Exhibit 10.24
Agreement to Organize and
Stockholder Agreement
This Agreement to Organize and Stockholder Agreement (this
"Agreement") dated as of February 1, 2003, is among Heartland
Financial USA, Inc., a Delaware corporation (the "Company"), and
those individuals who are signatories to this Agreement
(individually referred to as an "Investor" and collectively as
the "Investors").
Recitals
A. A new bank has been organized under the laws of the
State of Arizona known as "Red Mountain Bank" (the "Bank"), and a
board of directors (the "Board") has been established to
supervise and govern the Bank's operations.
B. The Company and the Investors (individually, an
"Organizer," and collectively, the "Organizers") desire to
provide additional capital to the Bank, all pursuant to the terms
of this Agreement, and to take all other steps necessary to
prepare the Bank to commence retail operations and transact a
banking business initially in Mesa, Arizona, and to effect all of
the other actions contemplated by this Agreement (collectively,
the "Transaction").
C. The Organizers understand that the Transaction requires
the approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve"), the Banking Department of the
State of Arizona (the "Department"), and the Federal Deposit
Insurance Corporation (the "FDIC").
D. Upon the completion of the organization of the Bank,
the Bank will issue shares of its capital stock (the "Bank
Stock") to each of the Organizers in proportion to their
contributions to the Bank's capitalization and as otherwise
provided in this Agreement.
E. The Organizers desire to impose certain restrictions on
the sale, transfer or other disposition of the Bank Stock owned
by the Investors and to give the Company and the Investors the
option to purchase and sell the shares of Bank Stock owned by
them under certain circumstances specified in this Agreement.
F. With the advice of counsel, the Board carefully
considered and negotiated with the Company the terms of the
initial draft of this Agreement, and have approved the form of
this Agreement as the same was revised based upon such
negotiations.
Now, therefore, in consideration of the mutual covenants
herein contained and for other good and valuable consideration,
the receipt of which is hereby acknowledged, each of the
Organizers, intending to be legally bound hereby, agrees as
follows:
Agreements
Article 1
Bank Organization and Stock Subscription
Section 1.1 Charter. The Organizers agree to use their
best efforts to cause the Department to authorize the Bank under
the laws of the State of Arizona to commence a banking business
and otherwise to effect the Transaction. The date the Bank
commences a banking business with the public is referred to as
the "Charter Date." Each of the undersigned authorizes Xxxx X.
Xxxxxxx, an executive officer of the Company, or such other
individual who may be chosen from time to time by the Company to
serve as the undersigned's lawful agent in connection with the
Transaction (the "Agent"), and further acknowledges the
employment of Xxxxxxx X. Xxxxx as the Bank's president (the
"President"). The President and the Agent shall be primarily
responsible for preparing and filing all regulatory applications
deemed by them to be necessary to effect the Transaction,
including, but not limited to, applications with the Federal
Reserve, the Department and the FDIC. Each of the Organizers
agrees to cooperate fully with the President and the Agent in
such efforts.
Section 1.2 Subscriptions for Bank Stock.
(a) The Organizers agree that the Bank's initial
capitalization shall be Fourteen Million Five Hundred Thousand
Dollars ($14,500,000) comprised of One Million Four Hundred Fifty
Thousand (1,450,000) common shares issued at a price of Ten
Dollars ($10.00) per share. The Organizers acknowledge and
accept the following subscriptions for Bank Stock:
(i) the Company agrees to subscribe for and
purchase One Million Two Hundred Thousand (1,200,000) shares, or
approximately Eighty Two and Seventy Six Hundredths Percent
(82.76%), of the initial issuance of Bank Stock at an aggregate
issuance price of Twelve Million Dollars ($12,000,000); and
(ii) the Investors agree to subscribe for and
purchase, in the aggregate, Two Hundred Fifty Thousand (250,000)
shares (the "Initial Organizers' Shares"), or approximately
Seventeen and Twenty Four Hundredths percent (17.24%), of the
initial issuance of Bank Stock at an aggregate issuance price of
Two Million Five Hundred Thousand Dollars ($2,500,000), and each
of the Investors individually agrees to subscribe for and
purchase Bank Stock in the amount set forth opposite his or her
name on Exhibit A attached hereto, provided, however, that it is
further acknowledged and reflected on Exhibit A that the Bank has
previously received and expended subscription funds from certain
of the Investors (the "Prior Funds") and such Investors shall be
given full credit against the total amount of subscription funds
that would otherwise be due and payable by such Investors
pursuant to the terms of this Section.
(b) The Organizers agree that Fifty Thousand (50,000)
shares of additional Bank Stock, and any of the Initial
Organizers' Shares up to a maximum of Twenty Five Thousand
(25,000) shares that have not been subscribed for by the Charter
Date (collectively, the "Additional Shares"), shall be reserved
for issuance to additional investors who are mutually acceptable
to the Company and the President (individually, an "Additional
Investor"), provided that the issuance price for any Additional
Shares which shall be determined by the Board and acceptable to
the Company is no less than Eleven Dollars ($11.00) per share and
that no Additional Shares shall be issued after the date which is
eighteen months (18) after the Charter Date, and provided
further, that any Additional Investor becomes a signatory to this
Agreement. Except as expressly provided in this Agreement, any
Additional Investor who becomes a signatory to this Agreement
shall for all purposes of this Agreement be deemed to be an
"Organizer" and an "Investor" and shall be entitled to all of the
same rights and privileges, and be bound by the same obligations,
of any other Organizer or Investor.
(c) The Organizers agree that if the Charter Date
shall not have occurred by the date which is eighteen (18) months
after the date of this Agreement, unless such delay shall have
been caused by the material breach by the Company of any material
term of this Agreement, or unless such time is extended by mutual
agreement of the Organizers, this Agreement shall terminate and
each of the Organizers shall:
(i) receive a pro rata portion of any of the
subscription funds previously contributed (after the satisfaction
of all expenses incurred in attempting to organize the Bank,
including the preparation and filing of all necessary regulatory
applications as described in this Agreement); and
(ii) accept such distribution in full
satisfaction of any amounts due under this Agreement to or from
any of the other Organizers, including the Company.
(d) Except as provided below in this Section, payment
by an Organizer of the aggregate cash amount for the Organizer's
subscription for the Bank Stock (the "Subscription Amount") shall
be made in two installments, with the first installment in an
amount equal to Ten Percent (10%) of the Organizer's aggregate
Subscription Amount (the "First Installment"), and the second
installment equal to the balance of the Organizer's Subscription
Amount (the "Second Installment"). Notwithstanding the foregoing
sentence, however, the amount of the Company's First Installment
shall be Five Hundred Thousand Dollars ($500,000) and the amount
of its Second Installment shall be Eleven Million Five Hundred
Thousand Dollars ($11,500,000). Each of the Organizers
irrevocably agrees to deliver to the Agent either cash, or
check(s) made payable to "Red Mountain Bank Escrow Fund," in the
amount of the Organizer's:
(i) First Installment by no later than ten (10)
days after the date of each Organizer's execution of this
Agreement; and
(ii) Second Installment by no later than the
Charter Date, unless the Agent and the President jointly
determine that the Bank needs additional funds prior to that time
in order to complete the Transaction.
Notwithstanding anything contained in this Section to the
contrary, the full cash amount for the subscription, or the
purchase, as the case may be, of Bank Stock by any Additional
Investor shall be made at the time the Additional Investor
becomes a signatory to this Agreement .
(e) The Bank has previously been tendered a "Letter of
Intent" by certain prospective shareholders expressing an
interest in investing in the Bank. The Bank has elected to
terminate all such Letters of Intent by a Letter of Termination
sent to each such shareholder together with the uncashed check
tendered by each such shareholder together with the Letter of
Intent.
Section 1.3 Deposit and Expenditure of Organizers' Funds.
All funds collected from the Organizers pursuant to this
Agreement (the "Organizers' Funds") shall be deposited into a
bank account (the "Organization Account") established with the
Dubuque Bank and Trust Company, Dubuque, Iowa (the "Escrow
Bank"). Upon the signature of the President, funds may be
withdrawn from the Organization Account to be used to pay normal
and customary expenses relating to the Transaction, including,
but not limited to, the following:
(a) expenses arising from or relating to the
organization, capitalization and operation of the Bank, including
the filing of all necessary regulatory applications with the
Federal Reserve, the Department and the FDIC to effect the
Transaction;
(b) accounting, auditing, legal, investment banking,
due diligence and appraisal expenses relating to or in connection
with the Transaction;
(c) salary payments to the President and to any other
officers or employees of the Bank that are deemed necessary by
the Agent; and
(d) other expenses arising from or directly relating
to the Transaction;
provided, however, that any expenditures in excess of Five
Thousand Dollars ($5,000) shall require the joint authorization
of the President and the Agent. The Organizers hereby
acknowledge that the President and the Agent may begin making
withdrawals from the Organization Account immediately, and
accordingly, if the Transaction is not consummated, the
Organizers will not receive a refund of 100% of the Organizers'
Funds.
Section 1.4 Books and Records. The President shall
ensure that proper records of all expenditures from the
Organization Account are maintained and such records shall be
available for inspection by any Organizer. The President will
prepare and distribute to each Organizer a monthly financial
report and a copy of the monthly account statement issued by the
Escrow Bank with respect to the Organization Account.
Section 1.5 Additional Capital. Each of the Organizers
agrees that any additional capital needed by the Bank shall be
contributed by the Company in return for the issuance of
additional Bank Stock, provided, however, that:
(a) each Investor shall receive the right to purchase
only that number of shares that would be necessary to allow such
Investor to maintain the same percentage ownership of outstanding
Bank Stock he or she enjoyed prior to the issuance of any
additional shares of Bank Stock to the Company;
(b) any right of an Investor to purchase any
additional shares of Bank Stock pursuant to the provisions of
this Section would not be transferable or assignable (except as
provided in Section 3.6) and any shares of Bank Stock purchased
in connection with the exercise of such right would be subject to
all the terms of this Agreement;
(c) any purchase of additional shares by an Investor
pursuant to the terms of this Section must be made on the same
terms and conditions as the Company; and
(d) any such offer to purchase additional Bank Stock
could be made to all the Investors in compliance with applicable
law and without material expense to the Bank.
Except as expressly provided in this Section, each of the
Investors hereby waives any right granted to him or her by
applicable law or otherwise to subscribe for additional Bank
Stock, or if the same is not waivable, each of the Investors
hereby agrees to assign to the Company any such subscription
right as the same may arise in the future.
Article 2
Repurchase Options and Obligations
Section 2.1 Repurchase Obligation at Fifth Anniversary.
(a) Upon the fifth (5th) anniversary of the Charter
Date (the "Fifth Anniversary"), the Company agrees to purchase
from the Investors, and each of the Investors agrees to sell to
the Company, all of the Bank Stock then owned by the Investors
(the "Investors' Stock") on the terms set forth in this Section.
The total purchase price for the Investors' Stock shall be an
amount equal to the "Repurchase Price," as defined below.
(b) Except as provided in this Section, the Repurchase
Price shall be the appraised value of the Investors' Stock as of
the Fifth Anniversary as determined by Xxxx Xxxxxxxxxx Management
Services, Inc. or its successor, or if neither such firm nor its
successor is still in existence and performing appraisals of the
stock of commercial banks, then by an independent, nationally
recognized appraisal firm with no less than (ten) 10 years of
experience in appraising the stock of commercial banks, jointly
selected by the Company and the Investors (the "Appraised
Value"). For purposes of such an appraisal, the value of the
Investors' Stock shall be determined as if the whole Bank were
being sold.
(c) Notwithstanding anything contained herein to the
contrary, if on the Fifth Anniversary:
(i) the Bank has total assets of greater than Two
Hundred Million Dollars ($200,000,000) and has earned greater
than a Ten Percent (10%) average annual return on equity during
the prior twenty four (24) months (computed in accordance with
generally accepted accounting principles and based upon average
equity during such twenty four month period), then in no event
shall the Appraised Value represent a multiple on the Bank's net
earnings for the prior twelve (12) months of less than twelve
times (12x) or greater than eighteen times (18x) such trailing
twelve (12) months' earnings; and
(ii) the Bank has total assets of less than
Two Hundred Million Dollars ($200,000,000) or has earned less
than a Ten Percent (10%) average annual return on equity during
the prior twenty four (24) months (computed in accordance with
generally accepted accounting principles and based upon average
equity during such twenty four month period), then in no event
shall the Appraised Value represent a multiple on the Bank's net
earnings for the prior twelve (12) months of less than six times
(6x) or greater than twelve times (12x) such trailing twelve (12)
months' earnings.
For purposes of this Section: (x) the total assets of the Bank
shall not include the amount of the assets (calculated at the
time of acquisition) of any bank, thrift or other financial
institution, or any branch, office or part thereof, acquired by
the Bank between the date of this Agreement and the Fifth
Anniversary; and (y) in computing return on equity, if the
corporate overhead allocation attributed to the Bank by the
Company is greater than that attributed proportionately to the
Company's other subsidiaries (based on the average assets of each
subsidiary), then the return on equity calculation will be
adjusted such that the Bank's corporate overhead allocation
equals its pro rata percentage share based upon the Bank's
percentage of total average assets to the Company's total average
consolidated assets.
(d) The Repurchase Price shall be paid to Investors
(pro rata based upon their respective percentage ownership of the
Investors' Stock) in two parts:
(i) the first part of the Repurchase Price, which
shall be equal to each Investor's total capital contribution as
reflected on Exhibit A attached hereto, shall be paid to the
Investor, at the Investor's election (but subject to compliance
with any applicable securities laws) in cash, common stock of the
Company ("Company Stock") or a combination of cash and Company
Stock; and
(ii) the second part of the Repurchase Price,
which shall be equal to each Investor's appropriate share of the
remaining balance of the total Repurchase Price, shall be paid to
the Investor, at the Company's election (but subject to
compliance with any applicable securities laws) in cash, Company
Stock or a combination of cash and Company Stock. For purposes
of this Section, the per share value of Company Stock shall be
equal to the average per share value based upon all trades of
Company Stock as reported by the media services of Bloomberg,
L.P., or its successor, during the ninety (90) day period prior
to the Fifth Anniversary, provided, however, that if on the Fifth
Anniversary purchase and sale transactions of the Company Stock
are reported on the Nasdaq, then the per share value of Company
Stock shall be equal to the average closing prices for Company
Stock as reported on Nasdaq during the ninety (90) day period
prior to the Fifth Anniversary.
Section 2.2 Tender Right. Each of the Investors shall
have the right, exercisable at any time after the date hereof and
through the Fifth Anniversary, to tender all of the Bank Stock
owned by such Investor to the Company for purchase at a cash
price equal to such Investor's original investment in Bank Stock,
plus a Six Percent (6%) annually compounded rate of return on
such original investment (the "Tender Right"). An Investor may
exercise the Tender Right by delivering to the Company written
notice of such Investor's intention to tender all of the
Investor's shares of Bank Stock to the Company for purchase.
Upon proper exercise of the Tender Right, the Company hereby
agrees to purchase for cash all of the shares of Bank Stock owned
by the Investor selling such Bank Stock at the purchase price and
on the terms set forth in this Article.
Section 2.3 Repurchase Upon Company Change of Control.
If at any time after the date hereof and through the Fifth
Anniversary there is a "Change of Control of the Company" (as
defined below), the Company, or its successor, agrees to purchase
from the Investors, and the Investors agree to sell to the
Company, all of the Bank Stock then owned by the Investors at a
price per share equal to the Control Premium Price, as defined
below. For purposes of this Section, a "Change of Control of the
Company" shall mean the acquisition by any person or entity (a
"Company Acquirer") of: (a) legal or beneficial ownership (as
defined by Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of greater than Two Thirds (2/3) of the
then issued and outstanding voting stock of the Company through
any transaction; or (b) all or substantially all of the assets of
the Company. The "Control Premium Price" shall be equal to the
per share book value of the Investors' equity interest in the
Bank, multiplied by the same multiple of book value as paid by
the Company Acquirer for the stock or assets of the Company. For
example, if the Company is sold to another entity for three times
the Company's book value, the Control Premium Price would be
equal to three times the per share book value of the Investors'
equity interest in the Bank.
Section 2.4 Terms, Time and Place of Closing.
(a) Except as otherwise specifically provided by the
terms of this Article, the purchase price of any Bank Stock
purchased by the Company from any Investor pursuant to the terms
of this Article shall be paid by delivery of a certified or
cashier's check payable to the order of the selling Investor or
Investors in the amount of the purchase price prescribed by the
terms of this Article.
(b) Except as otherwise specifically provided by the
terms of this Article, the closing of the purchase and sale of
any Bank Stock to be purchased and sold pursuant to the
provisions of this Article (the "Closing") shall be held at such
place and time and on such date as may mutually be agreed upon in
writing by the Investor and the Company, or, if they fail to
agree, at the main office of the Company at 10:00 a.m. on the
later of:
(i) the tenth (10th) Business Day (as defined
below) following the determination of the purchase price to be
paid in connection with such purchase of Bank Stock;
(ii) thirty (30) Business Days following the
action or occurrence that triggers the obligation to purchase
such Bank Stock; and
(iii) five (5) Business Days after the receipt
of any necessary regulatory approvals for such purchase.
(c) Except as otherwise specifically provided by the
terms of this Article, at the Closing held pursuant to this
Article, the Company shall make the delivery described in
subsection (a) of this Section and the selling Investor shall
deliver to the Company free and clear of all liens, claims and
encumbrances (other than those imposed by this Agreement and
evidenced by the legend provided for below), a certificate or
certificates representing the shares of Bank Stock to be
purchased and sold, duly endorsed in blank, with all taxes on the
transfer, if any, paid by the transferor thereof.
(d) The consummation of any purchase of Bank Stock
pursuant to this Article (the "Sale Stock") shall be subject to
the receipt by the Company of any necessary regulatory approvals,
which the Company agrees to use its best efforts to obtain as
soon as practicable, provided, however, that if the Company is
unable, after the exercise of diligent efforts, within one
hundred twenty (120) days after the last date provided in this
Agreement for the closing of the purchase of the Sale Stock, or
such longer period of time as may be mutually agreed upon by the
prospective purchasers and prospective sellers of the Sale Stock,
to obtain any necessary regulatory approvals, then:
(i) each of the prospective sellers of the Sale
Stock shall be released from any further obligations pursuant to
the terms of this Agreement solely with respect to such Sale
Stock and shall be free to sell the Sale Stock to any person or
entity free of any lien or encumbrance imposed by the terms of
this Agreement; and
(ii) the Company shall be released from any
further obligations pursuant to the terms of this Agreement with
respect to the purchase of the Sale Stock and shall have no
further rights with respect to the Sale Stock.
Article 3
Representations, Warranties And Covenants
Section 3.1 Bank Operations. Each of the Organizers
agrees to use its, his or her best efforts to cause the Bank to
be successful. Each of the Organizers acknowledges and agrees
that in addition to core deposit growth, the Organizers will work
to expand the Bank's operations through selected acquisitions of
banks and other financial institutions, provided, however, that
no offer will be made for any such institution without the prior
consent of the Company.
Section 3.2 Representations, Warranties and Covenants.
Each of the undersigned Organizers hereby represents and warrants
to, and acknowledges to and agrees with, the Agent, the President
and each other Organizer as follows:
(a) The attorney, accountant, executive officer or
financial investment advisor for the Organizer (collectively,
"Advisor") has had a reasonable opportunity to ask questions of
and receive information and answers from the other Organizers and
persons acting on behalf of the Bank concerning the Transaction,
all such questions asked have been answered and all such
information requested has been provided to the full satisfaction
of the Organizer or the Organizer's Advisor, and the Organizer
has extensively and on various occasions discussed with the other
Organizers the possible risks of purchasing Bank Stock.
(b) No oral or written representations have been made
or oral or written information furnished to the Organizer or the
Organizer's Advisor(s) in connection with the Organizer's
agreement to purchase Bank Stock that were in any way
inconsistent with the information stated in this Agreement.
(c) The Organizer is not subscribing for Bank Stock as
a result of or subsequent to any advertisement, article, notice
or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented
at any seminar or meeting, or any solicitation of a subscription
by a person not previously known to each of the undersigned
generally or in connection with investments in securities.
(d) The Organizer's overall commitment to investments
that are not readily marketable is not disproportionate to the
Organizer's net worth and the Organizer's investment in the Bank
will not cause such overall commitment to become disproportionate
to the Organizer's net worth.
(e) Any Organizer that is an individual has reached
the age of majority in the state in which the Organizer resides,
has adequate net worth and means of providing for the Organizer's
current needs and personal contingencies, is able to bear the
substantial economic risks of the investment in the Bank as
evidenced by this Agreement, has no need for liquidity in such
investment and, at the present time, could afford a complete loss
of such investment.
(f) The Organizer, individually or acting through its
executive officers, has such knowledge and experience in
financial and business matters so as to enable the Organizer to
utilize the information made available to him, her or it in
connection with his, her or its investment in the Bank in order
to evaluate the merits and risks of such an investment and to
make an informed investment decision with respect thereto and the
Organizer has carefully evaluated the risk of such investment.
(g) The Organizer is not relying on the Agent, the
President, any other Organizer or any other person acting on
behalf of the Bank, the Agent, the President or any of the other
Organizers with respect to the Organizer's economic
considerations relating to this investment; and in regard to such
considerations, the Organizer has relied on the advice of, or has
consulted with, his, her or its own Advisor(s).
(h) The Organizer is making the investment evidenced
hereby solely for the Organizer's own account as principal, for
investment purposes only and not with a view to the resale or
participation of any portion thereof, and no other person has a
direct or indirect beneficial interest in such investment.
(i) Any Organizer that is also an Investor
acknowledges that the Company is under no obligation to register
any Company Stock that the Organizer may receive pursuant to the
terms of this Agreement, and further acknowledges that the
receipt by the Organizer of any Company Stock is subject to the
Company's ability to satisfy the requirements of any applicable
federal or state securities laws, provided, however, that during
the two-year period following the issuance by the Company to any
Investor of any shares of the Company's common stock pursuant to
the terms of this Agreement, the Company agrees to use its best
efforts to file in a timely manner all reports required to be
filed with the Securities and Exchange Commission.
(j) The Organizer acknowledges that a legend will be
placed on each certificate representing the Bank Stock
substantially as follows:
Voluntary and involuntary transfer of any of the
shares represented by this certificate are governed by
and in all respects subject to the terms and conditions
of that certain Agreement to Organize and Stockholder
Agreement among Heartland Financial USA, Inc. and
certain other holders of the Bank's capital stock dated
as of February 1, 2003, an executed copy of which has
been deposited with the Cashier of the Bank at its
registered office in Mesa, Arizona. Such Agreement
imposes certain obligations on the holder of these
shares in certain circumstances, which obligations and
circumstances are described therein. No transfer of
such shares will be made on the books of the Bank
unless accompanied by evidence of compliance with the
terms of such Agreement.
(k) The Organizer recognizes that an investment in
Bank Stock involves a number of significant risks, including,
without limitation, the following considerations:
(i) no Federal or state agency has passed upon
the Bank Stock or made any finding or determination as to the
fairness of the investment in Bank Stock; and
(ii) there is no established market for the
Bank Stock and it is unlikely that a public market for the Bank
Stock will develop.
(l) The Organizer acknowledges receipt of copies of
certain financial and other information concerning the proposed
operations of the Bank, and recognizes that the Bank is a de novo
bank to be organized in the future and has no financial or
operating history, that the organization and operation of the
Bank entails significant risks, including, without limitation,
that the organization of the Bank is subject to regulatory
approvals and that there are no assurances that such approvals
will be obtained.
(m) Within five (5) days after receipt of a request
from the Agent or the President, the Organizer hereby agrees to
provide such information and to execute and deliver such
documents as may be reasonably necessary to complete the
necessary applications to organize the Bank and to comply with
any and all laws and ordinances to which the Bank is subject.
(n) The foregoing representations, warranties and
agreements, together with all other representations and
warranties made or given by the Organizer in any other written
statement or document delivered in connection with the
transactions contemplated hereby, shall be true and correct in
all respects on and as of the date of the delivery of such
statement or document as if made on and as of such date and shall
survive such date.
Section 3.3 Indemnification. Each Organizer agrees to
indemnify and hold harmless the Bank, the Agent, the President
and each of the other Organizers and all of their respective
agents and representatives who are associated with the
Transaction and all of the proposed officers and directors of the
Bank against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all
expenses reasonably incurred in investigating, preparing or
defending against any litigation commenced or threatened or any
claim whatsoever) arising out of or based upon any false
representations or warranty or breach or failure by the
undersigned to comply with any covenant or agreement made by the
undersigned herein or in any other document furnished by the
undersigned to any of the foregoing in connection with the
Transaction.
Section 3.4 Additional Information. Each of the
undersigned hereby acknowledges and agrees that the Agent or the
President may make or cause to be made such further inquiry and
obtain such additional information from any of the undersigned as
he may deem appropriate, and each of the undersigned hereby
agrees to cooperate fully with the Agent and the President in
this regard.
Section 3.5 Irrevocability; Binding Effect. Each of the
undersigned hereby acknowledges and agrees that:
(a) the undersigned is not entitled to cancel,
terminate or revoke this Agreement or any agreements of each of
the undersigned hereunder; and
(b) this Agreement and such other agreements shall
survive the death or disability of each of the undersigned and
shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal
representatives and assigns.
Section 3.6 Transfer Restrictions. Each of the Investors
hereby agrees that he or she will not sell, exchange, assign,
transfer, pledge, hypothecate, give away (by lifetime transfer)
or otherwise encumber or dispose of any shares of Bank Stock at
any time owned by him or her without the express prior written
consent of the Company, provided, however, that the foregoing
shall not prohibit the transfer of shares of Bank Stock by
testamentary transfer so long as each recipient of any shares of
Bank Stock becomes a party to this Agreement and agrees to be
bound by its terms.
Article 4
Miscellaneous
Section 4.1 Modification. Neither this Agreement nor any
provisions hereof shall be waived, modified, discharged or
terminated except by an instrument in writing signed by the party
against whom any such waiver, modification, discharge or
termination is sought.
Section 4.2 Notices. All notices, consents, waivers and
other communications under this Agreement must be in writing
(which shall include telecopier communication) and will be deemed
to have been duly given if delivered by hand or by nationally
recognized overnight delivery service (receipt requested), mailed
with first class postage prepaid or telecopied if confirmed
immediately thereafter by also mailing a copy of any notice,
request or other communication by mail with first class postage
prepaid to any Organizer at the address set forth on Exhibit A
attached hereto or to such other person or place as an Organizer
shall furnish to the other Organizers in writing. Except as
otherwise provided herein, all such notices, consents, waivers
and other communications shall be effective:
(a) if delivered by hand, when delivered;
(b) if mailed in the manner provided in this Section,
five (5) Business Days after deposit with the United States
Postal Service;
(c) if delivered by overnight express delivery service
(receipt requested), on the next Business Day after deposit with
such service; and
(d) if by telecopier, on the next Business Day if also
confirmed by mail in the manner provided in this Section.
For purposes of this Agreement, "Business Day" means any day
except Saturday, Sunday and any day on which the Escrow Bank is
authorized or required by law or other government action to
close.
Section 4.3 Counterparts. This Agreement may be executed
through the use of separate signature pages or in any number of
counterparts, and each of such counterparts shall, for all
purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same
counterpart.
Section 4.4 Entire Agreement. This Agreement contains
the entire agreement of the parties with respect to the subject
matter hereof and there are no representations, covenants or
other agreements except as stated or referred to herein.
Section 4.5 Severability. Each provision of this
Agreement is intended to be severable from every other provision,
and the invalidity or illegality of any portion hereof shall not
affect the validity or legality of the remainder hereof.
Section 4.6 Assignability. This Agreement is not
transferable or assignable by any of the undersigned, except as
otherwise provided by Section 3.6.
Section 4.7 Governing Law, Jurisdiction and Venue. This
Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa applied to residents of that state
executing contracts wholly to be performed in that state. Each
of the undersigned irrevocably agrees that any action or
proceeding in any way, manner or respect arising out of this
Agreement or any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection
herewith shall be litigated only in the courts having situs
within the City of Dubuque, the State of Iowa, and each of the
undersigned hereby consents and submits to the jurisdiction of
any local, state or federal court located within such city and
state. Each of the undersigned hereby waives any right the
Organizer may have to transfer or change the venue of any
litigation brought against the undersigned by the Bank or the
Agent.
Section 4.8 Certificate of Non-Foreign Status. Each of
the undersigned declares that, to the best of the Organizer's
knowledge and belief, the following statements are true, correct
and complete:
(a) unless an Internal Revenue Service Form 4224 has
been completed, each of the undersigned is not a foreign person
for purposes of U.S. income taxation (i.e., the Organizer is not
a nonresident alien, nor executing this document as an officer of
a foreign corporation, as a partner in a foreign partnership, or
as a fiduciary of a foreign employee benefit plan, foreign trust
or foreign estate);
(b) the following information contained elsewhere in
the subscription documents is true, correct and complete: the
U.S. taxpayer or employee identification number (e.g., social
security number) and the home address; and
(c) the undersigned agrees to inform the Bank promptly
if the undersigned becomes a nonresident alien.
Section 4.9 Director Benefits. Directors of the Bank
will be afforded the same benefits as directors of the Company's
other financial institution subsidiaries.
Section 4.10 Solicitation of Customers or Employees.
Commencing with the date of this Agreement and ending on the date
that is two (2) years after the effective date of the sale by an
Investor of all of his or her Bank Stock (the "Non-Solicitation
Period"), such Investor shall not, directly or indirectly, call
on, sell to, solicit business from or render services to any of
the Bank's customers who were customers of the Bank at the
commencement of, and during, the Non-Solicitation Period, or
recruit, persuade or attempt to recruit or persuade any employee
of the Bank who was an employee of the Bank at the commencement
of the Non-Solicitation Period and at the time of any such
prohibited act, to leave the Bank's employ, or to become employed
by any other person other than the Bank.
Section 4.11 Dispute Resolution. Unless otherwise
specifically provided for in this Agreement, all disputes,
controversies, claims or disagreements arising out of or relating
to this Agreement, (singularly, a "Dispute," and collectively,
"Disputes") shall be resolved in the following manner (the
"Dispute Resolution Process"), provided, however, that the
Dispute Resolution Process shall be commenced only if
(x) requested in a written notice (the "Notice of Dispute")
describing the Dispute that is delivered to all parties to this
Agreement and signed by either the Company, or by Investors
owning a majority of the Bank Stock owned by all Investors and
representing the joint position of all such Investors signing the
Notice of Dispute and (y) the Dispute has a liquidated monetary
value of greater than Five Hundred Thousand Dollars ($500,000):
(a) First, within ten (10) days after the receipt of
Notice of Dispute the parties representing the two opposing sides
of the Dispute, or representatives of such parties with decision
making authority (collectively, the "Dispute Parties," and
individually, a "Dispute Party") shall meet and negotiate in good
faith for a period of fifteen (15) days in an effort to resolve
the Dispute.
(b) Second, if within such fifteen (15) day period,
the Dispute Parties have not succeeded in negotiating a
resolution of the Dispute, they agree to submit the Dispute to
mediation in Chicago, Illinois, in accordance with the Commercial
Mediation Rules of the American Arbitration Association
("Mediation") and to bear equally the costs of the Mediation.
The Dispute Parties will jointly appoint a mutually acceptable
mediator, provided, however, they if they are unable to agree
upon such appointment within ten (10) days from the conclusion of
the negotiation period, then the Dispute Parties shall request
the American Arbitration Association to appoint an appropriate
mediator. The Dispute Parties shall agree to participate in good
faith in the Mediation and negotiations related thereto for a
period of thirty (30) days.
(c) Third, if the Dispute Parties are still unable to
resolve the Dispute within such thirty (30) day mediation period,
the Dispute Parties shall resolve the Dispute by submitting the
Dispute to binding arbitration in Chicago, Illinois, pursuant to
the procedures set forth in Section 4.11(d) ("Arbitration").
(d) Each Dispute Party shall submit the Dispute to
Arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in Chicago, Illinois, and
under the jurisdiction of the American Arbitration Association in
Chicago, Illinois, subject to the following provisions:
(i) Each Dispute Party shall set forth in writing
and deliver to the arbitrators its position on the issue(s) in
Dispute, provided, however, that in all Disputes, there shall be
only two positions: the Company's position and the joint
position of all Investors who signed the related Dispute Notice.
The arbitrators shall have the authority only to rule in favor of
one of the two stated positions of one of the Dispute Parties
with respect to each different issue, with no compromises or
alternative solutions permitted. The arbitrators shall have the
authority to rule for a different Dispute Party with respect to
each different issue presented. If one of the Dispute Parties
fails to submit its position to the arbitrators within the time
period provided therefor, the arbitrators shall rule in favor of
the stated position of the Dispute Party submitting such
position.
(ii) Within ten (10) days after submittal of
the Dispute to Arbitration, the Dispute Parties shall agree upon
an arbitrator. If the Dispute Parties are unable to agree upon
an arbitrator, within fifteen (15) days after submittal to
arbitration, each Dispute Party shall appoint an arbitrator and
within ten (10) days of their appointment the two arbitrators so
chosen shall nominate a third arbitrator. If within such ten
(10) day period the two arbitrators fail to nominate the third
arbitrator, upon written request of either Dispute Party, the
third arbitrator shall be appointed by the American Arbitration
Association from its commercial dispute panel of arbitrators and
both Dispute Parties shall be bound by the appointment so made.
If either of the Dispute Parties shall fail to appoint an
arbitrator as required under this Section 4.11(d)(ii), the
arbitrator appointed by the other Dispute Party shall be the sole
arbitrator of the matter.
(iii) The decision of the arbitrators (or such
single arbitrator) shall be made within thirty (30) days of the
close of the hearing in respect of the Arbitration (or such
longer time as may be agreed to, if necessary, which agreement
shall not be unreasonably withheld, conditioned or delayed) and
the award rendered by a majority of the panel of arbitrators (or
such single arbitrator) when reduced to writing and signed by
them shall be final, conclusive and binding upon the Dispute
Parties. Any award rendered shall be final and conclusive upon
the Dispute Parties and upon all other Investors and a judgment
thereon may be entered in the highest court of a forum, state or
federal, having jurisdiction. The expenses of the Arbitration
shall be borne equally by the Dispute Parties, provided that each
party shall pay for and bear the cost of its own experts,
evidence and attorneys' fees, provided, however, that in the
discretion of the arbitrators, any award may include the fees and
costs of a Dispute Party's attorney if the arbitrator expressly
determines that the Dispute Party against whom such award is
entered has caused the Dispute, controversy or claim to be
submitted to Arbitration in bad faith or as a dilatory tactic.
No Arbitration shall be commenced after the date when institution
of legal or equitable proceedings based upon such subject matter
would be barred by the applicable statute of limitations.
(iv) Notwithstanding anything contained in
this Section 4.11(d), any Dispute Party shall be entitled to:
(A) commence legal proceedings seeking such mandatory,
declaratory or injunctive relief as may be necessary to define or
protect the rights and enforce the obligations contained herein
or to maintain the "status quo ante" of the parties to this
Agreement pending the settlement of a Dispute in accordance with
the arbitration procedures set forth in this Section 4.11(d);
(B) commence legal proceedings involving the enforcement of an
Arbitration decision or award or judgment arising out of this
Agreement, or (C) join any Arbitration or legal proceeding
arising out of this Agreement with any other Arbitration or legal
proceeding arising out of this Agreement. The "status quo ante"
is defined as the last peaceable, uncontested status between the
parties to this Agreement, provided, however, that neither the
party bringing the action nor the party defending the action
thereby waives its right to Arbitration of any dispute,
controversy or claim arising out of or in connection with or
relating to this Agreement.
Section 4.12 Federal and State Securities and Other Laws.
Each of the undersigned should also be aware of the following
additional considerations:
THE INVESTMENTS EVIDENCED BY THIS AGREEMENT ARE NOT, AND THE
BANK STOCK TO BE ISSUED WILL NOT BE, SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT AND WILL NOT BE INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, ANY OTHER GOVERNMENT AGENCY OR OTHERWISE.
THE INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY
STATES OR UNDER OTHER APPLICABLE BANKING LAWS OR REGULATIONS.
SUCH INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF SUCH
INTERESTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
[Signatures are on following page.]
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Signatures
In witness whereof, this Agreement has been executed by the
undersigned Organizers on the date(s) indicated below:
Agent President
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxx
_________________________ _________________________
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxx
Social
Security
Signature Number/FEIN Printed Name Date
____________________ ___________ ____________________ _______
Heartland Financial Heartland Financial
USA, Inc. ___________ USA, Inc., a _______
Delaware corporation
By:
___________________
Name:
______________
Title:
_____________
____________________ ___________ ____________________ _______
____________________ ___________ ____________________ _______
____________________ ___________ ____________________ _______
____________________ ___________ ____________________ _______
____________________ ___________ ____________________ _______
____________________ ___________ ____________________ _______
Exhibit A
Total Amount of Amount of
Name and Address Number of Subscription First Second
of Subscriber Shares (in Dollars) Installment Installment
_____________________ _________ ____________ ___________ ___________
Heartland Financial $12,000,000 $ 500,000 $11,500,000
USA, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Xxxxxx X. Xxxxxx $ Prior Funds: $
$50,000
Balance:
$_________
Xxxx Xxxxx $ Prior Funds: $
$25,000
Balance:
$_________
Xxxxx Xxxxx $ Prior Funds: $
$10,000
Balance:
$_________
Xxxx Xxxxxx $ Prior Funds: $
$10,000
Balance:
$_________
Xxxxxxx X. Xxxxx $ Prior Funds: $
$10,000
Balance:
$_________
