SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
EXCHANGE NATIONAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other
than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________
2) Form, Schedule or Registration Statement No.:
_____________________________________________________
3) Filing Party:
_____________________________________________________
4) Date Filed:
_____________________________________________________
<PAGE>
PRELIMINARY COPY
EXCHANGE NATIONAL BANCSHARES, INC.
132 EAST HIGH STREET,
JEFFERSON CITY, MISSOURI 65101
April 5, 2000
Dear Shareholder:
You are cordially invited to attend the annual meeting
of shareholders of Exchange National Bancshares, Inc., to be held
at The Exchange National Bank of Jefferson City's facility,
located at 3701 West Truman Boulevard, Jefferson City, Missouri,
on Wednesday, May 10, 2000, commencing at 9:00 a.m., local time.
The business to be conducted at this important meeting is
described in the accompanying notice of annual meeting and proxy
statement. In addition, there will be an opportunity to meet
with members of senior management and review the business and
operations of our Company.
This year's annual meeting is being held about a month
earlier than in years past. The principal reason for moving the
date up is to allow our shareholders to vote promptly on a
proposal to increase our authorized capital. One of the
strategies which our board of directors is pursuing to increase
shareholder value and liquidity is to apply to list our common
stock on the Nasdaq securities market. In our agreement
respecting the CNS Bancorp acquisition, we agreed to use our best
efforts to list our stock on the Nasdaq securities market prior
to consummation of that acquisition, which is scheduled to take
place in late May or June. In order to expedite the application
process for Nasdaq listing, we also agreed that we would hold our
annual meeting of shareholders prior to May 15, 2000.
One requirement for listing our stock on Nasdaq is that
our Company have a minimum of 1,100,000 shares of stock
outstanding and held by persons other than management and other
affiliates. Presently we estimate that we are approximately
143,600 shares short of meeting this minimum "float" requirement.
If we exclude the approximately 212,745 shares we have committed
to issue in the CNS Bancorp acquisition, we do not have
sufficient shares authorized and as yet unissued to enable our
board to declare a stock dividend which is large enough to
satisfy the minimum "float" requirement. As indicated in the
attached proxy statement, once the additional shares are
authorized, our board intends to declare a two-for one stock
distribution in the form of a dividend to create the necessary
"float" in our outstanding shares.
Although there are several other requirements that must
be satisfied before our stock can be approved for listing on
Nasdaq, we believe that after achieving the required minimum
"float" we will be able to satisfy the other requirements as
well. With a larger number of shares outstanding as the result
of the planned stock distribution and the CNS Bancorp merger, as
well as the addition of approximately 400 shareholders of CNS
Bancorp who will acquire our stock in the merger, we are hopeful
that a market will develop in our stock which will provide
opportunities for our shareholders to sell shares or acquire
additional shares at a fair price.
In addition to the proposal to increase our authorized
capital, and our ordinary annual meeting business concerning the
election of directors and the approval of our independent
auditors, you will be asked to consider and vote on a proposed
incentive stock option plan. The purpose of this plan is to
encourage our key employees to participate in the ownership of
our Company, and to provide additional incentive for them to
promote the success of our business by sharing in our future
growth.
Your board of directors joins with me in urging you to
attend the meeting. It is particularly important this year that
all shareholders make their wishes known since the proposal to
increase the authorized capital requires a two-thirds majority
vote in favor of its adoption. Whether or not you plan to attend
the meeting, however, please sign, date and return the enclosed
proxy card promptly. A prepaid return envelope is provided for
this purpose. You may revoke your proxy at any time before it is
exercised and it will not be used if you attend the meeting and
prefer to vote in person.
Sincerely yours,
Donald L. Campbell
Chairman of the Board
and President
<PAGE>
EXCHANGE NATIONAL BANCSHARES, INC.
132 EAST HIGH STREET
JEFFERSON CITY, MISSOURI 65101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Shareholders of Exchange National Bancshares, Inc., a Missouri
corporation, will be held at The Exchange National Bank of
Jefferson City's facility, located at 3701 West Truman Boulevard,
Jefferson City, Missouri, on Wednesday, May 10, 2000, commencing
at 9:00 a.m., local time, and thereafter as it may from time to
time be adjourned, for the following purposes:
1. To elect three Class II directors to hold office
for a term expiring at the 2003 Annual Meeting of
the Shareholders of our Company and until their
respective successors are duly elected and
qualified or until their respective earlier
resignation or removal;
2. To consider and act upon approval of an amendment
to the articles of incorporation of our Company to
increase the number of authorized shares of our
Company's capital stock from 1,500,000 shares to
16,000,000 shares and to increase the number of
authorized shares of common stock, $1.00 par
value, from 1,500,000 shares to 15,000,000 shares,
and to authorize 1,000,000 shares of preferred
stock, $0.01 par value;
3. To consider and act upon approval of the Exchange
National Bancshares, Inc. Incentive Stock Option
Plan;
4. To consider and act upon ratification and approval
of the selection of the accounting firm of KPMG
LLP as the independent auditors of our Company for
the year ending December 31, 2000; and
5. To transact such other business as properly may
come before the meeting.
Our board of directors has fixed the close of business
on March 15, 2000 as the record date for determination of the
shareholders entitled to notice of, and to vote at, the Annual
Meeting.
All shareholders are cordially invited to attend the
meeting. Whether or not you intend to be present at the meeting,
our board of directors solicits you to sign, date and return the
enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time
before it is exercised and it will not be used if you attend the
meeting and prefer to vote in person. Your vote is important and
all shareholders are urged to be present in person or by proxy.
By Order of the Board of
Directors
Donald L. Campbell
Chairman of the Board
and President
April 5, 2000
Jefferson City, Missouri
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENVELOPE PROVIDED, WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON.
<PAGE>
Exchange National Bancshares, Inc.
132 East High Street
Jefferson City, Missouri 65101
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2000
__________________
INTRODUCTION
This proxy statement is being furnished to the
shareholders of Exchange National Bancshares, Inc., a Missouri
corporation, in connection with the solicitation of proxies by
our board of directors for use at the Annual Meeting of
Shareholders to be held on Wednesday, May 10, 2000, and at any
adjournment or adjournments thereof. The Annual Meeting will
commence at 9:00 a.m., local time, and will be held at The
Exchange National Bank of Jefferson City's facility located at
3701 West Truman Boulevard, Jefferson City, Missouri. Our
Company's principal business activity is the ownership, directly
or indirectly, of all the issued and outstanding stock of The
Exchange National Bank of Jefferson City, Union State Bank &
Trust of Clinton, and Osage Valley Bank.
Our principal executive offices are located at 132 East
High Street, Jefferson City, Missouri, 65101. This proxy
statement and the enclosed form of proxy were first mailed to
shareholders on or about April 5, 2000.
PROXIES
You are requested to complete, date and sign the enclosed
form of proxy and return it promptly in the enclosed postage
prepaid envelope. Shares represented by properly executed
proxies will, unless such proxies previously have been revoked,
be voted in accordance with the shareholders' instructions
indicated in the proxies. If no instructions are indicated, such
shares will be voted in favor of the election of the nominees for
director named in this proxy statement, in favor of the proposed
amendment to our Company's articles of incorporation described
herein, in favor of approving our Company's Incentive Stock
Option Plan, in favor of ratifying the selection of the
accounting firm of KPMG LLP as our Company's independent auditors
for the current year, and, as to any other matter that properly
may be brought before the Annual Meeting, in accordance with the
discretion and judgment of the appointed proxies. A shareholder
who has given a proxy may revoke it at any time before it is
exercised at the Annual Meeting by filing written notice of
revocation with the Secretary of our Company, by executing and
delivering to the Secretary of our Company a proxy bearing a
later date, or by appearing at the Annual Meeting and voting in
person.
VOTING AT THE MEETING
For purposes of voting on the proposals described
herein, the presence in person or by proxy of shareholders
holding a majority of the total outstanding shares of our
Company's common stock, $1.00 par value, will constitute a
quorum at the Annual Meeting. Only holders of record of shares
of our Company's common stock as of the close of business on
March 15, 2000 (the "Record Date"), are entitled to notice of,
and to vote at, the Annual Meeting or any adjournment or
adjournments thereof. As of the Record Date, 1,219,025 shares of
our Company's common stock were issued and outstanding. Each
such share of common stock is entitled to one vote on each matter
properly to come before the Annual Meeting. Shares of common
stock represented by a proxy which directs that the shares be
voted to abstain or to withhold a vote on any matter will be
counted in determining whether a quorum is present. Shares of
common stock as to which there is a broker non-vote (i.e., when a
broker holding shares for clients in street name is not permitted
to vote on certain matters without instruction) also will be
counted for quorum purposes. If a quorum should not be present,
the Annual Meeting may be adjourned from time to time until a
quorum is obtained.
<PAGE>
Directors are elected by a majority of the votes cast,
in person or by proxy of shareholders entitled to vote at the
Annual Meeting for that purpose. Shareholders do not have
cumulative voting rights in the election of directors. The
affirmative vote of the holders of two-thirds of the shares of
our Company's common stock, represented in person or by proxy and
entitled to vote at the Annual Meeting, is required for the
approval of the proposed amendment to our Company's articles of
incorporation described herein. The affirmative vote of a
majority of the shares of our Company's common stock, represented
in person or by proxy and entitled to vote at the Annual Meeting,
is required for (i) the approval of our Company's Incentive Stock
Option Plan, (ii) the ratification of the selection of KPMG LLP
as our Company's independent auditors, and (iii) the approval of
such other matters as properly may come before the Annual Meeting
or any adjournment thereof.
A shareholder entitled to vote in the election of
directors can withhold authority to vote for all nominees for
directors or can withhold authority to vote for certain nominees
for directors. In addition, a shareholder entitled to vote with
respect to any other matters at the Annual Meeting may abstain
from voting on such matters. With respect to the election of
directors, votes withheld from one or more nominees are treated
as votes against the particular nominee. Abstentions from any
other proposal at the Annual Meeting are treated as votes against
the particular proposal. Broker non-votes on any proposal to be
voted on at the Annual Meeting are treated as shares of common
stock as to which voting power has been withheld by the
respective beneficial holders and, therefore, as shares not
entitled to vote on the proposal as to which there is the broker
non-vote.
SOLICITATION OF PROXIES
This solicitation of proxies for the Annual Meeting is being
made by our Company's board of directors. Our Company will bear
all costs of such solicitation, including the cost of preparing
and mailing this proxy statement and the enclosed form of proxy.
After the initial mailing of this proxy statement, proxies may be
solicited by mail, telephone, facsimile transmission or
personally by directors, officers, employees or agents of our
Company, Exchange National Bank, Union State Bank or Osage Valley
Bank. Brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward soliciting materials to
beneficial owners of shares held of record by them, and their
reasonable out-of-pocket expenses, together with those of our
Company's transfer agent, will be paid by our Company.
A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at least ten days prior
to the date of the Annual Meeting during normal business hours at
the registered office of our Company located at 132 East High
Street, Jefferson City, Missouri. The list also will be
available at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors
Our Company's board of directors consists of nine
directors. The articles of incorporation of our Company divide
the board of directors into three classes of directors, with the
directors serving staggered terms of three years and until their
respective successors are duly elected and qualified or until
their respective earlier resignation or removal. The present
terms of David R. Goller, James R. Loyd and Gus S. Wetzel, II,
the three directors in Class II, expire at this Annual Meeting.
Directors in Class I (Charles G. Dudenhoeffer, Jr., Philip D.
Freeman and James E. Smith) and Class III (Donald L. Campbell,
Kevin L. Riley and David T. Turner) have been elected to terms
expiring at the time of the annual meeting of shareholders in
2002 and 2001, respectively.
One of the purposes of this Annual Meeting is to elect
three directors in Class II to serve for a three-year term
expiring at the Annual Meeting of Shareholders in 2003 and until
their respective successors are duly elected and qualified or
until their respective earlier resignation or removal. The board
of directors has designated David R. Goller, James R. Loyd and
Gus S. Wetzel, II as the three nominees proposed for election at
the Annual Meeting. Unless authority to vote for the nominees or
a particular nominee is withheld, it is intended that the shares
represented by properly executed proxies in the form enclosed
will be voted for the election as directors of these three
nominees. In the event that one or more of the nominees should
become unavailable for election, it is intended that the shares
represented by the proxies will be voted for the election of such
substitute nominee or nominees as <PAGE> may be designated by the
board of directors, unless the authority to vote for all nominees
or for the particular nominee who has ceased to be a candidate
has been withheld. Each of the nominees has indicated his
willingness to serve as a director if elected, and the board of
directors has no reason to believe that any nominee will be
unavailable for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF DAVID R. GOLLER, JAMES R. LOYD AND GUS S. WETZEL, II
AS CLASS II DIRECTORS.
Our Company's articles of incorporation and bylaws
provide that advance notice of shareholder nominations for the
election of directors must be given. With respect to this Annual
Meeting, written notice of the shareholder's intent to make a
nomination at the meeting must be received by our Company's
Secretary at our Company's principal executive offices not later
than the close of business on May 9, 2000. At future meetings of
shareholders, notice of nominations or other business to be
brought before the meeting must be delivered to our Company's
Secretary at our principal executive offices not less than 60
days (30 days in the case of nominations for the election of
directors) prior to the first anniversary of the previous year's
annual meeting. In the event that the date of the annual meeting
of shareholders is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, however, notice by
the shareholder to be timely must be so delivered not later than
the close of business on the later of (i) the 60th day (in the
case of nominations, the 30th day) prior to such annual meeting
or (ii) the tenth day following the date on which public
announcement of the date of such meeting is first made. See
"Shareholder Proposals For 2001 Annual Meeting."
The shareholder's notice of nomination must contain (i)
the name and address of the nominating shareholder, of each
person to be nominated and of the beneficial owner (as defined in
the articles of incorporation), if any, on whose behalf the
nomination is made, (ii) a representation that the nominating
shareholder is the holder of record of our Company's common stock
entitled to vote in the election of directors at the meeting and
intends to appear at the meeting to nominate the person or
persons specified in the notice, (iii) the number of shares of
our Company's common stock owned beneficially and of record by
the nominating shareholder and by each person to be nominated,
(iv) a description of all arrangements or understandings between
the nominating shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder, (v)
the consent of each nominee to serve as a director if so elected,
and (vi) such other information regarding each nominee proposed
by the nominating shareholder as would be required to be included
in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, as then in effect, if our
Company were soliciting proxies for the election of such
nominees. If no such notice has been received, the chairman of
the Annual Meeting is entitled to refuse to acknowledge the
nomination of any person which is not made in compliance with the
foregoing procedure. The board of directors does not know if,
and has no reason to believe that, anyone will attempt to
nominate another candidate for director at this Annual Meeting.
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The following table sets forth certain information with
respect to each person nominated by the board of directors for
election as a Class II director at the Annual Meeting and each
director whose term of office will continue after the Annual
Meeting.
<PAGE>
POSITION COMPANY
NAME AGE WITH OUR COMPANY DIRECTOR SINCE
NOMINEES
CLASS II: TERM TO EXPIRE IN 2003
David R. Goller 68 Director 1993
James R. Loyd 68 Director 1993
Gus S. Wetzel, II 59 Director 1999
DIRECTORS CONTINUING IN OFFICE
CLASS I: TERM TO EXPIRE IN 2002
Charles G. 60 Senior Vice 1993
Dudenhoeffer, Jr. President and
Director
Philip D. Freeman 46 Director 1993
James E. Smith 55 Vice Chairman 1997
and Director
CLASS III: TERM TO EXPIRE IN 2001
Donald L. 73 President, 1993
Campbell Chairman of
the Board
and Director
Kevin L. Riley 44 Director 1995
David T. Turner 43 Vice Chairman 1997
and Director
The business experience during the last five years of
each person nominated by the board of directors for election as a
Class II director at the Annual Meeting and each director whose
term of office will continue after the Annual Meeting is as
follows:
David R. Goller has served as a Director of Exchange
National Bank since 1975 and of our Company since 1993. He has
been an attorney with the law firm of Goller, Gardner & Feather,
P.C. (formerly Goller & Associates, P.C.), Jefferson City,
Missouri, counsel for Exchange National Bank, since 1975. Mr.
Goller also serves on our Company's Audit/Compensation Committee
and Incentive Stock Option Committee.
James R. Loyd has served as a Director of Exchange
National Bank since 1974 and of our Company since 1993. He
served as Executive Vice President of Exchange National Bank from
1974 until October 1996 and as Executive Vice President of our
Company from 1993 until October 1996. Mr. Loyd also serves on
our Company's Incentive Stock Option Committee.
<PAGE>
Gus S. Wetzel, II has served as a Director of Union
State Bank since 1974, and of our Company since 1999. He has
served as Chairman of Union State Bank since 1974. Dr. Wetzel
has served as a physician/surgeon with the Wetzel Clinic,
Clinton, Missouri since 1972. He also serves on our Company's
Incentive Stock Option Committee.
Charles G. Dudenhoeffer, Jr. has served as a Director
of Exchange National Bank since 1978 and of our Company since
1993. Mr. Dudenhoeffer has served as Vice President and Trust
Officer of Exchange National Bank from 1974 until June 1992, when
he became Senior Vice President and Trust Officer. He has served
as Senior Vice President of our Company since 1993.
Philip D. Freeman has served as a Director of Exchange
National Bank since 1990 and of our Company since 1993. He has
been the Owner/Manager of Freeman Mortuary, Jefferson City,
Missouri since 1974. Mr. Freeman also serves on our Company's
Audit/Compensation Committee and Incentive Stock Option
Committee.
James E. Smith has served as a Director of Union State
Bank since 1975, of our Company since 1997, and of Osage Valley
Bank since January 2000. He has served as Vice Chairman of our
Company since 1998, as President of Union State Bank since 1975,
and President of Osage Valley Bank since January 2000.
Donald L. Campbell has served as a Director of Exchange
National Bank since 1967, of Union State Bank since 1997, and of
our Company since 1993. He has served as Chairman of Exchange
National Bank since 1990, and of our Company since 1993. Mr.
Campbell has served as President of Exchange National Bank from
1971 until December 1996 and of our Company since 1993.
Kevin L. Riley has served as a Director of Exchange
National Bank since 1995 and of our Company since 1995. He has
been co-owner of Riley Chevrolet, Inc. and Riley Oldsmobile,
Cadillac, Inc., each a Jefferson City, Missouri automobile
dealership, since 1986 and 1992, respectively. Mr. Riley also
serves on our Company's Audit/Compensation Committee and
Incentive Stock Option Committee.
David T. Turner has served as a Director of Exchange
National Bank and of our Company since January 1997. Mr. Turner
has served as President of Exchange National Bank since January
1997 and as Vice Chairman of our Company since June 1998. From
1993 until June 1998, he served as Senior Vice President of our
Company. He served as Senior Vice President of Exchange National
Bank from June 1992 through December 1996 and as Vice President
from 1985 until June 1992.
There is no arrangement or understanding between any
director and any other person pursuant to which such director was
selected as a director, except that in connection with our
Company's acquisition of Union State Bank in November 1997, our
Company agreed to appoint James E. Smith as a director.
COMPENSATION OF DIRECTORS
Only outside (non-employee) members of our Company's
board of directors receive compensation for their service to our
Company as a director. Each of these outside (non-employee)
directors is paid $300 for each meeting of the Board attended in
person. Each member of our Company's Audit/Compensation
Committee receives $700 for each committee meeting attended. It
is anticipated that each member of our Company's Incentive Stock
Option Committee will receive a fee for each committee meeting
attended, although the amount has not yet been determined.
All directors of our Company (other than Mr. Smith and
Mr. Wetzel) are also directors of Exchange National Bank, and in
that capacity may receive compensation from Exchange National
Bank. For 1999 and 2000, each of Exchange National Bank's
outside (non-employee) directors is paid a monthly $500 retainer
and $300 for each meeting of the Board attended in person. In
addition, these directors are eligible for a $2,400 bonus if
Exchange National Bank meets certain financial goals and the
director attends at least 80% of the Board meetings held (which
could include one telephone conference meeting). All of Exchange
National Bank's non-employee directors received this bonus for 1999.
<PAGE>
Three of our Company's directors - Mr. Campbell, Mr.
Smith and Mr. Wetzel - also are directors of Union State Bank.
Mr. Campbell and Mr. Smith are not eligible to receive
compensation for their service to Union State Bank as a director.
For his service to Union State Bank as a director, Mr. Wetzel is
paid a monthly $300 retainer plus $300 for each meeting of the
Board that he attends in person. Mr. Wetzel also receives $100
for each meeting of Union State Bank's Trust Committee held,
and $50 for each meeting of Union State Bank's Loan
(Discount) Committee that he attends. One of our Company's
directors - Mr. Smith- also is a director of Osage Valley Bank,
but is not eligible to receive compensation for his service in
that capacity.
MEETINGS OF THE BOARD AND COMMITTEES
During 1999 the board of directors of our Company held
11 meetings. All directors attended at least 75% of the meetings
of the board of directors which were held during 1999. It should
be noted that our Company's directors discharge their
responsibilities throughout the year, not only at such board of
directors and committee meetings, but through personal meetings
and other communications with members of management and others
regarding matters of interest and concern to our Company.
Our Company's board of directors has established an
Audit/Compensation Committee. The Audit/Compensation Committee
assists the Board in fulfilling its responsibilities with respect
to accounting and financial reporting practices and the scope and
expense of audit and related services provided by external
auditors, among others. The Audit/Compensation Committee is
responsible for apprising the Board of management's compliance
with Board mandated policies, internal procedures and applicable
laws and regulations. The committee works with the internal
audit department and external auditors and supervises the
internal audit function directly, reviews and approves the hiring
of audit personnel and evaluates the performance of the internal
audit function and the external auditors. The committee also has
the duty to make, or cause to be made, a suitable examination and
audit of the financial affairs of our Company and its
subsidiaries at least annually, and to report thereon to the
board of directors. In January 2000, the Audit/Compensation
Committee also assumed the responsibility to make recommendations
to the board of directors regarding the compensation and benefits
of our executive officers and directors and the establishment and
administration of our Company's executive compensation program.
The members of the Audit/Compensation Committee currently are
Messrs. Freeman, Goller and Riley. The Audit/Compensation
Committee met five times during 1999. Each committee member
attended 100% of the meetings held in 1999.
In February 2000, our board of directors approved an
Incentive Stock Option Plan under which an Incentive Stock Option
Committee was established. Members of the committee are Messrs.
Freeman, Goller, Riley, Loyd and Wetzel.
With the exception of the Audit/Compensation Committee
and the Incentive Stock Option Committee, there currently are no
other standing compensation, executive, nominating or other
committees of our Company's board of directors, or committees
performing similar functions of the Board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
REPORT ON EXECUTIVE COMPENSATION
This report has been prepared by the Audit/Compensation
Committee of our Company's board of directors (the "Committee")
and by the board of directors of our Company, which together have
general responsibility for the establishment, direction and
administration of all aspects of the compensation policies and
programs for the executive officers of our Company and its
affiliate banks. Under an agreement between our Company and
Exchange National Bank, employees of our Company and Exchange
National Bank, including persons who are employees of both our
Company and Exchange National Bank, are compensated as such by
Exchange National Bank. Our Company's executive compensation
program, insofar as it pertains to the Chairman of the Board and
Chief Executive Officer (the "Chief Executive Officer") and the
Presidents of Exchange National Bank, Union State Bank and Osage
Valley Bank (the "Presidents"), is administered by the Committee.
The Committee is composed of three independent outside directors,
none of whom is an officer or employee of our Company or any
affiliate bank. All decisions by the Committee relating to the
compensation of the Chief Executive Officer and the Presidents
are reviewed by, and subject to the approval of, the full board
of directors of our Company. Our Company's executive <PAGE>
compensation program, insofar as it pertains to executive
officers other than the Chief Executive Officer and the
Presidents, is administered by the Chief Executive Officer and
the Presidents. All decisions by the Chief Executive Officer and
the Presidents relating to the compensation of the executive
officers of affiliate banks are reviewed by, and subject to the
approval of, the full board of directors of our subsidiary banks.
Mr. Donald Campbell, the Chief Executive Officer, and certain
other executive officers of our Company and affiliate banks, may
attend meetings of the Committee and of our Company' board of
directors, but are not present during discussions or
deliberations regarding their own compensation.
COMPENSATION POLICY. Our Company's executive
compensation policy is premised upon three basic goals: (1) to
attract and retain qualified individuals who provide the skills
and leadership necessary to enable our Company and its affiliate
banks to achieve earnings growth, capital compliance and return
on investment objectives, while maintaining a commitment to equal
employment opportunity and affirmative action guidelines and
practices; (2) to create incentives to achieve company and
individual performance objectives through the use of performance-
based compensation programs; and (3) to create a mutuality of
interest between executive officers and shareholders through
compensation structures that create a direct link between
executive compensation and shareholder return.
In determining the structure and levels of each of the
components of executive compensation needed to achieve these
goals, all elements of the compensation package are considered in
total, rather than any one component in isolation. As more fully
described below, the determination of such levels of executive
compensation is a subjective process in which many factors are
considered, including our Company's and/or affiliate banks'
performance and the individual executive's specific
responsibilities, historical and anticipated personal
contribution to our business, and length of service with our
Company or affiliate banks.
COMPENSATION COMPONENTS. The Committee, as well as the
Chief Executive Officer and the Presidents, reviews our Company's
compensation program annually to ensure that compensation levels
and incentive opportunities are competitive and reflect the
performance of our Company and its affiliate banks as well as
performance of the individual executive officer. The particular
elements of the compensation program for executive officers are
base salary, incentive compensation and periodic stock option
grants. The Committee believes that these compensation
components together advance both the short- and long-term
interests of our shareholders. In this regard, the Committee
believes that the long-term interests of our shareholders are
advanced by designating a portion of executive compensation to be
at risk: namely, incentive compensation (which permits individual
performance to be recognized on an annual and long-term basis
based, in part, on an evaluation of the executive's contribution
to our Company's and/or affiliate bank's performance) and the
grant of stock options (which directly ties a portion of the
executive's long-term remuneration to stock price appreciation
realized by shareholders). Each of the components of the
compensation program is addressed separately below.
Base Salary. The base salary for each executive
officer is reviewed from the previous year. In determining
whether to adjust base salary levels, management's
recommendations and subjective assessments of each executive's
growth and effectiveness in the performance of his or her duties
are taken into account. In addition, the performance of our
Company and/or the affiliate bank is considered. The increases
in the base salaries of executives of our Company and affiliate
banks for 2000 were based primarily upon a subjective analysis of
our Company's and/or the banks' performance during the period
since the last salary increase and the individual executive's
role in generating that performance. In this regard, the
analysis of performance included a review of our Company's and/or
affiliate bank's earnings and return on investment for the prior
year. The analysis of the role played by each individual
executive in generating our Company's and/or bank's performance
included a consideration of the executive's specific
responsibilities, contributions to our Company's and/or bank's
business, and length of service. The factors impacting base
salary levels are not independently assigned specific weights.
Rather, all of these factors are reviewed, and specific base pay
recommendations are made which reflect an analysis of the
aggregate impact of these factors. The Committee and the Chief
Executive Officer and the Presidents believe that base pay levels
for the executive officers are maintained within a range that is
considered to be appropriate and necessary.
Incentive Compensation. Our Company's and affiliate
banks' officers are eligible to receive incentive bonus awards.
Each of the officers who are eligible to receive bonus awards are
assigned to one of four bonus tiers, which assignments are made
primarily according to job category. Tier one consists of the
Chief Executive Officer. Tier two consists of our Company's Vice
Chairmen and affiliate bank presidents. Tier three consists of
senior officers of our Company and affiliate banks. Tier four
includes officers of affiliate banks. In 1997, the Committee
<PAGE> engaged a consulting firm to assist it in the
establishment of our Company's incentive compensation program.
After careful analysis of our Company's needs and an examination
of the competitive practices among peer companies, the Committee
recommended, and the full board of directors approved, the
adoption of an incentive bonus program.
Officers identified by the Chief Executive Officer and
the Presidents and the Committee are eligible to receive
incentive bonuses. These officers may earn annual awards only
upon the achievement of performance objectives which are
established at the beginning of the year. Threshold, target and
maximum levels of awards are established, and no awards are paid
if the threshold is not met. The performance objectives are
weighted based upon their relative importance to each individual.
The performance objectives for participants may include corporate
performance objectives and personal targeted objectives for
performance. The performance objectives may include functional
or operating unit objectives. Each participant's target bonus is
expressed as a percentage of his or her base salary, dependent on
responsibility and function. The target award is 30% of base
salary in the case of the Chief Executive Officer, and in the
case of the Presidents, senior officers and other officers, the
target award ranges from 20% to 10% of base pay. Earned awards
may range from 0% to 150% of the target award. In 1999, the
Committee granted an incentive bonus award of $63,000, or 30% of
base pay, to Mr. Campbell, the Chief Executive Officer, for the
1998 fiscal year.
Incentive bonus awards to the Presidents are allocated
based upon the recommendation of the Chief Executive Officer. In
allocating bonus awards among the other participants, the Chief
Executive Officer and the Presidents exercise their discretion
and judgment after considering the individual participant's
performance, responsibilities and contributions to our Company
and/or affiliate banks, and subjectively analyzing the basis of
their aggregate impact on the success of our Company and/or
affiliate banks for the preceding year.
Stock Options. The Committee believes that in order to
enhance long-term shareholder value it must provide incentives
that provide motivation beyond short-term results. In 2000, the
Committee engaged a consulting firm and legal counsel to develop
a stock option plan. The stock option plan was approved (subject
to shareholder approval) at our Company's February 2000 board
meeting. The objective of stock option grants is to advance the
longer term interests of our Company and its shareholders and
complement incentives tied to annual performance by rewarding
executives upon the creation of incremental shareholder value.
Stock options only produce value to executives if the price of
our Company' common stock appreciates, thereby directly linking
the interests of executives with those of shareholders.
Therefore, in order to provide long-term incentives to executive
officers and other employees related to long-term growth in the
value of our Company's common stock, it is intended that stock
options be granted to such persons under our Company' stock
option plan. The selection of the persons eligible to receive
stock options and the designation of the number of stock options
to be granted to such persons are made by our Company's board of
directors after recommendation from the Committee, and are made
after taking into account management's assessment of each
person's relative level of authority and responsibility with the
Bank, years of service and base salary, among other factors. No
stock options have been or will be granted until the stock option
plan is approved by shareholders.
AUDIT/COMPENSATION COMMITTEE BOARD OF DIRECTORS
Philip D. Donald L. Charles G. Philip
Freeman Campbell Dudenhoeffer D.
Jr. Freeman
David R. David R. James R. Kevin L.
Goller Goller Loyd Riley
Kevin L. James E. David T. Gus S.
Riley Smith Turner Wetzel,
II
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Audit/Compensation Committee are Mr.
Freeman, the Chairman, Mr. Goller, and Mr. Riley. As discussed
above under "Report on Executive Compensation", Mr. Campbell, the
Chief Executive Officer, and Messrs. Turner and Smith, affiliate
bank Presidents, administer the executive compensation program
insofar as <PAGE> it pertains to executive officers other than
the Chief Executive Officer and the Presidents. All decisions
relating to the compensation of executive officers are reviewed
by, and subject to the approval of, the full board of directors
of our subsidiary banks. Among the members of the banks' board of
directors, Messrs. Campbell, Turner, Smith and Dudenhoeffer are
officers and employees of the Company and affiliate banks.
None of the members of the Committee were an officer or
employee of our Company or any of its subsidiaries during 1999,
and none were formerly an officer of our Company or any of its
subsidiaries. Messrs. Freeman, Riley and Goller, and certain
corporations and firms in which such persons have interests, have
obtained loans from the affiliate banks. Each of such loans are
believed to have been made to such persons, corporations or firms
in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons, and did not involve more than the normal risk of
collectibility or present other unfavorable features.
Executive Officers
Executive officers of our Company are appointed by the
board of directors and serve at the discretion of the Board. The
following table sets forth certain information with respect to
all executive officers of our Company.
NAME AGE POSITION
Donald L. Campbell 73 President, Chairman
of the Board
and Director
David T. Turner 43 Vice Chairman and
Director
James E. Smith 55 Vice Chairman and
Director
Charles G. 60 Senior Vice President
Dudenhoeffer, Jr. and Director
Richard G. Rose 48 Treasurer
Kathleen L. Bruegenhemke 34 Senior Vice President
and Secretary
The business experience of the executive officers of
our Company (with the exception of those executive officers
previously described under the caption "Election of Directors--
Nominees and Directors Continuing in Office") during the last
five years is as follows:
Richard G. Rose has served as Treasurer of our Company
since July 1998 and as Senior Vice President and Controller of
Exchange National Bank since July 1998. Prior to that he served
as Senior Vice President and Controller of the First National
Bank of St. Louis from June 1979 until June 1998.
Kathleen L. Bruegenhemke has served as Senior Vice
President and Secretary of our Company since November 1997. From
January 1992 until November 1997, she served as Internal Auditor
of Exchange National Bank. Prior to joining Exchange National
Bank, Ms. Bruegenhemke served as a Commissioned Bank Examiner for
the Federal Deposit Insurance Corporation from 1986 to 1992.
There is no arrangement or understanding between any
executive officer and any other person pursuant to which such
executive officer was selected as an officer.
<PAGE>
Executive Compensation
Our Company does not pay compensation to its officers.
The following table sets forth for the years ended December 31,
1999, 1998 and 1997, respectively, the compensation paid or
accrued by our Company's subsidiaries to the chief executive
officer of our Company and the only three other employees whose
remuneration for 1999 was in excess of $100,000 for services to
our Company and its subsidiaries in all capacities:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
NAME AND ANNUAL COMPENSATION OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION <F2> COMPENSATION <F3>
<S> <C> <C> <C> <C> <C>
Donald L. Campbell 1999 $217,572 $ 63,000 $ 0 $22,094
Chairman and 1998 $214,932 $ 0 $ 0 $24,548
Director of ENB 1997 $131,832 $100,000 $8,100 $24,997
James E. Smith 1999 $125,516 $ 23,480 $ 0 $ 6,248
President and 1998 $114,269 $ 3,084 $ 0 $ 5,868
Director of USB 1997 $ 76,226 $130,215 $7,400 $10,105
<F1>
David T. Turner 1999 $140,828 $ 26,000 $ 0 $22,094
President and 1998 $134,632 $ 0 $ 0 $20,656
Director of ENB 1997 $121,584 $ 25,000 $7,500 $22,901
Charles G. 1999 $103,368 $ 9,383 $ 0 $15,569
Dudenhoeffer
Senior Vice 1998 $ 98,461 $ 0 $ 0 $15,107
President
and Director of 1997 $ 88,932 $ 0 $7,500 $13,894
ENB
______________
<FN>
<F1> Upon our Company's acquisition of Union State Bank in November 1997,
Mr. Smith commenced his service to our Company as a director and
President of Union State Bank. The 1997 compensation reported for Mr.
Smith, however, is for the entire year of 1997. In connection with
our Company's acquisition of Union State Bank in November 1997, Mr.
Smith has received certain amounts under a promissory note and
noncompetition agreement that are not reflected in the table. See
"Transactions with Directors and Officers."
<F2> Includes director and committee fee payments from Exchange National
Bank for 1997 of $7,500 to Mr. Campbell, $7,500 to Mr. Turner and
$7,500 to Mr. Dudenhoeffer; and director and committee fee payments
from Union State Bank for 1997 of $600 to Mr. Campbell and $7,400 to
Mr. Smith. Excludes perquisites and other benefits, unless the
aggregate amount of such compensation is equal to the lesser of either
$50,000 or 10% of the total of annual salary and bonus reported for
the named executive officer.
<F3> All Other Compensation includes (i) Exchange National Bank's
contributions to the Exchange National Bank profit-sharing plan and
trust for 1999, 1998 and 1997 of $22,094, $24,548 and $24,997,
respectively, allocated to Mr. Campbell's account; $22,094, $20,656
and $22,901, respectively, allocated to Mr. Turner's account, and
$15,569, $15,107 and $13,894, respectively, allocated to Mr.
Dudenhoeffer's account, and (ii) Union State Bank's contributions to
the Union State Bank profit-sharing plan for 1999, 1998 and 1997 of
$6,248, $5,868 and $10,105, respectively, allocated to Mr. Smith's
account.
</FN>
</TABLE>
EXCHANGE NATIONAL BANK PROFIT-SHARING TRUST
Exchange National Bank established a profit-sharing
plan and trust in 1951, which has been amended and restated from
time to time, and was most recently amended and restated on
January 20, 1999. All employees who have completed one year of
service are eligible to participate. Exchange National Bank
makes all contributions except for voluntary contributions by
participants who are not highly compensated employees. Exchange
National <PAGE> Bank is required to make an annual contribution
to the trust in an amount equal to 6% of its income before
provision for Federal and state income taxes and before provision
for contributions to the profit-sharing plan and retirement plan,
limited, however, to the maximum amount deductible for Federal
income tax purposes. Exchange National Bank's contribution to
the trust for any given year is allocated to the accounts of the
participants in direct proportion to the compensation of the
participants for such year. The trust can invest up to 60% of
the value of its assets in our Company's stock, and such common
stock held by the trust is allocated to the accounts of the
participants. The interest of a participant in Exchange National
Bank contributions does not vest prior to the completion of five
years of service. After five years of service a participant
becomes fully vested in the value of his or her employer
contribution account. A participant whose employment with
Exchange National Bank terminates because of his normal
retirement, death, or permanent disability is also fully vested.
Payments are made to participants upon termination of service.
If cash is distributed, any shares of our Company's stock
previously allocated to the terminating participant's account
would be reallocated among the remaining participants' accounts.
A participant may withdraw his or her own contributions, but a
participant may not borrow from the trust. Each participant may
direct the trustee with respect to the voting of shares of our
Company's stock allocated to his account on such matters upon
which shareholders are entitled to vote. Exchange National Bank
serves as trustee of the trust, and the trust is administered by
a retirement committee which is appointed by the board of
directors of Exchange National Bank. As of December 31, 1999,
the trust held assets with an aggregate book value of
$14,373,428.
As of March 15, 2000, the trust held 111,112 shares (or
9.11%) of our Company's common stock.
UNION STATE BANK PROFIT-SHARING PLAN
Union State Bank established the Union State Bank &
Trust of Clinton Profit Sharing Plan (the "Plan") in 1963. The
Plan was restated in 1994. All employees who have completed one
year of service and are twenty-one years old are eligible to
participate in the Plan. Eligible Plan participants may make
elective deferrals up to a maximum of 8% of such participant's
compensation. Under the terms of the Plan, a matching
contribution will be made on behalf of each participant by Union
State Bank in an amount of 33.33% of the participant's elective
deferrals. In addition to the employer matching contributions,
Union State Bank may make a discretionary annual profit sharing
contribution to the Plan. Both the employer matching
contribution and the discretionary employer profit sharing
contribution are subject to the Plan's vesting schedule. Under
the Plan's vesting schedule, a participant's interest in employer
contributions does not begin to vest until the participant has
completed three years of service. A participant becomes fully
vested after he or she has completed seven years of service.
Unless a participant terminates employment due to death,
disability or retirement, a participant is not eligible to
receive an employer matching or employer profit sharing
contribution for a specific Plan year unless the participant has
completed 1,000 hours or more of service during the Plan year and
is employed on the last day of the Plan year. A participant may
take a total distribution of his or her vested account balance
upon his or her termination from employment. Under the terms of
the Plan, in-service hardship withdrawals are allowed. Plan
loans, however, are not permitted. Union State Bank currently
serves as the trustee and plan administrator of the Plan.
STOCK OPTION PLAN
On February 29, 2000, our board of directors adopted
the Exchange National Bancshares, Inc. Incentive Stock Option
Plan. The Plan is sponsored by our Company for key employees of
our Company and its subsidiaries, and is intended to encourage
such employees to participate in the ownership of our Company,
and to provide additional incentive for them to promote the
success of our business through sharing in the future growth of
our business. As of March 15, 2000, our Company had not granted
options to purchase any shares of common stock pursuant to the
Plan. The Plan is being submitted for the approval of the
shareholders at the Annual Meeting. See Item 3.
The Plan is administered by a committee composed of all
members of our board of directors who are not employed by our
Company or any of its subsidiaries. The Plan committee has the
power to determine in its discretion the persons to whom options
are granted under the Plan, the number of shares covered by those
options, and the time at which an option becomes exercisable,
subject in each case to the limitations set forth in the Plan.
Options can be granted under the Plan only to key employees of
our Company or any of its subsidiary corporations. The
eligibility of the persons to whom options may be granted under
the Plan is limited to those persons whom the Plan committee
determines have made, or are expected to make, material
contributions to the successful <PAGE> performance of our
Company. The period of up to ten years during which an option
may be exercised, and the time at which it becomes exercisable,
are fixed by the Plan committee at the time the option is
granted. No option granted under the Plan is transferable by the
holder other than by will or the laws of descent and
distribution.
The aggregate number of shares of our common stock that
may be issued pursuant to the exercise of options granted under
the Plan is limited to 150,000 shares, subject to increase or
decrease in the event of any change in our Company's capital
structure. Shares subject to options granted under the Plan
which expire or terminate without being exercised in full become
available, to the extent unexercised, for future grants under the
Plan. No consideration is paid to our Company by any optionee in
exchange for the grant of an option. The per share exercise
price for an option granted under the Plan is determined by the
Plan committee but may not be less than the greater of the par
value or the fair market value of our common stock on the date
that the option is granted. The Plan provides for automatic
adjustments to prevent dilution or enlargement of the optionee's
rights in the event of a stock split, stock dividend,
reorganization, merger, consolidation, liquidation, combination
or exchange of shares, or other change in the capital structure
of our Company.
PENSION PLAN
Concurrently with the creation of the profit-sharing
plan and trust in 1951, Exchange National Bank established a
retirement plan for its employees, which has been amended and
restated from time to time, and was most recently amended on
October 29, 1999. Under the plan, all full-time employees become
participants on the earlier of the first of June or the first of
December coincident with or immediately following the later to
occur of (i) the completion of one year of service or (ii) the
attainment of the age of 21, and continue to participate so long
as they continue to be full-time employees, until their
retirement, death or termination of employment prior to normal
retirement date. The plan has a five-year vesting schedule under
which a participant becomes fully vested in his accrued benefit
after completing five years of service. This plan provides for
the payment of retirement and death benefits that are funded by
investments which, at December 31, 1999, had an aggregate book
value of $3,172,978.
The normal retirement benefits provided under the plan
for an employee with at least 25 years of continuous service are
based upon 45% of his/her average compensation over a ten-year
period, less 50% of his social security benefit. Compensation
covered by the plan includes wages, salaries and overtime pay but
excludes directors' fees, commissions, bonuses, expense
allowances, and other extraordinary compensation. Amounts
reported in the compensation table include salaries, directors'
fees, commissions and bonuses. For employees with less than 25
years of continuous service, retirement benefits are reduced
proportionally. Provision is made for early or late retirement
and optional payment provisions are available.
The table below illustrates the projected amount of
annual retirement income, based on a straight line annuity,
available under the plan for a person retiring at 65 years of age
at various levels of average annual compensation and years of
service classifications, with an assumed annual social security
benefit of $10,000.
AVERAGE TEN-
YEAR ANNUAL 10 YEARS 15 YEARS 20 YEARS 25 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE
$ 50,000 $7,000 $10,000 $14,000 $17,500
100,000 16,000 24,000 32,000 40,000
150,000 25,000 37,500 50,000 62,500
200,000 34,000 51,000 68,000 85,000
The amounts shown above reflect benefits payable in the
normal payment form. For a married participant, payment is by
monthly benefit to the participant during his or her lifetime,
and 50% of that amount is paid to the spouse monthly during the
spouse's life after the participant's death. For an unmarried
participant, payment is by a lifetime monthly benefit, with
payments guaranteed for the first 120 months.
Mr. Campbell, Mr. Turner and Mr. Dudenhoeffer have 48
years, 21 years and 42 years, respectively, of continuous service
under the plan. Mr. Smith is not a participant in the plan.
<PAGE>
SMITH EMPLOYMENT AGREEMENT
Our Company has entered into an employment agreement
with James E. Smith. The agreement has an initial three-year
term which expires on November 3, 2000, subject to automatic
extensions of one additional year upon the expiration of each
year prior to Mr. Smith's 62nd birthday (unless either party
gives notice not to so extend the term). The agreement provides
for an annualized base salary of $110,000, and eligibility for
merit-based increases. In addition to base salary, the agreement
also provides that Mr. Smith is eligible to participate in bonus
and other incentive compensation plans made available to
employees having responsibilities comparable to those of Mr.
Smith.
Mr. Smith's employment is subject to early termination
in the event of his death, disability or adjudication of legal
incompetence, and otherwise may be terminated only for cause (as
defined). The employment agreement prevents Mr. Smith from
competing with our Company, soliciting customers or hiring
employees during the term of the agreement and for a period of
two years thereafter. In addition, the employment agreement
requires Mr. Smith to maintain the confidentiality of our
Company's confidential information prior to its disclosure by our
Company.
COMPANY PERFORMANCE
The following performance graph shows a comparison of
cumulative total returns for our Company, the Nasdaq Stock Market
(U.S. Companies) and a peer index of 85 financial institutions
having total assets of between $500 million and $1 billion (as
calculated by SNL Securities LC) for the period from January 1,
1995, through December 31, 1999. The cumulative total return on
investment for each of the periods for our Company, the Nasdaq
Stock Market (U.S. Companies) and the peer index is based on the
stock price or index at January 1, 1995. The performance graph
assumes that the value of an investment in our Company's common
stock and each index was $100 at January 1, 1995 and that all
dividends were reinvested. The information presented in the
performance graph is historical in nature and is not intended to
represent or guarantee future returns.
Comparison of Cumulative Total Returns
(Exchange, Nasdaq, Peer Index)
[GRAPH]
<PAGE>
The comparison of cumulative total returns presented in
the above graph was plotted using the following index values and
common stock price values:
<TABLE>
<CAPTION>
1/1/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Exchange $100.00 $106.83 $127.72 $142.07 $155.64 $277.17
National
Bancshares
Nasdaq Stock $100.00 $141.33 $173.89 $213.07 $300.25 $542.43
Market (U.S.
Companies)
Peer Index $100.00 $132.76 $165.97 $269.80 $265.28 $245.56
</TABLE>
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as
of March 15, 2000 regarding the beneficial ownership of our
Company's common stock by each person known to the board of
directors to own beneficially 5% or more of our Company's common
stock, by each director of our Company, by each executive officer
named in the Summary Compensation Table under "Executive Officers
and Compensation--Executive Compensation" and by all directors
and officers of our Company as a group. All information with
respect to beneficial ownership has been furnished by the
respective directors, officers or 5% or more shareholders, as the
case may be.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE OF
NAME OWNERSHIP <F1> SHARES OUTSTANDING <F1>
Exchange National 111,112.00 9.1%
Bank of
Jefferson City
Profit-Sharing
Trust/Exchange
National Bank of
Jefferson City,
Trustee <F2><F3>
Donald L. 69,609.43 5.7
Campbell <F2><F4>
Charles G. 16,980.61 1.4
Dudenhoeffer,
Jr. <F5>
Philip D. 10,000.00 *
Freeman <F6>
David R. Goller 19,598.00 1.6
<F7>
James R. Loyd 31,074.00 2.6
<F8>
Kevin L. Riley 2,310.00 *
<F9>
James E. Smith 7,001.00 *
<F10>
David T. Turner 7,348.86 *
<F11>
Gus S. Wetzel, 20,751.00 1.7
II <F12>
All directors & 186,145.76 15.3
executive
officers
as a group (11
persons) <F13>
_________________
[FN]
* Less than one percent
<F1> Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission
which generally attribute beneficial ownership of
securities to persons who possess sole or shared voting
power and/or investment power with respect to those
securities. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and
investment power with respect to all shares shown as
beneficially owned by them. Percentage ownership
calculations are based on 1,219,025 shares of common
stock outstanding.
<F2> The address for The Exchange National Bank of Jefferson
City Profit-Sharing Trust/The Exchange National Bank of
Jefferson City, Trustee and for Mr. Campbell is 132
East High Street, Jefferson City, Missouri 65101.
<PAGE>
<F3> Participants in The Exchange National Bank of Jefferson
City Profit-Sharing Trust have the right to vote shares
which have been allocated to such participants in the
Profit-Sharing Trust. Accordingly, the Profit-Sharing
Trust/Trustee has investment power but not voting power
as to the shares shown as owned by it.
<F4> Includes 51,726 shares owned of record by Campbell
Family L.P., and 17,883.43 shares held in The Exchange
National Bank of Jefferson City Profit-Sharing Trust
for the benefit of Mr. Campbell. Mr. Campbell has sole
voting and investment power over 51,726 shares, and Mr.
Campbell has the right to vote, but has no investment
power, with respect to the 17,883.43 shares held in the
Profit-Sharing Trust.
<F5> Includes 6,150 shares held jointly by Mr. Dudenhoeffer
and his spouse and 10,830.61 shares held in The
Exchange National Bank of Jefferson City Profit-Sharing
Trust for his benefit. Mr. Dudenhoeffer and his spouse
share voting and investment power with respect to 6,150
shares, and Mr. Dudenhoeffer has the right to vote, but
has no investment power, with respect to the 10,830.61
shares held in the Profit-Sharing Trust.
<F6> These shares are held of record by a revocable living
trust, of which Mr. Freeman is a trustee, for the
benefit of Mr. Freeman and his wife.
<F7> Includes 9,070 shares held of record by Mr. Goller as
trustee of the David R. Goller Trust. Also includes
4,580 shares held of record by the Goller, Gardner &
Feather, P.C. Profit Sharing Trust, of which Mr. Goller
is trustee, and 5,948 shares held of record by two
family trusts for which he acts as sole trustee.
<F8> Includes 17,475 shares held by Mr. Loyd's spouse as
trustee of a family trust, as to which Mr. Loyd and his
spouse share voting and investment power.
<F9> Includes 1,950 shares held jointly by Mr. Riley and his
spouse, as to which they share voting and investment
power.
<F10> Includes 7,000 shares held jointly by Mr. Smith and his
spouse, as to which they share voting and investment
power.
<F11> Includes 667 shares held jointly by Mr. Turner and his
spouse and 4,806.86 shares held in The Exchange
National Bank of Jefferson City Profit-Sharing Trust
for his benefit. Mr. Turner and his spouse share
voting and investment power with respect to 667 shares,
and Mr. Turner has the right to vote, but has no
investment power, with respect to the 4,806.86 shares
held in the Profit-Sharing Trust.
<F12> Includes 20,750 shares held by Wetzel Investments, Ltd.
<F13> Includes 34,643.76 shares held in The Exchange National
Bank of Jefferson City Profit-Sharing Trust and
allocated to participant accounts which the participant
has the right to vote but not investment power.
</FN>
TRANSACTIONS WITH DIRECTORS AND OFFICERS
As part of the consideration provided by our Company
for its November 1997 acquisition of Union State Bancshares, Inc.
and Union State Bank, our Company issued a promissory note to
James E. Smith in the principal amount of $2,000,000, a
promissory note to Gus S. Wetzel, II in the principal amount of
$5,000,000, and four promissory notes to Mr. Wetzel's children
in the aggregate principal amount of $892,472. The six
promissory notes each matures on November 1, 2002, with quarterly
installments of accrued interest to be made on each February 1,
May 1, August 1 and November 1 of the loan term at the rate of 7%
per annum. Our Company has reserved the right to prepay the
promissory notes at any time on or after November 1, 2000. The
promissory notes, and one other promissory note issued to a former
shareholder of Union, are secured by Union's pledge of the
shares of Union State Bank capital stock owned by it.
In connection with our Company's acquisition of Union
State Bank in November 1997, our Company entered into a
noncompetition agreements with James E. Smith and Gus S. Wetzel,
II, respectively. The agreements prevent Mr. Smith and Dr.
Wetzel from competing with our Company, soliciting customers or
hiring employees <PAGE> during the six-year term of the agreement
in exchange for our Company's agreement to pay each of them six
annual installments of $50,000 each (without interest), the first
of which installments was paid on November 3, 1997.
The officers and directors of our Company and of its
subsidiaries, some of their family members and our Companies with
which some of the directors are associated, were customers of,
and had banking transactions with, Exchange National Bank and
Union State Bank in the ordinary course of Exchange National
Bank's and Union State Bank's respective businesses during 1998
and 1999. During each of these years Exchange National Bank and
Union State Bank each continued its policy of making loans and
loan commitments in the ordinary course of business to its
employees, officers and directors, and their affiliates, only on
substantially the same terms, including interest rates,
collateral and repayment terms, as those prevailing at the time
for comparable transactions with other persons. In the opinion
of the board of directors of Exchange National Bank and of Union
State Bank, respectively, none of its transactions with such
persons involved more than a normal risk of collectability or
other unfavorable features.
David R. Goller, a director of our Company and Exchange
National Bank, is a member of the firm Goller, Gardner & Feather,
P.C., which Exchange National Bank has retained and expects in
the future to retain as its general counsel. During 1999,
Exchange National Bank paid legal fees to Goller, Gardner &
Feather, P.C. in the amount of $2,355.
ITEM 2
AMENDMENT TO THE ARTICLES OF INCORPORATION
GENERAL
On February 29, 2000, our board of directors
unanimously adopted a resolution setting forth a proposed
amendment to our Company's articles of incorporation. The
proposed amendment would increase the total number of authorized
shares of our Company's capital stock from 1,500,000 shares to
16,000,000 shares and increase the number of authorized shares of
common stock, $1.00 par value, from 1,500,000 shares to
15,000,000 shares and authorize 1,000,000 shares of preferred
stock, $0.01 par value.
The text of the proposed amendment to the articles of
incorporation is set forth in Exhibit A hereto. If the proposed
amendment is adopted by the shareholders, our Company will cause
Articles of Amendment consistent with the text of the amendment
set forth in Exhibit A to be filed with the office of the
Missouri Secretary of State as promptly as practicable after the
Annual Meeting. The description of the proposed amendment
contained herein is qualified in its entirety by reference to
Exhibit A.
DESCRIPTION OF THE PROPOSED AMENDMENT
Our Company's articles of incorporation, as currently
in effect, provides that our Company is authorized to issue
1,500,000 shares of capital stock, consisting of 1,500,000 shares
of common stock, $1.00 par value. On February 29, 2000 our board
of directors authorized an amendment to the articles of
incorporation to increase the authorized shares of our Company's
capital stock from 1,500,000 shares to 16,000,000 shares. This
would be accomplished by increasing the number of authorized
shares of common stock, $1.00 par value, from 1,500,000 shares to
15,000,000 shares and by authorizing 1,000,000 shares of
preferred stock, $0.01 par value. Our shareholders are being
asked to approve such amendment to the articles of incorporation
at the Annual Meeting.
Of the 1,500,000 shares of our Company's common stock
authorized as of March 15, 2000, 1,219,025 shares of common stock
were issued and outstanding. Approximately 212,745 additional
shares of common stock are proposed to be issued in connection
with our Company's pending acquisition of CNS Bancorp, Inc. and
its wholly-owned subsidiary, City National Savings Bank, FSB. At
its February 29, 2000 meeting, our board of directors indicated
its intention to declare a two-for-one stock dividend promptly
following the annual meeting, if the proposed amendment is
approved by the shareholders. One reason for declaring this
stock dividend is to cause a sufficient number of shares to be
issued to enable our Company to satisfy Nasdaq's minimum "float"
requirements, which is a necessary condition for our Company to
have its stock listed on the Nasdaq National Market. Even if the
minimum "float" requirements are satisfied, however, it will
still be necessary for our Company to satisfy other <PAGE> Nasdaq
listing requirements, including a requirement that three dealers
be willing to make a market in our common stock. There is no
assurance that our Nasdaq listing application will be approved.
PURPOSES AND EFFECTS OF THE PROPOSED AMENDMENT
PURPOSES. The principal purpose of the proposed
amendment to the articles of incorporation is to authorize
additional shares of capital stock, which will be available (i)
for issuance of a two-for-one stock dividend, (ii) for issuance
upon the exercise of the Rights referred to under "Description of
Capital Stock and Related Instruments-Rights Plan" below, (iii)
for issuance pursuant to any employee benefit plan or employment
agreement, including upon the exercise of stock options granted
under our incentive stock option plan, or (iv) in the event that
our board of directors determines that it is necessary or
appropriate to permit future stock dividends or stock splits, to
adopt or amend employee benefit plans, to raise additional
capital through the sale of securities, or to acquire another
company or its business or assets. If the proposed amendment is
approved by the shareholders, our board of directors does not
intend to solicit further shareholder approval prior to the
issuance of any additional shares of common stock, except as may
be required by applicable law.
EFFECTS. The increase in authorized capital stock will
not have any immediate effect on the rights of existing
shareholders. To the extent that the additional authorized
shares of capital stock are issued in the future (other than
pursuant to stock distributions or dividends paid to all
shareholders pro rata), the existing shareholder's percentage
equity ownership will decrease and, depending on the price at
which shares are issued, could have the effect of diluting the
earnings per share and book value per share of outstanding shares
of common stock. Since our board of directors does not intend to
solicit further shareholder approval prior to the issuance of any
additional shares of capital stock, except as may be required by
applicable law, shareholder approval of the amendment to the
articles of incorporation at the Annual Meeting may have the
effect of authorizing the issuance of additional shares of
capital stock. The holders of common stock have no preemptive
rights. The increase in the authorized number of shares of
capital stock and the subsequent issuance of such shares could
have the effect of delaying or preventing a change in control of
our Company without further action by the shareholders by
diluting the stock ownership or voting rights of a person seeking
to obtain control of our Company. Shareholder approval of the
amendment to the articles of incorporation will also make it
possible for the Rights Plan referred to under "Description of
Capital Stock and Related Instruments-Rights Plan" below to be
adopted and implemented, which also could have the effect of
delaying or preventing a change in control of our Company.
DESCRIPTION OF CAPITAL STOCK AND RELATED INSTRUMENTS
COMMON STOCK. Each share of our common stock entitles
the holder thereof to one vote on all matters submitted to a vote
of the shareholders, including the election of directors.
Shareholders do not have cumulative voting rights in the election
of directors. The affirmative vote of the holders of two-thirds
of the shares of our common stock is required for the amendment
of certain provisions of our Company's articles of incorporation,
including those relating to our capitalization and the staggered
election of our board of directors. In addition, the holders of
two-thirds of our shares can call a special meeting of
shareholders and can remove a director from office. Our common
stock is not subject to redemption or future calls or assessment
by our Company. Holders of common stock do not have preemptive
rights, or rights to convert their common stock into other
securities. Subject to preferences which may be applicable to
any series of preferred stock that may be issued following
shareholder approval of the amendment to the articles of
incorporation at the Annual Meeting, the holders of common stock
are entitled to receive ratably such dividends as may be declared
by the board of directors out of funds legally available
therefore. The ability of our Company to pay dividends to the
holders of our common stock, however, will depend upon the amount
of dividends paid by our Company's subsidiaries to it. In the
event of a liquidation, dissolution or winding up of the affairs
of our Company, holders of our common stock have the right to a
ratable portion of the assets remaining after the payment of
liabilities subject to, and may be adversely affected by, the
rights of holders of shares of any series of preferred stock that
may be issued following shareholder approval of the amendment to
the articles of incorporation at the Annual Meeting. All
outstanding shares of our common stock are, and all shares issued
in exchange for the applicable purchase price will be, fully paid
and non-assessable. We have appointed Exchange National Bank of
Jefferson City as the transfer agent and registrar for our common
stock. See "Certain Provisions of the Articles of Incorporation,
Bylaws and Missouri Law."
<PAGE>
PREFERRED STOCK. If our shareholders approve the
amendment to the articles of incorporation at the Annual Meeting,
our Company may issue its preferred stock from time to time in
one or more series. Our board of directors would be authorized
to determine the rights, preferences, privileges and
restrictions, including dividend rights, conversion rights,
voting rights, terms of redemption (including mandatory
redemption provisions, if any) and liquidation preference,
granted to and imposed upon any series of preferred stock and to
fix the number of shares of any series of preferred stock and the
designation of any such series, without any vote or action by the
shareholders of our Company. Should our board of directors elect
to exercise its authority, the rights, preferences and privileges
of holders of common stock would be subject to the rights,
preferences and privileges of the preferred stock. Accordingly,
our board of directors could authorize a series of preferred
stock which adversely affects the voting power and other rights
of the holders of our common stock. Moreover, the existence of
preferred stock which could be issued by our Company may have the
effect of depressing the market price of our common stock. If
our shareholders approve the proposed amendment to the articles
of incorporation, we anticipate that our board of directors would
designate one series of preferred stock, Series A Preferred Stock
("Series A Preferred Stock"), which would only be issuable
pursuant to the terms of the Rights Plan referred to below. Our
Company has no present plans to issue any preferred stock, except
to the extent such preferred stock would be issued pursuant to
the Rights Plan.
RIGHTS PLAN. If our shareholders approve the proposed
amendment to the articles of incorporation, we anticipate that
our board of directors would adopt a Rights Plan consistent with
the description appearing under this "Rights Plan" section.
Pursuant to the Rights Plan, our Company would distribute a
dividend of one right (a "Right") to purchase certain shares of
capital stock of our Company under certain circumstances, for
each outstanding share of common stock. We anticipate that the
Rights would be traded with the common stock and detach and
become exercisable only if, in a transaction not approved by our
board of directors, a person or entity acquires 15% or more of
the outstanding shares of our common stock or announces a tender
offer the consummation of which would result in ownership by a
person or group of 15% or more of such shares.
Once the Rights detach and become exercisable, unless
subsequently redeemed, we anticipate that each Right then would
entitle its holder to purchase one one-thousandth of a share of
the Series A Preferred Stock for an exercise price that would be
specified in the Rights Plan (which is anticipated to equal an
estimate of the value of our common stock at the end of the ten-
year life of the Rights). If our Company were to be involved in
a merger or other business combination transaction after the
Rights become exercisable, each Right would entitle its holder to
purchase, for the Right's exercise price, a number of the
acquiring or surviving company's shares of common stock having a
market value equal to twice the exercise price. If, in a
transaction not approved by our board of directors, a person or
entity acquires 15% or more of the outstanding shares of our
common stock, each Right would entitle its holder to purchase,
for the Right's exercise price, a number of shares of our common
stock having a market value equal to twice the exercise price.
At any time after a person or entity acquires at least 15%, but
not more than 50%, of the outstanding shares of our common stock,
our board of directors can elect to exchange one share of our
common stock for each Right (other than Rights held by such
person or entity). Our Company would be entitled to redeem the
Rights at $.01 per Right at any time until ten business days
following a public announcement that a person or group of persons
has acquired beneficial ownership of 15% or more of the
outstanding shares of common stock. Following such an
announcement, or, subject to certain exceptions, the acquisition
of beneficial ownership of 15% or more of the outstanding shares
of common stock by the acquiror or certain related persons, the
Rights acquired by such person or persons would be null and void.
Prior to the date upon which the Rights detach, the terms of the
Rights Plan could be amended by our board of directors without
the consent of the holders of the Rights. We anticipate that the
Rights would expire ten years after they are distributed, unless
earlier redeemed by our Company. The Rights Plan would not be
intended to deter all takeover bids for our Company. To the
extent an acquiror would be discouraged by the Rights Plan from
acquiring an equity position in our Company, shareholders may be
deprived from receiving a premium for their shares. The issuance
of additional shares of common stock prior to the time the Rights
become exercisable would result in an increase in the number of
Rights outstanding.
We anticipate that the Series A Preferred Stock, if
issued, would rank junior to all other series of preferred stock
as to the payment of dividends and the distribution of assets in
liquidation, unless the terms of any such other series provide
otherwise. Each share of Series A Preferred Stock would have a
quarterly dividend rate per share equal to 1,000 times the per
share amount of any dividend (other than a dividend payable in
shares of common stock or a subdivision of the common stock)
declared from time to time on the common stock, subject to
certain adjustments. The holders of Series A Preferred Stock
would be entitled to receive a preferred liquidation payment
<PAGE> per share of $1,000 (plus accrued and unpaid dividends)
or, if greater, an amount equal to 1,000 times the payment to be
made per share of common stock. Generally, the holder of each
share of Series A Preferred Stock would vote together with the
common stock (and any other series of preferred stock entitled to
vote on such matter) on any matter as to which the common stock
is entitled to vote, including the election of directors. The
holder of each share of Series A Preferred Stock would be
entitled to 1,000 votes (one vote for each one one-thousandth of
a share). In the event of any merger, consolidation, combination
or other transaction in which shares of common stock are exchange
for or changed into other stock or securities, cash and/or
property, the holder of each share of Series A Preferred Stock
would be entitled to receive 1,000 times the aggregate amount of
stock, securities, cash and/or property into which or for which
each share of common stock is changed or exchanged.
The foregoing dividend, voting and liquidation rights
of the Series A Preferred Stock would be protected against
dilution in the event that additional shares of common stock are
issued pursuant to a stock split or stock dividend. Because of
the nature of the Series A Preferred Stock's dividend, voting,
liquidation and other rights, the value of the one one-thousandth
of a share of Series A Preferred Stock purchasable with each
Right is intended to approximate the value of one share of common
stock.
STOCK OPTIONS. On February 29, 2000, our board of
directors adopted the Exchange National Bancshares, Inc.
Incentive Stock Option Plan. As of March 15, 2000, our Company
had not granted options to purchase any shares of common stock
pursuant to the Plan. See " Stock Option Plan" under Proposal 1;
see also Proposal 3.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION, BYLAWS AND
MISSOURI LAW
Our Company's articles of incorporation and bylaws
contain several provisions explained in further detail below
which would render it more difficult for an entity to effect a
takeover of our Company without the cooperation of our board of
directors. Our management may consider and may propose the
approval of adoption of other anti-takeover measures in the
future, including the Rights Plan discussed above.
Our board of directors has no knowledge that any
takeover attempt is being contemplated, but believes that these
provisions in our articles of incorporation and bylaws reduce the
risk of any such attempt not approved by our board of directors.
The discussion concerning our articles of incorporation and
bylaws in this proxy statement is qualified in its entirety by
reference to the text of the articles of incorporation and
bylaws. You are urged to review our articles of incorporation
and bylaws in their entirety.
The following provisions could be deemed to have an
anti-takeover effect:
(1) Our board of directors is divided into three
classes, and our directors are elected by classes to three-year
terms, so that members of one of the three classes of our
directors will be elected at each annual meeting of the
shareholders. While this provision promotes stability and
continuity of the board of directors, classification of the board
of directors may also have the effect of decreasing the number of
directors that could otherwise be elected at each annual meeting
of shareholders by a person who obtains a controlling interest in
our common stock and thereby could impede a change in control of
our Company.
(2) A director may be removed from the board of
directors, but only for cause (limited in the articles of
incorporation to commission of a felony, or a finding by a court
of liability for negligence, or misconduct, in the performance of
the director's duty to our Company in a matter of substantial
importance to our Company, where such adjudication is no longer
subject to direct appeal) or by the affirmative vote of holders
of at least two-thirds of the outstanding shares of our common
stock entitled to vote.
(3) A special shareholders' meeting may be called only
by the board of directors or the holders of two-thirds or more of
the outstanding shares of our common stock entitled to vote at
any such meeting. Accordingly, during the interval between
annual shareholders' meetings, a shareholder with less than two-
thirds of the outstanding shares of our common stock would need
to get the cooperation of enough other shareholders to meet the
two-thirds requirement in order to force consideration of a
proposal over the opposition of our board of directors by calling
a special meeting of shareholders.
<PAGE>
(4) Advance notice of nominations for election of
directors and of any other business to be brought before a
meeting of our shareholders must be given as provided in the
bylaws. See "Election of Directors-The Board of Directors" under
Item 1. Although the advance notice provision does not give the
board of directors any power to approve or disapprove of
shareholder nominations for election of directors or of
shareholder proposals, it may have the effect of (i) precluding a
contest for the election of directors if the procedures
established are not followed, (ii) discouraging a third party
from conducting a solicitation of proxies to elect its own slate
of directors, without regard to whether or not this might be
harmful to our Company, and (iii) discouraging a third party from
submitting a proposal without regard to whether this might be
harmful or beneficial to our Company and its shareholders.
(5) The Missouri control share acquisition statute
(Mo. Rev. Stat. Section 351.407 (Supp. 1991)), is designed to
assist a corporation in defending itself against a hostile
takeover attempt. Because our Company has over 100 shareholders,
has its principal place of business in Missouri and more than 10%
of its shareholders are Missouri residents, we will be subject to
the statute, unless our articles of incorporation provide
otherwise. Because of the protection afforded by the statute,
our Company has not included such an "op-out" provision in its
Articles.
The statute provides that a person holding 20% or more
of the outstanding shares of our Company's common stock may not
vote any additional stock acquired unless the acquisition is
approved by the shareholders. The statute specifically applies
to newly-acquired shares which, when added to all other shares of
our Company owned or controlled by the acquiring person, would
enable the acquiring person to exercise voting control within any
one of three ranges: (a) one-fifth to one-third; (b) one-third to
a majority; or (c) a majority or more. The statute is triggered
each time a person acquires ownership or voting control of shares
which would result in such person's voting power reaching one of
the specified levels.
The newly-acquired shares would have voting rights only
to the extent approved by a resolution of our shareholders. The
voting rights must be approved by both (a) a majority of the
outstanding voting stock, and (b) the affirmative vote of a
majority of the outstanding voting stock after excluding shares
owned by the acquiring person, shares owned by directors who are
also employees of our Company and shares owned by officers of our
Company. Shareholders are given dissenters' rights, if they vote
against a share acquisition, and may receive the fair value of
their shares if voting rights are approved for the acquired
shares.
(6) Because our common stock has been registered with
the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, the Missouri Business Combination statute
(Mo. Rev. Stat. Section 351.459 (Supp. 1999)) also will apply to
our Company, unless the articles of incorporation provide
otherwise. This statute acts as a further deterrent to a hostile
take-over by requiring certain mergers, sales of assets and
similar business combinations involving our Company to be
approved by our board of directors. We have not included an "op
out" provision in our articles of incorporation.
The statute prohibits our Company from engaging in any
business combination with any "interested shareholder" for a
period of five years following the date upon which the
shareholder first became an "interested shareholder" unless the
business combination is approved by the board of directors. An
"interested shareholder" is defined as any person who is the
beneficial owner of 20% or more of our outstanding voting stock.
INDEMNIFICATION
Our articles of incorporation and bylaws require us to
indemnify each of our officers and directors to the full extent
permitted by Missouri law, including for serving in positions
with our subsidiary banks and for advancement of expenses related
to regulatory actions, whether the actions involve service as an
officer or director of our Company or our bank subsidiaries.
Our articles of incorporation provides that no director
or officer of our Company shall have personal liability to our
Company or our shareholders for monetary damages for breach of
fiduciary duty as a director, if such person:
exercised the same degree of care and skill as a
prudent person would have exercised under the
circumstances in the conduct of such person's own
affairs, or
<PAGE>
acted in reliance upon the advice of our Company's
counsel or upon information provided by our directors,
officers, employees or agents, without reasonable
grounds to disbelieve such advice or information.
The foregoing limitations on liability and
indemnification obligations may have the effect of reducing the
likelihood of derivative litigation against directors and may
discourage or deter shareholders or management from bringing a
lawsuit against directors for breach of their fiduciary duties,
even though such an action, if successful, might otherwise have
benefited our Company and its shareholders.
VOTE REQUIRED
The adoption of the proposed amendment to the articles
of incorporation of our Company requires approval by a two-thirds
majority of the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSED AMENDMENT TO OUR COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF AUTHORIZED CAPITAL STOCK.
ITEM 3
APPROVAL OF EXCHANGE NATIONAL BANCSHARES, INC. INCENTIVE STOCK
OPTION PLAN
GENERAL
On February 29, 2000, the board of directors
unanimously adopted the Exchange National Bancshares, Inc.
Incentive Stock Option Plan. The Plan is sponsored by our
Company for key employees of our Company and its subsidiaries.
The aggregate number of shares of common stock, $1.00 par value,
of our Company that may be issued pursuant to the exercise of
options granted under the Plan is limited to 150,000 shares,
subject to increase or decrease in the event of any change in our
Company's capital structure. See "Dilution or Enlargement."
PURPOSE
The purpose of the Plan is to encourage the key
employees of our Company and its subsidiaries to participate in
the ownership of our Company, and to provide additional incentive
for such key employees to promote the success of its business
through sharing in the future growth of such business.
ELIGIBLE PARTICIPANTS
Options to purchase shares of our Company's common
stock may be granted under the Plan only to key employees of our
Company or of any of its subsidiary corporations. Key employees
to whom options may be granted under the Plan will be those
employees selected from time to time by the Committee (as defined
below under "Administration of the Plan") who, in the sole
discretion of the Committee, have made material contributions in
the past, or are expected to make material contributions in the
future, to the successful performance of our Company. No option
may be granted under the Plan to any employee of our Company or
of a subsidiary corporation who owns stock possessing more than
ten percent of the total combined voting power of all classes of
stock of our Company or of any of its subsidiary corporations.
The aggregate fair market value of shares of common
stock for which an employee may be granted options under the Plan
in any calendar year has no limit. However, the aggregate fair
market value (determined at the time the options are granted) of
shares of common stock with respect to which incentive stock
options are exercisable for the first time by such individual
during any calendar year under the Plan (and under any other plan
of the employer corporation, its parent or its subsidiaries)
cannot exceed $100,000. To the extent such fair market value
exceeds $100,000 during any calendar year, amounts in excess of
$100,000 are treated as nonqualified stock options.
The number of persons eligible to participate in the
Plan has not yet been determined, although it is anticipated that
they will be members of senior management. As of March 15, 2000,
our Company had not granted options to purchase any shares of
common stock pursuant to the Plan.
<PAGE>
ADMINISTRATION OF THE PLAN
The Plan is administered by a committee (the
"Committee") composed of all members of our board of directors
who are not employed by our Company or any of its subsidiaries.
Currently, Messrs. Freeman, Goller, Loyd, Riley and Wetzel serve
as members of the Committee. The Committee is authorized to
construe, interpret and administer the Plan, and from time to
time to adopt such rules and regulations for carrying out the
Plan as it may deem proper and in the best interests of our
Company. Subject to the terms, conditions and provisions of the
Plan, the Committee has exclusive authority to (i) select the key
employees to whom options will be granted, (ii) determine the
number of shares subject to each option, (iii) determine the time
or times when options will be granted, (iv) determine the option
price of shares subject to each option, (v) determine the time
when each option may be exercised, (vi) fix such other provisions
of each incentive stock option agreement as the Committee may
deem necessary or desirable, consistent with the terms of the
Plan, and (vii) determine all other questions relating to the
administration of the Plan. The interpretation and construction
of the Plan by the Committee is final, conclusive and binding
upon all persons.
TERMS OF OPTIONS
The Committee is authorized to establish the terms
which will govern each option granted under the Plan, provided
that such terms are consistent with the terms, provisions and
conditions of the Plan. The exact terms established with respect
to any grant of an option under the Plan will be contained within
a written incentive stock option agreement. There is no
obligation to grant any two options on the same terms, and
options granted at the same time to different individuals or at
different times to the same individual may have different terms.
EXERCISE PERIOD. Subject to the conditions and
limitations of the Plan, the period during which each option
granted under the Plan may be exercised is fixed by the Committee
at the time such option is granted. The maximum period during
which an option is exercisable is ten years from the date that it
is granted.
In granting an option, the Committee may prescribe that
an option may be exercised as to all or part of the shares
subject to the option only after the occurrence of certain events
or the passage of specified periods of time, or both, after the
date the option is granted. In the event of a "Change of
Control," the time at which any of the outstanding options under
the Plan may be exercised by the optionee will be accelerated. A
"Change of Control" is defined to take place when either (a) a
person (other than our Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any corporation owned, directly or indirectly, by the
shareholders as of the date of the agreement) becomes the
beneficial ownership of 50% or more of the total voting power of
our Company's voting securities, (b) a merger involving our
Company is approved by shareholders in which such shareholders
own less than 50% of the voting stock of the surviving
corporation, or (c) a plan of liquidation or sale of
substantially all the assets of our Company is approved by
shareholders.
EFFECT OF TERMINATION OF EMPLOYMENT. Except as
provided below, options granted under the Plan may be exercised
only by persons who are then employed by our Company or any of
its subsidiaries and who have been so employed at all times since
the date on which such options were granted. If a person to whom
options are granted under the Plan ceases to be employed by our
Company or any of its subsidiaries for any reason other than
death, any option or unexercised portion thereof granted to such
person under the Plan which is otherwise exercisable will
terminate unless it is exercised within three months of the date
on which such person ceased to be so employed (but in no event
later than the expiration date of such option specified in the
applicable incentive stock option agreement).
EFFECT OF DEATH. In the event a person to whom options
are granted under the Plan dies while such person is an employee
of our Company or any of its subsidiaries (or within three months
of the date on which such person ceases to be so employed) any
option or unexercised portion thereof granted to such person
under the Plan which is otherwise exercisable may be exercised by
the person or persons to whom the optionee's rights under the
option pass by operation of the optionee's will or the laws of
descent and distribution, at any time within a period of one year
following the optionee's death (but in no event later than the
expiration date of the option as specified in the applicable
incentive stock option agreement).
No certificate for a fractional share of common stock
will be issued pursuant to the exercise of any option.
<PAGE>
PRICE
No consideration is paid to our Company by any optionee
in exchange for the grant of an option. The exercise price at
which shares of common stock may be purchased under an option
granted pursuant to the Plan shall be determined by the
Committee, but in no event will the exercise price be less than
the greater of (i) the par value thereof, or (ii) the fair market
value of such shares on the date that the option is granted. The
fair market value of shares of common stock for purposes of the
Plan will be determined by using the closing price on any
national securities exchange or market on which such shares are
traded on the date of the option grant (or if there were no
reported trades on such date, then on the latest date within 60
days prior to the date of the option grant). In the absence of
finding such a closing price, the fair market value shall be
determined by the Committee, in its sole discretion.
In the event of a change in our Company's capital
structure, the exercise price and number of shares subject to
outstanding options and the total number of shares subject to the
Plan shall be adjusted as described below under "Dilution or
Enlargement."
PAYMENT FOR SHARES
The exercise of any option will be contingent upon
receipt by our Company of (i) written notice of the number of
shares with respect to which the optionee is exercising an
option, (ii) the full option exercise price for the shares of
common stock and (iii) such representations or agreements as are
necessary in the opinion of counsel for our Company to secure any
necessary exemptions from the registration requirements of the
applicable securities laws in the event that the shares
underlying options are not registered under applicable securities
laws. Our Company currently intends to register those shares on
Form S-8 under the Securities Act of 1933 and any applicable
state securities laws. Payment for the shares issued upon the
exercise of an option may be made either in cash or in other
shares of common stock (whether by the actual surrender of shares
or, subject to the conditions and limitations contained in the
Plan, by the affirmation and attestation of ownership of shares
which have been held for at least six months).
No optionee and no legal representative, legatee or
distributee of any optionee shall be deemed to be a holder of any
shares of common stock subject to an option granted under the
Plan unless and until certificates for such shares are issued to
any such person under the terms of the Plan.
Our Company does not intend to regularly furnish
reports to optionees regarding the amount and status of their
options, but such information will be readily available at our
Company and will be given to the optionee upon request.
SHARES AVAILABLE FOR OPTIONS
The aggregate number of shares of common stock of our
Company that may be issued pursuant to the exercise of options
granted under the Plan is limited to 150,000 shares, subject to
increase or decrease in the event of any change in our Company's
capital structure. See "Dilution or Enlargement." The shares of
common stock to be delivered upon exercise of options under the
Plan will be made available, at the discretion of our Company's
board of directors, from either our Company's authorized but
unissued shares of common stock or any shares of common stock
held by our Company as treasury shares. Shares of common stock
subject to options granted under the Plan which expire or
terminate without being exercised in full become available, to
the extent unexercised, for future grants under the Plan. The
per share market value of the common stock on March 15, 2000,
computed by reference to the last sale price of the common stock,
was $60.00.
DILUTION OR ENLARGEMENT
In the event that there is any change in the capital
structure of our Company, including but not limited to a change
resulting from a stock dividend, stock split, reorganization,
merger, consolidation, liquidation or any combination or exchange
of shares of common stock, the number of shares of common stock
subject to an option under the Plan which remains unexercised and
the number of shares of common stock subject to the Plan, will be
subject to increase or decrease in order to prevent dilution or
enlargement. The option exercise price also will be <PAGE>
adjusted upon the occurrence of any of such events so that there
will be no change in the aggregate option exercise price payable
upon the exercise of the option.
RESTRICTIONS ON RESALE
Any person acquiring shares of common stock pursuant to
the exercise of an option under the Plan may resell such shares
without restriction, unless such person is an "affiliate" of our
Company. "Affiliates" of our Company (i.e., persons who are
deemed to directly or indirectly control our Company, including
executive officers and directors of our Company) who acquire
shares pursuant to the exercise of an option granted under the
Plan may resell such shares only if such shares are either (i)
registered under the Securities Act of 1933, as amended, and any
applicable state securities laws, or (ii) exemptions from
registration under the Securities Act and applicable state
securities laws are available.
Rule 144 under the Securities Act provides an exemption
from registration under that Act if all of its conditions are
met. Under Rule 144 as currently in effect, a person who has
beneficially owned shares of our common stock for at least one
year would be entitled to sell within any three month period a
number of shares that does not exceed the greater of:
1% of the number of shares of common stock then
outstanding; and
the average weekly trading volume of the common
stock during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to
such sale.
Sales under Rule 144 also are subject to certain manner
of sale provisions and notice requirements and to the
availability of current public information about us.
Our Company is subject to Section 16 of the Securities
Exchange Act of 1934, which permits the recovery by our Company
of any profit realized by any officer, director or beneficial
owner of more than ten percent of the outstanding shares of
common stock from each purchase and sale, or sale and purchase,
of common stock within any period of less than six months. Under
Rule 16b-3 of the Exchange Act, such persons are prohibited from
selling shares of common stock within six months of the option
grant unless the option grant was approved by the shareholders or
by the board of directors (or a committee of two or more "non-
employee directors"). It is anticipated that all grants of
options under the Plan will be approved in that manner and
therefore the six-month restriction period under Rule 16b-3 will
not be applicable. If the six-month period were to be
applicable, however, sales of shares of common stock by officers,
directors and ten percent shareholders within the six month
period would be subject to the short-swing profit recovery
provisions of Section 16(b).
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Plan are intended to qualify
as "incentive stock options" under section 422(b) of the Code.
Generally, an optionee incurs no Federal income tax consequences
at the time of a grant of an option under the Plan or upon
exercise of an option granted under the Plan; however, as
explained below, an optionee may incur alternative minimum tax
consequences upon the exercise of an incentive stock option.
Upon the sale of stock received pursuant to the
exercise of an option granted under the Plan, other than a sale
of stock which is a "disqualifying disposition," as defined
below, an optionee will recognize either a taxable gain equal to
the excess of the amount realized from the sale over the
optionee's basis in the shares, or a taxable loss equal to the
excess of the optionee's basis in the shares over the amount
realized from the sale. The basis in shares received upon
exercise of an option granted under the Plan will be the amount
paid for those shares, or, if the option was exercised by
exchanging shares of common stock for the new shares, the basis
in the shares received upon exercise is the same as the basis in
the shares surrendered in the exchange.
Gain or loss from the sale of stock received upon
exercise of an option granted under the Plan, other than a sale
of stock which is a "disqualifying disposition," as defined
below, will be considered gain or loss from the sale<PAGE> of a capital
asset if the shares are held for investment purposes. Losses
from sales of capital assets are subject to limitations based
upon the amount and nature of the taxpayer's other income,
deductions, gains and losses.
A "disqualifying disposition" of shares received
pursuant to the exercise of an option granted under the Plan
occurs if the optionee disposes of such shares within two years
from the date of the granting of the option or within one year
after the transfer of the shares to such optionee, unless such
disposition is (i) a transfer from a decedent to an estate or a
transfer by bequest or inheritance, (ii) an exchange to which
section 354, section 355, section 356 or section 1036 (or so much
of section 1031 as relates to section 1036) of the Code applies,
or (iii) a mere pledge or hypothecation. In the event of a
"disqualifying disposition," the optionee generally will realize
ordinary income in the year of the "disqualifying disposition" in
an amount equal to the difference between the fair market value
of the shares on the date of exercise and the exercise price. If
the disposition is one in which a loss, if sustained, would be
recognized by the optionee, the amount recognized as taxable
income in the preceding sentence is limited to the amount by
which the amount realized on the sale of the shares in the
"disqualifying disposition" exceeds the adjusted basis of the
shares sold. If the amount realized from the sale exceeds the
fair market value of the shares on the date of exercise, the
excess will be treated as a gain which is taxed under the rules
described in the preceding paragraph.
If an optionee exercises an option granted under the
Plan and pays the option exercise price for the shares by
exchanging shares of common stock already held by the optionee,
in general no gain or loss will be recognized upon the exchange
of shares pursuant to the exercise of an option. However, if an
optionee exercises an option granted under the Plan by exchanging
shares previously acquired by such optionee pursuant to the
exercise of an option previously granted under the Plan, gain or
loss will be recognized on the exchanges unless the stock
previously acquired has been held for at least two years from the
date the previously granted option was granted and at least one
year from the date the previously granted option was exercised.
Upon expiration of any option, no taxable income will
be recognized by the optionee whose option has expired and was
not exercised.
Our Company does not realize any Federal income tax
consequences on the issuance or exercise of options under the
Plan. If the optionee makes a "disqualifying disposition,"
however, our Company may deduct an amount equal to the amount
included in the optionee's ordinary income, provided our Company
satisfies applicable information reporting and income and payroll
tax withholding requirements.
If the stock received pursuant to the exercise of an
option granted under the Plan is freely transferable or not
subject to a substantial risk of forfeiture, then the excess, if
any, of the fair market value of such stock (determined without
regard to any restriction other than a restriction which by its
term will never lapse) over the amount paid for such stock is
included in the determination of the optionee's alternative
minimum taxable income in the year of exercise. If the stock
received pursuant to the exercise of an option granted under the
Plan is not freely transferable and is subject to a substantial
risk of forfeiture, then the excess, if any, of the fair market
value of such stock (determined as above) at the time such stock
becomes freely transferable or no longer is subject to a
substantial risk of forfeiture, whichever of said two events
occurs first, over the amount paid for such stock is included in
the determination of the optionee's alternative minimum taxable
income in the year in which such stock becomes freely
transferable or is no longer subject to a substantial risk of
forfeiture, whichever of said two events occurs first. Special
rules apply for purposes of determining whether stock received
pursuant to the exercise of an option granted under the Plan is
freely transferable or subject to a substantial risk of
forfeiture. These rules may impact the determination of
alternative minimum taxable income for optionees whose sale of
such stock at a profit could subject the optionee to suit under
Section 16(b) of the Exchange Act and in certain other
circumstances.
For purposes of computing the alternative minimum
income tax in the year of sale, the basis in the shares sold is
increased by the amount included in the determination of
alternative minimum taxable income in the year the option was
exercised. If stock received pursuant to the exercise of an
option granted under the Plan is sold in the same taxable year in
which the option was exercised, then the amount includible in the
determination of the optionee's alternative minimum taxable
income cannot exceed the excess (if any) of the amount realized
on the sale less the optionee's adjusted basis in such stock.
The Plan is not one which can be qualified under
section 401(a) of the Code.
<PAGE>
The federal income tax consequences described above are
for general information only. No information is provided as to
state, local or foreign tax consequences of the acquisition or
exercise of options granted under the plan or the sale of shares
of common stock acquired upon such exercise. Each optionee
should consult his or her own tax advisor as to the specific
federal income tax consequences and as to the specific
consequences under state, local and foreign tax laws.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
The Plan is not subject to any provision of the
Employee Retirement Income Security Act of 1974.
AMENDMENT AND TERMINATION OF THE PLAN
The Plan will terminate on February 28, 2010, except as
to options then outstanding under the Plan. Options which are
outstanding on the date of such termination shall remain in
effect until they have been exercised or have expired.
The board of directors has the right to amend, modify
or terminate the Plan, except that it cannot, without approval of
the holders of a majority of the issued and outstanding shares of
common stock, (i) increase the aggregate number of shares of
common stock as to which options may be granted under the Plan,
(ii) modify the requirements as to eligibility for participation,
(iii) extend the periods during which options may be granted or
exercised, or (iv) change the manner of determining the exercise
price (other than to change the manner of determining the fair
market value of shares of common stock). No amendment,
modification or termination of the Plan may adversely affect the
rights of any optionee under any then outstanding option granted
under the Plan without the consent of that optionee.
ASSIGNMENT
An option granted pursuant to the Plan shall not be
transferable or assignable by the optionee other than by will or
the laws of descent and distribution, and during the lifetime of
the optionee the option shall be exercisable only by the
optionee.
PLAN BENEFITS
As of March 15, 2000, our Company had not granted
options to purchase any shares of common stock pursuant to the
Plan. The number and dollar amount of benefits that will be
received by or allocated to each officer named in the Summary
Compensation Table under "Executive Compensation and Other
Information--Executive Compensation" in Item 1, all executive
officers as a group, all directors who are not executive officers
as a group, and all employees, including officers who are not
executive officers, as a group under the Plan therefore are not
currently determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE INCENTIVE STOCK OPTION PLAN.
ITEM 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors has selected the independent
certified public accounting firm of KPMG LLP as our Company's
independent auditors to audit the books, records and accounts of
our Company for the year ending December 31, 2000. Shareholders
will have an opportunity to vote at the Annual Meeting on whether
to ratify the Board's decision in this regard.
KPMG LLP has served as our Company's independent
auditors since our Company commenced business operations in 1993.
A representative of KPMG LLP is expected to be present at the
Annual Meeting. Such representative will have an opportunity to
make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
<PAGE>
Submission of the selection of the independent auditors
to the shareholders for ratification will not limit the authority
of the board of directors to appoint another independent
certified public accounting firm to serve as independent auditors
if the present auditors resign or their engagement otherwise is
terminated. Shareholder ratification of the board of directors'
selection of KPMG LLP as our Company's independent auditors is
not required by any statute or regulation or by our Company's
bylaws. Nevertheless, if the shareholders do not ratify the
selection of KPMG LLP at the Annual Meeting, the selection of
independent auditors for the current year will be reconsidered by
the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE SELECTION OF KPMG LLP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our Company's directors and executive officers, and
persons who own more than 10% of any class of equity securities
of our Company registered pursuant to Section 12 of the Exchange
Act, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership in such
securities and other equity securities of our Company.
Securities and Exchange Commission regulations require directors,
executive officers and greater than 10% shareholders to furnish
our Company with copies of all Section 16(a) reports they file.
To our Company's knowledge, based solely on review of
the copies of such reports furnished to our Company and written
representations that no other reports were required, during the
year ended December 31, 1999, all Section 16(a) filing
requirements applicable to its directors, executive officers and
greater than 10% shareholders were complied with.
OTHER BUSINESS OF THE MEETING
The board of directors is not aware of, and does not
intend to present, any matter for action at the Annual Meeting
other than those referred to in this proxy statement. If,
however, any other matter properly comes before the Annual
Meeting or any adjournment, it is intended that the holders of
the proxies solicited by the board of directors will vote on such
matters in their discretion in accordance with their best
judgment.
ANNUAL REPORT
Our Company's Annual Report to Shareholders, containing
consolidated financial statements for the year ended December 31,
1999, is being mailed with this proxy statement to all
shareholders entitled to vote at the Annual Meeting. Such Annual
Report is not to be regarded as proxy solicitation material.
A COPY OF OUR COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1999, EXCLUDING EXHIBITS, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH
15, 2000, UPON WRITTEN REQUEST TO DONALD L. CAMPBELL, EXCHANGE
NATIONAL BANCSHARES, INC., 132 EAST HIGH STREET, JEFFERSON CITY,
MISSOURI 65101. Our Company will provide a copy of any exhibit
to the Form 10-K report to any such person upon written request
and the payment of our Company's reasonable expenses in
furnishing such exhibits.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
It is anticipated that the 2001 Annual Meeting of
Shareholders will be held on June 13, 2001. Any shareholder who
intends to present a proposal at the 2001 Annual Meeting must
deliver the proposal to our Company at 132 East High Street,
Jefferson City, Missouri 65101, Attention: President by the
applicable deadline below:
If the shareholder proposal is intended for inclusion
in our Company's proxy materials for that meeting
pursuant to Rule 14a-8 under the Securities Exchange
Act of 1934, our Company must receive the proposal no
event later than December 13, 2000. Such proposal must
also comply with the other requirements of the proxy
solicitation rules of the Securities and Exchange
Commission.
<PAGE>
If the shareholder proposal is to be presented without
inclusion in our Company's proxy materials for that
meeting, our Company must receive the proposal no event
later than March 11, 2001 in accordance with the
advance notice provisions of our Company's articles of
incorporation and bylaws. See "Election of
Directors-The Board of Directors."
Proxies solicited in connection with the 2001 Annual Meeting of
Shareholders will confer on the appointed proxies discretionary
voting authority to vote on shareholder proposals that are not
presented for inclusion in the proxy materials unless the
proposing shareholder notifies our Company by March 11, 2001 that
such proposal will be made at the meeting.
By Order of the Board of Directors
Donald L. Campbell
Chairman of the Board
and President
April 5, 2000
Jefferson City, Missouri
<PAGE>
Exhibit A
EXCHANGE NATIONAL BANCSHARES, INC.
PROPOSED AMENDMENT
TO THE
ARTICLES OF INCORPORATION
RESOLVED, that the Articles of Incorporation of
the Corporation be amended by deleting all of the present Article
THIRD, section (a) and inserting in lieu thereof the following
Article THIRD, section (a):
(a) The total number of shares of capital stock
which the Corporation shall have authority to issue is
16,000,000, of which (i) 15,000,000 shares shall be
common stock, of the par value of $1.00 per share
(hereinafter referred to as "Common Stock") and (ii)
1,000,000 shares shall be preferred stock, of the par
value of $0.01 per share (hereinafter referred to as
"Preferred Stock"). All shares of Common Stock and
Preferred Stock shall be fully paid up when issued and
shall be non-assessable.
Shares of Common Stock may be issued from time to
time as the Board of Directors shall determine and on
such terms and for such consideration as shall be fixed
by the Board of Directors. Except as may otherwise be
required by law, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held
by such shareholder on all matters voted upon by the
shareholders.
The Board of Directors is authorized, by adopting
resolutions to such effect, to divide the shares of
Preferred Stock into one or more series, to provide for
the issuance of, or a change in the number of, shares
of any series of Preferred Stock and, by filing a
certificate pursuant to the law of the General and
Business Corporation Law of Missouri (if and to the
extent from time to time required by law), to establish
or change the number of shares to be included in any
such series and to fix the voting powers and the
designations, preferences and relative, participating,
optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, if
any, relating to the shares of each such series.
Shares of any series of Preferred Stock may be issued
from time to time as the Board of Directors shall
determine and on such terms and for such consideration
as shall be fixed by the Board of Directors.
* * * *
<PAGE>
APPENDIX A1 -- PROXY CARD
PRELIMINARY COPY
P R O X Y
ANNUAL MEETING OF THE SHAREHOLDERS
OF
EXCHANGE NATIONAL BANCSHARES, INC.
May 10, 2000
The undersigned hereby appoints Charles J. Kolb and Harry F.
Goldammer, and each of them, jointly and severally, the agents
and proxies of the undersigned, each with full power of
substitution, to attend the Annual Meeting of the Shareholders of
Exchange National Bancshares, Inc. (the "Company") to be held at
The Exchange National Bank of Jefferson City's facility located
at 3701 West Truman Boulevard, Jefferson City, Missouri, on
Wednesday, May 10, 2000, commencing at 9:00 a.m., local time, and
any adjournment thereof (the "Meeting"), and to vote all of the
stock of the Company, standing in the name of the undersigned on
its books as of the close of business on March 15, 2000, and
which the undersigned would be entitled to vote, if present, with
the same force and effect as if voted by the undersigned and
especially to vote said stock with respect to the following
matters:
1. ELECTION OF THREE CLASS II DIRECTORS.
(INSTRUCTIONS: To vote FOR, or to WITHHOLD AUTHORITY to
vote for (i.e., AGAINST) any individual nominee named below,
mark the appropriate box next to each such nominee's name.
Please mark only one box next to each such name.)
FOR the WITHHOLD AUTHORITY
nominee to vote for the nominee
___ ___
/__/ /__/ David R. Goller
___ ___
/__/ /__/ James R. Loyd
___ ___
/__/ /__/ Gus S. Wetzel, II
2. Proposal to consider and act upon approval of an
amendment to the Articles of Incorporation of the Company to
increase the number of authorized shares of the Company's
capital stock from 1,500,000 shares to 16,000,000 shares and
to increase the number of authorized shares of the Company's
common stock, $1.00 par value, from 1,500,000 shares to
15,000,000 shares, and to authorize 1,000,000 shares of the
Company's preferred stock, $0.01 par value.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
3. Proposal to consider and act upon approval of the
Exchange National Bancshares, Inc. Incentive Stock Option
Plan.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
4. Proposal to ratify the selection by the Board of
Directors of the Company of the accounting firm of KPMG LLP
as the Company's independent auditors for the current year.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
5. Such other matters, related to the foregoing or
otherwise, as properly may come before said Meeting or any
adjournment thereof. The Board of Directors has advised
that at present it knows of no other business to be
presented by or on behalf of the Company or its management
at the Meeting.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting and Proxy Statement, dated April 5, 2000.
Dated: _____________, 2000 __________________________________
No. of Shares: (Sign exactly as your name appears
on your stock certificate.
Where shares are held in the
name of two or more persons,
all should sign individually.
A corporation should sign by
authorized officer and
_______________________ affix corporate seal.)
UNLESS OTHERWISE SPECIFICALLY DIRECTED ABOVE, THIS PROXY SHALL
CONFER AUTHORITY TO VOTE FOR THE ELECTION OF THE THREE (3)
PERSONS LISTED ABOVE AS CLASS II DIRECTORS OF THE COMPANY FOR THE
NEXT THREE YEARS, FOR APPROVAL OF THE AMENDMENT TO THE ARTICLES
OF INCORPORATION OF THE COMPANY REFERRED TO ABOVE, FOR APPROVAL
OF THE COMPANY'S INCENTIVE STOCK OPTION PLAN AND FOR THE
RATIFICATION OF THE SELECTION OF THE ACCOUNTING FIRM OF KPMG LLP
AS THE COMPANY'S INDEPENDENT AUDITORS. IN THEIR DISCRETION, THE
APPOINTED PROXIES AND AGENTS ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE MEETING. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
<PAGE>
APPENDIX A2 -- PROXY CARD
PRELIMINARY COPY
PROXY/DIRECTION TO TRUSTEE
ANNUAL MEETING OF THE SHAREHOLDERS
OF
EXCHANGE NATIONAL BANCSHARES, INC.
May 10, 2000
The Annual Meeting of the Shareholders of Exchange National
Bancshares, Inc. (the "Company") will be held at The Exchange
National Bank of Jefferson City's facility located at 3701 West
Truman Boulevard, Jefferson City, Missouri, on Wednesday, May 10,
2000, commencing at 9:00 a.m., local time, and thereafter as it
may from time to time be adjourned.
I am a participant in The Exchange National Bank of
Jefferson City Profit Sharing Trust. As of the close of
business on March 15, 2000, my account in the profit sharing
trust was credited with the number of shares of common stock of
the Company set forth below. I may or may not be vested in all
or part of such shares.
I hereby direct the Trustee (The Exchange National Bank
of Jefferson City) to vote the above number of shares of stock
with respect to the following matters:
1. ELECTION OF THREE CLASS II DIRECTORS.
(INSTRUCTIONS: To vote FOR, or to WITHHOLD AUTHORITY to
vote for (i.e., AGAINST) any individual nominee named below,
mark the appropriate box next to each such nominee's name.
Please mark only one box next to each such name.)
FOR the WITHHOLD AUTHORITY
nominee to vote for the nominee
___ ___
/__/ /__/ David R. Goller
___ ___
/__/ /__/ James R. Loyd
___ ___
/__/ /__/ Gus S. Wetzel, II
2. Proposal to consider and act upon approval of an
amendment to the Articles of Incorporation of the Company to
increase the number of authorized shares of the Company's
capital stock from 1,500,000 shares to 16,000,000 shares and
to increase the number of authorized shares of the Company's
common stock, $1.00 par value, from 1,500,000 shares to
15,000,000 shares, and to authorize 1,000,000 shares of the
Company's preferred stock, $0.01 par value.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
3. Proposal to consider and act upon approval of the
Exchange National Bancshares, Inc. Incentive Stock Option
Plan.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
4. Proposal to ratify the selection by the Board of
Directors of the Company of the accounting firm of KPMG LLP
as the Company's independent auditors for the current year.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
5. Such other matters, related to the foregoing or
otherwise, as properly may come before said Meeting or any
adjournment thereof. The Board of Directors has advised
that at present it knows of no other business to be
presented by or on behalf of the Company or its management
at the Meeting.
IN WITNESS WHEREOF, the undersigned has duly executed
this instrument this _____ day of ___________, 2000.
_____________________________
Signature
_____________________________
Print Your Name
No. of Shares Credited
to my Account: ________________________________
<PAGE>
APPENDIX B -- INCENTIVE STOCK OPTION PLAN
EXCHANGE NATIONAL BANCSHARES, INC.
INCENTIVE STOCK OPTION PLAN
EXCHANGE NATIONAL BANCSHARES, INC., a corporation
organized and existing under the laws of the State of Missouri
(together with its successors, the "Company"), hereby establishes
the Exchange National Bancshares, Inc. Incentive Stock Option
Plan (the "Plan"), to be approved by the holders of a majority of
the issued and outstanding shares of common stock of the Company
("ENB Common Stock"), an incentive stock option plan for key
employees of the Company and its subsidiaries as follows:
1. PURPOSE OF PLAN.
The purpose of the Plan is to encourage the key
employees of the Company and its subsidiaries to participate in
the ownership of the Company, and to provide additional incentive
for such employees to promote the success of its business through
sharing in the future growth of such business.
2. EFFECTIVENESS OF PLAN.
The provisions of the Plan are effective from and after
February 29, 2000, the date of its adoption by the Board of
Directors of the Company (the "Board of Directors").
3. ADMINISTRATION.
The Plan shall be administered by a stock option
committee (the "Committee"), which shall be composed of all
members of the Board of Directors who are not employed by the
Company or any of its subsidiaries. The Committee shall have
full power and authority to construe, interpret and administer
the Plan, and may from time to time adopt such rules and
regulations for carrying out the provisions of the Plan as it may
deem proper and in the best interests of the Company. Subject to
the terms, provisions and conditions of the Plan, the Committee
shall have exclusive authority (i) to select key employees to
whom options shall be granted, (ii) to determine the number of
shares subject to each option, (iii) to determine the time or
times when options are granted, (iv) to determine the option
purchase price of the shares of ENB Common Stock subject to each
option, (v) to determine the time when each option may be
exercised, (vi) to fix such other provisions of each incentive
stock option agreement as the Committee may deem necessary or
desirable, consistent with the terms of the Plan, and (vii) to
determine all other questions relating to the administration of
the Plan. The interpretation and construction of the Plan by the
Committee shall be final, conclusive and binding upon all
persons.
4. ELIGIBILITY.
Options to purchase shares of ENB Common Stock shall be
granted under the Plan only to key employees of the Company or of
any of its subsidiary corporations, as the term<PAGE> "subsidiary
corporations" is defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code"). Key employees to
whom options may be granted under the Plan will be those
employees selected by the Committee from time to time who, in the
sole discretion of the Committee, have made material
contributions in the past, or who are expected to make material
contributions in the future, to the successful performance of the
Company. However, in no event shall an employee who owns more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any of its subsidiary
corporations be eligible to receive an option under the Plan.
5. SHARES SUBJECT TO THE PLAN.
Options granted under the Plan shall be granted solely
with respect to shares of ENB Common Stock. Subject to any
adjustments made pursuant to the provisions of Section 13, the
aggregate number of shares of ENB Common Stock which may be
issued upon exercise of options granted under the Plan shall not
exceed 150,000.
If any option granted under the Plan shall expire or be
cancelled or terminated for any reason without having been
exercised in full, the unpurchased shares subject to such option
shall be added to the number of shares otherwise available for
options which may be granted in accordance with the terms of the
Plan.
The shares to be delivered upon exercise of the options
granted under the Plan shall be made available, at the discretion
of the Board of Directors, from either the authorized but
unissued shares of ENB Common Stock or any treasury shares of ENB
Common Stock held by the Company.
6. OPTION AGREEMENT.
Each option granted under the Plan shall be evidenced
by an incentive stock option agreement (the "Agreement"), which
shall be signed by an officer of the Company and by the employee
to whom the option is granted (the "Optionee"). The terms of
such Agreement shall be in accordance with the provisions of the
Plan, but the Agreement may include such other provisions as may
be approved by the Committee. The granting of an option under
the Plan shall be deemed to occur on the date on which the
Agreement evidencing such option is executed by the Company and
the Optionee. Each Agreement shall constitute a binding contract
between the Company and the Optionee, and every Optionee, upon
the execution of an Agreement, shall be bound by the terms and
restrictions of the Plan and such Agreement. Unless otherwise
provided in the Agreement, all options are intended to qualify as
incentive stock options under Section 422 of the Code.
7. OPTION PRICE.
The price at which shares of ENB Common Stock may be
purchased under an option granted pursuant to the Plan shall be
determined by the Committee, but in no event shall the price be
less than the greater of (a) the par value thereof, or (b) 100
percent of the fair market<PAGE> value of such shares on the date
that the option is granted. The fair market value of shares of
ENB Common Stock for purposes of the Plan shall be determined by
using the closing price on any national securities exchange or
market on which such shares are traded on the date of the option
grant (or if there were no reported trades on such date, then on
the latest date within 60 days prior to the date of the option
grant). In the absence of finding such a closing price, the fair
market value shall be determined by the Committee, in its sole
discretion, and the Committee may adopt such formulas as in its
opinion shall reflect the true fair market value of ENB Common
Stock from time to time, and may rely on such independent advice
with respect to such fair market value as the Committee shall
deem appropriate.
8. PERIOD AND EXERCISE OF OPTION.
(a) Period--Subject to the provisions of Sections 10,
11 and 14 hereof with respect to the death or termination of
employment of an Optionee and the Change in Control of the
Company, the period during which each option granted under the
Plan may be exercised shall be fixed by the Committee at the time
such option is granted, provided that such period shall expire no
later than ten years from the date on which the option is
granted.
(b) Exercise--Any option granted under the Plan may be
exercised by the Optionee (or by a person acting under Section 11
below) only by (i) delivering to the Company written notice of
the number of shares being exercised, (ii) paying in full the
option price of the purchased shares, and (iii) if the shares to
be purchased have not been registered under the applicable
securities laws and if necessary, in the opinion of counsel for
the Company to secure an exemption from such registration,
furnishing to the Company such representation or agreement in
writing signed by the Optionee (or person acting under Section
11) as shall be necessary in the opinion of such counsel to
secure such exemption. Subject to the limitations of the Plan
and the terms and conditions of the respective Agreement, each
option granted under the Plan shall be exercisable in whole or in
part at such time or times as the Committee may specify in such
Agreement.
(c) Payment for shares--Payment for shares of ENB
Common Stock purchased pursuant to an option granted under the
Plan may be made either in cash or in other shares of ENB Common
Stock. If ENB Common Stock is used as payment of the option
price, the value of such ENB Common Stock shall be the fair
market value of such shares on the latest date prior to the
exercise date. The fair market value of such shares shall be
determined in the manner set forth in Section 7 of the Plan. In
lieu of the actual surrender of ENB Common Stock used as payment
of the option price, the Optionee may, with the consent of the
Committee, affirm and attest to the Company, in a form and manner
reasonably acceptable to the Committee, the Optionee's ownership
of the number of shares of ENB Common Stock to be used as payment
of the option price. In that event the number of shares of ENB
Common Stock to be issued to the Optionee for the exercise of the
option shall be reduced by the number of shares of ENB Common
Stock that otherwise would be surrendered by the Optionee as
payment of the option price.<PAGE>
(d) Delivery of certificates--As soon as practicable
after receipt by the Company of the notice and representation
described in subsection (b), and payment in full of the option
price for all of the shares of ENB Common Stock being purchased
pursuant to an option granted under the Plan, a certificate or
certificates representing such shares of stock shall be
registered in the name of the Optionee and shall be delivered to
the Optionee. No certificate for fractional shares of ENB Common
Stock shall be issued by the Company, but in lieu thereof the
Company shall distribute at such time to the Optionee who
otherwise would have been entitled to receive a fractional share
an amount in cash equal to the value of such fractional share
determined by multiplying the fraction either by (i) the average
of the high and low bid prices of ENB Common Stock on the date on
which the Company receives the notice and representation
described in subsection (b), if ENB Common Stock is then listed
on a national securities exchange or market or (ii) the fair
market value of ENB Common Stock, determined in the manner set
forth in Section 7 of the Plan, on the date on which the Company
receives the notice and representation described in subsection
(b), if ENB Common Stock is not then so listed. Neither any
Optionee, nor the legal representative, legatee or distributee of
any Optionee, shall be deemed to be a holder of any shares of ENB
Common Stock subject to an option granted under the Plan unless
and until the certificate or certificates for such shares have
been issued. All stock certificates issued upon the exercise of
any options granted pursuant to the Plan may bear such legend as
the Committee shall deem appropriate regarding restrictions upon
the transfer or sale of the shares evidenced thereby.
(e) Limitations on exercise--Except as provided in
Sections 10, 11 and 14 hereof, no option granted under the Plan
shall be exercised unless the Optionee is at the time of such
exercise employed by the Company or one of its subsidiary
corporations and shall have been so employed by the Company or
one of its subsidiary corporations at all times since the date on
which such option was granted.
9. LIMITATION ON OPTIONS GRANTED TO INDIVIDUAL
EMPLOYEES.
The aggregate fair market value (determined at the time
the options are granted) of stock with respect to which incentive
stock options are exercisable for the first time by any
individual during any calendar year under the Plan (and under any
other plan or plans of such individual's employer corporation and
any parent or subsidiary corporation or corporations) shall not
exceed $100,000; provided, however, the foregoing $100,000
limitation shall only apply to incentive stock options and shall
not limit the aggregate fair market value of stock with respect
to which all other options granted under the Plan are exercisable
for the first time by any individual during any calendar year,
and any options in excess of the $100,000 limitation shall be non-
statutory stock options subject to all other provisions of the
Plan. The $100,000 limitation provided by the preceding sentence
shall be applied by taking options into account in the order in
which they are granted. For purposes of the Plan, "incentive
stock options" shall mean options that meet the requirements of
Section 422 of the Code.<PAGE>
10. TERMINATION OF EMPLOYMENT.
If an Optionee shall cease to be employed by the
Company or any of its subsidiary corporations for any reason
other than death, any option or unexercised portion thereof
granted to him or her under the Plan which is otherwise
exercisable shall terminate unless it is exercised within three
months of the date on which such Optionee ceases to be so
employed, and in any event no later than the expiration date of
such option as specified in the respective Agreement. Nothing in
the Plan or in any Agreement shall be construed as an obligation
on the part of the Company or any of its subsidiary corporations
to continue the employment of any employee.
11. DEATH OF OPTIONEE.
In the event of the death of an Optionee while he or
she is an employee of the Company or any of its subsidiary
corporations (or within three months of the date on which such
Optionee ceases to be so employed) any option or unexercised
portion thereof granted to him or her under the Plan which is
otherwise exercisable may be exercised by the person or persons
to whom such Optionee's rights under the option pass by operation
of the Optionee's will or the laws of descent and distribution,
at any time within a period of twelve months following the death
of the Optionee (but in no event later than the expiration date
of the option as specified in the respective Agreement).
12. NONTRANSFERABILITY OF OPTIONS.
No option granted under the Plan shall be transferable
or assignable by the Optionee other than by will or the laws of
descent and distribution, and during the lifetime of the Optionee
may be exercised only by the Optionee.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of any change in the capital structure of
the Company, including but not limited to a change resulting from
a stock dividend, stock split, reorganization, merger,
consolidation, liquidation or any combination or exchange of
shares, after the effective date of the Plan the number of shares
of ENB Common Stock subject to the Plan shall be correspondingly
adjusted. In the event of any such change after the granting of
an option hereunder, the number of shares subject to such option
shall be correspondingly adjusted and the option price for which
shares of ENB Common Stock may be purchased pursuant to an option
granted under the Plan shall also be adjusted so that there will
be no change in the aggregate purchase price payable upon the
exercise of any option.
14. CHANGE IN CONTROL OF THE COMPANY.
In the event of any Change in Control of the Company,
as hereinafter defined, each option granted under the Plan shall
become immediately exercisable to the extent of all of the
aggregate number of shares subject to the option. In that event,
the Company shall notify<PAGE> each Optionee as soon as
practicable of the Optionee's rights to exercise the option. The
Committee or its successor may, in its discretion, include such
further provisions and limitations in any agreement documenting
such options as it may deem equitable and in the best interests
of the Company.
For purposes of the Plan a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as in effect on the date hereof (the "Exchange Act")),
other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, becomes, after the date
hereof, the beneficial owner, directly or indirectly, of
securities of the Company representing 50 percent or more of the
total voting power of the Company's then-outstanding securities
("Interested Shareholder"); (ii) the shareholders of the Company
approve a merger or consolidation of the Company with any other
entity, other than a merger or consolidation which would result
in the voting securities (which term means any securities which
vote generally in the election of directors) of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 50 percent of
the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately
after such merger or consolidation; or (iii) the shareholders of
the Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
15. AMENDMENT AND TERMINATION OF PLAN.
No option shall be granted pursuant to the Plan after
February 28, 2010, on which date the Plan will expire except as
to options then outstanding under the Plan, which options shall
remain in effect until they have been exercised or have expired.
The Board of Directors may at any time before such date amend,
modify or terminate the Plan; provided, however, that the Board
of Directors may not, without further approval by the holders of
a majority of the issued and outstanding shares of ENB Common
Stock voting in person or by proxy at a duly constituted meeting
of the shareholders of the Company, (i) increase the maximum
number of shares of ENB Common Stock as to which options may be
granted pursuant to the Plan, (ii) change the class of employees
eligible to be granted options pursuant to the Plan, (iii) extend
the period under the Plan during which options may be granted or
exercised, or (iv) change the provisions of Section 7 hereof with
respect to the determination of the option price, other than to
change the manner of determining the fair market value of shares
of ENB Common Stock to conform with any then applicable
provisions of the Code or the regulations issued thereunder. No
amendment, modification or termination of the Plan may adversely
affect the rights of any Optionee under any then outstanding
option granted hereunder without the consent of such
Optionee.<PAGE>
16. GOVERNING LAW.
The Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with
the laws of the State of Missouri.
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