-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+5QyHv5MTCZgMhiRFJt8UocavlGYSjWDPUsHGpih3PxHWrSD1oLRU2ZiII+JquW kMYkDQRLxJepK1iU+th5lQ== 0001206774-05-001636.txt : 20051013 0001206774-05-001636.hdr.sgml : 20051013 20051013125552 ACCESSION NUMBER: 0001206774-05-001636 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20051013 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051013 DATE AS OF CHANGE: 20051013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERPRISE FINANCIAL SERVICES CORP CENTRAL INDEX KEY: 0001025835 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 431706259 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15373 FILM NUMBER: 051136487 BUSINESS ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: 150 NORTH MERAMEC CITY: CLAYTON STATE: MO ZIP: 63105 BUSINESS PHONE: 3147255500 MAIL ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: 150 NORTH MERAMEC CITY: CLAYTON STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: ENTERBANK HOLDINGS INC DATE OF NAME CHANGE: 19961024 8-K 1 ef71661.htm FORM 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
October 13, 2005

ENTERPRISE FINANCIAL SERVICES CORP

(Exact name of registrant as specified in its charter)

Delaware	001-15373	43-1706259
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

150 N. Meramec, St. Louis, Missouri		63105
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code
(314) 725-5500

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4© under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operations

Item 1.01 Entry into Material Definitive Agreement.

On October 13, 2005, Enterprise Financial Services Corp. (“Enterprise”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Millennium Brokerage Group, LLC, (“Millennium”), all of the members of Millennium (collectively, the “Sellers”), Millennium Holding Company, Inc., a direct wholly-owned subsidiary of Enterprise (“MHC”), and Millennium Holdings, LLC (“MBG Holdings”). Millennium operates life insurance advisory and brokerage operations from thirteen offices serving life agents, banks, CPA firms, property & casualty groups, and financial advisors in 49 states.

On the terms and subject to the conditions of the Purchase Agreement, MHC will purchase all of the membership interests of Millennium. The aggregate consideration for the acquisition of all of the membership interests of Millennium depends on Millennium’s satisfaction of performance targets specified in the Purchase Agreement, but will not exceed Thirty Six Million Dollars ($36,000,000.00), subject to adjustments for working capital.

At the first installment (“First Closing”), which is expected to occur prior to October 31, 2005, MHC will purchase sixty percent (60%) of the membership interests of Millennium for consideration of Fifteen Million Dollars ($15,000,000.00), subject to adjustment for working capital. Simultaneously with the First Closing, the Sellers will transfer their remaining interests to MBG Holdings.

MHC will purchase an additional twenty percent (20%) of the membership interests of Millennium from MBG Holdings on or before March 31, 2008 (“Second Closing”) and will purchase the remaining twenty percent (20%) of the membership interests on or before March 31, 2010 (“Third Closing”). The amount of consideration to be paid for the remaining interests in Millennium at the Second Closing and the Third Closing will be determined in accordance with the Purchase Agreement based on Millennium’s “Weighted Average Pre-Tax Earnings” during the periods prior to the Second Closing and Third Closing respectively. The aggregate amount of consideration paid at the Second Closing and Third Closing may vary from zero to a maximum of Twenty One Million Dollars ($21,000,000.00). All payments by Enterprise for such membership interests will be in a combination of cash and Enterprise’s common stock, as described in Item 3.02 below.

Millennium and the Sellers have made customary representations and warranties to Enterprise in the Purchase Agreement. The Purchase Agreement also contains customary conditions to closing.

At the First Closing, MHC and MBG Holdings will cause Millennium to adopt a Second Amended and Restated Operating Agreement (“New Operating Agreement”) which will control matters of governance of Millennium as well as distributions of cash from Millennium’s operations. At the Third Closing, Millennium will become a wholly-owned subsidiary of Enterprise.

Also at the First Closing, Millennium will enter into an employment agreement (the “Employment Agreement”) with William L. Zelenik governing his employment as the Chief Executive Officer of Millennium. Under the Employment Agreement, Mr. Zelenik will receive a base salary at the annualized rate of $275,000 and he is eligible to receive an annual bonus based upon meeting certain targeted financial and operating goals. The Agreement provides Mr. Zelenik with severance benefits in the event of his termination under certain circumstances. The Agreement also contains certain confidentiality and non-competition provisions.

The foregoing description of the transactions contemplated by the Purchase Agreement, the New Operating Agreement and the Employment Agreement is qualified in its entirety by reference to the Purchase Agreement, the New Operating Agreement, and the Employment Agreement, copies of which are attached hereto as Exhibit 2.1, 10.1 and 10.2 and incorporated herein by reference.

Section 3 – Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

Pursuant to the Purchase Agreement, Enterprise has agreed to issue shares of its common stock to the Sellers at the First Closing and may, in its discretion issues shares of its common stock at the Second Closing and the Third Closing. The number of shares of Enterprise’s common stock issued at the First Closing will equal thirty five percent (35%) of the total First Closing purchase consideration. The shares will be valued at the average closing price during the period of thirty trading-days ending three days prior to the First Closing. The number of shares of Enterprise’s common stock to be issued at the Second Closing and Third Closing, if any, may be determined by Enterprise in its discretion, but with respect to each such installment may not exceed seventy percent (70%) of the consideration paid in such installment. For purposes of the Second Closing and Third Closing, Enterprise’s common stock will be valued at the average closing price during the period of thirty trading-days ending three days prior to such closing.

All such shares will be issued by Enterprise in reliance upon an exemption from registration set forth in Section 4(2) of the Securities Act of 1933. The issuance and sale of the shares will be undertaken without general solicitation or advertising. Each recipient of shares will represent to Enterprise that, among other things, such person is acquiring the shares for investment purposes only and not with a view toward public distribution. As a result, the shares will be “restricted securities” and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Certificates evidencing the shares will contain a legend stating the same.

Section 7 – Regulation FD

Item 7.01 Regulation FD Disclosure.

On October 13, 2005, the Company issued a press release announcing the execution of the Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(a)	Not applicable.

(b)	Not applicable.

(c)	Exhibits

	2.1	Purchase Agreement, dated October 13, 2005, by and among Enterprise Financial Services Corp. (“Enterprise”), Millennium Brokerage Group, LLC, (“Millennium”), all of the members of Millennium (collectively, the “Sellers”), Millennium Holding Company, Inc., a direct wholly-owned subsidiary of Enterprise (“MHC”), and Millennium Holdings (“MBG Holdings”).

	10.1	Form of Second Amended and Restated Operating Agreement of Millennium Brokerage Group, LLC, to be adopted by MHC and MBG Holdings at the First Closing.

	10.2	Form of Employment Agreement by and between William L. Zelenik and Millennium Brokerage Group, LLC, to be executed and delivered at the First Closing

	99.1	Text of Press Release, dated October 13, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENTERPRISE FINANCIAL SERVICES CORP.


Date: October 13, 2005	By:	/s/ Kevin C. Eichner

		Kevin C. Eichner
		Chief Executive Officer

EX-2.1 2 ef71661ex21.htm EXHIBIT 2.1

Exhibit 2.1

MEMBERSHIP INTEREST
PURCHASE AGREEMENT

by and between

ENTERPRISE FINANCIAL SERVICES CORP.,

MILLENNIUM HOLDING COMPANY, INC.,

MILLENNIUM BROKERAGE GROUP, LLC,

WILLIAM L. ZELENIK,

JOHN W. BOHLMAN, JR.,

JOHN R. GILLENWATER,

JAMES L. LAUGHLIN II,

DENNIS WALL,

STEVEN T. WELD,

JOHN A. WHITE,

ROBERT R. WILLIAMS, and

MILLENNIUM HOLDINGS, LLC

Dated October 13, 2005

TABLE OF CONTENTS

		Page

ARTICLE 1 - DEFINITIONS; CONSTRUCTION		1

1.01	DEFINITIONS	6
1.02	CONSTRUCTION	10

ARTICLE 2 – SALE AND TRANSFER OF MEMBERSHIP INTERESTS; FIRST INSTALLMENT CLOSING		11

2.01	PURCHASE OF FIRST INSTALLMENT INTERESTS	11
2.02	FIRST INSTALLMENT PRICE	11
2.03	ESTIMATED CLOSING BALANCE SHEET	11
2.04	NET WORKING CAPITAL OF THE COMPANY	11
2.05	FIRST INSTALLMENT CLOSING	12
2.06	FIRST INSTALLMENT CLOSING DELIVERIES	13

ARTICLE 3 – DEFERRED PURCHASE OF MEMBERSHIP INTERESTS; RESOLUTION OF CERTAIN DISPUTES		16

3.01	DIAMOND	16
3.02	PURCHASE OF SECOND INSTALLMENT INTERESTS	16
3.03	PURCHASE OF THIRD INSTALLMENT INTERESTS	17
3.04	RESOLUTION OF CERTAIN DISPUTES	18
3.05	STOCK RESTRICTION AGREEMENT	19

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY		19

4.01	INCORPORATION, QUALIFICATION AND POWER	20
4.02	CAPITALIZATION	20
4.03	SUBSIDIARIES	21
4.04	AUTHORIZATION OF TRANSACTION	21
4.05	NONCONTRAVENTION	21
4.06	BOOKS AND RECORDS	22
4.07	FINANCIAL STATEMENTS	22
4.08	TAX MATTERS	23
4.09	TITLE TO ASSETS	24
4.10	BANK ACCOUNTS	24
4.11	[INTENTIONALLY DELETED]	24
4.12	CONTRACTS	24
4.13	INTELLECTUAL PROPERTY	24
4.14	REAL PROPERTY	27
4.15	INSURANCE	28
4.16	UNDISCLOSED LIABILITIES; INDEBTEDNESS	28
4.17	LEGAL COMPLIANCE	28
4.18	LITIGATION	29
4.19	EMPLOYEE MATTERS	30
4.20	LABOR RELATIONS	31
4.21	EMPLOYEE BENEFITS	31
4.22	SUBSEQUENT EVENTS	33
4.23	AFFILIATED TRANSACTIONS	34
4.24	GUARANTIES	35
4.25	BROKERS’ FEES	35
4.26	DISCLOSURE	35

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER		35

5.01	ORGANIZATION	35

5.02	AUTHORIZATION OF TRANSACTION	35
5.03	NONCONTRAVENTION	36
5.04	FINANCIAL CAPABILITY	36
5.05	FINANCIAL STATEMENTS AND REPORTS	36
5.06	SEC REPORTS	36
5.07	ABSENCE OF CERTAIN CHANGES OR EVENTS	37
5.08	OFFERING	37
5.09	COMPLIANCE WITH APPLICABLE LAWS	37
5.10	BROKERS’ FEES	37
5.11	DISCLOSURE	37

ARTICLE 6 – COVENANTS AND AGREEMENTS		38

6.01	CERTAIN COVENANTS OF ALL PARTIES PRIOR TO FIRST INSTALLMENT CLOSING	38
6.02	CERTAIN COVENANTS OF THE SELLERS AND THE COMPANY PRIOR TO THE FIRST INSTALLMENT CLOSING	39
6.03	SELLER REPRESENTATIVE	41
6.04	COVENANTS OF THE PARTIES RELATED TO TAX MATTERS	42
6.05	NON-COMPETITION AND NON-SOLICITATION	44
6.06	RESTRICTED STOCK UNITS	44
6.07	RULE 144 REPORTING	45

ARTICLE 7 - CONDITIONS PRECEDENT TO FIRST INSTALLMENT CLOSING, SECOND INSTALLMENT CLOSING AND THIRD INSTALLMENT CLOSING		45

7.01	CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER	45
7.02	CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS	48

ARTICLE 8 – TERMINATION		49

8.01	TERMINATION OF AGREEMENT	49
8.02	EFFECT OF TERMINATION	50

ARTICLE 9 - INDEMNIFICATION		50

9.01	SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE	50
9.02	INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS	51
9.03	INDEMNIFICATION AND PAYMENT FOR DAMAGES BY PURCHASER	51
9.04	LIMITATIONS	52
9.05	PROCEDURE FOR INDEMNIFICATION	53
9.06	RIGHT OF SETOFF	54
9.07	SPECIFIC PERFORMANCE	54

ARTICLE 10 - MISCELLANEOUS		54

10.01	NO THIRD PARTY BENEFICIARIES	54
10.02	ENTIRE AGREEMENT	54
10.03	SUCCESSION AND ASSIGNMENT	55
10.04	COUNTERPARTS	55
10.05	COUNTERPART FACSIMILE EXECUTION	55
10.06	HEADINGS	55
10.07	NOTICES	55
10.08	GOVERNING LAW	56
10.09	AMENDMENTS AND WAIVERS	56
10.10	FAILURE OR DELAY	56
10.11	FURTHER ASSURANCES	56
10.12	SEVERABILITY	56
10.13	EXPENSES	57
10.14	ATTORNEYS’ FEES	57
10.15	CONSTRUCTION	57
10.16	INCORPORATION OF EXHIBITS AND SCHEDULES	57

iii

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (the “Agreement”) is made this 13^th day of October, 2005 by and among ENTERPRISE FINANCIAL SERVICES CORP., a Delaware corporation (“EFSC”), MILLENNIUM HOLDING COMPANY, INC., a Missouri corporation (“Acquisition Sub” and collectively with EFSC, “Purchaser”), MILLENNIUM BROKERAGE GROUP, LLC, a Tennessee limited liability company (the “Company”), MILLENNIUM HOLDINGS, LLC, a Tennessee limited liability company (“Diamond”), and the members of the Company that have executed the signature page of this Agreement (collectively, the “Sellers”).

RECITALS

A. The Company is engaged in the life insurance brokerage business, representing and marketing the products of various insurance carriers (collectively, the “Business”).

B. The Sellers own all of the Membership Interests of the Company.

C. The Company owns a portion of the issued and outstanding common stock of Millennium Distributors, Inc., a Tennessee corporation (“MDI”).

D. On the terms and subject to the conditions set forth in this Agreement, Purchaser wishes to acquire from the Sellers and the Sellers wish to sell to the Purchaser all of the Membership Interests of the Company through a series of transactions as more particularly described in this Agreement.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants herein contained and other good and valuable consideration (the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties by their execution hereof) and intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE 1
DEFINITIONS; CONSTRUCTION

1.01 Definitions. For purposes of this Agreement, unless the context clearly indicates otherwise, the following capitalized terms have the meanings specified or referred to in this Section 1.01:

“754 Election Form” has the meaning set forth in Section 2.06(a)(xiv).

“Acquisition Sub” has the meaning set forth in the introductory paragraph.

“Actual 2006/2007 Weighted Average Pre-Tax Income” means:

(a) the sum of (i) the product of the Pre-Tax Income for the 2006 calendar year multiplied by two; plus (ii) the product of the Pre-Tax Income for the 2007 calendar year multiplied by three; divided by

(b) five.

“Actual 2008/2009 Weighted Average Pre-Tax Income” means:

(a) the sum of (i) the product of the Pre-Tax Income for the 2008 calendar year multiplied by two; plus (ii) the product of the Pre-Tax Income for the 2009 calendar year multiplied by three; divided by

(b) five.

“Affiliate” means: (i) any Person which, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the party for whom an affiliate is being determined; (ii) any Person who is a director, Governor, manager or officer of any Person described in clause (i) above; or (iii) any partner (general or limited), grantor, trustee, beneficiary, spouse, child (including an adult child) or sibling of the party for whom an affiliate is being determined.

“Agreed Accounting Procedures” has the meaning set forth in Section 2.04(b).

“Agreement” has the meaning set forth in the introductory paragraph.

“Aggregate Purchase Price” means the sum of the First Installment Price, the Second Installment Price and the Third Installment Price.

“Audited 2004 Financial Statements” has the meaning set forth in Section 4.07(a).

“Audited Closing Balance Sheet” has the meaning set forth in Section 2.04(a).

“Authorized Action” has the meaning set forth in Section 6.03(c).

“Breach” means any breach of any representation or warranty or any breach of, or failure to perform or comply with, any covenant or obligation, in or of this Agreement or any other Contract.

“Business” has the meaning set forth in the Recitals.

“Business Day” means any day other than a Saturday, Sunday or any other day on which banks are permitted by Law to be closed in the City of St. Louis, Missouri or the City of Nashville, Tennessee.

“Claimant” has the meaning set forth in Section 9.05(a).

“Closing Indebtedness” has the meaning set forth in Section 2.03.

“Closing Value” means the average closing price of EFSC’s common stock on any public exchange where such common stock is listed for the thirty (30) trading days prior to the date of determination, which shall be three (3) Business Days prior to the First Installment Closing Date, the Second Installment Closing Date and the Third Installment Closing Date as applicable.

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and any similar state law.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the introductory paragraph to this Agreement.

“Company Contracts” has the meaning set forth in Section 4.12.

“Company’s Articles” has the meaning set forth in Section 4.01.

“Company’s Operating Agreement” has the meaning set forth in Section 4.01.

“Confidentiality Agreement” has the meaning set forth in Section 6.01(a).

“Consent” means any approval, consent, ratification, waiver, novation or other authorization.

“Contract” means any agreement, contract, lease, license, consensual obligation, promise, bid, proposal or undertaking that the Company currently has or at the First Installment Closing will have in effect that has not otherwise expired or been terminated (whether written or oral, express or implied and whether in the name of the Company or in the name of a Member for the benefit of the Company).

“Control” means, with respect to any Person, the power, direct or indirect, to (i) vote 25% or more of the securities having ordinary voting power for the election of directors or other members of the governing body of such Person; or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise and either alone or in conjunction with others.

“CPA Firm” has the meaning set forth in Section 2.04(a).

“Critical Representations” has the meaning set forth in Section 9.01(a).

“Damages” has the meaning set forth in Section 9.02(a).

“Diamond” has the meaning set forth in the introductory paragraph to this Agreement.

“Diamond Articles” has the meaning set forth in Section 4.01.

“Diamond Operating Agreement” has the meaning set forth in Section 4.01.

“Document Escrow Letter” has the meaning set forth in Section 2.06(a)(vi).

“EFSC” has the meaning set forth in the introductory paragraph.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA §3(3)) and each other formal, informal or written employee benefit plan, program, policy, contract or arrangement providing for payment, reimbursement or benefits to current or former employees (or their beneficiaries or dependents) of the Company (including any bonus plan, plan for deferred compensation, retirement, severance, sick leave, employee health or other welfare benefit plan or other arrangement, change of control bonuses), maintained, sponsored, or contributed to by the Company during the past three years, or with respect to which the Company has any Liability or potential Liability.

“Employee Pension Benefit Plan” has the meaning set forth in ERISA §3(2).

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA §3(1).

“Employment Agreements” has the meaning set forth in Section 2.06(a)(ii).

“Encumbrance” means any pledge, hypothecation, mortgage, deed of trust, assignment, restriction on transfer, lease, lien (statutory or otherwise), security interest or similar arrangement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means each entity which is treated as a single employer with the Company for purposes of Code §414.

“Estimated Closing Balance Sheet” has the meaning set forth in Section 2.03.

“Estimated Net Working Capital” has the meaning set forth in Section 2.03.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Final Net Working Capital” has the meaning set forth in Section 2.04(a).

“Financial Statements” has the meaning set forth in Section 4.07(a).

“First Installment Cash Consideration” has the meaning set forth in Section 2.02.

“First Installment Closing” has the meaning set forth in Section 2.05.

“First Installment Closing Date” has the meaning set forth in Section 2.05.

“First Installment Interests” has the meaning set forth in Section 2.01.

“First Installment Price” has the meaning set forth in Section 2.02.

“First Installment Stock Consideration” has the meaning set forth in Section 2.02.

“Fiscal Year” means a fiscal year of the Company, which ends on December 31.

“Funded Debt” of a Person means any of the following: (i) Liabilities for borrowed money or issued in substitution or exchange therefor, (ii) Liabilities evidenced by any note, bond, debenture or other debt security, and (iii) Liabilities under capitalized or “synthetic leases,” including any lease which is required to be reported as a capital lease under GAAP, in each case with respect to which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations such Person assures a creditor against loss.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board, the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the Public Company Accounting Oversight Board or in such statements by such other entity as may be approved by a significant segment of the accounting profession.

“Governmental Authorization” means any material permits, license, bonds, approvals certificates, registrations, accreditations, Consents or other authorizations issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law.

“Governmental Approvals” has the meaning set forth in Section 7.01(a)(iii).

“Governmental Body” means any: (i) nation, state, county, city, town, village, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or quasi-Governmental Body of any nature (including any governmental agency, branch, department, official, commission, board, bureau, instrumentality or entity and any court or other tribunal); (iv) military branch of the United States government or any other national government; (v) multi-national organization or body; or (vi) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature, including without limitation the NASD.

“Governor” means a member of the Board of Governors of a limited liability company, as further defined in the Tennessee Act.

“Income Tax” means any federal, state, local, or foreign income Tax, including any interest, penalty, or addition thereto, whether disputed or not.

“Income Tax Return” means any Tax Return relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Indebtedness” shall mean, at a particular time, without duplication, (i) any Liability for Funded Debt, (ii) any obligation for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current Liabilities incurred in the Ordinary Course of Business), (iii) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (iv) any obligation guaranteed in any manner by a Person (including, without limitation, guarantees in the form of an agreement to repurchase or reimburse), (v) any obligation secured by an Encumbrance on a Person’s assets, other than a Permitted Encumbrance (vi) any Liability under any deferred compensation plan, severance plan, bonus plan, employment agreement, or other plan, agreement or arrangement with any Person, which Liability is payable or becomes due as a result of the transactions contemplated herein, (vii) any Liability of the Company for bonuses or profit-sharing payments which are due and owing but unpaid as of the First Installment Closing Date, and (viii) any fees, penalties, premiums or accrued and unpaid interest with respect to the foregoing (in the case of prepayments or otherwise).

“Intellectual Property” means all of the following in any jurisdiction throughout the world: (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (ii) all Internet domain names, trademarks, service marks, trade dress, slogans, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in

connection therewith; (iii) all copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith; (iv) all mask works and all applications, registrations and renewals in connection therewith; (v) all trade secrets and confidential information (including ideas, research and development, know-how, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, copyrightable works, and business and marketing plans and proposals), which in each case have value and which a reasonably prudent operator of the business of the Company would have maintained as a trade secret; (vi) all computer software; (vii) all other proprietary and/or intellectual property rights; and (viii) all copies and tangible embodiments thereof (in whatever form or medium).

“Interim Balance Sheet” has the meaning set forth in Section 4.07(a).

“Interim Financial Statements” has the meaning set forth in Section 4.07(a).

“Key Employee” has the meaning set forth in Section 2.06(a)(ii).

“Knowledge”, “known to”, or similar terms, when used in this Agreement to qualify any representation or warranty, mean that (at the time the applicable representation or warranty is made or deemed made or repeated) (i) in the case of the Company and MDI, any of the Sellers or Kathy Ruskin, and (ii) in the case of Purchaser, the Chief Executive Officer or Chief Financial Officer has actual (and not imputed or constructive) knowledge of facts or circumstances affecting such representation or warranty assuming reasonable investigation and due inquiry.

“Law” means any laws, constitutions, statutes, rules, codes, regulations or ordinances of any federal, foreign, state or local Governmental Body including without limitation the rules of the NASD set forth in the NASD Manual.

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company, MDI or any Member of the Company for use by the Company.

“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including without limitation any liability for Taxes or deferred revenue.

“Material Adverse Effect” means, as to any entity, any change or effect that is materially adverse to the business, assets, Liabilities, properties, results of operations or condition (financial or otherwise) of such entity.

“Maximum Aggregate Purchase Price” means Thirty Six Million Dollars ($36,000,000.00) minus the Closing Indebtedness.

“MDI” has the meaning set forth in the Recitals.

“MDI Articles” has the meaning set forth in Section 4.01.

“MDI Bylaws” has the meaning set forth in Section 4.01.

“Membership Interests” means all of the equity interests in the Company held by all of the Members consisting of all of the Members’ aggregate financial rights and governance rights, as more particularly described in the Tennessee Act and the Company’s Operating Agreement or the New Operating Agreement, as applicable.

“Member(s)” means the members of the Company.

“NASD” means the National Association of Securities Dealers.

“Net Working Capital” means, as of any given date, the Company’s (i) total current assets, including without limitation, cash, cash equivalents, notes receivables, inventory, and prepaid expenses and other current assets, minus (ii) total current Liabilities, including without limitation trade accounts payable and accrued expenses, determined in all cases in accordance with GAAP; provided that Net Working Capital shall exclude any current Liabilities which are included in the defined term Indebtedness.

“New Operating Agreement” has the meaning set forth in Section 2.06(a)(iii).

“Objection Notice” has the meaning set forth in Section 2.04(b).

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Party” or “Parties” means a party or the parties to this Agreement.

“Payoff Letters” has the meaning set forth in Section 2.06(a)(x).

“Permitted Encumbrances” means (i) Encumbrances for Taxes not yet due or the validity of which are being contested in good faith by appropriate proceedings and as to which reasonable reserves have been established on the Company’s financial statements in accordance with GAAP, (ii) purchase money Encumbrances securing obligations reflected on the Audited Closing Balance Sheet and Encumbrances securing rental payments under lease arrangements disclosed in Schedule 4.12, and (iii) mechanic’s, materialmen’s and similar liens arising or incurred in the Ordinary Course of Business which are not yet due and payable and which would not, individually or in the aggregate, have a Material Adverse Effect.

“Person” means an individual, a sole proprietorship, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other entity or a Governmental Body.

“Post-Closing Financial Statements” has the meaning set forth in Section 3.04(a).

“Pre-Tax Income” with respect to any calendar year, means the before Tax net income of the Company, determined in accordance with GAAP, consistently applied with the accounting principles used in the preparation of the Audited 2004 Financial Statements to the extent applicable; provided that no portion of the Company’s goodwill attributable to the purchase of Membership Interests pursuant to this Agreement will be amortized for this purpose; and provided further, that in no event shall any portion of any draw or distribution made to a Key Employee under the New Operating Agreement be included as an expense of the Company for purposes of calculating Pre-Tax Income for any calendar year.

“Prevailing Party” has the meaning set forth in Section 10.14.

“Proceeding” means any action, cause, charge, complaint, demand, claim, arbitration, audit, hearing, investigation, litigation, suit or other proceeding (whether civil, criminal, administrative or investigative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body, the NASD or any arbitrator.

“Purchaser” has the meaning set forth in the introductory paragraph.

“Purchaser Closing Documents” has the meaning set forth in Section 5.02.

“Purchaser Indemnified Person” has the meaning set forth in Section 9.02.

“Qualified Investment” means any capital investment in the Company, excluding the Aggregate Purchase Price, made by Purchaser or its Affiliates, which is approved by the Company’s Board of Governors pursuant to Section 4.5 of the New Operating Agreement.

“Restricted Purchaser Shares” means shares of EFSC’s common stock, which will be subject to the Stock Restriction Agreements.

“Schedule” has the meaning set forth in the introductory paragraph to Article 4.

“SEC” means the Securities and Exchange Commission.

“Second CPA Firm” has the meaning set forth in Section 3.04(b).

“Second Installment Cash Consideration” has the meaning set forth in Section 3.02(d)(i).

“Second Installment Closing” has the meaning set forth in Section 3.02(c).

“Second Installment Closing Date” has the meaning set forth in Section 3.02(a).

“Second Installment Stock Consideration” has the meaning set forth in Section 3.02(d)(ii).

“Second Installment Interests” has the meaning set forth in Section 3.02(a).

“Second Installment Price” has the meaning set forth in Section 3.02(b).

“Securities Act” means the Securities Act of 1933, as amended.

“Sellers’ Expenses” means all of the fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, brokers and other representatives and consultants) of the Company incurred in connection with the preparation or negotiation of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby.

“Seller Closing Certificates” has the meaning set forth in Section 2.06(a)(vi).

“Seller Party Closing Documents” has the meaning set forth in Section 4.04.

“Seller Representative” has the meaning set forth in Section 6.03.

“Service Provider” means any Governor, manager, officer or employee of the Company or MDI and any Member that provides services to the Company including without limitation Key Employees.

“Stock Restriction Agreements” has the meaning set forth in Section 2.06(a)(iv).

“Subsidiary” means any entity with respect to which any Person (or a Subsidiary thereof) of which (i) if a corporation, a majority of the total voting power of shares of stock entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, either (A) a majority of the partnership, membership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof, or (B) such Person is a general partner, Governor, manager, managing member or managing director of such partnership, limited liability company, association or other entity.

“Substantial Updated Disclosure” has the meaning set forth in Section 6.01(d)(ii).

“Targeted 2006/2007 Weighted Average Pre-Tax Income” means Eight Million Two Hundred Thousand Dollars ($8,200,000.00); provided that if prior to the Second Installment Closing Date, Purchaser makes one or more Qualified Investments, the Targeted 2006/2007 Weighted Average Pre-Tax Income will be increased by an amount sufficient to yield Purchaser a cumulative annual before-tax return of twenty three and 1/10 percent (23.1%) on all such Qualified Investments, based upon Purchaser’s pro rata share of such adjustment amount, determined in accordance with the New Operating Agreement.

“Targeted 2008/2009 Weighted Average Pre-Tax Income” means Twelve Million Nine Hundred Thousand Dollars ($12,900,000.00); provided that if prior to the Third Installment Closing Date, Purchaser makes one or more Qualified Investments, the Targeted 2008/2009 Weighted Average Pre-Tax Income will be increased by an amount sufficient to yield Purchaser a cumulative annual before-tax return of twenty three and 1/10 percent (23.1%) on all such Qualified Investments, based upon Purchaser’s pro rata share of such adjustment amount, determined in accordance with the New Operating Agreement.

“Targeted Net Working Capital” has the meaning set forth in Section 2.04(d)(i).

“Tax” means any federal, state, local, county or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other Tax of any kind whatsoever, including any interest, penalty addition to tax or additional amount imposed by any Tax authority responsible for the imposition of any such tax (domestic or foreign), whether disputed or not.

“Tax Return” means any return, declaration, report, claim for refund or information return or statement supplied or required to be supplied relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Tennessee Act” means the Tennessee Limited Liability Company Act, Chapters 201 through 248 of the Tennessee Code, in effect as of the date of this Agreement.

“Third Installment Cash Consideration” has the meaning set forth in Section 3.03(d)(i).

“Third Installment Closing” has the meaning set forth in Section 3.03(c).

“Third Installment Closing Date” has the meaning set forth in Section 3.03(a).

“Third Installment Stock Consideration” has the meaning set forth in Section 3.03(d)(ii).

“Third Installment Interests” has the meaning set forth in Section 3.03(a).

“Third Installment Price” has the meaning set forth in Section 3.03(b).

“Third Party Approvals” has the meaning set forth in Section 7.01(a)(ii).

“Third Parties” has the meaning set forth in Section 7.01(a)(ix).

1.02 Construction. Unless the context of this Agreement clearly requires otherwise: (a) references to the plural include the singular and vice versa; (b) references to one gender include all genders; (c) ”including” is not limiting; (d) ”or” has the inclusive meaning represented by the phrase “and/or”; (e) the words “hereof”, “herein”, “hereby”, “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (f) section, clause, Exhibit and Schedule references are to this Agreement unless otherwise specified; (g) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect as of the date hereof in accordance with the terms thereof and, if applicable, the terms hereof; and (h) general or specific references to any applicable Law means such applicable Law as amended, modified, codified or reenacted, in whole or in part, and in effect as of the date hereof, unless the effect thereof is to reduce, limit or otherwise prejudicially affect any obligation or any right, power or remedy hereunder, in which case such amendment, modification, codification or reenactment shall not, to the maximum extent permitted by applicable Law, form part of this Agreement and is to be disregarded for purposes of the construction and interpretation hereof.

ARTICLE 2
SALE AND TRANSFER OF MEMBERSHIP INTERESTS;
FIRST INSTALLMENT CLOSING

2.01 Purchase of First Installment Interests. Pursuant to the terms and subject to the conditions of this Agreement, at the First Installment Closing, the Sellers will sell and transfer to Purchaser and Purchaser will purchase from the Sellers, on a pro rata basis, an aggregate portion of Sellers’ collective Membership Interests constituting sixty percent (60%) of all of the then issued and outstanding Membership Interests (the “First Installment Interests”), all as set forth on Exhibit A.

2.02 First Installment Price. The aggregate purchase price for the First Installment Interests (the “First Installment Price”) will be Fifteen Million Dollars ($15,000,000.00) minus the amount of Funded Debt as set forth on the Estimated Closing Balance Sheet. Subject to the other provisions of this Article 2, Purchaser shall pay sixty five percent (65%) of the First Installment Price in the form of cash (the “First Installment Cash Consideration”) and shall pay the remainder of the First Installment Price, namely thirty five percent (35%), in the form of Restricted Purchaser Shares (the “First Installment Stock Consideration”). For purposes of determining the aggregate number of Restricted Purchaser Shares constituting the First Installment Stock Consideration, the Restricted Purchaser Shares shall be valued at their Closing Value.

2.03 Estimated Closing Balance Sheet. Not later than five (5) days prior to the First Installment Closing, the Company, with the advice and consultation of Purchaser, shall prepare and deliver an estimated balance sheet as of the First Installment Closing Date (the “Estimated Closing Balance Sheet”), together with a (i) good faith estimate of the Net Working Capital of the Company as of the First Installment Closing (the “Estimated Net Working Capital”) and (ii) a statement of the Funded Debt of the Company as of the First Installment Closing (the “Closing Indebtedness”). The Estimated Closing Balance Sheet shall be prepared in accordance with GAAP, consistent with the application of GAAP in preparation of the Audited 2004 Financial Statements and with the financial books and records of the Company (which financial books and records are warranted by the Company to be correct and complete), and shall be certified by the Company’s Chief Executive Officer as being a reasonable good faith estimate of the items specified in clauses (i) and (ii) above.

2.04 Net Working Capital of the Company.

(a) Not later than sixty (60) days after the First Installment Closing Date, the Company shall deliver to the Seller Representative and the Purchaser a balance sheet of the Company as of the First Installment Closing Date (the “Audited Closing Balance Sheet”), audited by KPMG LLP (the “CPA Firm”) together with a calculation, prepared by the Company, of the proposed Net Working Capital as of the First Installment Closing Date based on the Audited Closing Balance Sheet (the “Final Net Working Capital”). Each of the Parties shall cooperate with the preparation and audit of the Audited Closing Balance Sheet.

(b) All fees and expenses of the Audited Closing Balance Sheet shall be allocated fifty percent by Purchaser and fifty percent to the Sellers collectively (which portion shall be treated as a Sellers’ Expense). The Audited Closing Balance Sheet shall be prepared in accordance with GAAP consistently applied with the accounting principles used in the preparation of Audited 2004 Financial Statements and with the financial books and records of the Company (which financial books and records are warranted by the Company to be correct and complete) (collectively, the “Agreed”).

Accounting Procedures To the extent permitted by the CPA Firm, which permission Purchaser shall request, the Seller Representative and Purchaser shall each have access to all working papers and other records relative to the preparation and audit thereof, and shall each have reasonable access to the personnel and financial records of the Company for the purpose of determining any item reflected on the Audited Closing Balance Sheet. The Audited Closing Balance Sheet shall be conclusive and binding on the Parties unless the Seller Representative or Purchaser delivers a detailed statement describing its objections thereto to the other Party (“Objection Notice”) within thirty (30) days after the delivery of the Audited Closing Balance Sheet to the Purchaser and the Seller Representative, provided that no objection shall be valid unless it relates to the failure of the Audited Closing Balance Sheet to comply with the Agreed Accounting Procedures. Any Objection Notice shall be in sufficient detail such that the other Party can determine the nature, basis and, to the extent possible, amount of such objections. Purchaser and the Seller Representative will use their good faith efforts to resolve any such objections themselves. In the event an Objection Notice is delivered by the Seller Representative or Purchaser, Purchaser and the Seller Representative shall meet (either in person or telephonically) within fifteen (15) days after delivery of the Objection Notice to attempt to resolve such objections.

(c) In the event that Purchaser and the Seller Representative do not obtain a final resolution within thirty (30) days after delivery of any Objection Notice, then the Second CPA Firm shall resolve such dispute pursuant to the provisions of Section 3.04(b).

(d) Five (5) Business Days after the final determination of the Final Net Working Capital pursuant to the preceding provisions of this Section 2.04:

(i) If the Final Net Working Capital exceeds Five Hundred Fifty Thousand and No/100 Dollars ($550,000.00) (the “Targeted Net Working Capital”), Purchaser will cause the Company to distribute the amount of such excess in cash to the Sellers, such distributions to be made to the Sellers in the proportions set forth on Schedule 4.02; and

(ii) If the Final Net Working Capital is less than the Targeted Net Working Capital, the Sellers will make a contribution of cash to the Company in the amount of such deficiency, which will be treated as a capital contribution under the New Operating Agreement, the Sellers’ respective shares of such contribution to be in the proportions set forth on Schedule 4.02. Any adjustments pursuant to this Section 2.04 shall be treated as an adjustment to the First Installment Price for tax and accounting purposes and the parties agree to treat any adjustment as such.

2.05 First Installment Closing. Subject to the conditions of this Agreement, the purchase and sale of the First Installment Interests provided for in this Article 2 (the “First Installment Closing”) will take place at the offices of Greensfelder, Hemker & Gale, P.C. at 10 South Broadway, Suite 2000, Saint Louis, Missouri, at 10:00 a.m., local time, on the fifth (5^th) Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the First Installment Closing (other than conditions with respect to actions the respective Parties will take at the Closing itself) or on such other date or location as the Parties may mutually determine (the “First Installment Closing Date”); provided, however, that the First Installment Closing Date shall be no later than November 30, 2005.

2.06 First Installment Closing Deliveries.

(a) At the First Installment Closing, the Company and the Sellers will deliver, or cause to be delivered, to Purchaser:

(i) [Intentionally deleted.]

(ii) Employment agreements (collectively, the “Employment Agreements”), in the forms attached hereto as Exhibit C-1 through Exhibit C-12, each duly executed by the Company and by each of the Sellers, Larry Gilkerson, Al Marano, William Rouse, and Kathy Ruskin (collectively, the “Key Employees”), respectively, which shall, among other things, have the effect of canceling and terminating, without liability to the Company, any employment agreement previously entered into by and between such Key Employee and the Company;

(iii) A Second Amended and Restated Operating Agreement of the Company, dated effective as of the First Installment Closing Date in the form of Exhibit D, duly executed by the Company and the Sellers (the “New Operating Agreement”);

(iv) Stock restriction agreements (collectively, the “Stock Restriction Agreements”), each in the form attached hereto as Exhibit E, duly executed by each Seller;

(v) A certificate of the Chief Executive Officer of the Company stating that on and at the First Installment Closing Date (i) each of the representations and warranties set forth in Article 4 is true, correct and accurate in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the First Installment Closing Date (except those representations and warranties which address matters only as of a particular date need only be true and correct as of such date), and (ii) each of the conditions specified in Sections 7.01(a)(ii) through (viii) have been satisfied in all respects;

(vi) The following documents under cover of a letter, satisfactory in form and substance to Purchaser, instructing Purchaser to hold such documents in escrow until the Second Installment Closing and the Third Installment Closing respectively (the “Document Escrow Letter”), duly executed by the Seller Representative, Diamond and the Company together with (A) membership interest assignments in the form of Exhibit A, duly executed by Diamond in favor of Purchaser, and dated effective as of the Second Installment Closing Date and Third Installment Closing Date, respectively, (B) two (2) certificates duly executed by Diamond, effective as of the Second Installment Closing Date and Third Installment Closing Date, respectively, stating that on and as of each such respective closing dates, Diamond has good and marketable title to its Membership Interest, free and clear of all Encumbrances and Purchaser will acquire good and marketable title thereto, free of any Encumbrances, and (the “Seller Closing Certificates”) (C) any other documents that Purchaser reasonably requests to transfer to Purchaser good and marketable title to all of the Second Installment Interests and the Third Installment Interests, free from any Encumbrances, effective as of such dates;

(vii) The Third Party Approvals;

(viii) A copy of the Articles of Organization of the Company with all amendments thereto including the amendment specified in Section 7.01(a)(xiv), certified by the Secretary of State of Tennessee as of a date not earlier than fifteen (15) days prior to the First Installment Closing Date;

(ix) A certificate of the Secretary of the Company, dated as of First Installment Closing Date, in form and substance satisfactory to Purchaser, certifying: (A) there have been no amendments to the Company’s Articles since the date of certification by the Secretary of State of Tennessee referred to in the immediately preceding clause (viii); (B) as to the incumbency and genuineness of the signatures of each officer, Governor or manager of the Company executing and performing under this Agreement and consummating any other transactions contemplated by this Agreement; and (C) that attached to the secretary’s certificate are true copies of the duly adopted resolutions of the Board of Governors of the Company and true copies of the duly adopted resolutions of the Members authorizing the execution and performance of this Agreement;

(x) Payoff letters from each lender to whom the Company owes any amount of Funded Debt, dated as of the First Installment Closing Date (the “Payoff Letters”), confirming the aggregate amount of principal, accrued interest and/or other fees or amounts owed by the Company in respect thereof through and including the First Installment Closing Date, as well as agreeing to terminate any Encumbrances against the Company’s assets upon receipt thereof, and otherwise in form and substance reasonably acceptable to Purchaser;

(xi) An opinion of Bass, Berry & Sims PLC, which shall be addressed to, and subject to reliance by, Purchaser, dated as of the First Installment Closing Date, with respect to the matters set forth in Exhibit F attached hereto and in form and substance reasonably satisfactory to Purchaser;

(xii) A certificate or certificates, dated as of a date not more than fifteen (15) days prior to the First Installment Closing Date, duly issued by the Secretary of State of Tennessee and any other state, if any, in which the Company is authorized to do business, in each case indicating that the Company, is in good standing and authorized to do business and that all state franchise and/or Tax Returns and Taxes for all periods ending prior to the First Installment Closing Date have been filed and paid;

(xiii) General releases executed by each Seller and Key Employee in the form attached hereto as Exhibit G;

(xiv) Forms of election in compliance with Section 754 of the Code, as reasonably determined by Purchaser’s counsel, duly executed by the Company and each Seller (the “754 Election Forms”) with respect to both (A) the final short tax year of the Company ending on the First Installment Closing and (B) the tax year of the Company commencing on the First Installment Closing; and

(xv) Such additional documents, instruments or items of information duly executed by the Sellers, the Company, or the Company’s members, managers, Governors, or officers as may be reasonably requested by Purchaser in respect of any aspect or consequence of the transactions contemplated hereby.

(b) At the First Installment Closing, Purchaser will:

(i) Deliver to the Sellers the First Installment Cash Consideration, by wire transfer of immediately available funds to the accounts designated in writing by the Sellers not less than two Business Days prior to the First Installment Closing which shall be in accordance with the sharing ratios set forth on Schedule 4.02;

(ii) Deliver to the Sellers the Restricted Purchaser Shares, or receipts therefor in accordance with the Stock Restriction Agreements, constituting the First Installment Stock Consideration, which shall be allocated among the Sellers in accordance with the sharing ratios set forth on Schedule 4.02;

(iii) Deliver to the Seller Representative a certificate of the Secretary of Purchaser, dated as of the First Installment Closing Date, in form and substance satisfactory to the Seller Representative, in each case, certifying: (A) that a true and complete copy of Purchaser’s Articles of Incorporation and bylaws, as in full force and effect on the First Installment Closing Date, is attached to such certificate; (B) as to the incumbency and genuineness of the signatures of each officer of Purchaser executing and performing under Agreement and consummating any other transactions contemplated by this Agreement; and (C) that attached to the secretary’s certificate are true copies of the duly adopted resolutions of the board of directors of such Person authorizing the execution and performance of this Agreement, and the consummation of the transactions contemplated hereby;

(iv) Deliver to the Seller Representative a certificate of an authorized officer of EFSC stating that on and at the First Installment Closing Date (i) each of the representations and warranties set forth in Article 5 is true, correct and accurate in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the First Installment Closing Date (except those representations and warranties which address matters only as of a particular date need only be true and correct as of such date), and (ii) each of the conditions specified in Sections 7.02(a) have been satisfied in all respects;

(v) Payoff amounts, pursuant to any Payoff Letters, of any Funded Debt of the Company which Purchaser elects to pay to the lenders thereof on behalf of the Company;

(vi) An opinion of Greensfelder, Hemker & Gale, P.C., which shall be addressed to, and subject to reliance by, the Sellers, dated as of the First Installment Closing Date, with respect to the matters set forth in Exhibit H attached hereto and in form and substance reasonably satisfactory to Purchaser;

(vii) The New Operating Agreement, duly executed by Purchaser; and

(viii) Such additional documents, instruments or items of information duly executed by the Purchaser, or the Purchaser’s officers as may be reasonably requested by the Sellers in respect of any aspect or consequence of the transactions contemplated hereby.

ARTICLE 3
DEFERRED PURCHASE OF MEMBERSHIP
INTERESTS; RESOLUTION OF CERTAIN DISPUTES

3.01 Diamond. At and as of the First Installment Closing, the Sellers will transfer to Diamond forty percent (40%) of all then issued and outstanding Membership Interests, namely all of their Membership Interests other than those owned by Purchaser after giving effect to the First Installment Closing, and each Seller shall cease to be a Member of the Company.

3.02 Purchase of Second Installment Interests.

(a) Pursuant to the terms and subject to the conditions of this Agreement, on the later of (i) March 31, 2008 and (ii) two (2) Business Days after the resolution of any dispute regarding the Second Installment Price as contemplated in Section 3.04 (the “Second Installment Closing Date”), Diamond will sell and transfer to Purchaser and Purchaser will purchase from Diamond an aggregate portion of Diamond’s Membership Interests constituting fifty percent (50%) of all issued and outstanding Membership Interests then held by Diamond (the “Second Installment Interests”), so that upon conclusion of the Second Installment Closing, Purchaser will own eighty percent (80%) of all of the then issued and outstanding Membership Interests.

(b) The aggregate purchase price for the Second Installment Interests (the “Second Installment Price”) shall equal:

(i) the product of (A) a fraction, the numerator of which is the Actual 2006/2007 Weighted Average Pre-Tax Income and the denominator of which is the Targeted 2006/2007 Weighted Average Pre-Tax Income, multiplied by (B) the sum of the First Installment Price plus Nine Million Five Hundred Thousand and 0/100 Dollars ($9,500,000.00); minus

(ii) the First Installment Price;

provided that in no event shall the Second Installment Payment exceed the excess, if any, of the Maximum Aggregate Purchase Price minus the First Installment Price.

(c) Subject to the conditions of this Agreement, the purchase and sale of the Second Installment Interests (the “Second Installment Closing”) shall take place on the Second Installment Closing Date at the time and location designated by Purchaser. At the Second Installment Closing:

(i) the Seller Representative will release, pursuant to the terms of the Escrow Letter (A) the membership interest assignments representing the Second Installment Interests, duly executed in favor of Purchaser, (B) the Seller Closing Certificates with respect to the Second Installment Closing and (C) any other documents in respect of the transfer of the Second Installment Interests that were deposited with the Escrow Agent pursuant to Section 2.06(a)(vi); and

(ii) Diamond will execute and deliver to EFSC a Stock Restriction Agreement governing the Second Installment Stock Consideration; provided that Diamond shall be permitted to, and the terms of such Stock Restriction Agreement shall not prohibit Diamond from, transferring all or any portion of the Second Installment Stock Consideration to the members of Diamond in accordance with the Diamond Operating Agreement, subject to such member’s execution and delivery of a Stock Restriction Agreement in the form of Exhibit E.

(d) On the Second Installment Closing Date, Purchaser will:

(i) Deliver to Diamond an aggregate amount determined in Purchaser’s discretion but in no event less than thirty percent (30%) of the Second Installment Price (the “Second Installment Cash Consideration”), by wire transfer of immediately available funds in accordance with instructions delivered by the Seller Representative not less than two (2) Business Days prior to the Second Installment Closing Date; and

(ii) Deliver to Diamond such number of Restricted Purchaser Shares having an aggregate Closing Value equal to the remainder of the Second Installment Price (the “Second Installment Stock Consideration”).

(iii) Notwithstanding the foregoing, in the event shares of EFSC’s common stock are not publicly traded on a securities exchange or the Nasdaq National Market, the Purchaser shall pay 100% of the Second Installment Price in cash by wire transfer of immediately available funds in accordance with subsection (i) above.

3.03 Purchase of Third Installment Interests.

(a) Pursuant to the terms and subject to the conditions of this Agreement, on the later of (i) March 31, 2010 and (ii) two (2) Business Days after the resolution of any dispute regarding the Third Installment Price (the “Third Installment Closing Date”), Diamond will sell and transfer to Purchaser and Purchaser will purchase from Diamond all of the issued and outstanding Membership Interests then held by Diamond (the “Third Installment Interests”).

(b) The aggregate purchase price for the Third Installment Interests (the “Third Installment Price”) shall equal:

(i) the product of (A) a fraction, the numerator of which is the Actual 2008/2009 Weighted Average Pre-Tax Income and the denominator of which is the Targeted 2008/2009 Weighted Average Pre-Tax Income, multiplied by (B) the Maximum Purchase Price; minus

(ii) the Second Installment Price; and minus

(iii) the First Installment Price;

provided that in no event shall the Third Installment Price exceed the excess, if any, of the Maximum Purchase Price minus the First Installment Price minus the Second Installment Price.

(c) Subject to the conditions of this Agreement, the purchase and sale of the Third Installment Interests (the “Third Installment Closing”) shall take place on the Third Installment Closing Date at the time and location designated by Purchaser. At the Third Installment Closing:

(i) the Seller Representative will cause the Document Escrow Agent to deliver (A) the membership interest assignments representing the Third Installment Interests duly executed by Diamond in favor of Purchaser, (B) the Seller Closing Certificates with respect to the Third Installment Closing and (C) any other documents in respect of the transfer of the Third Installment Interests that were deposited with the Escrow Agent pursuant to Section 2.06(a)(vi); and

(ii) Diamond will execute and deliver to EFSC a Stock Restriction Agreement governing the Third Installment Stock Consideration, to the extent any portion thereof is not subject to the Stock Restriction Agreement described in Section 3.02(i)(ii); provided that Diamond shall be permitted to, and the terms of such Stock Restriction Agreement shall not prohibit Diamond from, transferring all or any portion of the Second Installment Stock Consideration to the members of Diamond in accordance with the Diamond Operating Agreement, subject to such member’s execution and delivery of a Stock Restriction Agreement in the form of Exhibit E.

(d) On the Third Installment Closing Date, Purchaser will:

(i) Deliver to Diamond an aggregate amount determined in Purchaser’s discretion but in no event less than thirty percent (30%) of the Third Installment Price (the “Third Installment Cash Consideration”), by wire transfer of immediately available funds in accordance with instructions delivered by the Seller Representative not less than two (2) Business Days prior to the Third Installment Closing Date; and

(ii) Deliver to Diamond such number of Restricted Purchaser Shares having an aggregate Closing Value equal to the remainder of the Third Installment Price (the “Third Installment Stock Consideration”).

(iii) Notwithstanding the foregoing, in the event shares of EFSC’s common stock are not publicly traded on a securities exchange or the Nasdaq National Market, the Purchaser shall pay 100% of the Third Installment Price in cash by wire transfer of immediately available funds in accordance with subsection (i) above.

3.04 Resolution of Certain Disputes.

(a) The Actual 2006/2007 Weighted Average Pre-Tax Income and the Actual 2008/2009 Weighted Average Pre-Tax Income shall be based on the Company’s unaudited financial statements for the applicable fiscal years (the “Post-Closing Financial Statements”), each of which shall be prepared by Purchaser consistent with the books and records of the Company and in accordance with GAAP applied consistently with the Audited 2004 Financial Statements. Purchaser shall deliver to the Seller Representative each of the Post-Closing Financial Statements prior to three Business Days following EFSC’s filing of any form or report with the SEC, including without limitation a Current Report on Form 8-K, which contains EFSC’s consolidated earnings for such fiscal year, but in no event later than February 28 following such fiscal year. Such delivery of the Post-Closing Financial Statements for the 2007 Fiscal Year and the 2009 Fiscal Year shall be accompanied by Purchaser’s calculation of the Second Installment Price and the Third Installment Price, as applicable. The Seller Representative shall have access to all of Purchaser’s working papers and other records relative to the preparation of the Post-Closing Financial Statements, and shall have reasonable access to the personnel and financial records of the Company for the purpose of determining any item reflected on the Post-Closing Financial Statements. Each of the Post-Closing Financial Statements shall be conclusive and binding on the Parties unless the Seller Representative delivers an Objection Notice within thirty (30) days after Purchaser’s delivery thereof to the Seller Representative. Any

Objection Notice shall be in sufficient detail such that Purchaser can determine the nature, basis and, to the extent possible, amount of such objections. Purchaser and the Seller Representative will use their good faith efforts to resolve any such objections themselves. In the event an Objection Notice is delivered by the Seller Representative, Purchaser and the Seller Representative shall meet (either in person or telephonically) within fifteen (15) days after delivery of the Objection Notice to attempt to resolve such objections. In the event that Purchaser and the Seller Representative do not obtain a final resolution within thirty (30) days after delivery of any Objection Notice, then the Second CPA Firm shall resolve such dispute pursuant to the provisions of Section 3.04(b).

(b) In the event of any dispute between Purchaser and the Seller Representative contemplated in Section 2.04(c) or Section 3.04(a), Deloitte & Touche LLP (the “Second CPA Firm”) shall resolve any objections which remain unresolved and determine the Audited Closing Balance Sheet and/or any disputed Post-Closing Financial Statements in accordance with the provisions of this Agreement. Purchaser and the Seller Representative shall deliver to the Second CPA Firm all financial information concerning the Company reasonably necessary to resolve the objections in such Objection Notice, including the Audited Closing Balance Sheet or the disputed Post-Closing Financial Statements, a fully executed copy of this Agreement, the applicable work papers of the CPA Firm or other independent accounting firm if applicable and, to the extent permitted by the CPA Firm or other independent accounting firm, which permission Purchaser shall request, and each of Purchaser’s and the Seller Representative’s applicable calculations, including calculations of the Final Net Working Capital, Actual 2006/2007 Weighted Average Pre-Tax Income, Actual 2008/2009 Weighted Average Pre-Tax Income, the Second Installment Price or the Third Installment Price. Purchaser and the Seller Representative shall also instruct the Second CPA Firm to make its final determination based solely on presentations by Purchaser and the Seller Representative which are in accordance with the guidelines and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution by the Second CPA Firm of such objections and determination of the Audited Closing Balance Sheet, disputed Post-Closing Financial Statements and/or disputed calculations shall be: (i) set forth in writing; (ii) delivered to Purchaser and the Seller Representative within thirty (30) days after delivery to the Second CPA Firm of the financial and other information provided for herein; and (iii) conclusive and binding upon Purchaser, the Company and the Seller Representative. The fees and expenses of the Second CPA Firm shall be allocated fifty percent to Purchaser and fifty percent to the Sellers.

3.05 Stock Restriction Agreement. If Diamond transfers any portion of the Second Installment Stock Consideration or the Third Installment Stock Consideration to any member of Diamond, such transferee shall execute and deliver a Stock Restriction Agreement if and to the extent such transferee is not already a party to a Stock Restriction Agreement.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company and the Sellers hereby represent and warrant to Purchaser that the statements contained in this Article 4 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the First Installment Closing Date (as though made then and as though the First Installment Closing Date were substituted for the date of this Agreement throughout this Article 4), except as may be set forth in the disclosure schedules attached to this Agreement and incorporated as if fully set forth herein (the “Schedules”). The Schedules are arranged and numbered corresponding to the numbered and lettered sections contained in this Article 4, and any item disclosed

in the Schedules shall be deemed disclosed on and incorporated in and under each other section of the Schedules in which such disclosure is, on its face, reasonably apparent; provided that the mere listing (or inclusion of a copy) of a document shall not be deemed adequate to disclose the contents of such document or an exception to a representation or warranty made herein.

4.01 Incorporation, Qualification and Power. The Company and Diamond are each limited liability companies duly organized, validly existing and in good standing under the laws of the State of Tennessee. MDI is a corporation, duly organized, validly existing and in good standing under the laws of the State of Tennessee. The Company, Diamond and MDI have full requisite power and authority to carry on the business in which each is engaged in the manner now conducted and presently proposed to be conducted and to own and use the properties owned and used by each of them. The Company, Diamond and MDI are duly authorized to conduct business and are in good standing under the laws of each jurisdiction where such qualification is required, each of which are identified on Schedule 4.01, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to cause Damages to the Company. Diamond has previously delivered to Purchaser true, correct and complete copies of its articles of organization (the “Diamond Articles”) and operating agreement (the “Diamond Operating Agreement”), in each case as amended to date. The Company has previously delivered to Purchaser true, correct and complete copies of its Articles of Formation (the “Company’s Articles”) and operating agreement (the “Company’s Operating Agreement”) of the Company, in each case as amended to date excluding the amendment contemplated by Section 7.01(a)(xiv). MDI has previously delivered to Purchaser true, correct and complete copies of its Articles of Incorporation (the “MDI Articles”) and bylaws (the “MDI Bylaws”). The membership and stock ledgers of the Company and MDI are true, correct and complete in all respects. The Company is not in default under or in violation of any provision the Company’s Articles. None of the Company, any Seller, Governor or manager is in default under or in violation of any provision of the Company’s Operating Agreement. MDI is not in default of any provision of the MDI Articles or the MDI Bylaws.

4.02 Capitalization. Schedule 4.02 sets forth a complete and accurate list of all members of the Company together with each member’s respective address, capital account as of the date hereof and share of the profits and losses of the Company. At the First Installment Closing, no Seller’s capital account on the Company’s books shall be less than zero. The Sellers constitute all of the members of the Company and the Membership Interests held by the Sellers constitute all Membership Interests of the Company. Other than the Sellers, Diamond and the members of Diamond, there are no persons who have any rights to the profits, losses, distributions or other economic interest in the Company. The rights and obligations of the Members with respect to the Membership Interests are as set forth in the Company’s Articles and the Company’s Operating Agreement and except as set forth therein there are no (i) voting trusts, proxies or other agreements or understandings with respect to the voting of the Membership Interests or (ii) agreements or other understandings (whether or not contingent) with respect to any restrictions on the transfer of any Membership Interests. Other than as contemplated by this Agreement, no Person other than Diamond and the members of Diamond has any agreement, option, warrant, right or privilege, whether by law or contract, for the purchase from the Sellers of any of the Membership Interests, nor any agreement, convertible security, option, warrant, right or privilege to subscribe for or otherwise acquire any Membership Interest, whether by law or contract. There are no outstanding or authorized equity appreciation, equity participation or similar rights with respect to the Company. There are no declared but unpaid distributions. The Sellers and the individuals set forth on Schedule 4.02 will, as of the First Installment Closing Date, constitute all of the members of Diamond and the membership interests of Diamond held by the Sellers and the

individuals set forth on Schedule 4.02 shall constitute all of the membership interests of Diamond. The Company has not violated any federal or state securities laws in connection with the offer, sale or issuance of the Membership Interests. On the respective closing dates contemplated by Articles 2 and 3, Purchaser will acquire good and marketable title to the Membership Interests as contemplated thereby, free and clear of all Encumbrances.

4.03 Subsidiaries. Except for MDI, the Company does not have any Subsidiaries. Schedule 4.03 sets forth a correct and complete list of the owners of the capital stock of MDI, including their respective names, addresses, and number and class of shares owned. The Company is the record and beneficial owner of, and has good and marketable title to, the shares of outstanding capital stock of MDI indicated on Schedule 4.03, free and clear of all Liens. All of the issued and outstanding shares of capital stock of MDI have been duly authorized, are validly issued, fully paid, and nonassessable and are not subject to, nor were they issued in violation of, any preemptive rights or rights of first refusal. MDI does not have outstanding any capital stock or securities convertible or exchangeable for any of its capital stock or containing any profit participation features, nor any rights or options to subscribe for or to purchase any of its capital stock or any securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plans. MDI is not subject to any option or obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock. MDI has not violated any federal or state securities laws in connection with the offer, sale or issuance of its capital stock. There are no agreements, other than solely with the Company, with respect to the voting or transfer of the capital stock of MDI. Except for the Company’s ownership of MDI, the Company does not own or hold the right to acquire any shares of stock or any other security or interest in any other Person or any obligation to make any investment in any Person.

4.04 Authorization of Transaction. This Agreement constitutes and each other agreement to be executed and delivered by the Company, the Sellers and Diamond at the First Installment Closing, the Second Installment Closing and the Third Installment Closing (collectively, the “Seller Party Closing Documents”) will constitute the valid and legally binding obligation of the Company, the Sellers and Diamond, enforceable in accordance with their respective terms and conditions, except to the extent that (i) enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or similar laws now or hereafter in effect relating to or limiting creditors’ rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court or other similar Person before which any proceeding therefor may be brought. The Company, each Seller and Diamond have the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Seller Party Closing Documents and to perform its respective obligations under this Agreement and the Seller Party Closing Documents, and such action has been duly authorized by all necessary action on the part of the Company, each Seller and Diamond. The Company’s Board of Governors and Diamond’s Board of Governors have duly authorized the execution and delivery of this Agreement by each of them and the performance of their respective obligations hereunder and all action and approvals required under the Tennessee Act in order to consummate the transactions contemplated by this Agreement have occurred prior to the date hereof.

4.05 Noncontravention. Except as set forth on Schedule 4.05, the execution and delivery by the Company, the Sellers and Diamond of this Agreement and all of the other agreements and instruments contemplated hereby to which the Company, MDI, the Sellers or Diamond is a party and the fulfillment of and compliance with the respective terms hereof and thereof by the Company and the

Sellers do not and shall not (i) result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Encumbrance pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any Governmental Authorization or other Consent or other action of or by or notice or declaration to, or filing with, any third party or any Governmental Body pursuant to, (I) the Company’s Articles, the Company’s Operating Agreement, the Diamond Articles or the Diamond Operating Agreement, or (II) any Law to which the Company, MDI or any Seller is subject, or (III) any order, judgment or decree to which the Company, MDI or any Seller is subject, or (IV) any Contract.

4.06 Books and Records. The books of account and other financial records of the Company and MDI, all of which have been delivered or made available to Purchaser, are complete and correct in all material respects and represent actual, bona fide transactions and have been maintained in accordance with sound business practices. The minute books of the Company, copies of all of which have been delivered to Purchaser, contain in all material respects accurate and complete records of all meetings held of, and action taken by, the members, the Board of Governors and any committees of the Board of Governors of the Company, and no such meetings have been held for which minutes have not been prepared or are not contained in such minute books. The minute books of MDI, copies of all of which have been delivered to Purchaser, contain in all material respects accurate and complete records of all meetings held of, and corporate action taken by, the shareholders, the Board of Directors and any committees of the Board of Directors of MDI, and no such meetings have been held for which minutes have not been prepared or are not contained in such minute books.

4.07 Financial Statements.

(a) Attached to Schedule 4.07(a) are the following financial statements of the Company: (i) audited, consolidated, balance sheet and related statements of income and members’ equity and statements of cash flows as of and for the fiscal year ended December 31, 2003 (the “Audited 2003 Financial Statements”); (ii) audited and consolidated balance sheet and related statements of income and members equity and statements of cash flows as of and for the fiscal year ended December 31, 2004 (the “Audited 2004 Financial Statements”); and (iii) unaudited, consolidated internally prepared Balance Sheet and related statements of income and members’ equity and statements of cash flows as of and for the six (6) month period ended June 30, 2005 (such balance sheet, the “Interim Balance Sheet” and collectively with such statement of income, the “Interim Financial Statements”). The attached financial statements described in the preceding clauses (i), (ii) and (iii) shall be collectively referred to as the “Financial Statements.”

(b) Each of the Financial Statements (including in all cases the notes thereto, if any) have been prepared on a consistent basis throughout the periods covered thereby, present fairly in all material respects the financial condition of the Company as of such dates and the results of operations of the Company for such periods, are correct and complete in all material respects.

(c) The Audited 2003 Financial Statements, the Audited 2004 Financial Statements and the Interim Financial Statements have each been prepared in accordance with GAAP, consistently applied, except for the absence of footnote disclosure and year end adjustments in the Statements.

(d) The Audited Closing Balance Sheet will be prepared in accordance with GAAP, applied consistently with the Audited 2004 Financial Statements, present fairly the financial condition of the Company as of the First Installment Closing Date, will be correct and complete in all material respects, and will be consistent with the financial books and records of the Company.

4.08 Tax Matters.

(a) The Company and MDI have duly and timely filed all state and federal Income Tax Returns, all sales or use Tax Returns and all other Tax Returns that each was required to file. All such Tax Returns are correct and complete in accordance with applicable Law as filed. All Taxes owed by the Company and MDI (whether or not shown on any Tax Return) have been paid and all taxes accrued and not paid prior to Closing will be properly reflected on the Audited Closing Balance Sheet in accordance with GAAP. There are no Encumbrances on any of the assets of the Company or MDI that arose in connection with any failure (or alleged failure) to pay any Tax.

(b) The Company and MDI have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.

(c) There is no dispute or claim concerning any Tax Liability of the Company or MDI either: (i) claimed or raised by any Governmental Body in writing; or (ii) as to which the Sellers, the Company or MDI has Knowledge based upon personal contact with any agent of such authority. Schedule 4.08(c) lists all federal, state, local and foreign Income Tax Returns, all state sales or use Tax Returns and all other Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 2002 and specifically indicates any Tax Returns that have been audited or that currently are the subject of an ongoing audit by any Governmental Body. The Company and MDI have delivered to Purchaser correct and complete copies of all such Tax Returns and all examination reports and statements of deficiencies assessed against or agreed to by the Company since December 31, 2002.

(d) Except as set forth on Schedule 4.08(d), neither the Company nor MDI has waived any statute of limitations in respect of Taxes, agreed to any extension of time with respect to a Tax assessment or deficiency and is not the beneficiary of any extension of time within which to file any Tax Return.

(e) Neither the Company nor MDI is a party to or bound by any Tax allocation or Tax sharing agreement with any Person, and has no current or potential contractual obligation to indemnify any other Person with respect to Taxes.

(f) Neither the Company nor MDI has any liability for the Taxes of any Person (other than the Company or MDI) under Treas. Reg. § 1.1502-6 (or any similar provision of state, local, or foreign Law), as a transferee or successor, by contract, or otherwise.

(g) No claim has ever been made by a taxing authority in a jurisdiction where the Company or MDI does not file Tax Returns that the Company or MDI is or may be subject to taxation by such jurisdiction.

(h) There are no Encumbrances for Taxes (other than for Taxes not yet due and payable) upon the assets of the Company or MDI.

(i) Neither the Company nor MDI will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the First Installment Closing Date as a result of any (A) change in method of accounting for a taxable period ending on or prior to the First Installment Closing Date under Code Section 481(c) (or any corresponding or similar provision of state, local or foreign income Tax Law); (B) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax Law); (C) deferred intercompany gain or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax Law); (D) installment sale made prior to the First Installment Closing Date; or (E) prepaid amount received on or prior to the First Installment Closing Date.

4.09 Title to Assets. The Company and MDI each have good and marketable title to, or a valid leasehold interest in, the properties and assets used by each of them, located on their respective premises or reflected on the Interim Balance Sheet, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Interim Balance Sheet. Except as set forth on Schedule 4.09, all properties and assets reflected on the Interim Balance Sheet, are free and clear of all Encumbrances except Permitted Encumbrances, are free from material defects (patent and latent), have been maintained in accordance with normal industry practice, are in good operating condition and repair (subject to normal wear and tear). Such properties and assets constitute substantially all of the assets, tangible and intangible, of any nature whatsoever, owned by the Company as of the First Installment Closing Date and necessary to operate the Company’s business in the manner presently operated by the Company.

4.10 Bank Accounts. A correct and complete list of all deposit accounts, operating accounts, trust accounts, trust receivable accounts, investment accounts, any other accounts and safe deposit boxes of the Company and MDI are listed on Schedule 4.10, including with respect to each such account, the type of account, the depository institution, the account number and all individuals authorized to sign on the account, and, with respect to each safe deposit box, the depository institution where the box is held and all individuals authorized to access the box.

4.11 [Intentionally Deleted]

4.12 Contracts. Schedule 4.12 lists the following Contracts to which the Company or MDI is a party, other than the Company’s Operating Agreement (collectively, the “Company Contracts”):

(a) Any Contract pursuant to which any Person has granted the Company or MDI rights to act as a sales agent, broker or representative, including without limitation any such agreements with any insurance company;

(b) Any Contract pursuant to which the Company or MDI has granted any Person rights to act as a sales agent, broker or representative;

(c) Any Contract related to the employment, compensation or benefits of any Service Provider or sales representative that is not terminable at will or any Contract related to the termination of employment or service of any Service Provider;

(d) Any Contract for the lease or sublease of real property, whether as lessor or lessee;

(e) Any Contract that would involve any payment upon a change of control of the Company or MDI or as a result of the consummation of the transactions contemplated hereby,

(f) Any Contract (or group of related Contracts) for the lease of personal property to or from any Person providing for lease payments in excess of $10,000 per annum;

(g) Any Contract (or group of related Contracts) for the purchase or sale of commodities, supplies, products or other personal property, or for the furnishing or receipt of services, (i) the performance of which will extend beyond December 31, 2005 or (ii) that involves consideration in excess of $10,000;

(h) Any Contract concerning a partnership or joint venture or any management Contract;

(i) Any Contract (or group of related Contracts) under which the Company or MDI has created, incurred, assumed or guaranteed any Funded Debt, or under which an Encumbrance (other than Permitted Encumbrances) has been imposed on any of its properties or assets;

(j) Any Contract concerning confidentiality or noncompetition;

(k) Any Contract with any Service Provider, sales representative or any other Affiliate of either the Company or MDI;

(l) Any Contract under which the consequences of a default or termination would reasonably likely have a Material Adverse Effect;

(m) Any Contract pursuant to which of the Company or MDI has any license or use rights with respect to Company Intellectual Property, having a value in excess of Ten Thousand Dollars ($10,000);

(n) Any Contract that is not made in the Ordinary Course of Business and is to be performed at or after the date of this Agreement; and

(o) Any other Contract (or group of related Contracts), the performance of which involves consideration in excess of $25,000.

The Company and MDI have delivered to Purchaser a correct and complete copy of each written Company Contract (together with all written amendments, waivers or other changes thereto) required to be listed in Schedule 4.12 and a written summary setting forth the material terms and conditions of each oral Company Contract required to be listed on Schedule 4.12. With respect to each Company Contract required to be listed on Schedule 4.12: (i) the Contract is a legal, valid and binding obligation of the Company or MDI, enforceable in accordance with its terms; (ii) immediately following the consummation of the transactions contemplated hereby without the payment by Purchaser, the Company or MDI of any transfer or other fee, the Contract will continue to be a legal, valid and binding obligation of the Company or MDI, as applicable, enforceable in accordance with its terms; (iii) the Company and MDI have performed all material obligations required to be performed by them and neither of them are in material default under or in material Breach of nor in receipt of any claim of any default or Breach; (iv) no event has occurred which with the passage of time or the giving of notice or both that would result in a material default, material Breach or material event of

noncompliance by the Company or MDI or permit termination, modification or acceleration under any such Contract; (v) neither the Company nor MDI has any present expectation or intention of not fully performing all such obligations; (vi) no Contract is currently subject to or to the Knowledge of the Company or MDI is expected to be subject to cancellation or any other material modification by the other party thereto or is subject to any material penalty, right of set off or other charge by the other party thereto for late performance or delivery by the Company; and (vii) to the Knowledge of the Company and MDI, there is no material Breach or anticipated material Breach by the other parties to such Contract.

4.13 Intellectual Property.

(a) Schedule 4.13 contains a complete list of all of the following that are owned by the Company or MDI or used by either of them in the conduct of their business: (i) all registered trademarks, service marks and trade names, and registered copyrights, patents and Internet domain names, and pending applications for registration thereof; (ii) material unregistered trademarks, unregistered service marks, trade names and corporate names; (iii) material unregistered copyrights; and (iv) all computer software and software licenses having a value in excess of Ten Thousand Dollars ($10,000) (other than commercial “shrink-wrap” software licenses) (collectively, the “Company Intellectual Property”). The Company or MDI own and possess all right, title and interest to, or have a valid and enforceable written license to use, all of the Company Intellectual Property, free and clear of all Encumbrances. Except as set forth on Schedule 4.13, to the Knowledge of the Company, MDI and the Sellers, the loss or expiration of any Company Intellectual Property has not had and is not reasonably expected to have a Material Adverse Effect, and no loss or expiration of any material Intellectual Property is pending or, to the Knowledge of the Company, MDI or the Sellers, threatened or reasonably foreseeable. The Company and MDI have taken reasonable steps to maintain and protect the Company Intellectual Property and will continue to maintain and protect all of the Company Intellectual Property prior to the First Installment Closing so as not to materially and adversely affect the validity or enforceability thereof.

(b) Except as set forth on Schedule 4.13, (i) all of the Company Intellectual Property is valid and enforceable, (ii) no claim by any third party has been made, is currently outstanding or to the Knowledge of the Company, MDI and the Sellers, is threatened, against the Company or MDI contesting the validity, enforceability, use or ownership of any of the Company Intellectual Property and, to the Knowledge of the Company, MDI and the Sellers, there is no basis for any such claim, (iii) neither the Company nor MDI has infringed or misappropriated, and the operation of the their respective businesses as currently conducted does not infringe or misappropriate any Intellectual Property of other Persons, and to the Knowledge of the Company, MDI and the Sellers, there are no facts which indicate a likelihood of any of the foregoing and neither the Company not MDI has received any notices regarding any of the foregoing (including, without limitation, any demands to license any Intellectual Property from any third party), and (iv) to the Knowledge of the Company, MDI and the Sellers, the Company Intellectual Property has not been infringed, misappropriated or otherwise conflicted by other Persons and there are no facts that indicate a likelihood of any of the foregoing. The transactions contemplated by this Agreement will not have a Material Adverse Effect on the right, title or interest in and to the Company Intellectual Property and all of such Company Intellectual Property shall be owned or available for use by the Company on substantially the same terms and conditions immediately after the First Installment Closing.

4.14 Real Property.

(a) Neither the Company nor MDI owns any real property.

(b) Schedule 4.14 sets forth the address of each parcel of Leased Real Property, and a complete list of all leases for each such Leased Real Property (including the date and name of the parties to such lease document). Except as set forth in Schedule 4.14, with respect to each lease and sublease listed in Schedule 4.14:

(i) There are no disputes, oral Contracts or forbearance programs in effect as to the lease or sublease;

(ii) No security deposit or portion thereof deposited with respect to the lease or sublease has been applied in respect of a Breach or default under such Lease;

(iii) The other party to the lease or sublease is not an Affiliate of the Company or MDI;

(iv) Except for Permitted Encumbrances, there are no Encumbrances on the estate or interest created by the lease or sublease;

(v) With respect to each sublease, the representations and warranties set forth in subsections (i) through (iv) above are true and correct with respect to the Company and MDI for the underlying lease; and

(vi) The Company and MDI have not assigned, subleased, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold.

(c) The Leased Real Property set forth in Schedule 4.14 comprises all of the real property utilized by the Company and MDI. The Company and MDI have, and at the First Installment Closing, the Company will have the right to possession and quiet enjoyment of all Leased Real Property.

(d) As of the date hereof, to the Knowledge of the Company, MDI or the Sellers, there is no condemnation, expropriation or other Proceeding in eminent domain, pending or threatened, affecting any of the Leased Real Property or any portion thereof or interest therein. There is no injunction, decree, order, writ or judgment outstanding, nor any material claims, litigation, administrative actions or similar Proceedings, pending or to the Knowledge of the Company, MDI or the Sellers, threatened, relating to the lease, use or occupancy of the Leased Real Property or any portion thereof.

(e) To the Knowledge of the Company and MDI, the classification of each parcel of Leased Real Property under applicable zoning Laws, ordinances and regulations permits the use and occupancy of such parcel and the operation of the Business as currently conducted thereon, and permits the improvements located thereon as currently constructed, used and occupied. The consummation of the transactions contemplated by this Agreement will not adversely affect the Company’s or MDI’s right to conduct the Business on the Leased Real Property in the manner conducted prior to the Closing.

4.15 Insurance. Schedule 4.15 lists all fire, theft, casualty, health, life, accident, automobile, liability, employee errors and omissions, employee dishonesty, employment practices, title and other policies of insurance or bonds maintained by the Company and MDI, including policy limits and expiration dates. All such policies or bonds are in full force and effect and will be outstanding and in full force and effect immediately after the First Installment Closing and the premiums therefor have been paid in full as they have become due and payable. The Company and MDI have delivered to Purchaser a true and complete copy of each such insurance policy or bond. The Company and MDI have not received any notice of cancellation with respect to any such insurance policies or bond. The coverage provided by such policies or bonds complies in all material respects with all agreements to which the Company or MDI is a party, and applicable Laws to which it is subject. Except as set forth on Schedule 4.15, there are no pending Proceedings arising out of, based upon or with respect to any of such policies or bonds and, to the Knowledge of the Company, MDI or the Sellers, no basis for any such Proceedings exists. The Company and MDI are not in default with respect to any provisions contained in any such insurance policies or bonds and, to the Knowledge of the Company, MDI and the Sellers, no insurance provider is in default with respect to such insurance policies. All of such policies or bonds (a) are issued by an insurer or bonding company that is financially sound and reputable, (b) taken together, provide reasonably adequate coverage for the Company’s and MDI’s assets and the operation of the Company’s and MDI’s business, and (c) do not provide for any retrospective premium adjustment or other experienced-based liability on the part of the Company or MDI. Except as set forth on Schedule 4.15, the Company has no Liability for errors or omissions in the conduct of its insurance business.

4.16 Undisclosed Liabilities; Indebtedness.

(a) The Company and MDI do not and will not have any Liabilities, except for: (a) Liabilities reflected or reserved against, or which will be reflected or reserved against, on the face (rather than in any notes thereto) of the Interim Balance Sheet, (b) Liabilities which have or will arise after the date of the Interim Balance Sheet in the Ordinary Course of Business and fully reflected on the Audited Closing Balance Sheet, none of which results from, arises out of, relates to, is in the nature of or was caused by any Breach of contract, Breach of warranty, tort, infringement violation of Law, claim or Proceeding, and (c) any Liabilities disclosed on Schedule 4.16(a). Except as set forth on Schedule 4.16(a), no Person that is party to any Indebtedness incurred by the Company or MDI has the right to accelerate the payment of such Indebtedness on demand.

(b) Except as set forth on Schedule 4.16(b), the Company and MDI have no Indebtedness. Schedule 4.16(b) sets forth a correct and complete list of each Liability constituting Indebtedness, including the name of the lender thereof, the original principal amount, the outstanding amount of principal, accrued unpaid interest and any fees payable thereon as of the First Installment Closing Date and a per diem value for any such interest and/or fees. A true, accurate and complete copy of each Contract pertaining to any Indebtedness has been delivered to Purchaser.

4.17 Legal Compliance.

(a) Except as set forth on Schedule 4.17(a), the Company, MDI, all Sellers, and each Service Provider have complied in all material respects with, and are in compliance in all material respects with, all Laws of federal, state, local and foreign Governmental Bodies, applicable to the Business or the operations of the Company, and no Proceeding or notice has been filed or commenced against the Company or MDI alleging any failure so to comply. Without limiting the foregoing, except as set forth on Schedule 4.17(a):

(i) No complaint has been filed against the Company, MDI, any Seller, or any Service Providers, or against the Company or MDI with respect to actions of any sales representative, with any Governmental Body, including without limitation the securities commissioner of any state, the insurance commissioner of any state or the SEC;

(ii) None of the Company, MDI, any Seller, or any Service Provider, nor any sales representative with respect to actions taken on behalf of the Company or MDI, has pled guilty to, pled nolo contendere to, or been found guilty of, a crime involving offering or selling insurance or securities or providing investment advice;

(iii) None of the Company, MDI, any Seller or any Service Provider is or ever has been subject to any prohibition by any Governmental Body against engaging in the business of offering or selling insurance or securities or providing investment advice;

(iv) None of the Company, MDI, any Seller, or any Service Provider has made any bribes, kickback payments or illegal payments of cash or other consideration, including illegal payments to clients, referral sources, insurance companies or employees thereof for purposes of doing business with such Persons.

(b) Schedule 4.17(b) sets forth a complete and accurate list of each Governmental Authorization held by the Company, MDI, the Sellers or any Service Provider that otherwise relates to the Business or any of its respective properties and assets, including without limitation any “broker dealer” licenses required by any Governmental Body and any Governmental Authorization issued by the insurance commissioner, or applicable Governmental Body, of any state. Each such Governmental Authorization is valid and in full force and effect. The Company has complied, and is in compliance, in all material respects, with all of the terms and requirements of such Governmental Authorizations. The Company, MDI each Seller and each Service Provider have all Governmental Authorizations necessary to permit the Company and MDI to lawfully conduct and operate their respective businesses as currently conducted and operated and to permit the Company and MDI to own and use their respective assets in the manner in which they currently own and use such assets.

(c) Except as set forth on Schedule 4.17(c), none of the Company, MDI, any Seller any Service Provider, or, to the Knowledge of the Company and the Sellers, any sales representative with respect to actions taken on behalf of the Company or MDI has ever been the subject of any investigation, review, audit, by any Governmental Body with respect to compliance with Laws related to the offer or sale of insurance, the offer of sale of securities or the providing of investment advice.

4.18 Litigation.

(a) Except as set forth on Schedule 4.18(a), there are no Proceedings pending or, to the Knowledge of the Company, MDI or any Seller, threatened by, against or affecting the Company, MDI or, to the extent related to the Company’s or MDI’s business, any Service Provider or sales representative, at law or in equity, or before or by any Governmental Body, or any arbitrator (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement). The Company and MDI are not subject to any judgment, order or decree of any court or other Governmental Body, and, to the Knowledge of the Company, MDI and the Sellers, the Company and MDI have not received any written opinion from legal counsel to the effect that either of them is exposed, from a legal standpoint, to any material Liabilities. None of the Proceedings set forth on Schedule 4.18 could reasonably be expected to result in a Material Adverse Effect on the Company or MDI. The Company has notified its insurers of any pending or threatened litigation within the time period(s) specified in applicable insurance policies.

(b) Except as set forth on Schedule 4.18(b), none of the Company, MDI or, to the extent related to the Business of the Company or MDI, any Seller, any Service Provider or, to the Knowledge of the Company and the Sellers, sales representative has been a party to any Proceedings, at law or in equity, or before or by any Governmental Body or any arbitrator (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement) relating to the offer or sale of insurance or securities or providing investment advice.

4.19 Employee Matters. The Company and MDI have previously delivered to Purchaser a complete and accurate list, as of the date hereof, of the name, hire date, position and total compensation (including all bonuses, commissions and distributions) paid to all Service Providers, together with a summary of the bonuses and description of agreements for commissions or additional compensation and other like benefits, if any, payable to such Service Providers. Such list will be updated by the Company and MDI not later than five (5) Business Days prior to the Closing. Except as otherwise disclosed on Schedule 4.19:

(a) No Service Provider has any written Contract with the Company or MDI regarding his or her employment or engagement (including any severance arrangement);

(b) No Service Provider shall be entitled to receive any compensation as a result of the consummation of the transactions contemplated by this Agreement;

(c) Since December 31, 2004 no Service Provider who has been compensated by Company or MDI at an annual rate in excess of One-Hundred Thousand Dollars ($100,000) has given notice of termination of his or her employment or engagement or had such employment or engagement terminated for any reason or for no reason; to the Knowledge of the Company, MDI and the Sellers, no such Service Provider intends to terminate such employment, and no notice of termination has been given to any such Service Provider by the Company or MDI;

(d) No Service Provider is a party to any contract that provides for change of control benefits or termination or severance benefits or that would provide for increased compensation or permit termination as a result of the transactions to be consummated hereby;

(e) All compensation (including, without limitation, wages, salary, bonuses, guaranteed payments, incentive compensation, vacation, commissions, deferred compensation, severance, workers’ compensation, unemployment benefits, and expense reimbursements) due and payable to any current or former employee and to any current or former outside sales person has been paid or properly accrued on the books and records of the Company and MDI;

(f) The Company and MDI have not agreed to or do not otherwise have any obligation to indemnify, reimburse, defend or hold harmless any Person who is or was a Service Provider (excluding payments of commissions in the Ordinary Course of Business);

(g) To the extent required by Law, the Company and MDI have reported all compensation paid to or earned by each Service Provider or sales representative to the appropriate Governmental Bodies;

(h) Neither the Company, MDI nor any Service Provider is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar agreements relating to, affecting or in conflict with the present business activities of the Company or MDI; and

(i) No Service Providers are currently absent from active service, including without limitation leave of absence, sabbatical, disability or medical or maternity leave.

4.20 Labor Relations. The Company and MDI are not a party to or bound by any collective bargaining agreement, nor has either of them experienced any actual or threatened work stoppages, strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Company and MDI have not committed any unfair labor practice. None of the Company, MDI or the Sellers has any Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Company or MDI. The Company has complied in all material respects with all discrimination, equal opportunity Laws relating to the employment of labor (including provisions thereof relating to wages, hours, collective bargaining and the payment and withholding of social security and other Taxes).

4.21 Employee Benefits.

(a) Schedule 4.21 lists each Employee Benefit Plan that the Company or MDI sponsors, maintains, to which the Company or MDI contributes or has any obligation to contribute, or with respect to which the Company or MDI has any Liability or potential Liability.

(i) Each such Employee Benefit Plan (and each related trust, insurance contract or fund) has been maintained, funded and administered materially in accordance with the provisions of such Employee Benefit Plan and complies in form and operation in all material respects with the applicable requirements of ERISA, the Code and other applicable Laws.

(ii) All required reports and descriptions (including Internal Revenue Service Form 5500), summary annual reports and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan. The requirements of COBRA have been met in all material respects with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan subject to COBRA. With respect to any Employee Benefit Plan that is a “health plan” (as defined in 45 C.F.R. Section 160.103), all material required actions to comply with the final privacy regulations issued under the Health Insurance Portability and Accountability Act of 1996 (45 C.F.R. Parts 160 and 164 (“HIPAA privacy regulations”) have been taken by April 14, 2003, or, to the extent that a Plan is a “small health plan” (as defined in 45 C.F.R. 160.103), all necessary actions have been taken to ensure compliance in all material respects with the HIPAA privacy regulations by the end of the extended compliance period.

(iii) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been made within the time period prescribed by ERISA to each such Employee Benefit Plan which is an Employee Pension Benefit Plan and all contributions for any period ending on or before the First Installment Closing Date which are not yet due have been made to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of the Company. All premiums or other payments for all periods ending on or before the First Installment Closing Date have been paid with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan or accrued in accordance with (A) the past custom and practice of the Company and MDI, and (B) applicable Law.

(iv) Except as set forth in Schedule 4.21, each such Employee Benefit Plan which is intended to meet the requirements of a “qualified plan” under Code §401(a) has received a favorable determination letter (or has adopted a prototype or volume submitter plan that has received a favorable opinion letter) from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and, to the Knowledge of the Company, MDI and the Sellers, nothing has occurred since the date of such determination (or opinion) letter that could adversely affect the qualified status of any such Employee Benefit Plan. Except as set forth on Schedule 4.21, with respect to any Employee Benefit Plan which is intended to meet the requirements of a “qualified plan” under Code §401(a) for which a determination (or opinion) letter has not been received, the Company or MDI has appropriately filed an application for a determination letter with the Internal Revenue Service and no basis exists for the denial of such application.

(v) The market value of assets under each such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equals or exceeds the present value of all vested and nonvested Liabilities thereunder.

(vi) The Company and MDI have delivered to Purchaser correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (Internal Revenue Service Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts and other funding arrangements which implement each such Employee Benefit Plan.

(b) With respect to each Employee Benefit Plan that the Company or MDI maintains, to which any of them contributes or has any obligation to contribute, or with respect to which any of them has any Liability or potential Liability:

(i) No such Employee Benefit Plan is an Employee Pension Benefit Plan subject to Code §412.

(ii) To the Knowledge of the Company, MDI and the Sellers, there have been no Prohibited Transactions (as defined in ERISA §406 and Code §4975) with respect to any such Employee Benefit Plan. To the Knowledge of the Company, MDI and the Sellers, no Fiduciary (as defined in ERISA §3(21)) has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. No Proceeding with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of the Company, MDI or the Sellers, threatened. The Company, MDI and the Sellers have no Knowledge of any basis for any such Proceeding.

(c) The Company and MDI do not maintain, contribute to or have an obligation to contribute to, have any Liability or potential Liability with respect to, or have ever maintained, contributed to or had an obligation to contribute to any Multiemployer Plan.

(d) The Company and MDI do not maintain, contribute to or have an obligation to contribute to, or have any Liability or potential Liability with respect to, any Employee Welfare Benefit Plan providing medical, health or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses or their dependents (other than in accordance with COBRA).

(e) There is no contract, agreement, plan or arrangement covering any present, former or retired employee, director, independent contractor or consultant of the Company or MDI that, individually or collectively, provides for the payment of any amount or the provision of any benefit that is or could be treated as an “excess parachute payment” pursuant to Section 280G of the Code and the regulations thereunder.

4.22 Subsequent Events. Since December 31, 2004, there has not occurred any event which has caused, or could reasonably be expected to cause, a Material Adverse Effect on the Company or MDI. Except as provided in Schedule 4.22, since December 31, 2004, the Company and MDI have operated their respective businesses only in the Ordinary Course of Business.

(a) Without limiting the generality of the foregoing and except as set forth at Schedule 4.22, since December 31, 2004:

	(i) The Company and MDI have not sold, assigned, leased, licensed, transferred or otherwise encumbered any of their assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

	(ii) The Company and MDI have not entered into any Contract or series of related Contracts that involved more, retrospectively or prospectively, than an aggregate amount of $10,000 per Contract or series of related Contracts, other than Contracts with insureds for the sale of life insurance, or was entered into outside the Ordinary Course of Business;

	(iii) No party (including the Company and MDI) has accelerated, terminated, modified or cancelled any Contract (or series of related Contracts) involving more than $50,000 to which the Company or MDI is a party or by which either of them is bound;

	(iv) The Company and MDI have not adopted, amended, modified or terminated any bonus, profit-sharing, incentive, severance or other plan, contract or commitment for the benefit of any Service Providers (or taken any such action with respect to any other Employee Benefit Plan, except to the extent required by applicable law or to maintain the tax-favorable status of any Employee Benefit Plan);

	(v) The Company and MDI have not suffered any extraordinary loss (whether or not in the Ordinary Course of Business or consistent with past practices) in excess of $50,000 in the aggregate;

	(vi) The Company and MDI have not committed to do any of the foregoing; and

	(vii) The Company and MDI have not made any change in any method of accounting or accounting policies except as required to present the Financial Statements in accordance with GAAP or reversed any accruals except in the Ordinary Course of Business.

(b) Without limiting the generality of the foregoing and except as set forth at Schedule 4.22, since June 30, 2005:

	(viii) The Company and MDI have not made any capital expenditure (or series of related capital expenditures) or commitments therefor involving more than $20,000 or outside the Ordinary Course of Business;

	(ix) The Company and MDI have not made any capital investment in, any loan to or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans and acquisitions);

	(x) The Company and MDI have not issued any note, advance, bond or other debt security or created, incurred, assumed or guaranteed any Funded Debt;

	(xi) The Company and MDI have not delayed or postponed the payment of accounts payable or other Liabilities outside the Ordinary Course of Business;

	(xii) The Company and MDI have not cancelled, compromised, waived or released any right or claim (or series of related rights and claims) either involving more than $10,000 or outside the Ordinary Course of Business;

	(xiii) There has been no amendment or change made or authorized in the Company’s Articles, the Company’s Operating Agreement (except for authorization of the New Operating Agreement), the MDI Articles or the MDI Bylaws;

	(xiv) The Company and MDI have not merged or consolidated with any other Person, except for the merger of MDI with and into the Company prior to the Closing;

	(xv) Except in the Ordinary Course of Business, the Company has not declared, set aside or paid any distribution with respect to its Membership Interests (whether in cash or in kind) or redeemed, purchased or otherwise acquired any of its Membership Interests (including any warrants, options or other rights to acquire its capital stock);

	(xvi) The Company and MDI have not made any loan or advance to, or entered into any other transaction with, any of its Members, other Service Providers or sales representatives, other than payments of salary and commission in the Ordinary Course of Business;

	(xvii) The Company has not entered into any Contract with any Service Provider or sales representative, written or oral, or modified the terms of any existing such Contract; and

	(xviii) The Company and MDI have not committed to do any of the foregoing.

4.23 Affiliated Transactions. Except as set forth on the Schedule 4.23, no Member, Governor, manager, officer, director, stockholder, employee or Affiliate of the Company or MDI, including the Sellers, or any individual related by blood, marriage or adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest, is a party to any Contract with the Company or MDI or has engaged in any transaction (other than commission payments in the Ordinary Course of Business) with the Company or MDI or has any interest in any property (including any Intellectual Property), contract right or leasehold interest used by the Company or MDI.

4.24 Guaranties. Neither the Company nor MDI is a guarantor or otherwise is liable for any Liability or obligation (including Indebtedness) of any other Person and no other Person has guaranteed any Liability or obligation (including Indebtedness) of the Company.

4.25 Brokers’ Fees. None of the Company, MDI or any Seller has any Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

4.26 Disclosure. The representations and warranties contained in this Article 4 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Article 4 not misleading. The Schedules do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they will be made, not misleading.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser jointly and severally represents and warrants to the Company and the Sellers that the statements contained in this Article 5 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the First Installment Closing Date (as though made then and as though the First Installment Closing Date were substituted for the date of this Agreement throughout this Article 5).

5.01 Organization. EFSC is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all corporate power and authority to own and lease the properties and assets it currently owns and leases and to conduct its activities as currently conducted. The Acquisition Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri and has all corporate power and authority to own and lease the properties and assets it currently owns and leases and to conduct its activities as currently conducted.

5.02 Authorization of Transaction. Purchaser has full right, power and authority (including full corporate power and authority) to execute and deliver this Agreement and each other agreement to be executed and to perform their respective obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms and conditions. Upon the execution and delivery by Purchaser of each other agreement to be executed or delivered by Purchaser at the First Installment Closing (collectively, the “Purchaser Closing Documents”), each of the Purchaser Closing Documents will constitute the legal, valid and binding obligation of Purchaser enforceable in accordance with its respective terms and conditions, except to the extent that (i) enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or similar laws now or hereafter in effect relating to or limiting creditors’ rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court or other similar person before which any proceeding therefor may be brought. Purchaser has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Purchaser Closing Documents and to perform its obligations under this Agreement and the Purchaser Closing Documents, and such action has been duly authorized by all necessary action by the boards of directors of Purchaser.

5.03 Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will: (a) violate any Law, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Body to which Purchaser is subject or any provision of the articles of incorporation or bylaws of Purchaser; or (b) conflict with, result in a Breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, Contract, lease, license, instrument or other arrangement to which Purchaser is a party or by which it is bound or to which any of its assets are subject. Except as set forth on Schedule 5.03, to the Knowledge of Purchaser, and other than in connection with the provisions of applicable Law, Purchaser is not required to give any notice to, make any filing with, or obtain any Consent of any Governmental Body in order for the Parties to consummate the transactions contemplated by this Agreement.

5.04 Financial Capability. Based on existing cash reserves or availability under existing credit facilities, Purchaser has or will have the funds necessary to pay to the Sellers the First Installment Case Consideration, the Second Installment Case Consideration and the Third Installment Cash Consideration. EFSC has sufficient authorized shares of EFSC Common Stock which are not issued, subscribed for or otherwise reserved for issuance to issue the First Installment Stock Consideration, the Second Installment Stock Consideration and the Third Installment Stock Consideration.

5.05 Financial Statements and Reports. The consolidated financial statements of the EFSC and its Subsidiaries included in EFSC filings with the SEC for the last three (3) fiscal years and the unaudited financial statements as of June 30, 2005 and for the six months then ended (including the related notes) complied as to form, as of their respective dates of filing with the SEC, if applicable, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto (including, without limitation, Regulation S-X), have been presented in accordance with GAAP (except, in the case of unaudited statements, as permitted by Quarterly Report Form 10-Q of the SEC) applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial condition of EFSC and its Subsidiaries at the dates thereof and the consolidated results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that were not material in amount or effect). KPMG, LLP, who has expressed their opinion with respect to the audited financial statements of EFSC and its Subsidiaries included in EFSC’s filings with the SEC (including the related notes), is an Independent Registered Public Accounting Firm as required by the Securities Act and the Exchange Act.

5.06 SEC Reports. EFSC has on a timely basis filed all forms, reports and documents required to be filed by it with the SEC since January 1, 2002. Except to the extent available in full without redaction on the SEC’s web site through the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) two days prior to the date of this Agreement, EFSC has made available to counsel to the Company copies in the form filed with the SEC of (i) EFSC’s Annual Reports on Form 10-K for each fiscal year of EFSC beginning since January 1, 2002, (ii) its Quarterly Reports on Form 10-Q for each of the first three fiscal quarters in each of the fiscal years of EFSC referred to in clause (ii) above,

(iii) all proxy statements relating to EFSC’s meetings of stockholders (whether annual or special) held, and all information statements relating to stockholder consents since the beginning of the first fiscal year referred to in clause (i) above, (iv) all certifications and statements required by (x) Rule 13-14 or 15-14 under the Exchange Act, or (y) 18 U.S.C. § 1350 (Section 906 of the Sarbanes Oxley Act of 2002 (“SOX”)) with respect to any report referred to in clause (i) or (ii) above, and (v) all other forms, reports, registration statements and other documents (other than preliminary materials if the corresponding definitive materials have been made available to counsel to the Company pursuant to this Section) filed by EFSC with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements and other documents referred to in clauses (i), (ii), (iii), (iv) and (v) above are, collectively, the “EFSC SEC Reports” and, to the extent available in full without redaction on the SEC’s web site through EDGAR two days prior to the date of this Agreement, are, collectively, the “Filed EFSC SEC Reports”). The Filed EFSC SEC Reports (x) complied as to form in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not at the time they were filed with the SEC contain any untrue statement of a material fact or omit to state a material fact or required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of EFSC is or has been required to file any form, report, registration statement or other document with the SEC pursuant to the Securities Act or Exchange Act.

5.07 Absence of Certain Changes or Events. Since December 31, 2004, except as disclosed in this Agreement or Purchaser’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005 and except for the transactions contemplated by this Agreement, there has not been (a) any change, effect, event, circumstance, occurrence or state of facts that individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect on EFSC.

5.08 Offering Assuming the accuracy of the Sellers’ representations and warranties in Section 4.27, the offer, sale and issuance of the shares of EFSC Common Stock to be issued as First Installment Stock Consideration, Second Installment Stock Consideration and the Third Installment Stock Consideration as contemplated by this Agreement are exempt from the registration requirements of the Securities Act, and will be conducted in material compliance with applicable state securities laws. Neither Purchaser nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemption from the registration requirements of the Securities Act.

5.09 Compliance with Applicable Laws. Purchaser and each of its Subsidiaries hold, and have at all times held, all material licenses, franchises, permits and authorizations necessary for the lawful conduct of their respective business under and pursuant to all, and have complied in all material respects with and are not in default in any material respect under any, applicable Law, policy and/or guideline of any Governmental Body relating to Purchaser or any of its Subsidiaries, and neither Purchaser nor any of its Subsidiaries knows of, or has received notice of any violations of any of the above.

5.10 Brokers’ Fees. Purchaser has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Company or any Seller could become liable or obligated.

5.11 Disclosure. The representations and warranties contained in this Article 5 do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they will be made, not misleading.

ARTICLE 6
COVENANTS AND AGREEMENTS

6.01 Certain Covenants of All Parties Prior to First Installment Closing.

(a) Confidentiality. The parties acknowledge and agree that Purchaser, the Company, the Sellers and their respective directors, managers, governors, officers, employees, agents, consultants, advisors, legal counsel, accountants, and financial advisors shall be bound by the terms and conditions of that certain Confidentiality and Non-Disclosure Agreement (the “Confidentiality Agreement”), dated as of July 1, 2005, for the remainder of the term specified in the Confidentiality Agreement without modification thereof; provided however that no provision of the Confidentiality Agreement shall (i) prevent Purchaser from conducting its due diligence investigation of the Company and MDI, including without limitation making inquiries in the manner and with the contract vendors, insurance carriers, referral sources and other persons doing business with the Company and/or MDI set forth on Schedule 7.01(a)(ix), or (ii) prevent the Purchaser from making public announcements as provided in Section 6.01(b) below.

(b) Publicity; Announcements. Unless required by law, including without limitation federal securities laws (in which case each of Purchaser and the Seller Representative agree to use reasonable efforts to consult with each other prior to any such disclosure as to the form and content of such disclosure), after the date hereof and through and including the First Installment Closing Date, without the consent of Purchaser and the Seller Representative, no party will issue or release any press releases or announcements to the employees, clients, or others having dealing with the Company or other releases of information related to this Agreement or the transactions contemplated hereby; provided however that no provision of this Agreement or the Confidentiality Agreement shall prevent Purchaser from making any public announcement required to comply with applicable securities laws or regulations, as determined by Purchaser or its counsel, including without limitation the filing with the Securities Exchange Commission of a “current report” on Form 8-K.

(c) Cooperation. Any notices or certifications given under this Agreement or any related agreement shall be given in good faith without any intention to unfairly impede or delay the other Party. The Parties shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and the Parties shall execute such other documents as may be necessary and desirable to the implementation and consummation of this Agreement. Each Party agrees to use all reasonable efforts to take all actions and do all things necessary, proper or advisable in order to consummate the transactions contemplated by this Agreement. Each of the Parties shall reasonable give access to the other Parties of all information, documents and personnel reasonably necessary or desirable in order to consummate the transactions contemplated by this Agreement and to confirm the accuracy of the representation and warranties made pursuant to this Agreement.

(d) Notice of Material Developments; Updates to Schedules.

(i) Each Party shall give prompt written notice to the other parties of (A) any variances in any of its representations or warranties contained in Article 4 or Article 5 above, as

the case may be, of which they become aware, (B) any breach of any covenant or agreement hereunder by such Party of which they become aware, (C) any event which will result in the failure of any of the conditions set forth in Article 7 and (D) any other material development affecting the ability of such party to consummate the transactions contemplated by this Agreement.

(ii) The Parties acknowledge that certain of the representations and warranties of the Company, the Sellers and Diamond affirmatively require the listing of certain factual information on the Schedules attached hereto. The Company, the Sellers and Diamond shall be permitted to update such Schedules on or prior to the First Installment Closing Date with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth or described in the Schedules. No such additional disclosure or update by the Company, the Sellers or Diamond, however, shall be deemed to affect (A) any determination as to whether or not the condition set forth in Section 7.01(a)(i) has been satisfied, (B) any right of Purchaser to terminate this Agreement, or (C) any right of Purchaser to seek any remedy provided in Article 9; provided, however that if a matter disclosed in such additional disclosure on account of a matter arising after the date of this Agreement and before the First Installment Closing constitutes a Breach of a representation or warranty that is reasonably likely to result in Damages in excess of $100,000 (“Substantial Updated Disclosure”), and the Sellers Representative has given good faith notice to Purchaser upon the delivery of such Substantial Updated Disclosure that he believes that such Damages will likely exceed $100,000, and Purchaser nevertheless elects to close the transactions contemplated herein and pursuant to Section 7.01(c) waives the condition for closing set forth in Section 7.01(a)(i), then Purchaser shall be deemed to have waived any claim for indemnification against the Company, the Sellers and Diamond with respect to such matter disclosed in the Substantial Updated Disclosure.

(e) No Inconsistent Action. No Party shall take any action materially inconsistent with its respective obligations under this Agreement.

(f) Regulatory Matters and Approvals. Each of the Parties will (and the Company will cause each of its Affiliates and MDI to) give any notices to, make any filings with, and use its commercially reasonable best efforts to obtain any authorizations, consents, and approvals of Governmental Authorities in connection with the matters referred to in Section 4.05 and Section 5.03 above.

6.02 Certain Covenants of the Sellers and the Company Prior to the First Installment Closing.

(a) Operation of Business. Between the date of this Agreement and the First Installment Closing, the Company and MDI will not engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business and the Company and MDI will use commercially reasonable efforts to preserve the goodwill of their respective business and the relationships with clients, referral sources, Service Providers, sales representatives and insurance companies and other Persons having business relations with them. Without limiting the generality of the foregoing, prior to the First Installment Closing:

(i) The Sellers shall cause the Company and MDI to not to take or omit to take any action that would require disclosure under Section 4.22 above or that would otherwise result in a breach of any of the representations, warranties or covenants made by the Company and the

Sellers in this Agreement without regard to any modification of the Schedules after the date of this Agreement, provided that Purchaser acknowledges and agrees that the Company may make a distribution of cash to the Sellers prior to the First Installment Closing, so long as such distribution will not cause the Net Working Capital of the Company to be less than the Targeted Net Working Capital, and that the Company will cause MDI to consolidate or merge into the Company prior to the First Installment Closing;

(ii) The Sellers shall cause the Company and MDI to not take any action or omit to take any action which act or omission could reasonably be anticipated to have a Material Adverse Effect;

(iii) The Sellers shall cause the Company and MDI not to (A) delay the payments of accounts payable or accelerate the payment of commissions; (B) make any commitment with respect to capital expenditures in excess of Fifty Thousand and No/100 Dollars ($50,000.00); (C) make any commitment with respect to material changes to its normal and customary practices regarding the solicitation, booking and fulfillment of sales; or (D) cease from making accruals for Taxes, obsolete inventory, vacation and other customary accruals of the Company in a manner consistent with past practice;

(iv) The Sellers shall cause the Company and MDI not to enter into any transaction, arrangement or contract with any Person except on arm’s length basis in the Ordinary Course of Business consistent with past customs and practices.

(v) Notwithstanding the foregoing, nothing in this Section 6.02 shall prohibit the Company and MDI from taking any action or omitting to take any action as required or as expressly contemplated by this Agreement.

(b) Access to Information.

(i) From the date hereof to the First Installment Closing, the Company shall afford, and cause MDI to afford, Purchaser and its counsel, accountants and other representatives, complete access at all reasonable times to the Service Providers and the Company’s and MDI’s properties, contracts, books and records, and shall promptly furnish to Purchaser all financial, operating and other data and information as Purchaser may request concerning the business, operations, properties and personnel of the Company and MDI.

(ii) From the date hereof to the First Installment Closing, EFSC shall promptly furnish to Seller Representative financial, operating and other data and information as Seller Representative may reasonably request concerning the business and operation of EFSC taken as a whole, to the extent such information is not disclosed in EFSC’s filings with the SEC and would be material to a determination of the value of EFSC’s common stock.

(c) Exclusive Dealing. Except as contemplated by Section 4.26, none of the Sellers, MDI, the Company or its members, governors, managers, officers, or agents, shall directly or indirectly: (i) submit, solicit, initiate, encourage or discuss any proposal or offer from any Person relating to any: (A) sale or lease of a material portion of the Company’s assets or MDI’s assets; (B) sale or encumbrance of any Membership Interests of the Company or any shares of stock of MDI; (C) reorganization, dissolution or recapitalization of the Company or MDI; (D) merger or consolidation

involving the Company or MDI; or (E) any similar transaction or business combination involving the Company or MDI, or their respective business, operations or assets; (ii) enter into any agreement or commitment relating to any such transaction; or (iii) furnish any information with respect to, or assist or participate in or facilitate in any other manner, any effort to attempt by any Person to do or seek any of the foregoing. The Company shall as promptly as practicable (but in any event within one business day) notify Purchaser in writing if any Person makes any proposal, offer, inquiry or contact with respect to any of the foregoing.

(d) Tax Matters. Except as required by law, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, the Company and MDI shall not make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or MDI, or take any other similar action, or omit to take any action relating to the filing of any Tax Return or the payment of any Tax if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action or omission would have the effect of increasing the present or future Tax Liability or decreasing any present or future Tax benefit of the Company or MDI.

(e) Millennium Distributors, Inc. Prior to the First Installment Closing, the Company will acquire all of the assets of MDI by liquidation of MDI or consummate a merger with MDI, which shall be treated as an acquisition of the assets of MDI under the Code, pursuant to which the Company is the surviving entity.

(f) Capital Accounts. Prior to the First Installment Closing, each Seller shall make capital contributions to the Company to the extent necessary to eliminate any capital account deficit of such Seller on the Company’s books.

(g) Payment of Indebtedness by Sellers. Prior to the First Installment Closing, the Sellers will repay or cause to be repaid any Indebtedness owed to the Company or MDI.

6.03 Seller Representative.

(a) Each Seller and Diamond irrevocably constitutes and appoints William L. Zelenik (the “Seller Representative”) as such Seller’s and Diamond’s true and lawful attorney-in-fact and agent and authorizes him acting for such Seller and Diamond and in the name, place and stead of such Seller or Diamond, in any and all capacities to do and perform every act and thing required or permitted to be done in connection with the transactions contemplated by this Agreement and the other Seller Closing Documents, as fully to all intents and purposes as such Seller or Diamond might or could do in person. Each Seller and Diamond grants unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or desirable to be done in connection with such transactions, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that the Seller Representative may lawfully do or cause to be done by virtue hereof. Each Seller and Diamond acknowledges and agrees that upon execution of this Agreement, upon any delivery by the Seller Representative of any waiver, amendment, agreement, opinion, certificate or other document executed by the Seller Representative, such Seller and Diamond shall be bound by such documents as fully as if such Seller had executed and delivered such documents. Each Seller’s and Diamond’s appointment of the Seller Representative is irrevocable and is coupled with an interest.

(b) Upon the death, disability or incapacity of the initial Seller Representative appointed pursuant to Section 6.02(e)(i) above, a replacement for the Seller Representative shall be appointed by Diamond, to carry out the duties and perform the obligations of the Seller Representative hereunder.

(c) Each Seller and Diamond agrees that Purchaser shall be entitled to rely on any action taken by the Seller Representative on behalf of the Sellers (each, an “Authorized Action”), and that each Authorized Action shall be binding on each Seller as fully as if such Seller had taken such Authorized Action. The Sellers and Diamond jointly and severally agree to pay, and to indemnify and hold harmless Purchaser, its Affiliates (including the Company after the Closing), and their respective members, managers, officers, directors, employees, agents, and representatives from and against any Losses which they may suffer, sustain, or become subject to, as the result of any claim by any Seller or Diamond that an Authorized Action is not binding on, or enforceable against, the Sellers.

(d) The Seller Representative shall not be liable to the Sellers for any act done or omitted hereunder as the Seller Representative while acting in good faith, and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith. The Sellers shall severally indemnify the Seller Representative and hold him harmless against any loss, liability or expense incurred without gross negligence or bad faith on the part of the Seller Representative and arising out of or in connection with the acceptance or administration of his duties hereunder.

6.04 Covenants of the Parties Related to Tax Matters.

(a) Tax Returns Up to the First Installment Closing Date. The Sellers and the Purchaser agree that the income Tax year for the Company shall end on the First Installment Closing Date. The Sellers shall prepare and timely file all required income Tax Returns of the Company for the Tax periods ended on or before the First Installment Closing Date (including, without limitation, all federal and state income Tax Returns (along with Forms K-I) for the Company with respect to the partial taxable year ending as of the First Installment Closing Date, determined on a cut-off basis). Such returns shall be prepared in accordance with applicable law and, subject to such requirement, consistent with the prior practice of the Company. The Sellers shall provide each such Tax Return to Purchaser at least twenty (20) calendar days before the due date of such Tax Return for Purchaser’s review and comment. If Purchaser objects to any such Tax Return within ten (10) days of its receipt thereof and the parties are unable to promptly resolve such objection, then such objections shall be submitted promptly to the Second CPA Firm, which shall make the final determination with respect to the objections raised by Purchaser. The Sellers shall thereafter cause such Tax Returns to be filed in the manner and time required by applicable law (provided that the Sellers shall request an extension for any Tax Return that is disputed if the dispute has not been resolved by the due date of such Tax Return).

(b) 754 Election. Simultaneously with the filing of the federal income Tax Return for the Company with respect to the partial tax year ending as of the First Installment Closing Date the Sellers shall cause the Company to timely file a counterpart of the 754 Election Form in compliance with Section 754 of the Code and simultaneously with the filing of the federal income Tax Return for the Company with respect to the tax year commencing immediately after the First Installment Closing, the Company shall timely file a counterpart of the 754 Election Form in compliance with Section 754 of the Code.

(c) Taxes Arising Before First Installment Closing Date. The Sellers shall pay or cause to be paid, and shall indemnify each Purchaser Indemnified Person and agree to protect, save and hold each Purchaser Indemnified Person harmless from and against (i) any Tax imposed upon or relating to (A) the Company for any tax period ending on or prior to the First Installment Closing Date and (B) the Sellers for any tax period.

(d) Tax Returns After the First Installment Closing Date. Purchaser shall cause the Company to prepare and file all Tax Returns for tax periods ending after the First Installment Closing Date.

(e) Cooperation on Tax Matters. The Parties shall cooperate fully, as and to the extent reasonably requested by the other Parties, in connection with the filing of Tax Returns of, or which include, the Companies and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees or representatives available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Parties further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). Each Party agrees to provide timely notice to the other Parties in writing upon receipt of notice of any pending or threatened Tax audits or assessments relating to the Companies for any taxable period (or portion thereof) beginning before the First Installment Closing Date. Each Party agrees to furnish the other Parties with copies of all correspondence received from any tax authority in connection with any Tax audit or information request with respect to any taxable period (or portion thereof) beginning before the First Installment Closing Date.

(f) Income Tax Related to Restricted Purchaser Shares. Purchaser shall make one or more loans to each Seller in the amount of such Seller’s income Tax obligation with respect to the portion of the gain recognized on such Seller’s sale of Membership Interests attributable to such Seller’s receipt of Restricted Purchaser Shares. Purchaser shall make such a loan to any Seller promptly after Seller delivers to Purchaser a written notice that Seller has filed his or her federal income Tax Return for any year in which Seller recognized such gain. Such loan shall bear interest at the “prime rate” then offered by Enterprise Bank & Trust, St. Louis, Missouri, shall be for a term of two years and shall be secured by such Seller’s Restricted Purchaser Shares. Any such Seller receiving such a loan shall execute such documents reasonably requested by Purchaser to evidence such loan, including without limitation a loan agreement, pledge agreement, and/or promissory note. During the term of such loan, Purchaser shall forgive the interest on such loan, which shall be deemed to be compensation to such Seller for Tax purposes.

(g) Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other Taxes of such type and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by the Sellers. Purchaser shall cause the Company to file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes of such type and fees, and, if required by applicable law, the Sellers shall join in the execution of any such Tax Returns and other documentation.

6.05 Non-Competition and Non-Solicitation. In consideration of Purchaser’s agreement to enter into this Agreement, and as a condition thereto, each Seller covenants and agrees as follows:

(a) For a period of three (3) years from and after the First Installment Closing Date, no Seller nor any of its Affiliates shall, directly or indirectly either for such Seller’s own account or for the benefit or for the account of any other person or entity:

(i) engage in Competition (as defined below) in the United States subject to subsection (c) below;

(ii) (A) induce or attempt to induce or aid others in inducing an employee of the Company or any of its Affiliates to leave the employ of the Company or such Affiliate or in any way intentionally interfere with the relationship between the Company or any of its Affiliates and any of their respective employees; or (B) subject to subsection (c) below induce or attempt to induce any client, vendor, contractor, referral source, insurance company or other business relation of any of the Company or any of its Affiliates to cease doing business with the Company or such Affiliate or in any way intentionally interfere with the relationship between any client, vendor, contractor, referral source, insurance company or other business relation and the Company or any of its Affiliates.

(b) For purposes of this Section 6.05: (i) “Competition” means, whether directly or indirectly, (A) owning any equity interest in (except as a passive investor holding not more than 5% of the outstanding capital stock of a publicly traded company), (B) acting as a lender of funds or credit to or (C) participating in the management, operation or control of a Competitive Operation as an officer, manager, employee, consultant, independent contractor, adviser, director, shareholder member, partner or otherwise and (ii) “Competitive Operation” means any entity that directly or indirectly engages in or owns, invests in, manages or controls any venture or enterprise engaged in the business of brokering, representing or marketing the products of various life insurance carriers.

(c) It shall not be a violation of Section 6.05(j)(i) or clause (B) of Section 6.05(a)(ii) for any Seller to engage in, and such provisions shall not prevent Seller from engaging in “personal production,” as such term is commonly understood within the life insurance industry, with respect to insurance products or annuity products.

6.06 Restricted Stock Units.

(a) If the average Pre-Tax Income of the Company for the three Fiscal Years ending December 31, 2009, as indicated by the applicable Post-Closing Financial Statements as finally determined pursuant to Section 3.04, is greater than Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00), then not later than April 30, 2010, EFSC shall award to those Eligible Company Principals (as defined below) selected pursuant to Section 6.06(b) below, an aggregate number of Restricted Stock Units (as defined below) for restricted shares of EFSC’s common stock having a Closing Value, as of the Third Installment Closing, of Four Million Dollars ($4,000,000.00). The Restricted Stock Units will be subject to the terms of a Restricted Stock Unit Agreement and the terms and conditions of EFSC’s 2002 Stock Incentive Plan, as such plan may be amended, restated or replaced from time to time.

(b) Restricted Stock Units will be allocated among selected Eligible Company Principals as determined by EFSC and the Company’s Board of Governors, or an executive committee thereof. The Sellers acknowledge that one of the principle purposes of the award of Restricted Stock Units is planning for the succession of the management of the Company’s business and only those Eligible Company Principals who are selected by EFSC and the Company’s Board of Governors, or an executive committee thereof, will receive Restricted Stock Units. Specifically, (i) Restricted Stock Units may be awarded to Eligible Company Principals that are not Sellers, and (ii) only those Sellers who meet the requirements of the definition of “Eligible Company Principals” below and who are selected pursuant to this Section 6.06(b) shall receive Restricted Stock Units.

(b) For purposes of this Section 6.06:

(i) “Eligible Company Principals” means (A) those Sellers who are still employed as full time employees of the Company as of the date of the grant of Restricted Stock Units and (B) other full time employees, members, managers or Governors of the Company as of the date of the grant of Restricted Stock Units who satisfy requirements imposed by EFSC and the Company’s Board of Governors and or an executive committee thereof.

(ii) “Restricted Stock Units” means rights to acquire restricted shares of EFSC’s common stock, subject to the provisions of this Section 6.06, any applicable Restricted Stock Unit Agreement and EFSC’s 2002 Stock Incentive Plan, as amended, restated or replaced from time to time.

(iii) “Restricted Stock Unit Agreement” means a written agreement between EFSC and the recipient of Restricted Stock Units governing the Restricted Stock Units. The terms of the Restricted Stock Unit Agreement shall be determined by EFSC in its sole discretion; provided, that the Restricted Stock Unit Agreement will provide for vesting at a rate of twenty percent (20%) per annum, subject to accelerated vesting upon the occurrence of certain events set forth in the Restricted Stock Unit Agreement.

6.07 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Restricted Purchaser Shares to the public without registration, EFSC agrees to use commercially reasonable efforts to file with the SEC in a timely manner all annual, quarterly and current reports required of EFSC under Section 13 of the Exchange Act and so long as a Seller owns any Restricted Shares, furnish to such Seller forthwith upon reasonable request a written statement by EFSC as to EFSC’s compliance with Exchange Act reporting requirements.

ARTICLE 7
CONDITIONS PRECEDENT TO FIRST INSTALLMENT CLOSING, SECOND
INSTALLMENT CLOSING AND THIRD INSTALLMENT CLOSINGS

7.01 Conditions Precedent to Obligations of Purchaser.

(a) The obligations of Purchaser to consummate the transactions contemplated at the First Installment Closing, the Second Installment Closing and the Third Installment Closing are subject to satisfaction in full, at or prior to the First Installment Closing only, unless waived in writing by Purchaser, of each of the following conditions:

(i) Representation and Warranties. Each of the representations and warranties set forth in Article 4 shall be true, correct and accurate in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the date of this Agreement, and shall be true, correct and accurate in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the First Installment Closing Date, except for representations and warranties that speak as of a specific date or time other than the First Installment Closing Date, which shall be true, correct and accurate in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of such date and time;

(ii) Third Party Approvals. The Sellers and the Company shall have received or obtained all third-party consents and approvals that are necessary (A) for the consummation of the transactions contemplated hereby or (B) to prevent a breach of or default under, or a termination, modification or acceleration of, any instrument, contract, lease, license or other agreement on Schedule 7.01(a)(ii) (collectively, the “Third Party Approvals”) and all Third Party Approvals shall be in form and substance satisfactory to Purchaser, shall not be subject to the satisfaction of any condition that has not been satisfied or waived and shall be in full force and effect;

(iii) Governmental Consents. Purchaser and the Company shall have received or obtained all material governmental and regulatory consents, approvals, licenses and authorizations that are necessary (A) for the consummation of the transactions contemplated hereby or (B) for Purchaser to own the First Installment Interests, the Second Installment Interests and the Third Installment Interests and to operate the business of and control the Company immediately following the First Installment Closing (collectively, the “Governmental Approvals”) and all Governmental Approvals shall be in form and substance satisfactory to Purchaser, shall not be subject to the satisfaction of any condition that has not been satisfied or waived and shall be in full force and effect;

(iv) Covenants. The Company, MDI and the Sellers shall have performed and complied in all material respects with all covenants which it was required by this Agreement to perform or comply with;

(v) Proceedings. No Proceeding shall be pending or threatened in writing before any Governmental Body wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would: (A) prevent consummation of or declare unlawful the transactions contemplated hereby; (B) cause any of the other transactions contemplated by this Agreement to be rescinded following consummation; (C) materially adversely affect the right of Purchaser to own the Membership Interests of the Company and to control the Company pursuant to the New Operating Agreement immediately following the Closing; or (D) affect adversely the right of the Company and MDI to own their respective assets and to operate their respective businesses substantially in the manner they have been operated prior to the date of this Agreement (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

(vi) No Material Adverse Effect. Since the date of this Agreement, there shall have been no Material Adverse Effect with respect to the Company taken as a whole;

(vii) Termination of Related Party Agreements. Other than with respect to the Employment Agreements, all existing agreements between the Company and any Seller or any Affiliate of a Seller shall be cancelled or terminated;

(viii) Encumbrances. The Company shall have obtained releases of all Encumbrances (other than any Permitted Encumbrances) relating to the assets and properties of the Company;

(ix) Due Diligence. Purchaser shall be satisfied, in its sole and absolute discretion, with the results of its third party due diligence review of the relationships of the Company and MDI with customers, referral sources, sales representatives, insurance carriers and vendors (collectively the “Third Parties”) as set forth on Schedule 7.01(a)(ix) , which due diligence review shall be conducted in the manner and with the Third Parties as set forth on Schedule 7.01(a)(ix);

(x) Deliveries. The Company and the Sellers shall have delivered to Purchaser each of the deliveries set forth in Section 2.06(a);

(xi) Compliance with Requests or Waiver. Purchaser shall have received such additional documents, instruments or items of information reasonably requested by it in respect of any aspect or consequence of the transactions contemplated hereby. All proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement or by the other agreements referred to herein shall be reasonably satisfactory in form and substance to Purchaser and its special counsel;

(xii) The Sellers and Diamond shall have consummated the transaction contemplated in Section 3.01;

(xiii) The Contracts set forth on Schedule 7.01(a)(xiii) shall have been assigned to the Company by the Members that are parties thereto pursuant to an assignment and assumption agreement in form and substance acceptable to Purchaser; and

(xiv) The Company’s Articles shall be duly amended to provide for management by one or more governors pursuant to requirements of the Tennessee Act.

(b) The obligations of Purchaser to consummate the transactions contemplated at the Second Installment Closing and the Third Installment Closing are subject to satisfaction in full, at or prior to the Second Installment Closing and the Third Installment Closing, as applicable, unless waived in writing by Purchaser, of each of the following conditions:

(i) Proceedings. No Proceeding shall be pending or threatened in writing before any Governmental Body wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would: (A) prevent consummation of or declare unlawful the transactions contemplated hereby; (B) cause any of the other transactions contemplated by this Agreement to be rescinded following consummation; or (C) affect adversely the right of Purchaser to own the Membership Interests of the Company, immediately following the Second Installment Closing and Third Installment Closing, as applicable;

(ii) Deliveries. The Seller Representative shall have released to Purchaser each of the documents set forth in Sections 3.02(c) and 3.03(c), as applicable; and

(iii) Title. The warranty in the last sentence of Section 4.02 shall be true, correct, and accurate.

(c) Waiver of Conditions. Any condition specified in Section 7.01(a) or 7.01(b) may be waived by Purchaser if such waiver is set forth in a writing duly executed by Purchaser, provided that, subject to Section 6.01(d)(ii), the waiver of any condition based on the accuracy of any representation or warranty or on the performance of or compliance with any covenant or obligation shall not affect Purchaser’s right to indemnification pursuant to Article 9, payment of Damages or other remedy based on such representations, warranties, covenants and obligations.

7.02 Conditions Precedent to Obligations of the Company and the Sellers.

(a) The obligation of the Sellers to consummate the transactions contemplated at the First Installment Closing, the Second Installment Closing and the Third Installment Closing are subject to satisfaction in full, at or prior to the First Installment Closing only, unless waived in writing by Seller Representative, of each of the following conditions:

(i) Representation and Warranties. Each of the representations and warranties set forth in Article 5 shall be true, correct and accurate in all material respects (except to the extent that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the date of this Agreement, and shall be true, correct and accurate in all material respects (except to the extent that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects) at and as of the First Installment Closing Date, except for representations and warranties that speak as of a specific date or time other than the First Installment Closing Date, which shall be true, correct and accurate in all material respects (except to the extent that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true, correct and accurate in all respects);

(ii) Covenants. Purchaser shall have performed and complied in all material respects with all covenants required by this Agreement to be performed or complied with by Purchaser prior to Closing;

(iii) Deliveries. Purchaser shall have delivered to the Sellers and/or the Seller Representative each of the deliveries set forth in Section 2.06(b);

(iv) No Material Adverse Effect. Since the date of this Agreement, there shall have been no Material Adverse Effect with respect to EFSC taken as a whole;

(v) Third Party Diligence. The Seller Representative shall be satisfied, in its sole and absolute discretion, with the results of his third party due diligence review of the effect of the consummation of the transactions contemplated by this Agreement on the Company’s relationships with the Third Parties, which diligence review shall be conducted in the manner and with the Third Parties set forth on Schedule 7.01(a)(ix);

(vi) Satisfaction. All actions, proceedings, instruments and documents required to carry out this Agreement or incidental hereto and all other related legal matters shall be reasonably satisfactory to the Seller Representative and his counsel;

(vii) Compliance with Requests or Waiver. The Seller Representative shall have received such additional documents, instruments or items of information reasonably requested by him in respect of any aspect or consequence of the transactions contemplated hereby. All proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement or by the other agreements referred to herein shall be reasonably satisfactory in form and substance to the Seller Representative and his counsel; and

(viii) First Installment Stock Consideration. The Purchaser shall have taken all necessary corporate and other action necessary for the issuance of the Restricted Purchaser Shares constituting the First Installment Stock Consideration, including without limitation approval thereof by the Purchaser’s Board of Directors and filing of a NASDAQ Notification Form: Listing of Additional Shares with the NASDAQ National Market with respect thereto.

(b) Waiver of Conditions. Any condition specified in Section 7.02(a) may be waived by the Seller Representative if such waiver is set forth in a writing duly executed by the Seller Representative.

ARTICLE 8
TERMINATION

8.01 Termination of Agreement. Any of the Parties may terminate this Agreement as provided below:

(a) Termination by Mutual Consent. This Agreement may be terminated and the transactions contemplated hereby abandoned by the mutual written consent of the Purchaser and the Seller Representative at any time prior to the First Installment Closing.

(b) Termination by Purchaser. Purchaser may terminate this Agreement by giving written notice to the Company at any time prior to the First Installment Closing: (A) in the event the Company or the Sellers have Breached any representation, warranty, or covenant contained in this Agreement in any material respect (except to the extent that any representation or warranty that is qualified as to materiality or Material Adverse Effect, in the event the Company has Breached any such representation, warranty, or covenant contained in this Agreement in any respect), Purchaser has notified the Company of the breach, and the Breach has continued without cure for a period of fifteen (15) days after the notice of Breach; or (B) if the Closing shall not have occurred on or before November 30, 2005 by reason of the failure of any condition precedent under Section 7.01 hereof (unless the failure results primarily from Purchaser Breaching any representation, warranty, or covenant contained in this Agreement).

(c) Termination by the Sellers Representative. The Sellers Representative may terminate this Agreement by giving written notice to Purchaser at any time prior to the First Installment Closing: (A) in the event Purchaser has Breached any material representation, warranty, or covenant contained in this Agreement in any material respect (except to the extent that any representation or warranty that is qualified as to materiality or Material Adverse Effect, in the event the Company has Breached any such representation, warranty, or covenant contained in this Agreement in any respect), the Company has notified Purchaser of the Breach, and the Breach has continued without cure for a period of fifteen (15) days after the notice of Breach; or (B) if the Closing shall not have occurred on or before November 30, 2005 by reason of the failure of any condition precedent under Section 7.02 hereof (unless the failure results primarily from the Company or the Sellers Breaching any representation, warranty, or covenant contained in this Agreement).

8.02 Effect of Termination. If any Party terminates this Agreement pursuant to Section 8.01 above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party except for material willful breaches and intentional misstatements in or pursuant to this Agreement prior to the time of termination; provided, however, that the provisions contained in Sections 6.01(a), 6.01(b), and 6.02(c) and Articles 9 and 10 shall survive any such termination; provided, however, that, if this Agreement is terminated because of a Breach of this Agreement by the nonterminating party, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE 9
INDEMNIFICATION

9.01 Survival; Right to Indemnification Not Affected by Knowledge. All representations, warranties, covenants, and obligations in this Agreement, the Schedules, or any Exhibit hereto will survive the First Installment Closing Date as follows:

(a) the representations and warranties in Section 4.01 (Incorporation, Qualification and Corporate Power), Section 4.02 (Capitalization), Section 4.04 (Authorization of Transaction), clause (I) of Section 4.05 (Noncontravention), Section 4.25 (Broker’s Fees) (collectively, the “Critical Representations”) shall survive indefinitely;

(b) the representations and warranties in Section 5.01 (Organization), Section 5.02 (Authorization of Transaction) and Section 5.04 (Financial Capability) shall survive indefinitely;

(c) the representations and warranties in Section 4.08 (Tax Matters) and Section 4.17 (Legal Compliance) shall terminate upon the expiration of the applicable statutes of limitations in respect of such matters (after giving effect to any extensions or waivers thereof); and

(d) all other representations, warranties and covenants in this Agreement and the Schedules and Exhibits attached hereto shall terminate on the Business Day next following the eighteenth month anniversary of the First Installment Closing Date;

provided that any representation or warranty in respect of which indemnity may be sought under Section 9.02 below, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 9.01 if notice of a claim for indemnity hereunder shall have been given to the party against whom such indemnity may be sought prior to such time. The parties acknowledge that indemnification hereunder with respect to the Breach of any covenant or agreement contained herein, including any Breach of any covenant or agreement contained in this

Article 9, shall not be subject to any time or other limitations. Subject to Section 6.01(d)(ii), the right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the First Installment Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation.

9.02 Indemnification and Payment of Damages by Sellers. Subject to the limitations set forth below, the Sellers and Diamond, severally and not jointly, will indemnify and save and hold harmless Purchaser and the Company, and their respective officers, directors, employees, stockholders, agents, representatives, Affiliates, successors and assigns (collectively, the “Purchaser Indemnified Persons”) for, and will pay to the Purchaser Indemnified Persons the amount of any loss, Liability, action, cost, claim, damage, reasonable and necessary expense (including third-party costs of investigation and defense and reasonable attorneys’ fees), whether or not involving a third party claim (collectively, “Damages”), which any Purchaser Indemnified Persons suffers, sustains or becomes subject to, as a result or, in connection with, arising from, relating to or by virtue of any of the following matters; provided, however, that Damages shall not include any indirect, special, punitive, exemplary, incidental or consequential damages of any kind, except for any indirect, special, punitive, exemplary, incidental or consequential damages of any kind actually paid to third parties by a Purchaser Indemnified Person:

(a) any Breach of any representation or warranty made by the Company or the Sellers in this Agreement, the Schedules, or any Exhibits hereto, or any other closing certificate or document delivered by the Company or the Sellers pursuant to this Agreement;

(b) any Breach by the Company or the Sellers of any covenant or obligation in this Agreement or any Exhibits hereto, or any other closing certificate or document delivered by the Company or the Sellers pursuant to this Agreement;

(c) the amount of any Liabilities of the Company to any Seller arising prior to the First Installment Closing, to the extent that such amounts are not paid prior to the First Installment Closing, are not included as an accrued expense in determining the Final Net Working Capital, or are not deemed Indebtedness for purposes of determining the First Installment Purchase Price;

(d) the amount of any Sellers’ Expenses to the extent that such amounts are not paid prior to the First Installment Closing, are not included as an accrued expense in determining the Final Net Working Capital, or are not deemed Funded Debt for purposes of determining the First Installment Purchase Price; and

(e) any Taxes owed by the Company arising from tax incidents for any tax period ending on or prior to the First Installment Closing which are unpaid at the First Installment Closing, to the extent that such amounts are not paid prior to the First Installment Closing or not included as an accrued expense in determining the Final Net Working Capital.

9.03 Indemnification and Payment for Damages by Purchaser. Purchaser will indemnify and hold harmless the Company and the Sellers, and will pay to the Company and the Sellers the amount of any Damages arising, directly or indirectly, from or in connection with relating to or by virtue of any breach of any representation, warranty, covenant, or obligation made by Purchaser in this Agreement, any Schedule or Exhibit hereto or in any closing certificate or document delivered by Purchaser pursuant to this Agreement; provided, however, that Damages shall not include any punitive or exemplary damages.

9.04 Limitations.

(a) Notwithstanding anything to the contrary herein, the Sellers shall not be liable under Section 9.02(a) unless and until the aggregate Damages for which they would otherwise be liable under this Article 9 exceed $100,000 (at which point the Sellers shall become liable for all such Damages, including such $100,000); provided that the limitation set forth in this sentence shall not apply to a claim pursuant to Section 9.02(a) relating to a breach of the Critical Representations.

(b) Except in the case of fraud, the liability of any particular Seller under this Article 9 shall not exceed the aggregate amount of the First Installment Price, Second Installment Price and Third Installment Price actually paid or payable to him, her or it under this Agreement.

(c) Except as set forth below, the Sellers shall not be liable to the Purchaser Indemnified Persons, with respect to the matters described in Section 9.02(a) for any amounts exceeding $10,000,000; provided, however, that the foregoing limitation shall not apply to (i) any claim for intentional misrepresentation or fraud or (ii) any claim made for indemnification pursuant to Section 9.02(a) for any breach of or misrepresentation in Sections 4.01, 4.02, or 4.04.

(d) Except as set forth below, the Purchaser shall not be liable to the Company or the Sellers, with respect to the matters described in Section 9.03 for any amounts exceeding the aggregate Closing Value of the First Installment Stock Consideration, Second Installment Stock Consideration and the Third Installment Stock Consideration.

(e) The parties agree that from and after the First Installment Closing Date, indemnification pursuant to the provisions of Article 9 shall be the exclusive remedy of the parties for any misrepresentation or breach of warranty or covenant contained herein or in any Schedule or Exhibit.

(f) The amount of any Damages otherwise payable to any Claimant pursuant to this Article 9 shall be reduced to the extent that, by reason of such claims, any insurance proceeds are paid to such Claimant, which amount shall be offset by any directly corresponding increase in the insurance premiums payable to such Claimant or to the extent Claimant receives any tax benefit from such claim offset by the amount of any detriments as a result of the receipt of any indemnification proceeds. In the event that any such tax benefit or insurance proceeds are paid subsequent to the receipt by such Claimant of an indemnification payment hereunder in respect of such claim to which such tax benefit or insurance proceeds relate, appropriate refunds shall be made promptly regarding the amount of such indemnification payment.

(g) Mitigation of Damages; Insurance. Each Claimant covenants and agrees that in connection with any indemnity claim hereunder, it will use its reasonable best efforts to avail itself of the insurance policies available to it and will act in good faith to mitigate any Damages in connection with indemnity claims arising hereunder.

9.05 Procedure for Indemnification. The procedure for indemnification shall be as follows:

(a) The Party claiming indemnification (the “Claimant”) shall promptly give notice to the Party from whom indemnification is claimed (the “Indemnifying Party”) of any claim, whether between the Parties or brought by a third party, specifying: (i) the factual basis for such claim; and (ii) the amount (or estimated amount if not known) of the claim. For purposes of the preceding sentence, the Purchaser Indemnified Persons shall deliver any such notice to the Seller Representative. If the claim relates to a Proceeding filed by a third party against Claimant, such notice shall be given by Claimant within ten (10) business days after written notice of such Proceeding was given to Claimant. Claimant’s failure to give the Indemnifying Party such notice shall not preclude Claimant from obtaining indemnification from the Indemnifying Party unless Claimant’s failure has prejudiced the Indemnifying Party’s ability to defend the claim or litigation, and then the Indemnifying Party’s obligation shall be reduced only to the extent of such prejudice.

(b) Following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of said thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within said period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate legal remedy.

(c) With respect to any claim by a third party as to which the Claimant asserts it is entitled to indemnification hereunder, the Indemnifying Party shall have the right, at its own expense, to participate in or at its election to assume control of the defense of such claim, with counsel reasonably satisfactory to Claimant, provided, however, that the Claimant may retain separate co-counsel at its sole cost and expense and participate in the defense of any such claim by a third party; and, provided, further, that the Indemnifying Party shall conduct the defense of the third party claim actively and diligently thereafter and the Indemnifying Party shall provide the Claimant with reasonable assurance of the Indemnifying Party’s financial capacity to defend such claim. If the Indemnifying Party elects to assume control of the defense of any third party claim, (i) it will be conclusively established for purposes of this Agreement that such claim or claims are within the scope of and subject to indemnification; (ii) no compromise or settlement of such claims may be effected by the Indemnifying Party without the Claimant’s consent unless there is no finding or admission of any violation of Law or any violation of the rights of any Person and no effect on any other claims that may be made against the Claimant, and the sole relief provided is monetary damages that are paid in full by the Indemnifying Party; and (iii) the Claimant will have no Liability with respect to any compromise or settlement of such claims effected without its consent. If notice is given to the Indemnifying Party of the commencement of any claim and the Indemnifying Party does not, within thirty (30) business days after the Claimant’s notice is given, give notice to the Claimant of its election to assume the defense of such claim, the Claimant may assume control of the defense of such claim and the Indemnifying Party will be bound by any determination made with respect to such claim or any compromise or settlement effected by the Claimant; provided that no compromise or settlement of such claims may be effected by the Claimant without the Indemnifying Party’s consent unless (A) there is no finding or admission of any violation of Law or any violation of the rights of any Person and no effect on any other claims that may be made against the Indemnifying Party and (B) the sole relief provided is monetary damages.

(d) Notwithstanding the foregoing, if a Claimant determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its Affiliates other than solely as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Claimant may, by notice to the Indemnifying Party assume the exclusive right to defend, compromise, or settle such Proceeding and the Indemnifying Party shall pay the Damages, as well as the reasonable fees and expenses of counsel retained by the Claimant in connection therewith. The Indemnifying Party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which will not be unreasonably withheld).

9.06 Right of Setoff. In addition to any other right or means the Purchaser Indemnified Persons may have to enforce the indemnities provided for in this Article 9, the Purchaser Indemnified Persons will be entitled to set off any amount to which such Purchaser Indemnified Persons is, in its good faith determination, entitled under this Agreement or Damages for which such Purchaser Indemnified Persons may be entitled to payment under this Article 9 against the Second Installment Price and/or the Third Installment Price, subject to the limitations herein. Without limiting the foregoing, Purchaser shall be entitled to set off against the Second Installment Price and/or the Third Installment Price any amounts, subject to the limitation herein, to which the Company may be entitled under this Agreement or Damages for which the Company may be entitled to payment under this Article 9; provided that Purchaser shall pay such set off amount to the Company and such payment shall be deemed to be a direct payment to the Company by the Party or Parties against whom such set off rights are exercised. The Purchaser Indemnified Persons’ right to setoff or their exercise thereof will not prejudice the right of the Purchaser Indemnified Persons to pursue, in addition or as an alternative to such right, any other right or means the Purchaser Indemnified Persons may have to enforce the indemnification provided for in this Article 9 and in no event will the amount actually set off limit the Purchaser Indemnified Persons’ right to indemnification under this Article 9. The exercise of any such right of setoff shall not be deemed to be a reduction of the First Installment Price, Second Installment Price or Third Installment Price.

9.07 Specific Performance. Each Seller acknowledges and agrees that Purchaser and the Company would be damaged irreparably in the event Section 6.05 is not performed in accordance with its specific terms or is otherwise breached. Accordingly each Seller agrees that Purchaser shall be entitled to an injunction or injunctions to prevent breaches of Section 6.05 of this Agreement and to enforce specifically the terms and provisions of Section 6.05 in any action instituted in any court in the United States or in any state having jurisdiction over the parties and the matter in addition to any other remedy to which they may be entitled pursuant hereto.

ARTICLE 10
MISCELLANEOUS

10.01 No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

10.02 Entire Agreement. This Agreement and the Confidentiality Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof.

10.03 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective heirs, successors and permitted assigns; provided, however, that except as otherwise set forth in this Section 10.03, no party may assign its rights or delegate its obligations under this Agreement, whether by operation of law or otherwise, without the express prior written consent of each other party, which consent shall not be unreasonably withheld. So long as Purchaser remains liable for its obligations hereunder, Purchaser may assign its rights or obligations hereunder (including its right to purchase the Company Shares), in whole or in part, to any of its Affiliates without the consent of any of the other parties hereto.

10.04 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

10.05 Counterpart Facsimile Execution. For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or telecopier is to be treated as an original document. The signature of any Party thereon, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document. At the request of any Party hereto, any facsimile or telecopy document is to be re-executed in original form by the Parties who executed the facsimile or telecopy document. No Party hereto may raise the use of a facsimile machine or telecopier or the fact that any signature was transmitted through the use of a facsimile or telecopier machine as a defense to the enforcement of this Agreement or any amendment or other document executed in compliance with this Section 10.05.

10.06 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

10.07 Notices. All notices, consents, requests, demands and other communications hereunder are to be in writing, and are deemed to have been duly given or made: (i) when delivered in person; (ii) three days after deposited in the United States mail, first class postage prepaid; (iii) in the case of telegraph or overnight courier services, one business day after delivery to the telegraph company or overnight courier service with payment provided; or (iv) in the case of telex or telecopy or fax, when sent, verification received, in each case addressed as follows:

If to the Company or any Company Shareholder prior to the First Installment Closing:	with a copy to:
	Bass, Berry & Sims PLC
Millennium Brokerage Group, LLC	Howard H. Lamar III, Esq.
Mr. William L. Zelenik, Chief Executive Officer	2700 AmSouth Center
611 Commerce Street, Suite 2606	315 Deaderick Street
Nashville, Tennessee 37203	Nashville, Tennessee 37238
Facsimile: (615) 259-3250	Facsimile: (615) 742-2709

If to the Seller Representative after the First Installment Closing:	with a copy to:
	Bass, Berry & Sims, PLC
Mr. William L. Zelenik, Chief Executive Officer	Howard H. Lamar III, Esq.
611 Commerce Street, Suite 2606	2700 AmSouth Center
Nashville, Tennessee 37203	315 Deaderick Street
Facsimile: (615) 259-3250	Nashville, Tennessee 37238
	Facsimile: (615) 742-2709

If to Purchaser:	with a copy to:

Enterprise Financial Services Corp.	Greensfelder, Hemker & Gale, P.C.
Mr. Kevin C. Eichner, President and CEO	Joseph D. Lehrer, Esq.
150 N. Meramec Ave., Suite 300	10 South Broadway, Suite 2000
Clayton, Missouri 63105	St. Louis, Missouri 63124
Facsimile: (314) 812-7101	Facsimile: (314) 241-8624

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. Any notice to the Sellers shall be deemed sufficient if given to the Seller Representative in the manner set forth above.

10.08 Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Missouri without giving effect to any choice or conflict of law provision or rule (whether of the State of Missouri or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Missouri.

10.09 Amendments and Waivers. The Parties may mutually amend any provision of this Agreement. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

10.10 Failure or Delay. Except as otherwise provided by this Agreement, no failure on the part of any Party hereto to exercise, and no delay in exercising, any right, power or privilege hereunder operates as a waiver thereof; nor does any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. No notice to or demand on any Party hereto in any case entitles such Party to any other or further notice or demand in similar or other circumstances.

10.11 Further Assurances. The Parties hereto will execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.

10.12 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

10.13 Expenses. Except as otherwise provided herein, each of the Parties will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. All items which are Sellers’ Expenses shall be paid at or prior to the First Installment Closing by the Sellers or the Company or shall be reflected as an accrued expense on the Audited Closing Balance Sheet define for purposes of determining the Final Net Working Capital.

10.14 Attorneys’ Fees. If any Party to this Agreement shall bring any action, suit, claim in arbitration, counterclaim or appeal for any relief against any other party, declaratory or otherwise, to enforce the terms hereof or to declare rights hereunder, the Prevailing Party shall be entitled to recover as part of any such action its reasonable attorneys’ fees and costs, including any fees and costs incurred in bringing and prosecuting such action and/or enforcing any order, judgment, ruling or award granted as part of such action. “Prevailing Party” within the meaning of this section includes, without limitation, a Party who: (i) agrees to dismiss such an action upon the other Party’s payment of all or a substantial portion (50% or more) of the sums allegedly due, or the other party’s performance of the covenants allegedly breached; or (ii) recovers at least 75% of its total claims or who is required to pay no more than 25% of all the other party’s claims.

10.15 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

10.16 Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first set forth above.

THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY BE ENFORCED BY THE PARTIES.

EFSC		COMPANY

ENTERPRISE FINANCIAL SERVICES CORP.		MILLENNIUM BROKERAGE GROUP, LLC


By:	/s/ Kevin C. Eichner	By:	/s/ William L. Zelenik

	Kevin C. Eichner, President & CEO		William L. Zelenik, Chief Executive Officer

ACQUISITION SUB		DIAMOND

MILLENNIUM HOLDING COMPANY, INC.		MILLENNIUM HOLDINGS, LLC


By:	/s/ Frank H. Sanfilippo	By:	/s/ William L. Zelenik

	Frank H. Sanfilippo, President		William L. Zelenik, President

SELLERS


/s/ William L. Zelenik		/s/ John W. Bohlman, Jr.

William L. Zelenik		John W. Bohlman, Jr.

/s/ John R. Gillenwater		/s/ Steven T. Weld

John R. Gillenwater		Steven T. Weld

/s/ James L. Laughlin II		/s/ John A. White

James L. Laughlin II		John A. White

/s/ Dennis Wall		/s/ Robert R. Williams

Dennis Wall		Robert R. Williams

EX-10.1 3 ef71661ex101.htm EXHIBIT 10.1

Exhibit 10.1

Exhibit D

SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
MILLENNIUM BROKERAGE GROUP, LLC

A Tennessee Limited Liability Company

DATED AS OF:

October ___, 2005

SECOND AMENDED AND RESTATED
OPERATING AGREEMENT
OF
MILLENNIUM BROKERAGE GROUP, LLC

This SECOND AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) is entered into and shall be effective as of the ____ day of October, 2005, by and between the persons who are identified as Members on Exhibit A attached hereto and who have executed a counterpart of this Agreement as Members pursuant to the provisions of the Act, on the following terms and conditions:

ARTICLE I
ORGANIZATIONAL MATTERS

1.1 Name. The name of the Company shall be Millennium Brokerage Group, LLC, or such other name as the Board may from time to time hereafter designate.

1.2 Formation. The Company was formed on December 31, 1998 upon the filing of the Articles of Organization of the Company with the Secretary of State of the State of Tennessee setting forth the information required by the Act.

1.3 Effective Date. The Amended and Restated Operating Agreement of the Company was entered into as of the 1st day of February, 2001. This Agreement is effective as of the date first set forth above (the “Effective Date”).

ARTICLE II
DEFINITIONS

In addition to terms otherwise defined herein, the following terms are used herein as defined below:

“Act” means the Tennessee Limited Liability Company Act, Tennessee Code Annotated Section 48-201-101 et seq., as amended, or any corresponding provision or provisions of any succeeding law.

“Additional Investment” means any capital contribution by the Enterprise Member which has been unanimously approved by the Board in accordance with Section 4.5(k) hereof.

“Adjusted Capital Account Deficit” means the deficit balance, if any, in a Member’s Capital Account as of the end of the relevant Year, giving effect to the following adjustments:

(a) credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and

(b) debit to such Capital Account the items described in clauses (4), (5) and (6) of Section 1.704-1(b)(2)(ii)(d) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

“Advance Diamond Distribution” means a distribution to the Diamond Member which, with respect to both the timing and amount of any such distribution, is within the sole and absolute discretion of the Board.

“Adverse Terminating Event” means with respect to any Member or any Interest any of the following events, circumstances or occurrences:

	(a) The Member has breached the Transfer restrictions set forth in Article IX hereof; or

	(b) The Member attempts to resign or withdraw without the consent of a majority of the Board.

“Affiliate” means, with respect to a particular person or Entity, any person or Entity that directly or indirectly, through one or more intermediaries controls, is controlled by, or is under common control with, such other person.

“Agreement” means this Operating Agreement, as amended from time to time.

“Articles of Organization” means the Article of Organization of the Company filed with the Secretary of State of the State of Tennessee pursuant to the Act, as amended from time to time.

“Available Distributable Cash” means all cash, revenues and funds (including proceeds from the sale or other disposition or refinancing of capital assets) received by the Company, less the sum of the following, to the extent paid or set aside by the Company: (a) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (b) all cash expenditures incurred incident to the normal operation of the Company’s business (including the payment of any guaranteed payments); (c) all amounts deemed necessary by the Board acting in good faith to be held by the Company for working capital purposes; and (d) all amounts deemed necessary by the Board acting in good faith to fund capital expenditures of the Company which are not funded by Additional Investment.

“Bankruptcy” means, as to any Member, the Member’s taking of, acquiescing to the taking of, or becoming (voluntarily or involuntary) the subject of, or any action seeking relief under, or advantage of, any applicable debtor relief, liquidation, receivership, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar law affecting the rights or remedies of creditors generally, as in effect from time to time.

“Board” means the Board referenced in Section 4.1 hereof.

“Book Value” shall mean the following as of the Valuation Date: the book value of the Company (total assets minus liabilities) as shown on the Company’s books and records. Book Value shall be determined, without audit or certification, from the books and records of the Company by the accounting firm regularly employed by the Company, and shall be final and binding in the absence of a showing of gross negligence or willful misconduct.

“Capital Account” in respect of any Member means the account established for that Member pursuant to Section 6.4 hereof, and as may be adjusted from time to time in accordance with this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor legislation thereto.

“Company” means Millennium Brokerage Group, LLC.

“Continuation Event” has the meaning given to such term in Section 11.2 hereof.

“Diamond Governors” means the Governors designated by the Diamond Member.

“Diamond Employees” means William L. Zelenik, John Bohlman, John Gillenwater, Jim Laughlin, Dennis Wall, Steve Weld, John White Robert Williams, Larry Gilkerson, Al Marano, William Rouse and Kathy Ruskin.

“Diamond Member” means Millennium Holdings, LLC, a Tennessee limited liability company.

“Dissolution Event” has the meaning given to such term in Section 11.1 hereof.

“Effective Date” has the meaning set forth in Section 1.3.

“Enterprise Governors” means the Governors designated by the Enterprise Member.

“Enterprise Member” means Millennium Holding Company, Inc., a Missouri corporation.

“Entity” means any corporation, partnership, trust, limited liability company or other entity.

“Financial Rights” shall mean a Member’s share of one or more of the Company’s profits, losses and distributions pursuant to this Agreement and the Act, but shall not include any right to participate in the management or affairs of the Company, including the right to vote on, consent to, or otherwise, participate in any decision or decision making of the Members, the Governors or the management of the Company. A transferee of Financial Rights shall not be treated as a substituted Member hereunder.

“Governance Rights” means the interest of a Member in the Company with respect to such Member’s right to vote or grant or withhold consents with respect to Company matters as provided herein or in the Act. Any reference herein to any vote or action of Members shall only refer to those Members entitled to Governance Rights. If a Member Transfers the Financial Rights, but retains the Governance Rights, the transferring Member shall retain the right to vote or grant or withhold consents with respect to Company matters which may be exercised in connection with the ownership of the Interest transferred as provided in this Agreement, and the transferee of the Interest shall have no right to vote or grant or withhold consents.

“Governor” means a member of the Board as designated in, or selected pursuant to, Section 4.2 hereof.

“Interest” means the ownership interest of a Member in the Company, including Financial Rights and Governance Rights. A Member’s Interest shall be considered personal property for all purposes.

“Investment Amount” means the amount paid by the Enterprise Member pursuant to the Purchase Agreement for its Interests in the Company plus any Additional Investment by the Enterprise Member in accordance with Section 4.5(k) of this Agreement. On the Effective Date, the Investment Amount shall equal fifteen million dollars ($15,000,000), which amount shall be adjusted as provided in the Purchase Agreement.

“Involuntary Transfer” means any involuntary Transfer of an Interest, including an involuntary Transfer as a result of, or in connection with, a Member’s Bankruptcy.

“Involuntarily Transferred Interest” means any Interest that is the subject of an Involuntary Transfer.

“Majority in Interest of the Members” means Members having Governance Rights (based on the Percentage Interest owned, or the Percentage Interest transferred where Governance Rights are retained), in excess of fifty percent (50.0%) of the total Governance Rights held by all Members who have Governance Rights.

“Matching Account” shall mean that account established with respect to the Diamond Member in order to establish the cumulative amount of matching distributions to which the Diamond Member shall be entitled pursuant to Section 8.2(c). On the last day of each fiscal

quarter, the Matching Account shall be credited (increased) with an amount equal to the product of (A) the Priority Return of the Enterprise Member that has accrued with respect to such quarter, multiplied by (B) a fraction, the numerator of which is the Percentage Interest of the Diamond Member on the last date of such quarter and the denominator of which is the Percentage Interest of the Enterprise Member on that date; provided, however, that in the event the Diamond Member’s Percentage Interest changes during the fiscal quarter, the Matching Account shall be credited as of immediately before the change in the Diamond Percentage Interest based upon the Priority Return that has accrued since the end of the previous quarter in the manner set forth in this sentence, and the increase at the end of such fiscal quarter shall take into account only the Priority Return that has accrued since the date of the change of Diamond’s Percentage Interest.

“Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” in Section 1.704-2(b)(4) of the Regulations.

“Member Nonrecourse Debt Minimum Gain” means “partner nonrecourse debt minimum gain,” as such term is defined in Regulations Section 1.704-2(i)(2).

“Member Nonrecourse Deductions” means any item of partnership loss, deduction, or expenditure under Section 705(a)(2)(B) of the Code that is attributable to a Member Nonrecourse Debt, as determined pursuant to Regulations Section 1.704-2(i)(2).

“Members” means those persons set forth on the attached Exhibit A who have been admitted as Members to the Company pursuant to this Agreement, so long as they remain Members. Reference to a “Member” means any one of the Members. In the case of an Interest as to which the Governance Rights and Financial Rights are held by different persons, the person holding the Governance Rights shall be considered the Member.

“Minimum Gain” has the meaning given the term “partnership minimum gain” set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“Net Profit” or “Net Loss” means, for each Year, an amount equal to the Company’s taxable income or loss (after the adjustments described below) for each Year or other applicable period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

	(i) Expenditures described in Section 705(a)(2)(B) of the Code, not otherwise taken into account in determining Net Profit or Net Loss, shall be included as an expense in the determination of Net Profit and Net Loss; and

	(ii) Income exempt from taxation shall be included in the determination of Net Profit and Net Loss; and

(iii) Items which are specially allocated pursuant to Section 7.4 hereof (except for Nonrecourse Deductions) shall be eliminated by adding them or subtracting them, as the case may be, in the determination of Net Profit and Net Loss.

“Nonrecourse Deductions” has the meaning set forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

“Nonrecourse Liability” has the meaning set forth in Section 1.704-2(b)(3) of the Regulations.

“Percentage Interest” means, with respect to any Member, the percentage interest set forth opposite that Member’s name on Exhibit A attached hereto. In the event any Interest is Transferred in accordance with the provisions of this Agreement, the transferee of such interest shall succeed to the Percentage Interest of his transfer or to the extent it relates to the Transferred Interest.

“Permitted Transfer” has the meaning given to such term in Section 9.2 hereof.

“Priority Distribution” means the distribution of the Priority Return to the Enterprise Member pursuant to Section 8.2(b) hereof.

“Priority Return” means an amount equal to twenty-three and one-tenth percent (23.1%) before tax return per annum (prorated for any partial Year) on the from time to time Investment Amount commencing January 1, 2006. No Priority Return shall accrue for any period prior to such date.

“Prime Rate” means the prime rate as published in the Wall Street Journal from time to time.

“Purchase Agreement” means that certain Membership Interest Purchase Agreement by and between Enterprise Financial Services Corp. and Millennium Brokerage Group, LLC, William L. Zelenik, John Bohlman, John Gillenwater, Jim Laughlin, Dennis Wall, Steve Weld, John White, Robert Williams and the Diamond Member, of even date herewith pursuant to which the Enterprise Member acquired Interests in the Company from the Diamond Employees on the terms and conditions contained therein.

“Qualified Acquisition” has the meaning set forth in Section 4.10(c).

“Regulations” means the federal income tax regulations promulgated under the Code, as such regulations may be amended from time to time, including proposed, temporary and final regulations.

“Successor” means a Member’s executor, administrator, guardian, conservator, other legal representative or successor.

“Tax Matters Partner” has the meaning given to such term in Section 13.6 hereof.

“Terminating Event” means with respect to any Member or any Interest any of the following events, circumstances or occurrences:

	(a) If a Member that is an individual becomes adjudged incompetent by any court; or

	(b) If a Member resigns or withdraws as a Member with the unanimous consent of the Board, and is not at the time of withdrawal the subject of an Adverse Terminating Event.

“Transfer” or “Transferred” shall mean the sale, conveyance, alienation, assignment, transfer, pledge, encumbrance, hypothecation or other disposition (whether voluntarily, involuntary, by operation of law or otherwise) of all or a portion of any Interest.

“Undistributed Matching Return” means, as of any date of its calculation, the excess of the balance of the Matching Account with respect to the Diamond Member at that time, over the aggregate amount of previous distributions to the Diamond Member pursuant to Sections 8.2(a) and (c).

“Undistributed Priority Return” means, as of any date of its calculation, the excess of the cumulative Priority Return to the Enterprise Member at that time over the aggregate amount of previous distributions to the Enterprise Member pursuant to Section 8.2(b).

“Valuation Date” means the last day of the month preceding a Terminating Event.

“Year” means the fiscal year of the Company, which shall be the calendar year.

“Year of Liquidation” means the Year in which the Company is liquidated and final distributions are made to Members.

Words used herein, regardless of the number and gender used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires, and, as used herein, unless the context clearly requires otherwise, the words “hereof,” “herein,” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provisions hereof.

ARTICLE III
OFFICES AND TERM OF COMPANY

3.1 Purpose. The purpose of the Company shall be (a) to engage in the life insurance brokerage business, representing and marketing the products of various insurance carriers and (b) to engage in any lawful business that may be engaged in by a limited liability company organized under the Act, as such business activities may be determined by the Board from time to time.

3.2 Offices.

	(a) The principal office of the Company, and such additional offices as the Board may determine to establish, shall be located at such place or places inside or outside the State of Tennessee as the Board may designate from time to time.

	(b) The address of the Company’s registered office in Tennessee is 611 Commerce Street, Suite 2606, Nashville, Tennessee 37203, County of Davidson. The name of its registered agent at that address is William L. Zelenik. The Company may from time to time establish such other registered office and registered agent within the State of Tennessee as may be designated by the Board.

3.3 Members. The name and business, mailing or residence address of each Member of the Company are as set forth on Exhibit A attached hereto, as the same may be amended from time to time.

3.4 Term. The term of the Company shall be perpetual unless the Company is dissolved and terminated in accordance with Article XI of this Agreement.

ARTICLE IV
MANAGEMENT OF THE COMPANY

4.1 Management by Board of Governors. Subject to the delegation of rights and powers as provided for herein, the Board of Governors shall have the sole right to manage the business of the Company and shall have all powers and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company. No Member, by reason of its status as such, shall have any authority to act for or bind the Company, but shall have only the right to vote on or approve the actions specified herein or in the Act to be voted on or approved by the Members. At any time that there is only one Member, any and all action provided for herein to be taken or approved by the “Members” shall be taken or approved by the sole Member.

4.2 Members of the Board of Governors. The Board shall consist of five (5) Governors or such other number as the Board shall determine by the unanimous vote of the Governors. Governors do not have to be Members. At all times during which the Diamond Member or its Affiliates own any Interests, there shall be at least three Governors who have been appointed by the Enterprise Member and who shall be designated as the “Enterprise Governors” and two Governors who have been appointed by the Diamond Member and who shall be designated as the “Diamond Governors.” The Board shall initially be composed of the following individuals:

Enterprise Governors		Diamond Governors

Governors shall serve for a term of one (1) year and thereafter until their respective successors are duly elected, or until their earlier death, retirement, incapacity or removal. Election of Governors shall be by a Majority in Interest of the Members, voting in proportion to their respective Percentage Interests on the record date for the Members entitled to vote; provided, however, that the Member(s) entitled to designate Governors as such Member’s Governors shall alone have the power to elect such Governors. Vacancies on the Board of Governors from whatever cause shall be filled by the appointment of a successor Governor by (i) the Member(s) that designated the Governor, or (ii) if the Governor was not a Member designated Governor or if there are no Governors, by a vote of a Majority in Interest of the Members. A Governor may be removed with or without cause by a vote of a Majority in Interest of the Members, provided that Governors designated by Members may only be removed by the Member(s) that designated such Governor; provided further that if such Member shall cease to be a Member, the Governors designated by such Member may be removed by the Board.

4.3 Meetings.

	(a) Place of Meetings. All meetings of the Board may be held at any place that has been designated from time to time by resolution of the Board. In the absence of such a designation, regular meetings shall be held at the principal place of business of the Company. Any meeting, regular or special, may be held by conference telephone or similar communication equipment so long as all Governors participating in the meeting can hear one another, and all Governors participating by telephone or similar communication equipment shall be deemed to be present in person at the meeting.

	(b) Regular Meetings. Regular meetings of the Board shall be held at such times and at such places as shall be fixed by majority approval of the Governors, provided that the Board shall hold meetings not less than four (4) times annually following each calendar quarter upon notice by any Governor or by the Chief Executive Officer.

	(c) Special Meetings. Special meetings of the Board for any purpose or purposes may be called at any time by any Governor or by the Chief Executive Officer. Notice of the time and place of a special meeting shall be given at least five (5) business days before the date of the meeting and shall be delivered personally to each Governor and sent by first-class mail, by telegram, telecopy, e-mail (or similar electronic means) or by nationally recognized overnight courier, charges prepaid, addressed to each Governor at that Governor’s address as it is shown on the records of the Company. The notice need not specify the purpose of the meeting.

	(d) Quorum. A majority in number of the Governors shall constitute a quorum for the transaction of business at a meeting of the Board, except to adjourn as provided in Section 4.3(f) below. Notwithstanding the foregoing sentence, a quorum shall not be established unless and until at least one (1) Enterprise Governor and one (1) Diamond Governor are present at any meeting of the Board. Every act or decision done or made by the affirmative vote of a majority of the Governors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board, except to the extent that the vote of a greater number of Governors is required by this Agreement or applicable law.

	(e) Waiver of Notice. Notice of any meeting need not be given to any Governor who either before or after the meeting signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes. The waiver of notice or consent need not specify the purpose of the meeting. All such waivers, consents, and approvals shall be filed with the records of the Company or made a part of the minutes of the meeting. Notice of a meeting shall also be deemed waived with respect to any Governor who attends the meeting without protesting before or at its commencement the lack of notice to that Governor.

	(f) Adjournment. A majority of the Governors present, whether or not constituting a quorum of the Board, may adjourn any meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than forty-eight (48) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting in the manner specified in Section 4.3(c) hereof.

(g) Action Without a Meeting. Any action to be taken by the Board at a meeting may be taken without such meeting by the written consent of a majority of the Governors then in office (or such greater number of Governors as is required to authorize or take such action under the terms of this Agreement or applicable law). Any such written consent may be executed and given by telecopy or similar electronic means. Such written consents shall be filed with the minutes of the proceedings of the Board. If any action is so taken by the Board by the written consent of less than all of the Governors, prompt notice of the taking of such action shall be furnished to each Governor who did not execute such written consent, provided that the effectiveness of such action shall not be impaired by any delay or failure to furnish such notice.

4.4 Officers. The officers of the Company shall be as designated by the Board, and must include a Chief Executive Officer and a Secretary. The Company may also have, at the discretion of the Board, such other officers as may be appointed in accordance with the provisions of this Section 4.4. Any number of offices may be held by the same person, except that the offices of Chief Executive Officer and Secretary cannot be held by the same person. The current officers of the Company are set forth on Exhibit B. The salaries or other compensation, if any, of the officers and agents of the Company shall be fixed from time to time by the Board.

	(a) Election of Officers. The officers of the Company shall be chosen by the Chief Executive Officer with the approval of the Board, and each shall serve at the pleasure of the Board.

	(b) Removal and Resignation of Officers. Subject to the requirements set forth in Section 4.5, any officer may be removed, with or without cause, by the Chief Executive Officer with the approval of the Board at any regular or special meeting of the Board or by such officer, if any, upon whom such power of removal may be conferred by the Board. Any officer may resign at any time by giving written notice to the Company. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and unless otherwise specified in notice of a resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.

	(c) Vacancies in Offices. A vacancy in any office because of death, resignation, removal, disqualification or other cause shall be filled in the manner prescribed in this Agreement for regular appointment to that office. The Chief Executive Officer may make temporary appointments to a vacant office pending action by the Board.

	(d) Chief Executive Officer. The Chief Executive Officer shall have responsibility for implementation of the policies of the Company, as determined and directed by the Board, and for the administration of the business affairs of the Company. He or she shall preside at all meetings of the Members. He or she shall have the general powers and duties of management usually vested in the office of chief executive officer of a corporation and shall have such other powers and duties as may be prescribed by the Board or this Agreement. At all times, the Chief Executive Officer shall report directly to the Chief Executive Officer of Enterprise Financial Services Corp.

	(e) Secretary. The Secretary shall keep or cause to be kept at the principal place of business of the Company or such other place as the Board may direct a book of minutes of all meetings and actions of the Board, committees or other delegates of the Board and the Members with the time and place of holding, whether regular or special, and if special, how authorized, the notice given, the names of those present at Board meetings or committee or other delegate meetings, the Percentage Interest represented at meetings of Members and the proceedings. The Secretary shall give or cause to be given notice of all meetings of the Members and of the Board (or committees or other delegates thereof) required to be given by this Agreement or by applicable law and shall have such other powers and perform such other duties as may be prescribed by the Board or the Chief Executive Officer or by this Agreement.

	(f) Compensation. The salaries or other compensation, if any, of the officers and agents of the Company shall be fixed from time to time by the Board of Governors, and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Member of the Company. The payments made pursuant to this Section 4.4(f) to the officers that are Members shall be deemed to be guaranteed payments for federal income tax purposes as described in Code Section 707(c).

	(g) Employment Agreements. The Members acknowledge that the Company may enter into employment agreements with certain officers of the Company, particularly in connection with the closing of the Purchase Agreement, and that such employment agreements may set forth the terms and conditions upon which such officers’ employment with the Company will be governed, including, but not limited to, the compensation to be paid to such officers and the rights of such officers with respect to resignation and removal. In the event that an officer has entered into an employment agreement with the Company, the provisions of such officer’s employment agreement shall be enforced notwithstanding anything in this Section 4.4 to the contrary.

4.5 Major Decisions. The following matters must be unanimously approved by the Board:

	(a) The issuance of any equity interest in the Company or the admission of an additional Member of the Company (other than a Permitted Transfer as set forth in Section 9.2);

	(b) Any material change from the distribution procedure specified in Article VIII (except as otherwise permitted herein);

	(c) The entry into any merger, share exchange, business combination or consolidation with any other company or other entity; the sale, lease or transfer of all or substantially all of the Company’s properties or assets; or the liquidation, dissolution or winding up the Company’s affairs;

	(d) Causing a fundamental change in the nature of the Company’s business;

	(e) The amendment, restatement or repeal of the Articles of Formation or this Agreement except that this Agreement may also be amended by a unanimous vote of the Members in accordance with Section 14.7 of this Agreement;

	(f) Making any loan or advance to, or owning any stock or other securities of, any other Entity;

	(g) Authorizing or effecting the acquisition in any manner, directly or indirectly, for a purchase price (including liabilities assumed) in excess of $150,000, of a business unit or going concern of any person or Entity by the Company but excluding any Qualified Acquisition, which will be subject to the provisions of Section 4.10;

	(h) Entering into any extraordinary agreements or arrangements which involve the payment of more than $150,000 outside of the Company’s ordinary course of business, consistent with past practice;

	(i) a change in the location of the principal place of business of the Company;

	(j) Terminating the employment of William L. Zelenik or removing him as Chief Executive Officer (excluding the vote of William L. Zelenik, who shall not be permitted to vote on such action); and

	(k) Approval of an additional capital contribution by the Enterprise Member or the Diamond Member.

4.6 Authorized Decisions. Subject to the Board approval requirements set forth in Section 4.5, the Chief Executive Officer shall have the right, power and authority to:

	(a) Execute and deliver any and all documents, instruments or agreements on behalf of the Company in the ordinary course of business;

	(b) Prepare the Company’s annual operating budget and capital expense budget and submit such budgets to the Board, in accordance with the procedures and schedules determined by the Board;

	(c) Except as specifically set forth in Section 4.5 hereof, make any and all day to day decisions on behalf of the Company;

	(d) Manage or administer the management of the Company and employ such persons, firms and corporation as may be necessary or advisable for the conduct of the business of the Company, including, without limitation, any and all documents, instruments, agreements, and contracts, and any and all modifications, amendments, and renewals of same, with such contractors, managers, consultants, brokers, attorneys, accountants and such other parties as the officers shall select, on such terms and for such compensation as the officers shall determine; and

	(e) Prosecute, defend, adjust, compromise, settle, refer to mediation or otherwise deal with any claims in favor of or against the Company and to execute and deliver any and all documents, instruments, agreements, certificates, affidavits, or pleadings in connection therewith, and any modifications, amendments or extensions thereof, as may be necessary or appropriate.

4.7 Authority to Terminate Employment of Diamond Employees. Notwithstanding any other provision of this Agreement, the termination of employment of any Diamond Employee shall require approval of the Chief Executive Officer and the Board.

4.8 Authority to Bind the Company. Except as otherwise provided by the Board, when the taking of such action has been authorized by the Board, any officer(s) or other person(s) specifically authorized by the Board may execute any contract or other agreement or document on behalf of the Company and may execute on behalf of the Company and file with the Secretary of State of the State of Tennessee any certificates or filings provided for in the Act.

4.9 Duty of Good Faith. Each Governor and each Member shall have an obligation to the Company of good faith and fair dealing in all actions on behalf of or associated with the Company.

4.10 Duty to Company.

(a) The members of the Board shall not be required to manage the Company as their sole and exclusive function, but may have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company nor any Member shall have any right, by virtue of this Agreement, to share or participate in any other investments or activities of the members of the Board and the Members or to the income or proceeds derived therefrom. The members of the Board and the Members shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture.

	(b) Notwithstanding the provisions of the immediately preceding subsection (a), the Members, except to the extent set forth in subsection (c) below shall not be permitted to own any ownership interest in and/or lend funds to any entity that directly or indirectly engages in the business of brokering, representing or marketing the products of various life insurance carriers (any such entity, a “Wholesale Life Insurance Business”); provided however that this subsection (b) shall not prevent (i) the members of the Diamond Member from engaging in personal life insurance production, as such term is commonly understood within the life insurance industry or (ii) the Enterprise Member of its Affiliates from owning, lending funds to or otherwise investing in an entity that sells life insurance at retail.

	(c) Notwithstanding the provisions of the immediately preceding subsection (a), so long as the Diamond Member and the Enterprise Member are members of the Company, if the Enterprise Member or any of its Affiliates contemplates purchasing any equity ownership interest in, purchasing the assets of, or lending funds to an entity that is primarily engaged in a Wholesale Life Insurance Business (a “Qualifying Acquisition”), then the Enterprise Member shall give the Company forty five (45) calendar days prior written notice of such Qualifying Acquisition, which notice shall set forth in reasonable detail the terms on which such Qualifying Acquisition will be made (the “Acquisition Notice”). The Company may, not later than thirty (30) days after receipt of the Acquisition Notice, elect to make such Qualifying Acquisition. Notwithstanding the provisions of Section 4.5, such election by the Company shall be made by vote of the Diamond Governors, provided that any such election shall not be valid unless the Diamond Governors simultaneously approve an Additional Investment by the Enterprise Member in an amount necessary to fund such Qualifying Acquisition. If the Company timely elects to exercise its rights pursuant to the preceding sentence, the Enterprise Member or its Affiliate shall grant the Company the right to make the Qualifying Transaction, to the extent that the Enterprise Member determines to consummate the Qualifying Transaction. If the Company does not timely make such election, its rights pursuant to this subsection (c) with respect to such Qualifying Acquisition shall be irrevocably waived and the Enterprise Member and or any of its Affiliates may consummate such Qualifying Acquisition on the substantially the same terms set forth in the Acquisition Notice. To the extent the terms of the Qualifying Acquisition are changed so that they are not substantially the same as set forth in the Acquisition Notice, the Enterprise Member shall again be subject to this Section 4.10(c) and shall be required to comply with the terms of this Section 4.10(c).

ARTICLE V
MEMBERS

5.1 Rights or Powers. The Members shall not have any right or power to take part in the management or control of the Company or its business and affairs or to act for or bind the Company in any way. Notwithstanding the foregoing, the Members have all the rights and powers specifically set forth in this Agreement and, to the extent not inconsistent with this Agreement, in the Act.

5.2 Voting Rights. No Member has any voting right except with respect to those matters specifically reserved for a Member vote which are set forth in this Agreement and as required in the Act.

5.3 Meetings of Members. Meetings of Members shall be held at any place designated by the Board. In the absence of any such designation, meetings of Members shall be held at the principal place of business of the Company. Any meeting of the Members may be held by conference telephone or similar communication equipment so long as all Members participating in the meeting can hear one another, and all Members participating by telephone or similar communication equipment shall be deemed to be present in person at the meeting.

	(a) Call of Meetings. Meetings of the Members may be called at any time by the Board or by the Chief Executive Officer for the purpose of taking action upon any matter requiring the vote or authority of the Members as provided herein or in the Agreement or upon any other matter as to which such vote or authority is deemed by the Governors to be necessary or desirable. Meetings of the Members to act on any matter upon which Members may vote as provided in the Agreement or the Act shall be called promptly by the Board upon the written request of a Majority in Interest of the Members.

	(b) Notice of Meetings of Members. All notices of meetings of Members shall be sent or otherwise given not less then ten (10) nor more than ninety (90) days before the date of the meeting. The notice shall specify (i) the place, date and hour of the meeting, and (ii) the general nature of the business to be transacted.

	(c) Manner of Giving Notice. Notice of any meeting of Members shall be given personally to each Member or sent by first class mail, by telegram, telecopy, e-mail (or similar electronic means) or by a nationally recognized overnight courier, charges prepaid, addressed to the Member at the address of that Member appearing on the books of the Company or given by the Member to the Company for the purpose of notice. Notice shall be deemed to have been given at the time when delivered either personally, or at the time when deposited in the mail or with a nationally recognized overnight courier, or when sent by telegram, telecopy or e-mail (or similar electronic means).

	(d) Adjourned Meeting; Notice. Any meeting of Members, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the Percentage Interests represented at that meeting, either in person or by proxy. When any meeting of Members is adjourned to another time or place, notice need not be given of the adjourned meeting, unless a new record date of the adjourned meeting is fixed or unless the adjournment is for more than sixty (60) days from the date set for the original meeting, in which case the Board shall set a new record date and shall give notice in accordance with the provisions of this Section 5.3. At any adjourned meeting, the Company may transact any business that might have been transacted at the original meeting.

	(e) Quorum; Voting. At any meeting of the Members, a Majority in Interest of those Members having Governance Rights (considering only those Interests as to which a Member has Governance Rights), present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of Members holding a higher aggregate Percentage Interest is required by the Agreement or applicable law. Except as otherwise required by the Agreement or applicable law, all matters shall be determined by a Majority in Interest of the Members.

	(f) Waiver of Notice by Consent of Absent Members. When any notice is required to be given to any Member, a waiver thereof in writing signed by the person entitled to such notice, whether before, at or after the time stated therein, shall be equivalent to the giving of such notice. Attendance by a Member at a meeting is a waiver of notice of such meeting, unless the Member objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not otherwise participate in the consideration of any matter at the meeting.

	(g) Member Action by Written Consent Without a Meeting. Action required or permitted to be taken at a meeting of the Members may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed in one or more counterparts by all of the Members and delivered to the Secretary of the Company for filing with the Company records.

	(h) Proxies. At all meetings of the Members, a Member may vote in person or by proxy executed in writing by a Member or by a duly authorized attorney-in-fact. Such proxy shall be filed with the Company before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.

5.4 Members Liability. No Member shall be liable under a judgment, decree or order of a court, or in any other manner for the debts or any other obligations or liabilities of the Company. A Member shall not be required to restore a deficit balance in its Capital Account or to lend any funds to the Company or, after its capital contributions have been made, to make any additional contributions, assessments or payments to the Company, provided that a Member may be required to repay distributions made to it as provided in the Act. The Governors shall not have any personal liability for the repayment of any capital contributions of any Member.

5.5 Transactions Between a Member and the Company. Except as otherwise provided by applicable law, any Member may, but shall not be obligated to, lend money to the Company, act as surety for the Company and transact other business with the Company and has the same rights and obligations when transacting business with the Company as a person or entity who is not a Member. A Member may also be an employee or be retained as an agent of the Company. The existence of these relationships and acting in such capacities will not result in the Member being deemed to be participating in the control of the business of the Company or otherwise affect the limited liability of the Member.

ARTICLE VI
CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS; CAPITAL ACCOUNTS

6.1 Capital Contributions; Percentage Interests. As of the date hereof, the Members have the capital accounts set forth on Exhibit A attached hereto and are granted the Percentage Interests set forth on Exhibit A. Without any further action by the Members or by the Board, Exhibit A shall be appropriately amended to reflect changes to the Percentage Interests of the Members as new Members are admitted and as the Percentage Interests of existing Members are changed pursuant to the terms and conditions of this Agreement. Notwithstanding the foregoing, in no event shall the Percentage Interests be adjusted to reflect any additional capital contributions by the Enterprise Member. Except as unanimously approved by the Board as provided in Section 4.5(k) hereof, the Members shall have no right or obligation to make any further capital contributions to the Company.

6.2 Loans by Members. In order to satisfy its financial needs, the Company may borrow funds from the Members and pledge or mortgage any property of the Company and revenues attributable to such property. Unless otherwise designated in the loan agreements or accompanying documents, repayment of principal and interest on such loans will be solely the obligation of the Company and not of the Members. Any loans to the Company from Members shall bear interest at the Prime Rate.

6.3 Return of Capital. No Member or Governor shall have any liability for the return of any Member’s capital contributions. A Member shall not receive out of the Company’s property all or any part of such Member’s capital contributions except as provided in Sections 8.2 and 8.3 hereof.

6.4 Capital Accounts. The Company shall maintain for each Member an account designated as such Member’s Capital Account. Each such Capital Account shall be credited (a) with the cash contributions of the respective Members, (b) with the fair market value of contributions of property by the respective Members (net of liabilities secured by such contributed property) and (c) with the respective Member’s share, determined as provided herein, of Net Profit. Each Member’s Capital Account shall be debited (x) with the respective Member’s share, determined as provided herein, of Net Loss, (y) with the cash distributed to the respective Members and (z) with the fair market value of distributions of property to the respective Members (net of liabilities secured by such distributed property). The Capital Accounts shall be maintained in accordance with Section 1.704-1(b)(2)(iv) of the Regulations, and the items of income, profit, gain, expenditures, deductions and losses which increase or decrease such capital accounts shall be those items which, pursuant to such Regulations, affect the balance of capital accounts.

ARTICLE VII
ALLOCATION OF PROFITS AND LOSSES
FOR FEDERAL INCOME TAX PURPOSES

As of the end of each Year, the Company’s Net Profit or Net Loss and each item of income, gain, loss and deduction related thereto, as well as other items of income, gain, loss or deduction which are subject to special allocation provisions, shall be allocated to the Capital Accounts of the Members and for federal income tax purposes pursuant to the following Sections of this Article VII.

7.1 Allocation of Net Loss. After giving effect to the special allocations set forth in Section 7.3 and Section 7.4 hereof, if there is a Net Loss for any Year, such Net Loss shall be allocated to all Members in proportion to their Percentage Interests.

Notwithstanding the foregoing, no allocation of Net Loss shall be allocated to any Member if such allocation would cause such Member to have an Adjusted Capital Account Deficit. The amount of the allocation of Net Loss which would otherwise have caused a Member to have an Adjusted Capital Account Deficit shall instead be allocated to those Members who would not have an Adjusted Capital Account Deficit as a result of the allocation in proportion to their Percentage Interests.

7.2 Allocation of Net Profit. After giving effect to the special allocations set forth in Section 7.3 and Section 7.4 hereof, if there is a Net Profit for any Year, such Net Profit shall be allocated in the following manner:

	(a) First, to the Members who received an allocation of Net Loss pursuant to the last sentence of Section 7.1 hereof (i.e., which would have been allocated to another Member but for the creation of an Adjusted Capital Account Deficit for that Member), an amount of Net Profit equal to the allocations of Net Loss previously made pursuant to such last sentence of Section 7.1 hereof (without duplication) in reverse order to which such prior Net Losses were allocated; and

	(b) Second, to the Diamond Member in an amount equal to the excess of (x) the cumulative Advance Diamond Distributions as of the end of the current Year, for the current Year and all prior Years, over (y) the cumulative allocations of net Profit to the Diamond Member pursuant to this Section 7.2(b) for all prior Years;

	(c) Third, to the Enterprise Member to the extent of the excess of (x) the cumulative Priority Distributions to the Enterprise Member pursuant to Section 8.2(b) as of the end of the current Year, for the current Year and all prior Years, over (y) cumulative allocations of Net Profit to the Enterprise Member pursuant to this Section 7.2(c) for all prior Years; and

	(d) Fourth, to the Diamond Member, the excess of (x) the cumulative distributions to the Diamond Member pursuant to Section 8.2(c) as of the end of the current Year, for the current Year and all prior Years, over (y) cumulative allocations of Net Profit to such Diamond Member pursuant to this Section 7.2(d) for all prior Years; and

	(e) Thereafter, any remaining amount to all Members pro rata in accordance with their Percentage Interests.

7.3 Special Allocations. Prior to the allocations pursuant to Section 7.1 and Section 7.2 hereof, items of income, gain, loss and deduction for the Year shall be allocated in accordance with the following provisions of this Section 7.3 to the extent such provisions are applicable, and any items so allocated (except Nonrecourse Deductions) shall not be taken into account in determining Net Profit or Net Loss.

	(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article VII, if there is a net decrease in the Company’s Minimum Gain, special allocations shall be to the Members to comply with the minimum gain chargeback requirement in Regulation § 1.704-2(f).

	(b) Member Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any other provision of this Article VII, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Year, special allocations shall be made to each such Member to comply with the minimum gain chargeback requirement in Regulation § 1.704-2(i)(4).

	(c) Qualified Income Offset. If any Member receives any adjustment, allocation or distribution described in clauses (4), (5) and (6) of Regulation § 1.704-1(b)(2)(ii)(d), the Member shall be allocated items of the Company’s income and gain consistent with the “qualified income offset” provisions of Regulation § 1.704-1(b)(2)(ii)(d)(3); provided that an allocation pursuant to this Section 7.3(c) shall be made only if and to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article VII have been tentatively made as if this Section 7.3(c) were not in the Agreement.

	(d) Nonrecourse Deductions. For any Year in which there are allocations of Nonrecourse Deductions or Member Nonrecourse Deductions, items shall be allocated to the Members as a part of the allocations of Net Profit or Net Loss for that year in accordance with the requirements of Regulations Sections 1.704-2(e)(2) and 1.704-2(i)(1).

7.4 Curative Allocations. The allocations set forth in Sections 7.3(a), 7.3(b), 7.3(c), 7.3(d) and 7.3(e) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special

allocations of other items of Company income, gain, loss or deduction pursuant to this Section 7.4. Therefore, notwithstanding any other provision of this Article VII (other than the Regulatory Allocations), the Board shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Sections 7.1 and 7.2.

7.5 Tax Allocations: Code Section 704(c). In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial fair market value at the time of its contribution to the Company using any method selected by the Board of Governors.

In the event the book value of any Company asset is adjusted pursuant to the “revaluation” provisions of the Regulations, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its adjusted book value in the same manner as under Code Section 704(c) and the Regulations thereunder.

Any elections or other decisions relating to such allocations shall be made by the Board in any manner that reasonably reflects the purpose and intention of this Agreement; provided, however, it is expressly acknowledged and agreed that the Company shall make the election to adjust the basis of the Company property pursuant to Code Sections 754 and 743(b) in connection with Transfers of Interests. Allocations pursuant to this Section 7.5 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Profit, Net Loss, other items, or distributions pursuant to any provision of this Agreement.

7.6 Allocations for Year of Liquidation. Notwithstanding the allocation provisions set forth in Section 7.1 and Section 7.2, but subject to Section 7.3 and Section 7.4, Net Profit or Net Loss realized in connection with the dissolution of the Company in accordance with Article IX shall be allocated to the Members in a manner so that the distributions to each Member pursuant to Section 8.3 shall, to the greatest extent possible, be equal to that amount that each such Member would receive under Section 8.2 if the amounts to be distributed by the Company in connection with such dissolution were instead distributed under such Section 8.2.

7.7 Adjustment Upon Transfer of Member’s Interest or Change in Interest. For any Year during which a Member transfers all or part of his Interest, or during which there is a change in the Percentage Interest assigned to any Member, the adjustment for allocation of Net Profit or Net Loss and certain specific items of income, gain, loss and deduction between the transferor and transferee Members or regarding a Member having a different Percentage Interest during portions of the Year, shall be made in the following manner:

	(a) For purposes of the allocations pursuant to Sections 7.1, 7.2(a) and 7.2(b) hereof, the transferee Member shall inherit a pro-rata portion of the historical allocations of Net Profit and Net Loss to the transferor Member; and

	(b) Unless the Board determines to use another method, allocations pursuant to Sections 7.1 and 7.2 hereof shall be adjusted between the transferor and transferee Member, or between each Member having different Percentage Interests during different portions of the Year, according to the “pro-rata method” described in Regulations Section 1.706-1(c)(2)(ii); that is, all such items for the entire Year shall be allocated between the transferor and transferee Members according to the number of days in the Year that the Interest was held by each, or between each Member having a different Percentage Interest according to the number of days in the Year that each discrete Percentage Interest was assigned to that Member.

ARTICLE VIII
DISTRIBUTIONS

8.1 Distribution Procedure. Except as provided in Sections 8.2, 8.3, and 8.4 hereof for final distributions upon liquidation, the Board shall determine when distributions shall be made to Members and the total amount to be distributed.

8.2 Distributions of Available Distributable Cash. Except as otherwise provided in Section 8.3 hereof, distributions of all or any portion of Available Distributable Cash shall be made quarterly within fifteen (15) days after the end of each fiscal quarter and on each of the Second and Third Installment Closing Dates (as defined in the Purchase Agreement). Such distributions shall be apportioned among the Members as follows:

	(a) First, to the Diamond Member, in an amount equal to any Advance Diamond Distribution approved by the Board;

	(b) Second, to the Enterprise Member, a Priority Distribution to the extent of the Enterprise Member’s Undistributed Priority Return calculated as of the end of the previous fiscal quarter or as of the Second Installment Closing Date or Third Installment Closing Date, as the case may be;

	(c) Third, to the Diamond Member, to the extent of the Diamond Member’s Undistributed Matching Return, calculated as of the end of the previous fiscal quarter or as of the Second Installment Closing Date or Third Installment Closing Date, as the case may be; and

(d) Fourth, any remaining amount to all Members pro rata in accordance with their Percentage Interests.

8.3 Distributions Upon Liquidation. Upon liquidation of the Company pursuant to Section 11.3 hereof, assets remaining after payment of all Company debts and obligations in accordance with the Act shall be distributed in accordance with the positive balance in the Members’ Capital Accounts. In determining the final balance of the Capital Accounts, any assets which are distributed in kind shall be treated as if they were sold at their fair market value, as determined by the Board, with an allocation to the Capital Accounts of the deemed profit or loss on such sale pursuant to Article VII hereof, and with the distribution reducing the recipient Members’ Capital Accounts in an amount equal to the fair market value of the assets distributed.

8.4 Distributions for Periods Prior to 2006. Notwithstanding Section 8.2, the Company shall distribute Available Distributable Cash as of December 31, 2005 no later than January 15, 2006 sixty percent (60%) to the Enterprise Member and forty percent (40%) to the Diamond Member.

ARTICLE IX
TRANSFER OF INTERESTS;
ADMISSION OF NEW MEMBERS

9.1 Restrictions on Transfers. Except as otherwise permitted by this Agreement and as contemplated by the Purchase Agreement, no Member shall Transfer all or any portion of such Member’s Interest without the prior written consent of the other Member. Each Member hereby acknowledges the reasonableness of the restrictions on Transfer imposed by this Agreement in view of the Company’s purposes and the relationship of the Members. Accordingly, the restrictions on Transfer contained herein shall be specifically enforceable.

9.2 Permitted Transfers. A Member may at any time Transfer all or any portion of such Member’s Interest meeting the qualifications and limitations of this Section 9.2 (any such Transfer being referred to hereinafter as a “Permitted Transfer”).

	(a) Transfers of Interests by the Enterprise Member to an Affiliate. The Enterprise Member may Transfer all or any portion of its Interest to any of its Affiliates provided that such transferee Affiliate agrees to be bound by the terms of this Agreement and expressly agrees to assume all of the Enterprise Member’s obligations under the Purchase Agreement.

	(b) Transfers of Interests Pursuant to the Purchase Agreement. The Diamond Member may transfer Interests to the Enterprise Member pursuant to the terms of the Purchase Agreement.

9.3 Prohibited Transfers. Any purported Transfer of Interests that is not a Permitted Transfer shall be null and void and of no force or effect whatever; provided that, if the Company is required to recognize a Transfer that is not a Permitted Transfer, the rights with respect to the Transferred Interest shall be strictly limited to the transferor’s rights to allocations and distributions as provided by this Agreement with respect to the Transferred Interests, which allocations and distributions may be applied (without limiting any other legal or equitable rights of the Company) to satisfy any debts, obligations or liabilities for damages that the transferor or transferee of such Interests may have to the Company. In the case of a Transfer or attempted Transfer of Interests that is not a Permitted Transfer, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all expenses that the Company or any of such indemnified Members may incur (including incremental tax liabilities, lawyers’ fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby.

9.4 Rights of Unadmitted Assignees. If Interests are transferred to a Person who is not admitted as a substituted Member pursuant to Section 9.5, such Interests shall automatically be converted to a Financial Right only, and a holder of such Interests shall thereafter be deemed an assignee for all purposes hereunder, with the same Financial Right as was held by the transferor prior to the transfer, but without any other rights of a Member unless the holder of such Financial Right is admitted as a substituted Member pursuant to Section 9.5 hereof.

9.5 Admission of Substituted Members. Subject to the other provisions of this Article IX, a transferee of Interests may be admitted to the Company as a substituted Member only upon satisfaction of the conditions set forth in this Section 9.5:

	(a) The Interests with respect to which the transferee is being admitted were acquired by means of a Permitted Transfer;

	(b) The transferee of Interests shall, by written instrument in form and substance reasonably satisfactory to the Board (i) accept and adopt the terms and provisions of this Agreement, including this Article IX, and (ii) assume the obligations of the transferor Member under this Agreement with respect to the Transferred Interests. The transferor Member shall be released from all such assumed obligations except (x) those obligations or liabilities of the transferor Member arising out of a breach of this Agreement by the transferor Member and (y) in the case of a Transfer to any Person other than a Member, those obligations or liabilities of the transferor Member based on events occurring, arising or maturing prior to the date of Transfer; and

	(c) The transferee and transferor shall each execute and deliver such other instruments as the Board reasonably deems necessary or appropriate to effect, and as a condition to, such Transfer, including amendments to the Articles of Organization or any other instrument filed with the State of Tennessee or any other state or governmental authority.

9.6 Representations and Warranties. Each Member hereby represents and warrants to the Company that his acquisition of his Interest is made for his own account for investment purposes only, and not with a view to the resale or distribution of such Interest. Each Member agrees that he will not Transfer any or all of his Interest to any person or entity who or which does not similarly represent, warrant and agree as provided in this Section 9.6.

9.7 Rights and Obligations of Former Members. A Member who Transfers all of such Member’s Interest or whose Interest is otherwise terminated pursuant to the terms hereof shall cease to be a Member; provided, however, that such former Member or any Successor shall remain liable to the Company (a) for any obligations of such Member for wrongful distributions under the Act, (b) for any failure to comply with the standards of conduct set forth in the Act and (c) pursuant to any agreements with the Company.

9.8 Amendments to Exhibit A. An appropriate amendment to Exhibit A hereto shall be made upon any Transfer or termination of any Interest as described in this Article IX or in Article X.

9.9 Transfers of Interests of the Diamond Member; Operating Agreement of Diamond Member. In furtherance of the purposes of this Agreement, the Diamond Member shall not permit any of its members to Transfer all or any portion of any ownership interest in the Diamond Member without the prior written consent of the Enterprise Member. The Diamond Member represents and warrants that it has delivered to the Company a true, accurate and complete copy of the Diamond Member’s operating agreement as in effect as of the date hereof and further covenants that such operating agreement shall not be modified or amended nor any provision thereof waived without the prior written consent of the Enterprise Member.

ARTICLE X
TERMINATION OF INTERESTS, REPURCHASE OF INTERESTS

10.1 Termination of an Interest. A Member’s Interest shall be automatically terminated on the occurrence of any Terminating Event or Adverse Terminating Event; provided, however, that in the case of an Adverse Terminating Event that is the result of an Involuntary Transfer, the Member’s Interest shall be terminated only with respect to such Involuntarily Transferred Interest. Upon the occurrence of any Terminating Event or Adverse Terminating Event, the Governance Rights of the Member whose Interest is being terminated shall be extinguished, and the rights of such former Member or such former Member’s Successor shall automatically be converted solely to Financial Rights which will be liquidated pursuant to Section 10.3.

Upon the occurrence of any Terminating Event or Adverse Terminating Event respecting any Interest described in this Section 10.1, the Company shall cause Exhibit A hereto to be amended appropriately.

10.2 Occurrence of Terminating Event or Adverse Terminating Event.

	(a) In the event a Terminating Event shall occur with respect to any Member, within a period of ninety (90) days after such Terminating Event, the Company shall liquidate such former Member’s Interest in the Company pursuant to Section 10.3 below.

	(b) In the event the Company determines that an Adverse Terminating Event has occurred with respect to any Member, then the Company shall give written notice thereof to such Member and, within a period of one hundred twenty (120) days from the date of such notice, the Company shall liquidate such Member’s Interest or the portion of such Member’s Interest that was the subject of an Involuntary Transfer giving rise to the Adverse Terminating Event.

	(c) If a Member has transferred his or her Financial Rights, but retained the Governance Rights associated with the Member’s Interest, the occurrence of an Adverse Terminating Event or a Terminating Event with respect to the Member shall subject the Interest held by the transferee, as well as the Governance Rights of the Member, to the provisions of Article X hereof.

10.3 Payment for Terminated Interests.

	(a) When any Member’s Interest in the Company is liquidated because of the occurrence of a Terminating Event, the amount the Company will pay for the Interest owned by the former Member shall equal the Member’s Percentage Interest of the Book Value of the Company determined as of the Valuation Date.

	(b) When the Company liquidates any Member’s Interest in the Company as a result of an Adverse Terminating Event, the amount to be paid by the Company to such Member shall be One Hundred Dollars ($100). In the event of an Involuntary Transfer that was an Adverse Terminating Event as to a portion of a Member’s Interest, a Member may retain any Interest not the subject of the Transfer.

	(c) If the Company liquidates any Member’s Interest in the Company as provided in this Article X, the Company shall pay any such amounts owed therefor to such former Member or its Successor in a lump sum within ninety (90) days following the Terminating Event or Adverse Terminating Event or, at the discretion of the Company, in up to eight (8) equal quarterly payments plus interest at the Prime Rate on the unpaid principal balance calculated commencing on the date of payment of the first installment. If Company elects to pay for a liquidated Company Interest in quarterly installments, the first such installment will be paid to the former Member or his Successor on the first day of the fourth month after the Terminating Event or Adverse Terminating Event. Each subsequent installment shall be paid on the first day of each successive three (3) month period until the full amount owed to the Member or his successor in interest has been paid. The Company’s obligation to pay the Member in quarterly installments under this Section 10.3 will be evidenced by a promissory note executed by the Chief Executive Officer on behalf of the Company, which note may be prepaid at any time without penalty.

10.4 Exclusive Right. No Member shall be entitled to claim any further or different distribution upon termination under the Act; the provisions of this Agreement being exclusive.

ARTICLE XI
DISSOLUTION; WINDING-UP

11.1 Dissolution. The Company shall be dissolved and its affairs wound up and terminated upon the first to occur of the following events (each, a “Dissolution Event”):

	(a) The determination in writing to dissolve the Company by the unanimous consent of the Members;

	(b) At any time when there are no Members;

	(c) The sale or other disposition of all or substantially all of the assets of the Company in one transaction or a series of related transactions;

	(d) The occurrence of a Continuation Event followed within 90 days by a determination of the requisite percentage of ownership interests to dissolve the Company as described in Section 11.2 hereof; or

	(e) The entry of a decree of judicial dissolution under the Act.

Upon the occurrence of a Dissolution Event, the Company shall be wound up and liquidated pursuant to Section 11.3 hereof.

11.2 Continuation Event. Neither the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member nor the occurrence of any other event that terminates the continued membership of any Member (each, a “Continuation Event”) shall cause the Company to be dissolved or its affairs to be wound up, and upon the occurrence of any such Continuation Event, the Company shall be continued without dissolution, unless within ninety (90) days following such Continuation Event, a Majority in Interest of the Members agree in writing to dissolve the Company.

11.3 Winding Up of the Company. Upon dissolution of the Company pursuant to Section 11.1 hereof, the Chief Executive Officer, or if there is no Chief Executive Officer, such person as is designated by a Majority in Interest of the Members (the remaining Governors or such person being herein referred to as the “Liquidator”), shall proceed to wind up the business and affairs of the Company upon such terms, price and conditions as are determined by the Liquidator in accordance with this Agreement and the requirements of the Act. This Agreement shall remain in full force and effect and continue to govern the rights and obligations of the

Members and Governors and the conduct of the Company during the period of winding up the Company’s affairs. The Liquidator, if other than the Chief Executive Officer, shall have and may exercise, without further authorization or consent of Members, all of the powers conferred upon the Chief Executive Officer under the terms of this Agreement to the extent necessary or desirable in the good faith judgment of the Liquidator to carry out the duties and functions of the Liquidator hereunder for and during such period of time as shall be reasonably required in the good faith judgment of the Liquidator to complete the winding up and liquidation of the Company. The Liquidator shall liquidate the assets of the Company, collect the debts and obligations due to the Company, and pay or provide for payment of all liabilities and obligations of the Company, after which the Liquidator shall distribute the remaining assets of the Company to the Members in the order of priority described in Section 8.3 hereof. The Liquidator may distribute assets in kind; provided, however, that the Liquidator shall determine the fair market value by appraisal or other reasonable means of all assets so distributed in kind.

11.4 Resignation of a Member. If a Terminating Event or Adverse Terminating Event occurs with respect to a Member, such Member’s right to any payments or distributions shall be determined exclusively under the provisions of Article X hereof with respect to liquidation of the Interest of the Member following a Terminating Event or an Adverse Terminating Event, and no Member shall be entitled to claim any further or different distribution upon resignation under the Act or otherwise.

ARTICLE XII
LIMITATION ON LIABILITY; INDEMNIFICATION

12.1 Limitation on Liability. The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member, Governor or officer of the Company shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Governor and/or officer.

12.2 Standard of Care; Indemnification of Governors, Officers, Employees and Agents.

(a) No Governor or officer of the Company shall have any personal liability whatsoever to the Company or any Member on account of such Governor’s or officer’s status as a Governor or officer or by reason of such Governor’s or officer’s acts or omissions in connection with the conduct of the business of the Company; provided, however, that nothing contained herein shall protect any Governor or officer against any liability to the Company or the Members to which such Governor or officer would otherwise be subject by reason of (i) any act or omission of such Governor or officer that involves actual fraud, gross negligence or willful misconduct or (ii) any transaction from which such Governor or officer derived improper personal benefit.

	(b) The Company shall indemnify and hold harmless each Governor and officer and the Affiliates of any Governor or officer (each an “Indemnified Person”) against any and all losses, claims, damages, expenses and liabilities (including, but not limited to, any investigation, legal and other reasonable expenses incurred in connection with, and any amounts paid in settlement of, any action, suit, proceeding or claim) of any kind or nature whatsoever that such Indemnified Person may at any time become subject to or liable for by reason of the formation, operation or termination of the Company, or the Indemnified Person’s acting as a Governor or officer under this Agreement, or the authorized actions of such Indemnified Person in connection with the conduct of the affairs of the Company (including, without limitation, indemnification against negligence); provided, however, that such Indemnified Person was not guilty of gross negligence or willful misconduct with respect to such acts or omissions and that no Indemnified Person shall be entitled to indemnification if and to the extent that the liability otherwise to be indemnified for results from (i) any act or omission of such Indemnified Person that involves actual fraud or willful misconduct or (ii) any transaction from which such Indemnified Person derived improper personal benefit. The indemnities hereunder shall survive termination of the Company. Each Indemnified Person shall have a claim against the property and assets of the Company for payment of any indemnity amounts from time to time due hereunder, which amounts shall be paid or properly reserved for prior to the making of distributions by the Company to Members. If the Board of Governors determines that the facts then known would not preclude indemnification, costs and expenses that are subject to indemnification hereunder shall, at the request of any Indemnified Person, be advanced by the Company to or on behalf of such Indemnified Person prior to final resolution of a matter, so long as such Indemnified Person shall have provided the Company with a written undertaking to reimburse the Company for all amounts so advanced if it is ultimately determined that the Indemnified Person is not entitled to indemnification hereunder.

	(c) The contract rights to indemnification and to the advancement of expenses conferred in this Section 12.2 shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, agreement, vote of the Governors or Members or otherwise.

	(d) The Company may maintain insurance, at its expense, to protect itself and any Governor, officer, employee or agent of the Company or another Entity against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Act.

	(e) The Company may, to the extent authorized from time to time by the Board of Governors, grant rights to indemnification and to advancement of expenses to any employee or agent of the Company to the fullest extent of the provisions of this Section 12.2 with respect to the indemnification and advancement of expenses of Governors and officers of the Company.

(f) Notwithstanding the foregoing provisions of this Section 12.2, the Company shall indemnify an Indemnified Person in connection with a proceeding (or part thereof) initiated by such Indemnified Person only if such proceeding (or part thereof) was authorized by the Board of Governors of the Company; provided, however, that an Indemnified Person shall be entitled to reimbursement of his or her reasonable counsel fees with respect to a proceeding (or part thereof) initiated by such Indemnified Person to enforce his or her right to indemnity or advancement of expenses under the provisions of this Section 12.2 to the extent the Indemnified Person is successful on the merits in such proceeding (or part thereof).

ARTICLE XIII
FISCAL MATTERS

13.1 Books and Records. Full and accurate books and records of the Company (including without limitation all information and records required by the Act) shall be maintained at its principal place of business showing all receipts and expenditures, assets and liabilities, profits and losses, and all other records necessary for recording the Company’s business and affairs. All Members shall have the right to inspect and copy the books and records of the Company during regular business hours, at the Company’s principal place of business, upon provision of notice in writing by any Member to the Company at least five (5) business days before the date on which such Member desires to inspect and copy said books and records. It is acknowledged that the Enterprise Member’s ultimate parent is a financial institution whose equity is publicly traded and registered and/or subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. As a consequence, it is acknowledged that the books, records and internal controls of the Company must be maintained in accordance with all laws applicable to the Enterprise Member’s ultimate parent corporation.

13.2 Accounting Decisions; Fiscal Year. All decisions as to accounting matters, except as expressly provided in this Agreement, shall be made by the Board; provided that the Company shall use generally accepted accounting principles in the maintenance of its financial books and records and the preparation of its financial statements. The fiscal year of the Company shall be the calendar year.

13.3 Tax Status; Elections. Notwithstanding any provision hereof to the contrary, solely for purposes of the federal income tax laws, each of the Members hereby recognizes that the Company will be subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, the filing of a U.S. Partnership Return of Income shall not be construed to extend the purposes of the Company or expand the obligations or liabilities of the Members.

13.4 Reports and Statements. As soon as practicable after the end of each Year, but no later than ninety (90) days thereafter, the Company shall deliver to the Members a report containing a detailed list of the assets and liabilities of the Company. Further, as promptly as practicable after the close of each Year, and no later than ninety (90) days thereafter, the

Company shall supply all other information necessary to enable each Member to prepare his federal and state income tax returns, and the Company shall supply such other information as each Member may reasonably request for the purpose of enabling him to comply with any reporting requirements imposed by any United States or state governmental agency or authority.

13.5 Bank Accounts. All funds of the Company shall be deposited in its name at the Company’s principal financial institution or other financial institutions approved by the Board.

13.6 Tax Matters Partner. The “Tax Matters Partner” shall mean the Member responsible for all administrative and judicial proceedings for the assessment and collection of tax deficiencies or the refund of tax overpayment arising out of any Member’s distributive share of items of income, deduction, credit and/or of any other “partnership item” (as that term is defined in the Code or in the Regulations) allocated to the Members affecting any member’s tax liability. The Tax Matters Partner shall promptly give notice to all Members of any administrative or judicial proceeding pending before the Internal Revenue Service involving any Company item and the progress of any such proceeding. Such notice shall be in compliance with such regulations as are issued by the Internal Revenue Service. The Tax Matters Partner shall have all the powers provided to a “tax matters partner” in Sections 6221 through 6233 of Code, including the specific power to extend the statute of limitations with respect to any matter which is attributable to any Company item or affecting any item pending before the Internal Revenue Service and to select the forum to litigate any tax issue or liability arising from Company items. The Tax Matters Partner shall be the Member designated as such from time to time by the Board. The Tax Matters Partner shall be entitled to reimbursement for any and all reasonable expenses incurred with respect to any administrative and/or judicial proceedings affecting the Company. The Tax Matters Partner shall be responsible for timely tax returns, franchise tax returns and annual reports of the Company.

ARTICLE XIV
MISCELLANEOUS; GENERAL PROVISIONS

14.1 Notices. All notices given pursuant to this Agreement shall be in writing and shall be deemed effective when personally delivered or when placed in the United States mail, registered or certified with return receipt requested, or when sent by facsimile transmission followed by confirmatory letter. For purposes of notice, the addresses of the Members shall be as stated under their names on the attached Exhibit A; provided, however, that each Member shall have the right to change his address with notice hereunder to any other location by the giving of thirty (30) days notice to the Company in the manner set forth above.

14.2 Attorneys’ Fees. If any litigation is initiated by the Company against any Member or by any Member against another Member or the Company relating to this Agreement or the subject matter hereof, the person prevailing in such litigation shall be entitled to recover, in addition to all damages allowed by law and other relief, all court costs and reasonable attorneys’ fees incurred in connection therewith.

14.3 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Members, and their respective heirs, legal representatives, successors and permitted assigns; provided, however, that nothing contained herein shall negate or diminish the restrictions set forth in Articles IX and X hereof.

14.4 Construction. Every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Member. The failure by any party to specifically enforce any term or provision hereof or any rights of such party hereunder shall not be construed as the waiver by that party of its rights hereunder. The waiver by any party of a breach or violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other provision hereof.

14.5 Waiver of Partition Right. Notwithstanding any statute or principle of law to the contrary, each Member hereby agrees that, during the term of the Company, he or it shall have no right (and hereby waives any right that he or it might otherwise have had) to cause any Company property to be partitioned and/or distributed in kind.

14.6 Entire Agreement. This Agreement contains the entire agreement among the Members relating to the subject matter hereof, and all prior agreements relative hereto which are not contained herein are terminated.

14.7 Amendments. Except as otherwise expressly provided in this Section 14.7, amendments or modifications may be made to this Agreement only by setting forth such amendments or modifications in a document approved by the unanimous consent of the Members; any alleged amendment or modification herein which is not so documented shall not be effective as to any Member. Notwithstanding the foregoing, the Board may, without the consent of any Member, amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith to reflect:

	(a) a change in the location of the principal place of business of the Company, or a change in the registered office or the registered agent of the Company;

	(b) admission of a Member into the Company or termination of any Member’s Interest in the Company in accordance with this Agreement;

	(c) a change (i) that is of an inconsequential nature and does not adversely affect any Member in any material respect; (ii) that is necessary or desirable to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or contained in any federal or state statute, compliance with any of which the Board deems to be in the best interest of the Company and the Members; (iii) that is necessary or desirable so that the method of tax allocations will comply with applicable provision of the Code, the Regulations or rulings of the Internal Revenue Service; or (iv) that is required or contemplated by this Agreement;

14.8 Severability. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, but the extent of such invalidity or unenforceability does not destroy the basis of the bargain among the Members as expressed herein, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforced to the greatest extent permitted by law.

14.9 Gender and Number. Whenever required by the context, as used in this Agreement, the singular number shall include the plural and the neuter shall include the masculine or feminine gender, and vice versa.

14.10 Exhibits. Each Exhibit to this Agreement is incorporated herein for all purposes.

14.11 Additional Documents. Each Member, upon the request of any Governor, agrees to perform all further acts and execute, acknowledge and deliver any documents that may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.

14.12 Section Headings. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent or for any purpose, to limit or define the text of any section.

14.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be an original but all of which shall constitute but one document.

[Remainder of page intentionally left blank; signature page to follow.]

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement effective as of the Effective Date.

	MEMBERS:

	MILLENNIUM HOLDING COMPANY, INC.


	By:

		Frank H. Sanfilippo, President


	MILLENNIUM HOLDINGS, LLC


	By:

	Title:

EXHIBIT A

Members of Millennium Brokerage Group, LLC

Member Name and Address	Percentage Interest			Capital Accounts

Millennium Holding Company, Inc.		60	%	$	X,000.00
Millennium Holdings, LLC		40	%	$	X,000.00
Total		100	%	$	XX,000.00

EXHIBIT B

Officers of Millennium
Brokerage Group, LLC

EX-10.2 4 ef71661ex102.htm EXHIBIT 10.2

Exhibit 10.2

Exhibit C-1

MILLENNIUM BROKERAGE GROUP, LLC
EMPLOYMENT AGREEMENT

THIS AGREEMENT, is made by and between William L. Zelenik (the “Employee”) and MILLENNIUM BROKERAGE GROUP, LLC, a Tennessee limited liability company (the “Company”), effective as of ______________, 2005 (the “Effective Date”).

WITNESSETH:

WHEREAS, the Company is engaged in the life insurance brokerage business, representing and marketing the products of various insurance carriers.

WHEREAS, the Company desires to retain and employ Employee as Chief Executive Officer upon the terms and subject to the conditions of this Agreement.

WHEREAS, the execution and delivery of this Agreement is a condition precedent to the closing of the transactions contemplated by that certain Membership Interest Purchase Agreement dated September ___, 2005, by and among Employee, the Company, all other members of the Company, Enterprise Financial Services Corp. (“Enterprise”) Millennium Holding Corporation, Inc., a Missouri corporation and ________________ (the “Purchase Agreement”).

NOW, THEREFORE, for the reasons set forth above, and in consideration of the mutual promises and agreements herein set forth, the Company and Employee agree as follows:

1. Employment. Subject to the terms and conditions set forth in this Agreement, the Company hereby employs Employee for the Contract Term as hereafter defined. During the Contract Term, Employee shall serve as Chief Executive Officer and shall have such duties and responsibilities as are customarily assigned to individuals serving in such position and such other duties as the Board of Governors (the “Board”) of the Company may from time to time specify consistent with such position. Employee shall comply with all polices and procedures of the Company generally applicable to employees of the Company and to the extent consistent with the provisions of this Agreement. The duties and responsibilities Employee is to perform hereunder shall be conducted primarily within the Nashville, Tennessee metropolitan area. Employee may be required from time to time to perform his duties hereunder on an occasional basis at such other places as the Board shall designate or as the interests or business opportunities of the Company may require; provided, however, that without Employee’s consent, the Employee shall not be required to relocate his residence from the Nashville, Tennessee metropolitan area. Employee hereby accepts such employment and agrees to serve the Company in such capacities for the term of this Agreement. During the Contract Term, Employee shall report directly to the Chief Executive Officer of Enterprise.

2. Term of Employment. Except as otherwise provided herein, the term of this Agreement shall commence on the Effective Date and end on the “Third Installment Closing Date,” as defined in the Purchase Agreement (the “Contract Term”). The Contract Term may be extended by mutual written agreement of Employee and the Company upon such terms, provisions and conditions which are mutually acceptable to Employee and the Company. Notwithstanding any expiration of this Agreement at the end of the Contract Term, to the extent that Employee remains an employee of the Company thereafter, unless the parties otherwise agree in writing, (i) the obligations of the Company under Sections 4, 6 and 11 of this Agreement shall remain applicable and (ii) the obligations of Employee under Sections 7, 8, 9 and 11 of this Agreement shall remain applicable.

3. Devotion to Duties. Employee agrees that during the Contract Term Employee will devote all of his skill, knowledge, commercial efforts and customary working time to the conscientious and faithful performance of his duties and responsibilities to the Company except for (i) permitted vacation time and absence for sickness or similar disability and (ii) to the extent that it does not interfere with the performance of Employee’s duties hereunder, such reasonable time as may be devoted to the fulfillment of Employee’s civic and charitable activities. Employee will use his best good faith efforts to promote the success of the Company’s business and will cooperate fully with the Board in the advancement of the best interests of the Company. During the Contract Term, Employee will not be gainfully employed in any professional business other than that of the Company and those matters set forth on Exhibit A, attached hereto. Notwithstanding the foregoing, no provision of this Section 3 shall prohibit the Employee from engaging in “personal production,” as such term is commonly understood within the life insurance industry, with respect to life insurance products and annuity products (“Personal Production”).

4. Compensation of Employee.

	4.1 Base Salary. During the Contract Term, the Company shall pay to Employee as compensation for the services to be performed by Employee a base salary of $275,000.00 per year (the “Base Salary”). The Base Salary shall be payable in installments in accordance with the Company’s normal payroll practice and shall be subject to such income and employment tax withholdings and other ordinary employee withholdings as may be required by law.

	4.2 Targeted Bonus. In addition to the compensation set forth elsewhere in this Section 4, beginning in 2006 and continuing in each year or portion thereof during the Contract Term and any extensions thereof, the Employee shall qualify for a targeted annualized bonus as determined below (“Targeted Bonus”) based upon meeting certain financial and operating goals which will be mutually agreed upon by the Company and Employee in writing not later than the Company’s January Board meeting commencing in 2006 and each subsequent year thereafter (the financial and operating goals for 2006 and subsequent years are referred to herein as “Targets”). The established Targets shall be consistent with the operating budgets, capital budgets and strategic plans for the Company as adopted by the Company’s Board. Within 75 days after the end of each calendar year, the Board shall make a good faith determination as to the extent to which the Targets have been met or exceeded for the then-ended calendar year. If the Targets have been met for the 2006 calendar year, then Employee shall receive a minimum Targeted Bonus of $100,000.00. If the Targets for a subsequent calendar year are met, Employee shall receive a Targeted Bonus with respect to such calendar year as the Board

	may determine, subject to the condition that, if the Targets are met, the sum of annual base compensation plus Targeted Bonus for such subsequent calendar year is at least $350,000. In the event that the established Targets are exceeded in any calendar year, then Employee shall be entitled to receive additional bonus amounts above the Targeted Bonus as may be determined in the discretion of the Board. If the Board determines that the Targets have not been fully met, but minimum thresholds as may be established by the Board have been met, the Board shall make a good faith determination as to the extent the Targets have been met and determine the amount of such Targeted Bonus to be awarded to the Employee based proportionately upon the extent to which the Targets are determined to have been met. If the Targets for the 2006 calendar year and subsequent calendar years are met, the Board will review and consider an increase in the amount of Targeted Bonus for the following calendar year. Employee shall also be eligible to receive such other bonuses or incentive payments as may be approved by the Board.

	4.3 Benefits. Employee shall be entitled to participate, during the Contract Term, in all regular employee benefit and deferred compensation plans provided by the Company (to the extent such participation is not restricted by the Internal Revenue Code of 1986 (the “Code”)), including, without limitation, any savings, Section 401(k) plan, incentive stock plan, dental and medical plans, life insurance and disability insurance, such participation to be as provided in said employee benefit plans in accordance with the terms and conditions thereof as in effect from time to time and subject to any applicable waiting period. Employee shall also be entitled to four weeks of paid vacation during each year of the Contract Term, provided that any vacation not used in any year shall not be carried over to any subsequent year of Employee’s employment by the Company. Employee shall be entitled to recognize as holidays all days recognized as such by the Company pursuant to the policies of its parent company.

	4.4 Reimbursement of Expenses. The Company will provide for the payment or reimbursement of all reasonable and necessary expenses incurred by Employee in connection with the performance of his duties under this Agreement in accordance with the Company’s expense reimbursement policy, as such may change from time to time.

	4.5 Annual Compensation Review. The Board will review all facets of Employee’s compensation and benefits as set forth in this Section 4 no less often than annually, on the same compensation review cycle as the other officers of the Company and officers of Enterprise. The Board, pursuant to the provisions of the Second Amended and Restated Operating Agreement of the Company (the “New Operating Agreement”), may make annual adjustments to the elements of Employee’s compensation and benefits, subject to the provisions of this Section 4 and so long as such adjustments cause Employee’s compensation and benefits to be at least as favorable as set forth in this Agreement.

5. Termination of Employment.

	5.1 Termination for Cause. “Termination for Cause”, as hereinafter defined, may be effected by the Company, pursuant to the provisions of the New Operating Agreement, at any time during the term of this Agreement by written notification to Employee, specifying in detail the basis for the Termination for Cause. Not later than thirty (30) days after Termination for Cause, Employee shall be paid all accrued salary, vested deferred compensation, if any, (other than pension plan, Section 401(k) plan, or profit sharing plan benefits which will be paid in accordance with the terms of the applicable plan), any benefits under any plans of the Company or Enterprise in which Employee is a participant to the full extent of Employee’s rights under such plans, accrued vacation pay, and any appropriate business expenses incurred by Employee reimbursable by the Company in connection with his duties hereunder, all to the date of termination, but Employee shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation. “Termination for Cause” shall mean termination by the Company of Employee’s employment by the Company by reason of (a) an order of any federal or state regulatory authority having jurisdiction over the Company or any suspension, prohibition or loss of license which restricts Employee’s ability to sell, market or service life insurance products for the Company in any state or states which, taken individually or together, constitute a substantial portion of the commission revenue generated by Employee, (b) the willful failure or refusal of Employee substantially to perform Employee’s duties hereunder; (c) a willful breach by Employee of any material provision of this Agreement or of any other written agreement with the Company or any of its Affiliates; (d) Employee’s commission of a crime that constitutes a felony or other crime of moral turpitude or criminal fraud; (e) chemical or alcohol dependency which materially and adversely affects Employee’s performance of Employee’s duties under this Agreement; (f) any act of disloyalty or breach of responsibilities to the Company by Employee which is intended by Employee to cause material harm to the Company; or (g) embezzlement (or attempted embezzlement) of any of the Company’s funds or property.

	5.2 Termination Other Than for Cause. Notwithstanding any other provisions of this Agreement, the Company may effect a “Termination Other Than For Cause”, as hereinafter defined, in accordance with the provisions of the New Operating Agreement, at any time upon giving written notice to Employee of such termination.

	(i) Upon Termination Other Than For Cause, the Employee shall execute a release and waiver of all claims with respect to Employee’s employment against the Company, its Affiliates and their respective officers and directors in substantially the form of Exhibit B attached hereto (the “Release”).

	(ii) Within thirty (30) days of the Company’s acceptance of the Release, the Company shall pay the Employee:

	(A) all accrued salary, vested deferred compensation (other than pension plan, profit sharing plan, or Section 401(k) plan benefits which will be paid in accordance with the applicable plan), accrued vacation pay, any benefits under any plans of the Company or Enterprise in which Employee is a participant to the full extent of Employee’s rights under such plans, and any appropriate business expenses incurred by Employee in connection with Employee’s duties hereunder, all to the date of termination; and

		(B) severance payment as provided in subsection 6.1.

		(iii) “Termination Other Than for Cause” shall mean:


	(A) any termination by the Company of Employee’s employment with the Company other than termination pursuant to subsections 5.1, 5.3, 5.4 or 5.5; or


		(B) termination by Employee of Employee’s employment with the Company (x) by reason of the Company’s willful breach of a material provision of this Agreement, or (y) the assignment of Employee without Employee’s consent to a position, responsibilities or duties of a materially lesser status or degree of responsibility than Employee’s position, responsibilities or duties as of the Effective Date (“Constructive Termination”).

	5.3 Termination by Reason of Disability. If, during the term of this Agreement, Employee, in the judgment of the Board pursuant to the provisions of the New Operating Agreement, (i) has failed to perform his duties under this Agreement on account of illness or physical or mental incapacity, and (ii) such illness or incapacity continues for a period of more than ninety (90)consecutive days, or ninety (90)days during any 180 day period, the Company shall have the right to terminate Employee’s employment hereunder by written notification to Employee and payment to Employee of all accrued salary, vested deferred compensation, if any, (other than pension plan, Section 401(k) plan or profit sharing plan benefits which will be paid in accordance with the applicable plans), accrued vacation pay, any benefits under any plans of the Company or Enterprise in which Employee is a participant to the full extent of Employee’s rights under such plans, and any appropriate business expenses incurred by Employee in connection with his duties hereunder, all to the date of termination, but Employee shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation.

	5.4 Death. In the event of Employee’s death during the term of this Agreement, Employee’s employment shall be terminated as of the day of his death and the Company shall pay to his estate or such beneficiaries as Employee may from time to time designate all accrued salary, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Company or Enterprise in which Employee is a participant to the full extent of Employee’s rights under such plans, accrued vacation pay, and any appropriate business expenses incurred by Employee in connection with his duties hereunder, all to the date of termination, but Employee’s estate shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation.

	5.5 Voluntary Termination. In the event of a “Voluntary Termination,” as hereinafter defined, provided that Employee provides the Company with at least sixty (60) days notice of such termination (which notice and any requirement for service may be waived or shortened by the Company), the Company shall within thirty (30) days after such termination pay all accrued salary, vested deferred compensation, if any, (other than pension plan, Section 401(k) plan, or profit sharing plan benefits which will be paid in accordance with the applicable plans), any benefits under any plans of the Company or Enterprise in which Employee is a participant to the full extent of Employee’s rights under such plans, accrued vacation pay, and any appropriate business expenses incurred by Employee in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind, including without limitation, severance compensation. “Voluntary Termination” shall mean termination by Employee of Employee’s employment other than (i) Constructive Termination, (ii) termination by reason of Employee’s disability as described in subsection 5.3, and (iii) termination by reason of Employee’s death as described in subsection 5.4.

	5.6 Resignation Upon Termination. Effective upon any termination under this Section 5 or otherwise, Employee shall automatically and without taking any further actions be deemed to have resigned from all positions then held by him with the Company and all of its Affiliates.

6. Severance Compensation

	6.1 Termination Other Than for Cause. In the event Employee’s employment is terminated in a Termination Other Than For Cause and subject to the provisions of subsection 5.2., Employee shall be paid as severance compensation his Base Salary, at the rate payable at the time of such termination, for the two year period beginning on the effective date for such termination, plus (i) any accrued and unpaid Bonus due Employee under paragraph 4.3 of this Agreement and (ii) an amount equal to the Targeted Bonuses due (based on the Base Salary then in effect) for the calendar year of Employee’s termination and the following calendar year as though all requisite targets were fully and completely achieved. Notwithstanding any provision in this subsection 6.1 to the contrary, the Company may, in the Company’s sole discretion, by delivery of a notice to Employee within 30 days following a Termination Other Than For Cause, elect to remit to Employee a lump sum severance payment by bank cashier’s check equal to the present value of the flow of cash payments that would otherwise be paid to Employee pursuant to this subsection 6.2. Such present value shall be determined as of the date of delivery of the notice of election by the Company and shall be based on a discount rate equal to the prime rate, as reported in The Wall Street Journal, on the date of delivery of the election notice. If the Company elects to remit a lump sum severance payment, the Company shall make such payment to Employee within 30 days following the date on which the Company notifies Employee of its election.

	6.2 Termination Upon Any Other Event. In the event of a Voluntary Termination, Termination For Cause, termination by reason of Employee’s disability pursuant to subsection 5.3 or termination by reason of Employee’s death pursuant to subsection 5.4, Employee or his estate shall not be paid any severance compensation.

7. Non-Competition; Non-Solicitation.

	7.1 Definitions. For purposes of this Agreement:

	“Competition” means, whether directly or indirectly, (i) owning any equity interest in a Competitive Operation, (ii) acting as a lender of funds or credit to a Competitive Operation or (iii) acting as an officer, manager, employee, consultant, independent contractor, adviser, director, shareholder member, partner or sales representative of a Competitive Operation.

	“Competitive Operation” means any entity that directly or indirectly engages in or owns, invests in, manages or controls any venture or enterprise engaged in the business of brokering, representing or marketing the products of various life insurance carriers.

	“Non-Competition Period” means the period commencing on the Effective Date and continuing through and including the first anniversary of the termination of Employee’s employment with the Company for any reason other than the death of Employee.

	“Enterprise Entities” means Enterprise and all business entities Controlled by, under common Control with or Controlling Enterprise, including without limitation the Company. For purposes of the preceding sentence “Control,” and any derivation thereof, with respect to a business entity means the ownership of a majority of the voting equity securities or equity interests thereof.

	7.2 Covenants. Employee agrees that during the Non-Competition Period, Employee shall not, directly or indirectly either for Employee’s own account or for the benefit or for the account of any other person or entity:

	(i) Subject to Section 7.3(ii), engage in Competition in the United States; or

	(ii) (A) induce or attempt to induce or aid others in inducing an employee of any of the Enterprise Entities to leave the employ of such Enterprise Entity or in any way interfere with the relationship between the Enterprise Entities and any of their respective employees; or (B) subject to Section 7.3(ii), induce or attempt to induce any client, vendor, sales representative, contractor, referral source, insurance company or other business relation of any of the Enterprise Entities to cease doing business with such Enterprise Entity or in any way interfere with the relationship between any client, vendor, sales representative, contractor, referral source, insurance company or other business relation and any of the Enterprise Entities.

	7.3 (i) Nothing herein shall prohibit Employee from being a passive owner of not more than five percent (5%) of the outstanding stock of any class of securities of a Competitive Operation the equity securities of which are traded on a national exchange, the Nasdaq Stock Market or the over-the-counter market, so long as Employee has no active participation in the business of such Competitive Operation.

	(ii) It shall not be a violation of Section 7.2(i) or clause (B) of Section 7.2(ii) for Employee to engage in, and such provisions shall not prevent Employee from engaging, in Personal Production.

	7.4 If, at the time of enforcement of this Agreement, a court shall hold that the duration, scope, area or other restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope, area or other restrictions reasonable under such circumstances shall be substituted for the stated duration, scope, area or other restrictions.

8. Confidentiality and Non-Disclosure Agreement.

	8.1 Employee agrees that effective immediately, Employee shall hold in strict confidence and shall not, without the express prior written authorization of the Company specifically referencing this subsection 8.1, make personal use of, nor disclose to any person, firm, corporation, partnership, agency, commission, institution or other entity, any Trade Secret or other Confidential Information relating to the Company, Enterprise or any other Enterprise Entity, delivered to or obtained by Employee prior to or after the date hereof. Upon the Company’s request, Employee shall return all information furnished to him related to the business of the Company without retaining any copies in electronic or other form, provided that the Employee shall be entitled to retain a copy of all information returned to the Company solely for file protection purposes in connection with any potential litigation or other dispute matters.

	8.2 As used in this Agreement, “Confidential Information” includes, but is not limited to, the following: (i) financial statements and other financial information, including pricing, profitability information, budgets, projections, costs, licenses and forecasts; (ii) personnel information including salary, benefits and other compensation policies and practices; (iii) sales and marketing information including reports, strategies, techniques, plans, products, contacts and customer lists; (iv) information relating to computer hardware, customized software, inventions, improvements, data, reports and manuals; and (v) any other information designated in writing by the Company or any Enterprise Entity as confidential or proprietary in nature; provided that Confidential Information shall exclude information: (vi) which Employee can demonstrate was known to Employee before receipt thereof from the Company, (vii) which Employee can demonstrate is learned by Employee from a third party entitled to disclose it, (viii) which Employee can demonstrate becomes known publicly other than through Employee, or (ix) the disclosure of which by Employee is authorized by the Board, required by any legal requirement or contemplated by any agreement to which the Company is a party.

	8.3 As used in this Agreement, the term “Trade Secret” means information including a program, device, method, technique or process that: (i) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

8.4 Employee acknowledges that the Company has represented that any and all Confidential Information or Trade Secrets of the Company and the Enterprise Entities are proprietary, unique and commercially sensitive in nature and have been developed over time and reflect a substantial investment. Employee further acknowledges that the Company has represented that the Trade Secrets of the Company and the Enterprise Entities are not a matter of public or general knowledge in the industry or industries in which any of the Company and the Enterprise Entities conduct business and that the Company and the Enterprise Entities derive substantial economic value (actual or potential) from such information. Employee also acknowledges that the Company has represented that the Company and the Enterprise Entities maintain substantial secrecy concerning the Confidential Information and Trade Secrets and that, absent disclosure by the Company or the Enterprise Entities to Employee, Employee could not otherwise have readily ascertained by proper means and/or have acquired knowledge of such Confidential Information and Trade Secrets.

9. Representations and Acknowledgments.

	9.1 Employee represents and warrants to the Company that the execution and delivery of this Agreement does not conflict with or result in the breach by Employee or violation by Employee of any other agreement to which Employee is a party or by which Employee is bound.

	9.2 Employee acknowledges and agrees that:

	(i) the restrictive covenants set forth in Sections 7 and 8 hereof are reasonable and not more restrictive than necessary to protect the Company’s and the other Enterprise Entities’ goodwill and other legitimate business interests, including, without limitation, the Company’s and the other Enterprise Entities’ strong interest in preserving and protecting their respective Confidential Information and Trade Secrets;

	(ii) such covenants are reasonable in scope, area and duration, particularly in light of Employee’s experience, relationship and responsibilities with the Company; without limiting the foregoing, Employee acknowledges that the market for the Company’s products and services is national in scope and that the designation of the United States as the geographic area covered by the non-competition provisions of subsection 7.2(i) is reasonable; and

	(iii) the terms of Sections 7, 8 and 11 shall survive and remain in effect following any termination of this Agreement.

10. Remedies. Employee acknowledges that the extent of damages to the Company from a breach of Sections 7 and/or 8 of this Agreement would not be readily quantifiable or ascertainable, that monetary damages would be inadequate to make the Company whole in case of such a breach, and that there is not and would not be an adequate remedy at law for such a breach. Therefore, Employee specifically agrees that the Company is entitled to injunctive or other equitable relief (without any requirement to post any bond or other security) from a breach of Sections 7 and/or 8 of this Agreement, and hereby waives and covenants not to assert against a prayer for such relief that there exists an adequate remedy at law, in monetary damages or otherwise.

11. Non-Disparagement. No party hereto nor any of its Affiliates, officers, directors or employees shall at any time during or after the Contract Term whether in writing or orally, criticize, disparage or otherwise demean in any way the other party or any Affiliate thereof or any of their respective products, officers, directors, members, governors or employees.

12. Successors and Assigns; Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the Company, each Enterprise Entity and their respective successors and assigns and shall be binding upon Employee and Employee’s legal representatives. Each of the Enterprise Entities, whether currently in existence or coming into existence after the date hereof, is an intended third party beneficiary under and to this Agreement and shall have the right to commence enforcement of all rights and pursue all remedies of the Company under this Agreement as if an original party hereto. This Agreement is for the personal services of Employee and may not be assigned by Employee.

13. Modification or Waiver. No amendment, modification, waiver, termination or cancellation of this Agreement shall be binding or effective for any purpose unless it is made in a writing signed by the party against whom enforcement of such amendment, modification, waiver, termination or cancellation is sought. No course of dealing between or among the parties to this Agreement shall be deemed to affect or to modify, amend or discharge any provision or term of this Agreement. No delay on the part of the Company or any Enterprise Entity in the exercise of any of their respective rights or remedies shall operate as a waiver thereof and no single or partial exercise by the Company or any Enterprise Entity of any such right or remedy shall preclude other or further exercise thereof. A waiver of a right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any other occasion.

14. Severability. Whenever possible, each provision and term of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or term of this Agreement shall be held to be prohibited by or invalid under such applicable law, then, subject to the provisions of subsection 7.4, such provision or term shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provisions or terms or the remaining provisions or terms of this Agreement.

15. Entire Agreement. This Agreement and the Purchase Agreement and the other documents and agreements contemplated thereby, including without limitation the Company’s Second Amended and Restated Operating Agreement, dated as of the date hereof, contain the complete agreement concerning the employment arrangement between the parties, including without limitation severance or termination pay, and shall, as of the Effective Date, supersede all other agreements or arrangements between the parties with regard to the subject matter hereof.

16. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. The obligations of the Company under this Agreement shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business or similar event relating to the Company. This Agreement shall not be terminated by reason of any merger, consolidation or reorganization of the Company, but shall be binding upon and inure to the benefit of the surviving or resulting entity.

17. Manner of Giving Notice. All notices, requests and demands to or upon the respective parties hereto shall be sent by hand, certified mail, overnight air courier service, in each case with all applicable charges paid or otherwise provided for, addressed as follows, or to such other address as may hereafter be designated in writing by the respective parties hereto:

	To Company:	To Employee at his current
	Millennium Brokerage Group, LLC	residential address on file with
	611 Commerce Street, Suite 2606	the Company.
	Nashville, TN 37203
	c/o: _________________________

Such notices, requests and demands shall be deemed to have been given or made on the date of delivery if delivered by hand or by telecopy, on the next following date if sent by nationally recognized overnight courier service or the third business day after deposit in certified mail, postage prepaid.

18. Headings. The headings have been inserted for convenience only and shall not be deemed to limit or otherwise affect any of the provisions of this Agreement.

19. Choice of Law. It is the intention of the parties hereto that this Agreement and the performance hereunder be construed in accordance with, under and pursuant to the laws of the State of Tennessee without regard to the jurisdiction in which any action or special proceeding may be instituted.

20. Taxes. The company may withhold from any payments made under this Agreement all applicable taxes, including but not limited to income, employment and social insurance taxes, as shall be required by law.

21. Voluntary Agreement; No Conflicts. Employee hereby represents and warrants to the Company that he is legally free to accept and perform his employment with the Company, and that the complete performance of the obligations pursuant to Employee’s employment will not violate any order or decree of any governmental or judicial body or contract by which Employee is bound. The Company will not request or require, and Employee agrees not to use, in the course of Employee’s employment with the Company, any information obtained in Employee’s employment with any previous employer to the extent that such use would violate any contract by which Employee is bound or any decision, law, regulation, order or decree of any governmental or judicial body.

22. Certain Definitions. As used herein, the following definitions shall apply:

“Affiliate” with respect to any person, means any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with the first Person, including but not limited to a Subsidiary of the first Person, a Person of which the first Person is a Subsidiary, or another Subsidiary of a Person of which the first Person is also a Subsidiary.

“Control” With respect to any Person, means the possession, directly or indirectly, severally or jointly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.

“Person” Any natural person, firm, partnership, limited liability company, association, corporation, company, trust, business trust, governmental authority or other entity.

“Subsidiary” With respect to any Person, each corporation or other Person in which the first Person owns or Controls, directly or indirectly, capital stock or other ownership interests representing 50% or more of the combined voting power of the outstanding voting stock or other ownership interests of such corporation or other Person.

23. Dispute Resolution.

(a) The Employee and the Company shall resolve any claim, controversy or dispute arising out of or in connection with this Agreement, or relating to or arising out of Employee’s employment with the Company by compulsory arbitration in Chicago, Illinois. Any such arbitration shall be conducted according to the Commercial Arbitration Rules of the AAA. Notwithstanding the provisions of this Section, the Company may seek and obtain appropriate restraining orders and temporary or permanent injunctions in a court proceeding without engaging in arbitration with respect to any alleged violation of the covenants contained in Sections 7 and 8. The Employee shall invoke his right to arbitrate any claim, controversy or dispute with or against the Company only after first attempting to resolve it through the exhaustion of the employee problem solving mechanism contained in Company’s Employee Handbook (or Enterprise’s Employee Handbook if the Company has none) without first obtaining results satisfactory to the Employee, in his reasonable discretion.

(b) In any dispute which is finally resolved through arbitration or in a court of competent jurisdiction, the prevailing party (as defined below) shall be entitled to reimbursement for all reasonable attorneys’ fees and witness expenses, and in the case of arbitration, all fees and expenses of the arbitrators. The “prevailing party” shall be determined by the court or arbitrator, as appropriate.

[The remainder of this page is intentionally blank. The next page is the signature page.]

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first stated above.

	MILLENNIUM BROKERAGE GROUP, LLC


	By:



	Title:


	________________________________________________
	______________________________, Individually

EX-99.1 5 ef71661ex991.htm EXHIBIT 99.1

Exhibit 99.1

For more information, contact:
Kevin Eichner (314) 725 5500
Frank Sanfilippo (314) 725 5500
Melissa Sturges (816) 221 7500
Joe Anthony (610) 642 8253

ENTERPRISE FINANCIAL ACQUIRES MILLENNIUM BROKERAGE GROUP

Company Expands Wealth Management Franchise

St. Louis, October 13, 2005 – Enterprise Financial Services Corp (NASDAQ: EFSC), the parent company of Enterprise Bank & Trust, today announced the acquisition of the Millennium Brokerage Group, a highly regarded life insurance advisory and brokerage organization headquartered in Nashville, Tennessee with thirteen offices supporting operations in 49 states. Bill Zelenik, Millennium’s founder and CEO will continue in that capacity reporting to Kevin Eichner, President and CEO of Enterprise Financial. Zelenik will also join EFSC’s board as an advisory director.

“We are very pleased to add Millennium’s capabilities, market reach, and industry presence to our wealth management line of business,” said Eichner. “Bill Zelenik and his partners have built one of the most highly respected distribution organizations in the life insurance industry. With their platform, we expect to significantly increase our level of fee income, enhance our wealth product line, and open new wholesale marketing opportunities for our trust and banking lines of business.”

Millennium was founded in 1999 and operates life insurance consulting and brokerage operations serving life agents, banks, CPA firms, property & casualty groups, and financial advisors. The company is one of the top producers for several of the nation’s leading life insurance carriers including Jefferson Pilot, Lincoln National, Travelers, Hancock, and others.

“Enterprise provides a strong source of capital and other forms of support as we continue our national expansion. Its commitment to wealth management as a core business, its excellent banking franchise, the expertise and experience of its leadership in the life insurance industry, and its status as a high growth, high performance NASDAQ financial institution were all factors in choosing to join EFSC,” commented Zelenik.

Further details of the transaction are available in EFSC’s 8K filing dated today. The transaction is structured as an earn-out with an initial payout of $15 million, 65% cash and 35% EFSC stock, for 60% of Millennium shares with two subsequent payouts in years 2008 and 2010 for the remaining interests. The consideration mix between stock & cash for subsequent payouts are at EFSC’s discretion. Future payouts are conditioned upon certain pre-tax income performance targets up to a maximum of $36 million, inclusive of the initial $15 million payout. EFSC is contractually entitled to a priority return on its investment of 23.1% (pre-tax) before additional distributions to the Millennium principals.

“We expect this acquisition to be accretive to EPS by $0.10 – $0.14 in 2006,” said Frank Sanfilippo, CFO of Enterprise Financial. “Assuming Millennium performs as expected, this acquisition should materially enhance our ratio of fee income to revenue and will significantly increase the profits from our wealth management business segment over time,” said Sanfilippo.

Millennium will continue to operate under its own brand. All principals are expected to remain with the firm and have signed five year employment contracts. The firm will be managed as a stand-alone subsidiary of EFSC.

“Our mutual vision for Millennium is one of continued rapid growth further enhanced by our capital and complementary banking and trust products and services. We remain committed to Millennium’s partner management model and look forward to supporting Bill and his team in any way necessary to enable our two companies to benefit from the growing opportunities in life insurance and wealth management distribution,” commented Eichner.

Millennium results will be consolidated within EFSC’s financial statements and identified as the Wealth Products Group under EFSC’s Wealth Management Business Segment. This segment also includes revenues of Enterprise Trust Fiduciary and Trust Advisory Services. The deal is expected to close by October 31, 2005.

Enterprise Financial operates commercial banking and wealth management businesses in metropolitan St. Louis and Kansas City, with a primary focus on serving the needs of privately held businesses, their owners and other success-minded individuals. The Company’s stock is listed nationally on NASDAQ under the symbol EFSC.

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Readers should note that in addition to the historical information contained herein, this press release may contain forward-looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated from such statements. Factors that could cause or contribute to such differences include, but are not limited to, burdens imposed by federal and state regulations of banks, credit risk, exposure to local economic conditions, risks associated with rapid increase or decrease in prevailing interest rates and competition from banks and other financial institutions, as well as those in Enterprise Financial’s 2004 Annual Report on Form 10-K.

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