Exhibit 10.14

 

AGREEMENT FOR

PURCHASE OF SELECTED ASSETS

AND ASSUMPTION OF CERTAIN LIABILITIES

OF THE SAC CITY, ODEBOLT AND LAKE VIEW OFFICES OF METABANK

 

THIS AGREEMENT, dated as of January 31, 2007, by and between MetaBank, a
financial institution chartered under the laws of the United States, having its
principal place of business in Storm Lake, Iowa (the “Seller”), and Iowa State
Bank, a financial institution chartered under the laws of the State of Iowa,
presently having its principal place of business in Sac City, Iowa (the
“Buyer”).

 

WITNESSETH:

 

WHEREAS, Seller wishes to divest, upon the terms and conditions set forth
herein, certain assets and certain liabilities of its offices (the “Offices”)
located at Sac City, Odebolt and Lake View, Iowa; and

 

WHEREAS, Buyer wishes to buy such assets and assume such liabilities upon the
terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, Seller and Buyer agree as follows:

 

ARTICLE I

TRANSFER OF ASSETS AND LIABILITIES

 

Section 1.1.            Transfer of Assets.

 

(a)           As of the Effective Date (as defined in Section 2.1 below) and
upon the terms and conditions set forth herein, Seller will sell, assign,
transfer, convey and deliver to Buyer, and Buyer will purchase from Seller, all
of the following assets associated with the Offices and identified in this
Agreement and the Exhibits hereto, and not otherwise excluded from sale pursuant
to the provisions of Subsection 1.1(b) below (herein the “Assets”):

 

(1)           All real estate as set forth on Exhibit 1.1(a)(1), and any
improvements and fixtures thereon;

 

(2)           All furniture, equipment and other miscellaneous personal
property;

 

(3)           Loans (as defined below) transferred pursuant to Section 1.4;

 

(4)           All customer lists, customer histories and marketing information
pertaining to the Offices;

 

(5)           All property records, warranty information, manuals and other
information such as maintenance records;

 

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(6)           All loan files, loan records and other credit information
concerning the customers of the Offices whose loans are acquired by Buyer and
all records and files regarding the Assumed Liabilities (as defined below); and,

 

(7)                                  Cash on hand.

 

(b)           Excluded from the assets, properties and rights being transferred,
conveyed and assigned to Buyer under this Agreement are the assets listed on
Exhibit 1.1(b) hereto.  These excluded assets include Seller’s corporate logos,
trademarks, trade names, signs, paper stock, forms and other supplies containing
any such logos, trademarks or trade name (the “Excluded Assets”).  Seller shall
coordinate with the Buyer the removal of the Excluded Assets from the Offices on
or prior to the Effective Date.  Seller shall remove the Excluded Assets at its
own cost and shall make any repairs necessitated by Seller’s negligence in
removing the Excluded Assets.

 

Section 1.2.            Purchase Price.

 

(a)           As consideration for the purchase of the Assets and assumption of
the Assumed Liabilities, as defined in Section 1.2(b) hereof, Buyer shall pay to
Seller a purchase price equal to the sum of the following:

 

(1)           $2,460,000.00 for assets listed in Section 1.1(a)(1,2,4,5 and 6);

 

(2)           The Par Value (Principal and Accrued Interest to Effective Date),
of the Loans to be purchased as set forth in Section 1.4 hereof; and,

 

(3)                                  Cash on hand at par.

 

(b)           In addition to the payment of the purchase price under
Section 1.2(a) above, Buyer shall assume, as of the Effective Date, and the
Deposit Liabilities (collectively the “Assumed Liabilities”); provided, that any
cash items paid by Seller and not cleared prior to the Effective Date shall be
the responsibility of Seller, subject to the terms of Section 1.3 below.

 

(c)           Except for the Assumed Liabilities, Buyer is not assuming any
liabilities or obligations of any kind or nature.  Liabilities and obligations
not assumed include, but are not limited to, the following:

 

(1)           Seller’s cashier checks, letters of credit, money orders, interest
checks and expense checks issued prior to the Closing, consignments of U.S.
Government “E” and “EE” bonds and any and all traveler’s checks; or

 

(2)           Deposit accounts associated with qualified retirement plans (other
than IRA accounts and burial trusts which Buyer will assume) where Seller is the
trustee of such plan or the sponsor of a prototype plan used by such plan; or

 

(3)           Liabilities and/or obligations arising out of or related to the
employment of any Employee by Seller; or

 

(4)           General tort liabilities; or

 

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(5)           Liabilities and/or obligations and/or losses arising out of events
occurring or circumstances existing on or prior to the Effective Date, whether
or not such events or circumstances would be a covered risk or loss under any of
Seller’s errors and omissions insurance policies, directors’ and officers’
policies, worker’s compensation and employer’s liability policies, automobile
policies, general liability or casualty insurance policies, commercial general
liability insurance policies, umbrella and excess liability insurance policies,
banker’s blanket bond(s) and/or other fidelity bonds.

 

(d)           Seller shall prepare a balance sheet (the “Pre-Closing Balance
Sheet” which is also the Closing Statement referred to in Section 2.2(b)(13)
below) in accordance with generally accepted accounting principles as of a date
not earlier than three (3) business days prior to the Effective Date (the
“Pre-Closing Balance Sheet Date”) reflecting the assets to be sold and assigned
hereunder (as set forth in Section 1.2(a) hereof) and the liabilities to be
transferred and assumed hereunder.  Seller agrees to pay to Buyer at the Closing
(as defined in Section 2.1 hereof), in immediately available funds in the amount
due, as reflected by the Pre-Closing Balance Sheet.  Amounts paid at Closing for
the Loans purchased and the amount of assumed liabilities shall be subject to
subsequent adjustment on the Post-Closing Balance Sheet (as defined in
Section 2.3 hereof and which is also the Final Closing Statement).

 

Section 1.3.            Liabilities.

 

(a)           “Deposit Liabilities” shall mean all of Seller’s duties,
obligations, liabilities (including accrued interest) relating to the deposit
accounts, including, without limitation, all demand, time, savings and
individual retirement accounts, located at the Offices as of the Effective Date,
as listed as deposits in Exhibit 1.3(a), with the exception of those
specifically not assumed by Buyer pursuant to Section 1.2(c).

 

(b)           Buyer agrees to pay in accordance with law and customary banking
practices all properly drawn and presented checks, drafts and withdrawal orders
presented to Buyer by mail, over the counter or through the check clearing
system of the banking industry, by depositors of the accounts assumed, whether
drawn on the checks, withdrawal or draft forms provided by Seller or by Buyer,
and in all other respects to discharge, in the usual course of the banking
business, the duties and obligation of Seller with respect to the balances due
and owing to the depositors whose accounts are assumed by Buyer.

 

(c)           If, after the Effective Date, any depositor, instead of accepting
the obligation of Buyer to pay the Deposit Liabilities assumed, shall demand
payment from Seller for all or any part of any such assumed Deposit Liabilities,
Seller shall not be liable or responsible for making such payment.  Seller and
Buyer shall make arrangements to provide for the daily settlement with
immediately available funds by Buyer of checks, drafts, withdrawal orders,
returns and other items presented to and paid by Seller within sixty (60) days
after the Effective Date and drawn on or chargeable to accounts that have been
assumed by Buyer.

 

(d)           Buyer may (i) assign new account numbers to depositors of assumed
accounts, if needed, in the sole discretion of Buyer, (ii) notify such
depositors, on or before the Effective

 

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Date, in a form and on a date mutually acceptable to Seller and Buyer, of
Buyer’s assumption of Deposit Liabilities, and (iii) furnish such depositors
with checks on the forms of Buyer and with instructions to utilize Buyer’s
checks and destroy unused check, draft and withdrawal order forms of Seller. In
addition, Seller will notify its affected customers by letter of the pending
assignment of Seller’s deposit accounts to Buyer, which notice shall be at
Seller’s cost and expense and shall be in a form mutually agreeable to Seller
and Buyer.

 

(e)           Buyer shall pay promptly to Seller an amount equivalent to the
amount of any checks, drafts or withdrawal orders credited to an assumed account
as of the Effective Date that are returned to Seller after the Effective Date.

 

(f)            On or after the Effective Date, Buyer will assume and discharge
Seller’s duties and obligations in accordance with the terms and conditions and
laws, rules and regulation that apply to the certificates, accounts and other
Deposit Liabilities assumed under this Agreement.

 

(g)           On or after the Effective Date, Buyer will maintain and safeguard
in accordance with applicable law and sound banking practices all account
documents, deposit contracts, signature cards, deposit slips, canceled items and
other records related to the Deposit Liabilities assumed under this Agreement,
subject to Seller’s right of access to such records as provided in this
Agreement.

 

(h)           Seller will render a final statement to each depositor of a demand
or savings account assumed under this Agreement as to transactions occurring
through the Effective Date and will comply with all laws, rules and regulations
regarding tax reporting of transactions of such accounts through the Effective
Date.  Seller will not impose periodic fees or blanket charges in connection
with such final statements.

 

(i)            On or prior to the Effective Date, Buyer, at its expense, will
use its best efforts to notify all Automated Clearing House (“ACH”) originators
of the transfers and assumptions made pursuant to the Agreement, and Seller
shall furnish the required information.  For a period of ninety (90) days
beginning on the Effective Date, Seller will honor all ACH items related to
accounts assumed under this Agreement which are mistakenly routed or presented
to Seller.  During such ninety (90) days period, Buyer shall remit by wire
transfer on a daily basis the net amount of ACH items honored by Seller pursuant
to this Agreement.  Except as otherwise set forth in this Agreement, Seller will
make no additional charges to Buyer for honoring such items.  Items mistakenly
routed or presented after the ninety (90) day period will be returned to the
presenting party.

 

Section 1.4.            Loans Transferred.

 

(a)           Seller will transfer to Buyer on the Effective Date, subject to
the terms and conditions of this agreement, all of Seller’s right, title and
interest (including collateral relating thereto) in loans maintained, serviced
and listed in Seller’s general ledger as loans of the Offices (severally
referred to as “Loan” and collectively the “Loans”).  Notwithstanding the
foregoing, for purposes of this Agreement, the Loans shall include only those
Loans specifically identified by Buyer as Loans it will purchase.  In this
regard, it is understood Buyer shall have the right to purchase or exclude any
Loan or Loans previously identified as coded to the Seller’s Sac City,

 

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Odebolt and Lake View offices.  The purchased loans shall be listed on
Exhibit 1.4(a), shall be prepared by Buyer and furnished to Seller and affixed
to this Agreement as a part hereof within thirty (30) days following Seller’s
delivery to Buyer of complete loan information.

 

(b)           Buyer will become the beneficiary of credit life insurance and
property casualty insurance written on direct consumer installment loans. 
Contemporaneously with the Closing, Seller shall notify the appropriate
insurance companies of the transfer of Loans from Seller to Buyer and that Buyer
shall become the beneficiary of any insurance policies relating to the
transferred Loans and, as such, be entitled to all rights and privileges under
such policies following the Effective Date, including, without limitation, any
refunds paid after the Effective Date on such policies.

 

(c)           In connection with the transfer of any Loans requiring notice to
the borrower, Seller agrees to comply with all notice and reporting requirements
of the loan documents or any law or regulation.

 

(d)           All Loans transferred to Buyer shall be valued at their Par Value,
such value to include interest, through the Effective Date.

 

(e)           On or after the Effective Date, Buyer will be responsible for
maintaining and safeguarding all loan files, documents and records related to
the Loans in accordance with applicable law and sound banking practices.

 

(f)            If the balance due on any Loan purchased pursuant to this
Section 1.4 has been reduced by Seller as a result of a payment by check
received before the Effective Date, which item is returned on or after the
Effective Date, the asset value represented by the Loan transferred shall be
correspondingly increased and an amount in cash equal to such increase shall be
paid by Buyer to Seller promptly upon demand.

 

(g)           Seller shall remit loan payments it receives after closing on
loans purchased by the Buyer.

 

(h)           The standard “dragnet” provisions of security documents which
secure or are contained in other promissory notes made or held by Seller not
constituting the Loans being acquired by Buyer shall not have priority over
Buyer’s security interest in collateral for a Loan transferred to Buyer
hereunder.

 

Section 1.5.            Employee Matters.

 

(a)           Buyer may, but shall have no obligation to hire any employees of
the Offices.

 

(b)           Seller makes no representations or warranties about whether any of
the Employees will remain employed at the Offices after the Effective Date. 
Seller will use its best efforts to maintain the Employees as employees of
Seller at the Offices until the Effective Date.  Any Employee whose employment
shall be terminated for any reason prior to the Effective Date or who shall not
be selected by Buyer to become an employee of Buyer shall be dealt with by
Seller in its sole and absolute discretion.  Seller shall be responsible for
paying all federal, state

 

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and local income tax withholding, social security taxes and any other payroll
taxes applicable to the employment of Employees by Seller prior to the Effective
Date.  Seller agrees that, for a period of thirty-six (36) months after the
Effective Date, it will not solicit for employment (i) any Employee who becomes
employed by Buyer or (ii) any person known to Seller to have been employed by
Buyer and whose employment by Buyer has been terminated, either by the Employee
or by Buyer, without Buyer’s prior written permission.

 

(1)           At closing, Seller shall compensate Buyer for the accrued Paid
Time Off (vacation and floating holidays) for Employees retained by Buyer. 
Accrued Sick Time is not a part of accrued Paid Time Off.

 

(aa)         For those employees not retained by Buyer, Seller shall remain
responsible for the administration of the employees’ accrued Paid Time Off.

 

(c)           No Employee of the Offices is a third party beneficiary of this
Agreement and each Employee hired by Buyer shall be an employee at will.

 

(d)           Seller shall have the right, but not the obligation, to retain any
Employees not hired by Buyer.  Any Employees retained by Seller shall be subject
to the restrictions at Section 6.4.

 

Section 1.6.            Records and Data Processing.

 

(a)           On and after the Effective Date, Buyer shall become responsible
for maintaining the files, documents and records referred to in this Agreement. 
Buyer will preserve and safekeep them as required by applicable law and sound
banking practices for the joint benefit of Seller and Buyer.  After the
Effective Date, Buyer will permit Seller and its representatives, for reasonable
cause, at reasonable times and upon reasonable notice and at Seller’s expense,
to examine, inspect, copy and reproduce any such files, documents or records as
Seller deems reasonably necessary.

 

(b)           On or after the Effective Date, Seller will permit Buyer and its
representatives, for reasonable cause, at reasonable times and upon reasonable
notice and at Buyer’s expense, to examine, inspect, copy and reproduce files,
documents or record retained by Seller regarding the assets and liabilities
transferred under this agreement as Buyer deems reasonably necessary.

 

Section 1.7.            Security.

 

On and after the Effective Date, Buyer shall be solely responsible for the
security of and insurance on all persons and property located in or about the
Offices.

 

Section 1.8.            Taxes and Fees Proration of Certain Expenses: Allocation
Form 8594.

 

(a)           Buyer shall be responsible for the payment of all fees and taxes
related to this transaction; except that Buyer shall not be responsible for, or
have any liability with respect to, sales, transfer, income or similar taxes
arising out of this transaction, if any, and Seller agrees that it shall pay, or
represents that it has paid, in a timely manner any and all such taxes.  Buyer

 

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shall not be responsible for any income tax liability of Seller arising from the
business or operations of the Offices on or before the Effective Date, and
Seller shall not be responsible for any tax liabilities of Buyer arising from
the business or operations of the Offices on or after the Effective Date. 
Utility payments, telephone charges, real property taxes, personal property
taxes, rent, salaries, deposit insurance premiums, other ordinary operating
expenses of the Offices and other expenses related to the liabilities assumed or
assets purchased hereunder, including, without limitation, attorney’s fees,
costs and expenses incurred in connection with Litigation (as defined in
Section 4.10 below), shall be prorated between the parties as of the Effective
Date.  To the extent any such item has been prepaid by Seller for a period
extending beyond the Effective Date, there shall be a proportionate monetary
adjustment in favor of Seller, but only to the extent such prepayment benefits
Buyer.

 

(b)           Seller and Buyer shall allocate the total consideration paid
pursuant to this Agreement, including the deposit base intangible asset and
other identifiable intangible assets acquired by Buyer pursuant to this
Agreement, in accordance with Section 1060 of the Internal Revenue Code of 1986,
as amended.  Accordingly, within one hundred twenty (120) days after the
Closing, Buyer shall provide Seller copies of the Form 8594 and any required
exhibits thereto (the “Asset Acquisition Statement”) setting forth the
allocation of the total consideration.  Within twenty (20) days after receipt of
the Asset Acquisition Statement (or any proposed revision thereof required to
report any updated information), Seller shall propose any changes to Buyer or
shall indicate its concurrence with the Asset Acquisition Statement which
concurrence shall not be unreasonably withheld.  Seller and Buyer shall endeavor
in good faith to resolve any differences within twenty (20) days after Buyer’s
receipt of Seller’s notice of any proposed changes.  The parties agree to file
the Asset Acquisition Statement with their respective federal tax returns in
accordance with the instructions to Form 8594.

 

Section 1.9.            Real Property.

 

(a)           Seller shall deliver to Buyer as soon as reasonably possible after
the execution of this Agreement an updated abstracts of title as to the Real
Properties.

 

(b)           Buyer shall notify Seller in writing within forty-five (45) days
after Buyer’s receipt of the updated abstract of any mortgages, pledges,
material liens, encumbrances, restrictions, reservations, tenancies,
encroachments, overlaps or other title exceptions or zoning or similar land use
violations relating to the Real Properties to which Buyer reasonably objects
(the “Title Defects”).  Buyer agrees that Title Defects shall not include real
property taxes not yet due and payable and easements and rights of way which do
not materially interfere with the use of the Real Properties as Offices.  Seller
shall make a good faith effort to correct any such Title Defect to Buyer’s
reasonable satisfaction at least thirty (30) days prior to the Closing;
provided, however, that Seller shall not be obligated to bring any lawsuit or
make any payment of money (except to pay liens that Seller does not dispute in
good faith) to cure a Title Defect.  If Seller is unable to cure any such Title
Defect to Buyer’s reasonable satisfaction, Buyer shall have the option either to
(i) terminate this Agreement in accordance with Article X of this Agreement, or
(ii) receive title in its then existing condition.

 

(c)           Buyer shall have the right to update the title matters at Closing
for any change which may have arisen after the date of Buyer’s original title
search.  If such update indicates any

 

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new Title Defects, Seller may elect to delay the Closing for up to thirty (30)
days while it makes a good faith effort to cure any such Title Defect to Buyer’s
reasonable satisfaction; provided that Seller shall not be obligated to bring
any lawsuit or make any payment of money (except to pay liens that Seller does
not dispute in good faith) to cure a Title Defect.  If Seller is unable to cure
any such Title Defect within the thirty (30) day period, Buyer shall have the
option either (i) terminate this Agreement in accordance with the provisions of
Article X of this Agreement, or (ii) receive title in its then existing
condition.

 

ARTICLE II

CLOSING AND EFFECTIVE DATE

 

Section 2.1.            Dates.

 

The purchase of assets and assumption of liabilities provided for in this
Agreement shall occur at a closing (the “Closing”) on March 31, 2007 at a time
and place mutually agreed upon by the parties (the “Closing Date”) so long as
this date follows the receipt of all requisite regulatory approvals and the
expiration of all waiting periods imposed by law or by rule, regulation or order
of any regulatory authority (“Regulatory Prerequisites”).  If Regulatory
Prerequisites do not allow the Closing Date to be March 31, 2007, then the
Closing Date shall be on a day mutually agreeable to the parties, but in no
event later than June 30, 2007.  The parties may agree on an earlier Closing
Date if permitted by the satisfaction of the Regulatory Prerequisites.  The
effective date of this Agreement (the “Effective Date”) shall be 6:00 p.m. local
time on the business day on which the Closing occurs.

 

Section 2.2.            Closing.

 

(a)           All actions taken and documents delivered at the Closing shall be
deemed to have been taken and executed simultaneously, and no action shall be
deemed taken nor any document delivered until all have been taken and delivered.

 

(b)           At the Closing, subject to all the terms and conditions of this
Agreement, Seller shall deliver to Buyer, or, in the case of subsections (b)(5),
(6) and (8), make reasonably available to Buyer at the Offices:

 

(1)           A Corporate Warranty Deed transferring title to the Real
Properties, fixtures and improvements to Buyer;

 

(2)           A limited warranty Bill of Sale, in substantially the form
attached hereto as Exhibit 2.2(b)(2) (the “Bill of Sale”), transferring to Buyer
all of Seller’s interest in the Loans selected by Buyer and other personal
property comprising the Assets;

 

(3)           An Assignment and Assumption Agreement, in substantially the form
attached hereto as Exhibit 2.2(b)(3) (the “Assignment and Assumption
Agreement”), assigning Seller’s interest in the Deposit Liabilities;

 

(4)           Consents from third persons that are required, if any, to effect
the assignments set forth in the Assignment and Assumption Agreement;

 

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(5)           Seller’s files and records relating to and evidencing the Loans;

 

(6)           Seller’s records related to the Deposit Liabilities assumed by the
Buyer, including any stop payment orders and ACH records;

 

(7)           Immediately available funds in the net amount shown as owing to
Buyer by Seller on the Closing Statement;

 

(8)           Such other assets to be purchased as shall be capable of physical
delivery;

 

(9)           A certificate of a proper officer of Seller, dated the Effective
Date, certifying to fulfillment of all conditions which are the obligation of
Seller and that all of the representations and warranties of Seller set forth in
this agreement remain true and correct in all material respects on the Effective
Date;

 

(10)         Certified copies of (A) Federal stock charter and Bylaws of Seller
and (B) a resolution of the Board of Directors of Seller, or its Executive
Committee, approving the sale of the Offices contemplated hereby;

 

(11)         Such certificates and other documents as Buyer and its counsel may
reasonably require to evidence the receipt by Seller of all necessary corporate
and regulatory authorizations and approvals for the consummation of the
transactions provided for in this Agreement;

 

(12)         Such other documents, instruments and agreements necessary to
transfer and assign to Buyer all Loans, including, without limitation, all
promissory notes duly endorsed and assignments of mortgages, security
agreements, financing statements, guarantees and other collateral documents in
form and content reasonably satisfactory to Buyer; and

 

(13)         A Closing Statement (which shall be the Pre-Closing Balance Sheet),
substantially in the form attached hereto as Exhibit 2.2(b)(13) (the “Closing
Statement”).

 

(c)           At the Closing, subject to all the terms and conditions of this
Agreement, Buyer shall deliver to Seller:

 

(1)           The Assignment and Assumption Agreement;

 

(2)           A certificate and receipt acknowledging the delivery and receipt
of possession of the property and records referred to in this Agreement;

 

(3)           A certificate of a proper officer of the Buyer, dated the
Effective Date, certifying to the fulfillment of all conditions which are the
obligations of Buyer and that all of the representations and warranties of Buyer
set forth in this Agreement remain true and correct in all material respects in
the Effective Date;

 

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(4)           Certified copies of (A) the Articles of Incorporation and Bylaws
of Buyer and (B) a resolution of the Board of Directors of Buyer, or its
Executive Committee, approving the purchase of the Offices contemplated hereby;

 

(5)           Such certificates and other documents as Seller and its counsel
may reasonably require to evidence the receipt by Buyer of all necessary
corporate and regulatory authorizations and approvals for the consummation of
the transactions provided for in this Agreement; and,

 

(6)           The Closing Statement.

 

(d)           Seller shall prepare at its expense and deliver to Buyer records
in Seller’s field format as of the Effective Date, which records shall contain
the information related to the items described in subsections (b)(5) and (b)(6) 
above.  Such records shall be delivered thirty (30) days prior to Closing, or at
such other date as agreed to by the parties.

 

(e)           All agreements and certificates described in this Section 2.2
shall be in form and substance reasonable satisfactory to the parties’
respective legal counsel.

 

Section 2.3.            Post-Closing Adjustments.

 

(a)           Not later than fifteen (15) business days after the Effective Date
(the “Post-Closing Balance Sheet Delivery Date”), Seller shall deliver to Buyer
a balance sheet dated as of the Effective Date reflecting the assets sold and
assigned hereunder as set forth in Section 1.2(a), and the liabilities
transferred and assumed hereunder prepared in accordance with generally accepted
accounting principles (the “Post-Closing Balance Sheet” or “Final Closing
Statement”) substantially in the form attached hereto as Exhibit 2.3(a). 
Additionally, Seller shall deliver to Buyer a list of the Loans purchased,
individually identified by account number, which list shall be appended to the
Bill of Sale.  Seller shall afford Buyer and its accountants and attorneys the
opportunity to review all work papers and documents used by Seller in preparing
the Post-Closing Balance Sheet.  Within fifteen (15) business days following the
Post-Closing Balance Sheet Delivery Date (the “Adjustment Payment Date”), Seller
or Buyer, as the case may be, shall effect the offer of any funds as may be
necessary to reflect changes in the Par Value of the Loans Purchased or the
Assumed Liabilities between the Closing Balance Sheet and the Post-Closing
Balance Sheet together with interest thereon computed from the Effective Date to
the Adjustment Payment Date at the applicable Interest Rate (as hereinafter
defined).

 

(b)           In the event that a dispute arises as to the appropriate amounts
to be paid to either party on the Adjustment Payment Date, each party shall pay
to the other on such Adjustment Payment Date, all amounts other than those as to
which a dispute exists.  Any disputed amounts retained by a party which are
later found to be due to the other party shall be paid to such party promptly
upon resolution with interest thereon from the Adjustment Payment Date to the
date paid at the rate of two and one-half percent (2.5%) per annum (the
“Interest Rate”).

 

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ARTICLE III

INDEMNIFICATION

 

Section 3.1.            Seller’s Indemnification of Buyer.

 

Seller shall indemnify, hold harmless and defend Buyer from and against any and
all claims, losses, liabilities, demands and obligation, including reasonable
attorney’s fees and expenses, relating to or arising from (i) (subject to the
provisions of Section 9.1 below regarding Seller’s failure to close) a breach by
Seller of any covenant, promise, agreement, representation or warranty contained
herein; or (ii) real estate taxes, intangibles and franchise taxes, sales and
use taxes, social security and unemployment taxes, all accounts payable and
operating expenses (including salaries, rents and utility charges) incurred
prior to the Effective Date and which are claimed or demanded on or after the
Effective Date but not reflected on the Closing Statement.  Seller’s
indemnification shall be limited to the amount as established at Subsection
1.2(a).

 

Section 3.2.            Buyer’s Indemnification of Seller.

 

Buyer shall indemnify, hold harmless and defend Seller from and against any and
all claims, losses, liabilities, demands and obligation, including reasonable
attorney’s fees and expenses, relating to or arising from (i) (subject to the
provisions of Section 9.1 below regarding Buyer’s failure to close) a breach by
Buyer of any covenant, promise, agreement, representation or warranty contained
herein or (ii) real estate taxes, intangibles and franchise taxes, sales and use
taxes, social security and unemployment taxes, all accounts payable and
operating expenses (including salaries, rents and utility charges) incurred on
or after the Effective Date and which involve Buyer’s operation of the Offices
or Buyer’s ownership of the Assets; or (iii) Buyer’s failure to pay and
discharge the Assumed Liabilities pursuant to this Agreement.  Buyer’s
indemnification shall be limited to the amount as established as Subsection
1.2(a).

 

Section 3.3.            Claims for Indemnity.

 

(a)           A claim for indemnity under Sections 3.1 or 3.2 of this Agreement
may be made by the claiming party at any time prior to twelve (12) months after
the Effective Date by the giving of a written notice thereof to the other
party.  Such written notice shall set forth in reasonable detail the basis upon
which claim for indemnity is made.  In the event that any such claim is made
within the prescribed twelve (12) month period, the indemnity relating to such
claim shall survive until such claim is resolved.  Claims not made within such
twelve (12) month period shall cease and no indemnity shall be made therefor.

 

(b)           In the event that any person or entity not a party to this
Agreement shall make any demand or claim or file or threaten to file any
lawsuit, which demand, claim or lawsuit may result in any liability, damage or
loss to one party hereto of the kind for which such party is entitled to
indemnification pursuant to Section 3.1 or 3.2 hereof, then, after written
notice is provided by the indemnified party to the indemnifying party of such
demand, claim or lawsuit, the indemnifying party shall have the option, at its
cost and expense, to retain counsel for the indemnified party to defend any such
demand, claim or lawsuit.  In the event that the indemnifying party shall fail
to respond within five (5) days after receipt of such notice of any such demand,
claim or lawsuit, then the indemnified party shall retain counsel and conduct
the defense of such demand, claim or lawsuit as it may in its discretion deem
proper, at the cost and expense of the indemnifying party.  In effecting the
settlement of any such demand, claim or lawsuit, an indemnified party shall act
in good faith, shall consult with the indemnifying party and shall enter into
only such settlement as the indemnifying party shall approve (the

 

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indemnifying party’s approval will be implied if it does not respond within ten
(10) days of its receipt of the notice of such settlement offer).

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer as follows, which representations
and warranties shall survive the Effective Date for a period of twelve (12)
months:

 

Section 4.1.            Corporate Organization.

 

Seller is a banking association organized, validly existing and in good standing
under the laws of the United States and the State of Iowa.  Seller has the
corporate power and authority to own its property, to carry on its business as
currently conducted and to effect the transactions contemplated herein.

 

Section 4.2.            No Violation.

 

The Office has been operated by Seller in all material respects in accordance
with applicable laws, rules and regulations.  Neither the execution and delivery
of this agreement, nor the consummation of the transactions contemplated herein,
will violate or conflict with (i) Seller’s Articles of Association or Bylaws,
(ii) any material provision of any material agreement or any other material
restriction of any kind to which Seller is a party or by which Seller is bound,
(iii) any material statute, law, decree, regulation or order of any governmental
authority, or (iv) any material provision which will result in a default under,
or which causes the acceleration of the maturity of, any material obligations or
loan to which the Seller is a party.

 

Section 4.3.            Corporate Authority.

 

The execution and delivery of this Agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the Seller’s
Board of Directors (or the Executive Committee thereof).  No further corporate
authorization is necessary for Seller to consummate the transactions
contemplated hereunder.

 

Section 4.4.            Enforceable Agreement.

 

This Agreement has been duly authorized, executed and delivered by Seller and is
the legal, valid and binding agreement of Seller, enforceable in accordance with
its terms, subject to the receipt of all necessary regulatory approvals and
except as enforcement may be limited by bankruptcy, insolvency or other laws of
general applicability relating to creditor’s rights, or general equitable
principles.

 

Section 4.5.            No Brokers.

 

All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by Seller and Buyer, and there has been no
participation or intervention by any other persons, firm or corporation employed
or engaged by or on behalf of Seller in such a

 

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manner as to give rise to any valid claim against Seller or Buyer for a
brokerage commission, finders fee or like commission.

 

Section 4.6.            Real Property.

 

Seller makes the following representations regarding the Real Properties:

 

(a)           Seller has and can convey to Buyer good title to the Real
Properties, furniture, fixtures and equipment, free and clear of all liens,
security interest and encumbrances of any nature whatsoever.

 

(b)           Seller has no knowledge of any condemnation proceedings pending
against the Real Properties.

 

(c)           Seller has not entered into any agreement regarding the Real
Properties, and neither Seller nor the Real Properties is subject to any claim,
demand, suit, unfiled lien, charge, encumbrance or conditional sale or other
title retention agreement except for real property taxes not yet due and
payable, and easements and rights of way which do not materially interfere with
the use of the Real Properties as Offices.

 

Section 4.7.            Condition of Property.

 

The Real Properties to be purchased by Buyer hereunder are sold AS IS, WHERE IS,
with no warranties or representations whatsoever, except (i) as to title; and
(ii) as may be expressly represented or warranted in this Agreement.

 

Section 4.8.            Certain Loan Representations.

 

Seller represents and warrants to Buyer as of the Effective Date with respect to
each of the Loans as follows: (i) all Loans and all related documentation,
including but not limited to promissory notes, loan agreements, and security
interests, have been made and executed in the ordinary course of business,
contain genuine signatures of the named parties thereto, were given for valid
consideration and are all in full force and effect, and are enforceable in
accordance with this Agreement; (ii) each Loan has been originated, closed and
supervised in substantial accordance with all applicable laws and regulations;
(iii) each security interest (including without limitation, each deed, mortgage,
assignment, pledge and security agreement) taken or granted in connection with
any such Loan creates a valid and enforceable security interest in the property
described therein which has been duly perfected and has the priority reflected
in the loan file relating to such Loan subject as to enforceability to the
subsequent application of bankruptcy, equity or similar laws; and (iv) Seller is
not aware of any claim or dispute regarding such Loan or any document securing
such Loan.

 

Section 4.9.            Deposit Liabilities.

 

From the date of this Agreement to and including the Effective Date, the Offices
have no liability to pay deposits other than those as shown on the books of
Seller with respect to the Offices.

 

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Section 4.10.          Litigation.

 

There is (i) no litigation, action, claim, proceeding, or governmental or
regulatory investigation (collectively “Litigation”) pending or, to the
knowledge of the Board of Directors and/or management of Seller, threatened
against Seller; or (ii) to the knowledge of the Board of Directors, any
undisclosed liabilities relating to the assets and liabilities of the Offices;
which may have a material effect upon the deposits or assets of the Offices or
the transactions contemplated by this Agreement or upon Seller’s ability to
perform its obligations hereunder.

 

Section 4.11.          Mechanic’s Liens.

 

There are no unpaid charges, debts, liabilities, claims, or obligations arising
from the construction, ownership, or operation of the Offices which could give
rise to any mechanic’s or materialmen’s or other statutory or equitable liens
against the real estate occupied by the Offices, or any part thereof, for which
Buyer would be responsible.

 

Section 4.12.          Accuracy of Representations and Warranties.

 

No representation or warranty by Seller in this Agreement nor in any certificate
or other instrument furnished or to be furnished to Buyer pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained therein not misleading.

 

Section 4.13.          Conduct of Business.

 

The thrift business of Seller, as conducted at the Offices, has been conducted
in substantial compliance with all material laws, regulations, judicial writs,
orders, and decrees applicable to such business, including, but not limited to,
laws of the United States and the State of Iowa and rules and regulations of the
Office of Thrift Supervision and the Federal Deposit Insurance Corporation,
where any violation of such laws, rules, or regulations would have a material
adverse impact on such business.

 

Section 4.14.          Zoning.

 

The premises occupied by the Offices to be purchased by Buyer and the occupancy
or operation thereof is not in violation of any law or any building, zoning, or
other ordinance, code, or regulation in such manner as to interfere with the use
and occupancy thereof in the ordinary course of business of Buyer.

 

Section 4.15.          Environmental Compliance.

 

To the best of Seller’s knowledge, the Offices and the operations thereof are in
substantial compliance with all Environmental Laws, and such properties are not
affected or threatened by any condemnation or eminent domain proceeding. 
“Environmental Laws,” as used herein, shall mean all federal, state, and local
laws, including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements relating to the environmental or
hazardous

 

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substances, including, but not limited to, the Toxic Substance Act, the Clean
Air Act, the Clean Water Act, the Resources Conservation and Recovery Act of
1976, the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, regulations of the Environmental Protection Agency, regulations of the
Nuclear Regulatory Agency, and regulations of the Iowa State Department of
Natural Resources or Iowa State Environmental Protection Agency in effect now or
at any time prior to the Closing Date.  Seller has and will prior to the Closing
Date (i) comply with all applicable Environmental Laws at the Offices;
(ii) provide to Buyer, immediately upon receipt, copies of any correspondence,
notice, pleading, citation, indictment, complaint, order, decree, or other
document from any source asserting or alleging a circumstance or condition which
requires or may require a clean up, removal, remediation, or other response by
or on the part of Seller under Environmental Laws at the Offices or which seek
criminal or punitive penalties from Seller for an alleged violation of
environmental Laws at the Offices; and (iii) advise Buyer, in writing, as soon
as Seller becomes aware of any condition or circumstance which makes the
foregoing representation incomplete or inaccurate.

 

Section 4.16.          Accounting Records.

 

The financial accounting records regarding the thrift business of Seller
conducted at the Offices and which have been or will be provided to Buyer have
been or will be prepared in accordance with generally accepted accounting
principles, as applied to thrift institutions, and do or will present fairly the
financial position and results of operations of the thrift activities of the
Offices.

 

Section 4.17.          Access to Offices.

 

Until the Closing Date, Buyer shall have access, at reasonable times mutually
agreeable to Seller and Buyer, to the premises and books and records of the
Offices.

 

Section 4.18.          Information Reports.

 

Seller shall file with the Internal Revenue Service (“IRS”), in a manner
acceptable to the IRS, all required informational reports, including, without
limitation, all Form 1099s, to the extent interest was paid by Seller on
Deposits at the Offices which are transferred to Buyer pursuant to this
Agreement.

 

Section 4.19.          Processing of Items.

 

Seller shall promptly process, and provide to Buyer supporting documentation
relating thereto, all checks, drafts and withdrawal orders presented to Seller
through the clearing process against depositor accounts assumed by Buyer.

 

Section 4.20.          Limitation of Representations and Warranties.

 

Except as may be expressly represented or warranted in this Agreement, Seller
makes no representations of warranties whatsoever with regard to any assets
being transferred to Buyer or any liability or obligation being assumed by Buyer
or as to any other matter or thing.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller as follows, which representations
and warranties shall survive the Effective Date for a period of twelve (12)
months:

 

Section 5.1.            Corporate Organization.

 

Buyer is an Iowa banking corporation, duly organized, chartered and validly
existing under the laws of the State of Iowa.  Buyer has the corporate power and
authority to own the properties being acquired, to assume the liabilities being
transferred and to effect the transactions contemplated herein.

 

Section 5.2.            No Violation.

 

Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein, will violate or conflict with (i) the
Articles of Incorporation or Bylaws of the Buyer, (ii) any material provision of
any material agreement or any other material restriction of any kind to which
Buyer is a party or by which Buyer is bound, (iii) any material statute, law,
decree, regulation or order of any governmental authority, or (iv) any material
provision which will result in a default under, or cause the acceleration of the
maturity of, any material obligation or loan to which Buyer is a party.

 

Section 5.3.            Corporate Authority.

 

The Execution and delivery of this agreement, and the consummation of the
transactions contemplated herein, have been duly authorized by the Board of
Directors (or Executive Committee) of Buyer.  No further corporate authorization
on the part of the Buyer is necessary to consummate the transactions
contemplated hereunder.

 

Section 5.4.            Enforceable Agreement.

 

This Agreement has been duly authorized, executed and delivered by Buyer and is
the legal, valid and binding agreement of Buyer enforceable in accordance with
its terms, subject to the receipt of all necessary regulatory approvals and
except as enforcement may be limited by bankruptcy, insolvency or other laws of
general applicability relating to creditors’ rights, or by general equitable
principles.

 

Section 5.5.            No Brokers.

 

All negotiations relative to this Agreement and the transactions contemplated
hereby have been carried on by Buyer and Seller, and there has been no
participation or intervention by any other person, firm or corporation employed
or engaged by or on behalf of Buyer in such a manner as to give rise to any
valid claim against Buyer or Seller for a brokerage commission, finder’s fee or
like commission.

 

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ARTICLE VI

OBLIGATIONS OF PARTIES PRIOR TO AND AFTER

EFFECTIVE DATE

 

Section 6.1.            Full Access.

 

Seller shall afford to the officers and authorized representatives of Buyer,
upon prior notice and subject to Seller’s normal security requirements, access
to the properties, books and records pertaining to the Offices in order that
Buyer may have full opportunity to make reasonable investigations, at reasonable
times without interfering with the normal business and operations of the
Offices, of the affairs of Seller relating to the Offices.  The officers of
Seller shall furnish Buyer with such additional financial and operating data and
other information as to the business and properties of the Offices, or where
otherwise located, as Buyer may, from time to time, reasonably request and as
shall be available, including without limitation, information required for
inclusion in all governmental applications necessary to effect this
transaction.  Nothing in this Section 6.1 shall require Seller to breach any
obligation of confidentiality or to reveal any proprietary information, trade
secrets or marketing or strategic plans.  Records, including credit information,
relating to the Loans will be made available for review by Buyer after the
execution of this Agreement.

 

Section 6.2.            Applications for Approval to Effect Purchase of Assets
and Assumption of Liabilities.

 

Buyer shall prepare and file applications required by law with the appropriate
regulatory authorities for approval to purchase the Assets and assume the
Assumed Liabilities, and to effect in all other respects the transactions
contemplated herein.  Buyer shall use its best efforts to file such applications
by February 19,  2007, and to process such application(s) in a diligent manner
Buyer shall provide Seller with copies of all applications, materials, notices,
orders, opinions, correspondence and other documents with respect to such
regulatory filings, and shall use its best efforts to obtain all necessary
regulatory approvals.  Buyer shall promptly notify Seller upon receipt by Buyer
of notification that any application provided for hereunder has been denied. 
Seller shall provide such assistance and information to Buyer and shall make
such regulatory filings as shall be reasonably necessary on Seller’s part for
Buyer to comply with the requirements of the applicable regulatory authorities,
including, but not limited to any required notices regarding the closing of the
Offices.

 

Section 6.3.            Conduct of Business: Maintenance of Properties.

 

(a)           From the date the Agreement is signed until the Effective Date,
Seller covenants that it will:

 

(1)           Carry on the business of the Offices substantially in the same
manner as on the date hereof, use all reasonable efforts to preserve intact its
current business organization and preserve its business relationships with
depositors, customers and others having business relationships with it and whose
accounts will be retained at the Offices; provided, however, that Seller need
not, in its sole discretion, advertise or promote new or substantially new
customer services in the principal market of the Offices.

 

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(2)           Cooperate with and assist Buyer in assuring the orderly transition
of the business of the Offices to Buyer from Seller;

 

(3)           Maintain the Real Properties, furniture and equipment in its
current condition, ordinary wear and tear excepted; and

 

(4)           Create new deposit relationships only in a manner consistent with
past practices and upon rates and terms consistent with rates and terms provided
by competing financial institutions in the market areas served by the Offices.

 

(5)           Seller retains all discretion as to the granting or denial of
credit in the making of any loans from the Offices from and after the date of
Buyer’s last due diligence examination to and including the Effective Date and
Buyer shall not exercise any decision making power or authority over Seller’s
credit decisions, provided, however, that with regard to any loan extension and
any new loan which exceeds the sum of Fifty Thousand Dollars ($50,000.00) and
with regard to any Loan renewal (of a Loan to be purchased by Buyer) involving
any capitalization of interest, prior to committing to make, renew or amend the
terms of any such Loans, Seller shall notify Buyer and provide Buyer with access
to the Loan file and other relevant information concerning the credit thus
extended by Seller.  Upon receipt of such notice, Buyer shall make a decision
within two (2) business days after the time of notice to accept or reject any
such Loan, and if accepted or not rejected within the two (2) business days, the
Loan shall be purchased by Buyer at the Closing.  The loans rejected by Buyer,
if made by Seller, shall be retained by the Seller and shall not be included in
the Loans acquired pursuant to Section 1.4(a).

 

Section 6.4.            No Solicitation by Seller.

 

For a period of thirty-six (36) months after the Effective Date, Seller shall
not (i) establish any banking facility within a twenty (20) mile radius of the
Offices; or, (ii) solicit any customer of the Offices as of the Closing Date
with whom it has no other previously established banking relationship at
locations of the Seller other than the Offices; or, (iii) no advertising in Sac
City, Odebolt or Lake View papers; provided, however, these restrictions shall
not restrict general mass mailings to the public or newspaper, radio or
television advertisements of a general nature, not targeting customers of the
Offices, or otherwise prevent Seller from taking such actions as may be required
to comply with any applicable federal or state laws, rules or regulations and
provided further that not more than thirty (30) days after the date of this
Agreement, Seller shall provide to Buyer a list of customers of the Offices with
whom it has such a previously established banking relationship at locations
other than the Offices.  Seller covenants and agrees to use its best efforts to
completely purge its mailing and marketing lists of all deposit and loan
customers of the Offices with whom it has no other previously established
banking relationship, provided that Seller shall have the right to retain
records reasonably needed for tax or regulatory purposes.

 

Section 6.5.            Further Actions.

 

The parties hereto shall execute and deliver such instruments and take such
other actions as the other party may reasonably require to carry out the intent
of this Agreement.

 

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Section 6.6.            Fees and Expenses.

 

Buyer shall be responsible for the costs of all surveys, and recording fees
related to the Real Property, and each party shall be responsible for its own
attorneys’ and accountants’ fees and expenses and regulatory filing fees related
to this transaction.

 

Section 6.7.            Breaches with Third Parties.

 

Nothing in this Agreement shall constitute an agreement to assign, or the
assignment of, any material claim, contract, license, lease, commitment, sales
order or purchase order or any material claim of right or any benefit arising
thereunder or resulting therefrom, if an assignment or attempted assignment
thereof, without the consent of a third party thereto, would be in violation of
any law or regulation, or would constitute a breach thereof or materially affect
the rights of Buyer or Seller thereunder; and any transfer or assignment to the
Buyer or Seller of any material property or property rights or any contract or
agreement which shall require the consent or approval of any third party, shall
be made subject to such consent or approval being obtained.

 

Section 6.8.            Insurance.

 

On the Effective Date, Seller will discontinue its insurance coverage maintained
in connection with the Offices and the activities conducted thereon.  Buyer
shall be responsible for all insurance protection for the Offices premises and
the activities conducted thereon immediately following the Effective Date. 
Pending the Closing, risk of loss shall be the responsibility of the Seller.

 

Section 6.9.            Public Announcements.

 

Except as is necessary to obtain the regulatory approvals contemplated by this
Agreement, Seller and Buyer agree that, from the date hereof, neither shall make
any public announcement or public comment regarding this Agreement or the
transactions contemplated herein without first consulting with the other party
hereto and reaching an agreement upon the substance and timing of such
announcement or comment.  Further, Seller and Buyer acknowledge the sensitivity
of this transaction to the Employees and no announcement or communication with
the Employees shall be made without the prior approval of the Seller.

 

However, the parties may make public announcement as required by law or any
governing regulatory body, including but not limited to the SEC, but only after
making every effort to notify the employees first.

 

Section 6.10.          Further Negotiations.

 

Each party recognizes and acknowledges that between the date of this Agreement
and the Effective Date, each will expend a great deal of time and expense in
proceeding in good faith to close the transaction.  Accordingly, neither Buyer
or Seller will conduct, initiate or continue any discussions or negotiations or
enter into any understanding, arrangement or agreement with any other party or
entity in connection with the matters set forth herein prior to the Effective
Date.

 

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ARTICLE VII

CONDITIONS TO BUYER’S OBLIGATIONS

 

The obligations of Buyer to complete the transactions contemplated in this
Agreement are conditioned upon fulfillment, on or before the Effective Date, of
each of the following conditions:

 

Section 7.1.            Representations and Warranties True.

 

The representations and warranties made by Seller in this Agreement shall be
true and correct in all material respects on and as of the Effective Date as
though such representations and warranties were made at and as of such time,
except for any changes permitted by the terms hereof or consented to by Buyer.

 

Section 7.2.            Obligations Performed.

 

Seller shall (i) deliver or make available to Buyer those items required by
Section 2.2 hereof and (ii) perform and comply in all material respects with all
obligations and agreements required by this Agreement to be performed or
complied with by it prior to or on the Effective Date.

 

Section 7.3.            No Adverse Litigation.

 

On the Effective Date, no Litigation shall be pending or threatened against
Seller which is reasonably likely to (i) materially and adversely affect the
business, properties and assets of the Offices, or (ii) materially and adversely
affect the transactions contemplated herein.

 

Section 7.4.            Regulatory Approval.

 

Each of Buyer and Seller shall have received all necessary regulatory approvals
of the transactions provided in this Agreement, all notices and waiting periods
required by law to pass shall have passed, no proceeding to enjoin, restrain,
prohibit or invalidate such transactions shall have been instituted or
threatened, and any conditions of any regulatory approval shall have been met.

 

Section 7.5.            List of Customers.

 

                The list of customers with whom Seller claims to have a
previously existing banking relationship at locations other than the Offices
which Seller shall deliver to Buyer pursuant to Section 6.5 above, shall be
acceptable to Buyer in its reasonable discretion.

 

Section 7.6.            Buyer’s Due Diligence.

 

                The results of Buyer’s review of the books and records of the
Offices relating to the Assets to be acquired and the Assumed Liabilities, shall
be satisfactory to Buyer in its reasonable discretion.

 

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ARTICLE VIII

CONDITIONS TO SELLER’S OBLIGATIONS

 

The obligations of Seller to complete the transactions contemplated in this
Agreement are conditioned upon fulfillment, on or before the Effective Date, of
each of the following conditions:

 

Section 8.1.            Representations and Warranties True.

 

The representations and warranties made by Buyer in this Agreement shall be true
and correct in all material respects on and as of the Effective Date as though
such representations and warranties were made at and as of such time, except for
any changes permitted by the terms hereof or consented to by Seller.

 

Section 8.2.            Obligations Performed.

 

Buyer shall (i) deliver or make available to Seller those items required by
Section 2.2 hereof and (ii) perform and comply in all material respects with all
obligations and agreements required by this Agreement to be performed or
complied with by it prior to or on the Effective Date.

 

Section 8.3.            No Adverse Litigation.

 

On the Effective Date, no action, suit or proceeding shall be pending or
threatened against Buyer which is reasonably likely to materially and adversely
affect the transactions contemplated herein.

 

Section 8.4.            Regulatory Approval.

 

Each of Buyer and Seller shall have received all necessary regulatory approvals
of the transactions provided in this Agreement, all notices and waiting periods
required by law to pass shall have passed, no proceeding to enjoin, restrain,
prohibit or invalidate such transactions shall have been instituted or
threatened, and any conditions of any regulatory approval shall have been met.

 

ARTICLE IX

LIQUIDATED DAMAGES

 

Section 9.1.            Failure of Performance.

 

Unless otherwise agreed in writing by the Seller and Buyer and provided that
(i) the conditions to the Buyer’s obligations as set forth in Section 1.9 and
Article 7 of this Agreement have been satisfied in all material respects, and
(ii) the conditions to Seller’s obligations set forth in Article 8 of this
Agreement have been satisfied in all material respects; if either Buyer or
Seller (either a “Breaching Party”) fails to complete the transactions
contemplated by this Agreement, such Breaching Party shall pay to the other
party (either a “Non-Breaching Party”)

 

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the amount of Two Hundred Fifty Thousand Dollars ($250,000) as liquidated
damages, which payment shall be in lieu of all other remedies or actions at law
or in equity available to the Non-Breaching Party, and shall be entitled to
obtain judgment for such amount against the Breaching Party as permitted by law.

 

ARTICLE X

TERMINATION

 

Section 10.1.          Methods of Termination.

 

This Agreement may be terminated in any of the following ways:

 

(a)           By either Buyer or Seller, in writing five (5) days in advance of
such termination, if the Closing has not occurred by June 30, 2007 but any such
termination shall be subject to Article IX above if all conditions precedent to
Buyer’s and Seller’s obligations have been satisfied;

 

(b)           At any time on or prior to the Effective Date by the mutual
consent in writing of Buyer and Seller;

 

(c)           On the Effective Date, by Buyer, in writing, if the obligations
set forth in Article VII of this Agreement shall not have been met by Seller or
waived in writing by Buyer;

 

(d)           On the Effective Date, by Seller, in writing, if the conditions
set forth in Article VIII of this Agreement shall not have been met by Buyer or
waived in writing by Seller;

 

(e)           Any time on or prior to the Effective Date, by Buyer or Seller in
writing if the other shall have been in breach of the representations or
warranties in any material respect (as if any such representation or warranty
had been made on and as of the date hereof and on the date of the notice of
breach referred to below), or a breach of any covenant or obligation contained
herein, and such breach has not been cured by the earlier of thirty (30) days
after the giving of notice to the breaching party of such breach or the
Effective Date; provided, however, that there shall be no cure period in
connection with any breach of Section 6.2 hereof, so long as such breach by
Buyer was not caused by any action or inaction of Seller;

 

(f)            By either Buyer or Seller in writing at any time after any
applicable regulatory authority has denied approval of any application of Buyer
for approval of the transactions contemplated herein or such application has
been withdrawn after Buyer has in good faith met the requirements of Section 6.2
hereof; or

 

                (g)           In accordance with the provisions of Section 1.9
hereof.

 

Section 10.2.          Procedure Upon Termination.

 

In the event of termination pursuant to Section 10.1 hereof written notice
thereof shall be given to the other party, and this Agreement shall terminate
immediately upon receipt of such

 

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notice unless an extension is consented to by the party having the right to
terminate.  If this Agreement is terminated as provided herein:

 

(a)           Each party will return all documents, work papers and other
materials of the other party, including photocopies or other duplications
thereof, relating to this transaction, whether obtained before or after the
execution hereof, to the party furnishing the same; and

 

(b)           All information received by either party hereto with respect to
the other party (other than information which is a matter of public knowledge or
which has heretofore been published in any publication for public distribution
or filed as public information with any government authority) shall not at any
time be used for any business purpose by such party or disclosed by any such
party to third parties.

 

ARTICLE XI

MISCELLANEOUS PROVISIONS

 

Section 11.1.          Amendment and Modification.

 

The parties hereto, by mutual consent of their duly authorized officers, may
amend, modify and supplement this Agreement in such manner as may be agreed upon
by them in writing.

 

Section 11.2.          Waiver or Extension.

 

Except with respect to required approvals of the applicable governmental
authorities, either party, by written instrument signed by a duly authorized
officer, may extend the time for the performance of any of the obligations or
other acts of the other party and may waive (i) any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (ii) compliance with any of the undertakings, obligations,
covenants or other acts contained herein.

 

Section 11.3.          Assignment.

 

This Agreement and all of the provisions hereof shall be binding upon, and shall
inure to the benefit of, the parties hereto and their permitted assigns, but
neither this Agreement nor any rights, interests or obligations hereunder shall
be assigned by either of the parties without the prior written consent of the
other.

 

Section 11.4.          Confidentiality.

 

Seller and Buyer covenant and agree that all information received by either of
them with respect to the business of the other (other than information which is
a matter of public knowledge or which has heretofore been published in any
publication for public distribution or which has heretofore, or which is
hereafter, filed as public information with any governmental authority) shall
not at any time be used for any business purpose or disclosed by such party to
third persons.

 

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This covenant and agreement shall survive the consummation of the transactions
contemplated herein.

 

Section 11.5.          Addresses for Notices, Etc.

 

All notices, requests, demands, consents and other communications provided for
hereunder and under the related documents shall be in writing and mailed (by
registered or certified mail, return receipt requested), telegraphed, telexed,
telecopied or personally delivered (with receipt thereof acknowledged) to the
applicable party at the address indicated below:

 

If to Seller:

 

Benjamin Guenther

MetaBank

Erie at Fifth

Storm Lake, Iowa 50588

 

Telephone: (712) 732-4105

Facsimile: (712) 732-7105

Email:  bguenther@metabankonline.com

 

with a copy to:

 

Gary W. Armstrong

Mack, Hansen, Gadd, Armstrong & Brown, P.C.

316 East Sixth Street

Storm Lake, IA 50588-0278

 

Telephone: (712) 732-3538

Facsimile: (712) 732-7578

Email:  mhgab@iw.net

 

If to Buyer:

 

Stephen D. Spotts

Iowa State Bank

500 Audubon Street

Sac City, IA 50583

 

Telephone: (712) 662-4721

Facsimile: (712) 662-4950

Email:  sspotts@scsbank.com

 

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with a copy to:

 

Robert A. Mullen

Belin Law Firm

The Financial Center

666 Walnut, Suite 2000

Des Moines, IA 50309-3989

 

Telephone: (515) 243-7100

Facsimile: (515) 558-0715

Email:  ramullen@belinlaw.com

 

Section 11.6.          Counterparts.

 

This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same document.

 

Section 11.7.          Headings.

 

The headings of the Sections and Articles of this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.

 

Section 11.8.          Governing Law.

 

This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Iowa.

 

Section 11.9.          Entire Agreement.

 

This Agreement, the exhibits and attachments hereto, represent the entire
agreement between the parties hereto respecting the matters addressed herein and
supersedes all prior or contemporaneous written or oral proposals, agreements in
principle, representations, warranties and understandings between the parties.

 

Section 11.10.        Expenses.

 

Except as otherwise provided in this Agreement, all legal, accounting and other
costs and expenses incurred in connection with the execution, delivery and
performance of this Agreement and of the transactions contemplated hereby shall
be borne and paid by the party incurring such costs and expenses, and neither
party shall be obligated for any cost or expense incurred by the other party.

 

Section 11.11.        Severability.

 

If any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in effect.

 

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Section 11.12.        Parties in Interest.

 

Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon or give to any person (other than the parties hereto,
their successors and permitted assigns) and rights or remedies under or by
reason of this Agreement, or any term, provision, condition, undertaking,
warranty, representation, indemnity, covenant or agreement contained therein.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers as of the date first written above.

 

 

 

SELLER

 

 

 

 

 

METABANK

ATTEST:

 

 

 

 

 

 

 

 

By:

/s/ Sandra Hegland

 

 

By:

/s/ Benjamin Guenther

 

Its:

Senior Vice President of HR

 

Its:  

President

 

 

 

 

 

 

 

 

BUYER

 

 

 

ATTEST:

 

IOWA STATE BANK

 

 

 

 

 

 

By:

/s/ Bill Hess

 

 

By:

/s/ Stephen D. Spotts

 

Its:

Chairman

 

 

Its:

President

 

 

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