SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (Date of earliest event reported) November 3,1997
EXCHANGE NATIONAL BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
Missouri 0-23636 43-1626350
(State or other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation)
132 East High Street, Jefferson City, Missouri 65101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (573) 761-6100
_________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to the Acquisition Agreement, dated July 11,
1997, as amended August 25, 1997 (the "Acquisition Agreement"),
by and among the Registrant, ENBUSB Acquisition Company, Inc., a
Missouri corporation and wholly-owned subsidiary of the
Registrant ("ENBUSB"), Union State Bank & Trust of Clinton, a
Missouri trust company ("Bank") and Union State Bancshares, Inc.,
a Missouri corporation ("USB") and certain shareholders of USB
("Shareholders"), and a related Merger Agreement, dated October
22, 1997, by and between USB and ENBUSB, ENBUSB was merged (the
"Merger") with and into USB on November 3, 1997, with USB
thereupon becoming a wholly-owned subsidiary of the Registrant.
The Acquisition Agreement provided all shareholders
with the opportunity to elect to receive cash in exchange for
their shares of USB common stock. The Acquisition Agreement
further provided certain shareholders with the opportunity to
receive, in addition to or in lieu of cash, five year promissory
notes in their favor in exchange for their shares of USB common
stock. The valuation methodology for the Merger was negotiated
and agreed to by the parties to the Acquisition Agreement. At
the closing, Registrant paid to the shareholders of USB merger
consideration of approximately $17,750,000 (the "Merger
Consideration") in exchange for 100% of the USB common stock.
The Registrant paid approximately $11,700,500 of the Merger
Consideration in the form of five year promissory notes in favor
of eight shareholders and the balance of the Merger Consideration
was paid in cash. The Registrant funded the cash portion of the
Merger Consideration primarily with funds drawn on a $10,000,000
line of credit provided by Mercantile Bank, National Association.
The Registrant also satisfied and discharged $2,350,000 of USB's
indebtedness at the closing.
Immediately prior to the Merger, USB, through its
wholly-owned subsidiary, the Bank, engaged in a general banking
business, accepting funds for deposit, making loans and
performing the other usual and customary banking services. As of
September 30, 1997, the Bank had total assets of approximately
$132.9 million. The Bank's principal banking facility is located
in Clinton, Missouri with four branch locations in Clinton,
Osceola and Collins, Missouri. The Registrant, through the Bank,
will continue to engage in the general banking business from the
facilities referred to above.
Prior to the Merger, USB was managed by Gus S. Wetzel,
II, USB's Chairman of the Board, Douglas L. Thomason, USB's
President and James E. Smith, USB's Secretary and Treasurer. Mr.
Smith and Mr. Wetzel will continue to serve on USB's board of
directors. Mr. Smith also will serve as USB's President,
Treasurer and Assistant Secretary. Donald L. Campbell, Chairman
of the Board and President of the Registrant, will be added to
USB's board of directors and will serve as USB's Chairman of the
Board and Secretary. The operations of the Bank will not change
significantly. Mr. Wetzel and Mr. Smith have been elected to the
board of directors of the Registrant with Mr. Wetzel acting as an
advisory member.
<PAGE>
With the exception of the newly established
relationship, there is not a material relationship between any of
the controlling shareholders of USB and the Registrant or any of
the Registrant's affiliates, directors or officers, or any
associate of the Registrant's directors or officers. Certain
former stockholders of USB may be employed by the Registrant.
A press release of Registrant issued November 3, 1997,
announcing the consummation of the Merger, is attached as an
exhibit to this report and incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) Financial Statements of Business Acquired
Audited consolidated balance sheet as of December
31, 1996 and related consolidated statements of
income, stockholders' equity and cash flows for
the year then ended. Unaudited consolidated
balance sheet as of September 30, 1997 and related
consolidated statements of income and cash flows
for the nine months ended September 30, 1997 and
1996.
(b) Pro Forma Financial Information
Unaudited pro forma consolidated condensed balance
sheet as of September 30, 1997 and unaudited pro
forma consolidated statements of income for the
nine months ended September 30, 1997 and for the
year ended December 31, 1996. It is impractical
to provide at this time the pro forma financial
information that is required pursuant to Item
310(d) of Regulation S-B. The required pro-forma
financial information will be filed under separate
cover of Form 8-K/A as soon as practicable, but no
later than January 2, 1998.
(c) Exhibits
The following exhibits are filed with this report.
Exhibit
No. Description
2.1 Acquisition Agreement, dated as of July 11, 1997, as
amended August 25, 1997, by and among the Registrant,
ENBUSB, the Bank, USB and certain shareholders of USB.
2.2 Merger Agreement, dated as of October 22, 1997 by and
between USB and ENBUSB.
99.1 Press Release of Registrant, issued November 3, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized.
EXCHANGE NATIONAL BANCSHARES, INC.
Date: November 7, 1997 By: /s/ Donald L. Campbell
Name: Donald L. Campbell
Title: Chairman of the Board
and President
<PAGE>
UNION STATE BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Financial Statements
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Union State Bancshares, Inc.
Clinton, Missouri:
We have audited the accompanying consolidated balance sheet of
Union State Bancshares, Inc. and subsidiary (the Company) as of
December 31, 1996, and the related consolidated statements of
income, stockholders' equity, and cash flows for the year then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Union State Bancshares, Inc. and subsidiary as of
December 31, 1996, and the results of their operations and their
cash flows for the year then ended, in conformity with generally
accepted accounting principles.
July 25, 1997
<PAGE>
UNION STATE BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 1996
Assets
Loans, net of allowance for loan losses
of $1,284,040 $72,886,634
Investments in debt and equity securities:
Available-for-sale, at estimated market value 29,513,185
Held-to-maturity, estimated market value
of $10,223,222 10,079,466
Total investments in debt and equity
securities 39,592,651
Federal funds sold 5,975,000
Cash and due from banks 5,540,143
Interest-bearing deposits 461,197
Premises and equipment 1,205,543
Accrued interest receivable 1,221,443
Deferred income taxes, net 192,585
Goodwill 209,209
Other assets 160,819
$127,445,224
Liabilities and Stockholders' Equity
Deposits:
Demand 12,531,944
NOW 24,183,182
Money market 3,638,899
Savings 9,451,013
Time deposits $100,000 and over 10,794,958
Other time deposits 52,950,242
Total deposits 113,550,238
Advances from the Federal Home Loan Bank 3,300,000
Note payable 3,650,000
Accrued interest payable 1,016,400
Other liabilities 123,217
Total liabilities 121,639,855
Commitments and contingent liabilities
Stockholders' equity:
Common stock - $10 par value; 3,000 shares
authorized, 887.375 shares issued, and
556.875 shares outstanding 8,874
Surplus 1,464,663
Undivided profits 9,644,660
Treasury stock, at cost - 330.5 shares (5,399,869)
Unrealized holding gains on investments in
debt and equity securities available-for-sale 87,041
Total stockholders' equity 5,805,369
$127,445,224
See accompanying notes to consolidated financial statements.
<PAGE>
UNION STATE BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statement of Income
Year ended December 31, 1996
Interest income:
Interest and fees on loans $6,155,281
Interest and dividends on investments in debt
and equity securities:
Taxable 2,234,064
Exempt from federal income tax 355,731
Interest on federal funds sold 300,679
Interest on interest-bearing deposits 11,859
9,057,614
Interest expense:
Interest on:
NOW accounts 507,457
Money market 87,644
Savings accounts 285,077
Time deposit accounts $100,000 and over 524,906
Other time deposits 2,981,663
Advances from the Federal Home Loan Bank 226,331
Note payable 303,574
4,916,652
Net interest income 4,140,962
Provision for loan losses 90,000
Net interest income after provision for
loan losses 4,050,962
Noninterest income:
Service charges on deposit accounts 337,785
Trust fees 36,973
Other 82,600
457,358
Noninterest expense:
Salaries, wages, and employee benefits 1,207,624
Occupancy expense 180,433
Furniture and equipment expense 142,542
Data processing 176,829
FDIC insurance assessment 2,000
Office supplies 78,403
Advertising and promotion 43,448
Postage and freight 92,236
Management fees 250,000
Other 741,511
2,915,026
Income before income taxes 1,593,294
Income taxes 423,313
Net income $1,169,981
Earnings per share $2,073
See accompanying notes to consolidated financial statements.
<PAGE>
UNION STATE BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity
Year ended December 31, 1996
Common Undivided
stock Surplus profits
Balance, December 31, 1995
(unaudited) $8,874 1,464,663 8,474,679
Net income - - 1,169,981
Purchase of 30 shares of
common stock for
treasury - - -
Change in unrealized holding
gains on investments
in debt and equity securities
available-for-sale - - -
Balance, December 31,
1996 $8,874 1,464,663 9,644,660
Unrealized
holding
gains on
investments in
debt and equity Total
securities stock-
Treasury available- holders
stock for-sale equity
Balance, December 31, 1995
(unaudited) (4,910,269) 201,216 5,239,163
Net income - - 1,169,981
Purchase of 30 shares of
common stock for
treasury (489,600) - (489,600)
Change in unrealized holding
gains on investments
in debt and equity securities
available-for-sale - (114,175) (114,175)
Balance, December 31,
1996 (5,399,869) 87,041 5,805,369
See accompanying notes to consolidated financial statements.
<PAGE>
UNION STATE BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statement of Cash Flows
Year ended December 31, 1996
Cash flows from operating activities:
Net income $1,169,981
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 90,000
Depreciation expense 247,365
Net amortization of debt securities
premiums and discounts 13,033
Amortization of goodwill 21,615
Decrease in accrued interest receivable 78,096
Increase in other assets (68,443)
Increase in accrued interest payable 14,876
Decrease in other liabilities (29,099)
Other, net (5,096)
Net cash provided by operating activities 1,532,328
Cash flows from investing activities:
Net increase in loans (4,564,076)
Purchases of debt and equity securities
available-for-sale (12,278,991)
Proceeds from maturities of debt securities:
Available-for-sale 6,088,591
Held-to-maturity 3,425,294
Proceeds from sales of debt securities
available-for-sale 2,297,879
Purchases of premises and equipment (270,920)
Proceeds from sales of premises and equipment 6,095
Proceeds from sales of other real estate 296,367
Net cash used in investing activities (4,999,761)
Cash flows from financing activities:
Net increase in demand deposits 839,705
Net increase in interest-bearing
transaction accounts 2,078,597
Net increase in time deposits 2,416,115
Principal payments on advances from the
Federal Home Loan Bank (200,000)
Proceeds from note payable 500,000
Principal payments on note payable (850,000)
Purchase of common stock for treasury (489,600)
Net cash provided by financing activities 4,294,817
Net increase in cash and cash equivalents 827,384
Cash and cash equivalents, beginning of year 11,148,956
Cash and cash equivalents, end of year $11,976,340
Supplemental information:
Cash payments for interest $ 4,901,776
Cash payments for income taxes 468,062
Loans transferred to other real estate 126,068
See accompanying notes to consolidated financial statements.
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Union State Bancshares, Inc. (the Company), through its
wholly owned subsidiary, Union State Bank and Trust of
Clinton (the Bank), provides a full range of banking
services to individual and corporate customers located in
Clinton, Missouri, and the surrounding communities. The
Bank is subject to competition from other financial and
nonfinancial institutions providing financial products.
Additionally, the Company and the Bank are subject to the
regulations of certain regulatory agencies and undergo
periodic examinations by those regulatory agencies.
The consolidated financial statements of the Company have
been prepared in conformity with generally accepted
accounting principles and conform to predominant practices
within the banking industry. The preparation of the
consolidated financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions, including the
determination of the allowance for loan losses and the
valuation of real estate acquired in connection with
foreclosure or in satisfaction of loans, that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The significant accounting policies used by the Company in
the preparation of the consolidated financial statements are
summarized below:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts
of the Company and the Bank. All significant intercompany
accounts and transactions have been eliminated.
LOANS
Loans are stated at face amount less unearned income and the
allowance for loan losses. Income on loans is accrued on a
simple-interest basis.
Loans are placed on nonaccrual status when management
believes that the borrower's financial condition, after
consideration of business conditions and collection efforts,
is such that collection of interest is doubtful. Interest
accrued in the current year is reversed against interest
income, and prior years' interest is charged to the allow-
ance for loan losses. A loan remains on nonaccrual status
until the loan is current as to payment of both principal
and interest and/or the borrower demonstrates the ability to
pay and remain current.
Loan origination fees and costs are deferred and recognized
over the life of the loan as an adjustment to yield.
<PAGE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is increased by provisions
charged to operations and is reduced by loan charge-offs
less recoveries. Management utilizes a systematic,
documented approach in determining the appropriate level of
the allowance for loan losses. Management's approach, which
provides for general and specific valuation allowances, is
based on current economic conditions, past losses,
collection experience, risk characteristics of the
portfolio, assessment of collateral values by obtaining
independent appraisals for significant properties, and such
other factors which, in management's judgment, deserve
current recognition in estimating loan losses.
Management believes the allowance for loan losses is
adequate to absorb possible losses in the loan portfolio.
While management uses available information to recognize
loan losses, future additions to the allowance may be
necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part
of their examination process, periodically review the
allowance for loan losses. Such agencies may require the
Bank to increase the allowance for loan losses based on
their judgment about information available to them at the
time of their examination.
A loan is considered impaired when it is probable a creditor
will be unable to collect all amounts due, both principal
and interest, according to the contractual terms of the loan
agreement.
INVESTMENTS IN DEBT AND EQUITY SECURITIES
At the time of purchase, debt securities are classified as
available-for-sale or held-to-maturity. Held-to-maturity
securities are those securities which the Company has the
ability and intent to hold until maturity. All equity
securities and debt securities not classified as held-to-
maturity are classified as available-for-sale.
Available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost,
adjusted for the amortization or accretion of premiums or
discounts. Unrealized gains and losses, net of the related
tax effect, on available-for-sale securities are excluded
from earnings and reported as a separate component of
stockholders' equity until realized.
Premiums and discounts are amortized or accreted over the
lives of the respective securities, with consideration of
historical and estimated prepayment rates for mortgage-
backed securities, as an adjustment to yield, using the
interest method. Dividend and interest income are recog-
nized when earned. Realized gains and losses for securities
classified as available-for-sale are included in earnings
based on the specific identification method for determining
the cost of securities sold.
<PAGE>
A decline in the market value of any security below cost
that is deemed other than temporary results in a charge to
earnings and the establishment of a new cost basis for the
security.
The Bank, as a member of the Federal Home Loan Bank System
administered by the Federal Housing Finance Board, is
required to maintain an investment in the capital stock of
the Federal Home Loan Bank (FHLB) in an amount equal to the
greater of 1% of the Bank's total mortgage-related assets at
the beginning of each year, 0.3% of the Bank's total assets
at the beginning of each year, or 5% of advances from the
FHLB to the Bank. This investment is recorded at cost which
represents redemption value.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation applicable to buildings and
improvements and furniture and equipment is charged to
operating expense using straight-line and accelerated
methods over the estimated useful lives of the assets. Such
lives are estimated to be 5 to 40 years for buildings and
improvements and 3 to 20 years for furniture and equipment.
Maintenance and repairs are charged to operations as
incurred.
GOODWILL
Goodwill relates to the excess of cost over fair value of
net assets acquired in the acquisition of the former
Boatmen's Bank location in Clinton, Missouri. Also included
in goodwill is the costs related to the acquisition of the
Bank by the Company in 1977. Goodwill is being amortized to
expense over 15 years using the straight-line method.
OTHER REAL ESTATE
Other real estate, included in other assets in the
accompanying consolidated balance sheet, is recorded at fair
value. If the fair value of other real estate declines
subsequent to foreclosure, the difference is recorded as a
valuation allowance through a charge to income. Subsequent
increases in fair value are recorded through a reversal of
the valuation allowance. Expenses incurred in maintaining
the properties are charged to operations.
INCOME TAXES
The Company and the Bank file a consolidated federal income
tax return.
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in
which those temporary differences are <PAGE> expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
The Company and Bank have elected S Corporation status
effective January 1, 1997. Earnings and losses after that
date will be included in the personal income tax returns of
the stockholders and taxed depending on their personal tax
positions. Accordingly, the Company and Bank will not be
subject to additional income tax obligations, except for the
"built-in gains tax" and certain state taxes. Therefore,
future consolidated financial statements will generally not
include a provision for income taxes.
TRUST DEPARTMENT
Property held by the Bank in fiduciary or agency capacities
for its customers is not included in the accompanying
consolidated balance sheet, since such items are not assets
of the Company. Trust fees are recognized on the accrual
basis.
EARNINGS PER SHARE
Earnings per share of common stock is computed by dividing
net income by 564.375, the weighted average number of common
shares outstanding during 1996.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents consist of cash and due from
banks, federal funds sold, and interest-bearing deposits.
(2) CAPITAL REQUIREMENTS
The Bank is subject to various regulatory capital
requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate
certain mandatory, and possibly additional discretionary,
actions by regulators that, if undertaken, could have a
direct material effect on the Company's consolidated
financial statements. Under capital adequacy guidelines,
the Bank must meet specific capital guidelines that involve
quantitative measures of assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and
classification are subject to qualitative judgments by the
regulators about components, risk-weightings, and other
factors.
Quantitative measures established by regulations to ensure
capital adequacy require the Bank to maintain minimum
amounts and ratios (set forth in the following table) of
total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as
defined) to adjusted average assets (as defined).
Management believes, as of December 31, 1996, the Bank meets
all capital adequacy requirements to which it is subject.
<PAGE>
The Bank is also subject to the regulatory framework for
prompt corrective action. The most recent notification from
the Federal Deposit Insurance Corporation (FDIC), dated May
30, 1997, categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain
minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table. There are no
conditions or events since that notification that management
believes have changed the Bank's category.
<PAGE>
The actual and required capital amounts and ratios for the Bank
as of December 31, 1996 are as follows:
To be
well
capitalized
under
prompt
corrective
Capital action
Actual requirements provisions
Amount Ratio Amount Ratio Amount Ratio
Total
capital
(to risk-
weighted
assets) $9,886,1421 5.23% $5,193,920 8.00% $6,492,400 10.00%
Tier I
capital
(to risk-
weighted
assets) 9,069,142 13.97 2,596,960 4.00 3,895,440 6.00
Tier I
capital (to
adjusted
average
assets) 9,069,142 7.17 3,796,470 3.00 6,327,450 5.00
Bank dividends are the principal source of funds for payment
of dividends by the Company to its stockholders. The Bank
is subject to regulations of regulatory authorities which
require the maintenance of minimum capital requirements. At
December 31, 1996, unappropriated undivided profits of
$2,741,692 were available for the declaration of dividends
to the Company without prior approval from the FDIC.
(3) LOANS
A summary of loans, by classification, at December 31, 1996
is as follows:
Real estate $32,104,326
Commercial 25,572,885
Agriculture 11,131,677
Installment and other consumer 5,361,786
74,170,674
Less allowance for loan losses 1,284,040
$72,886,634
The Bank grants real estate, commercial, agriculture, and
installment and other consumer loans to customers located in
Clinton, Missouri and the surrounding communities. As such,
the Bank is susceptible to changes in the economic
environment in Clinton, Missouri and the surrounding
communities. The Bank does not have a concentration of
credit in any one economic sector. Installment and other
consumer loans consist primarily of the financing of
vehicles.
<PAGE>
Following is a summary of activity in 1996 of loans made by
the Bank to executive officers and directors or to entities
in which such individuals had a beneficial interest. Such
loans were made in the normal course of business on
substantially the same terms, including interest rates and
collateral requirements, as those prevailing at the same
time for comparable transactions with other persons, and did
not involve more than the normal risk of collectibility or
present unfavorable features.
Balance at December 31, 1995 $1,077,761
New loans 442,508
Payments received (670,179)
Balance at December 31, 1996$ 850,090
Changes in the allowance for loan losses
for 1996 are as follows:
Balance, beginning of year $1,207,236
Provision charged to expense 90,000
Charge-offs (47,506)
Recoveries of loans previously charged off 34,310
Balance, end of year $1,284,040
A summary of nonaccrual and other impaired loans at
December 31, 1996 is as follows:
Nonaccrual loans $ 98,486
Impaired loans continuing to accrue interest 280,787
Total impaired loans $ 379,273
Allowance for loan losses on impaired loans $ 56,891
Impaired loans with no related allowance
for loan losses $ -
The average balance of impaired loans during
1996 was $318,709.
<PAGE>
A summary of interest income on nonaccrual and other impaired
loans for 1996 is as follows:
Impaired
loans
continuing
Nonaccrual to accrue
loans interest Total
Income recognized $3,503 81,260 84,763
Interest income if
interest had accrued 4,817 - 4,817
$8,320 81,260 89,580
(4) Investments in Debt and Equity Securities
The amortized cost and estimated market values of debt and
equity securities classified as available-for-sale at
December 31, 1996 are as follows:
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
U.S. Treasury
securities $13,668,909 64,385 23,310 13,709,984
Securities of
U.S.
government
agencies 13,131,153 57,915 59,879 13,129,189
Obligations of
states and
political
subdivisions 2,155,361 108,066 9,015 2,254,412
Total debt
securities 28,955,423 230,366 92,204 29,093,585
Federal Home
Loan Bank
stock 419,600 - - 419,600
$29,375,023 230,366 92,204 29,513,185
The amortized cost and estimated market value of debt
securities classified as available-for-sale at December 31,
1996 by contractual maturity or call date, are shown below.
Expected maturities may differ from contractual maturities
because borrowers have the right to prepay obligations with
or without prepayment penalties.
Estimated
Amortized market
cost value
Due in one year or less $ 9,396,545 9,447,992
Due after one year through five years 13,268,440 13,262,474
Due after five years through ten years 3,090,720 3,146,728
25,755,705 25,857,194
Mortgage-backed securities 3,199,718 3,236,391
$28,955,423 29,093,585
The amortized cost and estimated market values of debt
securities classified as held-to-maturity at December 31,
1996 is as follows:
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
U.S. Treasury
securities $2,997,114 31,101 246 3,027,969
Securities of
U.S. government
agencies 1,851,112 28,540 21,441 1,858,211
Obligations of
states and
political
subdivisions 5,231,240 110,854 5,052 5,337,042
$10,079,466 170,495 26,739 10,223,222
The amortized cost and estimated market value of debt
securities classified as held-to-maturity at December 31,
1996, by contractual maturity or call date, are shown below.
Expected maturities may differ from contractual maturities
because borrowers have the right to prepay obligations with
or without prepayment penalties.
Estimated
Amortized market
cost value
Due in one year or less $2,214,055 2,220,886
Due after one year through
five years 3,525,128 3,591,720
Due after five years through
ten years 1,904,162 1,911,426
Due after ten years 585,010 640,979
8,228,355 8,365,011
Mortgage-backed securities 1,851,111 1,858,211
$10,079,466 10,223,222
Debt securities with carrying values aggregating
approximately $12,343,000 at December31, 1996 were pledged
to secure public funds and for other purposes as required or
permitted by law. Proceeds from the sale of debt
securities available-for-sale was $2,297,879 during 1996.
Gross losses from such sales were $5,897.
(5) Premises and Equipment
A summary of premises and equipment at December 31, 1996 is
as follows:
Land $ 383,295
Buildings and improvements 1,284,745
Furniture and equipment 1,846,097
3,514,137
Less accumulated depreciation 2,308,594
$ 1,205,543
Depreciation expense was $247,365 for 1996.
<PAGE>
(6) Deposits
The scheduled maturities of time deposits at December 31,
1996 is as follows:
Due within:
One year $43,815,200
Two years 9,685,000
Three years 2,974,000
Four years 1,231,000
Five years 873,000
Thereafter 5,167,000
$63,745,200
(7) Advances From the Federal Home Loan Bank
Advances from the Federal Home Loan Bank outstanding as of
December 31, 1996 are as follows:
Weighted
average
interest
rate Amount
Due in 1997 6.45% $ 200,000
Due in 1998 6.19 650,000
Due in 1999 6.13 450,000
Due in 2000 6.47 450,000
Due in 2001 6.60 450,000
Thereafter 7.50 1,100,000
6.73% $3,300,000
Advances from the Federal Home Loan Bank are secured under a
blanket agreement which assigns all investment in Federal
Home Loan Bank stock as well as mortgage loans equal to 150%
of the outstanding advance balance to secure amounts
borrowed.
<PAGE>
(8) NOTE PAYABLE
The note payable is with an unaffiliated financial
institution, bears variable interest at 2.25% over the 90
day U.S. Treasury Bill Index (7.42% at December 31, 1996),
matures on April5, 1997, and is secured by 19,994 shares of
common stock of the Bank with a book value of approximately
$9,265,000 at December 31, 1996. The weighted average
interest rate paid on the note payable for 1996 was 7.62%.
(9) RESERVE REQUIREMENTS AND COMPENSATING BALANCES
The Federal Reserve Bank required the Bank to maintain a
balance of $859,000 at December31, 1996. Compensating
balances held at correspondent banks were $1,870,242 at
December 31, 1996. The Bank maintains such compensating
balances with correspondent banks to offset charges for
services rendered by those banks.
(10) INCOME TAXES
The composition of income tax expense for 1996 is as
follows:
Current $449,631
Deferred (26,318)
Total provision for income taxes $423,313
Applicable income taxes for financial reporting purposes
differ from the amount computed by applying the statutory
federal income tax rate of 34% for the reasons noted in the
table below:
Tax at statutory federal income tax rate $541,720
Decrease in tax resulting from tax-exempt
income (119,294)
Amortization of nondeductible goodwill 7,553
Other, net (6,666)
$423,313
<PAGE>
The components of deferred tax assets and deferred tax
liabilities at December 31, 1996 is as follows:
Deferred tax assets:
Allowance for loan losses $259,385
Premises and equipment 8,679
Unearned loan fees 21,174
Total deferred tax assets 289,238
Deferred tax liabilities:
Available-for-sale securities 51,120
Federal Home Loan Bank stock dividends 18,268
Other 27,265
Total deferred tax liabilities 96,653
Net deferred tax asset $192,585
The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the
periods in which those temporary differences become
deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment.
Based upon the level of historical taxable income and
projections for future taxable income over the periods which
the deferred tax assets are deductible, management believes
it is more likely than not the Company will realize the
benefits of these temporary differences at December 31, 1996
and, therefore, has not established a valuation reserve.
(11) RETIREMENT PLAN
The Bank has a profit sharing plan which covers all full-
time employees. Eligible employees may defer up to 8% of
his or her salary each year. The Bank is required to match
1/3 of each employee's deferral. In addition, a
discretionary contribution of 5% of each employee's salary
was made in 1996. Contributions to the profit sharing plan
for 1996 were $67,594.
<PAGE>
(12) CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
The condensed balance sheet as of December 31, 1996 and the
related condensed schedules of income and cash flows for the
year ended December 31, 1996 of the Company are as follows:
Condensed Balance Sheet
Assets
Cash $ 148,207
Investment in Bank 9,266,959
Income taxes receivable 7,220
Goodwill 98,433
$9,520,819
Liabilities and Stockholders' Equity
Note payable 3,650,000
Accrued interest payable 65,450
Stockholders' equity 5,805,369
$9,520,819
<PAGE>
Condensed Schedule of Income
Revenues:
Dividends received from Bank $1,220,000
Interest income on deposits 2,493
Total revenues 1,222,493
Expenses:
Interest expense on note payable 303,574
Amortization of goodwill 4,696
Other 135,767
Total expenses 444,037
Income before income tax benefit and
equity in undistributed income of Bank 778,456
Income tax benefit 144,447
Equity in undistributed income of Bank 247,078
Net income $1,169,981
Condensed Schedule of Cash Flows
Cash flows from operating activities:
Net income $1,169,981
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in undistributed
income of Bank (247,078)
Amortization of goodwill 4,696
Other, net (6,430)
Net cash provided by operating activities 921,169
Cash flows from financing activities:
Payment of principal on note payable (850,000)
Proceeds from note payable 500,000
Purchase of common stock for treasury (489,600)
Net cash used in financing activities (839,600)
Net increase in cash 81,569
Cash at beginning of year 66,638
Cash at end of year $148,207
Supplemental information - income
taxes received $143,878
<PAGE>
(13) DISCLOSURES ABOUT FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-
balance-sheet risk in the normal course of business to meet
the financing needs of its customers. These financial
instruments include commitments to extend credit and
commercial and standby letters of credit. Those instruments
involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the con-
solidated balance sheet.
The Company's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and commercial
and standby letters of credit is represented by the
contractual amount of those instruments. The Company uses
the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet
instruments.
Off-balance-sheet financial instruments whose contractual
amounts represent credit risk at December 31, 1996 are as
follows:
Commitments to extend credit $7,247,000
Standby letters of credit 503,176
Commitments to extend credit are agreements to lend to a
customer as long as there is not a violation of any
condition established in the contract. Of the total
commitments to extend credit at December31, 1996, $3,746,779
represent fixed-rate loan commitments. Commitments
generally have fixed expiration dates or other termination
clauses. Since many of the commitments are expected to
expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash require-
ments.
Standby and commercial letters of credit are conditional
commitments issued by the Company to guarantee the
performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to
customers.
The Company evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained if
deemed necessary by the Company upon extension of credit is
based on management's credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable;
inventory; property, plant, and equipment; and income-
producing commercial properties.
<PAGE>
A summary of the carrying amounts and fair values of the
Company's financial instruments at December 31, 1996 is as
follows:
Carrying Fair
amount value
Assets:
Loans $72,886,634 73,473,000
Investments in debt and
equity securities 39,592,651 39,736,407
Federal funds sold 5,975,000 5,975,000
Cash and due from banks 5,540,143 5,540,143
Interest-bearing deposits 461,197 461,197
Accrued interest receivable 1,221,443 1,221,443
$125,677,068 126,407,190
Liabilities:
Deposits:
Demand $12,531,944 12,531,944
NOW 24,183,182 24,183,182
Money market 3,638,899 3,638,899
Savings 9,451,013 9,451,013
Time 63,745,200 64,249,000
Advances from the Federal
Home Loan Bank 3,300,000 3,362,674
Note payable 3,650,000 3,650,000
Accrued interest payable 1,016,400 1,016,400
$121,516,638 122,083,112
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for
which it is practicable to estimate such value:
LOANS
Fair values are estimated for portfolios of loans with
similar financial characteristics. Loans are segregated by
type, such as real estate, commercial, agriculture,
installment, and other consumer. Each loan category is
further segmented into fixed and adjustable interest rate
terms and by performing and nonperforming categories.
<PAGE>
The fair value of performing loans is calculated by
discounting scheduled cash flows through estimated maturity
using estimated market discount rates that reflect the
credit and interest rate risk inherent in the loan. The
estimate of maturity is based on the Company's historical
experience with repayments for each loan classification,
modified, as required, by an estimate of the effect of
current economic and lending conditions.
The fair value for significant nonperforming loans is based
on recent external appraisals. If appraisals are not
available, estimated cash flows are discounted using a rate
commensurate with the risk associated with the estimated
cash flows. Assumptions regarding credit risk, cash flows,
and discount rates are judgmentally determined using
available market and specific borrower information.
INVESTMENTS IN DEBT AND EQUITY SECURITIES
Fair values are based on quoted market prices or dealer
quotes.
FEDERAL FUNDS SOLD, CASH AND DUE FROM BANKS, AND
INTEREST-BEARING DEPOSITS
For federal funds sold, cash and due from banks, and
interest-bearing deposits, the carrying amount is a
reasonable estimate of fair value, as such instruments
reprice in a short time period.
ACCRUED INTEREST RECEIVABLE AND ACCRUED INTEREST
PAYABLE
For accrued interest receivable and accrued interest
payable, the carrying amount is a reasonable estimate of
fair value because of the short maturity for these financial
instruments.
DEPOSITS
The fair value of deposits with no stated maturity, such as
demand, NOW accounts, money market, and savings, is equal to
the amount payable on demand. The fair value of time
deposits is based on the discounted value of contractual
cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining
maturities.
ADVANCES FROM THE FEDERAL HOME LOAN BANK
The fair value of advances from the Federal Home Loan Bank
is based on the discounted value of contractual cash flows.
The discount rate is estimated using the rates currently
offered on advances from the Federal Home Loan Bank of
similar remaining maturities.
NOTE PAYABLE
For the note payable, the carrying amount is a reasonable
estimate of fair value, as such instrument reprices in a
short time period.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF
CREDIT
The fair value of commitments to extend credit and standby
letters of credit are estimated using the fees currently
charged to enter into similar agreements, taking into
account the remaining terms of the agreements, the
likelihood of the counterparties drawing on such financial
instruments, and the present creditworthiness of such
counterparties. The Company believes such commitments have
been made on terms which are competitive in the markets in
which it operates.
<PAGE>
The fair value estimates provided are made at a point in
time based on market information and information about the
financial instruments. Because no market exists for a
portion of the Company's financial instruments, fair value
estimates are based on judgments regarding future expected
loss experience, current economic conditions, risk
characteristics of various financial instruments, and other
factors. These estimates are subjective in nature and in-
volve uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the fair value
estimates.
(14) LITIGATION
Various legal claims have arisen in the normal course of
business, which, in the opinion of management of the
Company, will not result in any material liability to the
Company.
(15) SALE OF THE COMPANY
On July 9, 1997, the Company's Board of Directors approved
an acquisition agreement whereby Exchange National
Bancshares, Inc. (Exchange), a one-bank holding company in
Jefferson City, Missouri, will acquire for cash and seller
notes, 100% of the outstanding shares of common stock of the
Company. At June 30, 1997, the consolidated total assets
and stockholders' equity of Exchange was $293.3 million and
$42.0 million, respectively. The sale of the Company is
expected to close in the fourth quarter of 1997. The
acquisition agreement rescinds all existing stockholder
agreements.
<PAGE>
UNION STATE BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 (unaudited)
_________________________________________________________________
September 30, December 31,
Assets 1997 1996
_________________________________________________________________
Loans, net of allowance for loan
losses of $1,307,386 and 1,284,040
at September 30, 1997 and
December 31, 1996, respectively 74,312,288 72,886,634
Investments in debt and equity
securities:
Available for sale 33,461,206 29,513,185
Held to maturity 7,919,000 10,079,466
_________________________________________________________________
Total investments in debt and
equity securities $41,380,206 $39,592,651
_________________________________________________________________
Federal funds sold 9,325,000 5,975,000
Cash and due from banks 4,702,626 5,540,143
Interest-bearing deposits 189,323 461,197
Premises and equipment 1,219,111 1,205,543
Accrued interest receivable 1,452,018 1,221,443
Deferred income taxes, net 94,805 192,585
Goodwill 192,546 209,209
Other assets 91,895 160,819
_________________________________________________________________
$132,959,818 $127,445,224
_________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
_________________________________________________________________
Deposits:
Demand 12,192,168 12,531,944
NOW 26,329,564 24,183,182
Money market 4,297,691 3,638,899
Savings 10,037,806 9,451,013
Time deposits $100,000 and over 13,631,000 10,794,958
Other time deposits 51,981,136 52,950,242
_________________________________________________________________
Total deposits $118,469,365 $113,550,238
_________________________________________________________________
Advances from the Federal Home
Loan Bank 3,100,000 3,300,000
Note payable 3,175,000 3,650,000
Accrued interest payable 1,100,113 1,016,400
Other liabilities 95,463 123,217
_________________________________________________________________
Total liabilities $125,939,941 $121,639,855
_________________________________________________________________
Commitments and contingent liabilities
Stockholders' equity:
Common stock - $10 par value;
3,000 shares authorized,
887.375 shares issued,
and 556.875 shares outstanding 8,874 8,874
Surplus 1,464,663 1,464,663
Undivided profits 10,665,619 9,644,660
Treasury stock, at cost -
330.5 shares (5,399,869) (5,399,869)
Unrealized holding gains on
investments in debt and equity
securities available for sale 280,590 87,041
_________________________________________________________________
Total stockholders' equity $ 7,019,877 $ 5,805,369
_________________________________________________________________
$132,959,818 $127,445,224
_________________________________________________________________
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
UNION STATE BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
Nine months ended September 30, 1997 and 1996 (unaudited)
Nine months ended September 30
1997 1996
Interest income:
Interest and fees on loans 4,857,966 4,597,329
Interest and dividends on
investments in debt
and equity securities:
Taxable 1,706,854 1,664,166
Exempt from federal income tax 293,000 279,000
Interest on federal funds sold 289,893 235,985
Interest on interest-bearing deposits 7,132 7,486
$ ,154,845 $6,783,966
Interest expense:
Interest on:
NOW accounts 438,720 371,877
Money market 63,799 67,610
Savings accounts 227,245 210,563
Time deposit accounts
$100,000 and over 488,056 396,421
Other time deposits 210,755 2,228,443
Advances from the Federal
Home Loan Bank 159,312 169,562
Note payable 190,495 234,339
$3,778,382 $3,678,815
Net interest income 3,376,463 3,105,151
Provision for loan losses 45,000 67,500
Net interest income after
provision for loan losses 3,331,463 3,037,651
Noninterest income:
Service charges on deposit accounts 261,973 250,284
Trust fees 31,304 29,438
Other 106,280 54,945
$ 399,557 $ 334,667
Noninterest expense:
Salaries, wages, and employee
benefits 994,360 907,981
Occupancy expense 135,700 131,198
Furniture and equipment expense 99,807 98,430
Data processing 134,170 132,269
FDIC insurance assessment 3,065 1,500
Office supplies 64,902 59,821
Advertising and promotion 30,783 29,671
Postage and freight 47,621 47,886
Management fees 346,950 225,000
Other 477,600 437,374
$2,334,958 $2,071,130
Income before income taxes 1,396,062 1,301,188
Income taxes 375,103 410,461
Net income $1,020,959 $ 890,727
Earnings per share $ 1,833 $ 1,571
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
UNION STATE BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 (unaudited)
Nine months ended September 30,
1997 1996
Cash flows from operating activities:
Net income 1,020,959 890,727
Adjustments to reconcile net
income to net cash provided by
operating activities:
Provision for loan losses 45,000 67,500
Depreciation expense 171,900 179,575
Net amortization of debt
securities premiums
and discounts 7,901 11,908
Amortization of goodwill 16,662 16,662
Increase in accrued interest
receivable (230,575) (37,096)
Decrease in other assets 68,924 5,862
Increase in accrued interest payable 83,713 16,570
Decrease in other liabilities (27,754) (111,862)
Other, net 152,842 2,476
Net cash provided by operating
activities 1,309,572 1,042,322
Cash flows from investing activities:
Net increase in loans (1,596,722) (2,676,126)
Purchases of debt and equity
securities available for sale (12,026,948) (11,800,435)
Proceeds from maturities of debt
securities:
Available for sale 8,229,501 4,731,565
Held to maturity 2,144,419 3,479,294
Proceeds from sales of debt
securities available for sale 498,203
Purchases of premises and equipment (177,968) (249,617)
Proceeds from sales of premises
and equipment 6,095
Proceeds from sales of other
real estate 114,628 181,739
Net cash used in investing activities (3,313,090) (5,829,282)
Cash flows from financing activities:
Net decrease in demand deposits (339,776) (876,755)
Net increase in interest-bearing
transaction accounts 3,391,967 2,934,217
Net increase in time deposits 1,866,936 1,757,296
Principal payments on advances
from the Federal Home Loan Bank (200,000) (200,000)
Proceeds from note payable 500,000
Principal payments on note payable (475,000) (675,000)
Purchase of common stock for treasury (490,200)
Net cash provided by financing
activities 4,244,127 2,949,558
Net increase (decrease) in cash and
cash equivalents 2,240,609 (1,837,402)
Cash and cash equivalents,
beginning of period 11,976,340 11,148,956
Cash and cash equivalents,
end of period 14,216,949 9,311,554
Supplemental information:
Cash payments for interest 3,694,669 3,662,245
Cash payments for income taxes 368,062
Loans transferred to other real estate 126,068
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
UNION STATE BANCSHARES, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
Nine months ended September 30, 1997 and 1996 (Unaudited)
Note 1: Union State Bancshares, Inc. (the Company), through its
wholly owned subsidiary, Union State Bank & Trust of
Clinton, provides a full range of banking services to
individuals and corporate customers located in Clinton,
Missouri and the surrounding communities.
Note 2: Earnings per share of common stock is computed by
dividing net income by the weighted average number of
common shares outstanding for the period. The weighted
average number of common shares outstanding were
556.875 and 566.875 for the nine months ended September
30, 1997 and 1996, respectively.
Note 3: The accompanying condensed consolidated financial
statements include all adjustments which, in the
opinion of management, are necessary in order to make
those statements not misleading. Operating results for
the nine months ended September 30, 1997 are not
necessary indicative of the results that may be
expected for the year ending December 31, 1997. It is
suggested that these condensed consolidated financial
statements be read in conjunction with the Company's
audited consolidated financial statements as of and for
the year ended December 31, 1996.
Note 4: On November 3, 1997, the Company was acquired for cash
and seller notes by Exchange National Bancshares, Inc.
(Exchange), a one-bank holding company located in
Jefferson City, Missouri. At September 30, 1997, the
consolidated total assets and stockholders' equity of
Exchange was $301.6 million and $42.7 million,
respectively.
<PAGE>
EXHIBIT INDEX
2.1 Acquisition Agreement, dated as of July 11, 1997, as
amended August 25, 1997, by and among the Registrant,
ENBUSB, the Bank, USB and certain shareholders of USB.
2.2 Merger Agreement, dated as of October 22, 1997 by and
between USB and ENBUSB.
99.1 Press Release of Registrant, issued November 3, 1997.
ACQUISITION AGREEMENT
among
EXCHANGE NATIONAL BANCSHARES, INC.
a Missouri corporation,
and
ENBUSB ACQUISITION COMPANY, INC.
a Missouri corporation, as Buyers,
and
UNION STATE BANK & TRUST OF CLINTON,
a Missouri trust company,
and
UNION STATE BANCSHARES, INC.,
a Missouri corporation, and certain
of its shareholders as Sellers
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - THE ACQUISITION TRANSACTION. . . . . . . . . . . . .2
1.01 The Acquisition Transaction. . . . . . . . . . . . . .2
1.02 Closing. . . . . . . . . . . . . . . . . . . . . . . .2
1.03 Method of Effecting Merger and Effective Time. . . . .2
1.04 Articles and Bylaws. . . . . . . . . . . . . . . . . .3
1.05 Board of Directors and Officers. . . . . . . . . . . .3
1.06 Additional Actions . . . . . . . . . . . . . . . . . .3
1.07 Payment and Delivery of Consideration. . . . . . . . .3
1.08 Dissenting Shares. . . . . . . . . . . . . . . . . . .5
1.09 Reservation of Right to Revise Transaction . . . . . .6
1.10 Investment in USB at Closing . . . . . . . . . . . . .6
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . .6
2.01 Organization and Authority . . . . . . . . . . . . . .6
2.02 Corporate Authorization; Records . . . . . . . . . . .7
2.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . .8
2.04 Capitalization of The Bank and USB . . . . . . . . . .8
2.05 Financial Statements . . . . . . . . . . . . . . . . .8
2.06 Reports. . . . . . . . . . . . . . . . . . . . . . . .9
2.07 Title to and Condition of Assets . . . . . . . . . . .9
2.08 Real Property. . . . . . . . . . . . . . . . . . . . 10
2.09 Loans, Commitments and Contracts . . . . . . . . . . 11
2.10 Absence of Defaults. . . . . . . . . . . . . . . . . 13
2.11 Absence of Undisclosed Liabilities . . . . . . . . . 14
2.12 Allowance for Loan and Lease Losses; Non-Performing
Assets . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 15
2.14 Material Adverse Change. . . . . . . . . . . . . . . 16
2.15 Litigation and Other Proceedings . . . . . . . . . . 16
2.16 Compliance with Laws . . . . . . . . . . . . . . . . 16
2.17 Labor. . . . . . . . . . . . . . . . . . . . . . . . 18
2.18 Employee Benefit Plans . . . . . . . . . . . . . . . 18
2.19 Conduct of USB's and The Bank's Businesses to Date . 19
2.20 Full Disclosure. . . . . . . . . . . . . . . . . . . 20
2.21 Brokers and Finders; Other Liabilities . . . . . . . 20
2.22 Interest Rate Risk Management Instruments. . . . . . 20
2.23 Representations Concerning Shareholders. . . . . . . 20
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE EXCHANGE
ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.01 Organization and Authority . . . . . . . . . . . . . 21
3.02 Corporate Authorization. . . . . . . . . . . . . . . 21
3.03 Exchange Financial Statements. . . . . . . . . . . . 22
<PAGE>
3.04 Reports. . . . . . . . . . . . . . . . . . . . . . . 22
3.05 Material Adverse Change. . . . . . . . . . . . . . . 23
3.06 Brokers and Finders. . . . . . . . . . . . . . . . . 23
3.07 Legal Proceedings or Other Adverse Facts . . . . . . 23
3.08 Validity of Notes. . . . . . . . . . . . . . . . . . 23
3.09 Absence of Unreported Events.. . . . . . . . . . . . 23
ARTICLE IV - CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME 24
4.01 Conduct of Businesses Prior to the Closing Date. . . 24
4.02 Forbearances of USB and The Bank . . . . . . . . . . 24
4.03 Forbearances of the Exchange Entities. . . . . . . . 26
ARTICLE V - ADDITIONAL COVENANTS . . . . . . . . . . . . . . . 26
5.01 Access and Information; Due Diligence. . . . . . . . 26
5.02 Regulatory Matters . . . . . . . . . . . . . . . . . 27
5.03 Shareholder Approvals. . . . . . . . . . . . . . . . 27
5.04 Current Information. . . . . . . . . . . . . . . . . 28
5.05 Environmental Reports. . . . . . . . . . . . . . . . 28
5.06 Expenses . . . . . . . . . . . . . . . . . . . . . . 29
5.07 Miscellaneous Agreements and Consents. . . . . . . . 29
5.08 Press Releases . . . . . . . . . . . . . . . . . . . 29
5.09 Indemnification of USB and The Bank's Directors,
Officers and Employees . . . . . . . . . . . . . . . . . . . . 29
5.10 Employee Benefit Plans . . . . . . . . . . . . . . . 30
5.12 Noncompetition Agreement . . . . . . . . . . . . . . 31
5.13 Employment Agreements. . . . . . . . . . . . . . . . 31
5.14 Appointment to Exchange Board of Directors . . . . . 31
5.15 The Board of Directors of the Bank . . . . . . . . . 31
5.16 Notes Held Solely for Investment Purposes. . . . . . 32
5.17 Shareholders Purchase of Property. . . . . . . . . . 32
5.18 Regulatory Approvals . . . . . . . . . . . . . . . . 32
5.19 Breaches . . . . . . . . . . . . . . . . . . . . . . 32
5.20 Consummation of Agreement. . . . . . . . . . . . . . 32
ARTICLE VI - CONDITIONS. . . . . . . . . . . . . . . . . . . . 32
6.01 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . 32
6.02 Conditions to Obligations of the Sellers . . . . . . 33
6.03 Conditions to Obligations of the Exchange Entities . 34
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER. . . . . . . . 35
7.01 Termination. . . . . . . . . . . . . . . . . . . . . 35
7.02 Effect of Termination. . . . . . . . . . . . . . . . 36
7.03 Amendment. . . . . . . . . . . . . . . . . . . . . . 37
7.04 Waiver . . . . . . . . . . . . . . . . . . . . . . . 37
<PAGE>
ARTICLE VIII - INDEMNIFICATION . . . . . . . . . . . . . . . . 37
8.01 Indemnification. . . . . . . . . . . . . . . . . . . 37
8.02 Claims . . . . . . . . . . . . . . . . . . . . . . . 38
8.03 Costs. . . . . . . . . . . . . . . . . . . . . . . . 38
8.04 Reimbursement. . . . . . . . . . . . . . . . . . . . 39
8.05 Net Loss and De Minimis. . . . . . . . . . . . . . . 39
8.06 Limitations. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX - GENERAL PROVISIONS. . . . . . . . . . . . . . . . 39
9.01 Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . 39
9.02 No Assignment; Successors and Assigns. . . . . . . . 39
9.03 Severability . . . . . . . . . . . . . . . . . . . . 40
9.04 No Implied Waiver. . . . . . . . . . . . . . . . . . 40
9.05 Headings . . . . . . . . . . . . . . . . . . . . . . 40
9.06 Entire Agreement . . . . . . . . . . . . . . . . . . 40
9.07 Counterparts . . . . . . . . . . . . . . . . . . . . 40
9.08 Notices. . . . . . . . . . . . . . . . . . . . . . . 40
9.09 Governing Law. . . . . . . . . . . . . . . . . . . . 42
<PAGE>
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement") made and
entered into as of July 11, 1997 by and among EXCHANGE NATIONAL
BANCSHARES, INC., a Missouri corporation ("Exchange"), ENBUSB
ACQUISITION COMPANY, INC., a Missouri corporation ("Acquisition
Company," and collectively with Exchange, the "Exchange
Entities"), UNION STATE BANK & TRUST OF CLINTON, a Missouri trust
company (the "Bank"), UNION STATE BANCSHARES, INC., a Missouri
corporation ("USB"), and GUS S. WETZEL, II ("Wetzel"), GUS S.
WETZEL, II, as Trustee of the Gus S. Wetzel, II Revocable Trust,
dated January 16, 1995 (the "Wetzel Trust"), DOUGLAS L. THOMASON
("Thomason"), JAMES E. SMITH ("Smith") (collectively the
"Shareholders," and, together with USB and the Bank, the
"Sellers"), and DARRELL HOCKENBERRY ("Hockenberry," with respect
to Section 5.13 only) has reference to the following facts and
circumstances:
A. Exchange is the beneficial and record owner of one
hundred percent (100%) of the issued and outstanding shares of
the common stock of Acquisition Company; and
B. USB is the beneficial and record owner of one hundred
percent (100%) of the issued and outstanding shares of the common
stock of the Bank ("Bank Common Stock"); and
C. The Shareholders are the beneficial or record owners of
approximately 91.6% of the issued and outstanding common stock of
USB ("USB Common Stock"); and
D. Exchange desires to acquire one hundred percent (100%)
of the issued and outstanding shares of USB Common Stock; and
E. The Shareholders desire to sell their shares of USB
Common Stock to Exchange pursuant to the terms herein set forth
and believe that all other shareholders of USB would similarly
desire to sell their shares of USB Common Stock to Exchange; and
F. Exchange and Wetzel, Thomason and Smith (the
"Individual Shareholders") desire to enter into consulting and
noncompetition agreements on the terms set forth herein; and
G. In order to provide for the acquisition of the shares
of USB Common Stock held by the Shareholders and all other
shareholders of USB, Exchange has organized Acquisition Company
which proposes to merge with and into USB as provided in this
Agreement and the Merger Agreement attached hereto as Exhibit A;
and
H. The Exchange Entities, Sellers and Hockenberry 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:
<PAGE>
ARTICLE I
THE ACQUISITION TRANSACTION
1.01 The Acquisition Transaction. Subject to the terms and
conditions of this Agreement, Acquisition Company will merge with
and into USB (the "Merger") under the terms set forth in the
related Merger Agreement (the "Merger Agreement") to be executed
prior to the Closing Date by and between USB and Acquisition
Company in substantially the form set forth in Exhibit A to this
Agreement, whereby the shareholders of USB will receive the
consideration as set forth in this Agreement and the Merger
Agreement. Exchange hereby undertakes to pay and to execute and
deliver or cause to be paid and delivered all cash and promissory
notes of Exchange required to be paid and delivered to the
shareholders of USB pursuant to this Agreement and the Merger
Agreement.
The shareholders of USB will receive the amount of cash
and promissory notes of Exchange that will equal their respective
percentage ownership interest in the outstanding shares of USB
Common Stock as of the Effective Time multiplied by the total
amount of consideration payable in the Merger as set forth in
Section 1.07 of this Agreement (as defined therein, the "Merger
Consideration"); provided, however, that only the shareholders
designated in Section 1.07(a)(i) shall receive both cash and
promissory notes in the Merger and the amount of cash to be paid
to each USB shareholder shall be proportionately adjusted so that
the total consideration received by each, valuing the promissory
notes at face value, shall be in proportion to their respective
stock interests.
Upon consummation of the Merger, the separate corporate
existence of Acquisition Company will cease and USB will be the
surviving corporation in the Merger (the "Surviving
Corporation").
1.02 Closing. The closing (the "Closing") of the Merger,
unless the parties hereto shall otherwise mutually agree, shall
take place at the offices of Exchange's counsel in Kansas City,
Missouri, at 10:00 a.m., local time, on a date designated by
Exchange (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 Merger by the shareholders of USB
as set forth in Section 2.02 of this Agreement and (b) the
approval of the Merger by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), Division of Finance
of the Department of Economic Development ("Missouri Director of
Finance") and any other bank regulatory agency that may be
necessary or appropriate, and the expiration of any required
waiting period.
1.03 Method of Effecting Merger and Effective Time. On the
Closing Date, the parties hereto will cause the Merger to be
consummated by delivering to the Missouri Secretary of State, for
filing, copies of the 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 "Missouri Corporate Law"). The Merger
shall be effective on the <PAGE> date and at the time (the "Effective
Time") that the Missouri Secretary of State issues a certificate
of merger with respect to the Merger.
1.04 Articles and Bylaws. The articles of incorporation and
bylaws of USB in effect immediately prior to the 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.
1.05 Board of Directors and Officers.
(a) At the Effective Time, the members of the Board of
Directors of the Surviving Corporation and the terms of these
directors shall be as designated by Exchange immediately prior to
the Effective Time.
(b) At the Effective Time, the officers of the
Surviving Corporation shall be the persons designated by Exchange
immediately prior to the Effective Time, and such persons will
serve in their designated offices, thereafter, until their
respective successors are duly elected and qualified.
1.06 Additional Actions. If, at any time after the
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 USB, or (b) otherwise carry out the
purposes of this Agreement or the Merger Agreement, USB 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 Merger Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name
of USB or otherwise to take any and all such action.
1.07 Payment and Delivery of Consideration.
(a) At the closing, Exchange will pay to the
shareholders of USB consideration equal to $20,100,000 (subject
to adjustment pursuant to Section 1.07(c) hereof) (the "Merger
Consideration") in exchange for 100% of the USB Common Stock.
Such Merger Consideration shall be paid as follows:
(i) Seven separate promissory notes in the
combined principal amount of $11,370,000 and
individually as follows, Wetzel Trust - $5,000,000,
Thomason - $3,100,000, Smith - $2,500,000, Lauren
Allison Wetzel and Union State Bank, Co-Trustees of the
Lauren Allison Wetzel Revocable Trust U/A May 8, 1997 -
$200,000, Gus S. Wetzel, III and Union State Bank, Co-
Trustees of the Gus S. Wetzel, III Revocable Trust U/A
May 8, 1997 - $200,000, Courtney Ann Wetzel and Union
State Bank, Co-Trustees of the Courtney Ann Wetzel
Revocable Trust <PAGE> U/A May 8, 1997 - $200,000, and Susie
Heard Wetzel, II (as to be directed) - $170,000
(collectively, the "Notes", each, a "Note") to be
executed and delivered by Exchange in favor of each of
the designated shareholders, respectively. The Notes
shall be in the form attached as Exhibit B hereto and
shall bear interest at a rate of 7% per annum, shall,
subject to prepayment, mature on the fifth anniversary
of the Closing Date, shall provide for payments of
interest only until maturity, shall provide for
quarterly payments of accrued interest and shall, at
any time after the third anniversary of the Closing
Date, permit prepayment of principal and accrued
interest by Exchange upon 60 days' notice to the
holders of such Notes. The Notes shall be secured by
all of the Bank Common Stock pursuant to a Stock Pledge
Agreement in the form attached as Exhibit B1 hereto;
provided, however, that the holders of such Notes may,
anytime at their option, upon 30 days' notice, demand
that Exchange obtain and substitute in lieu of such
security interest an irrevocable standby letter of
credit in the face amount of the Notes, having an
expiration date at least thirty (30) days after the
maturity date of the Notes and otherwise reasonably
acceptable in form and substance to Exchange and such
holders, the cost of which shall be borne by the
holders of the Notes in an amount not to exceed 0.5%
per annum; and
(ii) The balance of the Merger Consideration in
cash.
The shareholders designated in Section 1.07(a)(i) above shall
have the right to reallocate the total consideration to be
received by each such shareholder between cash and the principal
amount of the Note in favor of such shareholder by giving notice
thereof to Exchange at least 30 days prior to Closing.
(b) At the Closing, Exchange shall deliver to each of
the shareholders of USB such amount of cash and Notes as such
shareholder shall be entitled to receive pursuant to Sections
1.01 and 1.07(a) hereof, and each of the shareholders of USB
shall surrender to the Surviving Corporation certificates
representing the total number of shares of USB Common Stock owned
by such shareholder.
(c) The Merger Consideration shall be adjusted as
follows:
(i) the Merger Consideration shall be decreased
by an amount equal to the parent company indebtedness
and other liabilities not taken into account in
computing 1997 consolidated results of operations of
USB as of the last day of the month next preceding the
month in which the Closing occurs; and
(ii) the Merger Consideration shall be increased
(or decreased, if a negative number) in an amount equal
to (a) USB's consolidated results of operations,
without any adjustment for taxes other than taxes
actually incurred and not passed through to
shareholders pursuant to Subchapter S, excluding
realized and unrealized securities gains and losses
("Net Income"), for the period from <PAGE> January 1, 1997
through the earlier of September 30, 1997 or the last
day of the month next preceding the month in which the
Closing occurs, as determined by USB's accountants and
subject to reasonable approval of KPMG Peat Marwick
LLP, and (b) forty percent (40%) of Net Income (if any)
for the period from October 1, 1997 through the earlier
of December 31, 1997 or the last day of the month next
preceding the month in which the Closing occurs, less
(x) dividends declared or paid by USB after December
31, 1996 and prior to Closing, (y) any principal
repayments of USB's indebtedness made after December
31, 1996 and prior to closing and (z) any expenses
related to negotiation and consummation of the Merger
which may be paid or incurred by USB or the Bank; and
(iii) the Merger Consideration shall be
increased (or decreased, if a negative number) in an
amount equal to USB's consolidated results of
operations, after taxes, excluding realized and
unrealized securities gains and losses, for the period
from January 1, 1998 through the earlier of March 31,
1998 or the last day of the month next preceding the
month in which the Closing occurs, as determined by
USB's accountants and subject to reasonable approval of
KPMG Peat Marwick LLP, less (x) dividends paid by USB
after December 31, 1996 and prior to Closing (y) any
principal repayments of USB's indebtedness made after
December 31, 1996 and prior to Closing and (z) any
expenses related to negotiation and consummation of the
Merger which may be paid or incurred by USB or the
Bank.
Any negative adjustment of the Merger Consideration shall be an
adjustment to the amount payable by Notes pursuant to Section
1.07(a)(ii).
1.08 Dissenting Shares.
(a) "Dissenting Shares" means any shares of USB Common
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 ("Section 351.455"). 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 Exchange shall cause the Surviving Corporation to pay
such consideration solely with funds provided by Exchange.
(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, received by such party, and USB shall give Exchange the
opportunity to direct all negotiations and proceedings with
respect to such objections or demands. USB 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 Exchange,
settle or offer to settle any such demands.
<PAGE>
1.09 Reservation of Right to Revise Transaction. The
Exchange Entities may at any time change the method of effecting
the Acquisition by the Exchange Entities (including without
limitation the provisions of this Article I) if and to the extent
the Exchange Entities deem such change to be desirable; provided,
however, that no such change shall (A) alter or change the amount
or kind (being a combination of cash and/or Notes pursuant to
Section 1.07 of this Agreement) of the 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
USB Common Stock as a result of receiving the Merger
Consideration or (C) materially impede or delay receipt of any
approval referred to in Section 6.01(b) or the consummation of
the transactions contemplated by this Agreement or the Merger
Agreement or any other agreement executed in connection herewith.
Notwithstanding the foregoing, the Exchange 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.
1.10 Investment in USB at Closing. At the Closing, Exchange
shall invest in or contribute capital to USB in an amount equal
to the total indebtedness of USB, including accrued and unpaid
interest thereon, as of the Closing Date. Immediately subsequent
to the Effective Time, the Surviving Corporation shall use such
invested capital to retire all of its indebtedness.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to the Exchange Entities to enter into and
perform their respective obligations under this Agreement, and
notwithstanding any examinations, inspections, audits and other
investigations made by the Exchange Entities, the Sellers hereby
jointly and severally represent and warrant to the Exchange
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:
2.01 Organization and Authority. USB 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. USB is registered as a bank holding company
with the Federal Reserve Board under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"). A current and accurate list
of USB's shareholders, including addresses thereof, and true and
complete copies of the articles of incorporation and bylaws of
USB, each as in effect on the date of this Agreement, are
included in Schedule 2.01 hereof.
The Bank is a Missouri trust company 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 Federal
Deposit Insurance Corporation (the "FDIC") under the Federal
Deposit Insurance Act of <PAGE> 1950, as amended (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 2.01.
2.02 Corporate Authorization; Records.
(a) The Bank has the corporate power and authority to
enter into this Agreement, and USB has the corporate power and
authority to enter into this Agreement and the Merger Agreement
and, subject to the approval of this Agreement by the
shareholders of USB and to the approval of the Merger, this
Agreement and the Merger Agreement by the shareholders of USB,
and such approvals of governmental agencies and other governing
boards having regulatory authority over USB and/or the Bank as
may be required by applicable law, rule or regulation, to carry
out their respective obligations thereunder. The only
shareholder vote of USB required to approve the Merger is the
affirmative vote of the holders of two thirds of the outstanding
shares of USB Common Stock. The execution, delivery and
performance of this Agreement and the Merger Agreement by USB
have been duly authorized by the Board of Directors of USB.
Subject to the approvals, as aforesaid, this Agreement is a valid
and binding obligation of the Bank, and this Agreement and the
Merger Agreement are the valid and binding obligations of USB,
enforceable against each in accordance with their respective
terms.
(b) Except as set forth on Schedule 2.02(b), neither
the execution, delivery and performance by USB of this Agreement
or the Merger Agreement, nor the consummation of the transactions
contemplated thereby, nor compliance by USB with any of the
provisions thereof 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 USB under any of the terms, conditions or
provisions of (i) its 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 USB
is a party or by which it may be bound, or to which USB or any of
their respective properties or assets may be subject, or (b)
subject to compliance with the statutes and regulations referred
to in subsection (c) of this Section 2.02, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to USB or any of its properties or assets.
(c) The minute books and stock records of USB 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.
<PAGE>
2.03 Subsidiaries. USB 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.
2.04 Capitalization of The Bank and USB. The authorized
capital stock of the Bank consists of 20,000 shares of Common
Stock, $100.00 par value, of which, as of the date hereof, 20,000
shares were issued and outstanding. The authorized capital stock
of USB consists of 3,000 shares of Common Stock, $10.00 par
value, of which, as of the date hereof, 562.88 shares (including
six (6) director qualifying shares) were issued and outstanding.
Except as set forth on Schedule 2.04, USB has and will have as of
the Effective Time good and marketable title to 20,000 shares, or
100% of the then issued and outstanding shares of the Bank Common
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 (as
defined below) of USB or the Bank outstanding. All of the issued
and outstanding shares of the Common Stock of USB and the Bank
are validly issued, fully paid and nonassessable. "Equity
Securities" of an issuer means capital stock or other equity
securities of such 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.
2.05 Financial Statements.
(a) Delivered herewith as Schedule 2.05(a) are copies
of the following financial statements:
(i) Balance sheets of USB as of December 31,
1996, 1995 and 1994, related statements of income for
the three (3) years ended December 31, 1996;
(ii) Balance sheets of USB as of March 31, 1997
and related statements of income for the three-month
period ended March 31, 1997 (which financial statements
were prepared on a "C" corporation basis; all
subsequent financial statements shall be prepared on
the basis of its status as a "Subchapter S"
corporation);
(iii) Form FR Y-6 reports of USB as of
December 31, 1996, 1995 and 1994, and Form FR Y-9LP and
Form FR Y-9C reports filed during such periods, as
furnished by USB to the Federal Reserve; and
<PAGE>
(iv) The Consolidated Reports of Condition and
Income of the Bank as of and for the years ended
December 31, 1996, 1995 and 1994, and as of and for the
three-month period ended March 31, 1997, as filed by
the Bank with the FDIC.
(b) The financial statements referenced above are
referred to collectively as the "Union Financial Statements."
The Union Financial Statements have been prepared in accordance
with the books and records of USB and the Bank in accordance with
generally accepted accounting principles ("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 USB 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) USB 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.
2.06 Reports. To the best knowledge of Sellers, since
January 1, 1994, USB and the Bank have filed all reports,
registrations and statements, together with any required
amendments thereto, that were required to be filed with 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" and individually as a "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 "Union Reports." To the
best knowledge of Sellers, as of their respective dates, the
Union Reports complied in all respects with all the rules and
regulations promulgated by the applicable Regulatory Authority.
To the best knowledge of Sellers, with respect to the Union
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 USB.
2.07 Title to and Condition of Assets.
(a) Except as may be reflected in the Union Financial
Statements or set forth on Schedule 2.07(a) and excepting all
real property (which is the subject of Section 2.08), USB 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 Union 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.
<PAGE>
(b) No assets reflected on the Union Financial
Statements, which in the aggregate exceed $10,000, have been
sold, leased, transferred, assigned or otherwise disposed of
since March 31, 1997, except in the ordinary course of business
or as set forth in Schedule 2.07(b). All dispositions of assets
since March 31, 1997, regardless of amount, have been made at
fair value.
(c) To the best knowledge of Sellers, all furniture,
fixtures, vehicles, machinery and equipment and computer software
owned or used by USB 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 USB 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.
2.08 Real Property.
(a) USB owns no real property and neither USB nor the
Bank is a lessee of real property, except as set forth in
Schedule 2.08(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 2.08(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 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) 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 <PAGE> 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 Union 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
as set forth in Schedule 2.08(f).
2.09 Loans, Commitments and Contracts.
(a) USB has no outstanding loans receivable nor any
commitments to lend. Schedule 2.09(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 2.09(a) and except as set forth in
Schedule 2.09(b) hereto, neither USB 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 USB 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 2.18 hereof);
(v) agreement, indenture or other instrument not
disclosed in the Union Financial Statements relating to
the borrowing of money by the Bank or USB or the
guarantee by the Bank or USB of any such obligation
(other than trade payables or <PAGE> instruments related to
transactions entered into in the ordinary course of
business by the Bank or USB 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 USB 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 USB 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 USB or any
other person or entity deemed an "executive officer" or
a "related interest" of the Bank or USB, as such terms
are defined in Regulation O by the Federal Reserve
Board;
(x) other agreements, contracts, arrangements,
understandings or commitments that involve obligations
by the Bank or USB 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 USB 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 USB carry property, casualty,
liability, directors and officer errors and omissions, products
liability and other insurance coverages as set forth in
Schedule 2.09(c).
<PAGE>
(d) True, correct and complete copies of the
agreements, contracts, leases, insurance policies and other
documents referred to in Schedule 2.09(a), Schedule 2.09(b), and
Schedule 2.09(c) shall be furnished or made available to the
Exchange Entities.
(e) To the best knowledge of the Sellers, each of the
agreements, contracts, leases, insurance policies and other
documents referred to in Schedule 2.09(a), Schedule 2.09(b) and
Schedule 2.09(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 USB) 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 2.09(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 $250,000
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
$250,000 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 $250,000 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 $250,000, 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.
2.10 Absence of Defaults. Except as set forth in Schedule
2.10, there are no pending disputes between the Bank or USB and
the other parties to the agreements, contracts, leases, insurance
policies and other documents referred to in Schedule 2.09(a),
Schedule 2.09(b), and Schedule 2.09(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 <PAGE> to the Bank or USB or any other party
thereto, and will continue in full force and effect immediately
after the Closing Date.
2.11 Absence of Undisclosed Liabilities. Except as
disclosed in Schedule 2.11 or in any other Schedule delivered
herewith:
(a) As of the date hereof, neither the Bank nor USB
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 Union
Financial Statements or the notes thereto in accordance with GAAP
consistently applied except:
(i) liabilities reflected in the Union Financial
Statements;
(ii) deposits, debts, liabilities or obligations
incurred since March 31, 1997, 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 Merger and the
transactions related thereto.
(b) To the best knowledge of the Sellers, neither the
Bank nor USB was, as of March 31, 1997, 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 USB 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.
2.12 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
March 31, 1997 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 March 31, 1997 was established in
accordance with the past practices and experiences of the <PAGE> 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; provided, however, nothing herein contained shall
be construed as a warranty of the collectibility of any loan or
that the actual loan losses incurred will not exceed the amount
of the allowance. 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 USB as
of March 31, 1997.
(c) Schedule 2.12(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").
2.13 Taxes.
(a) Each of USB 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 ("Union Returns").
To the best knowledge of Sellers, each of USB and the Bank has
paid, or has set up adequate reserves on the Union 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 Union 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 USB 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 USB or the Bank which would
not be covered by existing reserves. To the best knowledge of
Sellers, neither USB 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 USB
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 USB 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
the Tax Sharing Agreement dated August 9, 1984 by and between USB
and the Bank (the "Tax Sharing Agreement"), neither USB 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 Union Returns. Neither USB
nor the Bank has extended or waived any statute of limitations on
the assessment of any tax due that is currently in effect.
(b) Neither Sellers' election to convert USB to
Subchapter S status nor the termination of such status as a
result of the transactions contemplated by this Agreement and the
<PAGE>
Merger Agreement shall cause USB or the Bank to incur any
liability for income taxes which shall not be accrued or paid
during the period from January 1, 1997 through the earlier of
September 30, 1997 or the last day of the month next preceding
the month in which the Closing occurs.
2.14 Material Adverse Change. Since March 31, 1997, there
has been no material adverse change in the financial condition,
results of operations, business, assets, prospects or operations
of USB 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.
2.15 Litigation and Other Proceedings. Except as set forth
in Schedule 2.15, neither USB 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 USB or the Bank.
Without limiting the generality of the foregoing, except as set
forth in Schedule 2.15, there are no actions, suits or
proceedings pending or, to the best knowledge of the Sellers,
threatened against USB or the Bank or any of their respective
officers or directors by any shareholder of USB 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.
2.16 Compliance with Laws.
(a) To the best knowledge of the Sellers, USB 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 USB or the Bank.
(b) Each of USB 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 USB or
the Bank, and neither USB nor the Bank is in default <PAGE> 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 2.16, and to the
best knowledge of Sellers, neither USB 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 USB 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 USB 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 USB 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 USB 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 USB or the Bank which reasonably could be
expected to have a material adverse effect on the condition of
USB or the Bank.
(d) Since December 31, 1993, neither USB nor the Bank
has received any notification or communication which has not been
favorably resolved from any Regulatory Authority (i) asserting
that USB 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 2.16 or in any writing previously furnished
to the Exchange 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 USB or the Bank, or indicating that
USB 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 USB 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 USB 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.
<PAGE>
2.17 Labor. No work stoppage involving USB or the Bank is
pending or, to the best knowledge of Sellers, threatened.
Neither USB 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 USB or the Bank. Employees of USB and the Bank are
not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such
employees.
2.18 Employee Benefit Plans.
(a) Schedule 2.18(a) lists 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 USB or the
Bank in respect of any of the present or former directors,
officers or other employees of and/or consultants to USB or the
Bank (collectively, the "Sellers Employee Plans"). The Sellers
have furnished the Exchange 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) With respect to each of the Sellers Employee Plans
which is a pension plan (as defined in Section 3(2) of ERISA)
(the "Pension Plans"): (i) each Pension Plan which is intended
to be "qualified" within the meaning of Section 401(a) of the
Code has been determined to be so qualified by the IRS and, to
the best knowledge of the Sellers, such determination letter may
still be relied upon, and each related trust is exempt from
taxation under Section 501(a) of the Code; (ii) to the best
knowledge of the Sellers, there has been no "prohibited
transaction," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, which could subject any Pension Plan or
associated trust, or, to the best knowledge of the Sellers, USB
or the Bank, to any tax or penalty; and (iii) except as set forth
in Schedule 2.18(c), no Pension Plan or any trust created
thereunder has been terminated, nor to the best knowledge of the
Sellers have there been any "reportable events" with respect to
any Pension Plan, as that term is defined in Section 4043 of
ERISA since January 1, 1989. Except as set forth in Schedule
2.18(c), no Pension Plan is a "multiemployer plan" as that term
is defined in Section 3(37) of ERISA.
<PAGE>
(d) Except as set forth on Schedule 2.18(d), neither
USB 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 USB 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 2.18(f), neither
the execution nor delivery of this Agreement or the Merger
Agreement, 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 USB or the Bank to any director or employee of USB 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.
2.19 Conduct of USB's and The Bank's Businesses to Date.
Except as set forth in Schedule 2.19 or otherwise in this
Agreement, from and after March 31, 1997: (a) USB and the Bank
have carried on their respective business in the ordinary and
usual course consistent with past practices, (b) neither USB 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 USB 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 USB nor the Bank has, directly or indirectly,
redeemed or otherwise acquired any of its capital stock,
(e) neither USB 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 USB 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 USB 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 USB
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 USB 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 <PAGE> not covered by insurance, and
(j) neither USB nor the Bank has entered into any transaction,
contract or commitment outside the ordinary course of its
business. Notwithstanding anything to the contrary contained
herein, Bank and USB, in turn, shall, prior to the Effective
Time, declare a dividend equal to consolidated earnings, if any,
which would constitute an increase to the Merger Consideration
under Sections 1.7(c)(ii) and (iii) of this Agreement for the
period January 1, 1997 through the last day of the month next
preceding the month in which the Closing occurs less principal
payments of indebtedness and estimated expenses of this
transaction.
2.20 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 USB Common Stock with
all material information as to the properties and business of the
Bank.
2.21 Brokers and Finders; Other Liabilities. Neither USB
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 USB and/or the Bank in connection with
this Agreement or the Merger Agreement or the transactions
contemplated hereby and thereby.
2.22 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.
2.23 Representations Concerning Shareholders.
(a) Ownership. Except as set forth on
Schedule 2.23(a), (i) Wetzel is the owner, beneficially and of
record, of 58.5 shares of USB Common Stock, free of any lien,
claim, charge or encumbrance of any nature whatsoever; (ii) the
Wetzel Trust is the owner, beneficially and of record, of 230
shares of USB Common Stock, free of any lien, claim, charge or
encumbrance of any nature whatsoever; (iii) Thomason is the
owner, beneficially and of record, of 111.63 shares of USB Common
Stock, free of any lien, claim, charge or encumbrance of any
nature whatsoever; and (iv) Smith is, or as of the Closing Date
will be, the owner, beneficially and of record, of 110 shares of
USB Common Stock, free of any lien, claim, charge or encumbrance
of any nature whatsoever.
(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 <PAGE> 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 USB or
the Bank.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE EXCHANGE 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 Exchange Entities hereby
jointly and severally represent and warrant to the Sellers as to
the following matters:
3.01 Organization and Authority. Exchange and Acquisition
Company are each corporations duly organized, validly existing
and in good standing under the laws of the State of Missouri,
each is duly qualified to do business and each 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 each has the corporate power and authority to own
its properties and assets and to carry on its business as it is
now being conducted. Exchange is registered as a bank holding
company with the Federal Reserve Board under the BHC Act.
3.02 Corporate Authorization.
(a) Exchange 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 Exchange and
Acquisition Company and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of Exchange and the Board of Directors of Acquisition
Company, and no other approval of the 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 Exchange and Acquisition
Company as may be required by statute or regulation, this
Agreement is a valid and binding obligation of Exchange and
Acquisition Company, enforceable against each in accordance with
its terms.
(b) Neither the execution, delivery and performance by
Exchange or Acquisition Company of this Agreement, nor the
consummation of the transactions contemplated <PAGE> hereby, nor
compliance by Exchange 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 Exchange 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 Exchange or Acquisition
Company is a party or by which it may be bound, or to which
Exchange or Acquisition Company or any of its properties or
assets may be subject, or (b) subject to compliance with the
statutes and regulations referred to in subsection (c) of this
Section 3.02, to the best knowledge of the Exchange Entities,
violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Exchange or Acquisition
Company or any of their properties or assets.
(c) Other than in connection with or in compliance
with the provisions of the Missouri Corporate Law, the Securities
Act of 1993 and the rules and regulations thereunder (the
"Securities Act"), the Securities Exchange Act of 1934 and the
rules and regulations thereunder (the "Exchange Act"), the
securities or blue sky laws of the various states or filings,
consents, reviews, authorizations, approvals or exemptions
required under the BHC Act, or any required approvals of the
Federal Reserve Board or the Missouri Director of Finance, no
notice to, filing with, exemption or review by, or authorization,
consent or approval of, any public body or authority is necessary
for the consummation by Exchange, and Acquisition Company of the
transactions contemplated by this Agreement and the Merger
Agreement.
3.03 Exchange Financial Statements. The consolidated
balance sheet of Exchange and its subsidiary bank (hereinafter
sometimes referred to collectively as the "Exchange Subsidiary")
as of December 31, 1996, and related consolidated statements of
income, changes in shareholders' equity and cash flows for the
year ended December 31, 1996, together with the notes thereto,
audited by KPMG Peat Marwick LLP, as filed with the Securities
and Exchange Commission (the "SEC") (collectively, the "Exchange
Financial Statements"), have been prepared in accordance with
GAAP, consistently applied as applicable to financial
institutions, represent fairly the consolidated financial
position of Exchange and the Exchange Subsidiary at the dates
thereof and the consolidated results of operations, changes in
shareholders' equity and cash flows of Exchange and the Exchange
Subsidiary for the periods stated therein and are derived from
the books and records of Exchange and the Exchange Subsidiary.
3.04 Reports. Since January 1, 1992, Exchange and the
Exchange Subsidiary have filed all reports, registrations and
statements, together with any required amendments thereto, that
they were required to file with (i) the SEC, including, but not
limited to, Annual Report on Form 10-KSB, Forms 10-QSB, Forms 8-K
and proxy statements, (ii) the Federal Reserve Board, (iii) the
FDIC, (iv) the Office of the Comptroller of the Currency (the
"OCC"), and (v) any applicable state securities or banking
authorities. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein
as the "Exchange Reports." As of their <PAGE> respective dates, the
Exchange Reports complied with all the rules and regulations
promulgated by the SEC, the Federal Reserve Board, the FDIC, the
OCC and any applicable state securities or banking authorities,
as the case may be, and did not contain any untrue statements of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
3.05 Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the financial
condition, results of operations or prospects or Exchange and the
Exchange Subsidiary 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.
3.06 Brokers and Finders. Exchange has employed Hovde
Financial, Inc. ("Hovde") as a broker/finder for Exchange in
connection with this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, and Exchange shall
pay all of the fees and expenses of Hovde in connection
therewith. Neither Exchange, nor any of its officers, directors
or employees, has employed any broker or finder other than Hovde
or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees to any entity other
than Hovde in connection with this Agreement, the Merger
Agreement or the transactions contemplated hereby and thereby.
3.07 Legal Proceedings or Other Adverse Facts. There is no
legal action or governmental proceeding or investigation pending,
or to the best knowledge of the Exchange Entities, threatened
against Exchange or Acquisition Company that could prevent or
adversely affect or seeks to prohibit the consummation of the
transactions contemplated hereby, nor is Exchange or Acquisition
Company subject to any order of a court or governmental authority
having any such effect. Neither Exchange nor Acquisition Company
has knowledge of any other fact that could prevent or adversely
affect the consummation of the transactions contemplated hereby.
3.08 Validity of Notes. Each Note and the security and
collateral documents therefor, are the legal, valid and binding
obligations of Exchange, enforceable against Exchange in
accordance with their respective terms.
3.09 Absence of Unreported Events. From December 31, 1996
to the date of this Agreement, no events which would be required
to be included in any reports, registrations or statements filed
with the SEC have occurred except as have been disclosed in such
reports, and a copy of each such report has been provided to
Sellers.
<PAGE>
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01 Conduct of Businesses Prior to the Closing Date.
During the period from the date of this Agreement to the Closing
Date, USB and the Bank shall (i) conduct their respective
businesses according to the ordinary and usual course consistent
with past and current practices, (ii) conduct their respective
businesses in accordance with the budgets delivered to Exchange,
provided, however, that no additional provisions for loan losses,
shall be made except as may be necessary to maintain the reserve
for loan losses in accordance with Section 2.12(b) of this
Agreement, (iii) seek to keep the expenses of their respective
businesses at levels consistent with past practices, and (iv) 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.
4.02 Forbearances of USB and The Bank. Except as set forth
on Schedule 4.02, during the period from the date of this
Agreement to the Closing Date, neither USB nor the Bank shall,
without the prior written consent of the Exchange Entities:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its capital
stock, except that (i) the Bank may declare and pay dividends
required to pay the expenses of USB or to make scheduled USB
principal and interest payments on debt; (ii) prior to September
30, 1997, the Bank and USB may declare and pay dividends that
represent a distribution of, and do not in the aggregate exceed,
USB's consolidated net income from operations, excluding realized
and unrealized gains or losses in securities transactions during
the nine months ending September 30, 1997; and (iii) on the
Closing Date, USB may either repurchase the six shares of USB
Common Stock held by the directors of the Bank as director
qualifying shares for $100 per share pursuant to that certain
agreement dated December 30, 1996 or require that Exchange
exchange one share of its stock for each director qualifying
share and assume all rights and obligations under the agreement
with respect to such shares.
(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
Exchange Entities in writing and which the Exchange 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;
<PAGE>
(d) issue, sell, grant, confer or award any of its
Equity Securities or effect any 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 Exchange, 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 $250,000 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 $250,000; 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 Exchange prior written notice of its request to act
contrary hereto and if Exchange 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 agency 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 and the Merger
Agreement or the ability of the Exchange Entities and the Sellers
to obtain any approval of any Regulatory Authority required for
the transactions contemplated by this Agreement and the Merger
Agreement or to perform its covenants and agreements under this
Agreement or the 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;
provided, however, that USB and Bank may elect <PAGE> to terminate their
election to be treated as a Subchapter S corporation anytime
prior to the Effective Date;
(k) enter into or increase any loan or credit
commitment (including standby letters of credit) to any executive
officer or director of USB or the Bank, any shareholder of USB or
the Bank, or any entity controlled, directly or indirectly, by
any of the foregoing, without first obtaining the prior written
consent of Exchange, 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 USB or the Bank is in excess of $25,000, or enter
into any contracts under which, in the aggregate, the liability
of USB or the Bank is in excess of $50,000; or
(o) other than in the ordinary course of business
consistent with past practice, enter into any other material
agreements.
4.03 Forbearances of the Exchange Entities. During the
period from the date of this Agreement to the Closing Date, the
Exchange Entities shall not, without the prior consent of the
Sellers, agree in writing or otherwise engage in any activity,
enter into any transaction or take or omit to take any other
action which would make any of the representations and warranties
of Article III 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
action.
ARTICLE V
ADDITIONAL COVENANTS
5.01 Access and Information; Due Diligence.
(a) USB and the Bank each shall afford to the Exchange
Entities, and to the Exchange Entities' accountants, counsel and
other representatives, full access during normal business hours,
during the Exchange Due Diligence Period (as hereinafter defined)
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 Exchange
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 Exchange 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 <PAGE> and (ii) all other information
concerning its business, properties and personnel as the Exchange
Entities may reasonably request. In the event of the termination
of this Agreement, the Exchange 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 USB and
the Bank all documents (including copies thereof) obtained
hereunder from USB 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) Exchange, promptly following the date of this
Agreement, shall commence its review of USB and the Bank and
their respective operations, business affairs, prospects and
financial conditions, including, without limitation, those
matters which are the subject of USB' and the Bank's
representations and warranties included herein (the "Exchange Due
Diligence Review"). Exchange shall conclude such review by not
later than thirty (30) days after the date of this Agreement (the
"Exchange Due Diligence Period"). Exchange shall advise USB and
the Bank of any situation, event, circumstance or other matter
which first came to the attention of Exchange during the Exchange
Due Diligence Review which could result in the termination of
this Agreement by Exchange pursuant to Section 7.01(d) hereof,
or, if applicable, of the absence of any situation, event,
circumstance or other matter, it being the intention of Exchange
to provide notice to USB and the Bank, as promptly as possible,
of any perceived impediment to the consummation of the Merger.
Notwithstanding anything hereinabove contained or implied to the
contrary, the Exchange Due Diligence Review shall not limit,
restrict or preclude, or be construed to limit, restrict or
preclude, Exchange, 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 Exchange Due Diligence Period of any
event or condition which was not detected in the Exchange Due
Diligence Review by Exchange and which would constitute a breach
of any material representation, warranty or agreement of USB or
the Bank under this Agreement.
5.02 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 Merger Agreement as soon
as is reasonably practicable after the date of this Agreement,
including, without limitation, Exchange filing the necessary
applications with the Federal Reserve Board and the Missouri
Director of Finance.
5.03 Shareholder Approvals. USB 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
Merger Agreement and related matters. The Board of Directors of
USB shall submit and recommend for approval of their respective
shareholders the matters to be voted upon at such meetings. The
Board of Directors of USB hereby does and will recommend this
Agreement, the Merger Agreement and the transactions contemplated
hereby and thereby to its shareholders and <PAGE> 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 USB Common
Stock that he owns of record for the approval of this Agreement
and the Merger Agreement at the special meeting of shareholders
of USB, or if the transaction is altered by Exchange to a direct
purchase of stock pursuant to Section 1.09, to sell his shares of
USB for a purchase price equal to that portion of the Merger
Consideration that such Shareholder would be entitled to receive
under this Agreement.
5.04 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 USB and the Bank and
quarterly in the case of Exchange) 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.
5.05 Environmental Reports. The Bank shall provide to the
Exchange Entities within twenty (20) days after request, with
respect to all Real Property presently owned by the Bank, and as
soon as reasonably practicable, but not later than twenty (20)
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 Exchange Entities, the
Exchange Entities shall be permitted to obtain, at its expense, a
phase two investigation report on such designated parcels as soon
as practicable. The Exchange Entities 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 Exchange Entities are
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
$250,000 in the aggregate, as reasonably estimated by an
environmental expert retained for such purpose by the Exchange
Entities, or (ii) the costs of such remedial or other corrective
actions cannot be reasonably estimated by such expert to be
$250,000 or less with any reasonable degree of certainty, then
the Exchange Entities, at its sole discretion, shall have the
right to terminate this Agreement upon <PAGE> fifteen (15) days' notice
to Sellers unless Sellers, upon receipt of such notice, elect
within fifteen (15) days thereafter to reduce the 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 Merger Consideration shall
be so reduced and this Agreement shall not be terminated pursuant
to this Section.
5.06 Expenses. Each party hereto shall bear its own costs
and expenses incident to preparing, entering into and carrying
out this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby, whether or not the Merger shall
be consummated or this Agreement shall subsequently be
terminated.
5.07 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 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 Exchange 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 Merger Agreement.
5.08 Press Releases. The Sellers and the Exchange 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 Merger Agreement or any of
the transactions contemplated hereby or thereby. Unless in the
reasonable opinion of Exchange'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 Due Diligence Period shall have expired,
and (ii) Exchange has notified USB that Exchange waives its
termination right pursuant to Section 7.01(d) and Section
7.01(f).
5.09 Indemnification of USB and The Bank's Directors,
Officers and Employees.
(a) Exchange agrees that the Merger shall not affect
or diminish any of the Bank's or Surviving Corporation's (with
respect to USB and the Bank) duties and obligations of
indemnification existing at the Effective Time of the Merger in
favor of employees, agents, director or officers of the Bank or
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 Bank's or Surviving
Corporation's existing directors' and officers' liability
insurance policy would provide coverage for any action or
omission occurring prior to the Effective Time, the Sellers agree
to give proper notice to the <PAGE> insurance carrier and to the
Exchange Entities of a potential claim thereunder so as to
preserve the Bank's or Surviving Corporation's rights to such
insurance coverage.
(b) If after the Effective Time, the Surviving
Corporation or the Bank 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 this Surviving Corporation or the Bank shall
assume any remaining obligations of such surviving corporation or
the Bank set forth in this Section 5.09. If the Bank or the
Surviving Corporation shall liquidate, dissolve or otherwise wind
up its business, then the Exchange Entities shall indemnify,
defend and hold harmless each Indemnified Party to the same
extent and on the same terms that the Surviving Corporation or
the Bank was so obligated pursuant to this Section 5.09.
(c) For a period of three (3) years after the
Effective Time, Exchange will continue the Bank's and the
Surviving Corporation's directors' and officers' liability
insurance coverage with respect to actions occurring prior to the
Effective Time.
5.10 Employee Benefit Plans.
(a) Following the Effective Time, the Exchange
Entities shall cause the Surviving Corporation to honor in
accordance with their terms all employment, severance and other
compensation contracts set forth on Schedule 5.10 between the
Bank and any current or former director, officer, employee or
agent thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under
the Sellers Employee Plans.
(b) The provisions of any plan, program or arrangement
providing for the issuance or grant of any other interest in
respect of the capital stock of the Bank or USB shall be
terminated as of the Effective Time, so that following the
Effective Time no person shall have any right to acquire any
securities of the Bank or USB.
(c) Unless otherwise agreed by USB and Exchange, as of
the Effective Time USB and Exchange shall take the following
actions to the extent practicable:
(i) By amendment to the Union State Bank & Trust
of Clinton Profit Sharing Plan, which shall be
effective as of the Effective Time, all participants
shall be 100% vested, and such Plan shall be merged
into the Exchange Profit Sharing Trust or a new Bank
Profit Sharing Plan or the Union State Bank & Trust of
Clinton Profit Sharing Plan shall be frozen.
(ii) The employees of Bank who continue to work
for the Bank after the Effective Time shall participate
in the Exchange Profit Sharing Plan or a Bank Profit
Sharing Plan under the terms of such Plan as amended
from time to time. <PAGE> The service of such employees while
employed by Bank prior to the Effective Time shall be
counted for eligibility and vesting purposes but not
for benefit accrual purposes in such Plan. The level
of contribution to the Exchange Profit Sharing Plan or
a Bank Profit Sharing Plan for the benefit of the Bank
employees need not be the same as that for other
Exchange employees, but shall not be less than Bank's
current contribution to the Union State Bank & Trust of
Clinton Profit Sharing Plan.
(iii) Whether and when the employees of Bank
who continue to work for the Bank after the Effective
Time shall participate in the Exchange Pension Plan as
amended from time to time or a new Bank Pension Plan,
and the terms of such participation will, subject to
legal requirements, be determined by Exchange after the
Effective Time.
(iv) Exchange shall, with respect to each employee
of the Bank who continues to work for the Bank after
the Effective Time, provide the benefits described in
this Section 5.10(c)(iv). Subject to the right of
subsequent amendment, modification or termination in
Exchange's sole discretion, each such employee shall be
entitled to receive fringe benefits on terms no less
favorable to such employees than provided by their
current terms of employment with the Bank.
5.11 Consulting/Noncompetition Agreements. At the Closing,
Exchange will enter into a Consulting/Noncompetition Agreement
with each of Wetzel and Thomason in the form attached hereto as
Exhibit C.
5.12 Noncompetition Agreement. At the Closing, Exchange
will enter into a Noncompetition Agreement with Smith in the form
attached hereto as Exhibit D.
5.13 Employment Agreements. At the Closing, Exchange and
Smith and Exchange and Hockenberry will enter into three-year
employment agreements in the form attached hereto as Exhibit E
and Exhibit F, respectively.
5.14 Appointment to Exchange Board of Directors. Exchange
agrees that following the Closing, Smith will be appointed to the
Board of Directors of Exchange, and Exchange represents that its
present intention is to nominate Smith for reelection as a Board
candidate at subsequent meetings of the shareholders of Exchange.
5.15 The Board of Directors of the Bank.
(a) Sellers agree that concurrently with the Closing,
Sellers will take all actions necessary to ensure that David T.
Turner is appointed to the Board of Directors of the Bank.
(b) Exchange and the Individual Shareholders agree
that following the Closing, each of the Individual Shareholders
will continue to serve on the Board of Directors of the Bank, <PAGE> and
Exchange represents that its present intention is to continue to
elect each of the Individual Shareholders as directors of the
Bank so long as they are able to serve in such capacity. Each of
the Individual Shareholders agrees, if elected, to serve as a
director of the Bank, if able to do so, for a period of six years
following the Closing.
5.16 Notes Held Solely for Investment Purposes. The
Individual Shareholders agree and acknowledge that they will hold
their respective Notes solely for purposes of investment and
without any intent to distribute such Notes.
5.17 Shareholders Purchase of Property. On or before the
Effective Date, Shareholders shall be entitled to purchase from
the Bank that portion of the real property and improvements
thereon located at 125 N. Main Street, Clinton, Missouri
consisting of a garage known as the "Downtown Drive-In Facility",
together with a 30 foot wide access easement from the overhead
door on the east side of such building to North Main Street. The
purchase price shall be $41,500, which is the appraised value set
forth in that certain appraisal report dated June 10, 1997
prepared by Whitlow Appraisal Services.
5.18 Regulatory Approvals. The Exchange Entities shall use
their best efforts to file within ten (10) business days
following the expiration of the Exchange Due Diligence Period,
and to diligently prosecute, all regulatory applications required
to be filed by it in order to consummate the Merger. The
Exchange Entities shall use their reasonable best efforts to
obtain all legally required approvals for the consummation of the
Merger and the other transactions contemplated hereby. The
Exchange 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.
5.19 Breaches. Each of Exchange 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.
5.20 Consummation of Agreement. The Exchange Entities shall
perform and fulfill all conditions and obligations on their part
to be performed or fulfilled under this Agreement and to effect
the Merger in accordance with the terms and conditions of this
Agreement.
ARTICLE VI
CONDITIONS
6.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment or waiver at or prior
to the Closing Date of the following conditions:
<PAGE>
(a) The approval of the Merger, this Agreement and the
Merger Agreement shall have received the approval of the Board of
Directors of Exchange and the requisite vote of shareholders of
USB at the special meeting of shareholders called pursuant to
Section 5.03 hereof.
(b) This Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby shall have been
approved by the Federal Reserve, the Missouri Director of Finance
and any other federal and/or state regulatory agencies whose
approval is required for consummation of the transactions
contemplated hereby, and such approvals shall be continuing in
effect.
(c) Neither USB, the Bank, Exchange 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 Merger.
(d) No litigation challenging the Merger shall be
pending or have been threatened.
6.02 Conditions to Obligations of the Sellers. The
obligations of the Sellers to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Time of
the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of the Exchange Entities 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 Exchange 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 Exchange 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
Exchange, signing solely in his capacity as an officer of
Exchange, and is to that effect and also states that all of the
conditions set forth in Sections 6.01 and 6.03 shall have been
satisfied or waived as provided therein.
(b) Performance of Obligations. The Exchange Entities
shall have performed in all material respects all obligations
required to be performed by each under this Agreement prior to
the 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 Exchange, signing solely in his capacity
as an officer of Exchange, and is to that effect.
<PAGE>
(c) Permits, Authorizations, etc.. The Exchange
Entities shall have obtained any and all material permits,
authorizations, consents, waivers and approvals required for the
lawful consummation by it of the 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 Exchange and its subsidiaries, taken as a whole.
(e) Opinion of Counsel. Exchange shall have delivered
to the Sellers an opinion of counsel to Exchange dated as of the
Closing Date or a mutually agreeable earlier date in
substantially the form set forth as Exhibit G to this Agreement.
6.03 Conditions to Obligations of the Exchange Entities.
The obligations of the Exchange Entities to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the
Effective Time of the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of the Sellers set forth in
Article II 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 USB 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 USB or the Bank and
(iii) for the effect of transactions contemplated by this
Agreement) and Exchange shall have received a signed certificate
which is to the best knowledge of the Chairman of the Board and
President of each of USB 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 Exchange shall have received a signed certificate which
is to the knowledge of the Chairman of the Board and President of
each of USB 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
USB or the Bank's businesses required for the consummation of the
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 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 USB or the Bank.
<PAGE>
(e) Opinion of Counsel. The Sellers shall have
delivered to Exchange 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 H 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 Exchange, and
Sellers shall have made available to Exchange and its authorized
representatives for examination the originals or true and correct
copies of all documents relating to the business and affairs of
USB and the Bank which Exchange and its authorized
representatives may reasonably request.
(g) Employment of Hockenberry. Exchange and
Hockenberry shall have entered into an employment agreement on
terms satisfactory to Exchange and as described in Section 5.13.
(h) Total Assets of the Bank. As of the Closing Date,
the total assets of the Bank shall be equal to or greater than
$127,000,000, and the tangible equity capital of the Bank shall
be equal to or greater than $9,078,000, excluding unrealized
securities gains or losses and realized securities gains during
calendar year 1997.
(i) Indebtedness of USB. As of the Closing Date, the
principal amount of the total indebtedness of USB shall not
exceed the principal amount of the total indebtedness of USB as
of March 31, 1997.
(j) Limitation on Certain Loans and Non-Performing
Assets. The aggregate amount of all loans described by Section
2.09(f)(vi) and all Non-Performing Assets pursuant to Section
2.12(c) shall not exceed $500,000.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01 Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval
by the shareholders of USB,
(a) by mutual consent by the Board of Directors of
Exchange and the Board of Directors of USB;
(b) by the Board of Directors of Exchange or the Board
of Directors of USB hereto at any time after March 31, 1998 if
the Merger shall not theretofore have been consummated;
<PAGE>
(c) by the Board of Directors of Exchange or the Board
of Directors of USB if the Federal Reserve, the Missouri Director
of Finance or any other federal and/or state regulatory agency
whose approval is required for the consummation of the Merger
shall have denied approval of such transaction;
(d) by the Board of Directors of Exchange, at any time
prior to the completion of the Exchange Due Diligence Period, in
the event any situation, event, circumstance or other matter
shall come to the attention of Exchange during the course of
Exchange Due Diligence Review conducted pursuant to Section
5.01(b) hereof which Exchange 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
Exchange or its shareholders;
(e) by the Board of Directors of Exchange, on the one
hand, or by the Board of Directors of USB, 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 Exchange pursuant to
and in accordance with the provisions of Section 5.05 hereof; or
(g) by the Board of Directors of Exchange in the event
that it reasonably determines that a material adverse change in
the financial position or business of USB or the Bank shall have
occurred or if USB 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 Exchange 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
7.02 Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.01 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 5.01(a), Section 5.06 and Article
VIII, and, except that no termination of this Agreement pursuant
to subsection (e) of Section 7.01 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
Exchange for a breach by any Seller are inadequate and that in
addition to other remedies, Exchange shall be entitled to
specific performance in other equitable remedies.
Notwithstanding the foregoing, in the event that <PAGE> this Agreement
is terminated pursuant to Section 7.01(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
appropriate damages from the breaching party; provided, however,
that no party shall be liable for a breach of such representation
or warranty unless such party had actual knowledge of the
inaccuracy or breach of such representation or warranty which
results in the termination of this Agreement at the time that it
was made. For the purposes of the foregoing, "actual knowledge"
in the case of Sellers shall mean the knowledge of any director,
Chief Executive Officer or Chief Financial Officer of Bank or
USB.
7.03 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
Exchange and USB, at any time before or after approval of this
Agreement and the Merger Agreement by the shareholders of USB;
provided, however, that no such modification shall (A) alter the
amount or change the form of the Merger Consideration
contemplated by this Agreement to be received by the shareholders
of USB, (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 USB or (D) impede or delay receipt of any
approvals referred to in Section 6.01(b) or the consummation of
the transactions contemplated by this Agreement and the Merger
Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
7.04 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 VIII
INDEMNIFICATION
8.01 Indemnification. The Shareholders, jointly and
severally, and Exchange (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
<PAGE>
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses (including
legal expenses) incident to any of the foregoing provisions.
8.02 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 8.01, 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 VIII. 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.
8.03 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.
<PAGE>
8.04 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.
8.05 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 $25,000. After cumulative aggregate losses
equal $100,000, Indemnitee shall be entitled to full and complete
recovery of all losses incurred.
8.06 Limitations. Notwithstanding any provision of this
Article VIII 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 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 one year
after the Closing Date.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-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. Except for and to the extent provided in this
Section 9.01, no representation, warranty, covenant or agreement
contained in this Agreement shall survive the Effective Time or
the earlier termination of this Agreement. The agreements set
forth in Articles I and VIII and in Sections 5.09, 5.10, 5.11,
5.12, 5.13, 5.14, 5.15, 5.16 and 5.17, and all of the
representations and warranties of Sellers or the Exchange
Entities, shall survive until the first anniversary of the
Closing Date. The agreements set forth in Section 7.02 shall
survive the Effective Time or the earlier termination of this
Agreement.
9.02 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 9.02 shall be void and of no effect. There shall not be
any third party beneficiaries of any provisions hereof.
<PAGE>
9.03 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.
9.04 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.
9.05 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.
9.06 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.
9.07 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.
9.08 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 Exchange Entities:
Exchange National Bancshares, Inc.
132 E. High Street
Jefferson City, MO 65010-0688
Attention: Donald L. Campbell
Chairman and President
Telecopy: 573-761-5745
<PAGE>
and copy to:
Stinson, Mag & Fizzell, P.C.
1201 Walnut Street, Suite 2800
Kansas City, MO 64106
Attention: Howard H. Mick
Telecopy: 816-691-3495
(ii) if to Sellers:
Union State Bancshares, Inc.
102 N. Second
Clinton, MO 64735-0646
Attention: James E. Smith
President
Telecopy: 816-885-6820
and copy to:
Lewis, Rice & Fingersh
500 N. Broadway, Suite 2000
St. Louis, MO 63102
Attention: John K. Pruellage
Telecopy: 314-241-6056
<PAGE>
9.09 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.
"EXCHANGE ENTITIES"
EXCHANGE NATIONAL BANCSHARES, INC.
ATTEST:
By: /s/ Donald L. Campbell
Donald L. Campbell
Chairman and President
/s/ LaMont C. Grubbus
Secretary
ENBUSB ACQUISITION COMPANY, INC.
ATTEST:
By: /s/ David T. Turner
David T. Turner
President
/s/ Donald L. Campbell
Secretary
<PAGE>
"SELLERS"
UNION STATE BANK & TRUST OF CLINTON
ATTEST:
By: /s/ James E. Smith
James E. Smith
President
/s/ Darrell Hockenberry, Sr. VP
Secretary
UNION STATE BANCSHARES, INC.
ATTEST:
By: /s/ Gus S. Wetzel II
Gus S. Wetzel, II
Chairman
/s/ James E. Smith
Secretary
/s/ Gus S. Wetzel II
Gus S. Wetzel, II
/s/ Gus S. Wetzel II, Trustee
Gus S. Wetzel, II, Trustee of the
Gus S. Wetzel II Revocable Trust
/s/ Douglas L. Thomason
Douglas L. Thomason
/s/ James E. Smith
James E. Smith
/s/ Darrell Hockenberry
Darrell Hockenberry
(as to Section 5.13 only)
<PAGE>
EXHIBIT A
MERGER AGREEMENT
This Merger Agreement and Plan of Merger (the "Merger
Agreement") dated as of ____________, 1997 by and between UNION
STATE BANCSHARES, INC., a Missouri corporation ("USB"), and
ENBUSB ACQUISITION COMPANY, INC., a Missouri corporation
("Acquisition Company"), such corporations being hereinafter
collectively referred to as the "Constituent Corporations".
WITNESSETH:
WHEREAS, USB has an authorized capital of 3,000 shares
of common stock, $10.00 par value (the "USB Common Stock"), of
which 556.88 shares are issued and outstanding on the date
hereof; and
WHEREAS, Acquisition Company has an authorized capital
of 30,000 shares of common stock, $1.00 par value (the
"Acquisition Company Common Stock"), of which 1,000 shares are
issued and outstanding on the date hereof and which are owned
beneficially and of record by Exchange National Bancshares, Inc.,
a Missouri corporation ("Exchange"); and
WHEREAS, the respective Boards of Directors of USB and
Acquisition Company each have duly approved this Merger Agreement
providing for the merger of Acquisition Company with and into USB
as the surviving corporation as authorized by the statutes of the
State of Missouri (the "Merger"); and
WHEREAS, Acquisition Company, USB, the holders of 91.6%
of the USB Common Stock ("Controlling Shareholders"), and
Exchange have entered into an Acquisition Agreement (the
"Acquisition Agreement"), pursuant to which Acquisition Company
will merge with and into USB and the shareholders of USB will
receive cash and promissory notes of Exchange in exchange for
their USB Common Stock; and
WHEREAS, the parties have entered into this Merger
Agreement for the purpose of effectuating the Merger;
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for the
purpose of setting forth the terms and conditions of the Merger,
the manner and the basis of causing the shares of USB Common
Stock to be exchanged for or converted to cash or notes, as
herein provided, and such other details and provisions as are
deemed necessary or proper, the parties hereto have agreed as
follows:
<PAGE>
ARTICLE I
Merger and Name of Surviving Bank
At the Effective Time (as defined herein), Acquisition
Company shall be merged with and into USB, which is hereby
designated as the "Surviving Corporation," the name of which upon
and after the Effective Time shall be "Union State Bancshares,
Inc.".
ARTICLE II
Terms and Conditions of Merger
The terms and conditions of the Merger are (in addition
to those set forth elsewhere in this Agreement) as follows:
Section 1. At the Effective Time:
(a) Acquisition Company shall be merged with and into
USB, and USB shall be, and is designated herein as, the Surviving
Corporation.
(b) The separate existence of Acquisition Company
shall cease.
(c) The Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each
of the Constituent Corporations; and all property, real, personal
and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all
and every other interest, of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any
interest therein, vested in either Constituent Corporation shall
not revert or be in any way impaired by reason of the Merger; the
Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of each of the
Constituent Corporations; and any claim existing or action or
proceeding pending by or against either of such Constituent
Corporations may be prosecuted to judgment as if the Merger had
not taken place, or such Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be
impaired by the Merger.
Section 2. At the Effective Time, the Articles of
Incorporation of the Surviving Corporation shall be the Articles
of Incorporation of USB in effect immediately prior to the
Effective Time, until amended in accordance with its provisions
and applicable law. Surviving Corporation's capital account and
surplus accounts shall equal the combined capital accounts and
surplus accounts, respectively, of USB and of Acquisition Company
immediately prior to the Merger.
<PAGE>
Section 3. At the Effective Time, the members of
the Board of Directors and the terms of these directors shall be
as designated by Exchange immediately prior to the Effective
Time.
Section 4. At the Effective Time, the officers of
the Surviving Corporation shall be the persons designated by
Exchange immediately prior to the Effective Time, and such
persons will serve in their designated offices, thereafter, until
their respective successors are duly elected and qualified.
ARTICLE III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of USB
into the right to receive cash and notes of Exchange and the mode
of carrying the Merger into effect are as follows:
Section 1. Conversion of Acquisition Company Common
Stock
At the Effective Time, the 1,000 shares of Acquisition
Company Common Stock outstanding shall be converted into 100
shares of Surviving Corporation common stock.
Section 2. Conversion of USB Common Stock
(a) At the Effective Time, Exchange will pay cash and
issue and deliver its promissory notes as provided in the
Acquisition Agreement pursuant to the Merger (hereinafter such
promissory notes and cash shall be referred to in the aggregate
as the "Merger Consideration"). Each of the shareholders of USB
will be entitled to receive the proportion of the Merger
Consideration that is determined by multiplying such Merger
Consideration by such shareholders' respective percentage
ownership interests in USB, adjusted as between cash and notes as
provided in the Acquisition Agreement.
(b) At the Effective Time, by virtue of the Merger and
without any action on the part of Exchange, Acquisition Company,
USB or any USB shareholder, each share of USB Common Stock issued
and outstanding at the Effective Time, other than any shares held
by Exchange by virtue of Section 2(a) or any holder who becomes
entitled to payment of the fair value of such shares under
Section 351.455 of the Missouri Revised Statutes, shall cease to
be outstanding and shall be converted into and become the right
to receive his or her share of the Merger Consideration as
determined in Section 2(a) hereof.
Section 3. Dissenting USB Shareholders
The Constituent Corporations agree that the Surviving
Corporation will comply with the provisions of Section 351.455,
as amended, and will promptly pay to the dissenting <PAGE> shareholders
of USB the amount, if any, to which they shall be entitled under
the provisions of said section.
Section 4. USB Common Stock Certificates
After the Effective Time, each holder of an outstanding
certificate which prior thereto represented shares of USB Common
Stock shall be entitled, upon surrender thereof to Exchange or
its designee, to receive in exchange therefor the proportion of
the Merger Consideration into which it is entitled to be
exchanged or converted. Until so surrendered, each such
outstanding certificate which, prior to the Effective Time,
represented shares of USB Common Stock shall for all purposes
evidence solely the right to receive the Merger Consideration for
which such shares shall be entitled to be exchanged or converted.
The Merger Consideration shall be paid or issued in
full satisfaction of all rights pertaining to all USB shares
outstanding at the Effective Time.
ARTICLE IV
Other Provisions with Respect to Merger
Section 1. This Merger Agreement shall be submitted
to the shareholders of each Constituent Corporation as provided
by Chapter 351 of the Missouri Revised Statutes (the "Missouri
Corporate Law"). After the approval or adoption thereof by the
shareholders of each Constituent Corporation in accordance with
the requirements of the Missouri Corporate Law, and after all
conditions to the consummation of the Merger pursuant to the
Acquisition Agreement have been satisfied or waived by the party
or parties entitled to waive such conditions, all required
documents shall be executed, filed and recorded and all required
acts shall be done in order to accomplish the Merger pursuant to
the Missouri Corporate Law.
Section 2. If the Acquisition Agreement is
terminated, then this Merger Agreement shall simultaneously
terminate without further action by the Constituent Corporations.
In the event of such termination, the Board of Directors of each
of the Constituent Corporations shall direct its officers not to
file this Merger Agreement as provided above notwithstanding
favorable action on this Merger Agreement by the shareholders of
each Constituent Corporation.
ARTICLE V
Approval and Effective Time of Merger; Miscellaneous Matters
Section 1. The Merger shall become effective when this
Merger Agreement has been (a) authorized, adopted and approved on
behalf of each Constituent Corporation in accordance with the
Missouri Corporate Law, and (b) filed with the Missouri Secretary
of State. The time at which such actions are completed and the
required certificate of merger is issued by the Missouri
Secretary of State is herein referred to as the "Effective Time."
<PAGE>
Section 2. If at any time the Surviving Corporation
shall deem or be advised that any further grants, assignments,
confirmations or assurances are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to any property of USB acquired or to be
acquired by or as a result of the Merger, the officers and
directors of the Surviving Corporation shall be and they hereby
are severally and fully authorized to execute and deliver any and
all such deeds, assignments, confirmations and assurances and to
do all things necessary or proper so as to best prove, confirm
and ratify title to such property in the Surviving Corporation
and otherwise carry out the purposes of the Merger and the terms
of this Merger Agreement.
Section 3. For the convenience of the parties, and to
facilitate the filing and recording of this Merger Agreement, any
number of counterparts hereof may be executed, and each such
counterpart shall be deemed to be an original instrument, and all
such counterparts together shall be considered one instrument.
Section 4. This Merger Agreement cannot be altered or
amended except pursuant to an instrument in writing signed on
behalf of the parties hereto.
IN WITNESS WHEREOF, each Constituent Corporation has
caused this Merger Agreement to be executed, all as of the date
first above written.
UNION STATE BANCSHARES, INC.
[SEAL] By: ___________________________
ATTEST:
___________________
ENBUSB ACQUISITION COMPANY, INC.
[SEAL]
By: ____________________________
ATTEST:
___________________
<PAGE>
EXHIBIT B
PROMISSORY NOTE
$__________ __________, 1997
FOR VALUE RECEIVED, the undersigned, Exchange National
Bancshares, Inc., a Missouri corporation (the "Maker"), hereby
promises to pay to the order of _______________, his successors,
heirs or assigns (the "Holder") the principal sum of
_________________ Dollars ($__________) on ___________, 2002,
together with interest on the unpaid principal balance hereof at
the rate of seven percent (7%) per annum. Quarterly installments
of accrued interest only shall be made commencing _________, 1997
and each _________, ________ and ________ thereafter until this
Note is fully paid. Interest shall be computed for the actual
days elapsed over a year deemed to consist of 365 days.
If any installment of this Note becomes due and payable
on a Saturday, Sunday or business holiday in the State of
Missouri, payment shall be made on the next successive business
day with the same effect as though made on the due date.
Maker reserves the right to prepay all or any portion
of this Note at any time and from time to time without premium or
penalty of any kind upon 60 days' notice to Holder; provided,
however, that no prepayment of the principal balance of this Note
may be prepaid on or before _______, 2000.
If (i) Maker or any other person liable hereon should
make an assignment for the benefit of creditors, (ii) attachment
or garnishment proceedings are commenced against Maker or any
other person liable hereon, (iii) a receiver, trustee or
liquidator is appointed over or execution levied upon any
property of Maker, (iv) proceedings are instituted by or against
Maker or any other person liable hereon under any bankruptcy,
insolvency, reorganization, receivership or other law relating to
the relief of debtors from time to time in effect, including
without limitation the United States Bankruptcy Code, as amended,
(v) Maker liquidates or dissolves, (vi) Maker fails to pay any
principal or interest when due hereunder, (vii) Maker fails to
maintain the collateral described herein, perform or pay any
covenant or obligation in this Note or in any other obligation of
Maker to the Holder hereof in any agreement that secures this
Note or has been executed and delivered to the Holder hereof in
connection with the indebtedness evidenced by this Note,
(viii) Maker breaches any representation or warranty made to
Holder under the Acquisition Agreement (as hereinafter defined),
or (ix) Maker's tangible equity capital at any time is less than
seven percent of its assets, then, and in each such event, Holder
may, at its option, and without notice or demand of any kind
except as provided below, declare the remaining unpaid principal
balance of this Note and all accrued interest thereon immediately
due and payable in full; provided, however, that prior to
declaring a default pursuant to clauses (vi), (vii), (viii) or
(ix), Holder shall give Maker fifteen (15) days' prior notice and
allow an opportunity to cure during such period.
<PAGE>
Any amount hereunder which is not paid when due,
whether at stated maturity, by acceleration or otherwise, shall
bear interest from the date when due until paid at the lesser of
(i) the rate of nine percent (9%) per annum or (ii) the maximum
rate permitted by law, said interest to be compounded annually
and shall be payable to Holder on demand.
All payments made hereunder shall be made in lawful
currency of the United States of America and paid to Holder at
____________________, or at such other place as Holder may
designate in writing. All payments made hereunder, whether a
scheduled installment, prepayment or payment as a result of
acceleration, shall be allocated first to accrued but unpaid
interest and then to the principal balance remaining outstanding
hereunder.
If default be made, whether by failure to make payment
of any amount when due, or by any other default as defined above,
the Holder of this Note may, at the option of said Holder and
without notice to Maker, declare all unpaid indebtedness
evidenced by this Note or any other obligation of Maker to the
holder hereof immediately due and payable. Failure to do so at
any time shall not constitute a waiver of the right of the Holder
hereof to do so at any other time. Upon default, Maker agrees to
pay all costs of collection together with costs of any case or
proceedings under the Bankruptcy laws of the United States. Such
costs shall include reasonable attorneys' fees incurred in
connection with such collection, whether or not litigation should
be commenced in aid thereof, and such fees incurred in connection
with any such bankruptcy case or proceeding.
This Note is made pursuant to the provisions of that
certain Acquisition Agreement, dated as of July ___, 1997, among
Maker, ENBUSB Acquisition Company, Union State Bank & Trust of
Clinton (the "Bank"), Union State Bancshares, Inc. ("USB"),
Holder and certain other parties. This Note is secured by all of
Maker's/USB's interest in and to the common stock of the Bank, as
described in that certain Stock Pledge Agreement, dated as of
_________, 1997, among Maker, Holder and certain other persons
holding similar notes whose obligations are also secured thereby,
and reference to the Stock Pledge Agreement is made for a
statement of the rights of Holder with respect to such
collateral. The Holder hereof shall also have all of the rights
and may pursue and obtain all of the remedies of a secured party
under the Uniform Commercial Code then effective in the State of
Missouri, and the Holder hereof may immediately dispose of any
part or all of the Collateral held by it as security under such
security documents.
Maker, for itself and for any guarantors, sureties,
endorsers and/or any other person or persons now or hereafter
liable hereon, if any, hereby waives demand of payment,
presentment for payment, protest, notice of nonpayment or
dishonor and any and all other notices and demands whatsoever,
and any and all delays or lack of diligence in the collection
hereof, and expressly consents and agrees to any and all
extensions or postponements of the time of payment hereof from
time to time at or after maturity and any other indulgence and
waives all notice thereof.
<PAGE>
All rights and powers of the Holder hereof shall inure
to its successors or assigns, and all agreements herein shall
bind the successors and assigns of Maker.
By executing this Note on behalf of Maker, the
undersigned officer of Maker, in his personal and individual
capacity, represents to Holder that such officer is duly
authorized and empowered to execute and deliver this Note on
behalf of Maker and that this Note constitutes the legal, valid
and binding obligation of Maker, enforceable against Maker in
accordance with its terms.
This Note shall be governed by and construed and
enforced in accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the undersigned has duly caused
this Note to be executed and delivered as of the date first
written above.
EXCHANGE NATIONAL BANCSHARES, INC.
By: __________________________
Name:
Title:
<PAGE>
EXHIBIT B1
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement") is made
and entered into as of ______________ __, 1997, by and among
Union State Bancshares, Inc., a Missouri corporation ("Pledgor"),
and [list all recipients of Promissory Notes under Acquisition
Agreement] (collectively, "Pledgee").
RECITALS
A. Pursuant to that certain Acquisition Agreement
dated as of July 11, 1997, as amended, among Exchange National
Bancshares, Inc. ("Borrower"), ENBUSB Acquisition Company, Inc.,
Union State Bancshares, Inc. ("USB"), Union State Bank & Trust of
Clinton (and certain shareholders of USB ("Acquisition
Agreement"), Pledgee has received promissory notes, dated of even
date herewith ("Notes") from Borrower in partial payment of the
consideration due Pledgee for their shares of USB under the
Acquisition Agreement.
B. Pledgor owns 100% of the issued and outstanding
voting stock of Union State Bank & Trust of Clinton, a Missouri
state trust company ("Subsidiary"), which stock as of the date of
this Agreement consists of 20,000 shares of $100 par value common
stock) (collectively, the "Shares").
C. Under Section 1.07(a)(i) of the Acquisition
Agreement, Borrower has agreed to secure or cause to be secured
the repayment of the Notes to Pledgee with a pledge of all of
issued and outstanding capital stock of Subsidiary, as hereafter
provided.
AGREEMENT
In consideration of the foregoing, the mutual
agreements below and other sufficient consideration, the receipt
of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. GENERAL. Unless the context of this Agreement clearly
requires otherwise, (i) references to the plural include the
singular and vice versa, (ii) references to any Person include
such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement,
(iii) references to one gender include all genders, (iv)
"including" is not limiting, (v) "or" has the inclusive meaning
represented by the phrase "and/or", (vi) the words "hereof",
"herein", "hereby', 'hereunder" and similar terms in this
Agreement refer to this Agreement as a whole, including its
Exhibits, and not to any particular provision of this Agreement,
(vii) the word "Section" or "section" and "Page" or "page" refer
to a section or page, respectively, of this Agreement unless it
expressly refers to something else, (viii) reference to any
agreement, document, or instrument, including this Agreement, any
other agreement, document or instrument defined herein, means
such agreement, document, or instrument as it may have been or
may be amended, restated, extended, renewed, replaced, or
otherwise modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms hereof, and
includes all attachments thereto and instruments incorporated
therein, if any, and (ix) general and specific references to any
Law means such Law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time. Section
captions are for convenience only and do not affect the
interpretation or construction of this Agreement.
2. DEFINED TERMS. All capitalized terms not otherwise
defined herein have the meanings given them in the Notes and the
Acquisition Agreement. Capitalized terms used and not otherwise
defined herein or the Notes shall have the meanings given them in
the UCC.
<PAGE>
3. PLEDGE AND GRANT OF SECURITY INTEREST.
3.1. To secure the full and prompt payment and
performance of all the obligations of Borrower to each and every
Pledgee under the Notes (the "Secured Obligations"), Pledgor
hereby grants to Pledgee a security interest under the UCC in all
of the Shares. The Shares are represented by certificates which
are delivered with this Agreement, together with a stock power
attached to each such certificate executed in blank by Pledgor,
to Pledgee or to an escrow agent reasonably satisfactory to each
of Borrower, Pledgor and Pledgee. The cost of any such escrow
agent shall be borne by Borrower.
3.2. In addition, Pledgor hereby grants to Pledgee a
security interest in the following (which are deemed to be
included in the term "Shares"): (i) all dividends, cash,
securities, instruments and other property from time to time
paid, payable or otherwise distributed in respect of or in
exchange for any or all of such Shares, (ii) any and all
warrants, options, subscriptions or other contractual
arrangements for the purchase of stock or securities convertible
into stock, (iii) any and all distributions made by Borrower with
respect to the Shares, whether in cash or in kind, by way of
dividends or stock splits, or pursuant to a merger or
consolidation or otherwise, or any substitute security issued
upon conversion, reorganization or otherwise, (iv) any and all
other property hereafter delivered to Pledgor or Pledgee in
substitution for or in addition to any of the foregoing
(including all securities issued pursuant to any shareholder
agreement, stock purchase agreement, stock purchase rights or
other agreement with respect to stock of Borrower to which
Pledgor may now or hereafter be a party), all certificates and
instruments representing or evidencing such property and all
cash, securities, interest, dividends, rights, and other property
at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
thereof, and (v) any and all proceeds of any of the foregoing.
If any of the foregoing is received by Pledgor, Pledgor will
immediately deliver the same to Pledgee or its designated
nominee, accompanied, if appropriate, by proper instruments of
assignment and/or stock powers executed by Pledgor in accordance
with Pledgee's instructions, to be held subject to the terms of
this Agreement; provided, however, that, if no default then
exists, Pledgor may retain all cash dividends in respect of the
Shares. If Pledgor fails to make delivery to Pledgor in
compliance with the preceding sentence, all such property shall
be deemed received by Pledgor in trust for the benefit of Pledgee
and shall be segregated from the other property and funds of
Pledgor.
4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants that:
4.1. Pledgor owns the Shares, free of all security
interests, liens and encumbrances, other than in favor of
Pledgee.
4.2. There are no outstanding warrants, options,
subscriptions or other contractual arrangements for the purchase
of any other shares of stock or any securities convertible into
shares of stock of Subsidiary.
4.3. The delivery of the Shares to Pledgee (or escrow
agent) pursuant to this Agreement and the filing of the financing
statement(s), which have been, or contemporaneously with the
execution of this Agreement will be, delivered to Pledgee, in the
offices shown thereon, create a valid and fully perfected first
priority security interest in the Shares, securing the payment of
the Secured Obligations.
4.4. No consent of any other party (including any
stockholder or creditor of Pledgor) and no governmental approval
is required for the exercise by Pledgee of the voting rights or
other rights <PAGE> or remedies granted in this Agreement with respect
to the Shares (except as may be required in connection with the
disposition of the Shares by laws affecting the offering and sale
of securities generally and by laws regulating the sale of banks
generally and Missouri state trust companies specifically).
4.5. Pledgor is duly authorized to execute and deliver
this Agreement to Pledgee, and this Agreement constitutes the
legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms.
4.6. Pledgor owns 100% of the issued and outstanding
stock of Subsidiary.
5. DILUTION OF STOCK. Pledgor agrees that it will not
cause or permit Subsidiary to issue any stock or other securities
(including any warrants, options, subscriptions or other
contractual arrangements for the purchase of stock or securities
convertible into stock) in addition to or in substitution for the
Shares. Pledgor will deliver hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all
writings evidencing any additional Shares together with executed
stock powers duly endorsed in blank.
6. ADDITIONAL SECURITY INTERESTS. Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with
respect to, any of the Shares, (ii) create or permit to exist any
security interest upon or with respect to any of the Shares,
except for the security interest created by this Agreement, or
(iii) enter into any other contractual obligations which may
restrict or inhibit Pledgee's right or ability to sell or
otherwise dispose of the Shares or any part thereof after the
occurrence of a Default hereunder.
7. CUSTODY AND PRESERVATION OF THE COLLATERAL. The powers
conferred on Pledgee hereunder are solely to protect Pledgee's
interest in the Shares and shall not impose any duty on it to
exercise any such powers. Except for the safe custody of the
Shares in its possession and the accounting for monies actually
received by it hereunder, Pledgee shall have no duty as to the
Shares. It is expressly agreed that Pledgee shall not have
responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other
matters relative to the Shares, whether or not Pledgee has or is
deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any third parties with
respect to the Shares. Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral
in its possession (including the Shares) even if it fails to sell
or convert Collateral which is failing in market value, but
Pledgee may do so at its option and all reasonable expenses
incurred in connection therewith shall be for the sole account of
the Pledgor. The failure of Pledgee to preserve or protect any
rights with respect to any of the Shares against other parties
will not be deemed a failure to exercise reasonable care in the
custody or preservation of such Shares.
8. MAINTENANCE OF GOOD STANDING; NO LIQUIDATION OR
DISSOLUTION. Until Pledgee returns the certificates representing
the Shares to Pledgor and such Shares are released from the
security interest hereof in accordance with Section 15 below,
Pledgor shall cause Subsidiary to maintain in good standing its
corporate existence and its right to transact business in those
states in which it is now or hereafter doing business. Pledgor
shall not at any time liquidate, merge or dissolve the
Subsidiary, or cause the same to occur, without the prior written
consent of Pledgee.
9. DEFAULT. Any one or more of the following constitutes
a "Default" hereunder:
<PAGE>
9.1. any representation or warranty made by Pledgor
herein proves to have been untrue or misleading in any material
respect when made;
9.2. a violation by Pledgor of any of the provisions or
conditions of this Agreement;
9.3. a change in the stock structure of Subsidiary
which would cause Pledgor, upon liquidation of Subsidiary, to be
entitled to receive less than 100% of the net assets of
Subsidiary; or
9.4. the occurrence of any default under the Notes, to
the extent not otherwise
described above.
10. REMEDIES. Upon the occurrence and during the
continuation of any Default, in addition to all other rights and
remedies of Pledgee under the Notes, at law or in equity, and
subject to applicable law relative to the stock of banks
generally and Missouri trust companies specifically:
10.1. Pledgee may at any time exercise any and all
of its rights and pursue any and all of its remedies under the
UCC, under any other applicable Law, and pursuant to this
Agreement and the Notes, including selling some or all of the
Shares at any public sale or, at private sale without
advertisement if in Pledgee's reasonable judgment such private
sale would result in a greater sale price than a public sale. In
the event Pledgee elects to proceed with respect to some or all
of the Shares, whenever applicable provisions of the UCC require
that notice be reasonable, ten (10) calendar days notice will be
deemed reasonable. Pledgee will not be obligated to make any
sale of any of the Shares regardless of notice of sale having
been given. Pledgee may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgee may bid
and become a purchaser at any such sale, if public, and upon any
such sale Pledgee may collect, receive, and hold and apply, as
provided herein, the proceeds thereof to the payment of the
Secured Obligations, and assign and deliver some or all of the
Shares and the certificates therefor to the purchaser at any such
sale. The proceeds from any such sale will be applied first to
the payment of expenses incurred in enforcement and collection of
the Secured Obligations and then to the payment of the Secured
Obligations.
10.2. Pledgee may, at any time in its discretion
and without notice to Pledgor, transfer any or all of the Shares
to, or register any or all of the Shares in the name of, Pledgee
or any of its nominees.
10.3. In the event that Pledgee determines that it
is advisable to register under or otherwise comply in any way
with the Securities Act of 1933 or any similar federal or state
law, or if such registration or compliance is required with
respect to any or all of the Shares prior to the sale thereof by
Pledgee, Pledgor will use its best efforts to -cause such
registration to be effectively made, at no expense to Pledgee,
and to continue such registration effective for such time as may
be reasonably necessary in the opinion of Pledgee, and will
reimburse Pledgee for any reasonable expense incurred by Pledgee
including reasonable attorneys' and accountants' fees and
expenses in connection therewith; and should Pledgee determine
that, prior to any public offering of any of the Shares, such
securities should be registered under the Securities Act of 1933
and/or registered or qualified under any other federal or state
law, and that such registration and/or qualification is not
practical, then Pledgor agrees that it will cooperate in a
commercially reasonable manner to arrange a private sale so as to
avoid a public offering, even though the sales price established
and/or obtained may be substantially less than might have been
obtained through a public offering. Pledgor further acknowledges
the impossibility of ascertaining the <PAGE> amount of damages which
would be suffered by Pledgee by reason of the failure by Pledgor
to perform any of the covenants contained in this Section and,
consequently, agrees that, if Pledgor fails to perform any of
such covenants, Pledgor will pay, as damages and not as a
penalty, an amount equal to the value of the Shares on the date
Pledgee demands compliance herewith.
Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact
effective upon the occurrence of a Default, with full authority
in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in Pledgee's discretion
to take any action and to execute any instrument which Pledgee
may deem necessary or advisable to accomplish the purposes of
this Agreement.
11. RIGHT TO VOTE SHARES. Until the Secured Obligations
have been fully and irrevocably paid, Pledgee has the sole right
to vote the Shares with regard to any proposed amendment to the
Articles of Agreement of Subsidiary which would result in a
change in the preferences, qualifications, limitations,
restrictions, or the special or relative rights with respect to
the Shares. Otherwise, Pledgor has the sole right to vote the
Shares unless there is a Default hereunder. Upon the occurrence
of a Default, all rights of the Pledgor to exercise the voting
and other consensual rights which it would otherwise be entitled
to exercise pursuant hereto shall cease, and all such rights
shall, upon notice by Pledgee to Pledgor, become vested in
Pledgee who thereupon shall have the sole right to exercise such
voting and other consensual rights and the sole right to receive
and hold as Collateral any dividends (and to the extent
permissible, apply them to the Secured Obligations).
12. PRESERVATION AND PERFECTION OF SECURITY INTERESTS.
Pledgor will promptly, upon the request of Pledgee and at
Pledgor's expense, execute, acknowledge and deliver, or cause the
execution, acknowledgment and delivery of, and thereafter, if
applicable, register, file or record in an appropriate
governmental office, any document or instrument supplemental to
or confirmatory of this Agreement, and give such further
assurances as may otherwise be necessary or desirable for the
creation, preservation and/or perfection of the security
interests described in this Agreement.
13. RELEASES. In the event all of the Secured Obligations
have been fully and irrevocably paid, and Pledgee has received a
written request from Pledgor in connection therewith, Pledgee
will, at Pledgor's sole cost and expense, return to Pledgor all
certificates representing the Shares that have not been sold,
disposed of, retained, or applied to the Secured Obligations,
with the stock powers executed by Pledgor attached, and such
Shares will be deemed released from any security interest
hereunder. Notwithstanding the foregoing, if Pledgor or Borrower
shall deliver to Pledgee, at Borrower's cost, an irrevocable
standby letter of credit in form and substance acceptable to
Pledgee, which fully secures the amounts outstanding under the
Notes, then Pledgee will, at Pledgor's sole cost and expense,
return to Pledgor all certificates representing the Shares that
have not been sold, disposed of, retained, or applied to the
Secured Obligations, with the stock powers executed by Pledgor
attached, and such Shares will be deemed released from any
security interest hereunder.
14. SURVIVAL OF PROVISIONS. All representations,
warranties, and covenants of Pledgor contained herein survive the
execution and delivery of this Agreement, and terminate only upon
the full and irrevocable payment of all of the Secured
Obligations.
<PAGE>
15. MISCELLANEOUS.
15.1. NOTICES. All notices, consents, requests and
demands to or upon the respective parties hereto must be in
writing, and will be deemed to have been given or made when
delivered in person to those Persons listed on the signature
pages hereof or when deposited in the United States mail, postage
prepaid, or, in the case of telegraphic notice, or the overnight
courier services, when delivered to the telegraph company or
overnight courier service, or in the case of telex or telecopy
notice, when sent, verification received, in each case addressed
as set forth on the signature pages hereof, or to such other
address as either party may designate by notice to the other in
accordance with the terms of this Section. No notice given to or
demand made on Pledgor by Pledgee in any instance entities
Pledgor to notice or demand in any other instance.
15.2. AMENDMENTS AND WAIVERS. No amendment to,
waiver of, or departure from full compliance with any provision
of this Agreement, or consent to any departure by Pledgor
herefrom, will be effective unless it is in writing and signed by
authorized officers of Pledgor and Pledgee; provided, however,
that any such waiver or consent will be effective only in the
specific instance and for the purpose for which given. No
failure by Pledgee to exercise, and no delay by Pledgee in
exercising, any right, remedy, power or privilege hereunder will
operate as a waiver thereof, nor will any single or partial
exercise by Pledgee of any right, remedy, power or privilege
hereunder preclude any other exercise thereof, or the exercise of
any other right, remedy, power or privilege.
15.3. RIGHTS CUMULATIVE. Each of the rights and
remedies of Pledgee under this Agreement is in addition to all of
their other rights and remedies under applicable law, and nothing
in this Agreement may be construed as limiting any such rights or
remedies.
15.4. SUCCESSORS AND ASSIGNS. This Agreement binds
Pledgor and its successors and assigns and inures to the benefit
of Pledgee, and each of their successors, transferees,
participants and assignees. Pledgor may not delegate or transfer
any of its obligations under this Agreement without the prior
written consent of Pledgee, except that in the event that
Borrower elects to dissolve Pledgor, Borrower or the then holder
of the Shares shall assume, in a writing delivered to Pledgee,
all of the obligations of Pledgor hereunder. With respect to
Pledgor's successors and assigns, such successors and assigns
include any receiver, trustee or debtor-in-possession of or for
Pledgor.
15.5. SEVERABILITY. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in
any jurisdiction is, as to such jurisdiction, ineffective to the
extent of such prohibition, unenforceability or nonauthorization
without invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision in any
other jurisdiction unless the ineffectiveness of such provision
would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
15.6. GOVERNING LAW; NO THIRD PARTY RIGHTS. This
Agreement is to be governed by and construed and interpreted in
accordance with the internal Laws of the State of Missouri
applicable to contracts made and to be performed wholly within
such state, without regard to choice or conflicts of law
principles. This Agreement is solely for the benefit of the
parties hereto and their respective successors and assigns, and
no other Person has any right, benefit, priority or interest
under, or because of the existence of, this Agreement.
<PAGE>
15.7. COUNTERPARTS. This Agreement may be executed
by the parties hereto on any number of separate counterparts, and
all such counterparts taken together constitute one and the same
instrument. It is not necessary in making proof of this
Agreement to produce or account for more than one counterpart
signed by the party to be charged.
15.8. COUNTERPART FACSIMILE EXECUTION. For
purposes of this Agreement, a document (or signature page
thereto) signed and transmitted by facsimile machine or
telecopier is to be treated as an original document. The
signature of any Person thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted
is to be considered to have the same binding effect as an
original signature on an original document. At the request of
any party hereto, any facsimile or telecopy document is to be
re-executed in original form by the Persons who executed the
facsimile or telecopy document. No party hereto may raise the
use of a facsimile machine or telecopier or the fact that any
signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in
compliance with this Section.
15.9. FINAL EXPRESSION; NO COURSE OF DEALING. This
Agreement, together with the Notes and any other agreement
executed in connection herewith or therewith, is intended by the
parties as a final expression of their agreement and is intended
as a complete and exclusive statement of the terms and conditions
thereof. Acceptance of or acquiescence in a course of
performance or course of dealing rendered or taken under or with
respect to this Agreement or the Notes will not be relevant to
determine the meaning of this Agreement or the Notes even though
the accepting or acquiescing party had knowledge of the nature of
the performance and opportunity for objection.
15.10. NEGOTIATED TRANSACTION. Pledgor and Pledgee
each represent to the other that in the negotiation and drafting
of this Agreement each has been represented by and has relied
upon the advice of counsel of its choice. Each of Pledgor and
Pledgee affirm that its counsel has had a substantial role in the
drafting and negotiation of this Agreement; therefore, this
Agreement will be deemed drafted by each of Pledgor and Pledgee,
and the rule of construction to the effect that any ambiguities
are to be resolved against the drafter will not be employed in
the interpretation of this Agreement.
15.11. ATTORNEY'S FEES AND OTHER COSTS. Pledgor
will reimburse Pledgee for all expenses incurred by Pledgee in
seeking to collect or enforce the Secured Obligations and any
other rights under this Agreement or any of the other instrument,
document or agreement evidencing or executed in connection with
any of the Secured Obligations, including reasonable attorneys'
fees and actual attorneys' expenses (whether or not there is
litigation), court costs and all costs in connection with any
proceedings under the United States Bankruptcy Code, and any
expenses incurred on account of damage to any property to which
any of the Collateral may be affixed.
15.12. ASSIGNMENT BY PLEDGEE. Pledgee may assign or
transfer to another Person any instrument, document or agreement
evidencing any of the Secured Obligations and Pledgee's rights
under this Agreement, and may deliver all the property which is
part of the Collateral and in its possession to the participant,
assignee or transferee or to any Person acting as agent for
Pledgee.
15.13. REINSTATEMENT. This Agreement and any and
all security interests created or evidenced hereby will continue
to be effective or be reinstated, as the case may be, as though
such payments had not been made, if at any time any amount
received by Pledgee in respect of the Secured Obligations is
rescinded or must otherwise be restored or returned by Pledgee,
including upon the <PAGE> insolvency, bankruptcy, dissolution,
liquidation or reorganization of Pledgor or upon the appointment
of any intervenor or conservator of, or trustee or similar
official for, Pledgor, any substantial part of its assets, or
otherwise.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first above written.
___________________________________
By: _______________________________
Name: _____________________________
Title: ____________________________
Pledgor's Address:
___________________________________
___________________________________
___________________________________
"Pledgee"
___________________________________
Pledgee's Address:
<PAGE>
EXHIBIT C
CONSULTING/NONCOMPETITION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered
into this ____ day of __________, 1997, by and between Exchange
National Bancshares, Inc., a Missouri corporation (the
"Company"), and ___________ ("Consultant").
WITNESSETH:
WHEREAS, the Company has on this date acquired 100% of
the issued and outstanding common stock of Union State
Bancshares, Inc., a Missouri corporation ("USB") previously owned
by Consultant and the other shareholders of USB pursuant to that
certain Acquisition Agreement dated July ___, 1997 (the
"Acquisition Agreement"); and
WHEREAS, USB is the owner of 100% of the issued and
outstanding shares of common stock of Union State Bank & Trust of
Clinton, a Missouri trust company (the "Bank"); and
WHEREAS, Consultant has been active in the management
of the Bank, has considerable knowledge concerning the business
and affairs of the Bank and has important relationships with
certain customers of the Bank; and
WHEREAS, the Company desires to assure itself of the
ability to call upon Consultant from time to time as herein set
forth to utilize Consultant's knowledge and expertise; and
WHEREAS, the Company also desires to protect the going
business value of the Bank from any adverse effects that might
result from competition by Consultant; and
WHEREAS, pursuant to the Acquisition Agreement,
Consultant has agreed to enter into this
Consulting/Noncompetition Agreement; and
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, the parties
hereto agree as follows:
1. Consulting Responsibilities. During the term of
this Agreement, Consultant agrees to serve as consultant to the
Company with respect to such business matters of the Company or
any of its subsidiaries and at such time or times as the Company
may reasonably request, including, without limitation, employee
relations, marketing decisions and solicitation and retention of
customers; provided, however, that Consultant shall not be
required to devote more than eight (8) hours per month to such
consulting responsibilities.
<PAGE>
2. Agreement to Serve on the Board of Directors of the
Bank. Consultant agrees, if elected, to serve as a director of
the Bank during the term of this Agreement.<F1>
3. Agreement Not to Compete. Consultant covenants and
agrees that Consultant shall not, directly or indirectly, during
the term of this Agreement:
(a) own, manage, operate, control or participate
in the ownership, management, operation, control or
financing of, or have any interest, financial or
otherwise, in or act as an officer, director, partner,
principal, employee, agent, representative, consultant
or independent contractor of, or in any way assist any
bank, savings and loan, savings bank or other financial
institution (other than the Bank) that is located or
has an office in or within fifteen (15) miles of any
boundary of Henry or St. Clair County, Missouri;
(b) solicit for employment or hire any employees
of the Bank; or
(c) solicit, or interfere with, any contracts or
business relationships with any customer, depositor or
borrower of the Bank.
4. Term. The term of this Agreement shall be for the
period commencing on the date hereof and terminating on the date
six (6) years thereafter.
5. Compensation.
(a) As compensation and payment for the services
and covenants of Consultant set forth above, the
Company shall pay to Consultant the aggregate sum of
three hundred thousand dollars ($300,000), without
interest, payable in six annual installments of fifty
thousand dollars ($50,000) each, commencing on the date
hereof. Such compensation shall be allocated as
follows: $60,000 ($10,000 per year) to the provision
of consulting services and $240,000 ($40,000 per year)
to the agreement not to compete with the Bank.<F2>
<F1> The Consulting/Noncompetition Agreement with Gus S.
Wetzel, II will contain the following additional provision:
Advisory Directorship. As of the Effective Date,
Company agrees, for a term of three (3) years, to
appoint Consultant to the Company's Board of Directors
as an advisory director of the Company. Company shall
invite Consultant to attend and participate in an
advisory capacity in all meetings of the Board of
Directors of the Company, subject to the provisions of
the Company's Bylaws.
<F2> The Consulting/Noncompetition Agreement with Gus S.
Wetzel, II will contain an additional provision providing that
Dr. Wetzel may continue using his present company car, at an
expense of $700 per month, which expense shall be deducted from
his annual compensation payment.
<PAGE>
(b) In the event of the death of Consultant during
the term hereof, the Company shall continue to make the
scheduled compensation and noncompetition payments as
provided hereunder for the remainder of the term, but
shall make such payments to Consultant's estate or such
other beneficiary as shall be designated by Consultant
from time to time in writing.
(c) During any period in which Consultant serves
on the board of directors of the Bank, Consultant shall
be entitled to the payment of board of directors fees
and compensation on the same basis as provided to other
Bank directors, which in any event shall not be less
than three hundred dollars ($300.00) for each board of
directors' meeting attended.
6. Judicial Modification. Although the parties hereto
consider the restrictions contained in Section 3 of this
Agreement to be reasonable for the purposes set forth herein, if
a final judicial determination is made by a court of competent
jurisdiction that the time, territory, scope or other restriction
contained in Section 3 of this Agreement is an unreasonable or
otherwise unenforceable restriction against Consultant, neither
this Agreement nor the provisions of such Section shall be
rendered void, but shall be deemed amended to apply as to such
maximum time, territory, scope and to such other extent as such
court may judicially determine or indicate to be reasonable or,
if such court does not so determine or indicate, to the maximum
extent which any pertinent statute or judicial decision may
indicate to be a reasonable restriction under the circumstances
involved.
7. Remedies. Consultant acknowledges and agrees that
the Company's remedy at law for a breach or threatened breach of
any of the provisions of Section 3 of this Agreement would be
inadequate and, in recognition of that fact, in the event of any
such breach or threatened breach, it is agreed that, in addition
to its remedy at law, the Company shall be entitled to, and
Consultant agrees not to oppose the Company's request for,
equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available. Nothing herein
contained shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or
threatened breach.
8. Independent Contractor. During the term of this
Agreement, Consultant shall act in the capacity of an independent
contractor and shall not be subject to the direction, control or
supervision of the Company with respect to the method or
performance of the consulting services hereunder. Consultant
shall be solely responsible for the payment of any income or
payroll taxes applicable to the payments made under Section 4
hereof.
<PAGE>
9. Miscellaneous.
(a) This Agreement cancels and supersedes all
previous agreements relating to the subject matter of
this Agreement, written or oral, between the parties
hereto and contains the entire understanding of the
parties hereto with respect to the subject matter
hereof. This Agreement shall not be amended, modified
or supplemented in any manner whatsoever except as
otherwise provided herein or in writing signed by each
of the parties hereto.
(b) The waiver by either party, or the failure by
either party to claim a breach (or give notice with
respect thereto), of any provision of this Agreement
shall not be, or be deemed to be, a waiver of any
subsequent breach, or deemed to affect in any way the
effectiveness, of such provision.
(c) Neither this Agreement, nor any of the
rights, duties or obligations of either party
hereunder, may be assigned (either voluntarily or by
operation of law) or otherwise delegated by such party
without the prior written consent of the other party
hereto. This Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the
parties hereto and their respective successors and
permitted assigns.
(d) In the event a final judicial determination
is made by a court of competent jurisdiction that any
provision of this Agreement is illegal, invalid or
unenforceable to any extent, the legality, validity and
enforceability of the other provisions of this
Agreement shall not be affected thereby, said provision
shall be modified by the court to the extent necessary
to render it not illegal, invalid or unenforceable, and
this Agreement shall continue in full force and effect
as modified and shall be enforced to the fullest extent
permitted by law.
(e) This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one
agreement which is binding upon all the parties hereto.
(f) Any notice, consent or communication under
this Agreement shall be effective only if it is in
writing and delivered in person or by delivery service
or sent by certified mail with postage prepaid or
nationally recognized express delivery service with
delivery confirmed, addressed as follows:
<PAGE>
If to the Company:
Exchange National Bancshares, Inc.
132 E. High Street
Jefferson City, MO 65010-0688
Attn: President
If to Consultant:
__________________________
__________________________
__________________________
or to any other address as either party may provide to
the other in writing.
(g) This Agreement and all rights and obligations
of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the laws
of the State of Missouri applicable to agreements made
and to be performed entirely within such State,
including all matters of enforcement, validity and
performance.
(h) The parties hereto represent that in the
negotiation and drafting of this Agreement they have
been represented by and relied upon the advice of
counsel of their choice. The parties affirm that their
respective counsel have had a substantial role in the
drafting and negotiation of this Agreement and,
therefore, this Agreement shall be deemed to have been
drafted by all of the parties hereto and the rule of
construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any
attachment hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
COMPANY:
EXCHANGE NATIONAL BANCSHARES, INC.
By: _______________________________
Name:
Title:
CONSULTANT:
__________________________________
Name:
<PAGE>
EXHIBIT D
NONCOMPETITION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered
into this ____ day of __________, 1997, by and between Exchange
National Bancshares, Inc., a Missouri corporation (the
"Company"), and James E. Smith ("Smith").
WITNESSETH:
WHEREAS, the Company has on this date acquired 100% of
the issued and outstanding common stock of Union State
Bancshares, Inc., a Missouri corporation ("USB") previously owned
by Smith and the other shareholders of USB pursuant to that
certain Acquisition Agreement dated July __, 1997 (the
"Acquisition Agreement"); and
WHEREAS, USB is the owner of 100% of the issued and
outstanding shares of common stock of Union State Bank & Trust of
Clinton, a Missouri trust company (the "Bank"); and
WHEREAS, Smith has served as President of the Bank and
has been active in the management of USB and the Bank, and
therefore has considerable knowledge and expertise concerning the
business and affairs of USB and the Bank; and
WHEREAS, the Company desires to protect the going
business value of the Bank from any adverse effects that might
result from competition by Smith; and
WHEREAS, pursuant to the Acquisition Agreement, Smith
has agreed to enter into this Noncompetition Agreement; and
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, the parties
hereto agree as follows:
1. Agreement Not to Compete. Smith covenants and
agrees that Smith shall not, directly or indirectly, during the
period commencing on the date hereof and ending on the date six
(6) years thereafter:
(a) own, manage, operate, control or participate
in the ownership, management, operation , control or
financing of, or have any interest, financial or
otherwise, in or act as an officer, director, partner,
principal, employee, agent, representative, consultant
or independent contractor of, or in any way assist any
bank, savings and loan, savings bank or other financial
institution (other than the Bank) that is located or
has an office in or within fifteen (15) miles from any
boundary of Henry or St. Clair County, Missouri;
<PAGE>
(b) solicit for employment or hire any employees
of the Bank; or
(c) solicit, or interfere with, any contracts or
business relationships with any customer, depositor or
borrower of the Bank.
2. Compensation.
(a) As compensation for the covenants of Smith
set forth above, the Company shall pay to Smith the
aggregate sum of three hundred thousand dollars
($300,000), without interest, payable in six annual
installments of fifty thousand dollars ($50,000) each,
commencing on the date hereof.
(b) In the event of the death of Smith during
the term hereof, the Company shall continue to make the
scheduled compensation payments as provided hereunder
for the remainder of the term, but shall make such
payments to Smith's estate or such other beneficiary as
shall be designated by Smith from time to time in
writing.
3. Judicial Modification. Although the parties hereto
consider the restrictions contained in Section 1 of this
Agreement to be reasonable for the purposes set forth herein, if
a final judicial determination is made by a court of competent
jurisdiction that the time, territory, scope or other restriction
contained in Section 1 of this Agreement is an unreasonable or
otherwise unenforceable restriction against Smith, neither this
Agreement nor the provisions of such Section shall be rendered
void, but shall be deemed amended to apply as to such maximum
time, territory, scope and to such other extent as such court may
judicially determine or indicate to be reasonable or, if such
court does not so determine or indicate, to the maximum extent
which any pertinent statute or judicial decision may indicate to
be a reasonable restriction under the circumstances involved.
4. Remedies. Smith acknowledges and agrees that the
Company's remedy at law for a breach or threatened breach of any
of the provisions of Section 1 of this Agreement would be
inadequate and, in recognition of that fact, in the event of any
such breach or threatened breach, it is agreed that, in addition
to its remedy at law, the Company shall be entitled to, and Smith
agrees not to oppose the Company's request for, equitable relief
in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy
which may then be available. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach.
5. Miscellaneous.
(a) This Agreement cancels and supersedes all
previous agreements relating to the subject matter of
this Agreement, written or oral, between the <PAGE> parties
hereto and contains the entire understanding of the
parties hereto with respect to the subject matter
hereof. This Agreement shall not be amended, modified
or supplemented in any manner whatsoever except as
otherwise provided herein or in writing signed by each
of the parties hereto.
(b) The waiver by either party, or the failure by
either party to claim a breach (or give notice with
respect thereto), of any provision of this Agreement
shall not be, or be deemed to be, a waiver of any
subsequent breach, or deemed to affect in any way the
effectiveness, of such provision.
(c) Neither this Agreement, nor any of the
rights, duties or obligations of either party
hereunder, may be assigned (either voluntarily or by
operation of law) or otherwise delegated by such party
without the prior written consent of the other party
hereto. This Agreement shall be binding upon, and
inure to the benefit of and be enforceable by, the
parties hereto and their respective successors and
permitted assigns.
(d) In the event a final judicial determination
is made by a court of competent jurisdiction that any
provision of this Agreement is illegal, invalid or
unenforceable to any extent, the legality, validity and
enforceability of the other provisions of this
Agreement shall not be affected thereby, said provision
shall be modified by the court to the extent necessary
to render it not illegal, invalid or unenforceable, and
this Agreement shall continue in full force and effect
as modified and shall be enforced to the fullest extent
permitted by law.
(e) This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one
agreement which is binding upon all the parties hereto.
(f) Any notice, consent or communication under
this Agreement shall be effective only if it is in
writing and delivered in person or by delivery service
or sent by certified mail with postage prepaid or
nationally recognized express delivery service with
delivery confirmed, addressed as follows:
If to the Company:
Exchange National Bancshares, Inc.
132 E. High Street
Jefferson City, MO 65010-0688
Attn: President
<PAGE>
If to Smith:
James E. Smith
__________________________
__________________________
or to any other address as either party may provide to
the other in writing.
(g) This Agreement and all rights and obligations
of the parties hereto shall be governed by, and
construed and interpreted in accordance with, the laws
of the State of Missouri applicable to agreements made
and to be performed entirely within such State,
including all matters of enforcement, validity and
performance.
(h) The parties hereto represent that in the
negotiation and drafting of this Agreement they have
been represented by and relied upon the advice of
counsel of their choice. The parties affirm that their
respective counsel have had a substantial role in the
drafting and negotiation of this Agreement and,
therefore, this Agreement shall be deemed to have been
drafted by all of the parties hereto and the rule of
construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
COMPANY:
EXCHANGE NATIONAL BANCSHARES, INC.
By:________________________________
Name:
Title:
SMITH:
___________________________________
James E. Smith
<PAGE>
EXHIBIT E
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into this
____ day of __________, 1997, between Exchange National
Bancshares, Inc., a Missouri corporation (the "Company"), and
James E. Smith (the "Employee").
WITNESSETH:
WHEREAS, the Company is a bank holding company
controlling 100% of the issued and outstanding shares of common
stock of Union State Bank & Trust of Clinton, a Missouri trust
company (the "Bank"); and
WHEREAS, Employee desires to become employed by the
Company in an executive capacity as President of the Bank for a
period of at least three years, and the Company desires to employ
Employee to serve in such capacity, for the compensation and in
accordance with the terms and provisions contained herein; and
NOW, THEREFORE, in consideration of the foregoing and
the mutual promises and covenants contained herein, the Company
and Employee agree as follows:
1. Employment. The Company agrees to employ the
Employee and the Employee agrees to be employed by the Company in
an executive capacity upon the terms and conditions of this
Agreement for a period of three (3) years from and after the date
of this Agreement, and any extensions thereafter, unless earlier
terminated as provided in Section 9 hereof. At each anniversary
of the date of this Agreement prior to the sixty-second (62nd)
birthday of the Employee, this Agreement shall be automatically
extended for one additional year unless the Company or the
Employee gives the other party written notice of such party's
intention not to extend this Agreement at least thirty (30) days
prior to such anniversary date. Employee agrees that his
employment by the Bank shall satisfy the Company's employment
obligation hereunder and that he will accept employment as
President of the Bank, so long, during the term of this
Agreement, that the Bank's Board of Directors shall name him to
be elected to that position. The Employee's primary location of
employment during the term of this Agreement shall be in Clinton,
Missouri unless the Employee consents in writing to relocate to
another geographic location.
2. Compensation. For all services rendered by the
Employee to the Bank and the Company, the Bank and the Company
shall pay the Employee a salary of not less than one hundred and
ten thousand dollars ($110,000) per year, payable in accordance
with the customary payroll practices of the Bank and the Company,
but in no event less frequently than monthly. Salary payments
shall be subject to withholding and other applicable taxes.
Employee shall be eligible for merit-based increases in
compensation on terms and conditions offered to employees of the
Company generally having responsibilities commensurate to that of
Employee. Employee shall be eligible to <PAGE> participate in such
bonus or other incentive compensation plans as currently are or
may hereafter be established by the Company for employees
generally having responsibilities commensurate to that of
Employee, and which may relate to his contribution to the
profitability of the Bank. Employee shall receive board of
directors fees for his service to the Bank's board, which in any
event shall not be less than three hundred dollars ($300.00) for
each board of directors' meeting attended. Employee shall
receive the same board of directors fees for service on the
Company's board of directors or any other affiliated board as is
customarily paid to employees of the Bank and the Company serving
in such capacity.
3. Expenses. The Company shall reimburse the Employee
for all ordinary and necessary expenses incurred and paid by the
Employee in the course of the performance of the Employee's
duties pursuant to this Agreement and consistent with the
Company's policies in effect from time to time with respect to
travel, entertainment and other business expenses, and subject to
the Company's requirements with respect to the manner of
reporting such expenses.
4. Additional Benefits. The Employee shall be
eligible for such fringe benefits, if any, by way of insurance,
hospitalization and vacations normally provided to employees of
the Company generally having responsibility commensurate to that
of the Employee and such additional benefits as may be from time
to time agreed upon in writing between the Employee and the
Company. The Company shall provide to the Employee a new Company
owned or leased automobile of a year, make and model selected by
the Company befitting the executive office held by Employee with
Bank not less than every three years, and the Company shall pay
the expenses related to the use and upkeep thereof and insurance
related thereto. The tax treatment of all fringe benefits shall
be handled in a manner consistent with the customary practices of
the Bank and the Company.
5. Duties. The Employee agrees that so long as he is
employed under this Agreement he will (i) to the satisfaction of
the Company devote his best efforts and his entire business time
to further properly the interests of the Company, which shall
include all of Employee's current activities and participation in
the American Banker's Association, Missouri Banker's Association,
CSBS and other similar industry groups and organizations (and
such other additional activities and participation in such other
organizations as may be approved by the board of directors of the
Company), and the Company and the Bank acknowledge that such
listed activities shall, together with Employee's duties to the
Bank, constitute Employee's entire business time to further the
interests of the Company and the Bank, (ii) at all times be
subject to the direction and control of the Board of Directors of
his employer (which may be the Company or the Bank, as provided
in Section 1 hereof) with respect to his activities on behalf of
such employer, (iii) comply with all rules, orders and
regulations of the Company, (iv) truthfully and accurately
maintain and preserve such records and make all reports as the
Company may require, and (v) fully account for all monies and
other property of the Company of which he may from time to time
have custody and deliver the same to the Company whenever and
however directed to do so.
6. Covenant Not to Disclose Confidential Information.
The Employee acknowledges that during the course of his
employment with the Company he has or will have access to and
<PAGE>
knowledge of certain information and data which the Company
considers confidential and that the release of such information
or data to unauthorized persons would be extremely detrimental to
the Company. As a consequence, the Employee hereby agrees and
acknowledges that he owes a duty to the Company not to disclose,
and agrees that, during or after the term of his employment,
without the prior written consent of the Company he will not
communicate, publish or disclose, to any person anywhere or use
any Confidential Information (as hereinafter defined) for any
purpose other than carrying out his duties as contemplated by
this Agreement. The Employee will use his best efforts at all
times to hold in confidence and to safeguard any Confidential
Information from falling into the hands of any unauthorized
person and, in particular, will not permit any Confidential
Information to be read, duplicated or copied. The Employee will
return to the Company all Confidential Information in the
Employee's possession or under the Employee's control when the
duties of the Employee no longer require the Employee's
possession thereof, or whenever the Company shall so request, and
in any event will promptly return all such Confidential
Information if the Employee's relationship with the Company is
terminated for any or no reason and will not retain any copies
thereof. For purposes hereof the term "Confidential Information"
shall mean any information or data used by or belonging or
relating to the Company that is not known generally to the
banking community, including without limitation, any and all
proprietary data and information relating to the Company's or the
Bank's past, present or future business plans, services offered,
financial information, customer lists, and other information
concerning customers, depositors and borrowers of the Company or
any subsidiary of the Company, whether or not reduced to writing,
or information or data which the Company advises the Employee
should be treated as confidential information.
7. Covenant Not to Compete. The Employee agrees that
during the term of his employment by the Company and for a period
of two (2) years from and after the voluntary or involuntary
termination of such employment for any reason other than a
termination by the Employee pursuant to Section 9(c), he will
not, directly or indirectly, without the express written consent
of the Company:
(a) own, manage, operate, control or participate
in the ownership, management, operation , control or
financing of, or have any interest, financial or
otherwise, in or act as an officer, director, partner,
principal, employee, agent, representative, consultant
or independent contractor of, or in any way assist any
bank, savings and loan, savings bank or other financial
institution (other than the Bank) that is located or
has an office in or within fifteen (15) miles from any
boundary of Henry or St. Clair County, Missouri;
(b) solicit for employment or hire any employees
of the Bank; or
(c) solicit, or interfere with, any contracts or
business relationships with any customer, depositor or
borrower of the Bank.
8. Remedies. Recognizing that irreparable damage will
result to the Company in the event of the breach or threatened
breach of any of the foregoing covenants and assurances by the
<PAGE>
Employee contained in Sections 6 or 7 hereof, and that the
Company's remedies at law for any such breach or threatened
breach will be inadequate, the Company and its successors and
assigns, in addition to such other remedies which may be
available to them, shall be entitled to an injunction, including
a mandatory injunction, to be issued by any court of competent
jurisdiction ordering compliance with this Agreement or enjoining
and restraining the Employee, and each and every person, firm or
company acting in concert or participation with him, from the
continuation of such breach and, in addition thereto, he shall
pay to the Company all ascertainable damages, including costs and
reasonable attorneys' fees sustained by the Company by reason of
the breach or threatened breach of said covenants and assurances.
The obligations of the Employee and the rights of the Company,
its successors and assigns under Sections 6 and 7 of this
Agreement shall survive the termination of this Agreement. The
covenants and obligations of the Employee set forth in Sections 6
and 7 hereof are in addition to and not in lieu of or exclusive
of any other obligations and duties of the Employee to the
Company, whether express or implied in fact or in law.
9. Termination.
(a) This Agreement shall terminate immediately
upon the death, disability or adjudication of legal
incompetence of the Employee. For purposes of this
Agreement, the Employee shall be deemed to be disabled
when the employee has become unable, by reason of
physical or mental disability, to satisfactorily
perform his essential job duties and there is no
reasonable accommodation that can be provided to enable
him to be a qualified individual with a disability
under applicable law. Such matters shall be determined
by, or to the reasonable satisfaction of, the Board of
Directors of the Company.
(b) This Agreement may be terminated by the
Company upon notice to the Employee for "Cause." For
purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following events:
(i) Performance by the Employee of
illegal or fraudulent acts, criminal conduct
or willful misconduct or gross negligence
relating to the activities of the Company or
the Bank;
(ii) Performance by the Employee of any
criminal acts involving moral turpitude
having a material adverse effect upon the
Company or the Bank, including, without
limitation, upon their profitability,
reputation or goodwill;
(iii) Failure by the Employee to
perform his duties in a manner which he
knows, or has reason to know, to be in the
Company's or the Bank's best interests, which
he fails to cure promptly after receiving
written notice thereof;
<PAGE>
(iv) Continued conduct by the Employee
that is damaging to the business, employee or
customer relations of the Company or the Bank
after receiving written notice from the
Company or the Bank to cease such conduct; or
(v) Any other material breach of the
Employee's obligations hereunder which is
incurable or which he fails to cure promptly
after receiving written notice thereof.
(c) This Agreement may be terminated by the
Employee upon written notice to the Company in the
event of a material breach of the Company's obligations
hereunder which is incurable or which the Company fails
to cure within 15 days after receiving written notice
thereof.
(d) In the event this Agreement is terminated,
the parties' obligations under this Agreement shall
terminate immediately (except as otherwise provided
herein), and neither the Employee nor his estate,
heirs, successors or assigns shall be entitled to any
further compensation hereunder other than payment of
any unpaid compensation that accrued prior to such
termination; provided, however, that the termination of
this Agreement pursuant to subsections (b) or (c) of
this Section shall not limit any other remedies to
which the terminating party may be entitled in law or
in equity as a result of any breach of this Agreement
by the other party hereto.
10. Waiver of Breach. Failure of the Company to
demand strict compliance with any of the terms, covenants or
conditions hereof shall not be deemed a waiver of the term,
covenant or condition, nor shall any waiver or relinquishment by
the Company of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of the right or
power at any other time or times.
11. No Conflicts. The Employee represents and
warrants to the Company that neither the execution nor delivery
of this Agreement, nor the performance of the Employee's
obligations hereunder will conflict with, or result in a breach
of, any term, condition, or provision of, or constitute a default
under, any obligation, contract, agreement, covenant or
instrument to which the Employee is a party or under which the
Employee is bound, including without limitation, the breach by
the Employee of a fiduciary duty to any former employers.
12. Entire Agreement; Amendment. This Agreement
cancels and supersedes all previous agreements relating to the
subject matter of this Agreement, written or oral, between the
parties hereto and contains the entire understanding of the
parties hereto relating to the terms of the Employee's employment
and shall not be amended, modified or supplemented in any manner
whatsoever except as otherwise provided herein or in writing
signed by each of the parties hereto.
<PAGE>
13. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or otherwise modify any of the terms
or provisions hereof.
14. Governing Law. This Agreement and all rights and
obligations of the parties hereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of Missouri applicable to agreements made and to be
performed entirely within the State, including all matters of
enforcement, validity and performance.
15. Arbitration. Any dispute between any of the
parties hereto or claim by a party against another party arising
out of or in relation to this Agreement or in relation to any
alleged breach thereof shall be finally determined by arbitration
in accordance with the rules then in force of the American
Arbitration Association. The arbitration proceedings shall take
place in Jefferson City, Missouri or such other location as the
parties in dispute hereafter may agree upon; and such proceedings
shall be governed by the laws of the State of Missouri as such
laws are applied to agreements between residents of such State
entered into and to be performed entirely within that State.
The parties shall agree upon one arbitrator, who shall
be an individual skilled in the legal and business aspects of the
subject matter of this Agreement and of the dispute. If the
parties cannot agree upon one arbitrator, each party in dispute
shall select one arbitrator and the arbitrators so selected shall
select a third arbitrator. In the event the arbitrators cannot
agree upon the selection of a third arbitrator, the third
arbitrator shall be appointed by the American Arbitration
Association at the request of any of the parties in dispute. The
arbitrators shall, if possible, be individuals skilled in the
legal and business aspects of the subject matter of this
Agreement and of the dispute.
The decision rendered by the arbitrator or arbitrators
shall be accompanied by a written opinion in support thereof.
The decision shall be final and binding upon the parties in
dispute without right of appeal. Judgment upon the decision may
be entered into in any court having jurisdiction thereof, or
application may be made to that court for a judicial acceptance
of the decision and an order of enforcement. Costs of the
arbitration shall be assessed by the arbitrator or arbitrators
against any or all of the parties in dispute, and shall be paid
promptly by the party or parties so assessed.
16. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one
agreement which is binding upon all the parties hereto.
17. Notice. All notices, requests, demands and other
communications hereunder shall be deemed duly given if delivered
by hand or if mailed by certified or registered mail with postage
prepaid or nationally recognized express delivery service with
delivery confirmed, addressed as follows:
<PAGE>
If to the Company:
Exchange National Bancshares, Inc.
132 E. High Street
Jefferson City, MO 65010-0688
Attn: President
If to the Employee:
James E. Smith
______________________________
______________________________
or to any other address as either party may provide to the other
in writing.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the Company and Employee have
executed this Agreement as of the day and year first above
written.
COMPANY:
EXCHANGE NATIONAL BANCSHARES, INC.
By: _______________________________
Name:
Title:
EMPLOYEE:
___________________________________
James E. Smith
<PAGE>
EXHIBIT F
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into this
____ day of __________, 1997, between Exchange National
Bancshares, Inc., a Missouri corporation (the "Company"), and
Darrell Hockenberry (the "Employee").
WITNESSETH:
WHEREAS, the Company is a bank holding company
controlling 100% of the issued and outstanding shares of common
stock of Union State Bank & Trust of Clinton, a Missouri trust
company (the "Bank"); and
WHEREAS, Employee desires to become employed by the
Company in an executive capacity as an officer of the Bank for a
period of three years, and the Company desires to employ Employee
to serve in such capacity, for the compensation and in accordance
with the terms and provisions contained herein; and
NOW, THEREFORE, in consideration of the foregoing and
the mutual promises and covenants contained herein, the Company
and Employee agree as follows:
1. Employment. The Company agrees to employ the
Employee and the Employee agrees to be employed by the Company in
an executive capacity upon the terms and conditions of this
Agreement for a period of three (3) years from and after the date
of this Agreement. Employee and Company each agree that
Employee's employment by the Bank shall satisfy the employment
obligation of each of Company and Employee hereunder and that
Employee will accept employment as Senior Vice President (or
higher office) of the Bank, so long, during the term of this
Agreement, that the Bank's Board of Directors shall name him to
be elected to that position. The Employee's primary location of
employment during the term of this Agreement shall be in Clinton,
Missouri unless the Employee consents in writing to relocate to
another geographic location.
2. Compensation. For all services rendered by the
Employee to the Bank and the Company, the Bank and the Company
shall pay the Employee a salary of not less than Seventy Seven
Thousand Five Hundred Dollars ($77,500) per year, payable in
accordance with the customary payroll practices of the Bank and
the Company, but in no event less frequently than monthly.
Salary payments shall be subject to withholding and other
applicable taxes. Employee shall be eligible for merit-based
increases in compensation on terms and conditions offered to
employees of the Bank generally having responsibilities
commensurate to that of Employee. Employee shall be eligible to
participate in such bonus or other incentive compensation plans
as currently are or may hereafter be established by the Bank for
employees generally having responsibilities commensurate to that
of Employee, and which may relate to his contribution to the
profitability of the Bank. Employee shall <PAGE> receive board of
directors fees for his service to the Bank's board, which in any
event shall not be less than three hundred dollars ($300.00) for
each board of directors' meeting attended.
3. Expenses. The Bank shall reimburse the Employee for
all ordinary and necessary expenses incurred and paid by the
Employee in the course of the performance of the Employee's
duties pursuant to this Agreement and consistent with the Bank's
policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the
Bank's requirements with respect to the manner of reporting such
expenses.
4. Additional Benefits. The Employee shall be
eligible for such fringe benefits, if any, by way of insurance,
hospitalization and vacations normally provided to employees of
the Bank generally having responsibility commensurate to that of
the Employee and such additional benefits as may be from time to
time agreed upon in writing between the Employee and the Company
or the Bank. The tax treatment of all fringe benefits shall be
handled in a manner consistent with the customary practices of
the Company and the Bank.
5. Duties. The Employee agrees that so long as he is
employed under this Agreement he will (i) to the satisfaction of
the Company devote his best efforts and his entire business time
to further properly the interests of the Company and the Bank,
(ii) at all times be subject to the direction and control of the
Board of Directors of his employer (which may be the Company or
the Bank, as provided in Section 1 hereof) or his immediately
superior supervisor with respect to his activities on behalf of
such employer, (iii) comply with all rules, orders and
regulations of the Company and the Bank, (iv) truthfully and
accurately maintain and preserve such records and make all
reports as the Company or the Bank may require, and (v) fully
account for all monies and other property of the Company or the
Bank of which he may from time to time have custody and deliver
the same to the Company or the Bank whenever and however directed
to do so.
6. Covenant Not to Disclose Confidential Information.
The Employee acknowledges that during the course of his
employment with the Company he has or will have access to and
knowledge of certain information and data which the Company
considers confidential and that the release of such information
or data to unauthorized persons would be extremely detrimental to
the Company. As a consequence, the Employee hereby agrees and
acknowledges that he owes a duty to the Company not to disclose,
and agrees that, during or after the term of his employment,
without the prior written consent of the Company he will not
communicate, publish or disclose, to any person anywhere or use
any Confidential Information (as hereinafter defined) for any
purpose other than carrying out his duties as contemplated by
this Agreement. The Employee will use his best efforts at all
times to hold in confidence and to safeguard any Confidential
Information from falling into the hands of any unauthorized
person and, in particular, will not permit any Confidential
Information to be read, duplicated or copied. The Employee will
return to the Company all Confidential Information in the
Employee's possession or under the Employee's control when the
duties of the Employee no longer require the Employee's
possession thereof, or whenever the Company shall so request, and
in any event will promptly return all such Confidential
Information if the Employee's relationship with the Company is
terminated for any or no reason and will not retain any copies
thereof. For purposes <PAGE> hereof the term "Confidential Information"
shall mean any information or data used by or belonging or
relating to the Company that is not known generally to the
banking community, including without limitation, any and all
proprietary data and information relating to the Company's or the
Bank's past, present or future business plans, services offered,
financial information, customer lists, and other information
concerning customers, depositors and borrowers of the Company or
any subsidiary of the Company, whether or not reduced to writing,
or information or data which the Company advises the Employee
should be treated as confidential information.
7. Covenant Not to Compete. The Employee agrees that
during the term of his employment by the Company (whether or not
this agreement has expired or been terminated) and for a period
of two (2) years from and after the voluntary or involuntary
termination of such employment for any reason other than a
termination by the Employee pursuant to Section 9(c), he will
not, directly or indirectly, without the express written consent
of the Company:
(a) own, manage, operate, control or participate
in the ownership, management, operation , control or
financing of, or have any interest, financial or
otherwise, in or act as an officer, director, partner,
principal, employee, agent, representative, consultant
or independent contractor of, or in any way assist any
bank, savings and loan, savings bank or other financial
institution (other than the Bank) that is located or
has an office in or within fifteen (15) miles from any
boundary of Henry or St. Clair County, Missouri;
(b) solicit for employment or hire any employees
of the Bank; or
(c) solicit, or interfere with, any contracts or
business relationships with any customer, depositor or
borrower of the Bank.
8. Remedies. Recognizing that irreparable damage will
result to the Company in the event of the breach or threatened
breach of any of the foregoing covenants and assurances by the
Employee contained in Sections 6 or 7 hereof, and that the
Company's remedies at law for any such breach or threatened
breach will be inadequate, the Company and its successors and
assigns, in addition to such other remedies which may be
available to them, shall be entitled to an injunction, including
a mandatory injunction, to be issued by any court of competent
jurisdiction ordering compliance with this Agreement or enjoining
and restraining the Employee, and each and every person, firm or
company acting in concert or participation with him, from the
continuation of such breach and, in addition thereto, he shall
pay to the Company all ascertainable damages, including costs and
reasonable attorneys' fees sustained by the Company by reason of
the breach or threatened breach of said covenants and assurances.
The obligations of the Employee and the rights of the Company,
its successors and assigns under Sections 6 and 7 of this
Agreement shall survive the termination of this Agreement. The
covenants and obligations of the Employee set forth in Sections 6
and 7 hereof are in addition to and not in lieu of or exclusive
of any other obligations and duties of the Employee to the
Company, whether express or implied in fact or in law.
<PAGE>
9. Termination.
(a) This Agreement shall terminate immediately
upon the death, disability or adjudication of legal
incompetence of the Employee. For purposes of this
Agreement, the Employee shall be deemed to be disabled
when the employee has become unable, by reason of
physical or mental disability, to satisfactorily
perform his essential job duties and there is no
reasonable accommodation that can be provided to enable
him to be a qualified individual with a disability
under applicable law. Such matters shall be determined
by, or to the reasonable satisfaction of, the Board of
Directors of the Company.
(b) This Agreement may be terminated by the
Company upon notice to the Employee for "Cause." For
purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following events:
(i) Performance by the Employee of
illegal or fraudulent acts, criminal conduct
or willful misconduct or gross negligence
relating to the activities of the Company or
the Bank;
(ii) Performance by the Employee of any
criminal acts involving moral turpitude
having a material adverse effect upon the
Company or the Bank, including, without
limitation, upon their profitability,
reputation or goodwill;
(iii) Failure by the Employee to
perform his duties in a manner which he
knows, or has reason to know, to be in the
Company's or the Bank's best interests, which
he fails to cure promptly after receiving
written notice thereof;
(iv) Continued conduct by the Employee
that is damaging to the business, employee or
customer relations of the Company or the Bank
after receiving written notice from the
Company or the Bank to cease such conduct; or
(v) Any other material breach of the
Employee's obligations hereunder which is
incurable or which he fails to cure promptly
after receiving written notice thereof.
(c) This Agreement may be terminated by the
Employee upon written notice to the Company in the
event of a material breach of the Company's obligations
hereunder which is incurable or which the Company fails
to cure within 15 days after receiving written notice
thereof.
<PAGE>
(d) In the event this Agreement is terminated,
the parties' obligations under this Agreement shall
terminate immediately (except as otherwise provided
herein), and neither the Employee nor his estate,
heirs, successors or assigns shall be entitled to any
further compensation hereunder other than payment of
any unpaid compensation that accrued prior to such
termination; provided, however, that the termination of
this Agreement pursuant to subsections (b) or (c) of
this Section shall not limit any other remedies to
which the terminating party may be entitled in law or
in equity as a result of any breach of this Agreement
by the other party hereto.
10. Termination Following Expiration of Term. In the
event Employee is terminated by the Company following the
expiration of the three-year term of employment provided herein
other than for cause (as defined in Section 9(b) hereof), the
Company shall pay Employee six months' severance pay at a rate
equal to his salary at the time of such termination, payable on a
monthly basis. The Company shall only be obligated to pay such
monthly severance payments to Employee so long as Employee
continues to comply with his obligations under Section 6 and 7
hereof.
11. Waiver of Breach. Failure of the Company to
demand strict compliance with any of the terms, covenants or
conditions hereof shall not be deemed a waiver of the term,
covenant or condition, nor shall any waiver or relinquishment by
the Company of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of the right or
power at any other time or times.
12. No Conflicts. The Employee represents and
warrants to the Company that neither the execution nor delivery
of this Agreement, nor the performance of the Employee's
obligations hereunder will conflict with, or result in a breach
of, any term, condition, or provision of, or constitute a default
under, any obligation, contract, agreement, covenant or
instrument to which the Employee is a party or under which the
Employee is bound, including without limitation, the breach by
the Employee of a fiduciary duty to any former employers.
13. Entire Agreement; Amendment. This Agreement
cancels and supersedes all previous agreements relating to the
subject matter of this Agreement, written or oral, between the
parties hereto and contains the entire understanding of the
parties hereto relating to the terms of the Employee's employment
and shall not be amended, modified or supplemented in any manner
whatsoever except as otherwise provided herein or in writing
signed by each of the parties hereto.
14. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or otherwise modify any of the terms
or provisions hereof.
15. Governing Law. This Agreement and all rights and
obligations of the parties hereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of Missouri applicable to agreements made and to be
performed entirely within the State, including all matters of
enforcement, validity and performance.
<PAGE>
16. Arbitration. Any dispute between any of the
parties hereto or claim by a party against another party arising
out of or in relation to this Agreement or in relation to any
alleged breach thereof shall be finally determined by arbitration
in accordance with the rules then in force of the American
Arbitration Association. The arbitration proceedings shall take
place in Jefferson City, Missouri or such other location as the
parties in dispute hereafter may agree upon; and such proceedings
shall be governed by the laws of the State of Missouri as such
laws are applied to agreements between residents of such State
entered into and to be performed entirely within that State.
The parties shall agree upon one arbitrator, who shall
be an individual skilled in the legal and business aspects of the
subject matter of this Agreement and of the dispute. If the
parties cannot agree upon one arbitrator, each party in dispute
shall select one arbitrator and the arbitrators so selected shall
select a third arbitrator. In the event the arbitrators cannot
agree upon the selection of a third arbitrator, the third
arbitrator shall be appointed by the American Arbitration
Association at the request of any of the parties in dispute. The
arbitrators shall, if possible, be individuals skilled in the
legal and business aspects of the subject matter of this
Agreement and of the dispute.
The decision rendered by the arbitrator or arbitrators
shall be accompanied by a written opinion in support thereof.
The decision shall be final and binding upon the parties in
dispute without right of appeal. Judgment upon the decision may
be entered into in any court having jurisdiction thereof, or
application may be made to that court for a judicial acceptance
of the decision and an order of enforcement. Costs of the
arbitration shall be assessed by the arbitrator or arbitrators
against any or all of the parties in dispute, and shall be paid
promptly by the party or parties so assessed.
17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one
agreement which is binding upon all the parties hereto.
18. Notice. All notices, requests, demands and other
communications hereunder shall be deemed duly given if delivered
by hand or if mailed by certified or registered mail with postage
prepaid or nationally recognized express delivery service with
delivery confirmed, addressed as follows:
If to the Company:
Exchange National Bancshares, Inc.
132 E. High Street
Jefferson City, MO 65010-0688
Attn: President
<PAGE>
If to the Employee:
Darrell Hockenberry
______________________________
______________________________
or to any other address as either party may provide to the other
in writing.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the Company and Employee have
executed this Agreement as of the day and year first above
written.
COMPANY:
EXCHANGE NATIONAL BANCSHARES, INC.
By: _______________________________
Name:
Title:
EMPLOYEE:
___________________________________
Darrell Hockenberry
<PAGE>
EXHIBIT G
OPINION OF EXCHANGE'S COUNSEL
Union State Bancshares, Inc.
Union State Bank & Trust of Clinton
Gus Wetzel, II
Gus Wetzel, II, Trustee of Gus S. Wetzel, II Revocable Trust,
dated _________
Douglas L. Thomason
James E. Smith
Ladies and Gentlemen:
We have acted as counsel for Exchange National
Bancshares, Inc., a Missouri corporation ("Exchange") and ENBUSB
Acquisition Company, Inc., a Missouri corporation ("Acquisition
Company," and together with Exchange, the "Exchange Entities") in
connection with the Acquisition Agreement dated July ___, 1997
(the "Agreement") among Exchange, Acquisition Company, Union
State Bank & Trust of Clinton, a Missouri trust company, Union
State Bancshares, Inc., a Missouri corporation ("USB") and
certain shareholders of USB (the "Shareholders"). As such, we
have examined the Articles of Incorporation and Bylaws of
Exchange and Acquisition Company and such other documents as we
considered necessary for purposes of this opinion. All
capitalized terms used herein shall have the same meaning as in
the Agreement, unless otherwise defined. Based on foregoing, you
are advised that in our opinion:
1. Exchange and Acquisition Company are
corporations duly organized, validly existing and in
good standing under the laws of Missouri;
2. Exchange and Acquisition Company each has the
corporate power to enter into and carry out the terms
of the Agreement, the Agreement has been authorized by
the Board of Directors of each and by Exchange as the
sole shareholder of Acquisition Company, and the
Agreement and all other documents to be executed and
delivered by the Exchange Entities in connection with
the Agreement have been duly authorized, executed and
delivered by each of them and constitute the legal,
valid and binding obligations of each of them;
3. The execution and delivery of the Agreement
and all other documents to be executed and delivered in
connection therewith and the consummation of the
transactions contemplated thereby by Exchange and
Acquisition Company will not, to our best knowledge,
violate any provision of, or constitute a default
under, any law, regulation, order or judgment or any
contract or other agreement to which either is a party
or is bound or conflict with their respective Articles
of Incorporation or Bylaws; and
<PAGE>
4. The Notes to be executed and delivered by
Exchange in favor of each of the Shareholders,
respectively, as part of the Merger Consideration have
been duly authorized, executed and delivered by
Exchange and constitute the legal, valid and binding
obligations of Exchange.
As used herein the term "our best knowledge"
refers to our professional opinion based on the
information obtained and documents reviewed by
attorneys in the firm in the course of representing the
Exchange Entities in the preparation and communication
of the transactions contemplated by the Acquisition
Agreement. With your permission, we have relied upon
written representations of the appropriate officers of
Exchange and Acquisition Company as to factual matters.
Very truly yours,
STINSON, MAG & FIZZELL, P.C.
By:__________________________
Howard H. Mick
<PAGE>
EXHIBIT H
OPINION OF SELLERS' COUNSEL
Exchange National Bancshares, Inc.
Ladies and Gentlemen:
We have acted as counsel for Union State Bancshares,
Inc., a Missouri corporation ("USB"), Union State Bank & Trust of
Clinton, a Missouri trust company (the "Bank"), and certain
shareholders of USB (the "Shareholders," and together with USB
and the Bank, the "Sellers"), in connection with the Acquisition
Agreement dated July ____, 1997 (the "Agreement") among Exchange
National Bancshares, Inc., a Missouri corporation, ENBUSB
Acquisition Company, Inc., a Missouri corporation, USB, the Bank
and the Shareholders. As such, we have examined the Articles of
Incorporation and Bylaws of USB and the Bank and such other
documents as we considered necessary for purposes of this
opinion. All capitalized terms used herein shall have the same
meaning as in the Agreement, unless otherwise defined. Based on
foregoing, you are advised that in our opinion:
1. USB is a corporation duly organized, validly
existing and in good standing under the laws of Missouri;
2. USB has the corporate power to own its
properties and to carry on its business as and where such
are now conducted;
3. USB has the corporate power to enter into and
carry out the terms of the Agreement, the Agreement and the
Merger Agreement have been approved by the shareholders of
USB at a special meeting duly called and held, and the
Agreement and all documents to be delivered by USB in
connection with the Agreement have been duly authorized,
executed and delivered by USB and constitute the legal,
valid and binding obligation of USB;
4. USB has issued and outstanding 562.88 shares
of common stock, par value $10.00 per share, and such common
stock represents the only stock of USB outstanding, and all
of said outstanding shares have been legally and validly
authorized and issued, in accordance with applicable laws
and the preemptive rights of its shareholders, if any;
5. Shareholders are the record owners, and to
our best knowledge, the beneficial owners of the common
stock of USB as set forth in the Agreement and all of said
outstanding shares are fully paid, nonassessable and, to our
best knowledge, are owned by Shareholders free and clear of
any liens, claims or encumbrances;
<PAGE>
6. To our best knowledge, there are no
outstanding options, warrants, contracts, calls, commitments
or demands of any character whereby USB could be required to
issue or sell additional capital stock to any person;
7. The execution and delivery of the Agreement
and all other documents to be executed and delivered in
connection therewith and to our best knowledge the
consummation of the transactions contemplated thereby by USB
and the 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 USB or
any of the Shareholders is a party or by which any of them
is bound or conflict with USB's Articles of Incorporation or
Bylaws or result in the creation or imposition of any lien,
claim, charge or encumbrance of any nature whatsoever upon
the capital stock of USB or the Bank;
8. The Bank is duly organized, validly existing
and in good standing under the laws of Missouri;
9. The Bank has the corporate power to own its
properties and to carry on its business as and where such
are now conducted;
10 The Bank has the corporate power to enter
into and carry out the terms of the Agreement, and the
Agreement has been duly authorized, executed and delivered
buy the Bank and constitutes the legal, valid and binding
obligation of the Bank;
11. The Bank has outstanding 20,000 shares of
common stock, par value $100.00 per share, and such common
stock represents the only stock of the Bank outstanding, and
all said outstanding shares have been legally and validly
authorized and issued, in accordance with applicable laws
and the preemptive rights of its shareholders, if any;
12. All said outstanding shares are fully paid
and nonassessable;
13. To our best knowledge, there are no
outstanding options, warrants, contracts, calls, commitments
or demands of any character whereby the Bank could be
required to issue or sell additional capital stock to any
person; and
14. USB is the record owner, and, to our best
knowledge, the beneficial owner, of all of the shares of the
Bank's capital stock, free and clear of any lien, claim or
encumbrance, other than to secure indebtedness payable to
NationsBank, N.A. which is to be released upon payment in
full of such indebtedness immediately subsequent to the
Effective Time as contemplated by the Agreement.
<PAGE>
As used herein the term "our best knowledge" refers to
our professional opinion based on information obtained and
documents reviewed by attorneys in the firm in the course of
representing the Sellers in the preparation and communication of
the transactions contemplated by the Acquisition Agreement. With
your permission, we have relied upon written representations of
the appropriate officers of the Bank and USB as to factual
matters.
Very truly yours,
<PAGE>
AMENDMENT TO ACQUISITION AGREEMENT
THIS AMENDMENT to the Acquisition Agreement referred to
below is entered into as of this 25th day of August, 1997, by and
among Exchange National Bancshares, Inc., a Missouri corporation
("Exchange"), ENBUSB Acquisition Company, Inc., a Missouri
corporation ("Acquisition Company"), Union State Bank & Trust of
Clinton, a Missouri trust company (the "Bank"), Union State
Bancshares, Inc., a Missouri corporation ("USB"), and Gus S.
Wetzel, II, Gus S. Wetzel, II, as Trustee of the Gus S. Wetzel,
II Revocable Trust, dated January 16, 1995, Douglas L. Thomason,
and James E. Smith (collectively, the "Shareholders").
WITNESSETH:
WHEREAS, Exchange, Acquisition Company, the Bank, USB
and the Shareholders (collectively, the "Parties") and Darrell
Hockenberry (with respect to Section 5.13 only) are parties to an
Acquisition Agreement, dated as of July 11, 1997 (the
"Acquisition Agreement");
WHEREAS, the Parties desire to amend the Acquisition
Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements contained herein, the Parties
do hereby agree as follows:
1. Amendment of Section 5.15 of the Acquisition
Agreement. Section 5.15 of the Acquisition Agreement is hereby
amended by deleting subsection (a) thereof in its entirety and
inserting the following new subsection (a) in lieu thereof:
(a) Sellers agree that concurrently with the
Closing, Sellers will take all actions necessary to
ensure that Donald L. Campbell is appointed to the
Board of Directors of the Bank.
2. Effect of Amendment. Except as expressly amended
hereby, all of the terms, conditions and provisions of the
Acquisition Agreement shall remain unamended and in full force
and effect in accordance with its terms, and the Acquisition
Agreement, as amended hereby, is hereby ratified and confirmed.
The amendments provided herein shall be limited precisely as
drafted and shall not constitute an amendment of any other term,
condition or provision of the Acquisition Agreement.
3. General Terms. References in the Acquisition
Agreement to "Agreement," "hereof," "herein" and words of similar
impact shall be deemed to be a reference to the Acquisition
Agreement as amended by this Amendment.
<PAGE>
4. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which shall constitute one agreement which
is binding upon all of the parties hereto, notwithstanding that
all parties are not signatories to the same counterpart.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Amendment as of the date first above written.
EXCHANGE NATIONAL BANCSHARES, INC.
ATTEST:
By: /s/ Donald L. Campbell
Donald L. Campbell
Chairman and President
/s/ Charles G. Dudenhoeffer, Jr.
Acting Secretary
ENBUSB ACQUISITION COMPANY, INC.
ATTEST:
By: /s/ David T. Turner
David T. Turner
President
/s/ Charles G. Dudenhoeffer, Jr.
Acting Secretary
UNION STATE BANK & TRUST OF CLINTON
ATTEST:
By: /s/ James E. Smith
James E. Smith
President
/s/ Darrell Hockenberry, Sr. VP
Secretary
UNION STATE BANCSHARES, INC.
ATTEST:
By: /s/ Gus S. Wetzel II
Gus S. Wetzel, II
Chairman
/s/ James E. Smith
Secretary
/s/ Gus S. Wetzel II
Gus S. Wetzel, II
/s/ Gus S. Wetzel II, Trustee
Gus S. Wetzel, II, Trustee of
the Gus S. Wetzel II
Revocable Trust
/s/ Doulglas L. Thomason
Douglas L. Thomason
/s/ James E. Smith
James E. Smith
ARTICLES OF MERGER
of
ENBUSB ACQUISITION COMPANY, INC.
(a Missouri corporation)
and
UNION STATE BANCSHARES, INC.
(a Missouri corporation)
Pursuant to The General and Business
Corporation Law of Missouri, the undersigned
corporations certify as follows:
ARTICLE I
The plan of merger for the merger of ENBUSB Acquisition
Company Inc., a Missouri corporation, with and into Union State
Bancshares, Inc., a Missouri corporation, is set forth in the
Merger Agreement attached hereto as Exhibit A and by this
reference incorporated herein.
ARTICLE II
The plan of merger was approved by unanimous written
consent of the Board of Directors of ENBUSB Acquisition Company,
Inc., dated July 9, 1997. The plan of merger was approved by
written consent of the sole shareholder of ENBUSB Acquisition
Company, Inc., dated July 9, 1997.
The plan of merger was approved by the Board of
Directors at a meeting of the Board of Directors of Union State
Bancshares, Inc., held on June 30, 1997, and the plan of merger
was approved by at least the number of directors required to
approve the same under the provisions of The General and Business
Corporation Law of Missouri. The plan of merger was approved by
all of the shareholders of Union State Bancshares, Inc. at a
meeting of the shareholders held on October 15, 1997.
<PAGE>
The total number of issued and outstanding shares of
capital stock of ENBUSB Acquisition Company, Inc. and Union State
Bancshares, Inc., and the number of such shares of each such
corporation which were voted for and against the adoption of the
Merger Agreement are set forth opposite their respective names
below:
No. of Shares Shares
Outstanding Voted Voted
Name of Corporation Shares For Against
ENBUSB Acquisition 1,000 1,000 0
Company, Inc.
Union State Bancshares,
Inc. 556.88 556.88 0
<PAGE>
IN WITNESS WHEREOF, these Articles of Merger have been
executed in duplicate by ENBUSB Acquisition Company, Inc. and
Union State Bancshares, Inc. as of October 29, 1997.
[CORPORATE SEAL] ENBUSB ACQUISITION COMPANY, INC.
By: /s/ David T. Turner
ATTEST: David T. Turner
President
/s/ Donald L. Campbell
Donald L. Campbell
Secretary
[CORPORATE SEAL] UNION STATE BANCSHARES, INC.
By: /s/ Douglas L. Thomason
ATTEST: Douglas L. Thomason
President
/s/ James E. Smith
James E. Smith
Secretary
<PAGE>
STATE OF MISSOURI )
) SS
COUNTY OF COLE )
I, Elizabeth Anne Duderhoeffer, a notary public, do
hereby certify that on this 29th day of October, 1997, personally
appeared before me David T. Turner, who, being by me first duly
sworn, declared that he is the President of ENBUSB Acquisition
Company, Inc., a Missouri corporation, that he signed the
foregoing document as President of the corporation, and that the
statements therein contained are true.
/s/ Elizabeth Anne Duderhoeffer
Notary Public
(NOTARIAL SEAL)
My commission expires:
March 3, 2001
STATE OF MISSOURI )
) SS
COUNTY OF HENRY )
I, Eileen Albin, a notary public, do hereby certify
that on this 29th day of October, 1997, personally appeared
before me Douglas L. Thomason, who, being by me first duly sworn,
declared that he is the President of Union State Bancshares,
Inc., a Missouri corporation, that he signed the foregoing
document as President of the corporation, and that the statements
therein contained are true.
/s/ Eileen Albin
Notary Public
(NOTARIAL SEAL)
My commission expires:
8-31-98
<PAGE>
MERGER AGREEMENT
This Merger Agreement and Plan of Merger (the "Merger
Agreement") dated as of October 22, 1997 by and between UNION
STATE BANCSHARES, INC., a Missouri corporation ("USB"), and
ENBUSB ACQUISITION COMPANY, INC., a Missouri corporation
("Acquisition Company"), such corporations being hereinafter
collectively referred to as the "Constituent Corporations".
WITNESSETH:
WHEREAS, USB has an authorized capital of 3,000 shares
of common stock, $10.00 par value (the "USB Common Stock"), of
which 556.88 shares are issued and outstanding on the date
hereof; and
WHEREAS, Acquisition Company has an authorized capital
of 30,000 shares of common stock, $1.00 par value (the
"Acquisition Company Common Stock"), of which 1,000 shares are
issued and outstanding on the date hereof and which are owned
beneficially and of record by Exchange National Bancshares, Inc.,
a Missouri corporation ("Exchange"); and
WHEREAS, the respective Boards of Directors of USB and
Acquisition Company each have duly approved this Merger Agreement
providing for the merger of Acquisition Company with and into USB
as the surviving corporation as authorized by the statutes of the
State of Missouri (the "Merger"); and
WHEREAS, Acquisition Company, USB, the holders of 91.6%
of the USB Common Stock ("Controlling Shareholders"), and
Exchange have entered into an Acquisition Agreement (the
"Acquisition Agreement"), pursuant to which Acquisition Company
will merge with and into USB and the shareholders of USB will
receive cash and promissory notes of Exchange in exchange for
their USB Common Stock; and
WHEREAS, the parties have entered into this Merger
Agreement for the purpose of effectuating the Merger;
NOW THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for the
purpose of setting forth the terms and conditions of the Merger,
the manner and the basis of causing the shares of USB Common
Stock to be exchanged for or converted to cash or notes, as
herein provided, and such other details and provisions as are
deemed necessary or proper, the parties hereto have agreed as
follows:
<PAGE>
ARTICLE I
Merger and Name of Surviving Bank
At the Effective Time (as defined herein), Acquisition
Company shall be merged with and into USB, which is hereby
designated as the "Surviving Corporation," the name of which upon
and after the Effective Time shall be "Union State Bancshares,
Inc.".
ARTICLE II
Terms and Conditions of Merger
The terms and conditions of the Merger are (in addition
to those set forth elsewhere in this Agreement) as follows:
Section 1. At the Effective Time:
(a) Acquisition Company shall be merged with and into
USB, and USB shall be, and is designated herein as, the Surviving
Corporation.
(b) The separate existence of Acquisition Company
shall cease.
(c) The Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each
of the Constituent Corporations; and all property, real, personal
and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all
and every other interest, of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any
interest therein, vested in either Constituent Corporation shall
not revert or be in any way impaired by reason of the Merger; the
Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of each of the
Constituent Corporations; and any claim existing or action or
proceeding pending by or against either of such Constituent
Corporations may be prosecuted to judgment as if the Merger had
not taken place, or such Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be
impaired by the Merger.
Section 2. At the Effective Time, the Articles of
Incorporation of the Surviving Corporation shall be the Articles
of Incorporation of USB in effect immediately prior to the
Effective Time, until amended in accordance with its provisions
and applicable law. Surviving Corporation's capital account and
surplus accounts shall equal the combined capital accounts and
surplus accounts, respectively, of USB and of Acquisition Company
immediately prior to the Merger.
<PAGE>
Section 3. At the Effective Time, the members of
the Board of Directors and the terms of these directors shall be
as designated by Exchange immediately prior to the Effective
Time. (See attached Schedule 1)
Section 4. At the Effective Time, the officers of
the Surviving Corporation shall be the persons designated by
Exchange immediately prior to the Effective Time, and such
persons will serve in their designated offices, thereafter, until
their respective successors are duly elected and qualified. (See
attached Schedule 1)
ARTICLE III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of USB
into the right to receive cash and notes of Exchange and the mode
of carrying the Merger into effect are as follows:
Section 1. Conversion of Acquisition Company Common
Stock
At the Effective Time, the 1,000 shares of Acquisition
Company Common Stock outstanding shall be converted into 100
shares of Surviving Corporation common stock.
Section 2. Conversion of USB Common Stock
(a) At the Effective Time, Exchange will pay cash and
issue and deliver its promissory notes as provided in the
Acquisition Agreement pursuant to the Merger (hereinafter such
promissory notes and cash shall be referred to in the aggregate
as the "Merger Consideration"). Each of the shareholders of USB
will be entitled to receive the proportion of the Merger
Consideration that is determined by multiplying such Merger
Consideration by such shareholders' respective percentage
ownership interests in USB, adjusted as between cash and notes as
provided in the Acquisition Agreement.
(b) At the Effective Time, by virtue of the Merger and
without any action on the part of Exchange, Acquisition Company,
USB or any USB shareholder, each share of USB Common Stock issued
and outstanding at the Effective Time, other than any shares held
by Exchange by virtue of Section 2(a) or any holder who becomes
entitled to payment of the fair value of such shares under
Section 351.455 of the Missouri Revised Statutes, shall cease to
be outstanding and shall be converted into and become the right
to receive his or her share of the Merger Consideration as
determined in Section 2(a) hereof.
Section 3. Dissenting USB Shareholders
The Constituent Corporations agree that the Surviving
Corporation will comply with the provisions of Section 351.455,
as amended, and will promptly pay to the dissenting <PAGE> shareholders
of USB the amount, if any, to which they shall be entitled under
the provisions of said section.
Section 4. USB Common Stock Certificates
After the Effective Time, each holder of an outstanding
certificate which prior thereto represented shares of USB Common
Stock shall be entitled, upon surrender thereof to Exchange or
its designee, to receive in exchange therefor the proportion of
the Merger Consideration into which it is entitled to be
exchanged or converted. Until so surrendered, each such
outstanding certificate which, prior to the Effective Time,
represented shares of USB Common Stock shall for all purposes
evidence solely the right to receive the Merger Consideration for
which such shares shall be entitled to be exchanged or converted.
The Merger Consideration shall be paid or issued in
full satisfaction of all rights pertaining to all USB shares
outstanding at the Effective Time.
ARTICLE IV
Other Provisions with Respect to Merger
Section 1. This Merger Agreement shall be submitted
to the shareholders of each Constituent Corporation as provided
by Chapter 351 of the Missouri Revised Statutes (the "Missouri
Corporate Law"). After the approval or adoption thereof by the
shareholders of each Constituent Corporation in accordance with
the requirements of the Missouri Corporate Law, and after all
conditions to the consummation of the Merger pursuant to the
Acquisition Agreement have been satisfied or waived by the party
or parties entitled to waive such conditions, all required
documents shall be executed, filed and recorded and all required
acts shall be done in order to accomplish the Merger pursuant to
the Missouri Corporate Law.
Section 2. If the Acquisition Agreement is
terminated, then this Merger Agreement shall simultaneously
terminate without further action by the Constituent Corporations.
In the event of such termination, the Board of Directors of each
of the Constituent Corporations shall direct its officers not to
file this Merger Agreement as provided above notwithstanding
favorable action on this Merger Agreement by the shareholders of
each Constituent Corporation.
ARTICLE V
Approval and Effective Time of Merger; Miscellaneous Matters
Section 1. The Merger shall become effective when
this Merger Agreement has been (a) authorized, adopted and
approved on behalf of each Constituent Corporation in accordance
with the Missouri Corporate Law, and (b) filed with the Missouri
Secretary of State. The time at which such actions are completed
and the required certificate of merger is issued by the Missouri
Secretary of State is herein referred to as the "Effective Time."
<PAGE>
Section 2. If at any time the Surviving Corporation
shall deem or be advised that any further grants, assignments,
confirmations or assurances are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to any property of USB acquired or to be
acquired by or as a result of the Merger, the officers and
directors of the Surviving Corporation shall be and they hereby
are severally and fully authorized to execute and deliver any and
all such deeds, assignments, confirmations and assurances and to
do all things necessary or proper so as to best prove, confirm
and ratify title to such property in the Surviving Corporation
and otherwise carry out the purposes of the Merger and the terms
of this Merger Agreement.
Section 3. For the convenience of the parties, and
to facilitate the filing and recording of this Merger Agreement,
any number of counterparts hereof may be executed, and each such
counterpart shall be deemed to be an original instrument, and all
such counterparts together shall be considered one instrument.
Section 4. This Merger Agreement cannot be altered
or amended except pursuant to an instrument in writing signed on
behalf of the parties hereto.
IN WITNESS WHEREOF, each Constituent Corporation has
caused this Merger Agreement to be executed, all as of the date
first above written.
UNION STATE BANCSHARES, INC.
[SEAL] By: /s/ Gus S. Wetzel, II
Gus S. Wetzel, II
Chairman
ATTEST:
/s/ James E. Smith, Sec.
Secretary
ENBUSB ACQUISITION COMPANY, INC.
[SEAL]
By: /s/ David T. Turner
David T. Turner
President
ATTEST:
/s/ Donald L. Campbell
Secretary
<PAGE>
Schedule 1
OFFICERS AND DIRECTORS OF UNION STATE BANCSHARES, INC.
Directors
Name: Donald L. Campbell
Address: 341 Ladue, Jefferson City, MO 65109
Name: James E. Smith
Address: 517 South Second, Clinton, MO 64735
Name: Gus S. Wetzel, II
Address: 1700 South 8th, Clinton, MO 64735
Officers
Name: Donald L. Campbell
Title: Chairman and Secretary
Address: 341 Ladue, Jefferson City, MO 65109
Name: James E. Smith
Title: President, Treasurer and Assistant Secretary
Address: 517 South Second, Clinton, MO 64735
PRESS RELEASE
EXCHANGE NATIONAL BANCSHARES COMPLETES
ITS ACQUISITION OF UNION STATE BANCSHARES, INC.
JEFFERSON CITY, MO. -- November 3, 1997 -- Exchange
National Bancshares, Inc. announced today that it has completed
the acquisition of Union State Bancshares, Inc., parent company
of Union State Bank & Trust, Clinton, Missouri, in accordance
with the terms of a previously announced Acquisition Agreement.
Union State Bancshares, Inc., which owns Union State
Bank & Trust of Clinton, had total assets of approximately $134
million as of July 31, 1997, with five banking offices located in
Clinton, Osceola and Collins, Missouri.
As a result of the acquisition, Exchange National
Bancshares is now a multi-bank holding company which controls
Union State Bank and Trust of Clinton in addition to The Exchange
National Bank of Jefferson City. As of June 30, 1997, Exchange
National Bancshares had total consolidated assets of $293
million, total deposits of $231 million and total shareholders'
equity of $42 million.
Mr. Donald L. Campbell, Chairman of the Board and
President of Exchange National Bancshares, stated that "We are
delighted with this affiliation with Union State Bank & Trust of
Clinton. This combination will enable us to expand the services
offered by that Bank while continuing the strong tradition of
community banking in the Clinton area with the excellent Board
and staff already in place."
The management and personnel of Union State Bank are
not expected to change significantly. Dr. Gus S. Wetzel, II and
James E. Smith will continue as Chairman and President,
respectively. Donald L. Campbell will be added to the Bank's
Board. Both Mr. Smith and Dr. Wetzel will join the Board of
Exchange National Bancshares, Inc.
For additional information, contact Donald L. Campbell
at Exchange National Bancshares, Inc., at 132 East High Street,
telephone (573) 761-6100.
