Exhibit 10.1

Subscription and Shareholder Agreement

This Subscription and Shareholder Agreement (this “Agreement”) dated as of
September 21, 2007, is among Heartland Financial USA, Inc., a Delaware
corporation (the "Company"), and those individuals or entities who have signed
this Agreement and whose subscriptions have been accepted by the Company
(individually referred to as an "Investor" and collectively as the "Investors").
Recitals
A.           The Company, certain Investors and B-Opportunities LLC entered into
that certain Agreement to Organize dated as of August 2, 2006 (the “Initial
Agreement”), and relating to the evaluation of bank charter and acquisition
opportunities in the Minneapolis-St. Paul metropolitan area (“Market Area”).
B.           The Company and the Investors (collectively, the “Organizers”)
desire to organize a new bank under the laws of the State of Minnesota with its
main office to be located in the Market Area, to be known as “Minnesota Bank &
Trust” (the “Bank”).
C.           Pursuant to the terms of this Agreement, the Organizers intend to
provide the initial capitalization of the Bank, to take all steps necessary to
obtain authorization for and prepare the Bank to engage in the business of
banking and to effect all of the other actions contemplated by this
Agreement  (collectively, the “Transaction”).
D.           The Organizers understand that the Transaction requires the
approval of the Board of Governors of the Federal Reserve System (“Federal
Reserve”), Minnesota Department of Commerce (“Commerce”), and Federal Deposit
Insurance Corporation (“FDIC”).
E.           Upon approval of the organization of the Bank, the Organizers will
cause the Bank to issue shares of its capital stock (“Bank Stock”) to each of
the Organizers in proportion to their aggregate investment in the Bank’s
organization and capitalization and as otherwise provided in this Agreement.
F.           The Organizers desire to impose certain restrictions on the sale,
transfer or other disposition of the Bank Stock owned by the Organizers 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.
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 take all actions reasonably
required to prepare and file all regulatory applications, including, but not
limited to, applications with the Federal Reserve, Commerce and FDIC, and to use
their reasonable best efforts to obtain all approvals and authorizations as may
be deemed necessary or advisable to establish and authorize the Bank to engage
in the business of banking and otherwise to effect the Transaction.  The date
the Bank commences banking business with the public is referred to as the
“Charter Date.”  Each of the undersigned authorizes John K. Schmidt, 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
employment of  Kate Kelly as the Bank’s proposed president (the “President”)
effective July 9, 2007.  The Agent and the President, from and after the
effective date of her employment, shall be primarily responsible for: (a)
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, Commerce and FDIC (the “Applications”); (b) the preparation of
all related market studies, business plans, policies, procedures and other
documentation necessary to support the Applications; (c) the selection of the
Bank’s main office location; (d) the identification and recruitment of the
Bank’s senior management team; and (e) the identification and engagement of
legal, accounting and other professionals to assist in the preparation of the
Applications and organization of the Bank.  The President shall be compensated
in the manner provided in the Offer of Employment from the Company to the
President (the “Employment Offer”). 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 aggregate investment in the organization and initial capitalization of
the Bank shall be Sixteen Million Dollars ($16,000,000) and the Bank’s initial
capitalization shall be the amount of such investment paid in as of the Charter
Date, net of any pre-opening and organizational expenses that may not be
included in the Bank’s capitalization (the “Initial Capitalization”) and shall
be comprised of sixteen thousand (16,000) shares with a par value of ten dollars
($10) per share.  The Organizers agree to the following subscriptions for Bank
Stock and to cause the Bank to accept the same upon the completion of its
formation:
(i)  the Company agrees to subscribe for and purchase Twelve Thousand Eight
Hundred (12,800) shares of Bank Stock representing eighty percent (80%) of the
initial issuance of Bank Stock, for an aggregate investment of Twelve Million
Eight Hundred Thousand Dollars ($12,800,000); and
(ii)  the Investors severally, and not jointly, agree to subscribe for and
purchase that number of shares of Bank Stock set forth on his, her or its
signature page to this Agreement, which shall not, in the aggregate, exceed
Three Thousand Two Hundred (3,200) shares of Bank Stock or represent more than
twenty percent (20%) of the initial issuance of Bank Stock, for an aggregate
investment of up to Three Million Two Hundred Thousand Dollars ($3,200,000) (the
“Investor Subscription Pool”). The Organizers may reserve a portion of the Bank
Stock in the Investor Subscription Pool, to be allocated to Bank directors,
senior management and additional key investors, as further provided in Section
2.3 of this Agreement. If, as a result of such allocation, the entire aggregate
investment amount will not be paid or earned on or before the Charter Date, then
the number of shares initially issued from the Investor Subscription Pool may be
reduced as necessary and the un-issued portion of such shares shall be issued by
the Bank as and when paid for or earned.
(b)  Except as provided below in this Section 1.2(b), payment by an Organizer of
the aggregate cash amount for the Organizer’s subscription for 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”).  Each of the Organizers irrevocably agrees to deliver to the
Agent either cash, or check(s) made payable to “Minnesota Bank & Trust – Escrow
Account”:
(i)  In the amount of the Organizer’s First Installment concurrently with the
date of each Organizer’s execution of this Agreement; and
(ii)  In the amount of the Organizer’s Second Installment as and when required
in order to complete the organization of the Bank and satisfy the conditions or
requirements of any regulatory applications or approvals, but no later than the
Charter Date, unless the Agent and the President jointly determine additional
funds are needed prior to that time to complete the Transaction, in which case
the Agent and President may jointly request that all or a portion of each
Organizer’s Second Installment be paid in advance of such date; and in each case
as reflected in a written notice to the Organizers delivered at least ten (10)
days prior to the due date for payment of the Second Installment or any portion
thereof.
(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
(“Termination Date”), unless such time is extended by written agreement of the
Company and Investors who have subscribed for not less than a majority of the
shares in the Investor Subscription Pool, this Agreement shall terminate and
each of the Organizers shall:
(i)  receive a pro rata portion of that portion of the Subscription Amount
previously paid by the Organizers after satisfaction of all expenses incurred in
attempting to organize the Bank and complete the Transaction; 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.
Notwithstanding the foregoing, in the event the Investors do not agree to extend
the Termination Date in the manner provided above and the Charter Date has not
occurred before the originally scheduled Termination Date, then the Company
shall have the option, in its sole discretion and in lieu of terminating this
Agreement, to assume the rights, duties and obligations of the Investors with
respect to the Transaction, the Bank and the Investor Subscription Pool by
paying each of the Investors the entire Subscription Amount previously paid by
them and not otherwise reimbursed in accordance with this Section.
Section 1.3  Deposit and Pre-Opening 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 or
Agent, 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, Commerce and FDIC to effect the
Transaction;
(b)  accounting, auditing, legal, market study, 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 proposed officers or
employees of the Bank that are deemed necessary by the Agent;
(d)  expenses relating to the lease, acquisition or development of real estate
for the Bank’s main office; and
(e)  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
Subscription Amount paid by the Organizers, as provided in Section 1.2. The
Organizers further acknowledge and agree that B-Opportunities LLC has incurred
expenses on behalf of the Investors which shall not be eligible for payment from
the Organizers’ Funds but for which B-Opportunities may seek reimbursement from
the Investors who were not party to the Initial Agreement in an aggregate amount
not to exceed thirty thousand dollars ($30,000).
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.
Article 2
Restrictions on Transfer and Issuance of Bank Stock
Section 2.1  Transfer Restrictions.  Except as otherwise provided in this
Agreement, from the date of this Agreement through the seventh anniversary of
the Charter Date (the “Restriction Period”) each of the Investors hereby agrees
that he, she or it shall not: (a) directly or indirectly, sell, exchange,
assign, transfer, pledge, hypothecate, give away (by lifetime transfer) or
otherwise encumber or dispose of any Bank Stock at any time owned by him, her or
it, and (b) for Investors that are entities or trusts, issue or permit the sale,
exchange, transfer, pledge, hypothecation, gift, encumbrance or disposal of any
stock, membership interests, partnership interests, or other beneficial interest
in such entity or trust, or otherwise effect a change in the individual or
individuals that control such entity or trust at the time the entity or trust
became an Investor, whether in their capacity as trustee, general partner,
manager or otherwise (each act or occurrence described in (a) or (b)
individually and collectively a “Transfer”) without the express prior written
consent of the Company, provided, however, that the foregoing shall not prohibit
the Transfer of Bank Stock without prior written consent of the Company by an
Investor that is not an entity or trust, subject to the restrictions, terms and
conditions of this Agreement, to any "Permitted Transferee" which, as to each
Investor shall mean an entity or trust which is and will continue to be for so
long as it holds Bank Stock: (a) controlled by such Investor or by such Investor
and one or more other Investors, and (b) owned by or for the benefit of such
Investor(s), the parents, spouse, lineal descendants or siblings of such
Investor(s), and/or an entity or trust that itself satisfies the foregoing
criteria; provided that each recipient of any Bank Stock Transferred pursuant to
this paragraph is or becomes a party to this Agreement and agrees to be bound by
its terms, and provided further that for Investors that are entities or trusts,
that no prior written consent is required for a Transfer of any stock,
membership interests, partnership interests, or other beneficial interest in
such entity or trust that would not effect a change in the individual or
individuals that control such entity or trust at the time the entity or trust
became an Investor.
Section 2.2  Involuntary Transfers. If there is an involuntary Transfer or
proposed involuntary Transfer of an Investor’s Bank Stock (e.g. through divorce,
bankruptcy, etc.)  at any time (an “Involuntary Transfer”), then each of the
Investor, the Investor’s creditor, trustee, or other person or entity in
possession of the power of sale over any Bank Stock, and the involuntary
transferee or transferees of any Bank Stock, as the case may be, shall give the
Company at least sixty (60) days prior written notice of any proposed, pending,
or threatened Transfer, or, with respect to an Involuntary Transfer that does
not permit the delivery of such prior notice, as soon as permitted after the
Investor has knowledge of an actual or proposed Involuntary Transfer. Upon
receipt of such notice, the Company shall have the option, in its sole
discretion, to purchase from the Investor, any actual or intended transferee, or
person or entity with the power of sale, any Bank Stock subject to the actual or
proposed Involuntary Transfer, in the manner provided in Article 3 of this
Agreement. In the event the Company fails to exercise its option under this
Section and Article 3, then the Investor, intended transferee or person or
entity with the power of sale for such Bank Stock shall be entitled to all of
the benefits and subject to all of the restrictions applicable to Investors and
their Bank Stock, as set forth in this Agreement.
Section 2.3  Other Additional Capital.
(a)  The Organizers agree that the Bank may, from time to time, issue additional
shares of Bank Stock to senior management and directors of the Bank, either as
compensation, or in exchange for the investment of additional capital or both
(“Management Stock”), or to other individuals that the Board of Directors of the
Bank (the “Board”) determines are likely to make a material contribution to the
growth and successful operation of the Bank in exchange for additional capital
(“Key Investor Stock”), provided that:
(i)  from and after the date any Management Stock or Key Investor Stock is
issued, such shares shall be deemed Bank Stock covered by this Agreement and
each new investor in shares of Bank Stock shall execute and become an Investor
under this Agreement;
(ii)  no more than Five Hundred Thousand Dollars ($500,000) worth of Management
Stock and Key Investor Stock will be so issued without the prior written consent
of a majority of the Investors;
(iii)  except as otherwise provided in this Agreement, the value or price used
for determining the amount of compensation or the investment required for any
issuance of Management Stock or Key Investor Stock authorized by the Organizers
on or before the Charter Date shall be the same per share price applicable to
the Organizers and thereafter shall be as determined by the Board, based on such
factors as the Board may deem reasonable and appropriate, including, but not
limited to the book value and market value of Bank Stock as well as the value of
the anticipated contributions of the officer, director or key investor to
receive the new shares, but in no event at a value or for a price less than book
value; and
(iv)  the Company shall be entitled to purchase that number of additional shares
of Bank Stock necessary to maintain the Company’s percentage ownership of all
outstanding shares of Bank Stock at eighty percent (80%) and at the same per
share price applicable to the proposed issuance of Management Stock or Key
Investor Stock.
(b)  The Organizers agree that, except as otherwise provided in this Section
2.3, any additional capital needed by the Bank may be contributed by the Company
in return for the issuance of additional Bank Stock, provided, however, that:
(i)  the price per share shall be as determined by the Board, based on such
factors as the Board may deem reasonable and appropriate, including, but not
limited to the book value and market value of Bank Stock, but in no event at a
price less than book value;
(ii)  prior to any proposed issuance of additional Bank Stock, the Company shall
allow the Investors the right to purchase additional Bank Stock up to that
number of shares that would be necessary to allow the Investors to maintain the
same percentage ownership of outstanding Bank Stock they enjoyed prior to the
issuance of any additional Bank Stock;
(iii)  any right of an Investor to purchase any additional shares of Bank Stock
pursuant to the provisions of this Section shall not be transferable or
assignable (except as provided in Section 2.1) 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;
(iv)  any purchase of additional Bank Stock by an Investor pursuant to the terms
of this Section must be made on the same terms and conditions as the Company;
and
(v)  any such offer to purchase additional Bank Stock shall be made to all the
Investors in compliance with applicable laws and regulations.
Except as expressly provided in this Section or as required by applicable law,
each of the Investors hereby acknowledges that they shall have no rights to
subscribe for additional Bank Stock.
Article 3
Repurchase Options
Section 3.1  Repurchase Option Following Fifth Anniversary.
(a)  Beginning on the fifth anniversary of the Charter Date (the “Fifth
Anniversary”) and as of the end of each calendar quarter thereafter, the Company
shall have the option, but is not obligated to, purchase from the Investors, and
each of the Investors agrees, upon exercise of such option, to sell to the
Company, all Bank Stock then owned by the Investors on the terms set forth in
this Section (“Company Option”).  The Company may exercise the Company Option by
delivering written notice to all Investors no later than thirty (30) days after
the later of the Fifth Anniversary or the end of the most recent calendar
quarter, stating that the Company Option is being exercised. 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 Bank Stock as of the later of the Fifth Anniversary or the
end of the most recent calendar quarter (“Appraisal Date”), as determined by
Alex Sheshunoff 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”). In no event shall the Appraised Value be an amount that
is less than the Floor (defined below) or greater than the Cap (defined below).
For purposes of this Agreement, the “Floor” shall be an amount equal to a six
percent (6%) compounded annual return on the Investors’ investment, provided
that in the event the Company Option is not exercised as of Fifth Anniversary,
the compounded annual rate of return shall be Prime plus two percent (2%) for
the period following the Fifth Anniversary.  For purposes of this Agreement, the
“Cap” shall be: (x) an amount equal to 3.0 times the tangible book value of Bank
Stock as of the Appraisal Date if the book value of the Bank’s total assets is
two hundred million ($200,000,000) or more, the Bank has a net profit for the
prior twelve month period or on average over the prior two years, and the Bank
is not subject to a regulatory enforcement order, civil money penalty notice,
memorandum of understanding or similar enforcement action, or (y) in all other
circumstances, an amount equal to 2.25 times the tangible value of Bank Stock as
of the Appraisal Date.  For purposes of this Section: (i) the Appraised Value of
Bank Stock shall be determined as if 100% of the Bank were being sold; (ii) if
the value of the Bank or Bank Stock is presented as a range, the Appraised Value
shall be the mid-point of such range; (iii) the Bank’s net income and book value
shall be adjusted on an after tax basis to exclude any expenses for the
management performance pool, as described in the President’s Employment Offer
under “Additional Bonus”, provided that the aggregate Repurchase Price shall
also be reduced by the amount of such excluded after tax expenses unless the
Repurchase Price is equal to the Floor or Cap; and (iv) if corporate overhead is
allocated by the Company to the Bank in a manner which is inconsistent with
established company methodology for allocations to its affiliates and
subsidiaries, then the Bank’s net income and book value will be adjusted on an
after tax basis to reflect a corporate overhead allocation consistent with such
methodology.
(c)  The Repurchase Price shall be paid to Investors (pro rata based upon their
respective percentage ownership of Bank Stock) in two parts:
(i)  the first part of the Repurchase Price, which shall be equal to each
Investor’s total investment as reflected on such Investor’s signature page to
this Agreement, 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 pro rata share of the remaining balance of the total Repurchase
Price, shall be paid to each 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 purposes of this
Agreement, 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 3.2  Other Sales to or Purchases by the Company. At any time after the
date hereof, an Investor may offer to sell all or part of his, her or its Bank
Stock to the Company and, upon acceptance of such offer by the Company in its
sole discretion, such Bank Stock may be sold to the Company, for a purchase
price of not less than such Investor’s total investment as reflected on such
Investor’s signature page to this Agreement, plus a six percent (6%) annually
compounded rate of return on such investment, and on such other terms and
conditions as such Investor and the Company may mutually agree. If at any time
after the date hereof, any Bank Stock of an Investor is subject to an
Involuntary Transfer, then the Company shall have the option, in its sole
discretion, to purchase such Bank Stock for a purchase price equal to such
Investor’s total investment as reflected on such Investor’s signature page to
this Agreement, plus a six percent (6%) annually compounded rate of return on
such investment (the “Involuntary Transfer Option”). The Company’s Involuntary
Transfer Option may be exercised by delivery of notice to the Investor, intended
transferee or person or entity with the power of sale of such Bank Stock within
thirty (30) days after the Company receives actual notice of a proposed,
pending, or actual Involuntary Transfer.  Notwithstanding the foregoing, an
Investor shall first offer all, but not less than all, of his, her or its Bank
Stock to the other Investors on a pro rata basis provided that such sale or
transfer lawfully is exempt from registration under the Act, as hereinafter
defined, and state securities laws.
Section 3.3  Repurchase Upon Company Change of Control.  If at any time after
the date hereof there is a proposed “Change of Control” (as defined below), then
immediately prior to such Change of Control, either (a) 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 Bank Stock then owned by the
Investors at a price per share equal to the Control Premium Price (defined
below) or, (b) the Investors may elect to exchange their shares of Bank Stock
for the same consideration to be received by holders of common stock of the
Company in the transaction comprising the Change of Control, on an as if
converted basis using a per share exchange ratio equal to the book value per
share of Bank Stock divided by the book value per share of Company common stock
as of the end of the most recent calendar quarter.  For purposes of this
Section, a “Change of Control” shall mean a transaction resulting in 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 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 Investor’s equity interest in the Bank. In
the event the consideration to be paid by the Company Acquirer is not comprised
entirely of cash, then, for purposes of determining the Control Premium Price,
any non-cash consideration shall be valued as agreed to by the parties or,
absent such an agreement, the value provided in the applicable acquisition
agreement or, if no value is provided, the VWAP of any publicly traded
securities or the appraised fair market value of any other non-cash
consideration. For purposes of this section, VWAP shall mean the volume weighted
average price per share of such securities, rounded to the nearest one-hundredth
of a cent, during the ninety (90) days prior to repurchase by the Company.
Section 3.4  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 or its successor from
any Investor pursuant to the terms of this Article 3 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 3.
(b)  Except as otherwise specifically provided by the terms of this Article 3,
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 such 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 3,
at the Closing, 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 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 commercially
reasonable best efforts to obtain as soon as practicable, provided, however,
that if the Company is unable to obtain such regulatory approvals within one
hundred twenty (120) days after the last date provided in Section 3.4(b)(i) or
Section 3.4(b)(ii), or such longer period of time as may be mutually agreed upon
by the Company and the sellers of the Sale Stock, 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 3.5 and Section 3.6.
Section 3.5  Tag Along Right.  If the Company proposes to sell or transfer
control of more than a fifty percent (50%) interest in the Bank 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, her or its 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, with respect to all, but not less
than all, of such Investor’s Bank Stock.  The Investor shall exercise the rights
under this Section 3.5 (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, her
or its Bank 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 3.6  Right to Compel Sale.
(a)  Subject to the provisions of this Section, if at any time the Company
proposes to sell shares of Bank Stock representing more than a 50% interest in
the Bank, 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 Bank 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 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 Bank 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 3.6(a) and Section 3.6(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
Bank 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 his, her or its binding written commitment to
exercise this 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. If more than one Investor
delivers Notice of Exercise, as required by this Section, then such Investors’
rights to purchase the shares of Bank Stock the Company desires to sell shall be
allocated among such Investors, pro-rata based on their ownership of Bank Stock
prior to such transaction.
Article 4
Representations, Warranties And Covenants
Section 4.1  Bank and 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 in the Market Area,
provided, however, that no offer will be made for any such institution without
the prior consent of the Company.
Section 4.2  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 the Bank concerning the Transaction and investment in Bank Stock, 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.
Such information and future oral and written statements of the Organizers, the
Company, the Bank or their management may contain projections or forward-looking
statements with respect to the Bank’s financial condition, results of
operations, plans, objectives, future performance and business. Projections and
forward-looking statements, which may be based upon beliefs, expectations and
assumptions of the Organizers, the Company, the Bank or their management and on
information currently available to management, are generally identifiable by the
use of words such as believe, expect, anticipate, plan, intend, estimate, may,
will, would, could, should or similar expressions. Additionally, all such
information, including projections and other forward-looking statements, speak
only as of the date they are made, and the Organizers, the Company, the Bank or
their management undertake no obligation to update any statement in light of new
information or future events. A number of factors, many of which are beyond the
ability of the Organizers, the Company, the Bank or their management to control
or predict, could cause actual results to differ materially from those in its
forward-looking statements. These factors include, among others, the following:
(i) the strength of the local and national economy; (ii) the economic impact of
past and any future terrorist threats and attacks and any acts of war; (iii)
changes in state and federal laws, regulations and governmental policies
concerning the Bank's general business; (iv) changes in interest rates and
prepayment rates of the Bank's assets; (v) deposit and loan originations and
growth; (vi) Bank asset quality and provisions for loan losses; (vii)
non-interest expense and overhead; (viii) increased competition in the financial
services sector and the inability to attract new customers; (ix) changes in
technology and the ability to develop and maintain secure and reliable
electronic systems; (x) the loss of key executives or employees; (xi) changes in
consumer spending; (xii) unexpected results of acquisitions; (xiii) unexpected
outcomes of new litigation involving the Bank; and (xiv) changes in accounting
policies and practices. Each Organizer acknowledges that these risks and
uncertainties should be considered in evaluating projections and forward-looking
statements and undue reliance should not be placed on such projections or
statements.
(b)  Each Investor acknowledges that he, she or it has received and had an
opportunity to review the Company’s most recent Form 10-K in connection with
such Investor’s agreement to accept Company Stock upon exercise of the Company
Option, to the extent and in the manner provided in Section 3.1.  No offering
memorandum, prospectus, private placement memorandum or financial projections
have been prepared and provided to any Organizer with respect to their
investment in Bank Stock or the Transaction and 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 is in any way inconsistent with the
information stated in this Agreement. The Organizer is investing in a de novo
bank to be organized subsequent to his or her or its investment and with no
financial or operating history, and that the organization and operation of the
Bank therefore entails significant risks.
(c)  The Organizer is not investing 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)  Each 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, understands the purchase of the Bank Stock is a
long-term investment and has no need for liquidity in such investment, is in a
financial position to hold the investment in Bank Stock for an indefinite period
of time, 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)  Each Organizer that is also an Investor has reviewed with the Organizer’s
own tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement, and have and
will rely solely on such advisors and not on any statements or representations
of the Company or any of its agents.  The Organizer understands that the
Organizer (and not the Company) shall be responsible for the Organizer’s own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Agreement.
(i)  Each Organizer that is also an Investor represents and warrants that he,
she or it is a bona fide resident of, is domiciled in and received the offer and
made the decision to invest in the Bank Stock in the state set forth on such
Organizer’s signature page below under “Addresses” and that the shares are being
purchased in the Organizer’s name solely for his, her or its own beneficial
interest and not as nominee for, or on behalf of, or for the beneficial interest
of, or with the intention to transfer to, any other person, trust or
organization.
(j)  Each 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.
(k)  Each Organizer that is also an Investor represents and warrants that none
of the funds the Organizer will use to purchase Bank Stock will be borrowed
funds.
(l)  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;
(ii)  the shares of Bank Stock have not been registered under the Securities Act
of 1933, as amended (the “Act”), or under the securities laws of any state;
(iii)  there is no established market for the Bank Stock and it is unlikely that
a public market for the Bank Stock will develop; and
(iv)  the transferability of shares of Bank Stock will be further restricted and
governed by this Agreement.
(m)  EACH ORGANIZER THAT IS AN INVESTOR ACKNOWLEDGES THAT THE INVESTMENT
REPRESENTATIONS AND DECLARATIONS MADE ON SUCH ORGANIZER’S SIGNATURE PAGE TO THIS
AGREEMENT ARE REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE ACT AND STATE
LAWS BEING RELIED ON BY THE BANK WITH RESPECT TO THE OFFER AND SALE OF THE
SECURITIES, ARE TRUE AND CORRECT AS OF THE DATE OF HIS, HER OR ITS EXECUTION OF
THIS AGREEMENT AND WILL BE TRUE AND CORRECT AS OF THE CHARTER DATE. ALL OF SUCH
INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL BE REVIEWED ONLY BY THE COMPANY
AND ITS COUNSEL. EACH ORGANIZER THAT IS AN INVESTOR AGREES TO FURNISH ANY
ADDITIONAL INFORMATION WHICH THE COMPANY AND ITS COUNSEL DEEM NECESSARY TO
VERIFY THE RESPONSES SET FORTH BELOW.
(n)  The Organizer acknowledges that a legend will be placed on each certificate
representing the Bank Stock substantially as follows:
The Securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the “Act”), and have not been registered
under any state securities laws.  These Securities may not be sold, offered for
sale or transferred without first obtaining (i) an opinion of counsel
satisfactory to the Bank that such sale or transfer lawfully is exempt from
registration under the Act and under the applicable state securities laws, or
(ii) such registration.
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 Subscription and Shareholder Agreement among
Heartland Financial USA, Inc. and certain other holders of this Bank’s capital
stock dated as of ________ __, 200___, an executed copy of which has been
deposited with the Secretary of the Bank at its registered office in
____________, Minnesota.  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.
(o)  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 comply with
any and all laws and ordinances to which the Bank is subject.
(p)  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 and as of the Charter Date,
as if made on and as of such dates, and shall survive such date.
Section 4.3  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 investment in Bank Stock 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 and investment in Bank Stock.
Section 4.4  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 the Agent or President  may deem appropriate, and each of the
undersigned hereby agrees to cooperate fully with the Agent and the President in
this regard.
Section 4.5  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.
Article 5
Miscellaneous
Section 5.1  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 those Investors subscribing
for or holding a majority of the shares of Bank Stock in the Investor
Subscription Pool, on the other hand.  The Bank and all of its Organizers shall
be bound by any such modification, waiver, discharge or termination.
Section 5.2  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 each Organizer’s signature page 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 5.3  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 5.4  Entire Agreement.  This Agreement contains the entire agreement of
the parties and supersedes all prior oral or written agreements or
understandings with respect to the subject matter hereof, including but not
limited to the Initial Agreement, and there are no representations, covenants or
other agreements except as stated or referred to herein.
Section 5.5  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 5.6  Assignability.  This Agreement is not transferable or assignable by
any of the undersigned, except as otherwise specifically provided in Articles 2
and 3.
Section 5.7  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, subject to Section
5.8, 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 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 5.8  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 subscribing for or holding a
majority of the shares of Bank Stock in the Investor Subscription Pool 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 5.8(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 5.8(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 5.8(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 5.8(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 5.8(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 5.9  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 5.10  Director Benefits.  To the extent permissible under applicable
state and federal laws and regulations, directors of the Bank may be afforded
directors fees and benefits consistent with those generally provided to
directors of the Company’s other financial institution subsidiaries.
Section 5.11  Non-Compete, Solicitation of Customers or Employees.
(a)  In addition to such duties as may be applicable to Organizers serving as
officers or directors of the Bank, each of the Organizers agrees that he, she or
it will use their best efforts to promote the interests of the Bank in the
Market Area and consistent with the business plans and strategies as may be
adopted by the Bank from time to time, but in each case only to the extent
permitted by applicable laws and regulations.  Each of the Organizers further
agrees that he, she or it will not, without the prior written consent of all of
the holders of Bank Stock, From the date of this Agreement until twelve (12)
months after such Organizer has sold all of his, her or its Bank
Stock,  directly or indirectly (i) own, manage, operate, control, or finance a
Financial Institution (as defined below) to provide community banking services
within the Market Area; (ii) serving as the agent, broker or representative of,
or otherwise assisting, any person or entity in establishing or acquiring a
Financial Institution to provide community banking services within the Market
Area; (iii) directly or indirectly serve as an employee, officer or director of
a Financial Institution providing community banking services within the Market
Area; or (iv) provide consulting services relating to community banking services
relative to the Market area for a Financial Institution, either currently
located within the Market Area or attempting to enter the Market Area.
For purposes of the foregoing, a “Financial Institution” means a bank, savings
and loan association, credit union or similar financial institution, or any
person, firm, partnership, corporation, trust or other entity which owns or
operates any of the foregoing.  Notwithstanding anything contained herein to the
contrary, and to eliminate any doubt, the provisions of this Agreement shall not
prohibit each of the Organizers from continuing to conduct their current
businesses, nor shall it prohibit the Company or any of its current subsidiaries
and affiliates from continuing to engage in banking and lending activities
within the Market Area.  Further, nothing contained in this Section 5.11 shall
be deemed to prohibit the ownership by an Investor of up to two percent (2%) of
the stock of a publicly-traded Financial Institution.
(b)  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,
her or its Bank 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 5.11 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 5.11, then the Non-Solicitation Period
applicable to such Investor shall be the longer of the Non-Solicitation Period
in this Section 5.11, or the period contained in such other similar agreement.
Section 5.12  Affiliate Services.  The Organizers acknowledge and agree that the
Bank will, from time to time, purchase certain product, operations, compliance,
accounting and other standard support and services from the Company and its
affiliates and that the Company determines are best provided on a pooled or
combined basis, subject to applicable affiliate transaction regulations and
provided that the charges for such support and services is allocated among the
Bank and the Company’s other subsidiaries based upon the method or allocation
used by the Company for its other subsidiaries.
Section 5.13  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 pages.]

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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
____________________                               
_______________________             
John K.
Schmidt                                                                 Catherine
T. Kelly

Company
 
Heartland Financial USA, Inc.
 
By _________________________________
  Its ________________________________

Address:

 
[Investor Signatures on Following Pages]

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INVESTOR SIGNATURES
By signing where indicated below and subject to acceptance by the Company, I/we
hereby agree to the terms and conditions of the Subscription and Shareholder
Agreement, dated as of _________ ___, 2007, by and among Heartland Financial
USA, Inc. and such other investors as may enter into such agreement from time to
time, and relating to the organization and capitalization of the Bank (the
“Agreement”) and hereby subscribe for the purchase of ___ shares of Bank Stock,
for an aggregate investment of ___________________________ Dollars ($_________).

Pursuant to the terms and conditions of the Agreement, I/we further acknowledge,
represent and warrant to the Organizers that:

(A)
The manner in which title to Bank Stock is to be held is as:

 

Individual

Joint Tenants with Right of

 

Trust
Survivorship

                                                                                         
         Family Limited Partnership

(B)
The name in which title is to be held (Please Print—the certificates will be
issued in this name):

 
(C)
The Address of my/our domicile and bona fide residence is :

            ________________________
Street
 
            ________________________
                City, State and Zip Code

(D)
My/our Social Security or Tax ID Numbers (Both if grantor trust or partnership)
is/are:
 

 
(E)           Accredited Status.  I/we further represent and warrant as follows
(CHECK AS APPLICABLE):
 
ACCREDITED INVESTOR

______  (i)
The undersigned is an individual with a net worth, or a joint net worth together
with his or her spouse, in excess of $1,000,000.  (In calculating net worth, you
may include equity in personal property and real estate, including your
principal residence, cash, short term investments, stock and securities.  Equity
in personal property and real estate should be based on the fair market value of
such property minus debt secured by such property.)

______  (ii)
The undersigned is an individual that had an individual income in excess of
$200,000 in each of the prior two years and reasonably expects an income in
excess of $200,000 in the current year.
 

______  (iii)
The undersigned is an individual that had with his/her spouse joint income in
excess of $300,000 in each of the prior two years and reasonably expects joint
income in excess of $300,000 in the current year.

______  (iv)
The undersigned is an actual or proposed director or executive officer of the
Bank.

______  (v)
The undersigned, if other than an individual, is an entity all of whose equity
owners meet one of the tests set forth in (i) through (iv) above.  (If relying
on this category alone, each equity owner must complete a separate copy of this
Agreement.)

NON-ACCREDITED INVESTOR

______  (vi)
The undersigned does not meet any of the financial qualifications set forth in
(i)-(v) above, but represents, either alone or with its purchaser
representative, that the undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in Bank Stock.  If relying on a purchaser
representative, please provide name, address and telephone number:

 
(F)
Signatures:

 
(i)
Individual Signatures (If you are purchasing as joint tenants or tenants in
common, both parties must sign):

 
 
(ii)
Trust or Family Limited Partnership

 
 (Name of entity)

By  ______________________                                                              
     Its ____________________                                                               

 
Date:   _____________ , 2007

Accepted by Heartland Financial USA, Inc., as of the date indicated above

Heartland Financial USA, Inc.

 
By ______________________                                                     
 Its  _____________________