ASSET MANAGERS, LLC

September 30, 2020

Board of Directors
State Bank
Attn:
Vice-President
Street
City, ST 11111

Re: Letter of Intent regarding the acquisition of 100% of the shares of State
Bank (the “Bank”)

Dear Mr. :

We are pleased to present this letter of intent (this “Letter” or “LOI”) which outlines a
proposal by Asset Managers LLC (together with its investor group, “AM”) to acquire 100% of
the capital stock of State Bank (the “Acquisition”). The proposed transaction will result in the
acquisition of State Bank by AM and increase the capital available to the Bank through AM’s
investment. This LOI sets forth the principle terms and conditions of the Acquisition. It is not
meant to list every term and condition and shall not be binding on the parties. There shall be no
legal obligation between the parties with respect to the Acquisition unless and until the parties
enter into a definitive agreement with respect thereto (the “Definitive Agreement,” as defined in
paragraph 7, below), which Definitive Agreement is also approved by the Bank’s regulators.

The purpose of this LOI is to further clarify the preliminary terms of the acquisition and
to confirm your understanding thereof.

1. Structure. AM would acquire 100% of the capital stock of State Bank by means of a
merger or other transaction between State Bank and a phantom bank or other acquisition
entity to be formed by AM, as it may determine. Subject to final structure, AM and/or a
member of AM’s investor group will file all applications or notices to obtain any required
regulatory approvals for such transaction or transactions.

2. Community Bank Status. It is AM’s intent to continue to serve the Bank’s customer base
as a community bank.

3. Purchase Price. An amount equal to the greater of Total Equity Capital of State Bank, as
of the month’s end prior to Closing times 100% or $4,000,000, less such amount, if any,
as AM and Bank may agree as a holdback to address the Bank’s loans to insiders or
reserves for such loans. As of June 30, 2020, the Total Equity Capital of the Bank was
$3,846,000.

4. Investment Amount. AM shall invest an amount that ensures the Bank’s Total Equity
Capital is not less than $5,000,000 at Closing and AM will commit to increasing the
Bank’s capital by investing another $5,000,000 over a three-year period.
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5. Capital Plan. AM, incorporating the Investment Amount indicated above, shall produce
a capital plan providing for $10,000,000 in capital investment in State Bank over a three-
year period.

6. Due Diligence Bringdown Review. The execution of a Definitive Agreement is subject to

7. Execution of Definitive Agreement. AM and State Bank will negotiate in good faith to
enter into a definitive agreement (the “Definitive Agreement”) as soon as practicable
following acceptance of this LOI, which agreement will set forth the terms and conditions
governing the Acquisition. AM and its legal advisors will be responsible for preparing
the Definitive Agreement, which would embody the entire understanding between State
Bank and AM regarding the proposed Acquisition. The Definitive Agreement will
contain such representations, warranties, agreements, covenants and conditions as are
customary for transactions similar in size and nature to the Acquisition.

8. Business Plan. AM intends for the Bank to continue providing the products and services
that it does today to its customer base and will also assist the Bank to develop
opportunities to expand its market area into other areas of Illinois and contiguous states.
In addition, AM intends for the Bank to develop a robust infrastructure to offer lines of
business or services to certain business sectors that generate attractive recurring fee
income and to provide those services compliantly. Please see Exhibit A as a summary of
the draft plan for the Bank.

9. Necessary Approvals. The Definitive Agreement will provide that the Acquisition is
conditioned upon the prior receipt of all necessary regulatory, shareholder and corporate
approvals on terms and conditions satisfactory to each party, including the acquirer’s
business plan. We anticipate that regulatory approvals would be required from the Illinois
Department of Financial and Professional Regulation, Division of Banking and the
Federal Deposit Insurance Corporation. The Definitive Agreement will provide that State
Bank will cooperate with and aid AM in completing its regulatory applications, and agree
to provide AM with access to any records or information relative to the Bank that are
reasonably necessary for or are required to be included in such regulatory applications or
notices, or that are required or requested by any regulatory authority.

10. Employee and Management Matters. AM will attempt to minimize the disruption to
officers and employees of the Bank caused by the Acquisition. In connection with the
Acquisition, and subject to due diligence and discussion with Bank management, AM in
general intends to supplement management of the bank and will consider retaining certain
officers and employees of the Bank. However, AM reserves the right to terminate any of
the officers and employees at its sole discretion. Any liability created by the termination
of any officer or employee shall be borne by Seller. In addition, it is the intent of AM to
replace some and perhaps all existing members of the Board of Directors of the Bank
with AM’s appointed directors. The Bank’s existing directors will be asked to continue
to serve during a transition period.

11. Office Retention. AM intends to retain the Bank’s office in City, Illinois.
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12. Access. Upon execution of this LOI, the Bank will (i) allow authorized representatives of
AM as applicable full and complete access to its properties, assets, books, contracts and
records and those of the Bank, (ii) permit AM and its representatives to make such
inspections as they may reasonably require, (iii) furnish all information concerning it and
its affiliates as the other party may reasonably request, (iv) make available their senior
officers, other employees as the other party may reasonably request, attorneys,
independent accountants, benefit plan administrators, actuaries and its other agents to
discuss its business, condition (financial or otherwise) or prospects and those of its
affiliates.

13. No Material Adverse Change. AM’s obligation to consummate the Acquisition pursuant
to the Definitive Agreement will be conditioned upon the Bank continuing to operate
their businesses in the ordinary course, consistent with safe and sound banking practices
and AM’s verification that there has been no material adverse change greater than
$150,000 in the financial condition, assets, operations, properties or business of State
Bank from June 30, 2020 through the Closing Date.

14. Confidentiality. All information furnished by either party or its representatives will be
held in strict confidence by the party receiving such information and its representatives
and will not be disclosed to any third party except representatives who need access to the
information for purposes of the Acquisition. All information furnished by either party to
the other will be deemed to be proprietary in nature and shall be kept confidential unless
(a) the party providing the information consents to disclosure to third persons, (b) the
information is already in the public domain, or becomes public knowledge through no
fault of the receiving party, or (c) disclosure of the information is compelled by process
of law. If the Acquisition is not consummated, each party and its representatives will not
use to its commercial advantage any information obtained (whether or not contained in
hard copy, database or other physical form) concerning products, customers or other
information of or about the other which reasonably could be presumed to be of a
proprietary and confidential nature.

15. Exclusivity. At such time as AM and State Bank shall jointly agree, in writing, to initiate
the drafting of the Definitive Agreement, and for a period of 45 days thereafter during
which time the Definitive Agreement shall be drafted, none of the Bank, AM, their
respective directors, officers, affiliates, employees, or any of their financial advisors or
agents will, directly or indirectly:

(a) solicit, encourage, initiate or participate in any negotiations or discussions

(b) disclose to any third party any information concerning the Bank’s business,
properties, books or records, except in the ordinary course of business for
purposes other than an acquisition or as compelled by law; or

(c) cooperate with any third party to make any proposal to merge with or acquire
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all or any part of the capital stock or assets of the Bank other than non-
essential or excess assets, which would include the insider loans. Any party
receiving a formal or informal offer or proposal for such an acquisition (or an
offer or proposal to enter negotiations therefor) shall immediately inform AM
thereof (including the terms of such offer) and provide AM with copies of any
documents relating thereto.

16. Proof of Funds. AM shall provide proof of funds demonstrating at least $5,000,000 in
available capital from its investor group upon receipt of this LOI once executed.

17. Closing. It is expected that consummation of the Acquisition would occur as soon as
practicable after receipt of all necessary regulatory and shareholder approvals and the
expiration of any mandatory waiting periods.

This Letter is not intended to be a complete statement of the terms of this transaction. All
final terms and provisions will be contained in the Definitive Agreement. This Letter is not
intended to create or constitute any legally binding obligations between State Bank or AM, other
than for Sections 14 and 15 and the parties’ obligation to negotiate in good faith to enter into the
Definitive Agreement within a reasonable period of time, and neither of the Bank or AM shall
have any liability to the other party with respect to the matters addressed herein until a fully
integrated Definitive Agreement and other related documents are prepared, authorized, executed
and delivered by and between all parties. Each party shall bear its own expenses in connection
herewith. If a Definitive Agreement is not prepared, authorized, executed and delivered, for any
reason, no party shall have any liability to the other based upon, arising from, or relating to the
matters set forth in this Letter other than as contemplated by Sections 14 and 15 of this Letter or
for breach of such party’s obligation to negotiate in good faith.

If you have any questions regarding this Proposal, you should contact my Buyer
Representative, __________, President, Bancorp Inc. at 555-555-1111 or at
[email protected].

Signature page follows:

This Letter of Intent shall remain valid for ten days from the date hereof and, thereafter, if
not accepted by State Bank, shall expire without further action by either party. Representatives
of AM are prepared to complete their due diligence review upon receipt of a signed counterpart
of this Letter. We look forward to working with you.

Very truly yours,

Thomas Blank
Managing Director
Asset Managers LLC

Agreed and accepted this _____ day of September, 2020.

_______________________________
Robert Blank, Vice President
State Bank