Employee Stock Ownership Plan

THE BANC CORPORATION AND SUBSIDIARIES


EMPLOYEE STOCK OWNERSHIP PLAN


EFFECTIVE AS OF MAY 15, 2002


THE BANC CORPORATION AND SUBSIDIARIES
EMPLOYEE STOCK OWNERSHIP PLAN


TABLE OF CONTENTS


ARTICLE I


DEFINITIONS AND CONSTRUCTION


Page 1.1 Administrator.......................................................................................2 1.2 Annual Addition.....................................................................................2 1.3 Available Shares....................................................................................2 1.4 Beneficiary.........................................................................................2 1.5 Board of Directors..................................................................................3 1.6 Break in Service or One-Year Break in Service.......................................................3 1.7 Code................................................................................................3 1.8 Company.............................................................................................3 1.9 Company Stock.......................................................................................3 1.10 Company Stock Account or Account....................................................................3 1.11 Compensation........................................................................................3 1.12 Controlled Group....................................................................................6 1.13 Disability..........................................................................................6 1.14 Effective Date......................................................................................6 1.15 Eligible Employee...................................................................................6 1.16 Employee............................................................................................6 1.17 Employer............................................................................................6 1.18 Employer Contributions..............................................................................7 1.19 ERISA...............................................................................................7 1.20 ESOP Loan...........................................................................................7 1.21 ESOP Loan Suspense Account..........................................................................7 1.22 Fair Market Value...................................................................................8 1.23 Hour of Service.....................................................................................8 1.24 Maternity or Paternity Leave.......................................................................10 1.25 Month of Service...................................................................................10 1.26 Named Fiduciary....................................................................................10 1.27 Normal Retirement Date.............................................................................10 1.28 Participant........................................................................................10 1.29 Plan...............................................................................................10 1.30 Plan Year..........................................................................................10 1.31 Separation from Service............................................................................11 1.32 TBC401(k)..........................................................................................11 1.33 Trust Agreement....................................................................................11 1.34 Trust..............................................................................................11 1.35 Trustee............................................................................................11 1.36 Year of Service....................................................................................11


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ARTICLE II


ELIGIBILITY AND PARTICIPATION


2.1 Eligibility........................................................................................13 2.2 Change in Eligibility..............................................................................13 2.3 Reemployment.......................................................................................14 2.4 Current Employees..................................................................................14


ARTICLE III


CONTRIBUTIONS TO THE TRUST


3.1 Employer Contributions.............................................................................14 3.2 Time for Making Contributions......................................................................15 3.3 Dividends..........................................................................................15


ARTICLE IV


ESOP LOANS


4.1 In General.........................................................................................15 4.2 ESOP Loan Proceeds.................................................................................16 4.3 Puts, Calls and Other Restrictions.................................................................17


ARTICLE V


ESOP LOAN REPAYMENT AND
ALLOCATIONS OF COMPANY STOCK


5.1 ESOP Loan Repayment................................................................................17 5.2 Release from ESOP Loan Suspense Account............................................................18 5.3 Allocation of Company Stock........................................................................20 5.4 Limitations on Contributions and Benefits..........................................................21


ARTICLE VI


COMPANY STOCK ACCOUNTS


6.1 Establishment of Accounts..........................................................................22 6.2 Valuation of Accounts..............................................................................22 6.3 Pre-Retirement Diversification.....................................................................22


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ARTICLE VII


VESTING


7.1 Employer Contributions.............................................................................24 7.2 Account Balance....................................................................................25 7.3 Service Credit: Breaks in Service.................................................................25


ARTICLE VIII


DISTRIBUTION OF BENEFITS


8.1 Method of Distribution.............................................................................25 8.2 Designation of Beneficiary.........................................................................27 8.3 Infants, Incompetents..............................................................................28


ARTICLE IX


TRUST AND TRUST AGREEMENT


9.1 Trust Agreement....................................................................................28 9.2 Trust Sole Source of Benefits......................................................................28


ARTICLE X


ADMINISTRATION


10.1 Administrative Authority...........................................................................29 10.2 Company Administration.............................................................................30 10.3 ESOP Committee.....................................................................................33 10.4 Mutual Exclusion of Responsibility.................................................................35 10.5 Uniformity of Discretionary Acts...................................................................35 10.6 Fiduciary Standard.................................................................................35 10.7 Litigation.........................................................................................36 10.8 Payment of Administration Expenses.................................................................36 10.9 Claims Procedure...................................................................................36


ARTICLE XI


TENDERS AND VOTING


11.1 Tenders for Company Stock..........................................................................38 11.2 Voting Company Stock...............................................................................41 11.3 Invalidity of Voting or Tender Offer Provisions....................................................43


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ARTICLE XII


TOP-HEAVY RULES


12.1 General Rule.......................................................................................44 12.2 Definitions........................................................................................44 12.3 Aggregation Groups.................................................................................45 12.4 Minimum Contribution Requirement...................................................................46 12.5 Vesting Schedule...................................................................................46


ARTICLE XIII


AMENDMENT OR TERMINATION OF THE PLAN


13.1 Amendment..........................................................................................47 13.2 Plan Termination; Discontinuance of Contributions..................................................48


ARTICLE XIV


MILITARY SERVICE


14.1 USERRA Provision...................................................................................50


ARTICLE XV


MISCELLANEOUS PROVISIONS


15.1 Nonreversion: Return of Contributions.............................................................50 15.2 Plan Merger........................................................................................51 15.3 No Assignment or Alienation........................................................................51 15.4 No Employment Contract.............................................................................51 15.5 Communications.....................................................................................51 15.6 Applicable Law.....................................................................................52 15.7 Disqualification of the Employer...................................................................52 15.8 Employer Acquisitions..............................................................................52 15.9 Participants Who Cannot Be Located.................................................................53 15.10 Indemnification....................................................................................53 15.11 Headings...........................................................................................53 15.12 Notices............................................................................................53 15.13 Gender and Number..................................................................................53


ARTICLE XVI


EXECUTION


16.1 Execution..........................................................................................54
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THE BANC CORPORATION AND SUBSIDIARIES


EMPLOYEE STOCK OWNERSHIP PLAN


Effective as of May 15, 2002


PREAMBLE


The Banc Corporation, a Delaware corporation (the "Company"), has established The Banc Corporation and Subsidiaries Employee Stock Ownership Plan (the "Plan"), effective as of May 15, 2002, for the purpose of providing eligible employees of the Company and affiliated entities the opportunity to save for their retirement and a proprietary interest in the Company by investing primarily in Company Stock (as defined in Section 1.9). The Plan is a stock bonus arrangement under which employer contributions to the Plan enable eligible employees to receive allocations of Company Stock to their Company Stock Accounts (as defined in Section 1.10).


The Plan is intended to comply with sections 401(a), 501(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"). The Plan is an "employee stock ownership plan", within the meaning of section 4975(e)(7) of the Code, which is designed to invest primarily in "qualifying employer securities", as defined in sections 4975(e)(7) and 409(1) of the Code, and 407(d)(5) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan permits the Company or the Trustee to borrow money to acquire Company Stock. The Company intends that any such borrowing by the Trustee will be repaid with Employer Contributions (as defined in Section 1.18).


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ARTICLE I


DEFINITIONS AND CONSTRUCTION


Unless the context clearly requires a different meaning, the following definitions apply to the Plan:


1.1 ADMINISTRATOR means the Board of Directors or the ESOP Committee if one is appointed by the Board of Directors pursuant to Section 10.3. The Board of Directors or the ESOP Committee shall have the rights, duties, and obligations of an "administrator" as that term is defined in Section 3(16)(A) of the Employee Retirement Security Act of 1974, as amended ("ERISA"), and of a "plan administrator" as that term is defined in section 414(g) of the Code.


1.2 ANNUAL ADDITION means the total of the amount of Employer Contributions allocated to the Participant's Account for the Plan Year in accordance with Section 5.3, allocations of shares forfeited from Participant's Company Stock Accounts to the Participant's Account for the Plan Year in accordance with Section 7.1(c) and contributions on behalf of a Participant to other qualified defined contribution plans of the Employer, including the TBC401(k).


1.3 AVAILABLE SHARES means all shares of Company Stock available to be allocated in accordance with Section 5.3, including shares of Company Stock released from the ESOP Loan Suspense Account pursuant to Section 5.2, shares forfeited from Participants' Company Stock Accounts pursuant to Section 7.1(c), and shares of Company Stock contributed in kind as the Employer Contribution pursuant to Section 3.1.


1.4 BENEFICIARY means the person or persons described in Section 8.2 who are to receive benefits under the Plan after the death of a Participant.


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1.5 BOARD OF DIRECTORS means the Board of Directors of the Company or any committee of the Board of Directors (other than the ESOP Committee, if one is appointed by the Board of Directors pursuant to Section 10.3) which is authorized to act for the Board of Directors or to which the Board of Directors specifically delegates any authority granted to it under the Plan.


1.6 BREAK IN SERVICE or ONE-YEAR BREAK IN SERVICE means any Plan Year in which an individual does not complete at least 501 Hours of Service.


1.7 CODE means the Internal Revenue Code of 1986, as amended from time to time.


1.8 COMPANY means The Banc Corporation, a corporation duly organized and existing under the laws of the State of Delaware, and its successors and assigns, or any other corporation or business organization which, with the consent of the Company shall assume the obligations of the Company hereunder.


1.9 COMPANY STOCK means the Company's Common Stock, par value $.001 per share, which constitutes "employer securities" within the meaning of section 409(1) of the Code and the Company's Preferred Stock, par value $.001 per share, assuming such Preferred Stock satisfies the requirements of section 409(l)(3) of the Code when such Preferred Stock is issued by the Company.


1.10 COMPANY STOCK ACCOUNT or ACCOUNT means the account established and maintained by the Administrator to record a Participant's interest in the Plan, as provided in Section 6.1.


1.11 COMPENSATION means all of a Participant's compensation which is actually paid to the Participant during the Plan Year. Notwithstanding the above, compensation shall include any amount which is contributed by the Company pursuant to a salary reduction agreement and


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which is not includible in the gross income of an Employee under sections 125, 132(f)(4), 402(a)(8), 402(h), 401(k), 457 or 403(b) of the Code. The term "compensation" includes all of the following: (i) the Participant's wages, salaries, and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer to the extent that the amounts are includible in the gross income (including, but not limited to, commissions paid salespeople, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in Treasury Regulation ss. 1.62-2(c)) of the Participant; (ii) amounts received through accident or health insurance for personal injuries or sickness or under a discriminatory self-insured medical reimbursement plan, but only to the extent that these amounts are includible in the gross income of the Participant; (iii) amounts paid or reimbursed by the Employer for moving expenses incurred by the Participant, but only to the extent that at the time of the payment it is reasonable to believe that these amounts are not deductible by the Participant under section 217 of the Code; (iv) the value of a non-qualified stock option granted to the Participant by the Employer, but only to the extent that the value of the option is includible in the gross income of the Participant for the taxable year in which granted; and (v) the amount includible in the gross income of the Participant upon making the election described in section 83(b) of the Code. The term "compensation" does not include the following: (vi) contributions made by the Employer to a plan of deferred compensation to the extent that, before the application of the Code section 415 limitations to that plan, the contributions are not includible in the gross income of the Participant for the taxable year in which contributed. In addition, Employer contributions made on behalf of a Participant to a simplified employee pension described in Code section


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408(k) are not considered as compensation for the taxable year in which contributed. Additionally, any distributions from a plan of deferred compensation are not considered as compensation for Code section 415 purposes, regardless of whether such amounts are includible in the gross income of the Participant when distributed; (vii) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by a Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture, as defined in Code section 83 and the Treasury Regulations thereunder; (viii) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (ix) other amounts which receive special tax benefits, such as premiums for group-term life insurance (but only to the extent that the premiums are not includible in the gross income of the Participant), or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Code section 403(b) (whether or not the contributions are excludable from the gross income of the Participant). Notwithstanding any other provisions herein to the contrary, compensation taken into account under the Plan for any calendar year shall not exceed $200,000 (or such larger amount as the Secretary of the Treasury may determine for such year under section 401(a)(17) of the Code). This $200,000 limitation shall be adjusted automatically at the same time and in the same manner as any cost-of-living adjustment made by the Secretary of the Treasury pursuant to section 415(d) of the Code. In determining the Compensation of a Participant for purposes of the $200,000 limitation, the rules of section 414(q)(6) of the Code shall apply. Notwithstanding the foregoing, for purposes of the limitations on benefits and contributions under Code section 415, the annual compensation limit under Code section 401(a)(17) shall not apply.


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1.12 CONTROLLED GROUP means any corporation, trade or business which is a member of a controlled group of corporations or a group of businesses under common control (as defined in section 1563(a) and sections 414(c) and (o) of the Code, respectively, provided, that "50 percent" shall be substituted for "80 percent" in every place such term appears in each applicable section of the Code and in the Treasury Regulations for each such applicable section of the Code) or any member of an affiliated service group (as defined in sections 414(m) and (o) of the Code).


1.13 DISABILITY means any physical or mental condition which renders a Participant incapable of performing his usual duties and customary work for the Employer, as determined by a licensed physician approved by the Administrator.


1.14 EFFECTIVE DATE means May 15, 2002.


1.15 ELIGIBLE EMPLOYEE means any Employee who meets the eligibility requirements of Section 2.1(a), except the term Eligible Employee shall not include an Employee who is included in a unit of employees covered by a collective bargaining agreement where retirement benefits were the subject of good faith bargaining unless the collective bargaining agreement specifically provides for coverage of such Employee under the Plan.


1.16 EMPLOYEE means any individual who is employed by the Employer, except an individual who serves only as a director or who is employed as an independent contractor. The term "Employee" shall not include persons who are considered employees of the Employer under the leased employee rules of section 414(n)(2) of the Code.


1.17 EMPLOYER means the Company, the Controlled Group which includes the Company and any other company adopting the Plan with the consent of the Company as evidenced by such company's signature hereto or as otherwise provided in a written agreement between the


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Company and such other company. In addition, for purposes of determining an Employee's Hours of Service, the term "Employer" includes any corporation, trade or business which is or was a member of a controlled group of corporations, a group of businesses under common control or an affiliated service group (within the meaning of sections 1563(a), 414(c), 414(m), and 414(o) of the Code, respectively, provided, that for purposes of sections 1563(a) and 414(c) of the Code, "50 percent" shall be substituted for "80 percent" in every place such term appears in each applicable section of the Code and in the Treasury Regulations for each such applicable section of the Code) of which the Employer adopting the Plan is a member, but only for such period as the corporation, trade or business and the adopting Employer are or were considered members of the group. In addition, for purposes of Section 2.1, the term "Employer" includes any corporation, trade or business absorbed by the Company, by any member of the Controlled Group which includes the Company and by any other company adopting the Plan in the manner hereinabove set forth because of a change of name, merger, acquisition or a change of corporate status.


1.18 EMPLOYER CONTRIBUTIONS means contributions made by the Employer pursuant to Section 3.1.


1.19 ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.20 ESOP LOAN means a loan (or other extension of credit) used by the Trustee at the direction of the Administrator to finance the acquisition of Company Stock pursuant to Article IV, or to refinance an ESOP Loan.


1.21 ESOP LOAN SUSPENSE ACCOUNT means the account of that name established and maintained to hold shares of Company Stock acquired with the proceeds of an ESOP Loan.


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1.22 FAIR MARKET VALUE means, with respect to Company Stock, and as determined by the Administrator, the last reported sales price, regular way, on the applicable date, or, in the event that no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange Composite Tape, or, if such Company Stock is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which such security is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the NASDAQ National Market System or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in such security selected for such purpose by the Administrator, in each case, on the applicable date.


1.23 HOUR OF SERVICE means:


(a) An hour for which an Employee directly or indirectly receives compensation, o ...