Agreement to Organize and Stockholder Agreement
Agreement
to Organize and Stockholder Agreement
This Agreement
to Organize and Stockholder Agreement (this
“Agreement”)
dated
as of April 1, 2006, 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. The
Company and the Investors (collectively, the “Organizers”)
desire
to organize a new corporation under the laws of the State of Colorado to be
known as Summit Acquisition Corporation (“Summit”),
and a
new bank under the laws of the State of Colorado with its main office initially
to be located in Broomfield, Colorado, to be known as “Summit Bank & Trust”
and to be a wholly-owned subsidiary of Summit (the “Bank”).
B. Pursuant
to the terms of this Agreement, the Organizers intend to provide the initial
capitalization of Summit and the Bank and to take all other steps necessary
to
prepare the Bank to commence retail operations and transact a banking business
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
Colorado Division of Banking, a unit of the Colorado Department of Regulatory
Agencies (the “Division”),
and
the Federal Deposit Insurance Corporation (the “FDIC”).
D. Upon
the
completion of the organization of Summit, the Organizers will cause Summit
to
issue shares of its capital stock (the “Summit
Stock”)
to
each of the Organizers in proportion to their contributions to Summit’s
capitalization and as otherwise provided in this Agreement, and the Bank will
issue to Summit all of the shares of its capital stock (the “Bank
Stock”).
E. The
Organizers desire to impose certain restrictions on the sale, transfer or other
disposition of the Summit Stock owned by the Organizers and to give the Company
and the Investors the option to purchase and sell the shares of Summit Stock
owned by them under certain circumstances specified in this
Agreement.
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
Summit
and Bank Organization and Stock Subscription
Section
1.1 Charter.
The
Investors hereby authorize the Company to file with the Secretary of State
of
the State of Colorado appropriate articles of incorporation for Summit. The
Organizers further agree to use their reasonable best efforts to cause the
Division to authorize the Bank under the laws of the State of Colorado 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 Xxxx Xxxxxxxxxx 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 Division 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 Summit Stock.
(a) The
Organizers agree that Summit’s initial capitalization shall be Fifteen Million
Dollars ($15,000,000) comprised of One Million Five Hundred Thousand (1,500,000)
common shares issued at a price of Ten Dollars ($10.00) per share. The
Organizers further agree that the Bank’s minimum initial capitalization shall be
Twelve Million Dollars ($12,000,000) comprised of One Million Two Hundred
Thousand (1,200,000) common shares issued at a price of Ten Dollars ($10.00)
per
share. The Organizers acknowledge the following subscriptions for Summit Stock
and agree to cause Summit to accept the same upon the completion of its
formation:
(i) the
Company agrees to subscribe for and purchase One Million Two Hundred Thousand
(1,200,000) common shares, or Eighty Percent (80%), of the initial issuance
of
Summit Stock at an aggregate issuance price of Twelve Million Dollars
($12,000,000); and
(ii) the
Investors severally, and not jointly, agree to subscribe for and purchase,
Summit Stock in the amount set forth opposite his or her name on Exhibit A
attached
hereto, which shall, in the aggregate, equal Three Hundred Thousand (300,000)
common shares or Twenty Percent (20%), of the initial issuance of Summit Stock
at an aggregate issuance price of Three Million Dollars
($3,000,000).
(b) 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
time is extended by written agreement of the Organizers who have subscribed
for
not less than a majority of the shares of Summit Stock, 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.
(c) Except
as
provided below in this Section
1.2(c),
payment
by an Organizer of the aggregate cash amount for the Organizer’s subscription
for the Summit 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 Company shall pay the
full
amount of its Subscription Amount concurrently with the date of its execution
of
this Agreement. Each of the Organizers irrevocably agrees to deliver to the
Agent either cash, or check(s) made payable to “Summit Acquisition Corporation,”
in the amount of the Organizer’s:
(i) First
Installment concurrently with 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 to complete the Transaction.
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 non-interest bearing 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 only 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 Division 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 expenditure in excess of Five Thousand Dollars ($5,000) shall require the
joint authorization of the President and the Agent. The President and the Agent
shall jointly compile a budget of estimated expenses relating to the Transaction
(the “Operating
Budget”).
The
Organizers hereby acknowledge that the President and the Agent may begin making
withdrawals from the Organization Account immediately, and accordingly, if
the
Transaction were not consummated, the Organizers would 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, noting
variations, if any, from the Operating Budget.
Section
1.5 Additional
Capital.
Each of
the Organizers agrees that any additional capital needed by Summit or the Bank
shall be contributed by the Company in return for the issuance of additional
Summit Stock, provided,
however,
that
prior to any proposed issuance of additional Summit Stock, each Investor shall
receive the right to purchase that number of shares that would be necessary
to
allow such Investor to maintain the same percentage ownership of outstanding
Summit Stock he or she enjoyed prior to the issuance of any additional shares
of
Summit Stock. In addition:
(a) any
right
of an Investor to purchase any additional shares of Summit 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 Summit Stock purchased in connection with the exercise of such right
would be subject to all the terms of this Agreement;
(b) 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
(c) any
such
offer to purchase additional Summit Stock could be made to all the Investors
in
compliance with applicable law to Summit.
Except
as
expressly provided in this Section or as required by applicable law, each of
the
Investors hereby acknowledges that he or she shall have no rights to subscribe
for additional Summit Stock.
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 Summit Stock then owned by the Investor
(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 100% of Summit were being sold.
(c) Notwithstanding
anything contained herein to the contrary, if on the Fifth
Anniversary:
(i) Summit
has total consolidated assets of greater than Two Hundred Million Dollars
($200,000,000) and has earned greater than a Ten Percent (10%) average annual
consolidated return on equity during the prior twenty four (24) months (computed
in accordance with generally accepted accounting principles and based upon
average consolidated equity during such twenty four month period), then in
no
event shall the Appraised Value represent a multiple on Summit’s consolidated
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’ consolidated
earnings; and
(ii) Summit
has total consolidated assets of less than Two Hundred Million Dollars
($200,000,000) or has earned less than a Ten Percent (10%) average annual
consolidated return on equity during the prior twenty four (24) months (computed
in accordance with generally accepted accounting principles and based upon
average consolidated equity during such twenty four month period), then in
no
event shall the Appraised Value represent a multiple on Summit’s consolidated
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’ consolidated
earnings
For
purposes of this Section: (x) the total consolidated assets of Summit shall
include the amount of the assets (calculated at the time of acquisition) of
any
bank, thrift or other financial institution or financial institution holding
company, or any branch, office or part thereof, acquired by Summit or 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
Summit 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 Summit’s
corporate overhead allocation equals its pro rata percentage share based upon
Summit’s percentage of total average consolidated 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 VWAP, which means the volume
weighted average price per share of Company Stock, rounded to the nearest
one-hundredth of a cent, during the ninety (90) days prior to the Fifth
Anniversary. For this purpose, the VWAP shall be calculated using the default
criteria for the function known as “Bloomberg VWAP” of the AQR function for
Company Stock on the automated quote and analytical system distributed by
Bloomberg Financial LP.
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 Summit Stock
owned by such Investor to the Company for purchase at a cash price equal to
such
Investor’s original investment in Summit 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
Summit 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
Summit Stock owned by the Investor selling such Summit 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, shall purchase from the Investors, and each Investor agrees to sell
to the Company or its successor, all of the Summit 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 Company Stock 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 Investor’s equity interest in
Summit, 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
Investor’s equity interest in Summit.
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 Summit Stock purchased by the Company or its successor from any Investor
pursuant to the terms of this Article shall be paid by wire transfer of
immediately available funds to 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 Summit 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 Summit Stock;
(ii) thirty (30)
Business Days following the action or occurrence that triggers the obligation
to
purchase such Summit 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 Summit 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 Summit 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 commercially reasonable 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 Section
2.4(b)(i)
or
Section
2.4(b)(ii)
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 or obligations with respect to the Sale Stock, other than as
set
forth in Section
2.5
and
Section
2.6.
Section
2.5 Tag
Along Right.
If the
Company proposes to sell or transfer control of more than a 50% interest in
Summit to any non-Affiliate of the Company in one transaction or in a series
of
related transactions (a “Tag
Along Sale”),
then
the Investors shall each have the right to participate in such Tag Along Sale
on
the following terms:
(a) The
Company shall give the Investors not less than thirty (30) days written
notice (“Tag
Along Sale Notice”)
of its
intention, describing the price offered, all other material terms and conditions
of the Tag Along Sale and, if the consideration payable pursuant to the Tag
Along Sale consists in whole or in part of consideration other than cash, such
information relating to such other consideration as any Investor may reasonably
request.
(b) In
connection with any Tag Along Sale, each Investor shall have the right, in
his
or her sole discretion, to participate in such sale on a pro rata basis and
upon
substantially the same terms and conditions, including the amount and form
of
consideration, as the Company. The Investor shall exercise the rights under
this
Section
2.5
(if at
all) within thirty (30) days after receipt of the Tag Along Sale Notice by
submitting written notice of such exercise to the Company. Upon the exercise
of
such rights, each Investor shall deliver his shares of Summit Stock to the
purchaser on substantially the same terms and conditions as the Company as
set
forth in the Tag Along Sale Notice.
(c) For
purposes of this Agreement,
(i) “Person”
means any individual, bank, corporation, partnership, limited liability company,
association, joint-stock company, business trust or unincorporated organization;
and
(ii) “Affiliate”
means a Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
Person. For purposes of this definition, “control” means the possession, direct
or indirect, of the power to direct or cause the direction of management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
Section
2.6 Right
to Compel Sale.
(a) Subject
to the provisions of this Section, if at any time the Company proposes to sell
shares of Summit Stock representing more than a 50% interest in Summit, then
the
Company shall have the right, exercisable as set forth below, to compel all
of
the Investors to sell to the third party purchaser (a “Compelled
Sale”)
all,
but not less than all, of the shares of Summit Stock then held by them. In
connection with any Compelled Sale, such Investors will receive the same
consideration payable to the Company and be on the same terms and conditions
applicable to the Company.
(b) If
the
Company elects to exercise its right to cause a Compelled Sale, it will deliver
written notice (a “Compelled
Sale Notice”)
to
each Investor, setting forth the consideration, the number of shares of Summit
Stock to be sold and describing all other material terms and conditions of
the
Compelled Sale, including the proposed closing date, which shall not be less
than thirty (30) days after the date the Compelled Sale Notice is
delivered. Each Investor will deliver the Summit Stock held by each such
Investor to the third party purchaser in accordance with the terms set forth
in
the Compelled Sale Notice upon receipt of the consideration provided for
therein.
(c) Notwithstanding
the provisions of Section
2.6(a)
and
Section
2.6(b),
and in
lieu of complying with the Compelled Sale Notice, any Investor shall have the
right to purchase from the Company all, but not less than all, of the shares
of
Summit Stock the Company desires to sell, but only on the same terms and
conditions as described in the Compelled Sale Notice, including the proposed
closing date (the “Minority
Right of First Refusal”).
If by
no later than thirty (30) days after the date the Compelled Sale Notice is
delivered, an Investor delivers to the Company a binding written commitment
from
an Investor or Investors of his or their exercise of the Minority Right of
First
Refusal and specifying all of the terms of such purchase, together with evidence
reasonably satisfactory to the Company of the financial capability to consummate
such exercise (the “Notice
of Exercise”),
then
all Investors shall be released from their obligation to participate in the
Compelled Sale, provided,
however,
that if
the exercise of the Minority Right of First Refusal described in the Notice
of
Exercise does not occur in accordance with the terms specified therein, then
all
Investors shall again be subject to the obligation to participate in the
Compelled Sale.
Section
2.7 Corporate
Reorganization.
Notwithstanding anything contained herein to the contrary, at any time after
the
Bank commences banking operations, the Company shall have the right to effect
a
reorganization of Summit and the Bank to eliminate Summit and cause all of
the
then issued and outstanding shares of Summit Stock to be exchanged on a one
for
one basis for shares of Bank Stock (the “Reorganization”).
Each
of the Organizers agrees, upon the Company’s written request, to consent to the
taking of, and to take, all reasonable and necessary actions to effect the
Reorganization. Upon the effective date of any Reorganization, and with respect
to actions, obligations, events or circumstances that will occur, are intended
to occur or may occur thereafter:
(a) all
of
the rights and obligations applicable to the holders of Summit Stock shall
be
applicable to the holders of Bank Stock; and
(b) all
references in this Agreement to Summit and the Bank together, or to Summit
alone, except where clearly inapplicable or where the reference to Summit
clearly applies only to a corporation and not a bank, shall be deemed to refer
only to the Bank and all references to Summit Stock shall be deemed to refer
and
be applicable to Bank Stock.
ARTICLE
3
Representations,
Warranties And Covenants
Section
3.1 Summit
and Bank Operations.
Each of
the Organizers agrees to use its, his or her best efforts to cause Summit and
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
Organizer and, if applicable, 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 Summit and
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.
(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 Summit Stock that were in any way inconsistent
with the information stated in this Agreement.
(c) The
Organizer is not subscribing for Summit 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 Summit 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 Summit 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 Summit or 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 and one-half (2½) 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 Summit 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 this Company’s capital stock
dated as of April 1, 2006, an executed copy of which has been deposited
with the Secretary of the Company at its registered office in Broomfield,
Colorado. 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
Company unless accompanied by evidence of compliance with the terms of such
Agreement.
(k) The
Organizer recognizes that an investment in Summit Stock involves a number of
significant risks, including, without limitation, the following
considerations:
(i) no
Federal or state agency has passed upon the Summit Stock or made any finding
or
determination as to the fairness of the investment in Summit Stock;
and
(ii) there
is
no established market for the Summit Stock and it is unlikely that a public
market for the Summit Stock will develop.
(l) The
Organizer acknowledges receipt of copies of certain financial and other
information concerning the proposed operations of Summit and 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 Summit and the Bank entails significant risks,
including, without limitation, that the organization of Summit and 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 Summit or 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 Summit, 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 Summit and 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.
Subject
to Section
2.4(d)(ii),
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 Summit 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 Summit Stock by
testamentary transfer so long as each recipient of any shares of Summit 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 Company, on
the
one hand, and by the holders of a majority of the shares of Summit Stock owned
by the Investors, on the other hand. The Bank and all of its stockholders shall
be bound by any such modification, waiver, discharge or
termination.
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 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 Summit
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,
that if
they are unable to agree upon such appointment within ten (10) days from
the conclusion of the negotiation period described in Section
4.8(a),
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
4.8(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
4.8(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
4.8(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
4.8(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
4.9 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 with respect
to
such Investor:
(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, as provided by such Investor and 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
4.10 Director
Benefits.
Directors of the Bank will be afforded the same benefits as directors of the
Company’s other financial institution subsidiaries.
Section
4.11 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 Summit Stock (the “Non-Solicitation
Period”),
such
Investor shall not, directly or indirectly, call on, sell to, solicit banking
business from or render banking 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 or entity other than
the Bank. For purposes of clarification, and not by way of limitation, this
Section
4.11
shall
not prevent any Investor from calling on, selling to, or soliciting business
from any Bank customer if the purpose of such activity is not related to any
business or service which is at that time offered by the Bank to any of its
customers.
Notwithstanding anything contained herein to the contrary, if any Investor
is a
party to an agreement with the Company, the Bank or the affiliates of either
of
them which other agreement contains similar non-solicitation provisions as
contained in this Section
4.11,
then
the Non-Solicitation Period applicable to such Investor shall be the longer
of
the Non-Solicitation Period in this Section
4.11,
or the
period contained in such other similar 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 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.]
Signatures
In
witness whereof,
this
Agreement has been executed by the undersigned Organizers on the date(s)
indicated below:
Agent President
_______________ __________________
Xxxx
X.
Xxxxxxx Xxxx
Xxxxxxxxxx
|
Signature
|
Social
Security
Number/FEIN
|
Printed
Name
|
Date
|
|
Heartland
Financial USA, Inc.
By:
Name:
Title:
|
Heartland
Financial USA, Inc.,
a
Delaware corporation
|
||
Exhibit
A
|
Name
and Address of
Subscriber
|
Number
of
Shares
|
Total
Subscription (in
Dollars)
|
Amount
of
First
Installment
|
Amount
of
Second
Installment
|
|
Heartland
Financial USA, Inc.
0000
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx 00000
|
1,200,000
|
$ 12,000,000
|
$ 12,000,000
|
$ 0
|
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
||
|
$
|
$
|
$
|
