Exhibit 2.2
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement") is made
and entered into as of September 22, 1999 by and among
EXCHANGE NATIONAL BANCSHARES, INC., a Missouri corporation
("Buyer"), ENBMCB ACQUISITION COMPANY, INC., a Missouri
corporation ("Acquisition Company," and collectively with
Buyer, the "Buyer Entities"), MID-CENTRAL BANCORP, INC.
("Bancshares"), OSAGE VALLEY BANK, a Missouri bank (the
"Bank") and the undersigned shareholders of Bancshares
(collectively the "Shareholders," and, together with
Bancshares and the Bank, the "Sellers").
WITNESSETH:
WHEREAS, Buyer is the beneficial and record owner of
one hundred percent (100%) of the issued and outstanding
shares of the common stock of Acquisition Company;
WHEREAS, Bancshares is the beneficial and record
owner of the one (1) issued and outstanding share of the
common stock of the Bank, par value $50,000 ("Bank Stock");
WHEREAS, the Shareholders are the beneficial and/or
record owners of two thirds or more of the 4,364 issued and
outstanding shares of the common stock of Bancshares
("Bancshares Stock");
WHEREAS, Buyer desires to acquire one hundred percent
(100%) of the issued and outstanding shares of Bancshares
Stock;
WHEREAS, the Shareholders desire to sell their shares
of Bancshares Stock to Buyer pursuant to the terms herein set
forth and believe that all other shareholders of Bancshares
would similarly desire to sell their shares of Bancshares
Stock to Buyer;
WHEREAS, in order to provide for the acquisition of
the shares of Bancshares Stock held by the Shareholders and
all other shareholders of Bancshares, Buyer has organized
Acquisition Company which proposes to merge with and into
Bancshares as provided in this Agreement and the Bancshares
Merger Agreement;
WHEREAS, the Buyer Entities and the Sellers desire to
provide for certain undertakings, conditions, representations,
warranties and covenants in connection with the transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and
the representations, warranties and agreements herein
contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 "Acquisition Company" means ENBMCB Acquisition
Company, Inc., a Missouri corporation.
1.02 "Bancshares" means Mid-Central Bancorp, Inc., a
Missouri corporation and registered bank holding company.
1.03 "Bancshares Merger" means the merger of
Acquisition Company with and into Bancshares, with Bancshares
being the surviving corporation.
1.04 "Bancshares Merger Agreement" means the Merger
Agreement between Bancshares and Acquisition Company, attached
hereto as Exhibit A.
1.05 "Bancshares Merger Consideration" means a cash
amount computed pursuant to generally accepted accounting
principles as follows: (i) the sum of $8,565,000, (ii) plus
(minus) the amount, if any that the Tangible Equity Capital of
the Bank shall be greater (less) than $4,500,000 as of the
Determination Date MINUS (iii) the amount of any indebtedness
or other liabilities of Bancshares as of the Determination
Date; provided, however, if the Closing occurs after January
3, 2000, the Bancshares Merger Consideration shall also
include the combined pretax income of the Bank and Bancshares
for the month in which the Closing occurs through the last
business day prior to the Closing, and such amount shall be
determined by allocation of the total pretax income for such
month based on the number of days of such month which
transpire prior to the Closing Date.
1.06 "Bancshares Merger Effective Time" means the
date and the time that the Missouri Secretary of State issues
a certificate of merger with respect to the Bancshares Merger.
1.07 "Bank" means Osage Valley Bank, a Missouri
banking corporation that is not a member of the Federal
Reserve System.
1.08 "BHC Act" means the Bank Holding Company of
1956, as amended.
1.09 "Buyer" means Exchange National Bancshares,
Inc., a Missouri corporation that is a registered bank holding
company.
1.10 "Buyer Due Diligence Period" means the period of
time commencing on the date of execution of this Agreement
and ending 30 days thereafter, or on such earlier date as
Buyer shall have terminated such period by notice to the
Sellers.
1.11 "Buyer Due Diligence Review" means the review by
Buyer during the Buyer Due Diligence Period of Bancshares and
the Bank and their respective operations, business affairs,
prospects and financial condition, including, without
limitation, those matters which are the subject of Bancshares'
and the Bank's representations and warranties included herein.
1.12 "Closing Date" means the date as defined in
Section 2.02 of this Agreement.
1.13 "Determination Date" means the last day of the
month ending prior to the Closing Date.
1.14 "Dissenting Shares" means any shares of
Bancshares Stock held by any holder who becomes entitled to
payment of the value of such shares under Section 351.455 of
the Missouri Revised Statutes.
1.15 "Equity Securities" means the capital stock or
other equity securities of an issuer, options, warrants,
scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights
convertible into, shares of any capital stock or other equity
securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock
or other equity securities of such issuer, or options,
warrants, scrip or rights to purchase, acquire, subscribe to,
calls on or commitments for any shares of its capital stock or
other equity securities.
1.16 "FDI Act" means the Federal Deposit Insurance
Act of 1950, as amended.
1.17 "FDIC" means the Federal Deposit Insurance
Corporation.
1.18 "GAAP" means generally accepted accounting
principles.
1.19 "Missouri Director of Finance" means the
Division of Finance of the Missouri Department of Economic
Development.
1.20 "Regulatory Authority" means any federal,
state, municipal or local government, securities, banking,
insurance and other governmental or regulatory authority, and
the agencies and staffs thereof (such entities being referred
to herein collectively as the "Regulatory Authorities").
1.21 "Surviving Corporation" means Bancshares, as the
surviving corporation of the Bancshares Merger.
1.22 "Tangible Equity Capital of the Bank" means the
capital, surplus and undivided profits of the Bank, determined
in accordance with GAAP, but excluding any goodwill and other
intangible and unrealized securities gains and losses
reflected on the Bank's financial statements.
ARTICLE II
THE ACQUISITION TRANSACTION
2.01 THE ACQUISITION TRANSACTION. Subject to the
terms and conditions of this Agreement:
(a) Acquisition Company will merge with and into
Bancshares under the terms set forth in the Bancshares Merger
Agreement to be executed prior to the Closing Date by and
between Bancshares and Acquisition Company, whereby the
shareholders of Bancshares will receive the consideration as
set forth in this Agreement and the Bancshares Merger
Agreement; and
(b) the shareholders of Bancshares will receive the
amount of cash that will equal their respective percentage
ownership interest in the outstanding shares of Bancshares
Stock as of the Bancshares Merger Effective Time multiplied by
the total amount of Bancshares Merger Consideration payable in
the Bancshares Merger as set forth in Section 2.07 of this
Agreement. Upon consummation of the Bancshares Merger, the
separate corporate existence of Acquisition Company will cease
and Bancshares will be the Surviving Corporation.
2.02 CLOSING. The closing (the "Closing") of the
Bancshares Merger, unless the parties hereto shall otherwise
mutually agree, shall take place at the offices of Buyer's
counsel in Kansas City, Missouri, on January 3, 2000 at 10:00
a.m., local time, or a date thereafter designated by Buyer
(the "Closing Date"), which shall be at least two (2) business
days and not more than ten (10) business days following the
last to occur of the following events: (a) the receipt of the
requisite approval of the Bancshares Merger by the
shareholders of Bancshares, as set forth in Section 3.02 of
this Agreement and (b) the approval of the Bancshares Merger
by the Federal Reserve Board and any other bank regulatory
agency that may be necessary or appropriate, and the
expiration of any required waiting period.
2.03 METHOD OF EFFECTING THE BANCSHARES MERGER AND
EFFECTIVE TIME. On the Closing Date, the parties hereto will
cause the Bancshares Merger to be consummated by delivering to
the Missouri Secretary of State, for filing, copies of the
Bancshares Merger Agreement and related articles of merger in
such form as is required by, and executed in accordance with,
the relevant provisions of Chapter 351 of the Missouri Revised
Statutes. The Bancshares Merger shall be effective at the
Bancshares Merger Effective Time.
2.04 ARTICLES AND BYLAWS. The articles of
incorporation and bylaws of Bancshares in effect immediately
prior to the Bancshares Merger Effective Time shall be the
articles of incorporation and bylaws of the Surviving
Corporation, in each case until amended in accordance with
their respective provisions and applicable law.
2.05 BOARD OF DIRECTORS AND OFFICERS. With respect
to the Bancshares Merger, at the Bancshares Merger Effective
Time, (i) the members of the Board of Directors of the
Surviving Corporation and the terms of these directors shall
be as designated by Buyer immediately prior to the Bancshares
Merger Effective Time and (ii) the officers of the Surviving
Corporation shall be the persons designated by Buyer
immediately prior to the Bancshares Merger Effective Time, and
such persons will serve in their designated offices,
thereafter, until their respective successors are duly elected
and qualified.
2.06 ADDITIONAL ACTIONS. If, at any time after the
Bancshares Merger Effective Time, the Surviving Corporation
shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are
necessary or desirable to (a) vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation its right,
title or interest in, to, or under any of the rights,
properties or assets of Bancshares, or (b) otherwise carry out
the purposes of this Agreement or the Bancshares Merger
Agreement, Bancshares and its officers and directors shall be
deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such
deeds, assignments or assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes
of this Agreement or the Bancshares Merger Agreement, and the
officers and directors of the Surviving Corporation are
authorized in the name of Bancshares or otherwise to take any
and all such action.
2.07 PAYMENT AND DELIVERY OF BANCSHARES MERGER
CONSIDERATION. At the Bancshares Merger Effective Time, on
the Closing Date, Acquisition Company shall deliver to each of
the shareholders of Bancshares such amount of cash from funds
contributed to it by Buyer pursuant to Section 6.13 as such
shareholder shall be entitled to receive pursuant to Section
2.01, and each of the shareholders of Bancshares shall
surrender to the Surviving Corporation certificates
representing the total number of shares of Bancshares Stock
owned by such shareholder.
2.08 DISSENTING SHARES.
(a) Any holders of Dissenting Shares shall be
entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of such
law, and Buyer shall cause the Surviving Corporation to make
such payment.
(b) Each party hereto shall give the other prompt
notice of any written demands for the payment of the fair
value of such shareholder's shares, withdrawals of such
objections or demands, and any other instruments, served
pursuant to Section 351.455 of the Missouri Revised Statutes,
received by such party, and Bancshares shall give Buyer the
opportunity to direct all negotiations and proceedings with
respect to such objections or demands. Bancshares shall not
voluntarily make any payment with respect to any demands for
payment of value and shall not, except with the prior written
consent of Buyer, settle or offer to settle any such demands.
2.09 RESERVATION OF RIGHT TO REVISE TRANSACTION. The
Buyer Entities may at any time change the method of effecting
the acquisition by the Buyer Entities (including without
limitation the provisions of this Article II) if and to the
extent the Buyer Entities deem such change to be desirable;
provided, however, that no such change shall (a) alter or
change the amount or kind of the Bancshares Merger
Consideration, (b) in the reasonable opinion of the tax
counsel or tax advisor of the Sellers, adversely affect the
tax treatment to the holders of Bancshares Stock as a result
of receiving the Bancshares Merger Consideration or (c)
materially impede or delay receipt of any approval referred to
in Section 7.01(b) or the consummation of the transactions
contemplated by this Agreement, the Bancshares Merger
Agreement or any other agreement executed in connection
herewith. Notwithstanding the foregoing, the Buyer Entities
agree not to make an election under Section 338 or
Section 338(h)(10) of the Internal Revenue Code such that the
transaction shall be treated as a sale of assets for the
purposes of taxation.
2.10 ESCROW DEPOSITS BY BUYER.
(a) Promptly following the end of the Buyer Due
Diligence Period, Buyer will deposit, with a mutually
acceptable bank or trust company, as escrow agent, the sum of
$200,000 (the "Escrow Deposit") pursuant to an Escrow
Agreement substantially set forth as Exhibit B hereto. In the
event that the Closing does not occur, but Buyer and the Buyer
Entities are not in default under any of the terms of this
Agreement, the Escrow Deposit shall be returned to Buyer. In
the event that there is no Closing because Buyer or the Buyer
Entities are in default under any of the terms of this
Agreement applicable to them, and Sellers are in compliance
with all of the terms hereof applicable to them, the Escrow
Deposit shall be paid to the Sellers as liquidated damages for
the breach hereof by the Buyer Entities.
(b) Concurrently with the Closing, Buyer will deduct
from the Bancshares Merger Consideration the sum of $100,000
in cash (the "Second Escrow Deposit") and pay such amount to
Xxxxx X. Beach ("Beach"), the Seller's agent and
representative pursuant to Section 10.03 hereof. Such funds
shall be used by Beach to pay any (i) costs and expenses
related to any post closing adjustments to the Bancshares
Merger Consideration, (ii) any expenses of preparation of the
final tax return pursuant to Section 6.15 hereof, or (iii) any
other costs and expenses incurred by the Sellers with respect
to the Closing after the Determination Date, including any
liability for breach of warranty. If an additional payment is
required to compensate the Shareholders for any partial month
income, such amount will be paid by the Buyer to Beach to be
held and distributed as part of the Second Escrow Deposit.
Any funds remaining from the Second Escrow Deposit after
payment of the foregoing shall be disbursed to all
shareholders of Bancshares in proportion to their interests as
of the Bancshares Merger Effective Time. Buyer shall have no
responsibility to monitor or otherwise account for any funds
in the Second Escrow Deposit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to the Buyer Entities to enter into and
perform their respective obligations under this Agreement, and
notwithstanding any examinations, inspections, audits and
other investigations made by the Buyer Entities, the Sellers
hereby jointly and severally represent and warrant to the
Buyer Entities as to the following matters, except that
warranties of the Bank shall relate only to matters pertaining
to the Bank and no party other than a Shareholder shall be
responsible for any warranties that relate solely to that
Shareholder:
3.01 ORGANIZATION AND AUTHORITY.
(a) Bancshares is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Missouri, is duly qualified to do business, and is in
good standing in all jurisdictions where its ownership,
leasing of property or the conduct of its business requires it
to be so qualified, and has the corporate power and authority
to own its properties and assets and to carry on its business
as it is now being conducted. Bancshares is registered as a
bank holding company with the Federal Reserve Board under the
BHC Act. A current and accurate list of Bancshares's
shareholders, including addresses thereof, and true and
complete copies of the articles of incorporation and bylaws of
Bancshares, each as in effect on the date of this Agreement,
are included in Schedule 3.01(a) hereof.
(b) The Bank is a bank duly organized, validly
existing and in good standing under the laws of the State of
Missouri. The deposits of the Bank are insured by the FDIC
under the FDI Act. The Bank is qualified to do business and is
in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires
it to be so qualified and has the corporate power and
authority to own and operate its properties and to carry out
its business as and where the same is now being conducted. A
current and accurate list of the Bank's shareholders,
including addresses thereof, and true and complete copies of
the articles of agreement and bylaws of the Bank, each as in
effect on the date of this Agreement, are included in Schedule
3.01(b) hereof.
3.02 CORPORATE AUTHORIZATION; RECORDS.
(a) The Bank has the corporate power and authority
to enter into this Agreement and Bancshares has the corporate
power and authority to enter into this Agreement and the
Bancshares Merger Agreement and to carry out their respective
obligations thereunder, subject to (i) the approval of this
Agreement, the Bancshares Merger and the Bancshares Merger
Agreement by the shareholders of Bancshares, (ii) the approval
of this Agreement by the Board of Directors of the Bank, and
(iii) such approvals of governmental agencies and other
governing boards having regulatory authority over Bancshares
as may be required by applicable law, rule or regulation.
(b) The only shareholder vote of Bancshares required
to approve the Bancshares Merger is the affirmative vote of
the holders of two thirds of the outstanding shares of
Bancshares Stock. The execution, delivery and performance of
this Agreement and the Bancshares Merger Agreement by
Bancshares have been duly authorized by the Board of Directors
of Bancshares. The execution, delivery and performance of
this Agreement by the Bank is subject only to the approval of
the Board of Directors of the Bank. Subject to the approvals,
as aforesaid, this Agreement is the valid and binding
obligation of the Bank, and this Agreement and the Bancshares
Merger Agreement are the valid and binding obligations of
Bancshares, enforceable against each in accordance with their
respective terms.
(c) Except as set forth on Schedule 3.02(c), neither
the execution, delivery and performance by Bancshares of this
Agreement or the Bancshares Merger Agreement, nor the
consummation of the transactions contemplated thereby, nor
compliance by Bancshares with any of the provisions thereof
will (i) violate, conflict with or result in a breach of any
provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of
termination or acceleration of, or result in the creation of,
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Bancshares under any of the terms,
conditions or provisions of (A) its articles of incorporation
or bylaws, or (B) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which Bancshares is a party or by which it may
be bound, or to which Bancshares or any of their respective
properties or assets may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in
subsection (d) of this Section 3.02, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to Bancshares or any of its
properties or assets.
(d) Except as set forth on Schedule 3.02(d), neither
the execution, delivery and performance by the Bank of this
Agreement, nor the consummation of the transactions
contemplated thereby, nor compliance by Bank with any of the
provisions thereof will (i) violate, conflict with or result
in a breach of any provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the
creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Bank
under any of the terms, conditions or provisions of (A) its
articles of agreement or bylaws, or (B) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which Bank is a party or
by which it may be bound, or to which the Bank or any of their
respective properties or assets may be subject, or (ii)
subject to compliance with the statutes and regulations
referred to in subsection (d) of this Section 3.02, violate
any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to the Bank or any of
its properties or assets.
(e) The minute books and stock records of Bancshares
and the Bank are complete and correct in all respects and
accurately reflect in all respects all meetings, consents and
other actions of the shareholders, Board of Directors and
committees of the Board of Directors occurring since the
organization of each.
3.03 SUBSIDIARIES. Except as set forth on Schedule
3.03, Bancshares has no subsidiaries other than the Bank and
the Bank has no subsidiaries and does not control, or have any
equity ownership interest in, any other corporation,
partnership, joint venture or other business association,
other than any interest pledged to the Bank in the ordinary
course of its business as security for the obligations of
third parties to the Bank or held by the Bank as a consequence
of its exercise of rights and remedies in respect of any
interest pledged as security in respect of such obligation.
3.04 CAPITALIZATION OF THE BANK AND BANCSHARES. The
capital stock of the Bank consists of 1 share of common stock,
$50,000 par value, which is issued and outstanding as of the
date hereof. The authorized capital stock of Bancshares
consists of 30,000 shares of common stock, $1 par value, 4,364
shares of which are issued and outstanding as of the date
hereof. Except as set forth on Schedule 3.04, Bancshares has
and will have as of the Bancshares Merger Effective Time good
and marketable title to 1 share, or 100% of the then issued
and outstanding shares of the Bank Stock, free and clear of
any liens, claims, charges, encumbrances and assessments of
any kind or nature whatsoever. There are no other shares of
capital stock or other Equity Securities of Bancshares or the
Bank outstanding. All of the issued and outstanding
shares of the common stock of Bancshares and the Bank are
validly issued, fully paid and nonassessable.
3.05 FINANCIAL STATEMENTS.
(a) Delivered herewith as Schedule 3.05(a) are
copies of the following financial statements:
(i) Balance sheets of Bancshares as of December
31, 1998, 1997 and 1996, and related statements of
income for the three (3) years ended December 31,
1998;
(ii) Balance sheet of Bancshares as of June
30, 1999 and related statement of income for the
six-month period ended June 30, 1999;
(iii) Form FR Y-6 reports of Bancshares as
of December 31, 1998, 1997 and 1996, and Form FR Y-9LP
and Form FR Y-9C reports filed during such
periods, as furnished by Bancshares to the Federal
Reserve Board; and
(iv) The Consolidated Reports of Condition
and Income of the Bank as of and for the years ended
December 31, 1998, 1997 and 1996, and as of and for
the three-month periods ended March 31, 1999 and June
30, 1999, as filed by the Bank with the FDIC.
(b) The financial statements referenced in
subsection (a) of this Section 3.05 are referred to
collectively as the "Bancshares Financial Statements." The
Bancshares Financial Statements have been prepared in
accordance with the books and records of Bancshares and the
Bank in accordance with GAAP or, as to the financial
statements referenced in subsection (a)(iii) and (a)(iv)
above, regulatory accounting principles, consistently applied
in both cases as applied to financial institutions, and
present fairly the consolidated financial positions of
Bancshares and the Bank, respectively, at the dates thereof
and the consolidated results of their respective operations
(subject, in the case of interim financial statements, to
normal recurring year-end adjustments, none of which will be
material).
(c) Bancshares and the Bank have each prepared, kept
and maintained through the date hereof true, correct and
complete financial and other books and records of their
affairs which fairly reflect their respective financial
conditions, results of operations, businesses, assets,
prospects or operations.
3.06 REPORTS. Since January 1, 1996, Bancshares and
the Bank have filed all reports, registrations and statements,
together with any required amendments thereto, that were
required to be filed with any Regulatory Authority, having
jurisdiction over the affairs of each. All such reports and
statements filed with any such Regulatory Authority are
collectively referred to herein as the "Bancshares and Bank
Reports." As of their respective dates, the Bancshares and
Bank Reports complied in all respects with all the rules and
regulations promulgated by the applicable Regulatory
Authority. With respect to the Bancshares and Bank Reports
filed with the Regulatory Authorities, there is no material
unresolved violation, criticism or exception by any Regulatory
Authority with respect to any report or statement filed by, or
any examination of, the Bank or Bancshares.
3.07 TITLE TO AND CONDITION OF ASSETS.
(a) Except as may be reflected in the Bancshares
Financial Statements or set forth on Schedule 3.07(a) and
excepting all real property (which is the subject of Section
3.08) and any liens on any of the assets of the Bank securing
advances to the Bank by the Federal Home Loan Bank of Des
Moines, Bancshares and the Bank have, and at the Closing Date
will have, good and marketable title to their respective
properties and assets, including, without limitation, those
reflected on the Bancshares Financial Statements, free and
clear of any liens, charges, pledges, encumbrances, defects,
claims or rights of third parties, except for liens for taxes,
assessments or other governmental charges not yet delinquent.
(b) No assets reflected on the Bancshares Financial
Statements, which in the aggregate exceed $10,000, have been
sold, leased, transferred, assigned or otherwise disposed of
since June 30, 1999 except in the ordinary course of business
or as set forth in Schedule 3.07(b). All dispositions of
assets since June 30, 1999, regardless of amount, have been
made at fair value.
(c) All furniture, fixtures, vehicles, machinery and
equipment and computer software owned or used by Bancshares or
the Bank, including any of such items leased as a lessee and
all facilities and improvements comprising part of any owned
or leased real property, taken as a whole, with no single such
item being deemed of importance, are fit for the purposes for
which they were intended, are in good order and repair, free
of defects and in good operating condition, subject only to
normal wear and tear. The operation by Bancshares or the Bank
of such assets is in compliance in all material respects with
all applicable laws, ordinances and rules and regulations of
any governmental authorities having jurisdiction.
3.08 REAL PROPERTY.
(a) Bancshares owns no real property and neither
Bancshares nor the Bank is a lessee of real property, except
as set forth in Schedule 3.08(a). The legal description of
each parcel of real property owned by the Bank (other
than real property acquired in foreclosures or in lieu of
foreclosure in the course of collection of its loans and being
held by the Bank for disposition as required by law) is set
forth in Schedule 3.08(a) attached hereto (such real property
being herein referred to as the "Real Property").
(b) There is no pending dispute involving the Bank
as to the title of or the right to use any of its Real
Property.
(c) The Bank has no interest in any other real
property except interests as a mortgagee, and except for real
property acquired in foreclosures or in lieu of foreclosure
and being held for disposition as required by law.
(d) To the best of knowledge of Sellers, none of the
buildings, structures or other improvements located on the
Real Property encroaches upon or over any adjoining parcel or
real estate or any easement or right-of-way or "setback" line
and all such buildings, structures and improvements are
located and constructed in conformity with all applicable
zoning ordinances and building codes.
(e) To the best of knowledge of Sellers, none of the
buildings, structures or improvements located on the Real
Property are the subject of any official complaint or notice
by any governmental authority of violation of any applicable
zoning ordinance or building code, and there is no zoning
ordinance, building code, use or occupancy restriction or
condemnation action or proceeding pending, or, to the best
knowledge of the Sellers, threatened, with respect to any such
building, structure or improvement. The Real Property is in
generally good condition, reasonable wear and tear excepted,
and has been maintained in accordance with reasonable and
prudent business practices applicable to like facilities.
(f) Except as may be reflected on the Bancshares
Financial Statements or with respect to such easements, liens,
defects or encumbrances of record, which to the best knowledge
of Sellers, do not individually or in the aggregate adversely
affect the use or value of the parcel of Real Property, the
Bank has, and at the Closing Date will have, good and
marketable title to its Real Property, free and clear of any
liens, charges, pledges, encumbrances, defects, claims or
rights of third parties, except for those liens on the assets
of the Bank securing advances to the Bank by the Federal Home
Loan Bank of Des Moines and except as set forth in Schedule
3.08(f).
3.09 LOANS, COMMITMENTS AND CONTRACTS.
(a) Bancshares has no outstanding loans receivable
nor any commitments to lend. Schedule 3.09(a) contains a
complete and accurate listing of all contracts entered into
with respect to deposits of $250,000 or more, by account or
other identifying number, and all loan agreements and
commitments, notes, security agreements, repurchase
agreements, bankers' acceptances, outstanding letters of
credit and commitments to issue letters of credit,
participation agreements and other documents relating to or
involving extensions of credit or other commitments to extend
credit by the Bank with respect to any one entity or related
group of entities in excess of $250,000, to which any of the
foregoing is a party or by which it is bound, by account or
other identifying number, and, where applicable, such other
information as shall be necessary to identify any related
group of entities.
(b) Except for the contracts and agreements required
to be listed on Schedule 3.09(a) and except as set forth in
Schedule 3.09(b) hereto, neither Bancshares nor the Bank is a
party to or bound by any:
(i) agreement, contract, arrangement,
understanding or commitment with any labor union;
(ii) franchise or license agreement;
(iii) written employment, severance or
termination pay, agency, consulting or similar
agreement, contract, arrangement, understanding or
commitment in respect of personal services;
(iv) material agreement, arrangement or
commitment (A) not made in the ordinary course of
business, or (B) pursuant to which Bancshares or the
Bank is or may become obligated to invest in or
contribute other than pursuant to the Sellers
Employee Plans (as that term is defined in Section
3.18 hereof);
(v) agreement, indenture or other instrument
not disclosed in the Bancshares Financial Statements
relating to the borrowing of money by the Bank or
Bancshares or the guarantee by the Bank or Bancshares
of any such obligation (other than trade payables or
instruments related to transactions entered into in
the ordinary course of business by the Bank or
Bancshares such as deposits, Fed Funds borrowings,
Federal Home Loan Bank Board advances and repurchase
and reverse repurchase agreements), other than such
agreements, indentures or instruments providing for
annual payments of less than $50,000;
(vi) contract containing covenants which
limit the ability of the Bank or Bancshares to
compete in any line of business or with any person or
which involves any restrictions on the geographical
area in which, or method by which, the Bank or
Bancshares may carry on their respective businesses
(other than as may be required by law or any
applicable Regulatory Authority);
(vii) lease of personal property with annual
rental payments aggregating $25,000 or more;
(viii) loans or other obligations payable or
owing to any officer, director or employee except (A)
salaries, wages and directors' fees incurred and
accrued in the ordinary course of business and (B)
obligations due in respect of any depository accounts
maintained by any of the foregoing at the Bank in the
ordinary course of business;
(ix) loans or debts payable or owing by any
executive officer or director of the Bank or
Bancshares or any other person or entity deemed an
"executive officer" or a "related interest" of the
Bank or Bancshares, as such terms are defined by the
Federal Reserve Board in Regulation O (12 C.F.R. Part
215);
(x) other agreements, contracts, arrangements,
understandings or commitments that involve
obligations by the Bank or Bancshares of more than
$25,000 in the aggregate that extend beyond six
months from the date hereof and cannot be canceled
without cost or penalty upon notice of 30 days or
less, other than contracts entered into in respect of
deposits, loan agreements and commitments, notes,
security agreements, repurchase and reverse
repurchase agreements, bankers' acceptances,
outstanding letters of credit and commitments to
issue letters of credit, participation agreements and
other documents relating to transactions entered into
by the Bank or Bancshares in the ordinary course of
business and not involving extensions of credit with
respect to any one entity or related group of
entities in excess of $250,000.
(c) The Bank and Bancshares carry property,
casualty, liability, directors and officer errors and
omissions, products liability and other insurance coverages as
set forth in Schedule 3.09(c).
(d) True, correct and complete copies of the
agreements, contracts, leases, insurance policies and other
documents referred to in Schedule 3.09(a), Schedule 3.09(b),
and Schedule 3.09(c) shall be furnished or made available to
the Buyer Entities.
(e) Each of the agreements, contracts, leases,
insurance policies and other documents referred to in Schedule
3.09(a), Schedule 3.09(b) and Schedule 3 09(c) is a valid,
binding and enforceable obligation of the parties sought to be
bound thereby, except as the enforceability thereof against
the parties thereto (other than the Bank or Bancshares) may be
limited by bankruptcy, insolvency, reorganization, moratorium
and other laws now or hereafter in effect relating to
the enforcement of creditors' rights generally, and except
that equitable principles may limit the right to obtain
specific performance or other equitable remedies.
(f) Schedule 3.09(f) contains a true, correct and
complete listing, as of the date of this Agreement, by account
or other identifying number, of (i) all loans in excess of
$100,000 of the Bank which have been accelerated during the
past twelve months which have not, to date, been repaid or
written off, (ii) all loan commitments or lines of credit of
the Bank in excess of $100,000 which have been terminated by
the Bank during the past twelve months by reason of default or
adverse developments in the condition of the borrower or other
events or circumstances affecting the credit of the borrower
which have not, to date, been repaid or written off, (iii) all
loans, lines of credit and loan commitments in excess of
$100,000 as to which the Bank has given written notice to the
borrower or customer of the Bank's intent to terminate during
the past twelve months which have not, to date, been repaid or
written off, (iv) with respect to all loans in excess of
$100,000, all notification letters and other written
communications from the Bank to any of its borrowers,
customers or other parties during the past twelve months
wherein the Bank has requested or demanded that actions be
taken to correct existing material defaults or material facts
or circumstances which may become defaults, (v) each borrower,
customer or other party which has notified the Bank during the
past twelve months of, or asserted against the Bank, in
writing, any "lender liability" or similar claim, and each
borrower, customer or other party which has given the Bank any
oral notification of, or asserted against the Bank, any such
claim, and (vi) all loans in excess of $50,000 (1) that are
contractually past due 90 days or more in the payment of
principal and/or interest, (2) that are on non-accrual status,
(3) where a reasonable doubt exists as to the timely future
collectibility of future principal and interest, whether or
not interest is still accruing or the loan is less than 90
days past due, (4) the interest rate terms have been reduced
and/or the maturity dates have been extended subsequent to the
agreement under which the loan was originally created due to
concerns regarding the borrower's ability to pay in accordance
with such initial terms, (5) where a specific reserve
allocation exists in connection therewith, or (6) that have
been classified "substandard," "doubtful" or "loss" or the
equivalent thereof by any Regulatory Authority.
3.10 ABSENCE OF DEFAULTS. Except as set forth in
Schedule 3.10, there are no pending disputes between the Bank
or Bancshares and the other parties to the agreements,
contracts, leases, insurance policies and other documents
referred to in Schedule 3.09(a), Schedule 3.09(b), and
Schedule 3.09(c), and to the best knowledge of the Sellers,
all such agreements, contracts, leases, insurance policies and
other documents are in full force and effect and not in
default with respect to the Bank or Bancshares or any other
party thereto, and will continue in full force and effect
immediately after the Closing Date.
3.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in Schedule 3.11 or in any other Schedule delivered
herewith:
(a) As of the date hereof, neither the Bank nor
Bancshares has any debts, liabilities or obligations, equal to
or exceeding $25,000, individually, or $50,000, in the
aggregate, whether accrued, absolute, contingent or otherwise
and whether due or to become due, which are required to be
reflected in the Bancshares Financial Statements or the notes
thereto in accordance with GAAP consistently applied except:
(i) liabilities reflected in the Bancshares
Financial Statements;
(ii) deposits, debts, liabilities or
obligations incurred since June 30, 1999 in the
ordinary and usual course of its businesses, none of
which are for breach of contract, breach of warranty,
torts, infringements or lawsuits, and none of which
adversely affect their respective financial positions
or results of operations, businesses, assets,
prospects or operations; and
(iii) liabilities incurred for legal,
accounting, financial advising fees and out-of-pocket
expenses in connection with the Bancshares Merger and
the transactions related thereto.
(b) Neither the Bank nor Bancshares was, as of June
30, 1999, and since such date to the date hereof has become a
party to, any contract or agreement, excluding deposits, loan
agreements and commitments, notes, security agreements,
repurchase and reverse repurchase agreements, bankers'
acceptances, outstanding letters of credit and commitments to
issue letters of credit, participation agreements and other
documents relating to transactions entered into by the Bank or
Bancshares in the ordinary course of business which affected,
affects or may reasonably be expected to affect, materially
and adversely, its financial position, results of operations,
business, assets or operations.
3.12 ALLOWANCE FOR LOAN AND LEASE LOSSES; NON-PERFORMING ASSETS.
(a) All of the accounts, notes and other receivables
which are reflected in the balance sheet of the Bank as of
June 30, 1999 were acquired in the ordinary course of business
and are to the best knowledge of Sellers collectible in full
in the ordinary course of business, except for possible loan
and lease losses for which reserves have been made on the
financial statements in accordance with regulatory
requirements in the allowance for loan and lease losses in
such balance sheet.
(b) The allowance for loan losses contained in the
balance sheet of the Bank as of June 30, 1999 was established
in accordance with the past practices and experiences of
the Bank and such allowance was adequate in all material
respects under applicable regulatory requirements to provide
for possible losses on loans and leases (including, without
limitation, accrued interest receivable) and credit
commitments (including, without limitation, stand-by letters
of credit) as of the date of such balance sheet. The reserve
for loan losses as of the Closing Date shall be equal to or
greater than the amount of the reserve for loan losses
reflected on the financial statements of Bancshares as of June
30, 1999.
(c) Schedule 3.12(c) sets forth as of the date of
this Agreement all assets classified as real estate acquired
through foreclosure, including in-substance foreclosed real
estate ("Non-Performing Assets").
3.13 TAXES. Each of Bancshares and the Bank has
timely filed or will timely file (including all extensions)
all tax returns required to be filed at or prior to the
Closing Date ("Bancshares Returns"). Each of Bancshares and
the Bank has paid, or has set up adequate reserves on the
Bancshares Financial Statements for the payment of, all taxes
required to be paid in respect of the periods covered by such
returns and has set up adequate reserves on the Bancshares
Financial Statements for the payment of all taxes anticipated
to be payable in respect of the period subsequent to the last
of said periods (treating for this purpose the Closing Date as
the last day of an applicable period, whether or not it is in
fact the last day of a taxable period). Neither Bancshares
nor the Bank will have any liability for any such taxes in
excess of the amounts so paid or reserves so established, and
no deficiencies for any tax, assessment or governmental charge
have been proposed, asserted or assessed (tentatively or
definitively) against Bancshares or the Bank which would not
be covered by existing reserves. Neither Bancshares nor the
Bank is delinquent in the payment of any tax, assessment or
governmental charge, nor has it requested any extension of
time within which to file any tax returns in respect of any
fiscal year which have not since been filed and no requests
for waivers of the time to assess any tax are pending. The
federal, state and foreign income tax returns of each of
Bancshares and the Bank have not been audited by the Internal
Revenue Service (the "IRS") or the state or foreign taxing
authority during the previous seven years. Neither Bancshares
nor the Bank has made any election under Income Tax Regulation
Sections 1.1502-33(d)(3) or 1.1552-1(c), each of which relates
to the allocation of the consolidated federal income tax
liability, and, other than tax sharing agreements from time to
time in effect affecting solely such parties by and between
Bancshares and the Bank, neither Bancshares nor the Bank is a
party to or bound by any tax indemnity, tax sharing or tax
allocation agreement, or any other contractual obligation to
pay or contribute to the tax obligations of any other person.
There is no deficiency or presently pending refund litigation
or matter in controversy with respect to Bancshares Returns.
Neither Bancshares nor the Bank has extended or waived any
statute of limitations on the assessment of any tax due that
is currently in effect.
3.14 MATERIAL ADVERSE CHANGE. Since June 30, 1999,
there has been no material adverse change in the financial
condition, results of operations, business, assets, prospects
or operations of Bancshares or the Bank taken as a
whole, other than changes in banking laws or regulations, or
interpretations thereof, or other conditions that affect the
banking industry generally, or changes in the general level of
interest rates.
3.15 LITIGATION AND OTHER PROCEEDINGS. Except as set
forth in Schedule 3.15, neither Bancshares nor the Bank is a
party to any pending or, to the best knowledge of the Sellers,
threatened, claim, action, suit, investigation or proceeding,
or is subject to any order, judgment or decree, except for
matters which, in the aggregate, will not have, or cannot
reasonably be expected to have, a material adverse effect on
the business, financial condition, results of operations or
prospects of Bancshares or the Bank. Without limiting the
generality of the foregoing, except as set forth in Schedule
3.15, there are no actions, suits or proceedings pending or,
to the best knowledge of the Sellers, threatened against
Bancshares or the Bank or any of their respective officers or
directors by any shareholder of Bancshares or the Bank (or any
former shareholder) or involving claims under the Community
Reinvestment Act of 1977, Bank Secrecy Act, the fair lending
laws or any other laws applicable to the Bank.
3.16 COMPLIANCE WITH LAWS.
(a) To the best knowledge of Sellers, Bancshares and
the Bank have all permits, licenses, authorizations, orders
and approvals of, and have made all filings, applications and
registrations with, all Regulatory Authorities that are
required in order to permit them to own or lease their
respective properties and assets and to carry on their
respective businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and
approvals are in full force and effect and no suspension or
cancellation of any of them is threatened; and, to the best
knowledge of Sellers, all such filings, applications and
registrations are current; in each case except for permits,
licenses, authorizations, orders, approvals, filings,
applications and registrations the failure to have (or have
made) would not have a material adverse effect on the
financial condition, results of operations, business or
prospects of Bancshares or the Bank.
(b) Each of Bancshares and the Bank has complied
with all laws, regulations and orders (including, without
limitation, zoning ordinances, building codes, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
and securities, tax, environmental, civil rights and
occupational health and safety laws and regulations and
including, without limitation, in the case of the Bank, all
statutes, rules, regulations and policy statements pertaining
to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and
governing instruments applicable to it and to the conduct of
its business, the violation of which could reasonably be
expected to have a material adverse effect on the financial
condition, results of operations, business or prospects of
Bancshares or the Bank, and neither Bancshares nor the Bank is
in default under, and no event has occurred which, with
the lapse of time or notice or both, could result in the
default under, the terms of any judgment, order, writ, decree,
permit or license of any Regulatory Authority or court,
whether federal, state, municipal or local and whether at law
or in equity.
(c) Except as set forth in Schedule 3.16, and to the
best knowledge of Sellers, neither Bancshares nor the Bank is
subject to or reasonably likely to incur a material liability
as a result of its ownership, operation or use of any Property
(as defined below) of Bancshares or the Bank (whether directly
or as a consequence of such Property being part of the
investment portfolio of the Bank) (A) that contains any
hazardous waste, toxic substance or related materials,
including, without limitation, asbestos, PCBs, pesticides,
herbicides and any other substance or waste that is hazardous
to human health or the environment (collectively, a "Hazardous
Substance"), or (B) on which any Hazardous Substance has been
stored, disposed of, placed, or used in the construction
thereof. "Property" shall include all property (real or
personal, tangible or intangible) owned or controlled by
Bancshares or the Bank, including, without limitation,
property under foreclosure and property in which any venture
capital or similar unit of the Bank has an ownership or
possessory interest. No claim, action, suit or proceeding is
pending against Bancshares or the Bank relating to the
Property before any court or other Regulatory Authority or
arbitration tribunal relating to Hazardous Substances,
pollution or the environment, and there is no outstanding
judgment, order, writ, injunction, decree or award against or
affecting Bancshares or the Bank with respect to the same.
Except for statutory or regulatory restrictions of general
application, no Regulatory Authority has placed any
restriction on the business of Bancshares or the Bank which
reasonably could be expected to have a material adverse effect
on the condition of Bancshares or the Bank.
(d) Since December 31, 1995, neither Bancshares nor
the Bank has received any notification or communication which
has not been favorably resolved from any Regulatory Authority
(i) asserting that Bancshares or the Bank is not in
substantial compliance with any of the statutes, regulations
or ordinances that such Regulatory Authority enforces, except
with respect to matters which (A) are set forth on Schedule
3.16 or in any writing previously furnished to the Buyer
Entities and (B) reasonably could not be expected to have a
material adverse effect on the condition of the Bank, (ii)
threatening to revoke any license, franchise, permit or
governmental authorization that is material to the condition
of the Bank including, without limitation, the Bank's status
as an insured depository institution under the FDI Act, (iii)
requiring or threatening to require Bancshares or the Bank,
or indicating that Bancshares or the Bank may be required, to
enter into a cease and desist order, agreement or memorandum
of understanding or any other agreement restricting or
limiting or purporting to direct, restrict or limit in any
manner the operations of Bancshares or the Bank, including,
without limitation, any restriction on the payment of
dividends. No such cease and desist order, agreement or
memorandum of understanding or other agreement is currently in
effect.
(e) Neither Bancshares nor the Bank is required by
Section 32 of the FDI Act to give prior notice to any federal
banking agency of the proposed addition of an individual to
its board of directors or the employment of an individual as a
senior executive officer.
3.17 LABOR. No work stoppage involving Bancshares or
the Bank is pending or, to the best knowledge of Sellers,
threatened. Neither Bancshares nor the Bank is involved in,
or threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding which could
adversely affect the business of Bancshares or the Bank.
Employees of Bancshares and the Bank are not represented by
any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.18(a) lists, to the best knowledge of
Sellers, all pension, retirement, supplemental retirement,
stock option, stock purchase, stock ownership, savings, stock
appreciation right, profit sharing, deferred compensation,
consulting, bonus, medical, disability, workers' compensation,
vacation, group insurance, severance and other employee
benefit, incentive and welfare policies, contracts, plans and
arrangements, and all trust agreements related thereto,
maintained by or contributed to by Bancshares or the Bank in
respect of any of the present or former directors, officers or
other employees of and/or consultants to Bancshares or the
Bank (collectively, the "Sellers Employee Plans"). The
Sellers have furnished the Buyer Entities with the following
documents with respect to each of the Sellers Employee Plans:
(i) a true and complete copy of all written documents
comprising such Sellers Employee Plan (including amendments
and individual agreements relating thereto) or, if there is no
such written document, an accurate and complete description of
the Sellers Employee Plan; (ii) the most recently filed Form
5500 or Form 5500-C (including all schedules thereto), if
applicable; (iii) the most recent financial statements and
actuarial reports, if any; (iv) the summary plan description
currently in effect and all material modifications thereof, if
any; and (v) the most recent IRS determination letter, if any.
(b) All of the Sellers Employee Plans have been
maintained and operated in all material respects in accordance
with their terms and the requirements of all applicable
statutes, orders, rules and final regulations, including,
without limitation, to the extent applicable, ERISA and the
Internal Revenue Code (the "Code"). All contributions
required to be made to the Sellers Employee Plans have been
made.
(c) Seller has no pension plan as defined in Section
3(2) of ERISA.
(d) Except as set forth on Schedule 3.18(d), neither
Bancshares nor the Bank has any liability for any post-retirement health,
medical or similar benefit of any kind
whatsoever, except as required by statute or regulation.
(e) Neither Bancshares nor the Bank has any material
liability under ERISA or the Code as a result of its being a
member of a group described in Sections 414(b), (c), (m) or
(o) of the Code.
(f) Except as set forth on Schedule 3.18(f), neither
the execution nor delivery of this Agreement or the Merger
Agreements, nor the consummation of any of the transactions
contemplated hereby and thereby, nor the termination of any of
the Sellers Employee Plans which may occur as a result of the
consummation of any of the transactions so contemplated, will
(i) result in any payment (including, without limitation,
severance, unemployment compensation or golden parachute
payment) becoming due from Bancshares or the Bank to any
director or employee of Bancshares or the Bank, (ii) increase
any benefit otherwise payable under any of the Sellers
Employee Plans or (iii) result in the acceleration of the time
of payment of any such benefit.
3.19 CONDUCT OF BANCSHARES'S AND THE BANK'S
BUSINESSES TO DATE. Except as set forth in Schedule 3.19 or
otherwise in this Agreement, from and after June 30, 1999:
(a) Bancshares and the Bank have carried on their respective
business in the ordinary and usual course consistent with past
practices, (b) neither Bancshares nor the Bank has issued or
sold any of its capital stock or any corporate debt securities
which would be classified as long-term debt on its balance
sheet, (c) neither Bancshares nor the Bank has granted any
option for the purchase of its capital stock, effected any
stock split or otherwise changed its capitalization,
(d) neither Bancshares nor the Bank has, directly or
indirectly, redeemed or otherwise acquired any of its capital
stock, (e) neither Bancshares nor the Bank has incurred any
obligation or liability (absolute or contingent), except
normal trade or business obligations or liabilities incurred
in the ordinary course of business, or mortgaged, pledged or
subjected to lien, claim, security interest, charge,
encumbrance or restriction any of its assets or properties,
(f) neither Bancshares nor the Bank has discharged or
satisfied any lien, mortgage, pledge, claim, security
interest, charge, encumbrance, or restriction or paid any
obligation or liability (absolute or contingent), other than
in the ordinary course of business, (g) neither Bancshares nor
the Bank has sold, assigned, transferred, leased, exchanged or
otherwise disposed of any of its properties or assets other
than for a fair consideration in the ordinary course of
business, (h) neither Bancshares nor the Bank has increased
the rate of compensation of, or paid any bonus to, any of its
directors, officers or other employees, except merit or
promotion increases in accordance with existing policy,
entered into any new, or amended or supplemented any existing,
employment, management, consulting, deferred compensation,
severance or other similar contract, entered into, terminated
or substantially modified any of the Sellers Employee Plans in
respect of any of its present or former directors, officers or
other employees, or agreed to do any of the foregoing,
(i) neither Bancshares nor the Bank has suffered any damage,
destruction or loss, whether as the result of fire, explosion,
earthquake, accident, casualty, labor trouble,
requisition or taking of property by any government or any
agency of any government, flood, windstorm, embargo, riot, act
of God or the enemy or other similar or dissimilar casualty or
event or otherwise, and whether or not covered by insurance,
and (j) neither Bancshares nor the Bank has entered into any
transaction, contract or commitment outside the ordinary
course of its business.
3.20 FULL DISCLOSURE. No representation or warranty
of the Sellers contains any untrue statement of a material
fact or omits to state a material fact necessary in order to
(i) make the statements contained herein not materially
misleading or (ii) provide a prospective purchaser of the
Bancshares Stock with all material information as to the
properties and business of Bancshares or the Bank.
3.21 BROKERS AND FINDERS; OTHER LIABILITIES. Except
as set forth on Schedule 3.21, neither Bancshares nor the Bank
nor any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions
or finder's fees, and no broker or finder has acted directly
or indirectly for Bancshares and/or the Bank in connection
with this Agreement, the Bancshares Merger Agreement or the
transactions contemplated hereby and thereby.
3.22 INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
Except for caps on interest rates made on loans in the
ordinary course of its business, the Bank is not a party to,
nor are any of its properties or assets bound by, interest
rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements.
3.23 REPRESENTATIONS CONCERNING SHAREHOLDERS.
(a) OWNERSHIP. Each Shareholder is the owner,
beneficially and of record, of the number of shares of
Bancshares Stock as set forth in Schedule 3.23(a).
(b) POWER. Each Shareholder has complete and
unrestricted power to enter into this Agreement and all other
agreements to be executed and delivered by Shareholders
hereunder, to transfer their shares pursuant to the Merger,
and to perform their obligations hereunder and thereunder.
(c) BINDING OBLIGATION. This Agreement has been,
and all other agreements and documents to be executed and
delivered by Shareholders hereunder will be at or prior to the
Closing, duly authorized, executed and delivered by
Shareholders and constitute the legal, valid and binding
obligations of all Shareholders enforceable against each
Shareholder in accordance with its terms.
(d) NO VIOLATIONS OR DEFAULTS. The execution and
delivery of this Agreement and all other agreements to
be executed and delivered by Shareholders hereunder, and the
consummation of the transactions contemplated hereby and
thereby, by Shareholders will not violate any provision of, or
constitute a default under, any law, regulation, order or
judgment or any contract or other agreement to which any of
Shareholders is a party or by which any of them is bound or
result in the creation or imposition of any lien, claim,
charge or encumbrance of any nature whatsoever upon the
outstanding capital stock of Bancshares or the Bank.
3.24 SUBCHAPTER S ELECTION OF BANCSHARES. Bancshares
has duly filed an election, in accordance with Section 1362 of
the Internal Revenue Code (the "Code"), to be a Subchapter
S corporation and such election has not been terminated by
Bancshares or revoked by the Internal Revenue Service (the
"IRS"). Bancshares has duly filed an election to treat the
Bank as a qualified Subchapter S subsidiary under Section
1361(b)(3) of the Code., and such election has not been
terminated by Bancshares or the Bank or revoked by the IRS.
No shareholder of the Bank or Bancshares has sold, donated,
transferred pledged, hypothecated or otherwise disposed of any
of the shares of Bancshares or the Bank to any corporation,
partnership or nonresident alien or any other person, estate,
trust or other entity or organization whose ownership of such
shares would cause, or take any other action which would
cause, a termination of the Subchapter S election of
Bancshares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES
As an inducement to the Sellers to enter into and perform
their respective obligations under this Agreement, and
notwithstanding any examinations, inspections, audits or other
investigations made by the Sellers, the Buyer Entities hereby
jointly and severally represent and warrant to the Sellers as
to the following matters:
4.01 ORGANIZATION AND AUTHORITY. Buyer and
Acquisition Company are each corporations duly organized,
validly existing and in good standing under the laws of the
State of Missouri.
4.02 CORPORATE AUTHORIZATION.
(a) Buyer and Acquisition Company each have the
corporate power and authority to enter into this Agreement and
to carry out their respective obligations hereunder. The
execution, delivery and performance of this Agreement by Buyer
and Acquisition Company and the consummation of the
transactions contemplated hereby have been duly authorized by
the Board of Directors of Buyer and the Board of Directors of
Acquisition Company, and no other approval of their respective
Boards or shareholders or any committees thereof is required.
Subject to such approvals of governmental agencies and other
governing boards having regulatory authority over Buyer
and Acquisition Company as may be required by statute or
regulation, this Agreement is a valid and binding obligation
of Buyer and Acquisition Company, enforceable against each in
accordance with its terms.
(b) Neither the execution, delivery and performance
by Buyer or Acquisition Company of this Agreement, nor the
consummation of the transactions contemplated hereby, nor
compliance by Buyer or Acquisition Company with any of the
provisions hereof, will (a) violate, conflict with or result
in a breach of any provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the
creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of Buyer or
Acquisition Company under any of the terms, conditions or
provisions of (i) their respective Articles of Incorporation
or Bylaws or (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which Buyer or Acquisition Company is a party or
by which it may be bound, or to which Buyer or Acquisition
Company or any of its properties or assets may be subject.
4.03 MATERIAL ADVERSE CHANGE. Since December 31,
1998, there has been no material adverse change in the
financial condition, results of operations or prospects or
Buyer, other than changes in banking laws or regulations, or
interpretations thereof, or other conditions that affect the
banking industry generally, or changes in the general level of
interest rates.
4.04 FULL DISCLOSURE. No representation or warranty
of the Buyer Entities contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements contained herein not materially
misleading.
ARTICLE V
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
5.01 CONDUCT OF BUSINESSES PRIOR TO THE CLOSING DATE.
During the period from the date of this Agreement to the
Closing Date, Bancshares and the Bank shall (i) conduct their
respective businesses according to the ordinary and usual
course consistent with past and current practices, (ii) seek
to keep the expenses of their respective businesses at levels
consistent with past practices, and (iii) use their best
efforts to maintain and preserve their respective business
organizations, value of their franchise, employees and
advantageous business relationships and retain the services of
their officers and key employees.
5.02 FORBEARANCES OF BANCSHARES AND THE BANK. Except
as set forth on Schedule 5.02, during the period from the date
of this Agreement to the Closing Date, neither
Bancshares nor the Bank shall, without the prior written
consent of the Buyer Entities:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its
capital stock, except that the Bank may declare and pay
dividends prior to the Determination Date required to pay the
expenses, including holding company debt service in the last
quarter of 1999 and normal and customary operating expenses,
and permitted dividends of Bancshares and Bancshares may pay
dividends prior to the Determination Date in an amount
reasonably necessary to enable its shareholders to pay their
share of the income tax on Bancshares and the Bank's income;
(b) enter into or amend any employment, severance or
similar agreement or arrangement with any director or officer
or employee, or materially modify any of the Sellers Employee
Plans or grant any salary or wage increase or materially
increase any employee benefit (including incentive or bonus
payments), except (i) normal individual increases in
compensation to employees consistent with past practice, (ii)
as required by law or contract and (iii) such increase of
which the Sellers notify the Buyer Entities in writing and
which the Buyer Entities do not disapprove within 10 days of
the receipt of such notice;
(c) propose or adopt any amendments to its articles
of incorporation or other charter document or bylaws;
(d) issue, sell, grant, confer or award any of its
Equity Securities or effect any contribution to capital, stock
split or adjust, combine, reclassify or otherwise change its
capitalization as it existed on the date of this Agreement;
(e) purchase, redeem, retire, repurchase or
exchange, or otherwise acquire or dispose of, directly or
indirectly, any of its Equity Securities, whether pursuant to
the terms of such Equity Securities or otherwise;
(f) without first consulting with Buyer, enter into,
renew or increase any loan or credit commitment (including
stand-by letters or credit) to, or invest or agree to invest
in any person or entity or modify any of the material
provisions or renew or otherwise extend the maturity date of
any existing loan or credit commitment (collectively, "Lend
to") in an amount in excess of $100,000 or in any amount
which, when aggregated with any and all loans or credit
commitments of the Bank to such person or entity, would be in
excess of $100,000; or Lend to any person other than in
accordance with the Bank's lending policies as in effect on
the date hereof; provided, however, that Bank shall give Buyer
prior written notice of its request to act contrary hereto and
if Buyer has not responded within five (5) days of such
request Bank may proceed in accordance with its good faith
business judgment;
(g) except as directed by any Regulatory Authority
on its own motion or otherwise required by applicable
law, take any action that would materially impede or delay the
consummation of the transactions contemplated by this
Agreement or the Bancshares Merger Agreement or the ability of
the Buyer Entities and the Sellers to obtain any approval of
any Regulatory Authority required for the transactions
contemplated by this Agreement or the Bancshares Merger
Agreement or to perform its covenants and agreements under
this Agreement or the Bancshares Merger Agreement.
(h) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise as
an accommodation become responsible or liable for the
obligations of any other individual, corporation or other
entity;
(i) in the case of the Bank, materially restructure
or change its investment securities portfolio, through
purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported, or execute individual
investment transactions which would materially extend the
average maturity of the portfolio or which are greater than
$500,000 for U.S. Treasury Securities and Federal Agency
securities and $100,000 for all other investment instruments,
provided that for purposes of this subsection (k), such
consent shall not be unreasonably withheld;
(j) agree in writing or otherwise take any of the
foregoing actions or engage in any activity, enter into any
transaction or intentionally take or omit to take any other
act which would make any of the representations and warranties
in Article II of this Agreement untrue or incorrect in any
material respect if made anew after engaging in such activity,
entering into such transaction, or taking or omitting such
other act;
(k) enter into or increase any loan or credit
commitment (including standby letters of credit) to any
executive officer or director of Bancshares or the Bank, any
shareholder of Bancshares or the Bank, or any entity
controlled, directly or indirectly, by any of the foregoing,
without first obtaining the prior written consent of Buyer,
which consent shall not be unreasonably withheld;
(l) other than in the ordinary course of business
consistent with past practice, acquire, mortgage or dispose of
any material assets;
(m) make any capital investments in excess of
$25,000 individually or $75,000 in the aggregate;
(n) excluding loans in the ordinary course of its
business, enter into any individual contract under which the
liability of Bancshares or the Bank is in excess of
$25,000, or enter into any contracts under which, in the
aggregate, the liability of Bancshares or the Bank is in
excess of $50,000;
(o) other than in the ordinary course of business
consistent with past practice, enter into any other material
agreements; or
(p) engage in any negotiations or discussions with,
or consider proposals from, any person not a party to this
Agreement respecting the sale of Bancshares or the Bank to, or
the merger of the Bank or Bancshares with, any other person or
organization.
ARTICLE VI
ADDITIONAL COVENANTS
6.01 ACCESS AND INFORMATION; DUE DILIGENCE.
(a) Bancshares and the Bank each shall afford to the
Buyer Entities, and to the Buyer Entities' accountants,
counsel and other representatives, full access during normal
business hours, during the Buyer Due Diligence Period and
during any six (6) business days per month (and upon
reasonable request for such additional time as may be
required, provided such request shall not disrupt the normal
operation of the Bank) during the period from the expiration
of the Buyer Due Diligence Period to the Closing Date, to all
its properties, books, contracts, commitments and records and,
during such period, shall furnish promptly to the Buyer
Entities (i) a copy of each report, schedule and other
document filed or received by it during such period pursuant
to the requirements of federal and state banking laws and (ii)
all other information concerning its business, properties and
personnel as the Buyer Entities may reasonably request. In
the event of the termination of this Agreement, the Buyer
Entities shall, and shall cause their respective advisors and
representatives to, (1) hold confidential all information
obtained in connection with any transaction contemplated
hereby with respect to the other party which is not otherwise
public knowledge, (2) return to Bancshares and the Bank all
documents (including copies thereof) obtained hereunder from
Bancshares and the Bank and (3) use their best efforts to
cause all information obtained pursuant to this Agreement or
in connection with the negotiation hereof to be treated as
confidential and not use, or knowingly permit others to use,
any such information unless such information becomes generally
available to the public.
(b) Buyer, promptly following the date of this
Agreement, shall commence the Buyer Due Diligence Review,
which it shall conclude no later than the end of the Buyer Due
Diligence Period. Buyer shall advise Bancshares and the Bank
of any situation, event, circumstance or other matter which
first came to the attention of Buyer during the Buyer Due
Diligence Review which could result in the termination of this
Agreement by Buyer pursuant to Section 8.01(d) hereof,
or, if applicable, of the absence of any situation, event,
circumstance or other matter, it being the intention of Buyer
to provide notice to Bancshares and the Bank, as promptly as
possible, of any perceived impediment to the consummation of
the Bancshares Merger. Notwithstanding anything hereinabove
contained or implied to the contrary, the Buyer Due Diligence
Review shall not limit, restrict or preclude, or be construed
to limit, restrict or preclude, Buyer, at any time or from
time to time thereafter, from conducting further such reviews
or from exercising any rights available to it hereunder as a
result of the existence or occurrence prior to the Buyer Due
Diligence Period of any event or condition which was not
detected in the Buyer Due Diligence Review by Buyer and which
would constitute a breach of any material representation,
warranty or agreement of Bancshares or the Bank under this
Agreement.
6.02 REGULATORY MATTERS. Each of the parties hereto
shall cooperate and use their respective best efforts to
prepare all documentation, to effect all filings, and to
obtain all permits, consents, approvals and authorizations of
all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement and
the Bancshares Merger Agreement as soon as is reasonably
practicable after the date of this Agreement, including,
without limitation, Buyer filing the necessary applications
and notices with the Federal Reserve Board.
6.03 SHAREHOLDER APPROVALS. Bancshares shall call a
special meeting of its shareholders to be held as soon as is
reasonably practicable for the purpose of voting upon this
Agreement and the Bancshares Merger Agreement and related
matters. The Board of Directors of Bancshares shall submit
and recommend for approval of their respective shareholders
the matters to be voted upon at such meetings. The Board of
Directors of Bancshares hereby does and will recommend this
Agreement, the Bancshares Merger Agreement and the
transactions contemplated hereby and thereby to its
shareholders and use its best efforts to obtain the votes and
approvals of its shareholders necessary for the approval and
adoption of the matters contemplated hereby. Each of the
Shareholders agrees to vote all shares of Bancshares Stock
that he owns of record for the approval of this Agreement and
the Bancshares Merger Agreement at the special meeting of
shareholders of Bancshares, or if the transaction is altered
by Buyer to a direct purchase of stock pursuant to Section
2.09, to sell his shares of Bancshares for a purchase price
equal to that portion of the Bancshares Merger Consideration
that such Shareholder would be entitled to receive under this
Agreement.
6.04 CURRENT INFORMATION. During the period from the
date of this Agreement to the Closing Date, each party will
promptly furnish all other parties with copies of all relevant
interim financial statements (monthly in the case of
Bancshares and the Bank and quarterly in the case of Buyer) as
the same become available and shall cause one or more of its
designated representatives to confer on a regular and frequent
basis with representatives of the other party. Each party
shall promptly notify the other parties of the following
events immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps
being taken by the affected party with respect thereto: (a)
the occurrence of any event which could cause any
representation or warranty of such party or any schedule,
statement, report, notice, certificate or other writing
furnished by such party to be untrue or misleading in any
respect; (b) any material change in its business, financial
condition, results of operations or prospects; (c) the
issuance or commencement of any governmental and/or regulatory
agency complaint, investigation or hearing or any
communications indicating that the same may be contemplated
and, as to any such matter which shall now or hereafter be in
effect, any communications pertaining thereto; or (d) the
institution or the threat of any material litigation involving
such party.
6.05 ENVIRONMENTAL REPORTS. The Bank shall provide
to the Buyer, at the Bank's expense, but such expenses are not
to exceed a total amount of $2,000, within thirty (30) days
after request, with respect to all Real Property presently
owned by the Bank, and as soon as reasonably practicable, but
not later than thirty (30) business days, after the
acquisition or leasing, foreclosure or repossession by the
Bank of any Real Property subsequent to the date hereof, a
report of a phase one environmental investigation of such Real
Property consistent with ASTM practices (excluding space in
retail or similar establishments leased by the Bank for
automatic teller machines or bank branch facilities where the
space leased comprises less than 20% of the total space leased
to all tenants of such property). If required by the phase
one report with respect to any parcel of real property
referred to above, in the reasonable opinion of the Buyer, the
Buyer shall be permitted to obtain, at its expense, a phase
two investigation report on such designated parcels as soon as
practicable. The Buyer shall have fifteen (15) business days
from the receipt of any such phase two investigation report to
notify the Sellers of any dissatisfaction with the contents of
such report. If the Buyer is dissatisfied with the contents
of such report due to the fact that: (i) the estimated costs
of all remedial or other corrective actions or measures with
regard to the real property referred to above required by
applicable law (the "Remediation Costs") exceed $150,000 in
the aggregate, as reasonably estimated by an environmental
expert retained for such purpose by the Buyer, or (ii) the
costs of such remedial or other corrective actions cannot be
reasonably estimated by such expert to be $100,000 or less
with any reasonable degree of certainty, then the Buyer, at
its sole discretion, shall have the right to terminate this
Agreement upon fifteen (15) days' notice to Sellers unless
Sellers, upon receipt of such notice, elect within fifteen
(15) days thereafter to reduce the Bancshares Merger
Consideration by an amount equal to the Remediation Costs (or
in the case of an inability to estimate such costs, by an
amount equal to the actual costs of such required remedial or
other corrective actions), in which case the Bancshares Merger
Consideration shall be so reduced and this Agreement shall not
be terminated pursuant to this Section.
6.06 EXPENSES. Each party hereto shall bear its own
costs and expenses incident to preparing, entering into and
carrying out this Agreement, the Bancshares Merger Agreement
and the transactions contemplated hereby and thereby,
whether or not the Bancshares Merger shall be consummated or
this Agreement shall subsequently be terminated.
6.07 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject
to the terms and conditions herein provided, each of the
parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Bancshares
Merger Agreement as expeditiously as possible, including,
without limitation, using their respective best efforts to
lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby and thereby.
The Sellers and the Buyer Entities shall use their best
efforts to obtain consents of all third parties and
governmental bodies necessary or, in the opinion of any of the
foregoing, desirable for the consummation of the transactions
contemplated by this Agreement and the Bancshares Merger
Agreement.
6.08 PRESS RELEASES. The Sellers and the Buyer
Entities shall consult with each other as to the form and
substance of any proposed press release or other proposed
public disclosure of matters related to this Agreement, the
Bancshares Merger Agreement or any of the transactions
contemplated hereby or thereby. Unless in the reasonable
opinion of Buyer's counsel an announcement is required by the
securities laws, no announcement shall be made by either party
without the consent of the other party unless and until
either: (i) the Buyer Due Diligence Period shall have expired
or (ii) Buyer has notified Bancshares that Buyer waives its
termination right pursuant to Section 8.01(d) and Section
8.01(f).
6.09 INDEMNIFICATION OF BANCSHARES' AND THE BANK'S
DIRECTORS, OFFICERS AND EMPLOYEES.
(a) Buyer agrees that the Bancshares Merger shall
not affect or diminish any of the duties and obligations of
indemnification of the Surviving Corporation (with respect to
Bancshares) existing at the Bancshares Merger Effective Time
in favor of employees, agents, director or officers of the
Surviving Corporation arising by virtue of its charter or
Bylaws in the form in effect at the date hereof or arising by
operation of law or arising by virtue of any contract,
resolution, or other agreement or document existing at the
date hereof, and such duties and obligations shall continue in
full force and effect for so long as they would otherwise
survive and continue in full force and effect. To the extent
that the Surviving Entities' existing directors' and officers'
liability insurance policy would provide coverage for any
action or omission occurring prior to the Bancshares Merger
Effective Time, the Sellers agree to give proper notice to the
insurance carrier and to the Buyer Entities of a potential
claim thereunder so as to preserve the Surviving Corporation's
rights to such insurance coverage.
(b) If, after the Bancshares Merger Effective Time,
the Surviving Corporation or any of their respective
successors or assigns (i) shall consolidate with or merge into
any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any
individual, corporation or entity, that in each such case,
proper provisions shall be made so that the successors and
assigns of the Surviving Entities shall assume any remaining
obligations of such surviving corporation or bank set forth in
this Section 6.09. If the Surviving Corporation shall
liquidate, dissolve or otherwise wind up either of their
businesses, then Buyer shall indemnify, defend and hold
harmless each indemnified party to the same extent and on the
same terms that the Surviving Corporation were so obligated
pursuant to this Section 6.09.
6.10 MERGER AGREEMENT. At a time determined by the
Buyer after the expiration of the Buyer Due Diligence Period,
Bancshares shall execute the Bancshares Merger Agreement.
6.11 REGULATORY APPROVALS. The Buyer Entities shall
use their best efforts to file within five (5) business days
following the expiration of the Buyer Due Diligence Period,
and to diligently prosecute, all regulatory applications
required to be filed by it in order to consummate the
Bancshares Merger. The Buyer Entities shall use their
reasonable best efforts to obtain all legally required
approvals for the consummation of the Bancshares Merger and
the other transactions contemplated hereby. The Buyer
Entities shall keep Sellers reasonably informed as to the
status of such applications and make available to Sellers,
upon reasonable request by Sellers from time to time, copies
of such applications and any supplementally filed materials.
6.12 BREACHES. Each of Buyer and Acquisition Company
shall, in the event it has knowledge of the occurrence, or
impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused
or constituted a breach had such event occurred or been known
prior to the date hereof) of any of its representations or
agreements contained or referred to herein, give prompt
written notice thereof to Sellers and use its best efforts to
prevent or promptly remedy the same.
6.13 CONSUMMATION OF AGREEMENT. The Buyer Entities
shall perform and fulfill all conditions and obligations on
their part to be performed or fulfilled under this Agreement
and to effect the Bancshares Merger in accordance with the
terms and conditions of this Agreement, including, but not
limited to, (i) Buyer delivering cash in the amount of the
Bancshares Merger Consideration to Acquisition Company prior
to the Bancshares Effective Time and (ii) Acquisition Company
paying cash in the amount of the Bancshares Merger
Consideration to the shareholders of Bancshares on the Closing
Date.
6.14 POST CLOSING ADJUSTMENTS. The parties recognize
that following the Closing Date, Beach intends to have the
Bank's accounting firm review the final balance sheets of the
Bank and Bancshares used in computing the Bancshares Merger
Consideration. If (a) such review indicates that the
Bancshares Merger consideration was computed incorrectly and
(b) Buyer's accounting firm agrees with such determination, an
appropriate payment will be made by Buyer to the Second Escrow
Deposit or to Buyer out of the Second Escrow Deposit. If the
two accounting firms shall disagree, they shall appoint a
third independent accounting firm to make such determination
which shall be binding on all parties. The expenses of such
third accounting firm shall be paid by the party whose
requested adjustment was the farthest from that made by the
third independent accounting firm.
6.15 FINAL TAX RETURN. Beach, as Agent, shall have
the right and obligation to file any income tax returns
required to be filed by Bancshares for periods ending on or
before the Closing Date. Such returns will be prepared in
accordance with applicable law and regulations and shall be
submitted to Buyer for review and approval not less than 15
days prior to the due date.
ARTICLE VII
CONDITIONS
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to
effect the Bancshares Merger shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The approval of the Bancshares Merger, this
Agreement and the Bancshares Merger Agreement shall have
received the approval of the Board of Directors of Buyer and
the requisite vote of shareholders of Bancshares at the
special meeting of shareholders called pursuant to Section
6.03 hereof.
(b) Neither Bancshares, the Bank, Buyer nor
Acquisition Company shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the Bancshares
Merger.
(c) No litigation challenging the Bancshares Merger
shall be pending or have been threatened.
7.02 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to effect the Bancshares Merger
shall be subject to the fulfillment or waiver at or prior to
the Bancshares Merger Effective Time of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Buyer Entities set forth
in Article IV hereof shall be true and correct in all material
respects, except such as are not of a magnitude as to be
materially adverse to the business, financial condition,
results of operations or prospects of Buyer and its
subsidiaries, taken as a whole, as of the date of this
Agreement and as of the Closing Date (as though made on and as
of the Closing Date except (i) to the extent such
representations and warranties are by their express provisions
made as of a specified date, (ii) where the facts which caused
the failure of any representation or warranty to be so true
and correct have not resulted, and are not likely to result,
in a material adverse effect on the condition of Buyer and its
subsidiaries taken as a whole and (iii) for the effect of
transactions contemplated by this Agreement) and the Sellers
shall have received a signed certificate which is to the best
knowledge of the Chairman of the Board and President of Buyer,
signing solely in his capacity as an officer of Buyer, and is
to that effect and also states that all of the conditions set
forth in Sections 7.01 and 7.03 shall have been satisfied or
waived as provided therein.
(b) PERFORMANCE OF OBLIGATIONS. The Buyer Entities
shall have performed in all material respects all obligations
required to be performed by each under this Agreement prior to
the Bancshares Merger Effective Time, and the Sellers shall
have received a signed certificate which is to the knowledge
of the Chairman of the Board and President of Buyer, signing
solely in his capacity as an officer of Buyer, and is to that
effect.
(c) PERMITS, AUTHORIZATIONS, ETC.. The Buyer
Entities shall have obtained any and all material permits,
authorizations, consents, waivers and approvals required for
the lawful consummation by them of the Bancshares Merger and
all waiting periods required by law shall have expired.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of
this Agreement, there shall have been no material adverse
change in the business, financial condition, results of
operations or prospects of Buyer and its subsidiaries, taken
as a whole.
7.03 CONDITIONS TO OBLIGATIONS OF THE BUYER ENTITIES.
The obligations of the Buyer Entities to effect the Bancshares
Merger shall be subject to the fulfillment or waiver at or
prior to the Bancshares Merger Effective Time of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers set forth in
Article III hereof shall be true and correct in all material
respects, except such as are not of a magnitude as to be
materially adverse to the business, financial condition,
results of operations or prospects of Bancshares or the Bank,
as of the date of this Agreement and as of the Closing Date
(as though made on and as of the Closing Date except (i) to
the extent such representations and warranties are by their
express provisions made as of a specific date, (ii) where the
facts which caused the failure of any representation or
warranty to be so true and correct have not resulted,
and are not likely to result, in a material adverse effect on
the condition of Bancshares or the Bank and (iii) for the
effect of transactions contemplated by this Agreement) and
Buyer shall have received a signed certificate which is to the
best knowledge of the Chairman of the Board and President of
each of Bancshares and the Bank and is to that effect.
(b) PERFORMANCE OF OBLIGATIONS. The Sellers shall
have performed in all material respects all obligations
required to be performed by them under this Agreement prior to
the Closing Date, and Buyer shall have received a signed
certificate which is to the knowledge of the Chairman of the
Board and President of each of Bancshares and the Bank and is
to that effect.
(c) PERMITS, AUTHORIZATIONS, ETC. The Sellers shall
have obtained any and all material consents or waivers from
other parties to loan agreements, leases or other contracts
material to Bancshares or the Bank's businesses required for
the consummation of the Bancshares Merger, and the Sellers
shall have obtained any and all material permits,
authorizations, consents, waivers and approvals required for
the lawful consummation by it of the Bancshares Merger.
(d) NO MATERIAL ADVERSE CHANGE. Since the date of
this Agreement, there shall have been no material adverse
change in the business, assets (real, personal or mixed),
financial condition or results of operations of Bancshares or
the Bank.
(e) OPINION OF COUNSEL. The Sellers shall have
delivered to Buyer an opinion of counsel to the Sellers dated
as of the Closing Date or a mutually agreeable earlier date in
substantially the form set forth as Exhibit C to this
Agreement.
(f) PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All
proceedings, corporate or other, to be held or taken in
connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to counsel to
Buyer, and Sellers shall have made available to Buyer and its
authorized representatives for examination the originals or
true and correct copies of all documents relating to the
business and affairs of Bancshares and the Bank which Buyer
and its authorized representatives may reasonably request.
(g) NO DISSENTING SHAREHOLDER. No shareholder of
Bancshares shall have taken or threatened to take any action
which could result in such shareholder seeking to exercise
dissenter's appraisal rights under the Missouri statutes.
(h) TOTAL ASSETS OF THE BANK. As of the Closing
Date, the total assets of the Bank shall be equal to or
greater than $50,000,000 and the Tangible Equity Capital of
the Bank shall be equal to or greater than $4,500,000.
(i) INDEBTEDNESS OF BANCSHARES. As of the Closing
Date, the principal amount of the total indebtedness of
Bancshares shall not exceed the principal amount of the total
indebtedness of Bancshares as of June 30, 1999.
(j) LIMITATION ON CERTAIN LOANS AND NON-PERFORMING
ASSETS. The aggregate amount of all loans described by
Section 3.09(f)(vi) and all Non-Performing Assets pursuant to
Section 3.12(c) shall not exceed $250,000.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 TERMINATION. This Agreement may be terminated
at any time prior to the Closing Date, whether before or after
approval by the shareholders of Bancshares,
(a) by mutual consent by the Board of Directors of
Buyer and the Board of Directors of Bancshares;
(b) by the Board of Directors of Buyer or the Board
of Directors of Bancshares hereto at any time after January
31, 2000, if the Bancshares Merger shall not theretofore have
been consummated;
(c) by the Board of Directors of Buyer or the Board
of Directors of Bancshares if the Federal Reserve Board or any
other federal and/or state regulatory agency whose approval is
required for the consummation of the Bancshares Merger shall
have denied approval of such transaction;
(d) by the Board of Directors of Buyer, at any time
prior to the completion of the Buyer Due Diligence Period, in
the event any situation, event, circumstance or other matter
shall come to the attention of Buyer during the course of
Buyer Due Diligence Review conducted pursuant to Section
6.01(b) hereof which Buyer shall, in its sole discretion,
determine to be of a type or nature which causes it to believe
that proceeding with the Merger is not in the best interests
of Buyer or its shareholders;
(e) by the Board of Directors of Buyer, on the one
hand, or by the Board of Directors of Bancshares, on the other
hand, in the event of a breach by the other of any
representation, warranty or agreement contained in this
Agreement, which breach is of such a magnitude as to be
materially adverse to the business, financial condition,
results of operations or prospects of the breaching
party and its subsidiaries taken as a whole and is not cured
after 30 days' written notice thereof is given to the party
committing such breach or waived by such other party or
parties;
(f) by the Board of Directors of Buyer pursuant to
and in accordance with the provisions of Section 6.05 hereof;
or
(g) by the Board of Directors of Buyer in the event
that it reasonably determines that a material adverse change
in the financial position or business of Bancshares or the
Bank shall have occurred or if Bancshares or the Bank shall
have suffered a material loss or damage to any of their
properties or assets, which loss or damage materially
adversely affects or impairs their ability to conduct their
businesses, or if any suit or similar proceeding shall be
instituted or threatened by any party which in the opinion of
counsel to Buyer may result in the restraint, prohibition or
obtaining of damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
thereby; or
8.02 EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 8.01
above, this Agreement shall forthwith become void and without
further effect and there shall be no liability on the part of
any party hereto or the respective officers and directors of
each, except as set forth in the second sentence of Section
6.01(a), Section 6.06 and Article IX, and, except that no
termination of this Agreement pursuant to subsection (e) of
Section 8.01 shall relieve the non-performing party of any
liability to any other party hereto arising from the breach or
non-performance of any warranty or covenant herein, after the
giving of notice and the opportunity to cure. The parties
recognize that the remedies at law of Buyer for a breach by
any Seller are inadequate and that in addition to other
remedies, Buyer shall be entitled to specific performance and
other equitable remedies. Notwithstanding the foregoing, in
the event that this Agreement is terminated pursuant to
Section 8.01(e) hereof on the account of a willful breach of
any of the representations and warranties set forth herein or
any breach of any of the agreements set forth herein, then the
non-breaching party shall be entitled to recover actual
damages or liquidated damages, as appropriate, from the
breaching party; provided, however, that no party shall be
liable for a breach of any representation or warranty which
results in a termination of this Agreement unless such party
had actual knowledge of the inaccuracy or breach of such
representation or warranty which results in the termination of
this Agreement prior to the Closing Date at the time that it
was made.
8.03 AMENDMENT. This Agreement, the Exhibits and the
Schedules hereto may be amended by the parties hereto, by
action taken by or on behalf of the respective Boards of
Directors of Buyer and Bancshares, at any time before or after
approval of this Agreement and the Bancshares Merger Agreement
by the shareholders of Bancshares; provided, however, that no
such modification shall (a) alter the amount or change the
form of the Bancshares Merger Consideration contemplated
by this Agreement to be received by the shareholders of
Bancshares, (b) adversely affect the tax treatment of the
Shareholders, (c) alter or change any of the terms of this
Agreement if such alteration or change would adversely affect
the shareholders of Bancshares or (d) impede or delay receipt
of any approvals referred to in Section 7.01(b) or the
consummation of the transactions contemplated by this
Agreement and the Bancshares Merger Agreement. This Agreement
may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
8.04 WAIVER. Any term, condition or provision of
this Agreement may be waived in writing at any time by the
party which is, or whose shareholders are, entitled to the
benefits thereof.
ARTICLE IX
INDEMNIFICATION
9.01 INDEMNIFICATION. The Shareholders, jointly and
severally, and Buyer (individually, the "Indemnifying Party")
agree to defend, indemnify and hold harmless the other party
or parties (the "Indemnitee") and its or their officers,
directors, employees, agents, representatives, successors and
assigns from, against and in respect of any and all loss,
liability and expense resulting from:
(a) Any and all loss, diminution in value, damage or
deficiency resulting from any misrepresentation or breach of
warranty or nonfulfillment of any obligation by Indemnifying
Party under this Agreement or from any misrepresentation in or
omission from any certificate or other instrument furnished or
to be furnished by Indemnifying Party pursuant to this
Agreement; and
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses (including
legal expenses) incident to any of the foregoing provisions.
9.02 CLAIMS. If any Indemnitee receives notice of
any claim or the commencement of any action or proceeding with
respect to which the Indemnifying Party is obligated to
provide indemnification pursuant to Section 9.01, the
Indemnitee shall promptly give the Indemnifying Party notice
thereof. Such notice shall be a condition precedent to any
liability of the Indemnifying Party under the provisions for
indemnification contained in this Agreement and shall describe
the claim in reasonable detail and shall indicate the amount
(estimated if necessary) of the loss that has been or may be
sustained by the Indemnitee. The Indemnifying Party may elect
to compromise or defend, at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel, any such
matter involving the asserted liability of the Indemnitee;
provided, however, that to the satisfaction of the
Indemnitee, the Indemnifying Party shall indemnify and
secure the Indemnitee against such contested claims and for
the expenses of contesting and defending the claims. If the
Indemnifying Party elects to compromise or defend such
asserted liability, it shall within 30 days (or sooner, if the
nature of the asserted liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, any such asserted
liability. If the Indemnifying Party elects not to notify the
Indemnitee of its election as herein provided, the Indemnitee
may, if acting in accordance with its good faith business
judgment, pay, compromise or defend such asserted liability,
and such settlement shall be binding on the Indemnifying Party
for purposes of this Article IX. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim over the objection of the
other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. In any event,
the Indemnitee and the Indemnifying Party may each
participate, at its own expense, in the defense of such
asserted liability. If the Indemnifying Party chooses to
defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents
within its control that are necessary or appropriate for such
defense.
9.03 COSTS. If any legal action or other proceeding
is brought by any party to this Agreement against any other
party to this Agreement for the enforcement or interpretation
of any of the rights or provisions of this Agreement, or
because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and all other
costs and expenses incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
9.04 REIMBURSEMENT. Subject to the provisions of
Section 8.03, the Indemnitee shall be reimbursed on demand for
loss, damage, cost or expense suffered by such party at any
time after the Closing Date in respect to any liability to
which the foregoing indemnity relates.
9.05 NET LOSS AND DE MINIMIS. Except for any knowing
and intentional breach hereof by any party, no indemnity shall
be due hereunder until such time as the actual net loss or
damage (i.e., reduced by any recovery from any third party,
such as an insurer) suffered by the Indemnitee exceeds a
cumulative aggregate amount (as to all indemnifiable claims to
the date of determination combined) equal to $15,000. After
cumulative aggregate losses equal $15,000, Indemnitee shall be
entitled to full and complete recovery of all losses incurred,
including the first $15,000.
9.06 LIMITATIONS. Notwithstanding any provision of
this Article IX to the contrary, the extent of indemnification
herein to an Indemnitee by each Indemnifying Party who is also
a Shareholder shall be limited to that portion of the
Bancshares Merger Consideration that such Shareholder
would be entitled to received under this Agreement.
Notwithstanding any provision of this Agreement, no Indemnitee
shall be entitled to any reimbursement hereunder from an
Indemnifying Party with respect to any claim initially made
against such Indemnifying Party more than 12 months after the
Closing Date.
ARTICLE X
GENERAL PROVISIONS
10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and
warranties of the parties which are contained herein and each
such representation and warranty shall survive such
investigation until the first anniversary of the Closing Date,
except that the agreements set forth in Section 8.02 shall
survive the Bancshares Merger Effective Time or the earlier
termination of this Agreement.
10.02 NO ASSIGNMENT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns, but neither this Agreement nor any right or
obligation set forth in any provision hereof may be
transferred or assigned by any party hereto without the prior
written consent of all other parties, and any purported
transfer or assignment in violation of this Section 10.02
shall be void and of no effect. There shall not be any third
party beneficiaries of any provisions hereof.
10.03 SELLERS' REPRESENTATIVE. Sellers and each of
them hereby appoint and designate Xxxxx X. Beach as Sellers'
agent and representative with full authority on behalf of each
Seller to receive any notice or demand pursuant to Article IX,
to approve on behalf of the Sellers the final amount of the
Bancshares Merger Consideration, to pay from the Second Escrow
Deposit any costs and expenses of the Sellers which are
incurred after the Determination Date, and to agree to any
settlement of any claim for indemnification pursuant to
Article IX which does not obligate any Seller for more than
such Seller's proportionate share of such liability based on
the number of shares of Bancshares stock held by such Seller
in relation to all Sellers who are parties hereto.
10.04 FAILURE OF ALL NAMED PARTIES TO SIGN OR APPROVE
AGREEMENT. In the event that all persons whose names appear
at the end of this Agreement as Sellers do not sign this
Agreement, this Agreement shall, nevertheless, be binding on
those named Sellers who do sign, provided that no party to
this Agreement shall have any obligation unless and until the
Buyer Entities and the holders of at least two thirds of the
outstanding common stock of Bancshares have signed.
Irrespective of whether the Board of Directors of the Bank
shall approve this Agreement, it will be binding on all other
parties.
10.05 SEVERABILITY. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement.
10.06 NO IMPLIED WAIVER. No failure or delay on the
part of either party hereto to exercise any right, power or
privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver nor shall any single or
partial exercise of any right, power or privilege preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege.
10.07 HEADINGS. Article, section, subsection and
paragraph titles, captions and headings herein are inserted
only as a matter of convenience and for reference, and in no
way define, limit, extend or describe the scope of this
Agreement or the intent or meaning of any provision hereof.
10.08 ENTIRE AGREEMENT. This Agreement and the
Appendices and Schedules hereto constitutes the entire
agreement between the parties with respect to the subject
matter hereof, supersedes all prior negotiations,
representations, warranties, commitments, offers, letters of
interest or intent, proposal letters, contracts, writings or
other agreements or understandings with respect thereto. No
waiver, and no modification or amendment of any provision of
this Agreement shall be effective unless specifically made in
writing and duly signed by all parties thereto.
10.09 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and any party to this Agreement may
execute and deliver this Agreement by executing and delivering
any of such counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
10.10 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to be duly
received (a) on the date given if delivered personally or by
cable, telegram or telex or (b) on the date received if mailed
by registered or certified mail (return receipt requested), to
the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Buyer Entities:
Exchange National Bancshares, Inc.
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
and copy to:
Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telecopy: (000) 000-0000
and copy to:
Union State Bank & Trust of Clinton
000 X. Xxxxxx Xxxxxx
P. O. Xxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telecopy: (000) 000-0000
(ii) if to Sellers:
Xxxxx X. Beach
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
and copy to:
Schulz, Bender, Maher, Lee, Xxxxxx &
Hill, P.C.
0000 Xxxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
10.11 GOVERNING LAW. This Agreement shall be governed
by and controlled as to validity, enforcement, interpretation,
effect and in all other respects by the internal laws of the
State of Missouri applicable to contracts made in that state.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their respective officers thereunto
duly authorized and their respective corporate seals to be
affixed hereto, all as of the date first written above.
"BUYER ENTITIES"
EXCHANGE NATIONAL BANCSHARES, INC.
ATTEST:
By: _______________________________
Name:
Title:
____________________
Secretary
ENBMCB ACQUISITION COMPANY, INC.
ATTEST:
By: ________________________________
Name:
Title:
____________________
Secretary
"SELLERS"
MID-CENTRAL BANCORP, INC.
ATTEST:
By: ________________________________
Name:
__________________ Title:
Secretary
OSAGE VALLEY STATE BANK
ATTEST:
By: ________________________________
Name:
___________________ Title:
Secretary
"SHAREHOLDERS"
NAME NO. OF SHARES SIGNATURE
Xxxxx X. Beach 1,022 ___________________
Xxxxx X. Xxxxxxx 219 ___________________
Xxxxx X. Xxxxxxx and 207 ___________________
Xxxxx X. Xxxxxxx ___________________
Xxxxx X. Xxxxxx 353 ___________________
Xxxx X. Xxxxxxxxxx
TTEE U/TR DTD
10/15/86 or His
SUCC/TTEE 132 __________________
Xxxx X. Xxxxxxxxxx 4 __________________
Xxxx X. and Xxxx Xx Xxxxxxxxxx 535 __________________
__________________
Germantown Trust & Savings Bank, 509 GERMANTOWN TRUST &
Trustee for Trust #11-13 SAVINGS BANK,
(Xxxxx X. Xxxxx) as Trustee for
Trust #11-13
(Xxxxx X. Xxxxx)
By: ______________
Xxxxxxx X. Xxxxxx 1 __________________
Xxxxxxx X. Xxxxxx and 81 __________________
Xxxxx X. Xxxxxx __________________
Xxxxxxx Xxxxx 427 __________________
Xxxxxxx X. Xxxxxxxxxx 548 __________________
Xxxx Xxxxxx 49 __________________
Xxxxxxx X. Xxxxx 277 __________________
