PROMISSORY NOTE
Principal
$15,000,000.00
Loan Date
09-28-2010
Maturity
09-27-2011
Loan No
55120-0001
Call / Coll
9A00 / AA
Account
00000160370
Officer
00456
Initials
References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing “***” has been omitted due to text length limitations.
Borrower: Heartland Financial USA, Inc.
Lender: Bankers Trust Company
1398 Central Avenue
453 7th Street
Dubuque, IA 52004
P.O. Box 897
 
Des Moines, IA 50304-0897
 
(515)245-2863

 
Principal Amount: $15,000,000.00
Date of Note: September 28, 2010

PROMISE TO PAY. Heartland Financial USA, Inc. (“Borrower”) promised to pay
Bankers Trust Company (“Lender”), or order, in lawful money of the United States
of America, the principal amount of Fifteen Million & 00/100 ($15,000,000.00) or
so much as may be outstanding, together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on September 27, 2011. In addition, Borrower
will pay regular quarterly payments of all accrued unpaid interest due as of
each payment date, beginning December 28, 2010, with all subsequent interest
payments to be due on the same day of each quarter after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
unpaid collection costs; then to any late charges; then to any accrued unpaid
interest; and then to principal. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Base Rate on
Corporate Loans posted by at least 70% of the 10 largest U.S. banks known as the
Wall Street Journal U.S. prime Rate (the “Index”). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current index rate upon
Borrower's request. The interest rate change will not occur more often than each
day. Borrower understands that Lender may make loans based on other rates as
well. The Index currently is 3.250% per annum. Interest on the unpaid principal
balance of this Note will be calculated as described in the “INTEREST
CALCULATION METHOD” paragraph using a rate equal to the Index, adjust if
necessary for any minimum and maximum rate limitation described below, resulting
in an initial rate of 4.500% per annum based on a year of 360 days. NOTICE:
Under no circumstances will the interest rate on this Note be less than 4.500%
per annum or more than the maximum rate allowed by applicable law.
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. All interest payable under
this Note is computed using this method.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, early payments will reduce the principal
balance due. Borrower agrees not to send Lender payments marked “paid in full”,
“without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any check or other
payment instrument that indicated that the payment constitutes “payment in full”
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to:
Bankers Trust Company, 453 7th Street, P.O. Box 897, Des Moines, IA 50304-0897.
LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the interest rate on this Note shall

 

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be increased to 21.000% per annum based on a year of 360 days. However, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law.
DEFAULT. Each of the following shall constitute an event of default (“Event of
Default”) under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation covenant
or condition contained in any other agreement between Lender and Borrower.
False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceedings under any bankruptcy or
insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This included a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any guaranty of the indebtedness evidenced by this Note.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of this
Note is Impaired.
Insecurity. Lender in good faith believe itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note end all accrued unpaid interest immediately due, and
then Borrower will pay that amount.
ATTORNEY'S FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
without limitation all attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals. If not prohibited by law, Borrower also will pay any
court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of Iowa
without regard to its conflicts of law provisions. This Note has been accepted
by Lender in the State of Iowa.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Polk County, State of Iowa.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves the
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower hold
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorized Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
debt against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
COLLATERAL. This loan is unsecured.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need

 

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not, require that all oral requests be confirmed in writing. Borrower agrees to
be liable for all sums either: (A) advanced in accordance with the instruction
of any authorized person or (B) credited to any of Borrower's accounts with
Lender. The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Lender's internal records,
including daily computer print-outs. Lender will have no obligation to advance
funds under this Note if: (A) Borrower or any guarantor is in default under the
terms of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (D)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (E) Lender in good faith believes itself
insecure.
PURPOSE OF LOAN. The specific purpose of this loan is: Working Capital.
ADDITIONAL TERMS. This credit is subject to the terms and conditions of a
Commitment letter dated September 11, 2009.
PRIOR NOTE. A Promissory Note dated September 28, 2009 in the original principal
amount of $15,000,000.00 to mature on September 27, 2010.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Borrower may notify Lender if Lender reports any inaccurate information about
Borrower's account(s) to a consumer reporting agency. Borrower's written notice
describing the specific inaccuracy(ies) should be sent to Lender at the
following address: Bankers Trust Company 453 7th Street Des Moines, IA 50309.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE AND
ALL OTHER DOCUMENTS RELATING TO THIS DEBT.
 
BORROWER:
HEARTLAND FINANCIAL USA, INC.
 
By: /s/ John K. Schmidt
John K. Schmidt, EVP, CFO of Heartland Financial USA, Inc.
 

 

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BANKER'S TRUST LOGO INSERTED
JOHN RUAN IV
ASSISTANT VICE PRESIDENT
FINANCIAL INSTITUTIONS
PHONE: (515)245-2444
FAX: (515)245-5216
MOBILE: (515)473-4152
E-MAIL: JRUAN@BANKERSTRUST.COM

 
September 11, 2009
 
Mr. Kenneth J. Erickson
EVP, Chief Credit Officer
Heartland Financial USA, Inc.
1398 Central Avenue
PO BOX 778
Dubuque, IA 52004-0778
 
RE: LOAN COMMITMENT
 
Dear Mr. Erickson:
I am pleased to advise you that Bankers Trust Company, N.A, ("Bank") hereby
commits to lend Heartland Financial USA, Inc. "Borrower") up to $15,000,000.00
("Maximum Credit") subject to the terms and conditions described below.
 
BORROWER:
Heartland Financial USA, Inc.
 
MAXIMUM CREDIT:
$15,000,000.00
 
LOAN AMOUNT/TYPE:
$15,000,000.00 revolving line of credit.
 
INTEREST RATE/TERM/AMORTIZATION:
Wall Street Journal Prime Lending Rate (presently 3.25%), with an interest rate
floor of 4.50% for the life of the loan. The maturity date will be 364 days from
the day of closing, subject to satisfactory compliance with all financial
covenants. Interest payments will be due on a quarterly basis.
 
If the Index Rate is redefined or becomes unavailable, then Bank may select
another index which is substantially similar.
 
PREPAYMENT:
Prepayment of the principal balance is allowed at any time.
 
GUARANTORS:
None.
 
COLLATERAL:
The Loan will be on an unsecured basis.
 
 

 

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LOAN DOCUMENTATION FEE:
Bankers Trust will require a loan documentation fee of $500 on this transaction.
 
USE OF PROCEEDS:
Borrower shall use the proceeds for the following purpose(s): (1) Provide
funding for loans made by Citizens Finance, a wholly owned subsidiary of
borrower. (2) Future acquisitions, stock repurchases, and any other needs in the
normal course of business activities. Proceeds used under purpose (2) shall
require disclosure by borrower to Bankers Trust of amount and specific purpose.
 
ADDITIONAL RELATIONSHIPS:
Expectation of a DDA and Fed Funds relationship with Bankers Trust.
 
FINANCIAL COVENANTS:
 
Capital: Maintain regulatory capital of Heartland Financial USA, Inc at well
capitalized levels, measured quarterly. Citizens Finance to maintain a minimum
Capital Ratio (tangible net worth to total assets) of 14%, measured quarterly.
 
Net Charge-Offs: Citizens Finance Co. will maintain a Net Charge-Off Ratio (net
charge-offs to average net loans) not to exceed 5.00% based upon the trailing 4
quarters, to be measured quarterly. Should the company be out of compliance in
any given quarter they agree to either return to compliance by the following
quarter or reach agreement with Bank for an appropriate modification to the
covenant.
 
Compliance: Inform the Bank of any material regulatory non-compliance or written
agreement concerning Heartland Financial USA, Inc., or any of its subsidiaries.
 
Compliance Certification: Within thirty (30) days after the end of each quarter
Borrower will provide a certificate signed by the chief financial officer
certifying that the representations and warranties set forth in any future loan
documentation are true and correct as of the date of the certificate, that no
Event of Default exists under any future loan documentation, and performance is
in compliance with any covenants established within any future loan
documentation.
 
OTHER TERMS AND CONDITIONS:
 
Representations and Warranties: Certain representations and warranties would be
required from Borrower in accordance with a Loan Agreement or Loan Commitment
letter which would be required to be executed.
 
Sale of Company: The Loans shall be due and payable in full in the event
Borrower merges or consolidates with any Company or enterprise, or otherwise
disposes of a substantial portion (as determined by Bank) of its assets or
properties.
 
Financial Reporting Requirements: Borrower shall be required to submit to Bank
internally prepared financial statements for Citizens Finance quarterly, and
such other information as the Bank may request from time to time.
 
Occupational Safety Laws: Borrower shall not be in violation in any material
manner of any federal, state, county or city statutes, orders, rules or
regulations pertaining to occupational safety.
 
ERISA Compliance: Borrower shall meet its minimum funding requirements under the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, with
respect to any employee benefit plan

 

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or other class of benefit plan, which the Pension Benefit Guaranty Corporation,
established under ERlSA (PBGC) has elected to insure, in either case, whether
now in existence or hereafter instituted by the Borrower.
 
Misrepresentation: Any representation or warranty made by Borrower which proves
to be incorrect or untrue, or any financial information, schedule, statement,
report or writing furnished by Borrower to Bank is untrue in any material aspect
shall render this Commitment invalid in the Bank's sole discretion.
 
Loan Documents: This Commitment is not intended to be a complete statement of
all terms and conditions to be contained in the loan documentation which would
be required, and no loan or advance would be made to Borrower unless all of the
loan documentation is executed and delivered in form and content acceptable to
the Bank.
 
Expiration: This Commitment shall remain in effect until, and shall expire as
of, the close of the Bank's business on November 30,2009.
 
Closing: This Commitment shall be deemed expired and void if, Loan Closing does
not occur by the close of Bank's business on November 30,2009.
 
Assignment Prohibited: This Commitment is tendered only to Borrower and is not
available to any other party. The filing of any bankruptcy petition by or
against Borrower would render this Commitment null and void.
 
Termination of Loan Commitment: This commitment may be terminated, in the sole
discretion of Bank (a) if Bank determines that any financial information, or any
representations or warranties, or any other information given by Borrower, or
any party on their behalf, is materially misleading or inaccurate, or (b) upon
the occurrence of a material adverse change in the financial condition of
Borrower.
 
Confidentiality: The terms and provisions of this Commitment shall be
confidential between the
stockholders of Borrower and the Bank. The contents and terms of this Commitment
shall not be disclosed orally or in writing to any parties other than the
stockholders or the attorney or accountant for Borrower.
 
Documents to be delivered prior to Closing: If Borrower is agreeable to the
proposed terms and conditions, the following documents are required for review
by the Bank prior to closing:
 
A.    
Certified Copies of Articles of Incorporation and Bylaws.

 
IMPORTANT. READ BEFORE SIGNING, THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN AGREEMENT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
 
Sincerely,
 
/s/ JOHN RUAN IV
 
John Ruan IV
Assistant Vice President
 

 

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ACCEPTANCE
 
The above Loan Commitment is accepted by Borrower on this 18th day of September
, 2009.
 
HEARTLAND FINANCIAL USA, INC. (BORROWER)
 
By: /s/ Kenneth J. Erickson
 
Its: EVP, CCO__________