EXHIBIT 2.00
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of the 22nd day of
February 2002 by and between 1st Financial Bancshares, Inc. ("Seller") and
Brooke Bancshares, Inc. ("Buyer").
WITNESSED:
WHEREAS, the Seller owns all 5,000 shares of the total issued and outstanding
shares of stock in Centerville State Bank, Centerville, Kansas (the "Bank"); and
WHEREAS, the parties hereto desire to set forth the terms and conditions by
which Buyer will purchase from Seller and Seller shall sell, convey, transfer
and set over unto Buyers all of Seller's right, title and interest in and to all
issued and outstanding shares of stock in Bank, all on the terms and conditions
set forth hereinafter;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. PURCHASE OF SHARES. On the closing date as set forth hereinafter (the
"Closing Date"), subject, however, to the terms, conditions and restrictions
herein contained, Buyer shall purchase from Seller all of Seller's shares of
stock in the Bank, totaling 5,000 shares of common stock (the "Shares").
2. PURCHASE PRICE FOR SHARES BEING ACQUIRED; METHOD OF PAYMENT. Buyer agrees
to pay to Seller the "Formula Price" (as hereinafter defined) for the Shares.
For purposes of this Agreement, the "Formula Price" shall be calculated as of
the close of business on the last business day of the calendar month preceding
the Closing Date (such last business day of the calendar month preceding the
Closing Date is referred to herein as the "Determination Date").
The "Formula Price" for the Shares shall be the "Capital Account" (as
hereinafter defined) of the Bank as of the Determination Date plus a premium of
Two Hundred Thousand and No/100 Dollars ($200,000). In no event will the Formula
Price for the Bank Stock exceed $1,032,000. The "Capital Account" for the Bank
shall be its total capital, surplus, undivided profits and net income
year-to-date determined in accordance with the Bank's past accounting practices;
"Capital Account" specifically excludes any reserve for loan losses, net
unrealized gain on available for sale securities and goodwill. The parties
acknowledge that as of December 31, 2001, the Formula Price was One Million
Nineteen Thousand and No/100 Dollars ($1,019,000).
Concurrent with the execution hereof, Buyer will convey to First Community Bank,
▇▇▇'▇ Summit, Missouri (as "Escrow Agent") by cashier's check or electronically
wired funds the sum of $25,000 to be held pursuant to an escrow agreement
mutually acceptable to the parties hereto. Such amounts shall be held by Escrow
Agent and shall be referred to herein as the "▇▇▇▇▇▇▇ Money Deposit".
Buyer and Seller shall each be responsible for one-half of the Escrow Agent's
fees. If this transaction closes in accordance with the terms hereof, then at
the closing, the ▇▇▇▇▇▇▇ Money Deposit and all interest earned thereon shall be
returned to Buyer. Buyer will make the payment due to Seller in accordance with
the terms of this Agreement. If this transaction does not close for any reason,
except the failure to gain regulatory approval, then the disposition of the
▇▇▇▇▇▇▇ Money Deposit will be as provided in Section 25 hereof. Reference
hereinafter to the "▇▇▇▇▇▇▇ Money Deposit" shall include reference to all
interest earned on such ▇▇▇▇▇▇▇ Money Deposit through the date of disposition of
such account.
3. CLOSING DATE FOR PURCHASE OF SHARES. The Closing Date shall take place on
or before the tenth day of the month following the month in which all
contingencies to Seller's and Buyer's obligation to sell and purchase the Shares
have been met or waived, all required regulatory approvals have been obtained,
and all applicable waiting periods have expired, unless Buyer or Seller mutually
agree in writing to postpone the closing date up to 30 days. The closing shall
take place at such location as the parties shall agree. At the closing, Buyer
shall deliver to Seller the payment required under the terms of this Agreement.
Such payment shall be in the form of wire transfer to Seller's account with 1st
Financial Bank, Overland Park, Kansas, all in accordance with wire transfer
instructions furnished in writing by Seller. Seller shall deliver to Buyer the
certificate or certificates evidencing the shares of stock in the Bank being
conveyed to Buyer hereunder with such certificate(s) properly endorsed or
accompanied by properly executed stock powers. Additionally, the ▇▇▇▇▇▇▇ Money
Deposit will be returned to Buyer by the Escrow Agent. Seller will also deliver
to Buyer the corporate minute books, stock registers, corporate seals, all
shares of Bank Stock and all similar corporate documents for the Bank, and shall
deliver the resignations of all officers and directors of the Bank. Further, all
parties agree to execute and deliver any and all additional documents which are
required by this Agreement to be delivered at Closing including, not by way of
limitation, a certified copy of the certificate of authority of the Bank as of
the Closing Date from the Kansas Banking Department and insurance certificate
from the Federal Deposit Insurance Corporation, certificates executed by Seller
confirming that all representations and warranties herein contained are true,
accurate and complete as of the Closing Date, and any and all other
documentation as contemplated herein. In addition, if Seller (through its
subsidiaries) is required to purchase any loans pursuant to Section 6(f) hereof
or any securities pursuant to Section 6(h) hereof, then payment for same shall
be made by Seller (or Seller's subsidiary) to the Bank at closing and the Bank
shall deliver appropriate assignment documentation with respect to such
securities and/or loans.
Notwithstanding anything herein contained to the contrary, the Closing Date
shall not be later than June 30, 2002 (the "Drop Dead Date"), unless Buyer and
Seller mutually agree in writing to extend the closing beyond the Drop Dead
Date. If this transaction does not close for any reason by the Drop Dead Date
(and such date has not be extended by written agreement of all parties hereto),
then this Agreement shall terminate, neither party hereunder shall have any
further liability to the other, and the ▇▇▇▇▇▇▇ Money Deposit shall be
distributed in accordance with the terms of Section 25 herein.
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4. EXAMINATION OF ASSETS. All parties acknowledge and agree that as of the
date of the execution of this Agreement, representatives designated by Buyer
have not examined and inspected certain assets of the Bank including its loan
portfolio and securities account. Buyer and its authorized representatives shall
have forty-five (45) days (the "Due Diligence Period") from the date of this
Agreement to conduct its due diligence to inspect and examine the assets of the
Bank. During the Due Diligence Period, Seller shall give to Buyer full and free
access at all reasonable times to the financial statements; offices, properties,
personnel, auditors, books, records, stock books, minutes books, books of
account, notes, loan files, insurance policies, documents, files and
correspondence of Bank. Such access to Bank records shall be conducted in such a
manner that does not interfere with the normal operations of Bank. Seller shall
provide to Buyer all information and documents related to the Bank which are
reasonably requested by Buyer. If such initial due diligence discloses any
materially adverse conditions in the financial condition, assets or operations
of the Bank, then Buyer shall have the right, in its sole discretion, to
terminate this Agreement; provided, however, that Buyer shall deliver to Seller
written notice of the materially adverse condition of the Bank and Seller shall
have a thirty (30) day period to cure said condition. In the event that Seller
fails to cure said condition, this Agreement shall terminate and Buyer shall
receive a full refund of its ▇▇▇▇▇▇▇ Money Deposit. Such termination shall be
deemed to occur as a result of the failure of a condition precedent. During the
Due Diligence Period, Buyer's auditors shall also be authorized to perform such
activities as are required to conduct an audit of the Bank as of December 31,
2001, including without limitation the dissemination of account confirmation
letters. If such event occurs, then unless Buyer is willing to waive such matter
or unless Buyer and Seller agree to a modification of the terms hereof, this
Agreement shall terminate and shall be deemed to have terminated as a result of
a failure of a condition precedent. It is specifically agreed by the parties
hereto that the rights given to Buyer to conduct due diligence as provided
hereunder are not intended to result in Buyer having the right to negotiate a
modification to the purchase price, but merely to allow Buyer to determine
whether or not it wishes to close on the acquisition described hereunder in
accordance with the terms of this Agreement.
Seller specifically acknowledges and agrees that the conduct of inspections by
Buyer and the failure of Buyer to terminate this Agreement subsequent to all
such inspections (including those taken prior to the execution hereof) in no way
undermines, obviates or otherwise affects the representations and warranties of
Seller contained herein, except as to matters which are disclosed prior to
closing in writing to Buyer, or which are clearly disclosed in the books and
records of Bank made available to Buyer.
5. [INTENTIONALLY LEFT BLANK].
6. OPERATION OF BANK FROM AND AFTER DATE OF AGREEMENT. Seller agrees that
between the dates of execution hereof and the Closing Date, it shall cause the
Bank to be operated in conformity with the following terms and conditions:
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a) There shall be no additional issuance of any class of common or preferred
stock nor the creation of any new class of stock, nor any alteration of the
authorized shares of stock in the Bank. Further, Bank shall not redeem any
of its stock.
b) The Bank shall not enter into any stock options, stock warrants or other
agreements granting to any third party the right to acquire additional
stock of the Bank.
c) The Articles of Incorporation and Bylaws of the Bank shall not be amended.
d) No dividends shall be declared or paid with respect to the stock of the
Bank; provided, however, Bank may declare and pay dividends with respect to
its stock prior to the Closing Date only to the extent that the Capital
Account (as hereinabove defined) will not be below Eight Hundred Thirty
Two Thousand Dollars ($832,000) as of the Determination Date.
e) The Bank will carry on its respective business diligently and substantially
in the same manner as heretofore conducted and will not make or institute
any unusual or novel methods of management, accounting or operation and,
further, will not do anything to result in material non-compliance with any
applicable rule or regulation of the federal, state, and municipal
governments and all regulatory agencies.
f) All loans at the Bank will be made in accordance with the loan policies
then in effect. Seller agrees that it shall cause the Bank to give written
notice to Buyer of any proposed loan in excess of Fifty Thousand Dollars
($50,000.O0)(or establishment of a credit line in excess of Fifty Thousand
Dollars ($50,000.00)) to any new customer of the Bank. Buyer shall have
until the close of business on the next business day following the receipt
of such notice to advise Seller's Representative as to whether or not Buyer
approves of such loan. Likewise, if Buyer provides Seller with a list of
borrowers with respect to which Buyer has raised questions, Seller agrees
to cause the Bank to give Buyer notice of any proposed increase on existing
loans to such borrowers and shall also cause the Bank to give Buyer notice
of any proposed increase on all other existing loans to the extent such
increase of such existing loans involves the great of (i) Twenty Thousand
Dollars ($20,000) or (ii) ten percent (10%) of the existing loan balance
(or existing credit line limit). Buyer shall again have until 5:00 p.m. on
the next business day following receipt of written notice of such proposed
loan increase to advise Seller's Representative as to whether or not Buyer
approves of such proposed increase. It is specifically understood and
agreed that the approval process hereunder shall in no way restrict the
ability of the Bank to conduct business in its normal course and Seller is
free to cause the Bank to make any loans (increase existing loans) over the
objection of Buyer hereunder. However, to the extent the Bank makes any new
loans or increases any existing loans over the objection of Buyer as set
forth in this paragraph, then Seller's Representative agrees to cause the
Bank to give Buyer written notice of same immediately following the
commitment to make such loan or increase such existing loan. In such event,
Seller agrees that at the closing, Seller shall purchase from the Bank the
entirety of all loans made with respect to which Buyers has expressed
objection (either as to the
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making of the loan or the increase of any existing loan). Such loan(s)
shall be purchased at an amount equal to the total outstanding principal
balance, all accrued and unpaid interest and any and all other outstanding
expenses due the Bank from such borrower. Payment shall be made in full at
closing by immediately available funds (or by a set-off of the payment due
Seller hereunder) and the parties shall execute appropriate assignment
documentation to assure that such loans and all collateral securing same
are properly assigned to Seller without recourse.
g) Bank will not grant any increases in the rates of pay, bonuses or other
compensation of any of its employees or any increases in the fixed
compensation payable or to become payable to any directors, officers, or
other employees of the Bank except consistent with past compensation
practices. All increases shall be done in the same manner and same fashion
and on the same basis as past compensation practices of the Bank. The Bank
will not make any change in its employment commitments or enter into any
agreements that cannot be terminated upon the giving of thirty (30) days
notice.
h) The Bank (including any subsidiary of Bank) will not sell or dispose of any
of its assets other than in the ordinary course of business except those
loan participations acquired as listed on the attached Exhibit "A". The
Bank agrees to give Buyer written notice in the event the Bank or its
subsidiary engages in any securities sales between the dates hereof and the
Closing Date. Any such notice shall include all specifics with regard to
the terms of such sale(s) of securities. Further, Seller agrees to cause
the Bank to give Buyer notice of any securities to be purchased by the
Bank; provided, however, that no notice shall be required with respect to
the acquisition of U.S. Treasury Notes with maturities of two years or
less. Buyer may give Seller's Representative written notice on or before
5:00 on the business day next following the date of receipt of such written
notice by Buyer of the fact the Buyer does not approve of such securities
purchase. Buyer agrees that it shall not unreasonably withhold any
requested approval. If Buyer gives such notice of non-approval, the Bank
shall nonetheless be permitted to acquire such security, buy in such event,
Seller agrees that it shall purchase such security(ies) from the Bank at
closing, if so requested by Buyer. The purchase price for sale of any such
asset shall be its marked to market fair market value as of the
Determination Date.
i) Except as otherwise permitted herein, the Bank shall not create any
indebtedness other than (i) that incurred in the usual and ordinary course
of business, (ii) that incurred pursuant to existing contracts, or (iii)
that reasonably incurred in doing acts and things contemplated by the
specific terms and conditions of this Agreement. Likewise, the Bank shall
not mortgage, pledge or subject to lien or other encumbrance any of its
respective properties or assets; provided, however, that nothing herein
contained shall prohibit the Bank from pledging certain bonds of the Bank
in order to secure public funds.
j) The Bank will maintain in full force and effect all insurance policies and
blanket bond coverage presently in effect, including insurance of all
accounts with the FDIC.
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k) The Bank will not do any act or omit to do any act which will cause or
permit a breach of any material contract, commitment or obligation to which
it is a party.
l) The Bank will use, operate, maintain and repair all tangible personal
property in a careful and efficient manner, consistent with past practice.
m) The Bank will advise the Buyer as soon as reasonably possible of any loans
which are charged off whether required by regulatory authority or
otherwise. Further, if a regulatory examination of the Bank takes place at
any time after the date of this Agreement, Seller and the Bank shall give
Buyer notice of same and, as long as same is not prohibited by law, rule or
regulation or not objected to by the examining authority, Buyer shall be
entitled to attend, either in person or by a designated representative, and
Buyer or such representative shall be entitled to participate in such
examination.
n) Seller will cause the Bank to make available to Buyer any statements of
condition or other financial data which Buyer requests from time to time.
o) Seller will cause notice to be sent to Buyer of any and all meetings of the
Board of Directors and/or Shareholders of the Bank between the dates hereof
and the Closing date. An authorized representative of Buyer shall be
entitled to attend any and all such meetings.
p) The Bank shall make no expenditures or commitments for expenditures for
capital assets (exclusive of repairs or existing assets or other emergency
situations) in excess of Five Thousand Dollars ($5,000.00) for a single
item nor enter into any leases of capital assets, unless Buyer has granted
prior approval.
q) The Bank shall both accrue and establish appropriate reserves for any and
all taxes due and owing (including those which are current, accrued and
deferred) with respect to the operation of the Bank through the Closing
Date.
r) The Bank will use its best efforts (without making any commitments on
behalf of the Buyer) to preserve its business organization intact, to keep
available its present employees, and to preserve its present relationship
with the customers and others having business relations with it.
s) The Bank will not engage in any transaction which is not in the usual and
ordinary course of its business and consistent with its past business
practices.
7. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SELLER. Except as expressly
set forth in the Seller Disclosure Schedule attached to this Agreement, Seller
hereby represents and warrants to Buyer as follows:
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a) There are a total of 5,000 shares of common capital stock authorized by the
Bank. Each share has a par value of Ten and No/100 Dollars ($10.00) per
share. No other class of stock is authorized by the Bank.
b) Seller owns all 5,000 shares of issued and outstanding common capital stock
in the Bank.
c) All shares of stock in the Bank owned by the Seller will, at the time of
closing, be free and clear of any and all security interests, liens,
claims, charges or encumbrances of any kind or nature whatsoever. All such
shares are duly authorized, validly issued and outstanding and fully paid
and non-assessable.
d) There are no outstanding stock options, stock warrants or any other
agreements giving any third party any right to acquire stock in the Bank.
e) Seller has full legal power and capacity to transfer and deliver Seller's
shares to Buyer as required under the terms of this Agreement, and the
terms of this Agreement have been duly authorized by Seller. The
individuals executing this document on behalf of Seller have full power and
authority to bind Seller to all terms hereof. This Agreement has been/will
be duly and validly executed and delivered by Seller, and assuming due
authorization, execution and delivery by Buyer, constitutes a legal, valid
and binding obligation of Seller which is enforceable against Seller in
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
f) Subject to required approval by the appropriate regulatory agencies, to the
knowledge of Seller the execution, delivery and performance of this
Agreement by Seller do not, and the consummation of the transactions
described herein will not, constitute (i) a breach, violation of or default
under any material law, rule or regulation or any judgment, decree, order,
agreement or governmental permit or license to which the Bank (or any of
their respective properties) is subject or (ii) a breach or violation of or
default under or result in the termination of or result in the creation of
any lien, pledge or security interest upon the properties or assets of the
Bank under any of the terms, conditions or provisions of any agreement to
which the Bank is a party or to which any of their properties may be bound
or affected.
g) The Bank holds all material licenses, certificates, permits, franchises and
rights from all appropriate federal, state or other public authorities
necessary for the lawful conduct of its business and ownership of its
properties. To the knowledge of Seller, the Bank has substantially complied
with all material federal, state and local statutes, regulations,
ordinances or rules applicable to the ownership of its respective
properties or the conduct of its respective business.
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h) The Seller has delivered to Buyer the daily statement, balance sheet and
statement of earnings for the Bank as of December 31, 2001 and for the
periods then ending, as well as all related schedules and notes to the
foregoing. All financial statements and related information referenced in
the immediately preceding sentence are referred to herein as the "Financial
Statements." The Bank has no other liabilities, debts, charges, claims or
other assessments of any nature, fixed or contingent (including,
specifically, any recourse with respect to any loans sold in the secondary
market by Bank) other than those disclosed or reflected on the Financial
Statements in the ordinary course of business since the date of such
statements. There are no liabilities, debts, charges, claims or other
assessments incurred by the Bank subsequent to the date of the Financial
Statements which would, in the aggregate, materially adversely affect the
financial condition of the Bank. Further, Seller agrees to cause the Bank
to provide monthly financial statements for all months of operation of the
Bank from the date of the Financial Statements through the end of the month
preceding the Closing Date. The Financial Statements have been prepared in
accordance with generally accepted accounting principles and practices
which are applied on a consistent basis, are correct and complete and
fairly and accurately represent the financial position, results of
operation and changes of financial position of the Bank as of its
respective dates and for the periods indicated. Since February 6, 2001 (the
"Seller Acquisition Date"), there has been no material adverse change in
the financial condition, properties, assets, liabilities, rights or
business of the Bank, or in the relationship of the Bank with respect to
its respective employees, creditors, suppliers, distributors, customers or
others with whom such entity has a business relationship.
i) To the knowledge of Seller, there are no outstanding orders, judgments,
injunctions, awards, or decrees of any court, arbiter or governmental or
regulatory body involving the Bank. There is no claim, suit, demand or
other proceedings or investigations, either judicial or administrative,
pending or, to the knowledge of Seller, threatened against or affecting the
properties, assets, rights or business of the Bank, nor are there, to the
knowledge of Seller, any grounds therefore.
j) There is no action, suit, administrative proceeding, claim or investigation
pending or, to the knowledge of Seller, threatened against the Bank which
questions the validity or propriety of this Agreement or of any action
taken or to be taken in connection with this Agreement or which would make
any representation or warranty herein contained inaccurate incorrect or
misleading, and Seller does not know of any basis for any such action,
suit, proceeding or investigation.
k) The Bank has timely filed all material reports, registrations and
statements, together with any amendments required to be made with respect
thereto, with all governmental or regulatory authorities, agencies or
courts and has paid all fees and assessments due and payable in connection
therewith. There is no unresolved material violation, criticism or
exception by any governmental or regulatory authority or agency with
respect to any report or statement relating to any examinations of the
Bank. Seller has provided or made available to Buyer all final and
preliminary reports of examinations conducted by any governmental or
regulatory
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agency or authority with respect to the Bank during the preceding three (3)
years along with related correspondence.
l) Except for services rendered by ▇▇▇▇▇ ▇▇▇▇▇▇▇ in connection herewith, all
negotiations relative to this Agreement have been conducted by or on behalf
of the parties directly without the intervention of any person instigated
or authorized by Seller and otherwise carried on so as not to give rise to
any valid claim against Seller or Bank for any brokerage commission,
finder's fee or like payment in connection with the negotiation, execution,
delivery and performance of this Agreement. Buyer agrees to indemnify and
hold Seller harmless for any and all fees and payments which Buyer is
required to make to ▇▇▇▇▇ ▇▇▇▇▇▇▇ hereunder.
m) The financial statements of the Bank referenced hereinabove have been
prepared on a consistent basis in accordance with the accrual method of
accounting and properly reflect all assets and liabilities of the Bank as
of the date of said statements and represent fairly the financial condition
of the Bank and the results of its operations for the respective periods
shown; further, the Bank has good and merchantable title to all assets
included on its financial statements and all such assets are subject to no
liens or encumbrances except as reflected or disclosed on such financial
statements; further, since the date of such financial statements, the
business of the Bank has been operated in the ordinary course of business.
n) The Bank has filed with the appropriate governmental agencies all tax or
information returns and tax reports based on income or other required to be
filed for all prior years, copies of which are on file with the Bank.
Further, such returns have been examined and settled or where they have not
been examined and settled, no waivers of statutes of limitations have been
given; further all such returns and reports as are based on income or other
have been prepared on the same basis as those of previous years, and all
income or other taxes disclosed to be owing on any such returns have been
paid or adequately reserved for. All returns required are or will be
prepared and submitted on or before March 15, 2002 at Seller's expense, and
are or will be accurate and correct, and adequately and properly reflect
the tax liability of the Bank. Further the Bank has properly accrued (and
will properly accrue through the Closing Date) and will pay all income and
other taxes due and owing, both current and deferred through the Closing
Date, including those with respect to current year's earnings. If required
based upon the time of closing, Seller will prepare and file at Seller's
expense the short period tax return for the Bank for the Period from
January 1, 2002 through the day before the Closing Date which return shall
be completed and properly filed within ninety (90) days for closing. The
parties agree that Buyer shall have the opportunity to review the short
period tax return for the Bank prior to its filing. There are no ongoing
or pending examinations or investigations pertaining to taxes or
assessments asserted against the Bank by any taxing authority, and no
agreement for the extension of the time for the assessment of any amount of
tax has been or shall prior to the Closing Date be entered into or
requested by or on behalf of the Bank without Buyer's prior approval.
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o) The execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a breach of any other agreement to
which the Bank is a party.
p) Except as set forth herein, there are no written employment contracts to
which the Bank is a party that cannot be cancelled on less than thirty (30)
days notice without compensation. All employees of the Bank are and will at
closing be employees at will.
q) The Bank is validly existing and in good standing under the banking laws of
the State of Kansas and the United States of America, is an insured
depository institution under the supervision of the Federal Deposit
Insurance Corporation with all other appropriate insurance and bonds in
full force and effect, and has no subsidiaries and owns no interest in any
other corporation, partnership, proprietorship or business entity. The Bank
has good and merchantable title in fee simple to all lands and buildings
reflected on the most recent Financial Statements of the Bank. Such real
estate includes all real property used in the conduct of business of the
Bank and all such real estate is free and clear of all liens, encumbrances
and charges except for current taxes and assessment now delinquent. All
leases of real property to which the Bank is a party as lessee (including
any purchase options contained therein) are valid and enforceable in
accordance with their terms and there has been no material default by any
party thereto; no zoning ordinance prohibits, interferes with, or impairs
the usefulness of such real property and buildings thereon for the purposes
for which it is now used; and all structures and equipment upon such real
property are in good operating condition and repair.
r) Since the Seller Acquisition Date, there have been no material adverse
changes in the financial condition of, or in the properties, assets or
liabilities, taken as a whole, of the Bank or in the relationship of the
Bank with respect to their employees, creditors, suppliers, customers or
others with whom they have business relationships. Seller agrees to notify
the Buyer of the resignation, retirement or termination of employment for
any reason whatsoever of any Bank employee between the date hereof and the
Closing date.
s) The Bank has made no agreements to extend existing loans or enter into any
commitment to make any loan in the future except as disclosed in loan files
or as otherwise disclosed herein. There are no verbal commitments for loans
or loan extensions or modifications not otherwise disclosed herein. All
loans which have been classified as "substandard," "doubtful," "loss,"
"other loans especially mentioned," or any similar or comparable
classifications by the Bank or by any banking regulators have been included
on a list to be provided to Buyer by Seller during the initial thirty (30)
day due diligence period. Further, Seller will provide to Buyer a list of
any loans or loan commitments with any officers or directors of the Bank
during such initial thirty (30) day due diligence period. To the best
knowledge of Seller, the Bank is not a party to any written or oral loan
agreement, note or borrower arrangement which violates any law, regulation
or rule of any governmental authority.
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t) No representation or warranty herein contains an untrue statement of
material fact or omits to state a material fact necessary in order to make
the statements contained herein not misleading or to provide a prospective
buyer of the Bank with all material information as to the properties and
business of the Bank.
u) The operations of the Bank comply with all federal, state and local
environmental statutes and regulations and the condition of any property
owned by the Bank does not violate any such federal, state or local
environmental statute or regulation. To the knowledge of Seller, no
hazardous, toxic or polluting substances have been released, discharged or
disposed of in any real estate owned or occupied by the Bank, including any
real estate acquired by foreclosure or deed in lieu of foreclosure, in
violation of applicable law and neither the Bank, nor Seller has received
from any governmental authority or third party any request for information,
notice of claim, demand or letter or other notification that it is or may
be responsible or potentially responsible with respect to any investigation
or clean-up of hazardous, toxic or polluting substances released at any
site. There are no underground storage tanks now located or previously
located on any real property owned by the Bank. Seller acknowledges that
Buyer may obtain at its option and expense an environmental audit of all
properties and assets of the Bank, including property classified as other
real estate owned. Seller shall give Buyer a copy of any environmental
audit, inspection report, survey or other similar document it or the Bank
has relating to any property or asset owned by the Bank including property
classified as other real estate owned.
v) All notes owned by the Bank on the Closing Date will represent bona fide
indebtedness to the Bank and will be fully enforceable in accordance with
their terms without valid set-off or counterclaims, without warranty as to
collectability. There has not been any material adverse development with
respect to any such notes since the date of the Financial Statements.
w) The Bank has good and marketable title to the machinery, equipment,
materials, supplies and other property of every kind, tangible or
intangible, contained in its offices and other facilities or shown as
assets in its records and books of account, free and clear of all liens,
encumbrances and charges. All leases of personal property to which the Bank
is a party as lessee (including any purchase options contained therein) are
valid and enforceable in accordance with their terms and there has been no
material default by any party hereto.
x) The Bank has all material permits, charges, licenses, orders and approvals
of every federal, state, local or foreign governmental or regulatory body
required in order to permit it to carry on its business as presently
conducted. To the knowledge of Seller, all such permits, licenses,
charters, orders and approvals are in full force and effect, and no
suspension or cancellations of any of them is threatened; likewise, Seller
knows of no fact or circumstance that will interfere with or adversely
affect the renewal of any such licenses, permits, charters, approvals or
authorizations; and none of such permits, charters, licenses, orders or
approvals will be affected by the consummation of the transactions
described herein.
11
y) Seller will, within thirty (30) days from the date hereof, provide to Buyer
complete and correct copies of all policies of insurance maintained by the
Bank and represents that all premiums due on all such policies covering all
periods up to and including the date hereof have been paid. Seller has
received no notice of cancellation or termination with respect to any such
policies. Such policies are and shall remain valid, outstanding and
enforceable policies and will not be terminated prior to the Closing Date.
Beginning with a period one (1) year prior to the date hereof, and
continuously until the Closing Date, the Bank has been and will continue to
be adequately insured with respect to all risks normally insured against by
companies similarly situated, and, to the best knowledge of Seller, all
such insurance policies are sufficient for compliance with all material
requirements of law and all material agreements to which the Bank is a
party. To the best of Seller's knowledge, the Bank has not been refused any
insurance with respect to any material assets or operations nor has
coverage been limited in any material respect by any insurance carrier to
which they have applied while Seller has owned the Shares.
z) Seller will provide to Buyer, within the initial thirty (30) day due
diligence period as set forth hereinabove, a list of all employee benefit
plans (as defined in Sections 3(3) or 3(37) of the Employment Retirement
Income Security Act of 1974 ("ERISA")). All such employee benefit plans are
referred to herein as the "Plans." Seller has also provided to Buyer a true
and complete copy of each of the Plans and any related trust agreements, as
well as all determination letters received with respect to any qualified
plans and all required reports and supporting schedules which have been
filed with any governmental agency with respect to the Plans for the three
most recent fiscal years end. To Seller's knowledge, the Plans and each
fiduciary (as defined in Section 3(21) of ERISA) of the Plans are in
compliance in all material respects with all applicable requirements of the
Internal Revenue Code of 1986, as amended, all regulations an requirements
of the Department of Labor and any other applicable law. Further, to
Seller's knowledge, all required contributions to the Plans have been made
or will be made and the Bank has received no notice of any material Plan
liability to any person, including, but not limited to, any government
agency, other than for the payments of benefits in the ordinary course.
aa) Seller represents to Buyer that there are no currently pending or, to
the knowledge of Seller, threatened against the Bank any claims or suits
concerning or alleging employment practices violations, including but not
limited to discrimination, harassment or unfair practices.
bb) During Seller's period of ownership of the Bank, Seller represents
that the minute books of the Bank are, or will be as of the closing date,
with respect to all corporate transactions and proceedings accurate and
complete in all material respects and reflect all resolutions adopted and
all actions authorized or ratified by the shareholders or directors of the
Bank including those required to carry out the duties and obligations of
Seller hereunder. To the knowledge of Seller, Seller further represents and
agrees that the stock transfer books and stock ledgers of Bank are or will
be as of the closing date, with respect to all stock
12
transfers and transactions, in good order, complete, accurate and current
and contain all necessary signatures and set forth all stock securities
issues, transferred and surrendered.
cc) Seller represents and agrees that on and after the Closing Date it
shall discontinue using the name Centerville State Bank or any variations
thereof.
dd) Seller represents and agrees that Seller and its senior officers and
directors shall not engage directly or indirectly in the business of
banking in or within a three (3) miles radius of Centerville, Kansas for a
period of five (5) years from and after the closing date. Seller shall not
for a period of five (5) years from and after the closing date directly or
indirectly solicit or write bank or credit products for any customers that
are or were a part of the Bank's book of business and shall not directly or
indirectly attempt to divert any such customer from continuing to do
business with the Bank or Buyer. Buyer represents and agrees that Buyer
shall not directly or indirectly (through its subsidiaries, affiliates,
majority shareholders, employees or agents other than franchise agents of
Brooke Corporation) open a bank branch office or other banking facility in
or within a three (3) miles radius of 135th and Quivira, Overland Park,
Kansas for a period of two years from and after the closing date. The
parties acknowledge that the covenants set forth in this paragraph are
material to this agreement. Seller agrees that the covenants contained in
this paragraph are reasonable and necessary and that Buyer has paid ample
consideration for same. For the purpose of this paragraph "customer" shall
exclude debtors of 1st Financial Bank whose loans have been sold (or
participation interests in such loans have been sold) in whole or in part
to the Bank. Furthermore, for the purposes of this paragraph, "bank branch
office or other banking facility" shall mean retail bank branch office or
other retail banking facility that accepts deposits other than deposits by
mail.
ee) Seller shall take no action that would adversely affect or delay the
ability of Buyer to obtain any regulatory approval or to perform Buyer's
covenants and agreements under this Agreement.
ff) Seller shall us its best efforts to secure all corporate and other
non-regulatory consents with respect to all of the contracts to which
Seller is a party or for which consents are otherwise required to be
obtained and Buyer shall fully cooperate in order to obtain such consents.
Seller shall provide copies of such consents to Buyer upon its request.
8. REPRESENTATIONS AND WARRANTIES OF BUYER
Purchaser hereby represents and warrants to Seller as follows:
a) Buyer is/will be at closing a corporation duly organized, validly
existing and in good standing under the laws of the State of Kansas, with
full corporate power and authority to own or lease all of its properties
and assets and to carry on its business as now conducted and is duly
licensed or qualified to do business. Buyer is in good standing in each
13
jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such licensing or qualification, except where the
failure to be so licensed, qualified or in good standing would not prevent
or hinder the consummation of the transactions contemplated by this
Agreement. Buyer has heretofore delivered or will make available to Seller
true and complete copies of the Certificate of Incorporation and Bylaws of
Buyer as in effect as of the date of closing.
b) Buyer has/will have all requisite corporate power and authority
to enter into this Agreement and (subject to receipt of all necessary
governmental approvals) to perform all of its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of Buyer.
This Agreement has been duly and validly executed and delivered by Buyer,
and, assuming due authorization, execution and delivery by Seller,
constitutes a legal, valid and binding obligation of Buyer which is
enforceable against Buyer in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
c) To the knowledge of Buyer, none of (i) the execution and delivery
of this Agreement by Buyer pursuant to this Agreement, (ii) the
consummation of the transactions contemplated hereby or (iii) compliance by
Buyer with any of the provisions hereof: (x) does or will conflict with or
result in a breach of any provisions of the Articles of Incorporation or
Bylaws of Buyer; (y) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien upon,
any property or asset of Buyer pursuant to, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Buyer is a party, or by which any of Buyer's respective
properties or assets may be bound or affected, or (z) subject to receipt of
all required governmental approvals, violate any order, writ, injunction,
decree, judgment, governmental permit, license, statute, rule or regulation
applicable to Buyer.
d) Except for the filing of applications and notices with, and the
consents and approvals of, as applicable, the Federal Reserve System,
Kansas State Bank Commissioner or other regulator, no consents or approvals
of or filings or registrations with any governmental entity or with any
third party are, to the knowledge of Buyer, necessary on the part of Buyer
in connection with the execution and delivery by Buyer of this Agreement
and the consummation by Buyer of the transactions contemplated hereby.
e) Buyer is not aware of any reasons relating to it (including,
without limitation. Community Reinvestment Act compliance and Management
Interlocks Act compliance) why all consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for
14
consummation of the transactions contemplated by this Agreement and the
consummation by Buyer of the transactions contemplated hereby or thereby.
f) There are no actions, suits, claims, formal governmental
investigations or proceedings instituted or pending against Buyer or any
officer, director, employee or investors which would be reasonably likely
to prevent or hinder the consummation of the transactions contemplated by
this Agreement.
g) To the knowledge of Buyer, Buyer and its employees own or hold
all material permits, licenses, consents, certificates of authority, orders
and approvals of, and have made all material filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies which are required in order to permit Buyer to carry on
its business as presently being conducted and the absence of which could
reasonably be expected to have a material adverse effect on Buyer. All
such material permits, licenses, certificates of authority, orders and
approvals are in full force and effect. To the best knowledge of Buyer, no
suspension or cancellation of any of the same is threatened.
h) To the knowledge of Buyer, Buyer is not in violation of, nor is
any of the property owned or leased by Buyer in violation of, its Articles
of Incorporation of Bylaws, or of any applicable material federal, state or
local law or ordinance or any order, rule or regulation of any federal,
state, local or other governmental agency or body, or in material default
with respect to any order, writ, injunction or decree of any court, or in
material default under any order, license, regulation or demand of any
governmental agency. Buyer is not subject to any regulatory or supervisory
cease and desist order, agreement, written directive, memorandum of
understanding or written commitment, and has received no written
communication requesting that it enter into any of the foregoing.
i) Neither Buyer nor any of its directors, officers or employees,
has employed any broker or finder for which Seller is obligated to pay or
incurred any liability for any broker or finder fees or commissions which
Seller is obligated to pay in connection with the transactions contemplated
hereby.
j) No representation or warranty by Buyer contained in this
Agreement, contain any untrue statement of a material fact or omits to
state any material fact necessary in order to make any statement contained
herein or therein not misleading.
9. REPRESENTATIONS AND WARRANTIES SURVIVE CLOSING. All representations and
warranties made by Buyer and Seller in this Agreement shall be true on and as of
the Closing Date with the same effect as if such representations and warranties
had been made or given on such date. Buyer and Seller will execute a certificate
confirming that all such representations and warranties remain true, accurate
and complete as of the Closing Date and such certificate shall be delivered to
the other party at closing. Further, except as set forth in the immediately
following sentence, all representations and warranties shall survive the closing
of this Agreement for a period
15
of two (2) years from the Closing Date. However, all representations or
warranties pertaining to any federal or state income tax or privilege tax shall
survive the closing of this Agreement for the period of time commensurate with
the statute of limitations applicable to the tax and tax return for which each
such representation and warranty has been made.
10. COVENANTS OF BUYER. For the benefit of Seller, Buyer hereby makes the
covenants and agreements set forth in this Section 10, and Buyer agrees to
comply with such agreements and covenants:
a) CONDUCT OF BUSINESS. During the period from the date of this Agreement
to the Closing Date, except with the written consent of Seller and except as
provided elsewhere in this Agreement, Buyer will not take any action that would
(a) materially adversely affect Buyer's ability to obtain any necessary
approvals of governmental authorities required for the transactions contemplated
hereby or materially increase the period of time necessary to obtain such
approvals, (b) materially adversely affect its ability to perform its covenants
and agreements under this Agreement, or (c) result in the representations and
warranties of Buyer contained in this Agreement not being true and correct in
all material respects on the date of this Agreement or at any future date on or
prior to the Closing Date.
b) CURRENT INFORMATION. During the period from the date of this Agreement
to the Closing Date, to the extent that such could affect the consummation of
the transactions contemplated hereby, Buyer will promptly notify Seller of any
material change in the normal course of its business or in the operation of its
properties and, to the extent permitted by applicable law, of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of litigation
involving Buyer, and Buyer will also provide Seller such information with
respect to such events as Seller may reasonably request from time to time.
c) ALL REASONABLE EFFORTS. Subject to the terms and conditions herein,
Buyer agrees to use all reasonable efforts to take, or cause to be taken all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
d) REGULATORY APPROVALS. Buyer shall use reasonable efforts to assist
Seller in obtaining all required regulatory approvals of Seller, if any. Buyer
shall provide Seller or the appropriate regulatory authorities all information
reasonably required to be submitted by Buyer in connection with the regulatory
approvals. Buyer shall take no action that would adversely affect or delay the
ability of any party to obtain any regulatory approval or to perform such
Party's covenants and agreements under this Agreement.
e) CORPORATE AND OTHER CONSENTS. Buyer shall use its best efforts to
secure all corporate and other non-regulatory consents with respect to all of
the contracts to which Buyer is a
16
party or for which consents are otherwise required to be obtained, and Seller
shall fully cooperate in order to obtain such consents. Buyer shall provide
copies of such consents to Seller upon its request.
f) REGULATORY AUTHORIZATIONS. Buyer shall, and shall cause its employees
to, use all reasonable efforts to obtain all authorizations, consents, orders,
approvals and licenses of federal, state and local regulatory bodies and
officials that may be or become necessary for their respective execution and
delivery of, and the performance of their respective obligations pursuant to,
this Agreement and the other agreements, documents and instruments contemplated
hereby.
g) COMMUNICATIONS; NOTICES. Buyer shall furnish to Seller copies of the
text of all notices (including with respect to ▇▇▇ accounts), advertisements,
information or communications, written or oral, proposed to be sent or
transmitted by Buyer to employees, customers or the public generally regarding
the proposed or actual transfer to Buyer of the Bank (including any public
notices required to be given by law or regulation in connection with such
transactions or applications for approval thereof). Buyer shall not send or
transmit such notices, advertisements, information or communications or
otherwise make them public unless and until the prior consent of Seller shall
have been received (such consent not to be unreasonably withheld or delayed);
provided, however, that nothing in this Section 10(g) shall (i) prohibit Buyer
from making any press release or announcement that its legal counsel reasonably
deems necessary under law, if it makes a good faith effort to obtain Seller's
consent to the text of the press release or announcement before making it
public, or (ii) require Buyer to furnish to Seller or obtain Seller's consent
for any communication (x) made in an ad hoc fashion that is responsive to issues
or questions of any employees or customers and does not disparage Seller, or (y)
that makes factual statements about the transactions contemplated hereby and
does not disparage Seller.
11. INDEMNIFICATION.
a) Buyer shall be liable for, and shall defend, save, indemnify and hold
harmless Seller and its respective officers, directors, employees and agents,
and each of them (the "Seller Indemnified Parties") against and with respect to
any liabilities, loss, damage, claims, diminution in value demands, charges,
legal fees, suits, actions, proceedings, judgments, expenses or any other losses
(the "Indemnifying Losses") that may be sustained, suffered or incurred by, or
obtained against, the Seller Indemnified Parties from events occurring after the
Closing Date or arising from or by reason of the breach or non-fulfillment of
any warranties, representations or agreements made by Buyer hereunder.
b) Seller shall be liable for, and shall defend, save, indemnify and hold
harmless Buyer, the Bank, and the respective officers, directors, employees and
agents, and each of them (the "Buyer Indemnified Parties") against and with
respect to any Indemnifying Losses that may be sustained, suffered or incurred
by, or obtained against, any Buyer Indemnified Parties arising from events
occurring prior to the Closing Date or arising from or by reason of the breach
or non-fulfillment of any warranties, representations or agreements made by
Seller hereunder.
17
c) Buyer agrees, however, that it will notify the Bank's insurance agent
of any such claims or demands and will request the insurance company to
undertake defense to the extent existing insurance coverage provides defense at
no expense to the Bank, and no indemnification claim will be made to the extent
that any loss or damage is covered through insurance coverage maintained by the
Bank.
d) If any claim or demand for Indemnifying Losses shall be made or
liability asserted against any Seller Indemnified Party or Buyer Indemnified
Party, as the case may be (the "Indemnified Party") or if any suit, action or
administrative or legal proceedings shall be instituted or commenced in which
any Indemnified Party is involved or shall be named as a defendant, either
individually or with others, such Indemnified Party shall give the other party's
representative written notice of the pendency of same. If, within twenty (20)
days of the giving of such notice, the Indemnified Party receives written notice
from Buyer or Seller, as the case may be ("Indemnitor") stating that Indemnitor
disputes or intends to defend against such claim, demand, liability, suit,
action or proceeding, then Indemnitor shall have the right to defend such claim
at its expense, and the Indemnified Party shall fully cooperate with Indemnitor
in such dispute or defense so long as Indemnitor is conducting such dispute or
defense diligently and in good faith. If no such notice of intent to dispute or
defend is received by such Indemnified Party within the aforesaid twenty (20)
day period, or if such diligent and good faith defense is not being, or ceases
to be, conducted, the Indemnified Party shall have the right to dispute and
defend against the claim, demand, or other liability at the cost and expense of
Indemnitor, to settle such claim, demand or other liability, together with
interest or late charges thereon, and in either event to be indemnified as
provided in this Agreements so long as such Indemnified Party conducts such
defense diligently and in good faith. If any event shall occur that would
entitle Indemnified Party to a right of indemnification hereunder, any loss,
damage or expense subject to indemnification shall be the net loss after due
allowance for insurance, or offsetting income or assets resulting from the same
transaction.
12. LIMITATIONS ON INDEMNIFICATION. Notwithstanding any provision in this
Agreement to the contrary.
a) All claims for indemnification under this Agreement must be brought no
later than two (2) years following the Closing Date.
b) Seller shall have no liability whatsoever for any claims resulting
from or arising prior to the Seller Acquisition Date, and Buyer acknowledges and
agrees that Buyer has had sufficient opportunity to inspect the business and
affairs of the Bank pursuant to Section 4 hereof with respect to matters
existing on or prior to the Seller Acquisition Date. Provided however, upon
Buyer's request and at Buyer's sole cost and expense, Seller shall act as a
nominal plaintiff in an action to enforce the terms, representations, warranties
or covenants of the agreement pursuant to which Seller acquired the Bank. Seller
will provide to Buyer a copy of such acquisition agreement within ten (10) days
of the date of this Agreement.
18
c) The determination of the amount of any indemnifying losses for which
indemnification may be claimed under this Section 12 shall take into account and
be offset by any tax benefit or benefit under any policy of insurance derived,
accrued or received by the indemnified party as a result thereof.
d) No party otherwise entitled to indemnification under this Agreement
shall be indemnified pursuant to this Agreement to the extent that such party's
indemnifying losses are increased or extended by the gross negligence, willful
misconduct, violation of law or bad faith of such party.
e) No indemnifying party shall have any obligation to indemnify any
indemnified party until such indemnified party shall have suffered aggregate
indemnifying losses, that would otherwise be subject to indemnification
hereunder, in excess of Twenty Five Thousand Dollars ($25,000) (the
"Deductible"), at which point the indemnifying party will be obligated to
indemnify the indemnified party from and against any and all such indemnifying
losses in excess of the Deductible. For purposes of this Section 12, any
reference in this Agreement to "materiality", "material" or "materially" or
other similar terms shall mean when indemnifying losses relating to such
reference, in the aggregate, exceed the Deductible. Further, for purposes of
this Section 12, the Deductible shall only have to be satisfied once by each
indemnified party.
f) No Indemnifying Party shall have any obligation to indemnify any
Indemnified Party under this Agreement in an aggregate amount in excess of the
Formula Price.
g) The parties acknowledge and agree that, except as provided in this
Section 12(g), the indemnification provisions in this Section 12 shall be the
exclusive remedy of the parties hereto with respect to the transactions
contemplated by this Agreement. Notwithstanding the above, the parties
acknowledge and agree that each party shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement.
13. APPLICATION FOR REGULATORY APPROVAL. Buyer agrees to apply, as soon as
reasonably possible, to the appropriate regulatory agencies for approval
required by law or regulation of said agencies for the acquisition contemplated
hereunder. Subject to the terms of Sections 15 and 25 of this Agreement, the
Buyer shall promptly provide all information required by the regulatory agencies
in order to act on the applications and shall comply with all requirements of
any regulatory agency necessary to attain required regulatory approval. All the
expense incident to the making of such application and complying with the
requests for information shall be borne by the Buyer with the exception of costs
of gathering information requested by the regulatory agencies from the Bank or
Seller. Seller agrees to cooperate to permit Buyer to provide all information
requested by such regulatory agencies.
14. CONDITIONS TO THE OBLIGATIONS OF SELLER UNDER THIS AGREEMENT. The
obligations of Seller under this Agreement shall be further subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
19
a) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of Buyer contained in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (or on the date when made in the case of any representation
and warranty which specifically relates to an earlier date), and Buyer shall
have delivered to Seller a certificate of Buyer to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of Buyer as of the
Closing Date.
b) AGREEMENTS AND COVENANTS. Buyer shall have performed all obligations
and complied with all agreements or covenants of Buyer to be performed or
complied with by it at or prior to the Closing Date under this Agreement, and
Seller shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and Chief Financial Officer of Buyer to such effect dated as
of the Closing Date.
c) PERMITS, AUTHORIZATIONS, ETC. Buyer shall have obtained any and all
permits, authorizations, consents, waivers, clearances or approvals required to
be obtained by Buyer from any bank regulator or governmental entity for the
lawful consummation of the transactions contemplated by this Agreement.
15. BUYER'S CONDITIONS PRECEDENT. The obligation of Buyer to close the
transactions described herein is specifically contingent upon satisfaction of
the following conditions:
a) The parties hereto obtaining and complying with all requirements of any
regulatory agency as may be necessary to obtain requisite regulatory
approval from any and all regulatory authorities for the transactions
contemplated hereby. The obtaining of such approval shall include necessary
approval and acquiescence of all applicable regulatory agencies, as well as
the expiration of all applicable waiting periods in connection therewith,
all in a manner satisfactory to Buyer and Buyer's counsel. Seller, on its
own behalf and on behalf of the Bank, waives any claim which it might have
(or the Bank may have) against Buyer and releases Buyer from any liability
arising from any loss or other damage suffered by Seller or Bank as a
result of any regulatory examination, which examination resulted from or
arguably resulted from the submissions by Buyer or the application for
approval of this transaction.
b) [INTENTIONALLY LEFT BLANK]
c) The total of (i) general reserve for loan losses, (ii) specific reserves
and (iii) reserves for other real estate owned shall, as of the Closing
Date, be not less than Thirty Thousand Dollars ($30,000).
d) Buyer determining that all representations and warranties of Seller
contained herein are true, accurate and complete as of the Closing Date.
Seller shall deliver to Buyer a certificate of Seller signed by its Chief
Executive Officer and President at the closing confirming that all such
representations and warranties are true, accurate and complete as of such
date and
20
Buyer shall be entitled to rely upon same. If Seller fails to deliver such
certificate and Buyer nonetheless chooses to close, then Buyer shall simply
be deemed to have waived the condition precedent specified in this
subparagraph. Buyer shall not be deemed to have waived any right of
indemnification against Seller nor any right to rely on the representations
and warranties of Seller contained herein.
e) The financial condition of the Bank as a whole shall not have been
materially adversely affected in any way since the date of Financial
Statements.
f) [INTENTIONALLY LEFT BLANK]
g) There shall be no adverse judgment, restraining order, or injunction in
effect in any litigation challenging the lawfulness of the transactions
contemplated hereby or seeking to enjoin or restrain the consummation of
this Agreement.
h) Seller shall have performed and complied with all of its respective
obligations under this Agreement which are to be performed or complied with
by it prior to or on the Closing Date and Seller shall have delivered all
documents required to be delivered by it to Buyer at the time of Closing.
i) There shall be no material adverse development in the overall financial
condition of the Bank discovered by Buyer or Buyer's representative as a
result of the additional due diligence conducted by Buyer and/or Buyer's
representative in accordance with the terms of Section 4 hereinabove.
j) [INTENTIONALLY LEFT BLANK]
In the event Buyer determines that this transaction cannot close as a result of
the failure of any contingency enumerated hereinabove or stated elsewhere in
this Agreement, Buyer shall give written notice of same to Seller and this
Agreement shall immediately thereafter terminate. In such event, Buyer shall be
entitled to a refund of the ▇▇▇▇▇▇▇ Money Deposit, neither party shall have any
further liability to the other, but in such event, Buyer agrees to return to the
Bank copies of any material it has obtained with respect to the Bank or its
operations.
16. CONFIDENTIALITY.
a) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby. Each party (including such party's
representatives who shall be expressly bound by these confidentiality
provisions) shall use it best efforts to keep confidential all such information,
and shall not directly or indirectly use such information for any competitive
or other commercial purposes and, if such transactions shall not occur, the
party receiving the information shall either destroy or return to the
21
party that furnished such information all documents or other materials
containing, reflecting or referring to such information. The obligation to keep
such information confidential shall continue for five years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
that (x) the party receiving the information can establish by convincing
evidence was already in its possession prior to the disclosure thereof by the
party furnishing the information; (y) was then generally known to the public; or
(z) became known to the public through no fault of the party receiving the
information; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction; provided that the
party that is the subject of any such legal requirement or order shall use its
reasonable efforts to give the other party that disclosed the information at
least 10 business days prior notice thereof.
b) The parties acknowledge that the breach of any portion of Section
16(a) would cause the party furnishing information irreparable harm for which
monetary damages would be inadequate. Accordingly, in addition to other remedies
available to it, the party furnishing information shall be entitled to seek
injunctive or other equitable relief to remedy any threatened or actual
breach.
c) Unless otherwise stated herein, neither party hereto shall make any
public announcement, press release or other disclosure of the terms of this
Agreement until all parties hereto have agreed upon the timing and contents of
such public announcement.
17. GOVERNING STATE LAW; MEDIATION; ARBITRATION.
a) The terms of this Agreement shall be governed by and interpreted in
accordance with the laws of the State of Kansas, but subject to any and all
federal banking laws or regulations and all other applicable statutes,
ordinances and regulations.
b) Any dispute, controversy, claim or disagreement between the Parties
arising from, relating to or in connection with (i) this Agreement, (ii) any
agreement, certificate or other document referred to herein or delivered in
connection herewith or (iii) the relationships of the Parties hereunder or
thereunder, including questions regarding the interpretation, meaning or
performance of this Agreement, and including claims based on contract, tort,
common law, equity, statute, regulation, order or otherwise (each a
"Dispute"), shall be resolved in accordance with Schedule I.
18. COMPLETE AGREEMENT. This Agreement, including all exhibits and schedules
hereto, sets forth the complete understanding of the parties hereto and any
modification of the terms hereof must be in writing signed by both parties
hereto.
19. BINDING AGREEMENT. The terms of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs, successors
and assigns. Notwithstanding any other term or provision, this Agreement and/or
any or all rights and obligations hereunder may be assigned by Buyer upon
written notice of such assignment to the Seller.
22
20. NOTICES; SELLER'S REPRESENTATIVE. Seller hereby designates ▇▇▇▇▇▇ ▇▇▇▇▇▇ to
serve as Seller's Representative for purposes of receipt of all notices required
or permitted under this Agreement. If Buyer sends a notice as required or
permitted under this Agreement to Seller's Representative and specifies that it
is to constitute notice to Seller, then Buyer shall be deemed to have given
notice to Seller as contemplated under this Agreement. All notices required or
permitted hereunder shall be deemed effective if in writing, and delivered by
hand or mailed by United States mail, postage prepaid, certified or registered
with return receipt requested, or mailed by express courier with date of receipt
confirmed. The effective date of notice shall be the day of delivery by hand,
and if by certified mail or express courier, the date of receipt thereof.
Notices shall be addressed as follows:
If to Buyer: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
Brooke Bancshares, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Seller: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and CEO
1st Financial Bancshares, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party hereto may designate alternative addresses under the terms of this
Section 20 for notices from time to time throughout the term of this Agreement
by giving written notice of same to the other party.
Seller hereby authorizes Seller's Representative to receive all notices from
Buyer hereunder and authorizes Seller's Representative to execute instructions
on behalf of Seller.
21. PAYMENT AND ACCRUAL OF EXPENSES. Each party shall be responsible for its
own costs and expenses incurred in connection with this transaction.
22. [INTENTIONALLY LEFT BLANK]
23. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
24. MISCELLANEOUS.
a) The headings contained herein are for convenience only and shall not
be considered in construing or interpreting any of the provisions of this
Agreement.
23
b) The failure by either party to enforce any provision of this Agreement
shall not be in any way construed as a waiver of any such provision not prevent
such party thereafter from enforcing each and every other provision of this
Agreement.
c) This Agreement may not be modified, revised, altered, added to, or
extended in any manner, or superseded other than by an instrument in writing
signed by all the parties hereto. No waiver of any provision hereof shall be
effective unless agreed to in writing by all parties hereto. Any modification or
waiver shall only be effective for the specific instance and for the specific
purpose for which given.
d) The invalidity or non-enforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted. However, if it is determined that the non compete or
non solicit provisions set forth in paragraph 7 are not enforceable for any
reason (including but not limited to being unenforceable for the full stated
period of time or the stated geographic region), such non compete or non solicit
provisions shall not be stricken, but shall be reformed to the extent required
to be enforceable under and comply with applicable law and as reformed shall be
fully enforceable.
e) For the purposes of this Agreement, the term "to the knowledge of
Seller" or words of similar meaning shall mean to the knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. as Chairman and Chief Executive Officer of the Bank, and to the
knowledge of ▇▇▇▇ ▇▇▇▇▇, as President and Secretary of the Bank. For the
purposes of this Agreement, the term "to the knowledge of Buyer" or words of
similar meaning shall mean to the knowledge of Buyer's Chief Executive Officer
and Secretary.
25. DISPOSITION OF ▇▇▇▇▇▇▇ MONEY DEPOSIT. In the event this transaction does
not close as a result of (i) Buyer giving written notice on a timely basis of
its desire not to close as a result of the failure of any one or more conditions
precedent specified in Section 15, then Buyer shall be entitled to a refund of
the entire ▇▇▇▇▇▇▇ Money Deposit (including all interest earned thereon).
However, if (i) all conditions precedent have been met or waived in writing by
Buyer and Seller has performed all of its obligations hereunder, but Buyer fails
to close, or (ii) all conditions precedent have been met or waived in writing by
Buyer but Buyer otherwise breaches its obligations hereunder and Seller has
performed all of its obligations hereunder, then as Seller's sole and absolute
remedy, Seller shall be entitled to the ▇▇▇▇▇▇▇ Money Deposit (and all interest
earned thereon) as liquidated damages and not as a penalty. In the event Seller
receives the ▇▇▇▇▇▇▇ Money Deposit in accordance with the immediately preceding
sentence, then this Agreement shall thereafter terminate and neither party shall
have any further liability to the other.
Buyer and Seller shall divide equally any charges imposed by the Escrow Agent.
Buyer and Seller further agree to indemnify and hold the Escrow Agent harmless
from and against any loss or damage suffered or incurred by Escrow Agent in
connection with the Escrow Agent's performance of services hereunder as long as
the Escrow Agent abides by the terms of this Agreement. Escrow Agent shall be
entitled to rely on written instructions from any party hereto and shall not be
required
24
to inquire into or investigate the authenticity of any signatures on any
documents delivered to the Escrow Agent by any party hereto.
If the Escrow Agent intends to distribute funds in accordance with the terms of
this Agreement, it shall give written notice of same to Buyer and to Seller's
Representative identified in Section 20 hereof. If Buyer or Seller's
Representative objects to the proposed distribution at any time within ten (10)
business days of the date written notice (delivered in the same manner as
required under Section 20 above) is given, then Escrow Agent shall refrain from
making the distribution until the matter can be resolved. Any such objections
must be in writing and must be delivered to Escrow Agent (by telefax or
otherwise) on or before the end of the tenth business day following the date
such written notice is given by Escrow Agent. If no such objection is given,
then Escrow Agent shall be free to make the distribution in accordance with the
written notice of intention it has given to Buyer and to Seller's
Representative. If written objection is delivered by either Buyer or Seller's
Representative, then Escrow Agent shall not deliver the ▇▇▇▇▇▇▇ Money Deposit to
either party until so directed by a court of competent jurisdiction or until it
has received written instructions as to the disposition of the ▇▇▇▇▇▇▇ Money
Deposit signed by Buyer and Seller's Representative.
If at any time a dispute is pending regarding disposition of the ▇▇▇▇▇▇▇ Money
Deposit, then Escrow Agent shall be entitled to initiate an interpleader action
or similar proceeding and shall be entitled to recover its costs in connection
therewith.
IN WITNESS WHEREOF, the parties hereto set their hands as of the day and year
first above written.
SELLER: BUYER:
1st Financial Bancshares, Inc. Brooke Bancshares, Inc.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------- --------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: ▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO Its: Vice President
25
SCHEDULE I
DISPUTE RESOLUTION
1. LEVEL 1 DISPUTE REVIEW. Upon the written request of either Seller or
Buyer, each shall appoint a designated representative whose task shall be to
meet the other's designated representative (by conference telephone call or in
person at a mutually agreeable site) in an endeavor to resolve any Dispute
("LEVEL 1 DISPUTE REVIEW"). The designated representatives shall meet as often
as the parties reasonably deem necessary to discuss the Dispute and negotiate in
good faith in an effort to resolve the Dispute without the necessary of any
formal proceeding.
2. ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. If resolution of the Dispute cannot be
resolved within the earlier of (a) 15 days of the first ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
meeting and (b) such time as when a Party gives the others notice of an impasse
("LEVEL 1 DISPUTE TERMINATION DATE"), an executive officer (or a functional
equivalent) of Seller and Purchaser shall meet (by conference telephone call or
in person at a mutually agreeable site) within 72 hours after the ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Date for the purpose of resolving such unresolved Dispute
("LEVEL 2 DISPUTE REVIEW").
3. SUBMISSION OF DISPUTE TO MEDIATION. If the Parties are unable to
resolve the Dispute within a reasonable period after commencement of the ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, either of the Parties may give the other notice of the existence
of a continuing impasse (the date on which the other party is in receipt of such
notice, the "LEVEL 2 DISPUTE TERMINATION DATE") and may thereafter submit the
Dispute to mediation in accordance with the Commercial Mediation Rules of the
American Arbitration Association ("AAA"). The Parties shall bear equally the
costs of the mediation. The Parties will act in good faith to jointly appoint a
mutually acceptable mediator, seeking assistance in such regard from the AAA
within 15 days of the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. The Parties agree to participate
in good faith in the mediation and negotiations related thereto for a period of
30 days commencing with the selection of the mediator and any extension of such
period as mutually agreed to by the Parties.
4. ARBITRATION.
(a) If the Parties cannot agree to a mediator within 15 days of the
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Date or if the Dispute is not resolved within
30 days after the beginning of the mediation and any extension of such
periods as mutually agreed to by the Parties, the Dispute shall be
submitted to, and finally determined by, binding arbitration in accordance
with the following provisions of this Schedule, regardless of the amount in
controversy or whether such Dispute would otherwise be considered
justifiable or ripe for resolution by a court or arbitration panel.
(b) Any such arbitration shall be conducted by the AAA in accordance
with its current Commercial Arbitration Rules (the "AAA RULES"), except to
the extent that the AAA
26
Rules conflict with the provisions of this Schedule, in which event the
provisions of this Schedule shall control.
(c) The arbitration shall be conducted by one (1) arbitrator (the
"Arbitrator") who shall be an attorney having five or more years experience
in the primary area of law as to which the Dispute relates. The Arbitrator
shall be chosen in accordance with the AAA Rules (the "BASIC
QUALIFICATIONS").
(d) The arbitration shall be conducted in Kansas City, Missouri;
provided that the Arbitrator may from time to time convene, carry on
hearings, inspect property or documents and take evidence at any location
that the Arbitrator deems appropriate.
(e) The Arbitrator may in its discretion order a pre-exchange of
information including production of documents, exchange of summaries of
testimony or exchange of statements of position and shall schedule promptly
all discovery and other procedural steps and otherwise assume case
management initiative and control to effect an efficient and expeditious
resolution of the Dispute.
(f) At any oral hearing of evidence in connection with any
arbitration conducted pursuant to this Schedule, each Party and its legal
counsel shall have the right to examine its witnesses and to cross-examine
the witnesses of the other Parties. No testimony of any witness shall be
presented in written form unless the opposing Party or Parties shall have
the opportunity to cross-examine such witness, except as the Parties
otherwise agree in writing and except under extraordinary circumstances in
which, in the opinion of the Arbitrator, the interests of justice require a
different procedure.
(g) Within 15 days after the closing of the arbitration hearing, the
Arbitrator shall prepare and distribute to the Parties a written award. The
Arbitrator shall have the authority to award any remedy or relief that a
court of competent jurisdiction could order or grant and shall award
interest on any monetary award from the date that the loss or expense was
incurred by the successful Party. In addition, the Arbitrator shall have
the authority to decide issues relating to the interpretation, meaning or
performance of this Agreement, any agreement, certificate or other document
referred to herein or delivered in connection herewith, or the
relationships of the Parties hereunder or thereunder, even if such decision
would constitute an advisory opinion in a court proceeding or if the issues
would otherwise not be ripe for resolution in a court proceeding, and any
such decision shall bind the parties in their performance of this Agreement
and such other documents.
(h) Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, to obtain interim
relief, or as otherwise required by law no Party nor the Arbitrator shall
disclose the existence, content or results of any arbitration conducted
hereunder without the prior written consent of the other Parties.
27
(i) To the extent that the relief or remedy granted in an award
rendered by the Arbitrator is relief or a remedy on which a court could
enter judgment, a judgment upon the award rendered by the Arbitrator may be
entered in any court having jurisdiction thereof. Otherwise, the award
shall be binding on the parties in connection with their obligations under
this Agreement and in any subsequent arbitration or judicial proceedings
among any of the Parties.
(j) The Parties agree to share equally the cost of any arbitration,
including the administrative fee, the compensation of the arbitrators and
the costs of any neutral witnesses or proof produced at the direct request
of the Arbitrator.
(k) Notwithstanding the choice of law provision set forth in Section
17(a), The Federal Arbitration Act, 9 U.S.C. Sections 1 to 14, except as
modified hereby, shall govern the enforcement of Section 17(a) and this
Schedule.
5. RECOURSE TO COURTS AND OTHER REMEDIES. Notwithstanding the Dispute
resolution procedures contained in this Schedule, any Party may apply to any
court having jurisdiction (a) to enforce this Agreement to arbitrate, (b) to
seek injunctive relief so as to maintain the status quo until the arbitration
award is rendered or the Dispute is otherwise resolved, (c) to avoid the
expiration of any applicable limitation period, or (d) to preserve a superior
position with respect to other creditors.
6. ATTORNEYS' FEES. If any action, suit, or proceeding is commenced to
establish, maintain or enforce any right or remedy under this Agreement, the
Party or Parties not prevailing therein shall pay, in addition to any damages or
other award, all reasonable attorneys' fees and litigation expenses incurred
therein by the prevailing Party.
28
EXHIBIT A
TO STOCK PURCHASE AGREEMENT
All loan participations of the Bank.
DISCLOSURE SCHEDULE
This Disclosure Schedule, and attached exhibits, constitutes additional
disclosures and/or exceptions to the representations, warranties, covenants,
indemnifications and agreements of 1st Financial Bancshares, Inc. ("SELLER")
made in that certain Stock Purchase Agreement dated the _____ day of February,
2002 (the "AGREEMENT") with Brooke Bancshares, Inc. ("BUYER"). For convenience
and to avoid repetition, each disclosure or exception has been listed on a
separate page under the corresponding section of the Agreement to which it is
most applicable, but each disclosure or exception shall also be deemed to apply
to any relevant representation, warranty, covenant or agreement contained in any
other section of the Agreement. This Disclosure Schedule is for the information
of Buyer only, and is not deemed any admission by Seller or its directors or
shareholders that any of them has failed to comply with any applicable law,
regulation or agreement disclosed herein. Buyer hereby agrees to execute an
officer's certificate acknowledging whether Seller has delivered or made
available for Buyer's inspection all documentation referred to in any part of
this Disclosure Schedule (pursuant to due diligence provisions set forth in the
Agreement). Further, Buyer acknowledges and agrees that, except as otherwise
agreed to by Sellers in the Agreement or as expressly noted in this Disclosure
Schedule, Sellers shall have no liability whatsoever to Buyer under the
Agreement for matters set forth in this Disclosure Schedule and for any
representations or warranties made or related to matters on or before the Seller
Acquisition Date (as defined in the Agreement). Seller acknowledges and agrees
that it has a continuing obligation to update and modify this Disclosure
Schedule to disclose matters arising after the execution of the Agreement but
before the Closing Date.
SECTION 7(z)
BENEFIT PLANS
Centerville State Bank ("CENTERVILLE") was a participating employer in the
C.S.I. Pension Plan & Trust (the "PLAN"), a defined benefit multiple employer
plan, until October 15, 2000. The plan administrator of the Plan is Kansas
Agencies & Investments, Inc. The trustees are M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
Generally, before a defined benefit plan can be terminated, all accrued
benefits must be fully funded. Such plans must follow a very specific procedure
for termination, including making a submission to the Pension Benefit Guaranty
Corporation requesting approval for the termination. If there is a funding
deficit at the time of termination, all sponsors of the terminating plan are
jointly and severally liable for the deficit. On September 30, 2001, on behalf
of the Plan, ▇▇▇▇▇▇, Perky & ▇▇▇▇▇▇, L.L.C. ("▇▇▇▇▇▇ PERKY") filed a request for
a determination letter to terminate the Plan. The IRS and PBGC have not yet
issued said determination letter.
Four Centerville employees have accrued benefits in the Plan. Effective
October 16, 2000, Centerville ceased to be a participating employer in the Plan
and all future benefit accruals with respect to the four Centerville
participants stopped. All necessary action was taken and all required notices
were given in connection with Centerville's withdrawal as a participating
employer. However, at the time of the withdrawal, there was a funding deficit
with respect to the four Centerville participants, the amount of which was
undetermined.
On February 6, 2001, Seller purchased Centerville in a stock transaction.
As part of the transaction, Seller agreed to pay Centerville's portion of the
funding deficit up to a maximum of $50,000. Two of Centerville's former
principal stockholders, M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
D-2
▇▇▇▇▇▇▇, signed an Indemnity Agreement whereby they agreed to indemnify Seller
for any amount it is required to pay in excess of $50,000 in connection with the
funding deficit. Although submissions have been made to the IRS and PBGC in
connection with the Plan termination, the Plan's advisors have not been able to
provide Seller with a definite amount of the underfunding liability associated
with the Centerville employees. However, an estimate of $42,440 for
Centerville's portion of the funding deficit has been calculated. Seller has
also been advised that the final termination of the Plan (and determination of
underfunding liability for the Centerville employees), is anticipated on or
about March, 2002.
In connection with the Agreement, Seller hereby agrees to pay up to $50,000
of any underfunding liability associated with the Centerville employees who are
or were part of the Plan. Except for a separate written Agreement between
Seller and Buyer with respect to said underfunding liability, Seller shall have
no other liability whatsoever with respect to the funding of the Plan.
D-3
AGREEMENT
THIS AGREEMENT is dated as of this 22nd day of February, 2002, by and
between 1st Financial Bancshares, Inc., a Kansas corporation ("SELLER") and
Brooke Bancshares, Inc., a Kansas corporation ("BUYER").
WHEREAS, Buyer and Seller have entered into that certain Stock Purchase
Agreement ("the STOCK PURCHASE AGREEMENT") dated the 22nd day of February, 2002,
pursuant to which Buyer will purchase all the issued and outstanding capital
stock of Centerville State Bank ("CENTERVILLE BANK").
WHEREAS, Seller and M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇") (▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ herein collectively
referred to as "INDEMNITOR") are parties to that certain Indemnity Agreement
dated as of February 6, 2001 (the "ORIGINAL INDEMNITY AGREEMENT"), pursuant to
which Indemnitor have agreed to indemnify Seller for "Indemnifying Losses" as
the term is defined therein.
WHEREAS, subject to the terms and conditions herein contained, Seller has
agreed to indemnify Buyer with respect to Indemnifying Losses which Seller
recovers under the Original Indemnity Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and in the Stock Purchase Agreement, and other good and
valuable consideration, the receipt of which is hereby acknowledge by the
parties hereto, Seller and Buyer agree as follows:
1. DEFINITIONS. To the extent not expressly defined herein, all
capitalized terms have the meanings ascribed to them in the Original Indemnity
Agreement.
2. PROSECUTION OF INDEMNITY CLAIMS. In the event a claim for Indemnifying
Losses arises under the Original Indemnity Agreement, Seller hereby agrees to
utilize its best efforts to prosecute enforcement of its rights thereunder, and
Seller shall diligently seek collection of all amounts due under the Original
Indemnity Agreement from Indemnitor. If Buyer, in its reasonable discretion, is
not satisfied with the manner in which Seller is prosecuting the claim for
Indemnifying Losses under the Original Indemnity Agreement, Buyer may deliver
written demand to Seller to promptly assign to Buyer a non exclusive right to
enforce such agreement. If it is alleged by any person that this assignment
renders any such agreement unenforceable, then the assignment of the right to
enforce the agreement set forth in this paragraph shall be rendered void. In
such event and upon Buyer's request and at Buyer's expense, Seller shall act as
a nominal plaintiff in an action to enforce such Agreement. Seller will provide
to Buyer a copy of the Original Indemnity Agreement within ten (10) days from
the date of this Agreement.
3. RECOVERY OF INDEMNIFYING LOSSES. To the extent Indemnitor shall make
any payment for Indemnifying Losses to Seller (herein, the "RECOVERY AMOUNTS"),
Seller hereby agrees to
endorse, transfer and assign to Buyer said Recovery Amounts within five (5) days
from the date of Seller's receipt of said funds from Indemnitor.
4. DURATION OF AGREEMENT. This Agreement shall become effective
automatically and without further action by Buyer or Seller, upon the Closing
(as defined in the Stock Purchase Agreement) of the transactions contemplated by
the Stock Purchase Agreement. In the event that the Closing does not occur, this
Agreement shall be deemed null and void. Furthermore, after the Closing, this
Agreement shall automatically terminate, without notice or demand, on the 6th
day of February, 2003 (the "TERMINATION DATE"). Any action, lawsuit or other
proceeding by Buyer to enforce any of the terms, conditions, obligations or
rights under this Agreement must be commenced on or before the Termination Date.
5. NOTICES. Seller shall, promptly after obtaining knowledge thereof,
advise Buyer in writing of the existence of any funding deficiency that gives
rise to a claim for Indemnifying Losses under the Original Indemnity Agreement.
As a condition precedent to any liability of Seller under this Agreement, Buyer
shall promptly, and in any case not more than ten (10) business days after
obtaining knowledge, advise Seller in writing of the existence of a funding
deficiency that gives rise to a claim for Indemnifying Losses under the Original
Indemnity Agreement.
6. PAYMENT OF EXPENSES. In the event of litigation between the parties
arising from this Agreement, the prevailing party or parties shall be entitled
to their reasonable attorneys fees and expenses incurred in pursuing or
defending such litigation.
7. NOTICES. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been fully
given if delivered in the manner required by the Stock Purchase Agreement.
8. ASSIGNMENT. This Agreement and the rights and obligations of any party
hereunder are not assignable by any of the parties hereto without the written
consent of the other parties.
9. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their permitted assigns.
10. ENTIRE AGREEMENT. This Agreement, and the applicable provisions of the
Stock Purchase Agreement, contains the entire agreement among the parties with
respect to the transactions contemplated herein.
11. AMENDMENT. No alteration, modification or change of this Agreement
shall be valid unless made in writing executed by the parties hereto.
12. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
13. GOVERNING LAW. The validity of this Agreement, the terms hereof, and
all duties, obligations and rights arising therefrom, shall be governed by and
interpreted in accordance with the laws and decisions of the State of Kansas, as
applicable to contracts made and to be performed in that State without reference
or regard to conflicts of laws principles.
14. ARBITRATION. The parties expressly agree to the arbitration provisions
contained in the Stock Purchase Agreement.
15. RECITALS/PREAMBLE. The preamble and recitals to this Agreement are
hereby incorporated by reference and made a part hereof.
16. FACSIMILE SIGNATURES. The parties hereby agree that, for purposes of
the execution of this Agreement, facsimile signatures shall constitute original
signatures.
17. SEVERABILITY. If any clause, provision or section of this Agreement is
held illegal or invalid by any court, the invalidity of such clause, provision
or section shall not affect any of the remaining clauses, provisions or sections
hereof, and this Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or section had not been contained herein.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by the different parties hereto on separate counterparts, each
of which shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
1st FINANCIAL BANCSHARES, INC.,
a Kansas corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
Chairman and C.E.O.
BROOKE BANCSHARES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇,
Vice President
ESCROW AGREEMENT
AGREEMENT this 22nd day of February 2002, by and among 1st Financial Bancshares,
Inc. (Seller) and First Community Bank, ▇▇▇'▇ Summit, Missouri (Escrow Agent),
and Brooke Bancshares, Inc. (Buyer).
Seller and Buyer have simultaneously with the execution of this Agreement
entered into a Stock Purchase Agreement (Agreement) by which Seller conveys to
Buyer all of Seller's shares of stock in Centerville State Bank, Centerville,
Kansas for the Formula Price as defined in the Agreement. The closing will take
place on or before the date set forth in the Agreement but no later than June
30, 2002, unless Buyer and Seller mutually agree in writing to extend the
closing date beyond June 30, 2002. Such closing shall take place at 1st
Financial Bank, Overland Perk, Kansas or at such other place as Seller and Buyer
may jointly designate in writing.
In accordance with the Agreement, Buyer must deposit $25,000 by cashier's check
or electronically wired funds. Such amount will be considered and referred to as
the "▇▇▇▇▇▇▇ Money Deposit." The $25,000 ▇▇▇▇▇▇▇ money deposit has been paid to
Escrow Agent by Buyer. Escrow Agent acknowledges receipt of same from Buyer by
cashier's check or electronically wired funds.
If the closing takes place under the Agreement, Escrow Agent at the time of
closing shall pay the amount deposited with Escrow Agent plus all interest
earned thereon to Buyer. If no closing takes place under the Agreement, Escrow
Agent shall continue to hold the ▇▇▇▇▇▇▇ money deposit until receipt of written
authorization for its deposition signed by Buyer or Seller. If Escrow Agent
intends to distribute funds based upon such instruction, Escrow Agent shall give
written notice of its intent to Buyer and Seller. If Buyer or Seller objects to
the proposed distribution at any time with ten business days of the date written
notice is given, then Escrow Agent shall refrain from making the distribution
until the matter can be resolved. Any such objections must be in writing and
must be delivered to Escrow Agent by telefax or otherwise on or before the end
of the tenth business day following the date such written notice is given by
Escrow Agent. If no such objection is given, then Escrow Agents shall be free to
make the distribution in accordance with the written notice of intention it has
given to Buyer and to Seller. If written objection is delivered by either Buyer
or Seller, then Escrow agent shall not deliver the ▇▇▇▇▇▇▇ money deposit to
either party until the parties' rights are finally determined in an appropriate
action or proceeding or until a court or arbitrator orders Escrow Agent to
deposit the down payment with it. If Escrow Agent does not receive a proper
written authorization from Seller or Buyer, or if an action or proceeding to
determine Seller's and Buyer's rights is not begun or diligently prosecuted,
Escrow Agent is under no obligation to bring an action or proceeding in court to
deposit the sum held, but may continue to hold the deposit or may initiate an
interpleader action or similar proceeding and shall be entitled to recover its
costs in connection therewith.
Escrow Agent shall be entitled to a fee of $400 which shall be evenly divided
between Seller and Buyer. Escrow Agent assumes no liability except that of a
stakeholder. Escrow Agent's duties are limited to those specifically set out in
this Agreement. Escrow Agent shall incur no liability to anyone except for
willful misconduct or gross negligence so long as the Escrow Agent acts in good
faith. Seller and Buyer release Escrow Agent from any act done or omitted in
good faith in the performance of Escrow Agent's duties.
Executed the date above written.
SELLER: BUYER:
1st Financial Bancshares, Inc. Brooke Bancshares, Inc.
/s/ [ILLEGIBLE] /s/[ILLEGIBLE]
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By: By:
Its: Its:
ESCROW AGENT:
First Community Bank
/s/ [ILLEGIBLE]
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By: [ILLEGIBLE]
Its: