shares, stock dividend or similar transaction. The
adjustment shall be made in an equitable manner which will cause
the awards to remain unchanged as a result of the applicable transaction.
13. Service
An individual shall be considered to be in the service of the Company or a
Related Corporation as long as he or she remains a director, employee,
consultant or advisor of the Company or such Related Corporation. Nothing
herein shall confer on any individual the right to continued service with
the Company or a Related Corporation or affect the right of the Company or
such Related Corporation to terminate such service.
14. Withholding of Tax
To the extent the award, issuance or exercise of Shares or SARs results
in the receipt of compensation by a director, employee, consultant or
advisor, the Company is authorized to withhold a portion of such Shares
receivable or any cash compensation then or thereafter payable to such
person to pay any tax required to be withheld by reason of the receipt of
the compensation. Alternatively, the director, employee, consultant or
advisor may tender Shares with a value equal to, or a personal check in
the amount of, the tax required to be withheld.
15. Delivery and Registration of Stock
The Company's obligation to deliver Shares with respect to an award shall,
if the Board so requests, be conditioned upon the receipt of a representation
as to the investment intention of the individual to whom such Shares are to
be delivered, in such form as the Board shall determine to be necessary or
advisable to comply with the provisions of the '33 Act or any other federal,
state or local securities legislation or regulation. It may be
provided that any representation requirement shall become inoperative upon a
registration of the Shares or other action eliminating the necessity of such
representation under securities legislation. The Company shall not be
required to deliver any Shares under the Plan prior to (i) the admission of
such Shares to listing on any stock exchange on which Shares may then be
listed, and (ii) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation, as the Board
shall determine to be necessary or advisable. The Plan is intended to
comply with Rule 16b-3, if applicable. any provision of the Plan which is
inconsistent with said rule should to the extent of such inconsistency, be
inoperative and shall not affect the validity of the remaining provisions
of the Plan.
