Document:

Exhibit 4.2(d)

                      AMENDMENT NO. 3 TO THE THIRD AMENDED
                  AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                          EQUITY INNS PARTNERSHIP, L.P.

         This Amendment No. 3 (this "Amendment") to the Third Amended and
Restated Agreement of Limited Partnership of Equity Inns Partnership, L.P. dated
June 25, 1997 (the "Partnership Agreement") is entered into as of February 15,
2006, by and among Equity Inns, Inc., a Tennessee corporation (the
"Corporation"), Equity Inns Trust, a Maryland real estate investment trust (the
"General Partner"), and the limited partners (the "Limited Partners") of Equity
Inns Partnership, L.P. (the "Partnership"). All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Partnership Agreement.

         WHEREAS, the Corporation, which is the sole shareholder of the General
Partner, on even date herewith, has issued 2,400,000 shares of its 8.00% Series
C Cumulative Preferred Stock, $.01 par value per share, having a liquidation
preference equivalent to $25.00 per share (the "Series C Preferred Stock"), and
has sold such Series C Preferred Stock in two public offerings;

         WHEREAS, the Corporation desires to contribute the net proceeds of the
sale of the Series C Preferred Stock through the General Partner to the
Partnership in exchange for the issuance to the General Partner of preferred
partnership interests in the Partnership as set forth herein; and

         WHEREAS, the General Partner is authorized to cause the Partnership to
issue interests in the Partnership to the General Partner in exchange for such
contribution of such net proceeds made by the Corporation through the General
Partner.

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Partnership Agreement as follows:

         Section 1.        Contribution.

         The Corporation hereby contributes through the General Partner to the
Partnership the entire net proceeds received by the Corporation from the
issuance of the Series C Preferred Stock. As provided in Section 4.02(g) of the
Partnership Agreement, the Corporation shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the gross proceeds raised
in connection with the issuance of such shares of Series C Preferred Stock,
which is $60,000,000, and the Partnership shall be deemed simultaneously to have
paid, pursuant to Section 6.05(b) of the Partnership Agreement, for the costs
and expenses relating to the offer, registration and sale of the Series C
Preferred Stock.

<PAGE>

         Section 2.    Issuance of Series C Preferred Units.
                       -------------------------------------

         In consideration of the contribution to the Partnership made by the
Corporation through the General Partner pursuant to Section 1 hereof, the
Partnership hereby issues to the General Partner 2,400,000 Series C Preferred
Units (as defined below).

         Section 3.    Definitions.

         Article I of the Partnership Agreement is hereby amended by inserting
in the appropriate alphabetical locations the following definitions of Change of
Control, Series C Preferred Return, Series C Preferred Stock, Series C Preferred
Units and Voting Stock, as follows:

         "Change of Control" shall be deemed to have occurred at such time as
(i) the date a "person" or "group" (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
becomes the ultimate "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person or group shall be deemed to have
beneficial ownership of all shares of Voting Stock that such person or group has
the right to acquire regardless of when such right is first exercisable),
directly or indirectly, of Voting Stock representing more than 50% of the total
voting power of the total Voting Stock of the Corporation; (ii) the date the
Corporation sells, transfers or otherwise disposes of all or substantially all
of its assets; or (iii) the date of the consummation of a merger or share
exchange of the Corporation with another entity where the Corporation's
shareholders immediately prior to the merger or share exchange would not
beneficially own immediately after the merger or share exchange, shares
representing 50% or more of all votes (without consideration of the rights of
any class of stock to elect directors by a separate group vote) to which all
shareholders of the corporation issuing cash or securities in the merger or
share exchange would be entitled in the election of directors, or where members
of the Corporation's Board of Directors immediately prior to the merger or share
exchange would not immediately after the merger or share exchange constitute a
majority of the Board of Directors of the corporation issuing cash or securities
in the merger or share exchange.

         "Series C Preferred Return" means an annualized amount equal to $2.00
per Series C Preferred Unit; provided, however, if following a Change of Control
the Series C Preferred Stock is not listed on the New York Stock Exchange, Inc.
(the "NYSE") or the American Stock Exchange ("Amex") or quoted on the Nasdaq
Stock Market, Inc. ("Nasdaq"), Series C Preferred Return shall mean, from (but
excluding) the first date on which both the Change of Control has occurred and
the Series C Preferred Stock is not so listed or quoted, $2.25 per Series C
Preferred Unit for as long as the Series C Preferred Stock is not so listed or
quoted.

         "Series C Preferred Stock" means the 8.00% Series C Cumulative
Preferred Stock, $.01 par value, of the Corporation.

         "Series C Preferred Units" means the Preferred Units issued to the
General Partner in exchange for the net proceeds of the issuance by the
Corporation of its Series C Preferred Stock, which Series C Preferred Units
shall have the designations, preferences, privileges, limitations and relative
rights set forth in Section 4.02(c)(iii) hereof.

<PAGE>

         "Voting Stock" means stock of any class or kind having the power to
vote generally for the election of directors.

         Section 4.    Creation of Series C Preferred Units.
                       -------------------------------------

         Article IV of the Partnership Agreement is hereby amended by adding
Section 4.02(c)(iii) as follows:

                  "(iii) 8.00% Series C Cumulative Preferred Units.

         (1) Designation and Number. A series of Preferred Units, designated the
         "8.00% Series C Cumulative Preferred Units" (the "Series C Preferred
         Units"), is hereby established. The number of Series C Preferred Units
         shall be as set forth on Exhibit B hereto.

         (2) Rank. The Series C Preferred Units will, with respect to
         distribution rights and rights upon liquidation, dissolution or winding
         up of the Partnership, rank (i) senior to all classes or series of
         Common Units of the Partnership, and to all Partnership Units ranking
         junior to the Series C Preferred Units with respect to distribution
         rights or rights upon liquidation, dissolution or winding up of the
         Partnership; (ii) on a parity with all Partnership Units issued by the
         Partnership the terms of which specifically provide that such
         Partnership Units rank on a parity with the Series C Preferred Units
         with respect to distribution rights or rights upon liquidation,
         dissolution or winding up of the Partnership; and (iii) junior to all
         existing and future indebtedness of the Partnership. The term
         "Partnership Units" does not include convertible debt securities, which
         will rank senior to the Series C Preferred Units prior to conversion.

         (3)      Distributions.

                  (a) Holders of the Series C Preferred Units are entitled to
         receive, when and as distributed by the General Partner out of
         available cash flow, preferential cumulative cash distributions in an
         amount equal to the excess, if any, of (i) the cumulative Series C
         Preferred Return for the current and all prior years over (ii) the sum
         of all prior Series C Preferred Return distributions pursuant to this
         Section 4.02(c)(iii)(3). Distributions on the Series C Preferred Units
         shall be cumulative from the date of original issue and shall be
         payable quarterly in arrears on or before the last day of January,
         April, July and October of each year, or, if not a Business Day (as
         defined below), the next succeeding business day (each, a "Series C
         Distribution Payment Date"). The first distribution will be paid on or
         before April 30, 2006. The first distribution will be prorated for less
         than a full quarter. Any distribution payable on the Series C Preferred
         Units for any partial distribution period will be computed on the basis
         of a 360-day year consisting of twelve 30 day months. Distributions
         will be payable to holders of record as they appear in the ownership
         records of the Partnership at the close of business on the applicable
         record date, which shall be the last Business Day of each of March,
         June, September and December immediately preceding such Series C
         Distribution Payment Date, or on such other date designated by the
         General Partner of the Partnership for the payment of distributions
         that is not more than 30 nor less than 10 days prior to such Series C
         Distribution Payment Date (each, a "Series C Distribution Record
         Date"). "Business Day" shall mean any day, other than a Saturday or
         Sunday, that is neither a legal holiday nor a day on which banking
         institutions in New York City are authorized or required by law,
         regulation or executive order to close.

<PAGE>

                  (b) The amount of any distributions accrued on any Series C
         Preferred Units at any Series C Distribution Payment Date shall be the
         amount of any unpaid distributions accumulated thereon, to and
         including such Series C Distribution Payment Date, whether or not
         earned or declared, and the amount of distributions accrued on any
         Series C Preferred Units at any date other than a Series C Distribution
         Payment Date shall be equal to the sum of the amount of any unpaid
         distributions accumulated thereon, to and including the last preceding
         Series C Distribution Payment Date, whether or not earned or declared,
         plus an amount calculated on the basis of the Series C Preferred Return
         for the period after such last preceding Series C Distribution Payment
         Date to and including the date as of which the calculation is made
         based on a 360-day year of twelve 30-day months.

                  (c) The holder of the Series C Preferred Units will not be
         entitled to any distributions in excess of full cumulative
         distributions as described above and shall not be entitled to
         participate in the earnings or assets of the Partnership, and no
         interest, or sum of money in lieu of interest, shall be payable in
         respect of any distribution payment or payments on the Series C
         Preferred Units which may be in arrears.

                  (d) No distributions on Series C Preferred Units shall be
         declared by the General Partner or paid or set apart for payment by the
         Partnership if the terms and provisions of any agreement of the
         Partnership, including any agreement relating to its indebtedness,
         prohibit such declaration, payment or setting apart for payment or
         provide that such declaration, payment or setting apart for payment
         would constitute a breach thereof or a default thereunder, or if such
         declaration or payment shall be restricted or prohibited by law.
         Notwithstanding the foregoing, distributions on the Series C Preferred
         Units will accrue whether or not the Partnership has earnings, whether
         or not there is available cash flow for the payment of such
         distributions and whether or not such distributions are declared.
         Accrued but unpaid distributions on the Series C Preferred Units will
         not bear interest and holders of the Series C Preferred Units will not
         be entitled to any distributions in excess of full cumulative
         distributions described above.

                  (e) Except as set forth in the next sentence, no distributions
         will be declared or paid or set apart for payment on any Partnership
         Units or any other series of Preferred Units ranking, as to
         distributions, on a parity with or junior to the Series C Preferred
         Units (other than a distribution of the Partnership's Common Units or
         any other class of Partnership Units ranking junior to the Series C
         Preferred Units as to distributions and upon liquidation) for any
         period unless full cumulative distributions have been or
         contemporaneously are declared and paid or declared and a sum
         sufficient for the payment thereof is set apart for such payment on the
         Series C Preferred Units for all past distribution periods and the then
         current distribution period. When distributions are not paid in full
         (or a sum sufficient for such full payment is not so set apart) upon
         the Series C Preferred Units and any other series of Preferred Units
         ranking on a parity as to distributions with the Series C Preferred
         Units, all distributions declared upon the Series C Preferred Units and
         any other series of Preferred Units ranking on a parity as to
         distributions with the Series C Preferred Units shall be declared pro
         rata so that the amount of distributions declared per Series C
         Preferred Unit and such other series of Preferred Units shall in all
         cases bear to each other the same ratio that accrued distributions per
         Series C Preferred Unit and such other series of Preferred Units (which
         shall not include any accrual in respect of unpaid distributions for
         prior distribution periods if such Preferred Units do not have a
         cumulative distribution) bear to each other.

<PAGE>

                  (f) Except as provided in the immediately preceding paragraph,
         unless full cumulative distributions on the Series C Preferred Units
         have been or contemporaneously are declared and paid or declared and a
         sum sufficient for the payment thereof is set apart for payment for all
         past distribution periods and the then current distribution period, no
         distributions (other than a distribution of Common Units or other
         Partnership Units ranking junior to the Series C Preferred Units as to
         distributions and upon liquidation) shall be declared or paid or set
         aside for payment nor shall any other distribution be declared or made
         upon the Common Units, or any other Partnership Units ranking junior to
         or on a parity with the Series C Preferred Units as to distributions or
         upon liquidation, nor shall any Common Units, or any other Partnership
         Units in the Partnership ranking junior to or on a parity with the
         Series C Preferred Units as to distributions or upon liquidation be
         redeemed, purchased or otherwise acquired for any consideration (or any
         monies be paid to or made available for a sinking fund for the
         redemption of any such units) by the Partnership. Holders of Series C
         Preferred Units shall not be entitled to any distribution, whether
         payable in cash, property or securities in excess of full cumulative
         distributions on the Series C Preferred Units as provided above.

         (4) Liquidation Preference. Upon any voluntary or involuntary
         liquidation, dissolution or winding up of the affairs of the
         Partnership, the holders of Series C Preferred Units are entitled to be
         paid out of the assets of the Partnership legally available for
         distribution to its partners a liquidation preference of $25.00 per
         Series C Preferred Unit (the "Series C Liquidation Preference"), plus
         an amount equal to any accrued and unpaid distributions with respect to
         the Series C Preferred Units to the date of payment, but without
         interest, before any distribution of assets is made to holders of
         Common Units or any other class or series of Partnership Units in the
         Partnership that ranks junior to the Series C Preferred Units as to
         liquidation rights. The Partnership will promptly provide to the
         holders of Series C Preferred Units written notice of any event
         triggering the right to receive such Series C Liquidation Preference.
         After payment of the full amount of the Series C Liquidation
         Preference, the holders of Series C Preferred Units will have no right
         or claim to any of the remaining assets of the Partnership. If, upon
         any voluntary or involuntary dissolution, liquidation, or winding up of
         the Partnership, the amounts payable with respect to the Series C
         Liquidation Preference, plus an amount equal to any accrued and unpaid
         distributions to the date of payment, of the Series C Preferred Units
         and any other units of the Partnership ranking as to any such
         distribution on a parity with the Series C Preferred Units are not paid
         in full, the holders of the Series C Preferred Units and of such other
         units will share ratably in any such distribution of assets of the
         Partnership in proportion to the full respective preference amounts to
         which they are entitled. The consolidation or merger of the Partnership
         with or into any other partnership, corporation, trust or entity or of
         any other partnership or corporation with or into the Partnership, or
         the sale, lease or conveyance of all or substantially all of the
         property or business of the Partnership, shall not be deemed to
         constitute a liquidation, dissolution or winding up of the Partnership.

<PAGE>

         (5)      Redemption.

                  (a) Except as set forth in Section 4.02(c)(iii)(6) below, the
         Series C Preferred Units are not redeemable by the Partnership prior to
         February 15, 2011. On and after February 15, 2011, the Partnership, at
         its option upon not less than 30 nor more than 60 days' written notice,
         may redeem the Series C Preferred Units, in whole or in part, at any
         time or from time to time, for cash at a redemption price of $25.00 per
         Series C Preferred Unit, plus all accrued and unpaid distributions
         thereon to the date fixed for redemption, without interest. A holder
         shall surrender its Series C Preferred Units at the place designated in
         such notice and shall be entitled to the redemption price and any
         accrued and unpaid distributions payable upon such redemption following
         such surrender. If notice of redemption of any Series C Preferred Units
         has been given and if the funds necessary for such redemption have been
         set aside by the Partnership in trust for the benefit of the holders of
         any Series C Preferred Units so called for redemption, then from and
         after the redemption date distributions will cease to accrue on such
         Series C Preferred Units, such Series C Preferred Units shall no longer
         be deemed outstanding and all rights of the holders of such Series C
         Preferred Units will terminate, except the right to receive the
         redemption price. If less than all of the outstanding Series C
         Preferred Units are to be redeemed, the Series C Preferred Units to be
         redeemed shall be selected pro rata (as nearly as may be practicable
         without creating fractional Series C Preferred Units) or by any other
         equitable method determined by the General Partner.

                  (b) Notice of redemption will be mailed or delivered to
         holders of Series C Preferred Units not less than 30 nor more than 60
         days prior to the redemption date. In addition to any information
         required by law, each notice shall state: (i) the Specified Redemption
         Date; (ii) the Redemption Amount; (iii) the number of Series C
         Preferred Units to be redeemed; (iv) the place or places where the
         Series C Preferred Units are to be surrendered for payment of the
         redemption price; and (v) that distributions on the Series C Preferred
         Units to be redeemed will cease to accrue on the Specified Redemption
         Date. If less than all of the Series C Preferred Units held by any
         holder are to be redeemed, the notice mailed to such holder shall also
         specify the number of Series C Preferred Units held by such holder to
         be redeemed.

                  (c) Immediately prior to any redemption of Series C Preferred
         Units, the Partnership shall pay, in cash, any accumulated and unpaid
         distributions through the redemption date, unless a redemption date
         falls after a Series C Distribution Record Date and prior to the
         corresponding Series C Distribution Payment Date, in which case each
         holder of Series C Preferred Units at the close of business on such
         Series C Distribution Record Date shall be entitled to the distribution
         payable on such Series C Preferred Units on the corresponding Series C
         Distribution Payment Date notwithstanding the redemption of such shares
         before such Series C Distribution Payment Date.

<PAGE>

                  (d) If the Partnership exercises its optional redemption right
         with respect to the Series C Preferred Units pursuant to this Section
         4.02(c)(iii)(5), then the Corporation must redeem a corresponding
         number of shares of Series C Preferred Stock. Similarly, if the
         Corporation exercises its optional redemption right with respect to
         shares of Series C Preferred Stock, then the Partnership must redeem a
         corresponding number of Series C Preferred Units.

         (6)      Special Optional Redemption by the Partnership.

(a)      If at any time following a Change of Control the Series C Preferred
         Stock is not listed on the NYSE or the Amex or quoted on Nasdaq, the
         Partnership will have the option upon written notice to the holders of
         record of the Series C Preferred Units in accordance with Section
         4.02(c)(iii)(5)(b) to redeem the Series C Preferred Units, in whole but
         not in part, within 90 days after the first date on which both the
         Change of Control has occurred and the Series C Preferred Stock is not
         so listed or quoted, for a cash redemption price equal to 100% of the
         Series C Liquidation Preference plus all accrued and unpaid
         distributions to the Specified Redemption Date.

(b)      Upon any redemption of the Series C Preferred Units pursuant to this
         Section 4.02(c)(iii)(6), the Partnership will pay, in cash, any accrued
         and unpaid distributions to the Specified Redemption Date, whether or
         not authorized, unless the Specified Redemption Date falls after a
         distribution payment record date and prior to the corresponding Series
         C Distribution Payment Date, in which case each holder of the Series C
         Preferred Units at the close of business on such distribution payment
         record date will be entitled to the distribution payable on such units
         on the corresponding Series C Distribution Payment Date notwithstanding
         the redemption of such units before the Series C Distribution Payment
         Date. Except as provided in the previous sentence, the Partnership will
         make no payment or allowance for unpaid distributions, whether or not
         in arrears, on the Series C Preferred Units.

(c)      At its election, the Partnership, prior to the Specified Redemption
         Date, may irrevocably deposit the redemption price described in Section
         4.02(c)(iii)(6)(a) above for the Series C Preferred Units so called for
         redemption in trust for the holders thereof with a bank or trust
         company.

         (7)      Conversion.

         The Series C Preferred Units are not redeemable for, convertible into
         or exchangeable for any other property or securities of the Partnership
         or the General Partner."

         Section 5.    Allocation of Profit and Loss.

         Article V of the Partnership Agreement is hereby amended by adding the
following new Section 5.01(f) immediately following Section 5.01(e), and the
sections previously designated as Section 5.01(f) and Section 5.01(g) are hereby
redesignated as Section 5.01(g) and Section 5.01(h), respectively:

<PAGE>

                  "(f) Priority Allocations With Respect To Series C Preferred
         Units. After giving effect to the allocations set forth in Sections
         5.01(b), (c), (d) and (e) hereof, but before giving effect to the
         allocations set forth in Section 5.01(a), Net Operating Income shall be
         allocated to the General Partner until the aggregate amount of Net
         Operating Income allocated to the General Partner under this Section
         5.01(f) for the current and all prior years equals the aggregate amount
         of the Series B Preferred Return and the Series C Preferred Return paid
         to the General Partner pursuant to Sections 4.02(c)(ii)(3),
         4.02(c)(ii)(4), 4.02(c)(iii)(3) and 4.02(c)(iii)(4) hereof for the
         current and all prior years. For purposes of this Section 5.01(f), "Net
         Operating Income" means the excess, if any, of the Partnership's gross
         income over its expenses (but not taking into account depreciation,
         amortization, or any other noncash expenses of the Partnership),
         calculated in accordance with the principles of Section 5.01(h)
         hereof."

                            [Signature page follows.]

<PAGE>

         IN WITNESS WHEREOF, the foregoing Amendment No. 3 to the Third Amended
and Restated Agreement of Limited Partnership of Equity Inns Partnership, L.P.
has been signed and delivered as of this 15th day of February, 2006, by the
undersigned sole general partner of the Partnership, as general partner and on
behalf of the Limited Partners, and by the Corporation as non-Partner party to
the Partnership Agreement.

                               EQUITY INNS TRUST, a
                               Maryland real estate
                               investment trust, as sole
                               General Partner

                             By:     /s/ Howard A. Silver
                                     --------------------
                             Name:   Howard A. Silver
                             Title:  President and Chief Executive Officer

                             EQUITY INNS TRUST, a Maryland real estate
                             investment trust, as General Partner, on behalf
                             of the Limited Partners pursuant to Section 8.02
                             and Article XI of the Partnership Agreement

                             By:     /s/ Howard A. Silver
                                     --------------------
                             Name:   Howard A. Silver
                             Title:  President and Chief Executive Officer

                             EQUITY INNS, INC., a Tennessee corporation,
                             as a non-Partner party to the Partnership Agreement

                             By:     /s/ Howard A. Silver
                                     --------------------
                             Name:   Howard A. Silver
                             Title:  President and Chief Executive Officer

<PAGE>

                                    Exhibit B

                            SERIES C PREFERRED UNITS
                       (Effective as of February 15, 2006)

<TABLE>
<CAPTION>

                              Cash Amount of Capital                          Percentage of Series C
Partner and Address               Contribution           Preferred Units         Preferred Units
-------------------           ----------------------     ---------------      ----------------------
<S>                           <C>                        <C>                  <C>
Equity Inns Trust                  $60,000,000              2,400,000                  100.0%
7700 Wolf River Boulevard
Memphis, TN  38138
</TABLE>exhibit 101

    

     

     

    

     

    

     

    

     

    Agreement
      and Plan of Merger

     

    among

     

    Heartland
      Financial USA, Inc.,

     

    Arizona
      Bank & Trust

     

    and

     

    Bank
      of the Southwest

     

    

     

    

     

    as
      of December 30, 2005

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of Contents

     

     

    
      	 	
              Article
                1 Definitions

            

    

    
      	 	
              Section
                1.1 Definitions

            

    

    
      	 	
              Section
                1.2 Principles of Construction.

            

    

     

    
      	 	
              Article
                2 The Merger

            

    

    
      	 	
              Section
                2.1 The Merger

            

    

    
      	 	
              Section
                2.2 Closing; Effective Time.

            

    

    
      	 	
              Section
                2.3 Articles of Incorporation;
                Bylaws

            

    

    
      	 	
              Section
                2.4 Directors and Officers

            

    

    
      	 	
              Section
                2.5 Name and Place of Business

            

    

    
      	 	
              Section
                2.6 Acquiror’s Deliveries at
                Closing

            

    

    
      	 	
              Section
                2.7 Bank’s Deliveries at Closing

            

    

    
      	 	
              Section
                2.8 Alternative Structure

            

    

    
      	 	
              Section
                2.9 Branch Sale

            

    

    
      	 	
              Section
                2.10 Absence of Control

            

    

     

    
      	 	
              Article
                3

            

    

    
      	 	
              Section
                3.1 Manner of Merger.

            

    

    
      	 	
              Section
                3.2 Rights as Shareholders; Stock
                Transfers

            

    

    
      	 	
              Section
                3.3 Steps of Transaction.

            

    

    
      	 	
              Section
                3.4 Dissenting Shares

            

    

     

    
      	 	
              Article
                4 Representations and Warranties of the
                Bank

            

    

    
      	 	
              Section
                4.1 Bank Organization

            

    

    
      	 	
              Section
                4.2 Authorization; Enforceability.

            

    

    
      	 	
              Section
                4.3 No Conflict

            

    

    
      	 	
              Section
                4.4 Bank Capitalization.

            

    

    
      	 	
              Section
                4.5 Financial Statements and
                Reports

            

    

    
      	 	
              Section
                4.6 Books and Records

            

    

    
      	 	
              Section
                4.7 Title to Properties

            

    

    
      	 	
              Section
                4.8 Condition and Sufficiency of
                Assets

            

    

    
      	 	
              Section
                4.9 Loans; Allowance for Loan and Lease
                Losses

            

    

    
      	 	
              Section
                4.10 Undisclosed Liabilities; Adverse
                Changes

            

    

    
      	 	
              Section
                4.11 Taxes

            

    

    
      	 	
              Section
                4.12 Compliance with ERISA

            

    

    
      	 	
              Section
                4.13 Compliance with Legal
                Requirements

            

    

    
      	 	
              Section
                4.14 Legal Proceedings; Orders.

            

    

    
      	 	
              Section
                4.15 Absence of Certain Changes and
                Events

            

    

    
      	 	
              Section
                4.16 Properties, Contracts and Employee Benefit
                Plans

            

    

    
      	 	
              Section
                4.17 No Defaults

            

    

    
      	 	
              Section
                4.18 Insurance

            

    

    
      	 	
              Section
                4.19 Compliance with Environmental
                Laws

            

    

    
      	 	
              Section
                4.20 Regulatory Filings

            

    

    
      	 	
              Section
                4.21 Fiduciary Accounts

            

    

    
      	 	
              Section
                4.22 Indemnification Claims

            

    

    
      	 	
              Section
                4.23 Insider Interests

            

    

    
      	 	
              Section
                4.24 Brokerage Commissions

            

    

    
      	 	
              Section
                4.25 Approval Delays

            

    

    
      	 	
              Section
                4.26 Code Sections 280G, 409A and
                4999

            

    

    
      	 	
              Section
                4.27 Disclosure

            

    

     

    
      	 	
              Article
                5 Representations and Warranties of Acquiror and
                AB&T

            

    

    
      	 	
              Section
                5.1 Acquiror Organization

            

    

    
      	 	
              Section
                5.2 AB&T Organization

            

    

    
      	 	
              Section
                5.3 Authorization; Enforceability.

            

    

    
      	 	
              Section
                5.4 No Conflict

            

    

    
      	 	
              Section
                5.5 Brokerage Commissions

            

    

    
      	 	
              Section
                5.6 Approval Delays

            

    

    
      	 	
              Section
                5.7 Disclosure

            

    

    
      	 	
              Section
                5.8 Financial Resources

            

    

     

    
      	 	
              Article
                6 Covenants of the Bank

            

    

    
      	 	
              Section
                6.1 Access and Investigation.

            

    

    
      	 	
              Section
                6.2 Operation of the Bank

            

    

    
      	 	
              Section
                6.3 Negative Covenant

            

    

    
      	 	
              Section
                6.4 Subsequent Bank Financial
                Statements

            

    

    
      	 	
              Section
                6.5 Advice of Changes

            

    

    
      	 	
              Section
                6.6 Other Offers.

            

    

    
      	 	
              Section
                6.7 Shareholders’ Meeting

            

    

    
      	 	
              Section
                6.8 Information Provided to
                Acquiror

            

    

    
      	 	
              Section
                6.9 Amendment or Termination of Employee Benefit
                Plans

            

    

    
      	 	
              Section
                6.10 Data and Item Processing
                Agreements

            

    

    
      	 	
              Section
                6.11 Tax Matters

            

    

    
      	 	
              Section
                6.12 Accounting and Other
                Adjustments

            

    

    
      	 	
              Section
                6.13 Other Agreements

            

    

     

    
      	 	
              Article
                7 Covenants of Acquiror and
                AB&T

            

    

    
      	 	
              Section
                7.1 Advice of Changes

            

    

    
      	 	
              Section
                7.2 Information Provided to the
                Bank

            

    

    
      	 	
              Section
                7.3 Indemnification

            

    

     

    
      	 	
              Article
                8 Covenants of All Parties

            

    

    
      	 	
              Section
                8.1 Regulatory Approvals

            

    

    
      	 	
              Section
                8.2 Necessary Approvals

            

    

    
      	 	
              Section
                8.3 Customer and Employee
                Relationships

            

    

    
      	 	
              Section
                8.4 Best Efforts; Cooperation

            

    

     

    
      	 	
              Article
                9 Conditions Precedent to Obligations of Acquiror and
                AB&T

            

    

    
      	 	
              Section
                9.1 Accuracy of Representations and
                Warranties

            

    

    
      	 	
              Section
                9.2 Bank’s Performance

            

    

    
      	 	
              Section
                9.3 Documents Satisfactory

            

    

    
      	 	
              Section
                9.4 No Proceedings

            

    

    
      	 	
              Section
                9.5 No Claim Regarding Stock Ownership or Sale
                Proceeds

            

    

    
      	 	
              Section
                9.6 Absence of Material Adverse
                Effects

            

    

    
      	 	
              Section
                9.7 Consents and Approvals

            

    

    
      	 	
              Section
                9.8 No Prohibition

            

    

    
      	 	
              Section
                9.9 Dissenting Shares

            

    

    
      	 	
              Section
                9.10 Consulting Agreement

            

    

     

    
      	 	
              Article
                10 Conditions Precedent to Obligations of the
                Bank

            

    

    
      	 	
              Section
                10.1 Accuracy of Representations and
                Warranties

            

    

    
      	 	
              Section
                10.2 Bank’s Performance

            

    

    
      	 	
              Section
                10.3 Documents Satisfactory

            

    

    
      	 	
              Section
                10.4 Consents and Approvals

            

    

    
      	 	
              Section
                10.5 No Injunction

            

    

     

    
      	 	
              Article
                11 Termination

            

    

    
      	 	
              Section
                11.1 Reasons for Termination and
                Abandonment

            

    

    
      	 	
              Section
                11.2 Effect of Termination

            

    

    
      	 	
              Section
                11.3 Expenses

            

    

    
      	 	
              Section
                11.4 Remedies.

            

    

     

    
      	 	
              Article
                12 Miscellaneous

            

    

    
      	 	
              Section
                12.1 Governing Law

            

    

    
      	 	
              Section
                12.2 Jurisdiction and Service of
                Process

            

    

    
      	 	
              Section
                12.3 Assignments, Successors and No Third Party
                Rights

            

    

    
      	 	
              Section
                12.4 Waiver

            

    

    
      	 	
              Section
                12.5 Modification

            

    

    
      	 	
              Section
                12.6 Publicity

            

    

    
      	 	
              Section
                12.7 Confidentiality

            

    

    
      	 	
              Section
                12.8 Notices

            

    

    
      	 	
              Section
                12.9 Entire Agreement

            

    

    
      	 	
              Section
                12.10 Severability

            

    

    
      	 	
              Section
                12.11 Further Assurances

            

    

    
      	 	
              Section
                12.12 Counterparts; Facsimile
                Signatures

            

    

    
      	 	
              Section
                12.13 Survival

            

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    Exhibit
      Index

     

    

     

    
      	
              Exhibit A

            	
              Form
                of Legal Opinion of Bank’s Counsel

            
	
              Exhibit B

            	
              Form
                of Paying Agent Agreement

            
	
              Exhibit C

            	
              Form
                of Voting Agreement

            
	
              Exhibit D

            	
              Form
                of Consulting Agreement

            

    

    

     

    Schedule
      Index

     

    
      	
              Schedule 4.1

            	
              Bank
                Organization

            
	
              Schedule 4.3

            	
              No
                Conflict

            
	
              Schedule 4.4

            	
              Bank
                Capitalization

            
	
              Schedule 4.5

            	
              Financial
                Statements and Reports

            
	
              Schedule 4.7

            	
              Title
                to Properties

            
	
              Schedule 4.9

            	
              Loans;
                Allowance for Loan and Leases Losses

            
	
              Schedule 4.10

            	
              Undisclosed
                Liabilities; Adverse Changes

            
	
              Schedule 4.12

            	
              Compliance
                with ERISA 

            
	
              Schedule 4.13

            	
              Compliance
                with Legal Requirements

            
	
              Schedule 4.14

            	
              Legal
                Proceedings; Orders

            
	
              Schedule 4.15

            	
              Absence
                of Certain Changes and Events

            
	
              Schedule 4.16

            	
              Properties;
                Contracts and Employee Benefit Plans

            
	
              Schedule 4.17

            	
              No
                Defaults

            
	
              Schedule 4.18

            	
              Insurance

            
	
              Schedule 4.19

            	
              Compliance
                with Environmental Laws

            
	
              Schedule 4.23

            	
              Insider
                Interests

            
	
              Schedule 4.26

            	
              Code
                Sections 280G, 409A and 4999

            

    

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Agreement
      and Plan of Merger

     

    This
      Agreement and Plan of Merger (this
      “Agreement”)
      is
      entered into as of December 30, 2005, (the “Agreement
      Date”)
      between Bank
      of the Southwest,
      an
      Arizona state bank (the “Bank”),
      and
Arizona
      Bank & Trust,
      an
      Arizona state bank (“AB&T”),
      and
      is joined in by Heartland
      Financial USA, Inc.,
      a
      Delaware corporation and the owner of a majority of the outstanding stock of
      AB&T (“Acquiror”).

     

    Recitals

     

    A. The
      parties to this Agreement desire to effect a reorganization whereby Acquiror
      desires to acquire control of the Bank through the merger (the "Merger")
      of the
      Bank with and into AB&T with AB&T being the resulting bank.

     

    B. As
      a
      result of the Merger and at the time of the consummation thereof, each
      outstanding share of the capital stock of the Bank, which is comprised of one
      class of common stock, no par value per share ("Bank
      Stock"),
      will
      be
      cancelled and converted solely into the right to receive the amount of cash
      as
      provided below, and with each outstanding share of common stock of AB&T
      thereafter representing one share of common stock of the Resulting Bank (as
      defined below).

     

    C. The
      Bank’s board of directors, acting pursuant to a resolution adopted by the vote
      of a majority of its directors and pursuant to the Arizona State Revised
      Statutes, as amended (the “Arizona
      Statutes”),
      has
      approved the Merger and this Agreement and has recommended approval of the
      same
      to the holders of record of Bank Stock (the “Bank
      Shareholders”).

     

    D. AB&T’s
      board of directors, acting pursuant to a resolution adopted by the vote of
      a
      majority of its directors and pursuant to the Arizona Statutes, has approved
      the
      Merger and this Agreement and has recommended approval of the same to the
      holders of record of AB&T’s common stock (the “AB&T
      Shareholders”).

     

    E. The
      parties desire to make certain representations, warranties and agreements in
      connection with the Merger and the other transactions contemplated by this
      Agreement and also agree to certain prescribed conditions to the Merger and
      other transactions.

     

    Agreements

     

    In
      consideration of the foregoing premises, which are incorporated herein by this
      reference, and the mutual promises, covenants and agreements hereinafter set
      forth, the parties hereto hereby agree as follows:

     

    Article
      1  

     

    Definitions

     

    Section
      1.1  Definitions.
      In
      addition to those terms defined throughout this Agreement, the following terms,
      when used herein, shall have the following meanings.

     

    (a)  “Adjusted
      Shareholders’ Equity”
means
      the consolidated tangible shareholders’ equity of the Bank, calculated in
      accordance with GAAP and this Agreement and reflecting, among other things,
      and
      except as described herein, the accrued income and expenses of the Bank for
      all
      periods ending on or prior to the Determination Date, and the recognition of
      or
      accrual for all expenses paid or incurred or projected to be paid or incurred
      by
      the Bank in connection with this Agreement and the Contemplated Transactions,
      including the Bank Transaction Expenses, and including all fees and expenses
      incurred in connection with obtaining shareholder approval and any attorneys,
      accountants, brokers, finders or investment bankers and any amounts paid or
      payable to any director, officer or employee of the Bank under any Contract
      or
      benefit plan as a result of the Contemplated Transactions, but adjusted to
      exclude:

     

    (i)  any
      realized gains or losses resulting from sales of investment securities effected
      between June 30, 2005, and the Closing Date (as defined
      below);

     

    (ii)  any
      realized gains on any extraordinary sales effected between June 30, 2005,
      and the Closing Date;

     

    (iii)  any
      penalty or termination fee payable by the Bank to OSI, the Bank’s service
      provider, pursuant to the Contract between the Bank and OSI as a result of
      the
      Bank’s termination of such Contract;

     

    (iv)  any
      adjustments made in accordance with Statement of Financial Accounting Standard
      No. 115; and

     

    (v)  any
      expenses incurred or accounting or other adjustments made pursuant to
Section
      2.9
      and
Section
      6.12.

     

    The
      Bank’s Adjusted Shareholders’ Equity shall be calculated by the Bank, in
      consultation with Acquiror, as of the close of business on the Determination
      Date using reasonable estimates of revenues and expenses where actual amounts
      are not available. If requested by Acquiror, such calculation shall be subject
      to verification and approval prior to the Closing (as defined below) by
      Acquiror’s independent accountants, which approval shall not be unreasonably
      withheld.

     

    (b)  “Affiliate”
means
      with respect to:

     

    (i)  a
      particular individual: (A) each other member of such individual’s Family;
      (B) any Person that is directly or indirectly controlled by such individual
      or one or more members of such individual’s Family; (C) any Person in which
      such individual or members of such individual’s Family hold (individually or in
      the aggregate) a Material Interest; and (D) any Person with respect to
      which such individual or one or more members of such individual’s Family serves
      as a director, officer, partner, executor or trustee (or in a similar capacity);
      and

     

    (ii)  a
      specified Person other than an individual: (A) any Person that directly or
      indirectly controls, is directly or indirectly controlled by, or is directly
      or
      indirectly under common control with such specified Person; (B) any Person
      that holds a Material Interest in such specified Person; (C) each Person
      that serves as a director, officer, partner, executor or trustee of such
      specified Person (or in a similar capacity); (D) any Person in which such
      specified Person holds a Material Interest; (E) any Person with respect to
      which such specified Person serves as a general partner or a trustee (or in
      a
      similar capacity); and (F) any Affiliate of any individual described in
      clauses (B) or (C) of this subsection (ii).

     

    (c)  “Bank
      Shareholders”
means
      the holders of record of the Outstanding Bank Shares.

     

    (d)  “Bank
      ISO”
means
      each of the 81,640 incentive stock options granted to officers or employees
      of
      the Bank prior to the date of this Agreement that is outstanding and which
      will
      be, by virtue of the Contemplated Transactions or otherwise, vested and fully
      exercisable immediately prior to the Effective Time.

     

    (e)  “Bank
      NQSO”
means
      each of the 83,578 non-tax qualified stock options granted to a Person by the
      Bank prior to the date of this Agreement that is outstanding and which will
      be,
      by virtue of the Contemplated Transactions or otherwise, vested and fully
      exercisable immediately prior to the Effective Time.

     

    (f)  “Best
      Efforts”
means
      the efforts that a prudent Person desirous of achieving a result would use
      in
      similar circumstances to ensure that such result is achieved as expeditiously
      as
      possible, provided,
      however,
      that an
      obligation to use Best Efforts under this Agreement does not require the Person
      subject to that obligation to take actions that would result in a materially
      adverse change in the benefits to such Person of this Agreement and the
      Merger.

     

    (g)  “Branch
      Sale”
means
      the sale by the Bank of certain of its assets to TrustBank, all as described
      in
Section
      2.9.

     

    (h)  “Breach”
means
      with respect to a representation, warranty, covenant, obligation or other
      provision of this Agreement or any instrument delivered pursuant to this
      Agreement: (i) any
      inaccuracy in or breach of, or any failure to perform or comply with, such
      representation, warranty, covenant, obligation or other provision; or
      (ii) any
      claim (by any Person) or other occurrence or circumstance that is or was
      inconsistent with such representation, warranty, covenant, obligation or other
      provision.

     

    (i)  “Business
      Day”
means
      any day except Saturday, Sunday and any day on which the Bank is authorized
      or
      required by law or other government action to close.

     

    (j)  “Call
      Reports”
means
      the quarterly reports of income and condition filed by the Bank with Regulatory
      Authorities. 

     

    (k)  “Certificate”
means
      a
      stock certificate representing a share or shares of Bank Stock.

     

    (l)  “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    (m)  “Contract”
means
      any agreement, contract, obligation, promise or understanding (whether written
      or oral and whether express or implied) that is legally binding: (i) under
      which a Person has or may acquire any rights; (ii) under which such Person
      has or may become subject to any obligation or liability; or (iii) by which
      such Person or any of the assets owned or used by such Person is or may become
      bound.

     

    (n)  “Contemplated
      Transactions”
      means
      all of the transactions contemplated by this Agreement, including: (i) the
      Merger; (ii) the
      performance by Acquiror, AB&T and the Bank of their respective covenants and
      obligations under this Agreement; (iii) AB&T’s
      acquisition of control of the Bank; (iv) Acquiror’s
      payment of cash in exchange for shares of Bank Stock; and (v) if
      requested by Acquiror, the Branch Sale and the Office Relocation.

     

    (o)  “Determination
      Date”
means
      the close of business on the last Business Day preceding the Closing
      Date.

     

    (p)  “GAAP”
means
      generally accepted accounting principles in the United States consistent with
      those used in the preparation of the most recent consolidated financial
      statements of the Bank.

     

    (q)  “Knowledge”
with
      respect to:

     

    (i)  an
      individual means that such person will be deemed to have “Knowledge” of a
      particular fact or other matter if: (A) such individual is actually aware of
      such fact or other matter; or (B) a prudent individual could be expected to
      discover or otherwise become aware of such fact or other matter in the Ordinary
      Course of Business; and

     

    (ii)  a
      Person
      (other than an individual) means that such Person will be deemed to have
“Knowledge” of a particular fact or other matter if any individual who is
      serving as a director, officer, partner, executor or trustee of such Person
      (or
      in any similar capacity) has, or at any time had, Knowledge of such fact or
      other matter.

     

    (r)  “Legal
      Requirement”
means
      any federal, state, local, municipal, foreign, international, multinational
      or
      other Order, constitution, law, ordinance, regulation, rule, policy statement,
      directive, statute or treaty.

     

    (s)  “Material
      Adverse Effect”
with
      respect to a Person (other than an individual) means a material adverse effect
      (whether or not required to be accrued or disclosed under Statement of Financial
      Accounting Standards No. 5): (i) on the condition (financial or
      otherwise), properties, assets, liabilities, businesses or results of operations
      of such Person; or (ii) on the ability of such Person to perform its
      obligations under this Agreement on a timely basis, provided,
      however,
      that a
      Material Adverse Effect with respect to any Person that is a party hereto shall
      not include: (A) a change with respect to, or effect on, that Person and
      its subsidiaries resulting from a change in law, rule, regulation, GAAP or
      regulatory accounting principles, as such would apply to the financial
      statements of such Person; (B) a change with respect to, or effect on, that
      Person or any of its subsidiaries resulting from any other matter affecting
      depository institutions generally (including financial institutions and their
      holding companies) including changes in general economic conditions and changes
      in prevailing interest and deposit rates; and (C) actions or omissions
      taken by that Person as required hereunder and actions or omissions by such
      Person with the prior written consent of the other parties hereto.

     

    (t)  “Merger
      Consideration”
means
      the amount of cash required to be paid to each Bank Shareholder pursuant to
      the
      terms of this Agreement.

     

    (u)  “Office
      Relocation”
means
      the relocation of the Bank’s main office, all as described in Section
      2.9.

     

    (v)  “Order”
means
      any award, decision, injunction, judgment, order, ruling, extraordinary
      supervisory letter, policy statement, memorandum of understanding, resolution,
      agreement, directive, subpoena or verdict entered, issued, made, rendered or
      required by any court, administrative or other governmental agency, including
      any Regulatory Authority, or by any arbitrator.

     

    (w)  “Ordinary
      Course of Business”
shall
      include any action taken by a Person only if such action:

     

    (i)  is
      consistent with the past customs and practices of such Person, including with
      respect to quantity and frequency, and is taken in the ordinary course of the
      normal day-to-day operations of such Person;

     

    (ii)  is
      not
      required to be authorized by the board of directors of such Person (or by any
      Person or group of Persons exercising similar authority), other than loan
      approvals for customers of a financial institution; and

     

    (iii)  is
      similar in nature and magnitude to actions customarily taken, without any
      authorization by the board of directors (or by any Person or group of Persons
      exercising similar authority), other than loan approvals for customers of a
      financial institution, in the ordinary course of the normal day-to-day
      operations of other Persons that are in the same line of business as such
      Person. 

     

    (x)  “Outstanding
      Bank Shares”
means
      the shares of Bank Stock issued and outstanding immediately prior to the
      Effective Time.

     

    (y)  “Paying
      Agent”
means
      any
      of
      Acquiror’s banking subsidiaries pursuant to its appointment described in
Section
      3.3.

     

    (z)  “Person”
means
      any individual, corporation (including any non-profit corporation), general
      or
      limited partnership, limited liability company, joint venture, estate, trust,
      association, organization, labor union or other entity or any Regulatory
      Authority.

     

    (aa)  “Proceeding”
means
      any action, arbitration, audit, hearing, investigation, litigation or suit
      (whether civil, criminal, administrative, investigative or informal) commenced,
      brought, conducted or heard by or before, or otherwise involving, any judicial
      or governmental authority, including a Regulatory Authority, or
      arbitrator.

     

    (bb)  “Regulatory
      Authorities”
means
      any federal, state or local governmental body, agency or authority that, under
      applicable statutes and regulations: (i) has supervisory, judicial,
      administrative, police, taxing or other power or authority over the Bank,
      Acquiror or AB&T; (ii) is required to approve, or give its consent to,
      any of the Contemplated Transactions; or (iii) with which a filing must be
      made in connection therewith, including in any case, the Board of Governors
      of
      the Federal Reserve System (the “Federal
      Reserve”),
      the
      Department of Financial and Professional Regulation of the State of Illinois,
      the Arizona Banking Department (the “Department”)
      and
      the Federal Deposit Insurance Corporation (the “FDIC”).

     

    (cc)  “Representative”
means
      with respect to a particular Person, any director, officer, manager, employee,
      agent, consultant, advisor or other representative of such Person, including
      legal counsel, accountants and financial advisors.

     

    (dd)  “Tax”
means
      any tax (including any income tax, capital gains tax, value-added tax, sales
      tax, property tax, gift tax or estate tax), levy, assessment, tariff, duty
      (including any customs duty), deficiency or other fee, and any related charge
      or
      amount (including any fine, penalty, interest or addition to tax), imposed,
      assessed or collected by or under the authority of any Regulatory Authority
      or
      payable pursuant to any tax-sharing agreement or any other Contract relating
      to
      the sharing or payment of any such tax, levy, assessment, tariff, duty,
      deficiency or fee.

     

    (ee)  “Tax
      Return”
means
      any return (including any informational return), report, statement, schedule,
      notice, form or other document or information filed with or submitted to, or
      required to be filed with or submitted to, any Regulatory Authority in
      connection with the determination, assessment, collection or payment of any
      Tax
      or in connection with the administration, implementation or enforcement of
      or
      compliance with any Legal Requirement relating to any Tax.

     

    (ff)  “Threatened”
means
      a
      claim, Proceeding, dispute, action or other matter for which any demand or
      statement has been made (orally or in writing) or any notice has been given
      (orally or in writing), or if any other event has occurred or any other
      circumstances exist, that would lead a prudent Person to conclude that such
      a
      claim, Proceeding, dispute, action or other matter is likely to be asserted,
      commenced, taken or otherwise pursued in the future.

     

    (gg)  “TrustBank”
means
      TrustBank, an Illinois state bank with its main office located in Olney,
      Illinois.

     

    Section
      1.2  Principles
      of Construction.

     

    (a)  In
      this
      Agreement, unless otherwise stated or the context otherwise requires, the
      following uses apply: (i) actions
      permitted under this Agreement may be taken at any time and from time to time
      in
      the actor’s sole discretion; (ii) references
      to a statute shall refer to the statute and any successor statute, and to all
      regulations promulgated under or implementing the statute or successor, as
      in
      effect at the relevant time; (iii) in
      computing periods from a specified date to a later specified date, the words
      “from” and “commencing on” (and the like) mean “from and including,” and the
      words “to,” “until” and “ending on” (and the like) mean “to, but excluding”;
      (iv) references
      to a governmental or quasi-governmental agency, authority or instrumentality
      shall also refer to a regulatory body that succeeds to the functions of the
      agency, authority or instrumentality; (v) indications
      of time of day mean Phoenix, Arizona, time; (vi) “including”
      means “including, but not limited to”; (vii) all
      references to sections, schedules and exhibits are to sections, schedules and
      exhibits in or to this Agreement unless otherwise specified; (viii) all
      words used in this Agreement will be construed to be of such gender or number
      as
      the circumstances require; and (ix) the
      captions and headings of articles, sections, schedules and exhibits appearing
      in
      or attached to this Agreement have been inserted solely for convenience of
      reference and shall not be considered a part of this Agreement nor shall any
      of
      them affect the meaning or interpretation of this Agreement or any of its
      provisions.

     

    (b)  The
      disclosure schedules of the Bank (the “Schedules”)
      referred to in this Agreement consist of the agreements, lists, instruments
      and
      other documentation described or referred to in this Agreement with respect
      to
      the Bank, which Schedules are attached to this Agreement. The disclosures in
      the
      Schedules relate only to the representations and warranties in the Sections
      of
      this Agreement to which they expressly relate and not to any other
      representation or warranty in this Agreement. In the event of any inconsistency
      between the statements in the body of this Agreement and those in the Schedules
      (other than an exception expressly set forth as such in the Schedules with
      respect to a specifically identified representation or warranty), the statements
      in the body of this Agreement will control.

     

    (c)  All
      accounting terms not specifically defined herein shall be construed in
      accordance with GAAP.

     

    (d)  With
      regard to each and every term and condition of this Agreement and any and all
      agreements and instruments subject to the terms hereof, the parties hereto
      understand and agree that the same have or has been mutually negotiated,
      prepared and drafted, and that if at any time the parties hereto desire or
      are
      required to interpret or construe any such term or condition or any agreement
      or
      instrument subject hereto, no consideration shall be given to the issue of
      which
      party hereto actually prepared, drafted or requested any term or condition
      of
      this Agreement or any agreement or instrument subject hereto.

     

    Article
      2  

     

    The
      Merger

     

    Section
      2.1  The
      Merger.
      Provided
      that this Agreement shall not have been terminated in accordance with its
      express terms, upon the terms and subject to the conditions of this Agreement
      and in accordance with applicable Legal Requirements, including the receipt
      of
      all requisite regulatory and shareholder approvals, at the Effective Time (as
      defined below), the Bank shall be merged with and into AB&T pursuant to the
      provisions of, and with the effects provided in, the Arizona Statutes, the
      separate existence of the Bank shall thereupon cease and AB&T shall be the
      resulting bank in the Merger (the “Resulting
      Bank”).
      As a
      result of the Merger, each of the Outstanding Bank Shares, other than Dissenting
      Shares (as defined below), will be converted into the right to receive the
      Merger Consideration as provided in Article 3.

     

    Section
      2.2  Closing;
      Effective Time.

     

    (a)  The
      closing of the Merger (the “Closing”)
      shall
      occur on a date that is mutually agreed upon by the parties; provided that,
      in
      the absence of an agreement, the Closing shall occur as soon as practicable
      following the date on which the conditions set forth in Article 8
      and
      Article 9
      have
      been satisfied or waived, but in no event later than the tenth (10th)
      Business Day of the calendar month following the calendar month in which such
      date occurs (the “Closing
      Date”).
      The
      Closing shall occur through the mail or at a time and place that is mutually
      acceptable to Acquiror, AB&T and the Bank, or if they fail to agree, at
      10:00 a.m. at the main office of AB&T. Subject to the provisions of
Article
      11,
      failure
      to consummate the Contemplated Transactions on the date and time and at the
      place determined pursuant to this Section will not result in the termination
      of
      this Agreement and will not relieve any party of any obligation under this
      Agreement. The Merger shall become effective following satisfaction of all
      requirements of law and other conditions specified in this Agreement, or on
      such
      other date and time as may be agreed upon by the parties hereto, and in either
      case as set forth in an approval letter from the Department to the Resulting
      Bank (the “Effective
      Time”).

     

    (b)  The
      parties hereto agree to file the appropriate plan of merger and articles of
      merger, as contemplated by Section 10-1105 of the Arizona Statutes, with
      the Arizona Corporation Commission, which articles of merger shall specify
      that
      the Merger shall be effective on the Closing Date at a time mutually agreed
      upon
      by the parties.

     

    Section
      2.3  Articles
      of Incorporation; Bylaws.
      At the
      Effective Time, each of the current articles of incorporation and bylaws of
      AB&T shall be the articles of incorporation and bylaws of the Resulting
      Bank. 

     

    Section
      2.4  Directors
      and Officers.
      The
      directors and officers of the Resulting Bank shall consist of the individuals
      serving as directors and officers of AB&T immediately prior to the Effective
      Time, until their successors have been duly elected or appointed in accordance
      with the bylaws of the Resulting Bank.

     

    Section
      2.5  Name
      and Place of Business.
      The
      business of the Resulting Bank shall be that of an Arizona state bank. The
      Resulting Bank shall conduct this business under the name of “Arizona Bank &
Trust” at its main banking premises which shall be located at 1000 N.
      54th
      Street,
      Chandler, Arizona 85226, and at its legally established branches.

     

    Section
      2.6  Acquiror’s
      Deliveries at Closing.
      At the
      Closing, Acquiror shall deliver the following items to the Bank:

     

    (a)  copies
      of
      resolutions of the board of directors of Acquiror authorizing and approving
      this
      Agreement and the consummation of the transactions contemplated herein,
      certified as of the Closing by the
      President or any Vice President of Acquiror;

     

    (b)  copies
      of
      resolutions of the board of directors and the shareholders of AB&T
      authorizing and approving this Agreement and the consummation of the
      transactions contemplated herein, certified as of the Closing by the
      Cashier or the President or any Vice President of Acquiror;

     

    (c)  a
      certificate executed by the President or any Vice President of Acquiror dated
      the Closing stating that: (i) all
      of the representations and warranties of Acquiror set forth in this Agreement
      are true and correct in all material respects with the same force and effect
      as
      if all of such representations and warranties were made at the Closing; and
      (ii) Acquiror
      has performed or complied in all material respects with all of the covenants
      and
      obligations to be performed or complied with by it under the terms of this
      Agreement on or prior to the Closing, provided,
      however,
      that to
      the extent any representations and warranties, or performance and compliance
      with any covenants and obligations, are subject in this Agreement to a standard
      of Knowledge, materiality, material adverse effect or similar standard, such
      representations and warranties shall be true and correct in all respects, and
      Acquiror shall have performed and complied in all respects with such covenants
      and obligations, in each case to the extent of the Knowledge, materiality,
      material adverse effect or similar standard set forth herein;

     

    (d)  a
      certificate executed by the President or any Vice President of AB&T dated
      the Closing stating that: (i) all
      of the representations and warranties of AB&T set forth in this Agreement
      are true and correct in all material respects with the same force and effect
      as
      if all of such representations and warranties were made at the Closing; and
      (ii) AB&T
      has performed or complied in all material respects with all of the covenants
      and
      obligations to be performed or complied with by it under the terms of this
      Agreement on or prior to the Closing, provided,
      however,
      that to
      the extent any representations and warranties, or performance and compliance
      with any covenants and obligations, are subject in this Agreement to a standard
      of Knowledge, materiality, material adverse effect or similar standard, such
      representations and warranties shall be true and correct in all respects, and
      AB&T shall have performed and complied in all respects with such covenants
      and obligations, in each case to the extent of the Knowledge, materiality,
      material adverse effect or similar standard set forth herein; and

     

    (e)  such
      other documents as the Bank or the Bank’s counsel shall reasonably
      request.

     

    All
      of
      such items shall be reasonably satisfactory in form and substance to
the
      Bank
and
      its
      counsel.

     

    Section
      2.7  Bank’s
      Deliveries at Closing.
      At the
      Closing, the Bank shall deliver the following items to Acquiror:

     

    (a)  a
      good
      standing certificate for the Bank issued by the Arizona Corporation Commission
      dated not more than fifteen (15) Business Days prior to the
      Closing;

     

    (b)  a
      copy of
      the articles of incorporation of the Bank certified by the Arizona Corporation
      Commission and dated not more than fifteen (15) Business Days prior to the
      Closing;

     

    (c)  a
      certificate of the Cashier or the President or any Vice President of the Bank
      dated the Closing certifying a copy of the bylaws of the Bank and stating that
      there have been no further amendments to the articles of incorporation of the
      Bank delivered pursuant to this Section;

     

    (d)  copies
      of
      resolutions of the shareholders and the board of directors of the Bank
      authorizing and approving this Agreement and the consummation of the
      transactions contemplated herein, certified as of the Closing by the
      Cashier or the President or any Vice President of the Bank;

     

    (e)  a
      list of
      the Bank Shareholders as of the Closing certified by the Cashier or the
      President or any Vice President of the Bank;

     

    (f)  a
      certificate executed by the President and Cashier
      or any Vice President of the Bank
      dated
      the Closing stating that: (i) all
      of the representations and warranties of the Bank set forth in this Agreement
      are true and correct in all material respects with the same force and effect
      as
      if all of such representations and warranties were made at the Closing; and
      (ii) the
      Bank has performed or complied in all material respects with all of the
      covenants and obligations to be performed or complied with by it under the
      terms
      of this Agreement on or prior to the Closing, provided,
      however,
      that to
      the extent any representations and warranties, or performance and compliance
      with any covenants and obligations, are subject in this Agreement to a standard
      of Knowledge, materiality, material adverse effect or similar standard, such
      representations and warranties shall be true and correct in all respects, and
      the Bank shall have performed and complied in all respects with such covenants
      and obligations, in each case to the extent of the Knowledge, materiality,
      material adverse effect or similar standard set forth herein; 

     

    (g)  a
      certificate of each of the Bank’s legal counsel, accountants and financial
      advisor or investment banker, if any, representing that their respective fees
      and expenses incurred by the Bank prior to and including the Effective Time
      in
      connection with the transactions contemplated by this Agreement, including
      the
      Merger, have been paid in full or were fully accrued prior to the close of
      business on the day immediately preceding the Closing;

     

    (h)  a
      legal
      opinion of counsel to the Bank dated the Closing to the effect set forth in
      Exhibit A;
      and

     

    (i)  such
      other documents as Acquiror or AB&T or their counsel shall reasonably
      request.

     

    All
      of
      such items shall be reasonably satisfactory in form and substance to
Acquiror,
      AB&T and
      their
      counsel.

     

    Section
      2.8  Alternative
      Structure.
      Notwithstanding anything contained herein to the contrary, Acquiror may request
      for any reasonable business, tax or regulatory purpose that the Bank enter
      into
      transactions other than those described in this Agreement to effect the purposes
      of this Agreement, including the merger of the Bank with any other Affiliate
      of
      Acquiror, and if requested by Purchaser, the parties to this Agreement shall
      take all action necessary and appropriate to effect, or cause to be effected,
      such transactions; provided,
      however,
      that no
      such proposed change in the structure of the transactions contemplated by this
      Agreement shall delay the Closing (if such a date has already been firmly
      established) by more than thirty (30) Business Days or adversely affect the
      economic benefits, the form of consideration or the tax effect of the Merger
      at
      the Effective Time to the Bank Shareholders.

     

    Section
      2.9  Branch
      Sale.
      The
      parties acknowledge and agree that it is their intent as part of the
      Contemplated Transactions that concurrently with, or promptly after the
      execution of this Agreement, the Bank enter into an agreement (the “Branch
      Sale Agreement”)
      with
      TrustBank providing for the sale and transfer to TrustBank of certain of the
      Bank’s assets, including the Bank’s leasehold interest in its office located at
      7910 South Kyrene Road, Suite 108, Tempe, Arizona, and the assumption by
      TrustBank of certain deposit liabilities of the Bank, all on terms and
      conditions mutually agreed upon by Acquiror, TrustBank and AB&T.
Acquiror,
      AB&T and the Bank agree to take such steps as may be necessary to obtain all
      requisite regulatory, corporate and other approvals to effect the Branch Sale
      and the relocation of the Bank’s main office from its current Tempe location to
      the Bank’s office located at Camelback Road, Phoenix, Arizona (the “Office
      Relocation”),
      subject to the consummation of, and to be effective immediately after the Merger
      or as soon as practicable thereafter. The
      Branch Sale shall be accomplished pursuant to the Branch Sale Agreement which
      shall contain such terms and conditions as are ordinary and customary for branch
      sales and shall otherwise be in a form reasonably acceptable to Acquiror and
      the
      Bank. Notwithstanding
      anything contained herein to the contrary, the Office Relocation and the Branch
      Sale will be effective no earlier than the Effective Time.

     

    Section
      2.10  Absence
      of Control.
      Subject
      to any specific provisions of this Agreement, it is the intent of the parties
      to
      this Agreement that none of Acquiror, AB&T, TrustBank or the Bank by reason
      of this Agreement shall be deemed (until consummation of the Merger and the
      Branch Sale) to control, directly or indirectly, any other party and shall
      not
      exercise, or be deemed to exercise, directly or indirectly, a controlling
      influence over the management or policies of any such other party.

     

    Article
      3  

    Conversion
      of Stock in the Merger

     

    Section
      3.1  Manner
      of Merger.

     

    (a)  Subject
      to the provisions of this Agreement, including the possible adjustment set
      forth
      in this Section, each Outstanding Bank Share (other than shares of Bank Stock
      that are held by shareholders exercising appraisal rights pursuant to the
      Arizona Statutes (“Dissenting
      Shareholders”))
      and
      each outstanding Bank NQSO and Bank ISO shall, ipso
      facto
      and
      without any action on the part of the holder thereof, become and be converted
      at
      the Effective Time as follows:

     

    (i)  each
      share of common stock of AB&T that is issued and outstanding immediately
      prior to the Effective Time shall be converted into one validly issued, fully
      paid and non-assessable share of common stock of the Resulting
      Bank;

     

    (ii)  each
      Outstanding Bank Share shall be converted into the right to receive cash in
      an
      amount equal to Ten Dollars and Twenty and One Half Cents ($10.205) (the
“Purchase
      Price Per Share”),
      provided that there are no greater than 1,730,463 shares of Outstanding Bank
      Shares; 

     

    (iii)  each
      Bank
      NQSO shall, ipso
      facto
      and
      without any action on the part of holders thereof, become and be converted
      into
      the right to receive the difference between the Purchase Price Per Share and
      Six
      Dollars and Thirty One Cents ($6.31) (the “NQSO Option
      Spread”),
      payable as provided herein and less any Tax withholding required under the
      Code
      or any provision of state or local law, and prior to the Effective Time, the
      Bank’s board of directors shall take such actions or make such determinations as
      may be required under the Bank’s stock option plan or plans, subject to the
      approval of Acquiror, to effect the provisions of this Agreement;

     

    (iv)  each
      Bank
      ISO shall, ipso
      facto
      and
      without any action on the part of holders thereof, become and be converted
      into
      the right to receive the difference between the Purchase Price Per Share and
      Ten
      Dollars ($10.00) (the “ISO
      Option Spread”),
      payable as provided herein and less any Tax withholding required under the
      Code
      or any provision of state or local law, and prior to the Effective Time, the
      Bank’s board of directors shall take such actions or make such determinations as
      may be required under the Bank’s stock option plan or plans, subject to the
      approval of Acquiror, to effect the provisions of this Agreement;
      and

     

    (v)  each
      share of Bank Stock held by the Bank as treasury stock shall not be converted
      into the right to receive cash, but instead shall be canceled as a result of
      the
      Merger.

     

    (b)  For
      purposes of this Agreement, if the Adjusted Shareholders’ Equity is less than
      Eleven Million Two Hundred Thirty Five Thousand Dollars ($11,235,000), the
      total
      purchase price of Eighteen Million Dollars ($18,000,000) to be paid by Acquiror
      pursuant to this Agreement shall be reduced by any amount by which the Adjusted
      Shareholders’ Equity is less than Eleven Million Two Hundred Thirty Five
      Thousand Dollars ($11,235,000) (the “Adjusted Total Purchase Price”), and the
      Purchase Price Per Share and each of the ISO Option Spread and the NQSO Option
      Spread shall be adjusted as appropriate to take into account such adjustment
      in
      Acquiror’s total purchase price to be paid pursuant to this Agreement.

     

    Section
      3.2  Rights
      as Shareholders; Stock Transfers.
      At the
      Effective Time, the Bank Shareholders shall cease to be, and shall have no
      rights as, Bank Shareholders, other than to receive the Merger Consideration.
      All rights to receive the Merger Consideration in exchange for shares of Bank
      Stock shall be deemed to have been paid in full satisfaction of all rights
      pertaining to all Outstanding Bank Shares. After the Effective Time, there
      shall
      be no transfers on the stock transfer books of the Bank or the Resulting Bank
      of
      shares of Bank Stock. If Certificates are presented to the Paying Agent after
      the Effective Time, they shall be canceled and exchanged for the applicable
      Merger Consideration as provided in this Agreement.

     

    Section
      3.3  Steps
      of Transaction.

     

    (a)  Upon
      the
      occurrence of the Closing and on the terms and conditions of this Agreement,
      AB&T will pay or cause to be paid to each holder of record of Bank Stock
      such holder’s pro rata share of the Merger Consideration in accordance with the
      procedures set forth in this Section.

     

    (b)  AB&T
      or any of Acquiror’s banking subsidiaries selected by Acquiror shall serve as
      Paying Agent for the parties (the “Paying
      Agent”)
      to
      effect the surrender of the Certificates in exchange for cash, as provided
      in
      this Article, all pursuant to the terms of a Paying Agent Agreement in the
      form
      of Exhibit B.

     

    (c)  As
      soon
      as is reasonably practicable, but in no event later than five (5) Business
      Days after the Closing Date, the Paying Agent shall mail to each holder of
      record of Bank Stock, instructions for use in effecting the surrender of the
      Certificates in exchange for the Merger Consideration (the “Transmittal
      Letter”),
      and
      shall specify that delivery shall be effected, and risk of loss and title to
      the
      certification, shall pass upon delivery of the certificates (or a lost
      certificate affidavit and a bond in a form reasonably acceptable to Acquiror).
      Upon proper surrender to the Paying Agent of a Certificate for exchange and
      cancellation, together with such properly completed and duly executed
      Transmittal Letter, the holder of such Certificates shall be entitled to receive
      in exchange therefore a check representing the amount of Merger Consideration
      that such holder is entitled to receive pursuant to this Article, and the
      Certificates so surrendered shall forthwith be cancelled. 

     

    (d)  The
      Paying Agent shall deliver to each Bank Shareholder who has submitted a
      completed Transmittal Letter, accompanied by the related Certificates, the
      Merger Consideration, without interest, to which he or she is entitled to
      receive pursuant to the terms of this Agreement.

     

    (e)  Neither
      the Paying Agent nor any party hereto shall be liable to any former Bank
      Shareholder for any amount properly delivered to a public official pursuant
      to
      applicable abandoned property, escheat or similar laws. 

     

    (f)  Each
      of
      the Paying Agent, the Resulting Bank and Acquiror shall be entitled to deduct
      and withhold from the consideration otherwise payable to any Person pursuant
      to
      this Article such amounts as it is required to deduct and withhold with respect
      to the making of such payment under any Legal Requirement. If the Paying Agent,
      the Resulting Bank or Acquiror, as the case may be, so withholds amounts, such
      amounts shall be treated for all purposes of this Agreement as having been
      paid
      to the Bank Shareholders by the Paying Agent.

     

    (g)  If
      any
      Certificate shall have been lost, stolen or destroyed, upon the making of an
      affidavit of the fact by the Person claiming such Certificate to be lost, stolen
      or destroyed and the posting by such person of a bond, in such reasonable amount
      as the Paying Agent or the Resulting Bank may direct, as indemnity against
      any
      claim that may be made against it with respect to such Certificate, the Paying
      Agent will issue, in exchange for such lost, stolen or destroyed Certificate,
      the appropriate amount of cash, as provided in this Article, to be paid in
      respect of Bank Stock represented by such Certificate.

     

    (h)  Any
      portion of the Merger Consideration that remains unclaimed by the Bank
      Shareholders on the six (6) month anniversary of the Effective Time shall
      be paid to Acquiror to be held for the benefit of holders of unsurrendered
      Certificates. Any Bank Shareholders who have not theretofore complied with
      this
      Article shall thereafter look only to Acquiror for payment of the Merger
      Consideration without any interest thereon.

     

    (i)  If
      a
      check representing Merger Consideration is to be issued in a name other than
      that in which the Certificate surrendered in exchange therefor is registered,
      it
      shall be a condition of the issuance thereof that the Certificate so surrendered
      shall be properly endorsed, accompanied by all documents required to evidence
      and effect such transfer and otherwise in proper form for transfer and that
      the
      Person requesting such payment shall pay to Acquiror any transfer or other
      taxes
      required by reason of the issuance of a check for Merger Consideration in any
      name other than that of the registered holder of the Certificate surrendered,
      or
      otherwise required, or shall establish to the satisfaction of Acquiror that
      such
      tax has been paid or is not payable.

     

    (j)  Immediately
      prior to the Effective Time, all outstanding Bank NQSOs and Bank ISOs shall
      become immediately exercisable and fully vested. At the Effective Time, all
      outstanding Bank NQSOs and Bank ISOs shall be converted into cash as provided
      in
      this Section. Immediately prior to the Effective Time, all outstanding Bank
      NQSOs and Bank ISOs shall be cancelled and, immediately after the Effective
      Time, AB&T shall pay each holder, for each Bank NQSO held, an amount in cash
      equal to the NQSO Option Spread, and for each Bank ISO held, an amount in cash
      equal to the ISO Option Spread, reduced in the case of all such payments, by
      any
      required Tax withholdings. The payment of the NQSO Option Spreads and the ISO
      Option Spreads pursuant to this Article shall be delivered and paid in full
      satisfaction of all rights pertaining to the outstanding Bank NQSOs and Bank
      ISOs, respectively.

     

    Section
      3.4  Dissenting
      Shares.
      Notwithstanding anything in this Agreement to the contrary, the shares of Bank
      Stock that are issued and outstanding immediately prior to the Effective Time
      and that are held by Dissenting Shareholders (the “Dissenting
      Shares”)
      shall
      not be converted into or be exchangeable for the right to receive the Merger
      Consideration pursuant to the provisions of this Article, unless and until
      such
      holder shall have failed to perfect or shall have effectively withdrawn the
      holder’s right to appraisal and payment under the Arizona Statutes. If such
      holder shall have so failed to perfect or shall have effectively withdrawn
      or
      lost such right, such Bank Stock shall thereupon be deemed to have been
      converted into and to have become exchangeable for, as of the Effective Time,
      the right to receive the consideration described in this Article, without any
      interest thereon. The Bank agrees to give Acquiror notice of any written demands
      for appraisal or notices of dissent with respect to any Bank Stock pursuant
      to
      the Arizona Statutes, or any withdrawal of any such demand, and any other
      instruments served and received by the Bank, and Acquiror shall have the right
      to participate in all negotiations and proceedings with respect to any demands
      for appraisal made by any Dissenting Shareholders. Prior to the Effective Time,
      the Bank shall not, except with the prior written consent of Acquiror, make
      any
      payment with respect to, or offer to settle, any such demands.

     

    Article
      4  

     

    Representations
      and Warranties of the Bank

     

    The
      Bank
      hereby represents and warrants to Acquiror and AB&T that the following are
      true and correct as of the Agreement Date, and will be true and correct as
      of
      the Effective Date:

     

    Section
      4.1  Bank
      Organization.
      The
      Bank
      is an Arizona corporation that holds a banking permit and is validly existing
      and in good standing under the laws of the State of Arizona. The Bank has full
      power and authority, corporate and otherwise, to own, operate and lease its
      properties as presently owned, operated and leased, and to carry on its business
      as it is now being conducted, and is duly qualified to do business and is in
      good standing in each jurisdiction in which the nature of the business conducted
      or the properties or assets owned or leased by it makes such qualification
      necessary. Copies of the articles of incorporation and bylaws of the Bank and
      all amendments thereto are set forth on Schedule 4.1
      and are
      complete and correct.

     

    Section
      4.2  Authorization;
      Enforceability. 

     

    (a)  The
      Bank
      has the requisite power and authority to enter into and perform its obligations
      under this Agreement. The execution, delivery and performance of this Agreement
      by the Bank, and the consummation by it of its obligations under this Agreement,
      have been authorized by all necessary corporate action, subject to shareholder
      approval, and this Agreement constitutes a legal, valid and binding obligation
      of the Bank enforceable in accordance with its terms, except as such enforcement
      may be limited by bankruptcy, insolvency, reorganization or other laws affecting
      creditors’ rights generally and subject to general principles of
      equity.

     

    (b)  Except
      for ordinary corporate requirements, no “business combination,” “moratorium,”
“control share” or other state anti-takeover statute or regulation or any
      provisions contained in the articles of incorporation or bylaws or similar
      organizational documents of the Bank: (i) prohibits
      or restricts the Bank’s ability to perform its obligations under this Agreement,
      or its ability to consummate the Contemplated Transactions; (ii) would
      have the effect of invalidating or voiding this Agreement, or any provision
      hereof; or (iii) would
      subject Acquiror or AB&T to any material impediment or condition in
      connection with the exercise of any of its rights under this Agreement. The
      board of directors of the Bank has unanimously approved the execution of, and
      performance by the Bank of its obligations under, this Agreement.

     

    Section
      4.3  No
      Conflict.
      Except
      as set forth on Schedule 4.3,
      neither
      the execution nor delivery of this Agreement nor the consummation or performance
      of any of the Contemplated Transactions will, directly or indirectly (with
      or
      without notice or lapse of time): (a) contravene,
      conflict with or result in a violation of any provision of the articles of
      incorporation or bylaws (or similar organizational documents), each as in effect
      on the Agreement Date, or any currently effective resolution adopted by the
      board of directors or shareholders of the Bank; (b) contravene,
      conflict with or result in a violation of, or give any Regulatory Authority
      or
      other Person the valid and enforceable right to challenge any of the
      Contemplated Transactions or to exercise any remedy or obtain any relief under,
      any Legal Requirement or any Order to which the Bank, or any of their respective
      assets that are owned or used by them, may be subject, except for any
      contravention, conflict or violation that is permissible by virtue of obtaining
      the regulatory approvals necessitated by the Contemplated Transactions,
      including such approvals under the Federal Deposit Insurance Act, as amended
      (the “FDIA”)
      and
      the Arizona Statutes; (c) contravene,
      conflict with or result in a violation or breach of any provision of, or give
      any Person the right to declare a default or exercise any remedy under, or
      to
      accelerate the maturity or performance of, or to cancel, terminate or modify
      any
      material Contract to which the Bank is a party or by which any of their
      respective assets is bound; or (d) result
      in the creation of any lien, charge or encumbrance upon or with respect to
      any
      of the assets owned or used by the Bank or any subsidiary of the Bank. Except
      for the approvals referred to in Section
      8.1
      and the
      requisite approval of its shareholders, the Bank is not or will not be required
      to give any notice to or obtain any consent from any Person in connection with
      the execution and delivery of this Agreement or the consummation or performance
      of any of the Contemplated Transactions.

     

    Section
      4.4  Bank
      Capitalization.

     

    (a)  The
      authorized capital stock of the Bank currently consists, and at the Closing
      will
      consist, exclusively of 10,000,000 shares
      of
      Bank Stock, 1,730,463 of which shares are duly issued, fully paid and
      non-assessable. The Bank acknowledges that the Merger Consideration was
      determined based upon the accuracy of the representations and warranties made
      in
      this Section with respect to the number of outstanding shares of Bank Stock
      and
      the absence of any options (except for the Bank NQSOs and the Bank ISOs) or
      other rights to purchase additional shares of Bank Stock, and acknowledges
      that
      any Breach of such representations and warranties shall be deemed to have a
      Material Adverse Effect on the Bank for purposes of this Agreement.

     

    (b)  None
      of
      the shares of Bank Stock have been issued in violation of any federal or state
      securities laws or any other Legal Requirement. Since December 31, 2004,
      except as disclosed in or permitted by this Agreement or as provided on
Schedule 4.4,
      no
      shares of Bank Stock have been purchased, redeemed or otherwise acquired,
      directly or indirectly, by the Bank and no dividends or other distributions
      payable in any equity securities of the Bank have been declared, set aside,
      made
      or paid to the Bank Shareholders. To the Knowledge of the Bank, none of the
      shares of authorized capital stock of the Bank are, nor on the Closing will
      they
      be, subject to any claim of right inconsistent with this Agreement. Except
      for
      the Bank NQSOs and the Bank ISOs and as provided in the Arizona Statutes, as
      of
      the Agreement Date, there are no outstanding subscriptions, contracts,
      conversion privileges, options, warrants, calls or other rights obligating
      the
      Bank to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
      acquire, any shares of capital stock of the Bank, and except as provided in
      this
      Section or otherwise disclosed in this Agreement, the Bank is not a party to
      any
      Contract relating to the issuance, purchase, sale or transfer of any equity
      securities or other securities of the Bank. The Bank does not own or have any
      Contract to acquire any equity securities or other securities of any Person
      or
      any direct or indirect equity or ownership interest in any other business except
      for the capital stock of the Bank and as set forth in Schedule 4.4.

     

    Section
      4.5  Financial
      Statements and Reports.
      True,
      correct and complete copies of Call Reports for the Bank as of the close of
      business on December 31, 2002, 2003 and 2004, and for the nine months ended
      September 30, 2005 (collectively, the “Bank
      Financial Statements”),
      are
      included in Schedule 4.5.
      The
      Bank Financial Statements have been prepared on a basis consistent with past
      accounting practices and as required by applicable Legal Requirements and fairly
      present the Bank’s financial condition and results of operations at the dates
      and for the periods presented. The Bank Financial Statements are complete and
      correct in all material respects and fairly and accurately present the
      respective financial position, assets, liabilities and results of operations
      of
      the Bank as at the respective dates of, and for the periods referred to in,
      the
      Bank Financial Statements, subject to normal year-end non-material audit
      adjustments in amounts consistent with past practice. The Bank Financial
      Statements do not include any material assets or omit to state any material
      liabilities, absolute or contingent, or other facts, which inclusion or omission
      would render the Bank Financial Statements misleading in any material respect
      as
      of the respective dates and for the periods referred to in the respective Bank
      Financial Statements.

     

    Section
      4.6  Books
      and Records.
      The
      books of account, minute books, stock record books and other records of the
      Bank
      are complete and correct in all material respects and have been maintained
      in
      accordance with the Bank’s business practices and all applicable Legal
      Requirements, including the maintenance of any adequate system of internal
      controls required by the Legal Requirements. The minute books of the Bank
      contain accurate and complete records in all material respects of all meetings
      held of, and corporate action taken by, its respective shareholders, board
      of
      directors and committees of the board of directors. At the Closing, all of
      those
      books and records will be in the possession of the Bank.

     

    Section
      4.7  Title
      to Properties.
      The
      Bank has good and marketable title to all assets and properties, whether real
      or
      personal, tangible or intangible, that it purports to own, subject to no valid
      liens, mortgages, security interests, encumbrances or charges of any kind
      except: (a) as
      noted in the most recent Bank Financial Statement or on Schedule 4.7;
      (b) statutory
      liens for Taxes not yet delinquent or being contested in good faith by
      appropriate Proceedings and for which appropriate reserves have been established
      and reflected on the Bank Financial Statements; (c) pledges
      or liens required to be granted in connection with the acceptance of government
      deposits or granted in connection with repurchase or reverse repurchase
      agreements; and (d) minor
      defects and irregularities in title and encumbrances that do not materially
      impair the use thereof for the purposes for which they are held (all of such
      exceptions in clauses (a) through (d) are collectively referred to as
“Permitted
      Exceptions”).
      Except as set forth on Schedule 4.7,
      the
      Bank as lessee has the right under valid and existing leases to occupy, use,
      possess and control any and all of the respective property leased by it. Except
      where any failure would not reasonably be expected to have a Material Adverse
      Effect on the Bank, all buildings and structures owned by the Bank lie wholly
      within the boundaries of the real property owned or validly leased by it, and
      do
      not encroach upon the property of, or otherwise conflict with the property
      rights of, any other Person.

     

    Section
      4.8  Condition
      and Sufficiency of Assets.
      The
      buildings, structures and equipment of the Bank are structurally sound, are
      in
      good operating condition and repair, and are adequate for the uses to which
      they
      are being put, and none of such buildings, structures or equipment is in need
      of
      maintenance or repairs except for ordinary, routine maintenance and repairs
      that
      are not material in the aggregate in nature or in cost. Except where any failure
      would not reasonably be expected to have a Material Adverse Effect on the Bank,
      the real property, buildings, structures and equipment owned or leased by the
      Bank are in compliance with the Americans with Disabilities Act of 1990, as
      amended, and the regulations promulgated thereunder, and all other building
      and
      development codes and other restrictions, including subdivision regulations,
      building and construction regulations, drainage codes, health, fire and safety
      laws and regulations, utility tariffs and regulations, conservation laws and
      zoning laws and ordinances. The assets and properties, whether real or personal,
      tangible or intangible, that the Bank purports to own are sufficient for the
      continued conduct of the business of the Bank after the Closing in substantially
      the same manner as conducted prior to the Closing.

     

    Section
      4.9  Loans;
      Allowance for Loan and Lease Losses.
      Except
      as set forth in Schedule 4.9,
      all
      loans and loan commitments extended by the Bank and any extensions, renewals
      or
      continuations of such loans and loan commitments (the “Bank
      Loans”)
      were
      made in accordance with the lending policies of the Bank in the Ordinary Course
      of Business. The Bank Loans are evidenced by appropriate and sufficient
      documentation and constitute valid and binding obligations to the Bank
      enforceable in accordance with their terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization or other laws affecting
      creditors’ rights generally and subject to general principles of equity. All
      such Bank Loans are, and at the Closing will be, free and clear of any
      encumbrance or other charge (except for liens, if any, set forth on Schedule 4.7)
      and the
      Bank has complied, and at the Closing will have complied with all Legal
      Requirements relating to such Bank Loans, except where any such failure to
      comply would not reasonably be expected to have a Material Adverse Effect on
      the
      Bank. The allowance for loan and lease losses of the Bank is and will be on
      the
      Closing adequate in all material respects to provide for possible or specific
      losses, net of recoveries relating to loans previously charged off, and contains
      and will contain an additional amount of unallocated reserves for unanticipated
      future losses at an adequate level. To the Knowledge of the Bank: (i) none
      of the Bank Loans is subject to any material offset or claim of offset; and
      (ii) the aggregate loan balances in excess of the Bank’s allowance for loan
      and lease losses are, based on past loan loss experience, collectible in
      accordance with their terms (except as limited above) and all uncollectible
      loans have been charged off. 

     

    Section
      4.10  Undisclosed
      Liabilities; Adverse Changes.
      Except
      as set forth on Schedule 4.10,
      the
      Bank has no material liabilities or obligations of any nature (whether absolute,
      accrued, contingent or otherwise), except for liabilities or obligations
      reflected or reserved against in the Bank Financial Statements and current
      liabilities incurred in the Ordinary Course of Business since the respective
      dates thereof. Except as set forth on Schedule 4.10,
      since
      the date of the latest Bank Financial Statement, there has not been any change
      in the business, operations, properties, prospects, assets or condition of
      the
      Bank, and, to the Bank’s Knowledge, no event has occurred or circumstance
      exists, that has had or would reasonably be expected to have a Material Adverse
      Effect on the Bank. 

     

    Section
      4.11  Taxes.
      The
      Bank has duly filed all material Tax Returns required to be filed by it, and
      each such Tax Return is complete and accurate in all material respects. The
      Bank
      has paid, or made adequate provision for the payment of, all Taxes (whether
      or
      not reflected in Tax Returns as filed or to be filed) due and payable by the
      Bank, or claimed to be due and payable by any Regulatory Authority, and is
      not
      delinquent in the payment of any Tax, except such Taxes as are being contested
      in good faith and as to which adequate reserves have been provided. There is
      no
      claim or assessment pending or, to the Knowledge of the Bank, Threatened against
      the Bank for any Taxes owed by any of them. No audit, examination or
      investigation related to Taxes paid or payable by the Bank is presently being
      conducted or, to the Knowledge of the Bank, Threatened by any Regulatory
      Authority. The Bank has delivered or made available to Acquiror true, correct
      and complete copies of all Tax Returns filed with respect to the last three
      fiscal years by the Bank and any tax examination reports and statements of
      deficiencies assessed or agreed to for any such time period.

     

    Section
      4.12  Compliance
      with ERISA.
      Except
      as set forth on Schedule 4.12,
      all
      employee benefit plans (as defined in Section 3(3)
      of
      ERISA) and all Bank Employee Benefit Plans established or maintained by the
      Bank
      or to which the Bank contributes, are in compliance with all applicable
      requirements of ERISA, and are in compliance with all applicable requirements
      (including qualification and non-discrimination requirements in effect as of
      the
      Closing) of the Code for obtaining the tax benefits the Code thereupon permits
      with respect to such employee benefit plans. No such employee benefit plan
      has
      any amount of unfunded benefit liabilities (as defined in Section 4001(a)(18)
      of ERISA) for which the Bank would be liable to any Person under Title IV
      of ERISA if any such employee benefit plan were terminated as of the Closing.
      Such employee benefit plans are funded in accordance with Section 412
      of
      the Code (if applicable). There would be no obligations of the Bank under
      Title IV of ERISA relating to any such employee benefit plan that is a
      multi-employer plan if any such plan were terminated or if the Bank withdrew
      from any such plan as of the Closing. All contributions and premium payments
      that are due under any such benefit plans have been made.

     

    Section
      4.13  Compliance
      with Legal Requirements.
      The
      Bank holds all licenses, certificates, permits, franchises and rights from
      all
      appropriate Regulatory Authorities necessary for the conduct of its respective
      business. Except as set forth on Schedule 4.13,
      the
      Bank is, and at all times since January 1, 2002, has been, in compliance
      with each Legal Requirement that is or was applicable to it or to the conduct
      or
      operation of its respective businesses or the ownership or use of any of its
      respective assets, except where the failure to comply would not reasonably
      be
      expected to have a Material Adverse Effect on the Bank. No event has occurred
      or
      circumstance exists that (with or without notice or lapse of time):
      (a) may
      constitute or result in a violation by the Bank of, or a failure on the part
      of
      the Bank to comply with, any Legal Requirement; or (b) may
      give rise to any obligation on the part of the Bank to undertake, or to bear
      all
      or any portion of the cost of, any remedial action of any nature in connection
      with a failure to comply with any Legal Requirement; except, in either case,
      where the failure to comply or the violation would not reasonably be expected
      to
      have a Material Adverse Effect on the Bank. Except as set forth on Schedule 4.13,
      the
      Bank has not received, at any time since January 1, 2002, any notice or
      other communication (whether oral or written) from any Regulatory Authority
      or
      any other Person, nor does the Bank have any Knowledge regarding: (x) any
      actual, alleged, possible or potential violation of, or failure to comply with,
      any Legal Requirement; or (y) any actual, alleged, possible or potential
      obligation on the part of the Bank to undertake, or to bear all or any portion
      of the cost of, any remedial action of any nature in connection with a failure
      to comply with any Legal Requirement, except where any such violation, failure
      or obligation would not reasonably be expected to have a Material Adverse Effect
      on the Bank.

     

    Section
      4.14  Legal
      Proceedings; Orders. 

     

    (a)  Schedule 4.14
      is a
      true and correct list of all Proceedings and Orders pending, entered into or,
      to
      the Knowledge of the Bank, Threatened against, affecting or involving the Bank
      or any of their respective assets or businesses, or the Contemplated
      Transactions, since January 1, 2002, that has not been fully satisfied and
      terminated and that would reasonably be expected to have, a Material Adverse
      Effect on the Bank, and there is no fact to the Bank’s Knowledge that would
      provide a basis for any other Proceeding or Order. To the Knowledge of the
      Bank,
      no officer, director, agent or employee of the Bank is subject to any Order
      that
      prohibits such officer, director, agent or employee from engaging in or
      continuing any conduct, activity or practice relating to the businesses of
      the
      Bank as currently conducted.

     

    (b)  Except
      as
      described on Schedule 4.14,
      the
      Bank: (i) is
      not subject to any cease and desist or other Order or enforcement action issued
      by, or (ii) is
      not a party to any written agreement, consent agreement or memorandum of
      understanding with, or (iii) is
      not a party to any commitment letter or similar undertaking to, or (iv) is
      subject to any order or directive by, or (v) is
      subject to any supervisory letter from, or (vi) has
      not been ordered to pay any civil money penalty, which has not been paid, by,
      or
      (vii) ) has
      not adopted any policies, procedures or board resolutions at the request of,
      any
      Regulatory Authority that currently (w) restricts in any material respect
      the conduct of its business or (x) that in any material manner relates to
      its capital adequacy, or (y) restricts its ability to pay dividends, or
      (z) limits in any material manner its credit or risk management policies,
      its management or its business; nor has the Bank been advised by any Regulatory
      Authority that it is considering issuing, initiating, ordering or requesting
      any
      of the foregoing. 

     

    Section
      4.15  Absence
      of Certain Changes and Events.
      Except
      as set forth on Schedule 4.15,
      since
      December 31, 2004, the Bank has conducted its business only in the Ordinary
      Course of Business. Without limiting the foregoing, with respect to each, since
      December 31, 2004, there has not been any:

     

    (a)  change
      in
      its authorized or issued capital stock; grant of any stock option or right
      to
      purchase shares of its capital stock; issuance of any security convertible
      into
      such capital stock or evidences of indebtedness (except in connection with
      customer deposits); grant of any registration rights; purchase, redemption,
      retirement or other acquisition by it of any shares of any such capital stock;
      or declaration or payment of any dividend or other distribution or payment
      in
      respect of shares of its capital stock;

     

    (b)  amendment
      to its articles of incorporation or bylaws or adoption of any resolutions by
      its
      board of directors or shareholders with respect to the same;

     

    (c)  payment
      or increase of any bonus, salary or other compensation to any of its
      shareholders, directors, officers or employees, except for normal increases
      in
      the Ordinary Course of Business or in accordance with any then existing Bank
      Employee Benefit Plan disclosed in the Schedules, or entry by it into any
      employment, consulting, non-competition, change in control, severance or similar
      Contract with any shareholder, director, officer or employee;

     

    (d)  adoption,
      amendment (except for any amendment necessary to comply with any Legal
      Requirement) or termination of, or increase in the payments to or benefits
      under, any Bank Employee Benefit Plan;

     

    (e)  damage
      to
      or destruction or loss of any of its assets or property, whether or not covered
      by insurance and where the resulting diminution in value individually or in
      the
      aggregate is greater than $10,000;

     

    (f)  entry
      into, termination or extension of, or receipt of notice of termination of any
      joint venture or similar agreement pursuant to any Contract or any similar
      transaction;

     

    (g)  except
      for this Agreement, entry into any new, or modification, amendment, renewal
      or
      extension (through action or inaction) of the terms of any existing, lease,
      Contract or license that has a term of more than one year or that involves
      the
      payment the Bank of more than $10,000 in the aggregate;

     

    (h)  Bank
      Loan
      or commitment to make any Bank Loan other than in the Ordinary Course of
      Business;

     

    (i)  Bank
      Loan
      or commitment to make, renew, extend the term or increase the amount of any
      Bank
      Loan to any Person if such Bank Loan or any other Bank Loans to such Person
      or
      an Affiliate of such Person is on the “watch list” or similar internal report of
      the Bank, or has been classified by the Bank or Regulatory Authority as
“substandard,” “doubtful,” “loss,” or “other loans specially mentioned” or
      listed as a “potential problem loan”; provided,
      however,
      that
      nothing in this Section shall prohibit the Bank from honoring any contractual
      obligation in existence on the date of this Agreement;

     

    (j)  incurrence
      by it of any obligation or liability (fixed or contingent) other than in the
      Ordinary Course of Business;

     

    (k)  sale
      (other than any sale in the Ordinary Course of Business), lease or other
      disposition of any of its assets or properties, or mortgage, pledge or
      imposition of any lien or other encumbrance upon any of its material assets
      or
      properties, except for tax and other liens that arise by operation of law and
      with respect to which payment is not past due, and except for pledges or liens:
      (i) required to be granted in connection with the acceptance by the Bank of
      government deposits; (ii) granted in connection with repurchase or reverse
      repurchase agreements; or (iii) otherwise incurred in the Ordinary Course
      of Business;

     

    (l)  cancellation
      or waiver by it of any claims or rights with a value in excess of
      $5,000;

     

    (m)  any
      investment by it of a capital nature exceeding $10,000 or aggregate investments
      of a capital nature exceeding $50,000;

     

    (n)  except
      for the Contemplated Transactions, merger or consolidation with or into any
      other Person, or acquisition of any stock, equity interest or business of any
      other Person;

     

    (o)  transaction
      for the borrowing or loaning of monies, or any increase in any outstanding
      indebtedness, other than in the Ordinary Course of Business; 

     

    (p)  material
      change in any policies and practices with respect to liquidity management and
      cash flow planning, marketing, deposit origination, lending, budgeting, profit
      and tax planning, accounting or any other material aspect of its business or
      operations, except for such changes as may be required in the opinion of the
      management of the Bank to respond to then current market or economic conditions
      or as may be required by any Regulatory Authorities;

     

    (q)  filing
      of
      any applications for additional branches, opening of any new office or branch,
      closing of any current office or branch, or relocation of operations from
      existing locations;

     

    (r)  discharge
      or satisfaction of any material lien or encumbrance on its assets or repayment
      of any material indebtedness for borrowed money, except for obligations incurred
      and repaid in the Ordinary Course of Business;

     

    (s)  entry
      into any Contract or agreement to buy, sell, exchange or otherwise deal in
      any
      assets or series of assets in a single transaction in excess of $10,000 in
      aggregate value, except for sales by the Bank of “other real estate owned” and
      other repossessed properties or the acceptance of a deed in lieu of
      foreclosure;

     

    (t)  purchase
      or other acquisition of any investments, direct or indirect, in any derivative
      securities, financial futures or commodities or entry into any interest rate
      swap, floors and option agreements, or other similar interest rate management
      agreements;

     

    (u)  hiring
      of
      any employee with an annual salary in excess of $25,000, except for employees
      at
      will who are hired to replace employees who have resigned or whose employment
      has otherwise been terminated; or

     

    (v)  agreement,
      whether oral or written, by it to do any of the foregoing.

     

    Section
      4.16  Properties,
      Contracts and Employee Benefit Plans.
      Except
      for Contracts evidencing Bank Loans made by the Bank in the Ordinary Course
      of
      Business, Schedule 4.16
      lists or
      describes the following with respect to the Bank:

     

    (a)  all
      real
      property owned by the Bank and the principal buildings and structures located
      thereon, together with the address of such real estate, and each lease of real
      property to which the Bank is a party, identifying the parties thereto, the
      annual rental payable, the expiration date thereof and a brief description
      of
      the property covered, and in each case of either owned or leased real property,
      the proper identification, if applicable, of each such property as a branch
      or
      main office or other office of the Bank;

     

    (b)  all
      loan
      and credit agreements, conditional sales contracts or other title retention
      agreements or security agreements relating to money borrowed by the Bank,
      exclusive of deposit agreements with customers of the Bank entered into in
      the
      Ordinary Course of Business, agreements for the purchase of federal funds and
      repurchase agreements;

     

    (c)  each
      Contract that involves performance of services or delivery of goods or materials
      by the Bank of an amount or value in excess of $10,000;

     

    (d)  each
      Contract that was not entered into in the Ordinary Course of Business and that
      involves expenditures or receipts of the Bank in excess of $10,000;

     

    (e)  each
      Contract not referred to elsewhere in this Section that:

     

    (i)  relates
      to the future purchase of goods or services that materially exceeds the
      requirements of its respective business at current levels or for normal
      operating purposes; or 

     

    (ii)  materially
      affects the business or financial condition of the Bank;

     

    (f)  each
      lease, rental, license, installment and conditional sale agreement and other
      Contract affecting the ownership of, leasing of, title to or use of, any
      personal property (except personal property leases and installment and
      conditional sales agreements having a value per item or aggregate payments
      of
      less than $10,000 or with terms of less than one year);

     

    (g)  each
      licensing agreement or other Contract with respect to patents, trademarks,
      copyrights, or other intellectual property (collectively, “Intellectual
      Property Assets”),
      including agreements with current or former employees, consultants or
      contractors regarding the appropriation or the non-disclosure of any of the
      Intellectual Property Assets of the Bank;

     

    (h)  each
      collective bargaining agreement and other Contract to or with any labor union
      or
      other employee representative of a group of employees;

     

    (i)  each
      joint venture, partnership and other Contract (however named) involving a
      sharing of profits, losses, costs or liabilities by the Bank with any other
      Person; 

     

    (j)  each
      Contract containing covenants that in any way purport to restrict the business
      activity of the Bank or any Affiliate of any of the foregoing, or limit the
      ability of the Bank or any Affiliate of the foregoing to engage in any line
      of
      business or to compete with any Person;

     

    (k)  each
      Contract providing for payments to or by any Person based on sales, purchases
      or
      profits, other than direct payments for goods;

     

    (l)  the
      name
      and annual salary of each director, officer or employee of the Bank, and the
      profit sharing, bonus or other form of compensation (other than salary) paid
      or
      payable by the Bank to or for the benefit of each such person in question for
      the year ended December 31, 2004, and for the current fiscal year, and any
      employment agreement, consulting agreement, non-competition, severance or change
      in control agreement or similar arrangement or plan with respect to each such
      person;

     

    (m)  each
      profit sharing, group insurance, hospitalization, stock option, pension,
      retirement, bonus, severance, change of control, deferred compensation, stock
      bonus, stock purchase, employee stock ownership or other employee welfare or
      benefit agreements, plans or arrangements established, maintained, sponsored
      or
      undertaken by the Bank for the benefit of the officers, directors or employees
      of the Bank, including each trust or other agreement with any custodian or
      any
      trustee for funds held under any such agreement, plan or arrangement, and all
      other Contracts or arrangements under which pensions, deferred compensation
      or
      other retirement benefits are being paid or may become payable by the Bank
      for
      the benefit of the employees of the Bank (collectively, the “Bank
      Employee Benefit Plans”),
      and,
      in respect to any of them, the latest reports or forms, if any, filed with
      the
      Department of Labor and Pension Benefit Guaranty Corporation under ERISA, any
      current financial or actuarial reports and any currently effective Internal
      Revenue Service private rulings or determination letters obtained by or for
      the
      benefit of the Bank;

     

    (n)  the
      name
      of each Person who is or would be entitled pursuant to any Contract or Bank
      Employee Benefit Plan to receive any payment from the Bank as a result of the
      consummation of the Contemplated Transactions (including any payment that is
      or
      would be due as a result of any actual or constructive termination of a Person’s
      employment or position following such consummation) and the maximum amount
      of
      such payment;

     

    (o)  each
      Contract entered into other than in the Ordinary Course of Business that
      contains or provides for an express undertaking by the Bank to be responsible
      for consequential damages;

     

    (p)  each
      Contract for capital expenditures in excess of $10,000;

     

    (q)  each
      warranty, guaranty or other similar undertaking with respect to contractual
      performance extended by the Bank other than in the Ordinary Course of Business;
      and

     

    (r)  each
      amendment, supplement and modification in respect of any of the
      foregoing.

     

    Copies
      of
      each document, plan or Contract listed and described on Schedule 4.16
      are
      appended to such Schedule.

     

    Section
      4.17  No
      Defaults.
      Except
      as set forth on Schedule 4.17,
      to the
      Knowledge of the Bank, each Contract identified or required to be identified
      on
Schedule 4.16
      is in
      full force and effect and is valid and enforceable in accordance with its terms,
      except as such enforcement may be limited by bankruptcy, insolvency,
      reorganization or other laws affecting creditors’ rights generally and subject
      to general principles of equity. The Bank is, and at all times since
      January 1, 2002, has been, in full compliance with all applicable terms and
      requirements of each Contract under which the Bank has or had any obligation
      or
      liability or by which the Bank or any asset owned or used by it is or was bound,
      except where the failure to be in full compliance would not reasonably be
      expected to have a Material Adverse Effect on the Bank. To the knowledge of
      the
      Bank, each other Person that has or had any obligation or liability under any
      such Contract under which the Bank has or had any rights is, and at all times
      since January 1, 2002, has been, in full compliance with all applicable
      terms and requirements of such Contract, except where the failure to be in
      full
      compliance would not reasonably be expected to have a Material Adverse Effect
      on
      the Bank. No event has occurred or circumstance exists that (with or without
      notice or lapse of time) may contravene, conflict with or result in a material
      violation or breach of, or give the Bank or other Person the right to declare
      a
      default or exercise any remedy under, or to accelerate the maturity or
      performance of, or to cancel, terminate or modify, any Contract. Except in
      the
      Ordinary Course of Business with respect to any Bank Loan, the Bank has not
      given to or received from any other Person, at any time since January 1,
      2002, any notice or other communication (whether oral or written) regarding
      any
      actual, alleged, possible or potential violation or breach of, or default under,
      any Contract, that has not been terminated or satisfied prior to the Agreement
      Date. Other than in the Ordinary Course of Business in connection with workouts
      and restructured loans, there are no renegotiations of, attempts to renegotiate,
      or outstanding rights to renegotiate, any material amounts paid or payable
      to
      the Bank under current or completed Contracts with any Person and no such Person
      has made written demand for such renegotiation.

     

    Section
      4.18  Insurance. Schedule 4.18
      lists
      the
      policies and material terms of insurance (including bankers’ blanket bond and
      insurance providing benefits for employees) owned or held by the Bank on the
      Agreement Date. Each policy is in full force and effect (except for any expiring
      policy which is replaced by coverage at least as extensive). All premiums due
      on
      such policies have been paid in full.

     

    Section
      4.19  Compliance
      with Environmental Laws.
      Except
      as set forth on Schedule 4.19,
      there
      are no actions, suits, investigations, liabilities, inquiries, Proceedings
      or
      Orders involving the Bank or its assets that are pending or, to the Knowledge
      of
      the Bank, Threatened, nor to the Knowledge of the Bank is there any factual
      basis for any of the foregoing, as a result of any asserted failure of the
      Bank,
      or any predecessor thereof, to comply with any federal, state, county and
      municipal law, including any statute, regulation, rule, ordinance, Order,
      restriction and requirement, relating to underground storage tanks, petroleum
      products, air pollutants, water pollutants or process waste water or otherwise
      relating to the environment or toxic or hazardous substances or to the
      manufacture, processing, distribution, use, recycling, generation, treatment,
      handling, storage, disposal or transport of any hazardous or toxic substances
      or
      petroleum products (including polychlorinated biphenyls, whether contained
      or
      uncontained, and asbestos-containing materials, whether friable or not),
      including, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
      Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
      Occupational Health and Safety Act, the Federal Resource Conservation and
      Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
      Environmental Response, Compensation and Liability Act of 1980 and the Superfund
      Amendments and Reauthorization Act of 1986, all as amended, and regulations
      of
      the Environmental Protection Agency, the Nuclear Regulatory Agency and any
      state
      department of natural resources or state environmental protection agency now
      or
      at any time hereafter in effect (collectively, the “Environmental
      Laws”).
      No
      environmental clearances or other governmental approvals are required for the
      conduct of the business of the Bank or the consummation of the Contemplated
      Transactions. To the Knowledge of the Bank, the Bank is not the owner of any
      interest in real estate on which any substances have been used, stored,
      deposited, treated, recycled or disposed of, which substances if known to be
      present on, at or under such property, would require clean-up, removal or some
      other remedial action under any Environmental Law.

     

    Section
      4.20  Regulatory
      Filings.
      The Bank
      has filed in a timely manner all required filings with all Regulatory
      Authorities, including the FDIC and the Department. All such filings were
      accurate and complete in all material respects as of the dates of the filings,
      and no such filing has made any untrue statement of a material fact or omitted
      to state a material fact necessary in order to make the statements made, in
      light of the circumstances under which they were made, not
      misleading.

     

    Section
      4.21  Fiduciary
      Accounts.
      The Bank
      has properly administered in all material respects all accounts for which it
      acts as fiduciary, including accounts for which it serves as trustee, agent,
      custodian or investment advisor, in accordance with the material terms of the
      governing documents and applicable Legal Requirements and common law. Neither
      the Bank nor any of its directors, officers or employees, has committed any
      breach of trust with respect to any such fiduciary account, and the accountings
      for each such fiduciary account are true and correct in all material respects
      and accurately reflect the assets of such fiduciary account.

     

    Section
      4.22  Indemnification
      Claims.
      To the
      Bank’s Knowledge, no action or failure to take action by any of its
      Representatives has occurred that may give rise to a claim or a potential claim
      by any such Person for indemnification against the Bank under any Contract
      with,
      or the corporate indemnification provisions of, the Bank, or under any Legal
      Requirements.

     

    Section
      4.23  Insider
      Interests.
      Except
      as set forth on Schedule 4.23,
      no
      officer or director of the Bank, or any member of the Family of any such Person,
      and no entity that any such Person “controls” within the meaning of
      Regulation O of the Federal Reserve, has any loan, deposit account or any
      other agreement with the Bank, any interest in any material property, real,
      personal or mixed, tangible or intangible, used in or pertaining to the business
      of the Bank.

     

    Section
      4.24  Brokerage
      Commissions.
      Neither
      the Bank nor any of its Representatives has incurred any obligation or
      liability, contingent or otherwise, for brokerage or finders’ fees or agents’
commissions or other similar payment in connection with this Agreement or the
      Contemplated Transactions.

     

    Section
      4.25  Approval
      Delays.
      To the
      Knowledge of the Bank, there is no reason why the granting of any of the
      regulatory approvals referred to in Section
      8.1
      would be
      denied or unduly delayed. The Bank’s most recent Community Reinvestment Act
      (“CRA”)
      rating
      is “satisfactory” or better.

     

    Section
      4.26  Code
      Sections 280G, 409A and 4999.
      Except
      as set forth on Schedule 4.26,
      no
      payment that is owed or may become due to any director, officer, employee or
      agent of the Bank will be non-deductible to the Bank (or, following the Merger,
      Acquiror or AB&T) or subject to tax under Section 280G,
      Section 409A or Section 4999 of the Code, nor will the Bank (or,
      following the Merger, Acquiror or AB&T) be required to “gross up” or
      otherwise compensate any such person because of the imposition of any tax or
      excise tax on a payment to such person. Except to the extent required under
      Section 601 et
      seq.
      of ERISA
      and Section 4980B of the Code, and except as set forth on Schedule 4.26,
      the
      Bank does not provide health or welfare benefits to any active employee
      following such employee’s retirement or other termination of
      service. 

     

    Section
      4.27  Disclosure.
      Neither
      any representation nor warranty of the Bank in, nor any Schedule to, this
      Agreement contains any untrue statement of a material fact, or omits to state
      a
      material fact necessary to make the statements contained herein or therein,
      in
      light of the circumstances under which they were made, not misleading. No notice
      given pursuant to Section
      6.5
      will
      contain any untrue statement or omit to state a material fact necessary to
      make
      the statements therein or in this Agreement, in light of the circumstances
      under
      which they were made, not misleading.

     

    Article
      5  

     

    Representations
      and Warranties of Acquiror and AB&T

     

    Acquiror
      and AB&T hereby represent and warrant to the Bank that the following are
      true and correct as of the Agreement Date, and will be true and correct as
      of
      the Effective Date:

     

    Section
      5.1  Acquiror
      Organization.
      Acquiror: (a) is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware and is also in good standing in the State of
      Arizona and in each other jurisdiction in which the nature of business conducted
      or the properties or assets owned or leased by it makes such qualification
      necessary; (b) is
      registered with the Federal Reserve as a bank holding company under the Bank
      Holding Company Act of 1956 as amended (“BHCA”);
      and
      (c) has
      full power and authority, corporate and otherwise, to operate as a bank holding
      company and to
      own,
      operate and
      lease
      its properties as presently owned, operated and leased, and to carry on its
      business as it is now being conducted. 

     

    Section
      5.2  AB&T
      Organization.
      AB&T
      is an Arizona corporation that holds a banking permit and is validly existing
      and in good standing under the laws of the State of Arizona. The Bank has full
      power and authority, corporate and otherwise, to own, operate and lease its
      properties as presently owned, operated and leased, and to carry on its business
      as it is now being conducted, and is duly qualified to do business and is in
      good standing in each jurisdiction in which the nature of the business conducted
      or the properties or assets owned or leased by it makes such qualification
      necessary. 

     

    Section
      5.3  Authorization;
      Enforceability. 

     

    (a)  Each
      of
      Acquiror and AB&T has the requisite power and authority to enter into and
      perform its obligations under this Agreement. The execution, delivery and
      performance of this Agreement by Acquiror and AB&T, and the consummation by
      each of them of its respective obligations under this Agreement, have been
      authorized by all necessary actions, except for the approval of AB&T’s
      shareholders. Subject to such shareholder approval, this Agreement constitutes
      a
      legal, valid and binding obligation of each of Acquiror and AB&T enforceable
      in accordance with its terms, except as such enforcement may be limited by
      bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights
      generally and subject to general principles of equity.

     

    (b)  Except
      for ordinary corporate requirements, no “business combination,” “moratorium,”
“control share” or other state anti-takeover statute or regulation or any
      provisions contained in the certificate of incorporation or bylaws or similar
      organizational documents of Acquiror or any Acquiror Subsidiary:
      (i) prohibits or restricts Acquiror’s ability to perform its obligations
      under this Agreement, or its ability to consummate the Contemplated
      Transactions; (ii) would have the effect of invalidating or voiding this
      Agreement, or any provision hereof; or (iii) would subject the Bank to any
      material impediment or condition in connection with the exercise of any of
      its
      rights under this Agreement. The boards of directors of Acquiror and AB&T
      have unanimously approved the execution of, and performance by Acquiror and
      AB&T of their respective obligations under, this Agreement.

     

    Section
      5.4  No
      Conflict.
      To the
      knowledge of Acquiror and AB&T, neither the execution nor delivery of this
      Agreement nor the consummation or performance of any of the Contemplated
      Transactions will, directly or indirectly (with or without notice or lapse
      of
      time): (a) contravene,
      conflict with or result in a violation of any provision of the certificate
      or
      articles of incorporation or bylaws, each as in effect on the Agreement Date,
      or
      any currently effective resolution adopted by the board of directors or
      shareholders of, Acquiror or AB&T; or (b) contravene,
      conflict with or result in a violation of, or give any Regulatory Authority
      or
      other Person the valid and enforceable right to challenge any of the
      Contemplated Transactions or to exercise any remedy or obtain any relief under,
      any Legal Requirement or any Order to which Acquiror or AB&T, or any of
      their respective assets that are owned or used by them, may be subject, except
      for any contravention, conflict or violation that is permissible by virtue
      of
      obtaining the regulatory approvals necessitated by the Contemplated
      Transactions, including any such approvals under the BHCA, the FDIA, the
      Delaware General Corporation Law and the Arizona Statutes. Neither Acquiror
      nor
      AB&T is or will be required to give any notice to or obtain any consent from
      any Person in connection with the execution and delivery of this Agreement
      or
      the consummation or performance of any of the Contemplated Transactions except
      such approvals of Regulatory Authorities that are required by law or regulation
      to consummate the transactions contemplated by this Agreement.

     

    Section
      5.5  Brokerage
      Commissions.
      Neither
      Acquiror nor AB&T, nor any of their respective Representatives, has incurred
      any obligation or liability, contingent or otherwise, for brokerage or finders'
      fees or agents' commissions or other similar payment in connection with this
      Agreement or the Contemplated Transactions.

     

    Section
      5.6  Approval
      Delays.
      To the
      Knowledge of Acquiror, there is no reason why the granting of any of the
      regulatory approvals referred to in Section
      8.1
      would be
      denied or unduly delayed. The CRA rating of each of Acquiror’s subsidiaries,
      including AB&T, that is a “depository institution” as defined by the FDIA,
      is “satisfactory” or better. 

     

    Section
      5.7  Disclosure.
      No
      representation or warranty of Acquiror or AB&T in this Agreement contains
      any untrue statement of a material fact, or omits to state a material fact
      necessary to make the statements contained herein or therein, in light of the
      circumstances under which they were made, not misleading. No notice given
      pursuant to Section
      7.1
      will
      contain any untrue statement or omit to state a material fact necessary to
      make
      the statements therein, or in this Agreement, in light of the circumstances
      in
      which they were made, not misleading.

     

    Section
      5.8  Financial
      Resources.
      Acquiror will have sufficient cash available on the Closing to enable it to
      pay
      the Merger Consideration to the Bank Shareholders pursuant to the terms of
      this
      Agreement. 

     

    Article
      6  

     

    Covenants
      of the Bank

     

    Section
      6.1  Access
      and Investigation. 

     

    (a)  Acquiror
      and AB&T and their respective Representatives shall, at all times during
      normal business hours and with reasonable advance notice prior to the Closing,
      have full and continuing access to the facilities, operations, records and
      properties of the Bank in accordance with the provisions of this Section.
      Acquiror and AB&T and their respective Representatives may, prior to the
      Closing, make or cause to be made such reasonable investigation of the
      operations, records and properties of the Bank and of their respective financial
      and legal condition as Acquiror or AB&T shall deem necessary or advisable to
      familiarize itself with such records, properties and other matters; provided,
      however,
      that
      such access or investigation shall not interfere unnecessarily with the normal
      operations of the Bank. Upon request, the Bank will furnish Acquiror or AB&T
      attorneys’ responses to auditors’ requests for information regarding the Bank,
      and such financial and operating data and other information reasonably requested
      by Acquiror or AB&T (provided,
      with
      respect to attorneys, such disclosure would not result in the waiver by the
      Bank
      of any claim of attorney-client privilege), and will permit Acquiror and
      AB&T and their respective Representatives to discuss such information
      directly with any individual or firm performing auditing or accounting functions
      for the Bank, and such auditors and accountants shall be directed to furnish
      copies of any reports or financial information as developed to Acquiror or
      AB&T. No investigation by Acquiror, AB&T or any of their respective
      Representatives shall affect the representations and warranties made by the
      Bank. This Section shall not require the disclosure of any information the
      disclosure of which to Acquiror or AB&T would be prohibited by any Legal
      Requirement.

     

    (b)  The
      Bank
      shall allow a Representative of Acquiror or AB&T to attend as an observer
      all meetings of the board of directors and committees of the board of directors
      of the Bank, including any meeting of the loan committee and asset liability
      management committee of the Bank. The Bank shall give reasonable notice to
      Acquiror and AB&T of any such meeting and, if known, the agenda for or
      business to be discussed at such meeting. The Bank shall provide to Acquiror
      and
      AB&T all information provided to the directors on all such boards or members
      of such committees in connection with all such meetings or otherwise provided
      to
      the directors or members, and shall provide any other financial reports or
      other
      analysis prepared for senior management of the Bank, in each case excluding
      information which is privileged or is subject to any restriction on disclosure.
      It is understood by the parties that Acquiror’s or AB&T’s Representative
      will not have any voting rights with respect to matters discussed at these
      meetings and that neither Acquiror nor AB&T is managing the business or
      affairs of the Bank. All information obtained by Acquiror or AB&T at these
      meetings shall be treated in confidence as required by Section
      12.7.
      Notwithstanding the foregoing, neither Acquiror nor AB&T shall be permitted
      to attend any portion of a meeting and the Bank shall not be required to provide
      Acquiror or AB&T with any materials, in violation of applicable law or that
      relates to an Acquisition Transaction (as defined below), except for information
      to be provided as required by Section
      6.6,
      or that
      involve matters protected by the attorney-client privilege.

     

    Section
      6.2  Operation
      of the Bank.
      Except
      with the prior written consent of Acquiror, between the Agreement Date and
      the
      Closing, the Bank will:

     

    (a)  conduct
      its business only in the Ordinary Course of Business;

     

    (b)  use
      its
      Best Efforts to preserve intact the current business organization of the Bank,
      keep available the services of the current officers, employees and agents of
      the
      Bank, and maintain the goodwill of suppliers, customers, landlords, creditors,
      employees, agents and others who have business relationships with the
      Bank;

     

    (c)  confer
      with Acquiror and AB&T concerning operational matters of a material nature;

     

    (d)  enter
      into loan transactions only in accordance with sound credit practices and the
      Bank’s current loan policy, and only on terms and conditions that are not
      materially more favorable than those available to the borrower from competitive
      sources in arm’s-length transactions, and in that connection, from the date
      hereof to the Closing, shall not:

     

    (i)  enter
      into any new unsecured credit or lending relationships with any Person and
      such
      Person’s Borrowing Affiliate (as defined below) in a principal amount of $75,000
      or more, or any new secured credit or lending relationships with any Person
      and
      such Person’s Borrowing Affiliate in a principal amount of $500,000 or more,
      unless the Bank has delivered to AB&T as soon as reasonably possible after
      the making of such loan the Bank’s internal written memorandum describing the
      loan and the Bank’s internal spreadsheets analyzing the financial background and
      circumstances of such loan; or

     

    (ii)  other
      than incident to a reasonable loan restructuring, extend additional credit
      to
      any Person and any director or officer of, or any owner of a
      ten percent (10%) or greater equity interest in, such Person (any of
      the foregoing with respect to a Person being referred to as a “Borrowing
      Affiliate”)
      if
      such Person or such Borrowing Affiliate is the obligor under any indebtedness
      to
      the Bank which constitutes a non-performing loan or against any part of such
      indebtedness the Bank has established loss reserves or any part of which has
      been charged-off by the Bank;

     

    (e)  consistent
      with past practice, maintain an allowance for possible loan and lease losses
      which is adequate in all material respects under the requirements of GAAP to
      provide for possible losses, net of recoveries relating to loans previously
      charged off, on loans outstanding (including accrued interest receivable),
      and
      charge-off any loans or leases that would be deemed uncollectible in accordance
      with GAAP or any Legal Requirements and place on non-accrual any loans or leases
      that are past due greater than ninety (90) days

     

    (f)  maintain
      all of its assets necessary for the conduct of its business in good operating
      condition and repair, reasonable wear and tear and damage by fire or unavoidable
      casualty excepted, and maintain policies of insurance upon its assets and with
      respect to the conduct of its business in amounts and kinds comparable to that
      in effect on the date hereof and pay all premiums on such policies when
      due;

     

    (g)  not
      buy
      or sell any security held, or intended to be held, for investment, but such
      restriction shall not affect the buying and selling by any the Bank of Federal
      Funds or the reinvestment of interest and dividends paid on any securities
      owned
      by the Bank as of the date of this Agreement;

     

    (h)  not
      declare or pay any dividends or make any other similar distributions of cash
      or
      property to any of the Bank’s directors, officers, employees or shareholders,
      other than regular salary or other earned compensation;

     

    (i)  not
      incur
      any financial obligation to any financial advisor, valuation expert or similar
      consultant except for the fees payable to Tim Gay & Associates on the terms
      and conditions described on Schedule 4.16;

     

    (j)  file
      in a
      timely manner all required filings with all Regulatory Authorities and cause
      such filings to be true and correct in all material respects; 

     

    (k)  maintain
      its books, accounts and records in the Ordinary Course of Business, on a basis
      consistent with prior years;

     

    (l)  comply
      with all Legal Requirements and Contracts; and

     

    (m)  report
      periodically to Acquiror concerning the status of the business, operations
      and
      finances of the Bank.

     

    Section
      6.3  Negative
      Covenant.
      Except
      as otherwise expressly permitted by this Agreement, between the date of this
      Agreement and the Closing, the Bank will not, without the prior written consent
      of Acquiror, take any affirmative action, or fail to take any reasonable action
      within its control, as a result of which any of the changes or events listed
      in
Section
      4.15
      is
      likely to occur. Without limiting the generality of the foregoing, prior to
      the
      Closing, the Bank will increase the fees, salaries or other payments to the
      Bank’s directors, officers or shareholders.

     

    Section
      6.4  Subsequent
      Bank Financial Statements.
      As soon
      as available after the date hereof, the Bank will furnish Acquiror copies,
      when
      available, of the Call Reports of the Bank for each quarterly or annual period
      completed after the Agreement Date, and all other financial reports or
      statements submitted after the date hereof by the Bank to any Regulatory
      Authority, to the extent permitted by law (collectively, the “Subsequent
      Bank Financial Statements”).
      Except as may be required by changes in any Legal Requirements effective after
      the date hereof, the Subsequent Bank Financial Statements shall be prepared
      on a
      basis consistent with past accounting practices and shall fairly present in
      all
      material respects the financial condition and results of operations for the
      dates and periods presented. The Subsequent Bank Financial Statements will
      not
      include any material assets or omit to state any material liabilities, absolute
      or contingent, or other facts, which inclusion or omission would render such
      Subsequent Bank Financial Statements misleading in any material
      respect.

     

    Section
      6.5  Advice
      of Changes.
      Between
      the Agreement Date and the Closing, the Bank shall promptly notify Acquiror
      in
      writing if the Bank becomes aware of any fact or condition that causes or
      constitutes a Breach of any of the Bank’s representations and warranties as of
      the Agreement Date, or if the Bank becomes aware of the occurrence after the
      Agreement Date of any fact or condition that would (except as expressly
      contemplated by this Agreement) cause or constitute a Breach of any such
      representation or warranty had such representation or warranty been made as
      of
      the time of occurrence or discovery of such fact or condition. If any such
      fact
      or condition would require any change in the Schedules if such Schedules were
      dated the date of the occurrence or discovery of any such fact or condition,
      the
      Bank will promptly deliver to Acquiror a supplement to the Schedules specifying
      such change. During the same period, the Bank will promptly notify Acquiror
      of
      the occurrence of any Breach of any covenant of the Bank in this Agreement
      or of
      the occurrence of any event that might reasonably be expected to make the
      satisfaction of the conditions in Article 9
      impossible or unlikely.

     

    Section
      6.6  Other
      Offers. 

     

    (a)  Until
      such time, if any, as this Agreement is terminated pursuant to Article 10,
      the
      Bank will not, and will cause its Representatives not to, directly or indirectly
      solicit, initiate or encourage any inquiries or proposals from, discuss or
      negotiate with, provide any non-public information to, or consider the merits
      of
      any unsolicited inquiries or proposals from, any Person (other than Acquiror)
      relating to any Acquisition Transaction (as defined below) or a potential
      Acquisition Transaction involving the Bank. Notwithstanding such foregoing
      restriction, the Bank may provide information at the request of, or enter into
      negotiations with, a third party with respect to an Acquisition Transaction
      if
      the board of directors of the Bank determines, in good faith, that the exercise
      of its fiduciary duties to the Bank’s shareholders under applicable law, as
      advised by its counsel, requires it to take such action, and, provided
      further,
      that
      the Bank may not, in any event, provide to such third party any information
      which it has not provided to Acquiror. The Bank shall promptly notify Acquiror
      orally and in writing in the event it receives any such inquiry or proposal
      and
      shall provide reasonable detail of all relevant facts relating to such
      inquiries, along with a summary of the advice provided by its
      counsel.

     

    (b)  “Acquisition
      Transaction”
shall,
      with respect to the Bank, mean any of the following: (i) a
      merger or consolidation, or any similar transaction (other than the Merger)
      of
      any company with either the Bank; (ii) a
      purchase, lease or other acquisition of all or substantially all the assets
      of
      either the Bank; (iii) a
      purchase or other acquisition of “beneficial ownership” by any “person” or
“group” (as such terms are defined in Section 13(d)(3) of the Securities
      Exchange Act of 1934, as amended) (including by way of merger, consolidation,
      share exchange or otherwise) that would cause such person or group to become
      the
      beneficial owner of securities representing twenty percent (20%) or more of
      the
      voting power of the Bank; (iv) a
      tender or exchange offer to acquire securities representing twenty percent
      (20%)
      or more of the voting power of the Bank; (v) a
      public proxy or consent solicitation made to the Bank Shareholders seeking
      proxies in opposition to any proposal relating to any aspect of the Contemplated
      Transactions that has been recommended by the board of directors of the Bank;
      (vi) the
      filing of an application or notice with any Regulatory Authority (which
      application has been accepted for processing) seeking approval to engage in
      one
      or more of the transactions referenced in clauses (i) through (iv) above; or
      (vii) the
      making of a bona
      fide
      proposal
      to the Bank or its shareholders, by public announcement or written
      communication, that is or becomes the subject of public disclosure, to engage
      in
      one or more of the transactions referenced in clauses (i) through (v)
      above.

     

    Section
      6.7  Shareholders’
      Meeting.
      The
      Bank
      shall cause a meeting of its shareholders to be held at the earliest practicable
      date, but in no event later than ninety (90) days after the date of this
      Agreement (the “Meeting
      Date”),
      for
      the purpose of acting upon this Agreement. In connection with such shareholders’
meeting and in accordance with all applicable Legal Requirements, the Bank
      shall
      send to its shareholders prior to such meeting, notice of such meeting together
      with a proxy statement (the “Bank
      Proxy Statement”).
      In
      advance of mailing the Bank Proxy Statement, the Bank shall provide Acquiror
      and
      its counsel with a copy of the Bank Proxy Statement and provide Acquiror and
      its
      counsel a reasonable opportunity to comment thereon. The Bank
      and its
      board of directors acting as a board shall recommend to the Bank Shareholders
      the approval of this Agreement and the Merger and shall solicit from the Bank
      Shareholders proxies voting only in favor thereof. For the avoidance of doubt,
      the parties acknowledge that the failure of the Bank to comply with the
      provisions of this Section shall be deemed to have a Material Adverse Effect
      on
      the Bank and on Acquiror’s rights under this Agreement.

     

    Section
      6.8  Information
      Provided to Acquiror.
      The Bank
      agrees that the information concerning the Bank that is provided or to be
      provided by the Bank to Acquiror for inclusion in any documents to be filed
      with
      any Regulatory Authority in connection with the Contemplated Transactions will,
      at the respective times such documents are filed will not be false or misleading
      with respect to any material fact, or omit to state any material fact necessary
      in order to make the statements therein not misleading.

     

    Section
      6.9  Amendment
      or Termination of Employee Benefit Plans.
      To the
      extent permitted by applicable Legal Requirements, upon the written request
      of
      Acquiror, the Bank shall take such action as may be necessary to amend or
      terminate any Bank Employee Benefit Plan of the Bank on or before the Closing
      on
      terms reasonably acceptable to Acquiror; provided,
      however,
      that
      the Bank shall not be obligated to take any such requested action that is
      irrevocable until immediately prior to the Closing.

     

    Section
      6.10  Data
      and Item Processing Agreements.
      The
      Bank agrees to consult with Acquiror prior to the entry by it, either through
      action or inaction, into any new, or any extension of any existing, data or
      item
      processing agreements. The Bank agrees to coordinate with Acquiror the
      negotiation of any new or extension of any existing data or item processing
      agreement, with the purpose of achieving the best possible economic and business
      result in light of the Merger.

     

    Section
      6.11  Tax
      Matters.
      The Bank
      shall not make any election inconsistent with prior Tax Returns or elections
      or
      settle or compromise any liability with respect to Taxes without prior written
      notice to Acquiror. The Bank shall timely file all Tax Returns required to
      be
      filed prior to the Closing; provided,
      however,
      that
      each such Tax Return shall be delivered to Acquiror for its review as soon
      as
      the same are prepared and first delivered to the Bank. 

     

    Section
      6.12  Accounting
      and Other Adjustments.
      Subject
      to applicable Legal Requirements, the Bank agrees that it shall: (a) make
      any accounting adjustments or entries to its books of account and other
      financial records; (b) make
      additional provisions to any allowance for loan and lease losses; (c) sell
      or transfer any investment securities held by it; (d) charge-off
      any loan or lease; (e) create
      any new reserve account or make additional provisions to any other existing
      reserve account; (f) make
      changes in any accounting method; (g) accelerate,
      defer or accrue any anticipated obligation, expense or income item; and
      (h) make
      any other adjustments that would affect the financial reporting of Acquiror,
      on
      a consolidated basis after the Agreement Date, in any case as Acquiror shall
      reasonably request, provided,
      however,
      that
      the Bank shall not be obligated to take any such requested action until
      immediately prior to the Closing and at such time as the Bank shall have
      received reasonable assurances that all conditions precedent to the Bank’s
      obligations under this Agreement (except for the completion of actions to be
      taken at the Closing) have been satisfied.

     

    Section
      6.13  Other
      Agreements.
      Concurrently with the execution and delivery of this Agreement, the Bank shall
      deliver or cause to be delivered to Acquiror:

     

    (a)  a
      voting
      agreement in the form of Exhibit C
      that
      governs the voting of all of the shares of Bank Stock over which the Bank’s
      directors exercise, or share the exercise, of the right to vote, and signed
      by
      all of the Bank’s directors; and

     

    (b)  a
      consulting agreement in the form of Exhibit D,
      signed
      by Paul Muscenti (the “Consulting
      Agreement”),
      to be
      effective at the Effective Time. 

     

    Article
      7  

     

    Covenants
      of Acquiror and AB&T

     

    Section
      7.1  Advice
      of Changes.
      Between
      the Agreement Date and the Closing, Acquiror shall promptly notify the Bank
      in
      writing if Acquiror or AB&T becomes aware of any fact or condition that
      causes or constitutes a Breach of any of the representations and warranties
      herein of Acquiror or AB&T as of the Agreement Date, or if Acquiror or
      AB&T becomes aware of the occurrence after the Agreement Date of any fact or
      condition that would (except as expressly contemplated by this Agreement) cause
      or constitute a Breach of any such representation or warranty had such
      representation or warranty been made as of the time of occurrence or discovery
      of such fact or condition. During the same period, Acquiror will promptly notify
      the Bank of the occurrence of any Breach of any covenant of Acquiror or AB&T
      in this Agreement or of the occurrence of any event that might reasonably be
      expected to make the satisfaction of the conditions in Article 10
      impossible or unlikely.

     

    Section
      7.2  Information
      Provided to the Bank.
      Each of
      Acquiror and AB&T agrees that none of the information concerning Acquiror or
      AB&T that is provided or to be provided by Acquiror or AB&T to the Bank
      for inclusion or that is included in the Bank Proxy Statement and any other
      documents to be filed with any Regulatory Authority in connection with the
      Contemplated Transactions will, at the respective times such documents are
      filed
      and, with respect to the Bank Proxy Statement, when mailed, be false or
      misleading with respect to any material fact, or omit to state any material
      fact
      necessary in order to make the statements therein not misleading.
      Notwithstanding the foregoing, neither Acquiror nor AB&T shall have any
      responsibility for the truth or accuracy of any information with respect to
      the
      Bank or
      any of
      its Affiliates contained
      in the Bank Proxy Statement or in any document submitted to, or other
      communication with, any Regulatory Authority.

     

    Section
      7.3  Indemnification.
      Except
      as may be limited by applicable Legal Requirements, Acquiror shall honor any
      of
      the Bank obligations in respect of indemnification and advancement of expenses
      currently provided by the Bank in its articles of incorporation or bylaws in
      favor of the current and former directors and officers of the Bank for not
      less
      than two (2) years from the Effective Time with respect to matters
      occurring prior to the Effective Time. 

     

     

    Article
      8  

     

     

    Covenants
      of All Parties

     

    Section
      8.1  Regulatory
      Approvals.
      By no
      later than forty-five (45) days after the Agreement Date, Acquiror and
      AB&T shall make all appropriate filings with Regulatory Authorities for
      approval of the Merger, including the preparation of an application or any
      amendment thereto or any other required statements or documents filed or to
      be
      filed by any party with: (a) the
      Federal Reserve pursuant to the BHCA; (b) the
      FDIC pursuant to the FDIA; (c) the
      Department pursuant to the Arizona Statutes; and (d) any
      other Person or Regulatory Authority pursuant to any applicable Legal
      Requirement, for authority to consummate the Contemplated Transactions. Acquiror
      and AB&T shall pursue in good faith the regulatory approvals necessary to
      consummate the Merger. In advance of any filing made under this Section, the
      Bank and its counsel shall be provided with the opportunity to comment upon
      all
      non-confidential portions thereof, and Acquiror and AB&T agree promptly to
      advise the Bank and its counsel of, and share with them, any material
      communication received by Acquiror or AB&T or its counsel from any
      Regulatory Authorities with respect to the non-confidential portions of such
      filings.

     

    Section
      8.2  Necessary
      Approvals.
      Acquiror and the Bank agree that Acquiror’s counsel will have primary
      responsibility for the preparation of the necessary applications for regulatory
      approval of the Contemplated Transactions. Each of Acquiror, AB&T and the
      Bank agree fully and promptly to cooperate with each other and their respective
      counsels and accountants in connection with any steps to be taken as part of
      their obligations under this Agreement.

     

    Section
      8.3  Customer
      and Employee Relationships.
      Each of
      Acquiror, AB&T and the Bank agrees that its respective Representatives may
      jointly:

     

    (a)  participate
      in meetings or discussions with officers and employees of the Bank, Acquiror
      and
      AB&T in connection with employment opportunities with Acquiror after the
      Effective Time; and

     

    (b)  contact
      Persons having dealings with the Bank, Acquiror, AB&T or any of their
      respective Subsidiaries for the purpose of informing such Persons of the
      services to be offered by Acquiror or AB&T after the Effective
      Time.

     

    Section
      8.4  Best
      Efforts; Cooperation.
      Each of
      Acquiror, AB&T and the Bank agrees to exercise good faith and use its Best
      Efforts to satisfy the various covenants and conditions to Closing in this
      Agreement, and to consummate the transactions contemplated hereby as promptly
      as
      possible. None of Acquiror, AB&T or the Bank will intentionally take or
      intentionally permit to be taken any action that would be a Breach of the terms
      or provisions of this Agreement. Between the Agreement Date and the Closing,
      each of Acquiror, AB&T and the Bank will, and will cause all of their
      respective Affiliates and Representatives to, cooperate with respect to all
      filings that any party is required by Legal Requirements to make in connection
      with the Contemplated Transactions.

     

    Article
      9  

     

    Conditions
      Precedent to Obligations of Acquiror and AB&T

     

    The
      obligations of Acquiror and AB&T to consummate the Merger and to take the
      other actions required to be taken by Acquiror or AB&T at the Closing are
      subject to the satisfaction, at or prior to the Closing, of each of the
      following conditions (any of which may be waived by Acquiror and AB&T, in
      whole or in part):

     

    Section
      9.1  Accuracy
      of Representations and Warranties.
      All of
      the representations and warranties of the Bank set forth in this Agreement
      shall
      be true and correct with the same force and effect as if all of such
      representations and warranties were made at the Closing (provided,
      however,
      that to
      the extent such representations and warranties expressly relate to an earlier
      date, such representations shall be true and correct on and as of such earlier
      date), except for any untrue or incorrect representations or warranties that
      individually or in the aggregate do not have a Material Adverse Effect on the
      Bank or on Acquiror’s or AB&T’s rights under this Agreement.

     

    Section
      9.2  Bank’s
      Performance.
      The Bank
      shall have performed or complied with all of the covenants and obligations
      to be
      performed or complied with by it under the terms of this Agreement on or prior
      to the Closing, except where any non-performance or noncompliance would not
      have
      a Material Adverse Effect on the Bank or on Acquiror’s or AB&T’s rights
      under this Agreement.

     

    Section
      9.3  Documents
      Satisfactory.
      All
      proceedings, corporate or other, to be taken by the Bank in connection with
      the
      Merger, and all documents incident thereto, shall be reasonably satisfactory
      in
      form and substance to Acquiror and AB&T and their counsel, and the Bank
      shall have made available to Acquiror and AB&T for examination the originals
      or true and correct copies of all records and documents relating to the business
      and affairs of the Bank which Acquiror or AB&T may reasonably request in
      connection with said transactions.

     

    Section
      9.4  No
      Proceedings.
      Since
      the
      date of this Agreement, there must not have been commenced or Threatened against
      the Bank, AB&T or Acquiror, or against any of the Affiliates of Acquiror,
      any Proceeding that would reasonably be expected to have a Material Adverse
      Effect on the financial condition or operations of the Bank, Acquiror or
      AB&T.

     

    Section
      9.5  No
      Claim Regarding Stock Ownership or Sale Proceeds.
      Except
      for the Bank Shareholders identified on the shareholder
      list
      delivered pursuant to Section
      2.7,
      there
      must not have been made or Threatened by any Person any claim asserting that
      such Person: (a) is
      the holder or the beneficial owner of, or has the right to acquire or to obtain
      beneficial ownership of, any stock of, or any other voting, equity or ownership
      interest in, the Bank; or (b) is
      entitled to all or any portion of the consideration payable under the terms
      of
      this Agreement to the Bank Shareholders.

     

    Section
      9.6  Absence
      of Material Adverse Effects.
      From
      the date hereof to the Closing, there shall be and have been no change in the
      financial condition, assets or business of the Bank that has had or would
      reasonably be expected to have a Material Adverse Effect on the
      Bank.

     

    Section
      9.7  Consents
      and Approvals.
      Any
      consents or approvals required to be secured by any party by the terms of this
      Agreement or otherwise reasonably necessary in the opinion of Acquiror or
      AB&T to consummate the Merger, including the approval of the Bank
      Shareholders, shall have been obtained and shall be reasonably satisfactory
      to
      Acquiror and AB&T, and all applicable waiting periods shall have
      expired. 

     

    Section
      9.8  No
      Prohibition.
      The
      consummation of the Merger will not, directly or indirectly (with or without
      notice or lapse of time), materially contravene, or conflict with or result
      in a
      material violation of, or cause Acquiror, AB&T or any of Acquiror’s
      Affiliates to be required to make any material change in its operations as
      a
      result of: (a) any
      applicable Legal Requirement or Order; or (b) any
      Legal Requirement or Order that has been published, introduced or otherwise
      proposed by or before any Regulatory Authority.

     

    Section
      9.9  Dissenting
      Shares.
      The
      total
      number of Dissenting Shares shall be no greater than five percent (5%) of
      the number of issued and outstanding shares of Bank Stock.

     

    Section
      9.10  Consulting
      Agreement.
      The
      Consulting Agreement shall be in full force and effect, and Paul Muscenti shall
      be an active employee of the Bank.

     

    Article
      10  

     

    Conditions
      Precedent to Obligations of the Bank

     

    The
      Bank’s obligation to consummate the Merger and to take the other actions
      required to be taken by the Bank at the Closing are subject to the satisfaction,
      at or prior to the Closing, of each of the following conditions (any of which
      may be waived by the Bank, in whole or in part):

     

    Section
      10.1  Accuracy
      of Representations and Warranties.
      All of
      the representations and warranties of Acquiror and AB&T set forth in this
      Agreement shall be true and correct with the same force and effect as if all
      of
      such representations and warranties were made at the Closing (provided,
      however,
      that to
      the extent such representations and warranties expressly relate to an earlier
      date, such representations shall be true and correct on and as of such earlier
      date), except for any untrue or incorrect representations or warranties that
      individually or in the aggregate do not have a Material Adverse Effect on the
      Bank Shareholders’ rights under this Agreement.

     

    Section
      10.2  Bank’s
      Performance.
      Acquiror
      and AB&T shall have performed or complied with all of the covenants and
      obligations to be performed or complied with by them under the terms of this
      Agreement on or prior to the Closing, except where any non-performance or
      noncompliance would not have a Material Adverse Effect on the Bank Shareholders’
rights under this Agreement.

     

    Section
      10.3  Documents
      Satisfactory.
      All
      proceedings, corporate or other, to be taken by Acquiror and AB&T in
      connection with the Merger, and all documents incident thereto, shall be
      reasonably satisfactory in form and substance to the Bank and its counsel,
      and
      Acquiror and AB&T shall have made available to the Bank for examination the
      originals or true and correct copies of all records and documents relating
      to
      the business and affairs of Acquiror and AB&T which the Bank may reasonably
      request in connection with said transactions.

     

    Section
      10.4  Consents
      and Approvals.
      Any
      consents or approvals required to be secured by any party by the terms of this
      Agreement or otherwise reasonably necessary in the opinion of the Bank to
      consummate the Merger, including the approval of the merger by AB&T’s
      shareholders, shall have been obtained and shall be reasonably satisfactory
      to
      the Bank, and all applicable waiting periods shall have expired. 

     

    Section
      10.5  No
      Injunction.
      There
      is
      no Legal Requirement or any injunction or other Order that has been adopted
      or
      issued, or has otherwise become effective, since the date of this Agreement
      that
      prohibits the Merger.

     

    Article
      11  

     

    Termination

     

    Section
      11.1  Reasons
      for Termination and Abandonment.
      This
      Agreement may, by prompt written notice given to the other parties prior to
      or
      at the Closing, be terminated:

     

    (a)  by
      mutual
      consent of the board of directors of each of the Bank, Acquiror and
      AB&T;

     

    (b)  by
      Acquiror or AB&T if: (i) any
      of the conditions in Article
      9 has
      not
      been satisfied, or satisfaction of such a condition is or becomes impossible,
      as
      of the Closing; (ii) such
      condition has not been waived in writing by Acquiror and AB&T; and
      (iii) the
      failure of such condition has had, or would reasonably be expected to have,
      a
      Material Adverse Effect on the Bank or on Acquiror or AB&T if the Merger
      were consummated, provided,
      however,
      that
      the contingency set forth in clause (iii) of this paragraph need not be
      satisfied to terminate this Agreement if the failure of such condition was
      the
      result of any intentional or grossly negligent action, failure to act or
      misrepresentation of the Bank;

     

    (c)  by
      the
      Bank if: (i) any
      of the conditions in Article
      10
      has not
      been satisfied, or satisfaction of such a condition is or becomes impossible,
      as
      of the Closing; (ii) such
      condition has not been waived in writing by the Bank; and (iii) the
      failure of such condition has had, or would reasonably be expected to have,
      a
      Material Adverse Effect on the Bank Shareholders, provided,
      however,
      that
      the contingency set forth in clause (iii) of this paragraph need not be
      satisfied to terminate this Agreement if the failure of such condition was
      the
      result of any intentional or grossly negligent action, failure to act or
      misrepresentation of Acquiror or AB&T; or

     

    (d)  by
      any of
      Acquiror, AB&T or the Bank if the Closing has not occurred (other than
      through the failure of any party seeking to terminate this Agreement to comply
      fully with its obligations under this Agreement) on or before the date that
      is
      eight months after the date of this Agreement.

     

    Section
      11.2  Effect
      of Termination.
      Except
      as provided in Section
      11.3
      or
Section
      11.4,
      if this
      Agreement is terminated pursuant to Section
      11.1,
      this
      Agreement shall forthwith become void, there shall be no liability under this
      Agreement on the part of Acquiror, AB&T, the Bank, or any of their
      respective Representatives, and all rights and obligations of each party hereto
      shall cease; provided,
      however,
      that,
      subject to Section
      11.3
      or
Section
      11.4,,
      nothing herein shall relieve any party from liability for the Breach of any
      of
      its representations, warranties, covenants or agreements set forth in this
      Agreement. 

     

    Section
      11.3  Expenses.
      Except
      as otherwise expressly provided in this Agreement, each party to this Agreement
      will bear its own respective expenses incurred in connection with the
      preparation, execution, and performance of this Agreement and the Merger,
      including all fees and expenses of agents, representatives, counsel and
      accountants. If any of the parties hereto files suit to enforce this Section
      or
      a suit seeking to recover costs and expenses or damages for Breach of this
      Agreement, the costs, fees, charges and expenses (including attorneys’ fees and
      expenses) of the prevailing party in such litigation (and any related
      litigation) shall be borne by the non-prevailing party.

     

    Section
      11.4  Remedies. 

     

    (a)  If
      this
      Agreement is terminated
      by
      Acquiror
      or AB&T pursuant to Section
      11.1
      because
      there is a Breach of any of the Bank’s representations, warranties, covenants or
      agreements, Acquiror or AB&T, as the case may be, shall be entitled to
      enforce its rights under this Agreement, to recover damages by reason of any
      such Breach, including the costs, fees, charges and expenses (including
      attorneys’ fees and expenses) of enforcing such rights under this Agreement
      provided it prevails in such litigation, and to exercise all other rights
      granted by law or equity.

     

    (b)  If
      this
      Agreement is terminated by the Bank pursuant to Section
      11.1
      because
      there is a Breach of any of Heartland’s representations, warranties, covenants
      or agreements, the Bank shall be entitled to enforce its rights under this
      Agreement, to recover damages by reason of any such Breach, including the costs,
      fees, charges and expenses (including attorneys’ fees and expenses) of enforcing
      such rights under this Agreement provided it prevails in such litigation, and
      to
      exercise all other rights granted by law or equity.

     

    Article
      12  

     

    Miscellaneous

     

    Section
      12.1  Governing
      Law.
      Except
      as expressly provided by the Arizona Statutes with respect to the Contemplated
      Transactions, all questions concerning the construction, validity and
      interpretation of this Agreement, and the performance of the obligations imposed
      by this Agreement shall be governed by the internal laws of the State of Iowa
      applicable to Contracts made and wholly to be performed in such state without
      regard to conflicts of laws.

     

    Section
      12.2  Jurisdiction
      and Service of Process.
      Any
      action or proceeding seeking to enforce, challenge or avoid any provision of,
      or
      based on any right arising out of, this Agreement shall be brought only in
      the
      courts of the State of Iowa, County of Dubuque or, if it has or can acquire
      jurisdiction, in the United States District Court serving the County of Dubuque,
      and each of the parties consents to the exclusive jurisdiction of such courts
      (and of the appropriate appellate courts) in any such action or proceeding
      and
      waives any objection to jurisdiction or venue laid therein. Process in any
      action or proceeding referred to in the preceding sentence may be served on
      any
      party anywhere in the world.

     

    Section
      12.3  Assignments,
      Successors and No Third Party Rights.
      No
      party may assign any of its rights under this Agreement to any other Person
      without the prior written consent of the other parties, which consent shall
      not
      be unreasonably withheld or delayed, provided,
      however,
      that
      Acquiror may assign its respective rights under this Agreement to any
      wholly-owned subsidiary of Acquiror without the consent of the Bank so long
      as
      Acquiror continues to guarantee the performance of all of its covenants set
      forth in this Agreement. Subject to the preceding sentence, this Agreement
      and
      every representation, warranty, covenant, agreement and provision hereof shall
      be binding upon and inure to the benefit of the parties hereto and their
      respective successors and permitted assigns. Nothing expressed or referred
      to in
      this Agreement will be construed to give any Person other than the parties
      to
      this Agreement any legal or equitable right, remedy or claim under or with
      respect to this Agreement or any provision of this Agreement. This Agreement
      and
      all of its provisions and conditions are for the sole and exclusive benefit
      of
      the parties to this Agreement and their successors and assigns.

     

    Section
      12.4  Waiver.
      The
      rights and remedies of the parties to this Agreement are cumulative and not
      alternative. Neither the failure nor any delay by any party in exercising any
      right, power or privilege under this Agreement or the documents referred to
      in
      this Agreement will operate as a waiver of such right, power or privilege,
      and
      no single or partial exercise of any such right, power or privilege will
      preclude any other or further exercise of such right, power or privilege or
      the
      exercise of any other right, power or privilege. To the maximum extent permitted
      by applicable law: (a) no
      claim or right arising out of this Agreement or the documents referred to in
      this Agreement can be discharged by one party, in whole or in part, by a waiver
      or renunciation of the claim or right unless in writing signed by the other
      parties; (b) no
      waiver that may be given by a party will be applicable except in the specific
      instance for which it is given; and (c) no
      notice to or demand on one party will be deemed to be a waiver of any obligation
      of such party or of the right of the party giving such notice or demand to
      take
      further action without notice or demand as provided in this Agreement or the
      documents referred to in this Agreement.

     

    Section
      12.5  Modification.
      This
      Agreement may only be amended by a written agreement executed by the party
      to be
      charged with the amendment.

     

    Section
      12.6  Publicity.
      Prior
      to
      the Closing and except as required by law, the parties hereto will consult
      with
      each other before issuing any press releases or otherwise making any public
      statements with respect to this Agreement or the Merger and shall not issue
      any
      such press release or make any such public statement without the prior consent
      of the other parties, which consent shall not be unreasonably withheld. Unless
      consented to by Acquiror in advance or except as required by law, prior to
      the
      Closing, the Bank shall keep this Agreement strictly confidential and not make
      any disclosure of this Agreement to any Person. The Bank, Acquiror and AB&T
      will consult with each other concerning the means by which the Bank’s employees,
      customers and suppliers and others having dealings with the Bank will be
      informed of the Merger.

     

    Section
      12.7  Confidentiality.
      Between
      the date of this Agreement and the Closing, Acquiror, AB&T and the Bank will
      maintain in confidence, and will cause its respective directors, officers,
      employees, agents and advisors to maintain in confidence, and not use to the
      detriment of any other party any written, oral or other information obtained
      in
      confidence from another party in connection with this Agreement or the Merger,
      unless: (a) such
      information is already known to such party or to others not bound by a duty
      of
      confidentiality or such information becomes publicly available through no fault
      of such party; (b) the
      use of such information is necessary or appropriate in making any filing or
      obtaining any consent or approval required for the consummation of the Merger;
      or (c) the
      furnishing or use of such information is required by or necessary or appropriate
      in connection with any Proceedings. If the Merger is not consummated, each
      party
      will return or destroy as much of such written information as the other parties
      may reasonably request.

     

    Section
      12.8  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 by certified mail (return receipt
      requested) with postage prepaid or telecopied if confirmed immediately
      thereafter by also mailing a copy of any notice, request or other communication
      by mail as required in this Section:

     

    (d) if
      to the
      Bank, to:

     

    Bank
      of
      the Southwest

    7910
      South Kyrene Road, Suite 108

    Tempe,
      Arizona  85284

    Telephone: (480)
      346-4600

    Facsimile: (480)
      346-4630

    Attention: Paul
      Muscenti

    Chairman
      of the Board

     

    with
      copies to:

     

    Gust
      Rosenfeld P.L.C.

    201
      E.
      Washington Street, Suite 800 

    Phoenix,
      Arizona 85004-2327

    Telephone: (602)
      257-7422

    Facsimile: (602)
      254-4878

    Attention: John
      L.
      Hay, Esq.

     

    (a) If
      to
      Acquiror or AB&T, to:

     

    Heartland
      Financial USA, Inc.

    1398
      Central Avenue

    P.O.
      Box
      778

    Dubuque,
      Iowa 52004

    Telephone: (563)
      589-1994

    Facsimile: (563)
      589-1951

    Attention: Mr.
      John
      K. Schmidt

    Chief
      Operating Officer and Chief Financial Officer

     

    with
      copies to:

     

    Barack
      Ferrazzano Kirschbaum Perlman & Nagelberg LLP

    333
      West
      Wacker, Suite 2700

    Chicago,
      Illinois 60606

    Telephone: (312)
      984-3100

    Facsimile: (312)
      984-3150

    Attention: Dennis
      R.
      Wendte, Esq.

     

    or
      to
      such other Person or place as any party shall furnish to the other parties
      hereto 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, on the next Business Day after
      deposit with such service; and (d) if
      by facsimile, on the next Business Day if also confirmed by mail in the manner
      provided in this Section.

     

    Section
      12.9  Entire
      Agreement.
      This
      Agreement and any documents executed by the parties pursuant to this Agreement
      and referred to herein constitute a complete and exclusive statement of the
      entire understanding and agreement of the parties hereto with respect to their
      subject matter and supersede all other prior agreements and understandings,
      written or oral, relating to such subject matter between the
      parties. 

     

    Section
      12.10  Severability.
      Whenever
      possible, each provision of this Agreement shall be interpreted in such manner
      as to be effective and valid under applicable law, but if any provision of
      this
      Agreement is held to be prohibited by or invalid under applicable law, such
      provision will be ineffective only to the extent of such prohibition or
      invalidity, without invalidating the remainder of such provision or the
      remaining provisions of this Agreement unless the consummation of the Merger
      is
      adversely affected thereby.

     

    Section
      12.11  Further
      Assurances.
      The
      parties agree: (a) to
      furnish upon request to each other such further information; (b) to
      execute and deliver to each other such other documents; and (c) to
      do such other acts and things, as any party may reasonably request for the
      purpose of carrying out the intent of this Agreement and the documents referred
      to in this Agreement.

     

    Section
      12.12  Counterparts;
      Facsimile Signatures.
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one and the same
      instrument. This Agreement may be executed and accepted by facsimile signature
      and any such signature shall be of the same force and effect as an original
      signature.

     

    Section
      12.13  Survival.
      None of
      the representations and warranties set forth in this Agreement shall survive
      the
      Closing.

     

     

     

    [This
      Space Left Intentionally Blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof,
      the
      parties hereto have caused this Agreement to be executed by their respective
      officers as of the day and year first written above.

     

    
      	
              Bank
                of the Southwest

               

               

              By: /s/
                Paul Muscenti

              Paul
                Muscenti

              Chairman
                of the Board

            	
              Heartland
                Financial USA, Inc.

               

               

              By: /s/Lynn
                B. Fuller

              Lynn
                B. Fuller
    Chairman,
                President and Chief Executive
                Officer

            
	
              Arizona
                Bank & Trust

               

               

              By: /s/
                William F. Frank

              William
                F. Frank
    President
                and Chief Executive Officer

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit A

     

    Form
      of Legal Opinion of Bank’s Counsel

     

    [                      
      ],
      2006

     

    
      	
              Heartland
                Financial USA, Inc. 

              1398
                Central Avenue

              Dubuque,
                Iowa 52004-0778

               

            	
              Arizona
                Bank & Trust 

              1000
                N. 54th
                Street

              Chandler,
                Arizona 85226

            

    

    

    Re: Acquisition
      of Bank of the Southwest by Heartland Financial USA,
      Inc.

     

    Ladies
      and Gentlemen:

     

    We
      have
      served as special counsel to Bank of the Southwest, an Arizona chartered
      commercial bank with its main office located in Tempe, Arizona (the
“Bank”),
      in
      connection with the Agreement and Plan of Merger dated as of December 30,
      2005 (the “Agreement”),
      among
      the Bank, Heartland Financial USA, Inc., a Delaware corporation (“Heartland”),
      and
      Arizona Bank & Trust, an Arizona chartered commercial bank with its main
      office located in Chandler, Arizona, and a majority controlled subsidiary of
      Heartland (“AB&T”).
      Except as specifically defined herein, all capitalized terms used in this letter
      shall have the meanings given them under the Agreement. This opinion is
      delivered to you pursuant to Section 2.7(h) of the Agreement.

     

    As
      counsel for the Bank, we have reviewed the Agreement and also have examined
      and
      relied upon such other documents and instruments, and certificates of public
      officials, and have made such other investigations and inquiries as we have
      deemed necessary or appropriate for purposes of this opinion. In stating our
      opinion, we have relied solely upon certificates of officers of the Bank with
      respect to certain factual matters as we have deemed reasonably necessary.
      For
      purposes of this opinion, we have also assumed, without investigation:
      (a) the legal capacity of each natural Person; (b) the full power and
      authority of each Person, other than the Bank and its officers, to execute,
      deliver and perform each document heretofore executed and delivered or hereafter
      to be executed and delivered, and to do each other act heretofore done or
      hereafter to be done by such Person; (c) the due authorization, execution
      and delivery by each Person, other than the Bank and its officers, of each
      document heretofore executed and delivered or hereafter to be executed and
      delivered by such Person; (d) the legality, validity, binding effect and
      enforceability as to each Person, other than the Bank and its officers, of
      each
      document heretofore executed and delivered or hereafter to be executed and
      delivered, and of each other act heretofore done or hereafter to be done by
      such
      Person; (e) the genuineness of each signature on and the completeness of
      each document submitted to us as an original; (f) the conformity to, and
      the authenticity of, the original of each document submitted to us as a copy;
      (g) no modification of any provision of any document, nor waiver of any
      right or remedy; and (h) no exercise of any right or remedy other than in a
      commercially reasonable and conscionable manner and in good faith.

     

    As
      to
      questions of fact material to our opinion that have not been independently
      established, we have relied upon, without independent verification, the accuracy
      of the relevant facts stated in the certificates or comparable documents of
      officers of the Bank and upon the accuracy of the representations and warranties
      contained in the Agreement. Although we have made no independent investigation
      or verification of each matter set forth therein, nothing has come to our
      attention indicating that such reliance by us or by you is not justified. In
      addition, and particularly with respect to numbered paragraphs 5, 6 and 7
      below, we wish to advise you that: (a) we have not been engaged to give
      substantive attention to any legal or governmental proceedings or orders to
      which the Bank may be a party; and (b) we have made no special
      investigation as to the factual matters stated in our opinion, including any
      search of the dockets or records of any Regulatory Authority, to determine
      if
      any such Proceedings are pending or Orders have been entered involving the
      Bank.

     

    The
      opinions hereafter expressed are qualified to the extent that the rights,
      interests and remedies under the Transaction Documents (as defined below) may
      be
      subject to or affected by: (a) any bankruptcy, insolvency, bank
      conservatorship or receivership or similar laws affecting creditors’ rights and
      remedies generally, and the enforcement thereof; (b) the unavailability of,
      or any limitation on the availability of, any particular right or remedy
      (whether in a proceeding in equity or at law) because of general principles
      of
      equity; and (c) any limitation insofar as indemnification and contribution
      provisions thereof may be limited by applicable law.

     

    We
      express no opinion concerning the applicability to the Bank, or to the Agreement
      or any other documents, exhibits or schedules delivered in connection with
      the
      Merger (collectively, the “Transaction
      Documents”),
      of
      federal, state or local laws, rules, regulations or ordinances relating to:
      (a) occupational health and safety, environmental siting, impact and
      discharge, or storage and discharge of flammable or hazardous materials or
      solid
      or toxic waste; (b) any federal, state or local tax consequences arising in
      connection with the transactions contemplated in the Transaction Documents;
      (c) patent, copyright, service mark, trade name or trademark rights; or
      (d) the accuracy, adequacy or legal sufficiency of any personal property
      descriptions contained in the Transaction Documents.

     

    On
      the
      basis of and subject to the foregoing and the qualifications stated below,
      we
      are of the opinion that:

     

    1. The
      Bank
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Arizona. The Bank has all necessary corporate and
      regulatory power and authority to own its properties and to carry on its
      business as it is now being conducted, including the conduct of a banking
      business in the State of Arizona. 

     

    2. The
      authorized capital stock of the Bank consists of 10,000,000 shares of Bank
      Stock. To our knowledge, 1,730,463 shares of Bank Stock are duly issued and
      outstanding, fully paid and non-assessable, no shares of Bank Stock are held
      by
      the Bank as treasury shares and, to our knowledge, no shares have been issued
      in
      violation of any preemptive right of the Bank’s shareholders. To our knowledge
      and except as disclosed in the Agreement and the Schedules, there are no other
      shares of capital stock of the Bank issued and outstanding, and the Bank owns
      no
      voting stock or equity securities of any corporation, association, partnership
      or other entity. 

     

    3. To
      our
      knowledge, except as disclosed in the Agreement or the Schedules, there is
      no
      existing Contract obligating the Bank to issue or sell, or to purchase or
      redeem, any shares of capital stock of the Bank.

     

    4. The
      execution, delivery and performance of the Agreement and the Contemplated
      Transactions have been duly authorized and approved by the Bank’s board of
      directors and its shareholders, these being the only corporate authorizations
      thereof required of the Bank under its articles of incorporation and bylaws
      and
      under applicable law. The Agreement constitutes the legal, valid and binding
      obligation of the Bank enforceable in accordance with its terms. 

     

    5. The
      execution, delivery and performance by the Bank of the Agreement will not
      violate the articles of incorporation or bylaws of the Bank, and will not,
      to
      our knowledge, result in a material Breach of or constitute a default under
      any
      material Contract or Order of which we have knowledge to which the Bank is
      a
      party or to which it or a material portion of any of its properties or assets
      may be bound.

     

    6. To
      our
      knowledge, no consent, approval, authorization or Order of any Regulatory
      Authority that has not been obtained is required on behalf of the Bank for
      consummation of the Contemplated Transactions, except for the filing of the
      articles of merger with the Arizona Corporation Commission.

     

    7. To
      our
      knowledge, there are no Proceedings, pending or Threatened, against or affecting
      the Bank, at law or in equity or before or by any Regulatory Authority, or
      before any arbitrator of any kind that, in our opinion, based upon such
      knowledge, are reasonably likely to have a Material Adverse Effect on the
      Bank.

     

    In
      addition to the matters set forth above, although we have not independently
      verified the accuracy or completeness of the statements contained in the Proxy
      Statement, based upon our knowledge obtained while acting as special counsel
      to
      the Bank and our review and discussion of the contents of the Proxy Statement
      with the representatives of the Bank and the certificates of officers of the
      Bank verifying certain factual information included therein, nothing has come
      to
      our attention during the course of our representation of the Bank that leads
      us
      to believe that (except for financial statements, other financial data and
      information relating to or supplied by Heartland or AB&T, and financial
      statements and other financial data supplied by the Bank included therein as
      to
      which we do not express any belief) the Proxy Statement, at the time the Proxy
      Statement was first mailed to the shareholders of the Bank, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or as necessary to make the statements therein, in light of
      the
      circumstances under which they were made, not misleading.

     

    With
      respect to the opinions expressed above, we are qualified to practice law in
      the
      State of Arizona and express no opinion concerning any law other than the laws
      of the State of Arizona and the laws of the United States of America,
provided,
      however,
      that
      with your consent and approval, we have assumed for the purposes of the opinion
      expressed in the last sentence of paragraph 4 above, that the laws of the
      State of Iowa are the same in all material respects as the laws of the State
      of
      Arizona.

     

    To
      the
      extent any statement is made subject “to our knowledge” or words of like import,
      such statement is limited to facts actually known, or facts that would have
      been
      known after reasonable inquiry concerning the statement made, by attorneys
      in
      our office who have participated in the representation of the Bank in connection
      with the Contemplated Transactions. 

     

    This
      opinion is being furnished to you solely for your benefit in connection with
      the
      Agreement. It may not be relied upon by, nor a copy of it delivered to any
      other
      party, without our prior written consent. This opinion is based upon our
      knowledge of the law and facts as of the date hereof, and we assume no duty
      to
      communicate with you with respect to any matter that comes to our attention
      hereafter.

     

    Very
      truly yours, 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit B

     

    Form
      of Paying Agent Agreement

     

    This Paying
      Agent Agreement (this
      “Agreement”)
      is
      entered into as of [__________], 2006, among Heartland
      Financial USA, Inc., a
      Delaware corporation (“Heartland”);
      Bank
      of the Southwest,
      an
      Arizona chartered commercial bank with its main office located in Tempe, Arizona
      (“Southwest”);
      Arizona
      Bank & Trust,
      an
      Arizona chartered commercial bank with its main office located in Chandler,
      Arizona (“AB&T”);
      and
[________________]
      Bank,
      a
      commercial bank organized and existing under the laws of the State of [________]
      with its main office located in [________], [________] (“[_____]
      Bank”).

     

    Recitals

     

    A. Heartland,
      Southwest and AB&T have entered into an Agreement and Plan of Merger dated
      as of December 30,
      2005
      (the “Merger
      Agreement”),
      pursuant to which Southwest will be merged with and into AB&T (the
“Merger”)
      and
      each outstanding share of the common stock of Southwest, no par value per share
      (“Bank
      Stock”),
      will
      be converted into the
      right
      to receive cash in the amount set forth in the Merger Agreement. 

     

    B. The
      parties to the Merger Agreement desire that [______] Bank serve as paying agent
      (the “Paying
      Agent”)
      in
      connection with the Merger, and [______] Bank has indicated its willingness
      to
      do so.

     

    Agreements

     

    In
      consideration of the premises and the mutual covenants herein contained and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto hereby agree as follows:

     

    Section
      1.  Definitions
      and Construction.
      All
      terms
      that are capitalized and used in this Agreement (and are not otherwise
      specifically defined herein) shall be used in this Agreement as defined in
      the
      Merger Agreement. The parties hereby incorporate by this reference the
      principles of construction set forth in Section 1.2 of the Merger
      Agreement.

     

    Section
      2.  Appointment
      of Paying Agent.
      Southwest, Heartland and AB&T hereby appoint [______] Bank as Paying Agent
      for the purpose of receiving delivery of Transmittal Letters and Certificates,
      and transmitting the Merger Consideration to the shareholders of Southwest
      (collectively, the “Bank
      Shareholders”).
      [______] Bank hereby agrees to serve as Paying Agent upon the terms and
      conditions set forth herein.

     

    Section
      3.  Duties.
      The
      Paying Agent is hereby authorized and directed to, and hereby agrees
      to:

     

    (a)  mail
      the
      Transmittal Letter to Bank Shareholders for their use in effecting their
      delivery of the Certificates to the Paying Agent;

     

    (b)  accept
      and comply with telephone requests for information relative to the completion
      of
      the Transmittal Letter and the delivery of Certificates to the Paying
      Agent;

     

    (c)  receive
      and examine all Certificates and the accompanying Transmittal Letters and other
      documents required to be submitted by Bank Shareholders in connection therewith
      (collectively, the “Transmittal
      Documents”),
      in
      each case for proper completion and execution in accordance with the terms
      thereof;

     

    (d)  provisionally
      retain any Transmittal Documents evidencing any deficiency in execution, make
      a
      reasonable attempt to inform Southwest of the need for fulfillment of any
      necessary requirements, make available for review by Southwest, Heartland or
      AB&T any Transmittal Documents that continue to be deficient and follow the
      mutual instructions of Southwest, Heartland and AB&T regarding their
      disposition;

     

    (e)  accept
      Transmittal Documents signed by any person acting in a fiduciary or
      representative capacity only if such capacity is shown on the Transmittal
      Documents and is accompanied by proper evidence of such person’s authority so to
      act;

     

    (f)  accept
      Transmittal Documents with respect to any shares of Bank Stock with more than
      one record holder only if each record holder has signed the necessary
      Transmittal Documents;

     

    (g)  accept
      deliveries of Transmittal Documents from persons alleging loss, theft or
      destruction of their Certificates upon the additional receipt of an appropriate
      affidavit of loss for the Certificate and, if required in the Paying Agent’s
      reasonable discretion, a corporate bond of indemnity from a surety that shall
      include indemnification of Southwest, Heartland and AB&T, and [______] Bank,
      in its capacity as the Paying Agent, all in such form and substance as have
      been
      reasonably approved by Southwest, Heartland and AB&T;

     

    (h)  within
      the time period and upon the terms specified in the Merger Agreement, issue
      to
      the Bank Shareholders upon their delivery of Certificates and properly executed
      Transmittal Documents checks in payment of the Merger
      Consideration;

     

    (i)  as
      the
      Paying Agent, cancel all Certificates accepted for delivery in exchange for
      the
      Merger Consideration and retain such Certificates pending further instructions
      from Heartland and AB&T;

     

    (j)  retain
      in
      safekeeping the cash delivered to it by Heartland to satisfy Heartland’s
      requirement to pay the Merger Consideration; and

     

    (k)  maintain
      on a continuing basis a list of Bank Shareholders who have not yet delivered
      their Certificates to the Paying Agent.

     

    Section
      4.  Indemnification.
      Southwest,
      Heartland and AB&T agree to indemnify and hold harmless the Paying Agent
      from and against any and all reasonable and necessary expenses, including
      reasonable and necessary counsel fees and disbursements, or losses suffered
      by
      the Paying Agent in connection with any action, suit or other proceeding or
      investigation involving any claim or liability, that, directly or indirectly,
      results from or arises out of the Paying Agent’s actions hereunder; provided,
      however,
      that
      the Paying Agent shall not be indemnified and held harmless with respect to
      such
      expenses or losses that result from or arise out of the Paying Agent’s gross
      negligence or willful misconduct. Promptly after the receipt by the Paying
      Agent
      of notice of any demand or claim or the commencement of any action, suit,
      proceeding or investigation, the Paying Agent shall, if a claim in respect
      thereof is to be made against the other parties hereto, notify the other parties
      thereof in writing. The other parties hereto shall be entitled to participate
      in
      the defense of any such claim or legal action or proceeding, and, if they so
      elect at any time after receipt of such notice, they may assume the defense
      of
      any suit brought to enforce any such claim or of any other such legal action
      or
      proceeding. For the purposes hereof, the term “expense
      or loss”
paid
      or
      payable to satisfy a claim, demand or liability, or in settlement of any claim,
      demand, action, suit or proceeding settled with the express written consent
      of
      the Paying Agent, shall mean all reasonable costs and expenses, including
      reasonable counsel fees and disbursements, paid or incurred in investigating
      or
      defending against any such claim, demand, action, suit, proceeding or
      investigation.

     

    Section
      5.  Compensation
      of Agent.
      The
      Paying Agent shall receive a fee for its services under this Agreement in an
      amount that is mutually agreeable to Heartland, AB&T and the Paying Agent.
      The Paying Agent shall also be reimbursed by Heartland and AB&T for all
      reasonable and necessary expenses incurred by the Paying Agent pursuant to
      or in
      connection with this Agreement. Heartland and AB&T shall be responsible for
      the fees and expenses payable to the Paying Agent pursuant to this
      Section.

     

    Section
      6.  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 by registered or certified U.S.
      mail (return receipt requested) postage prepaid or telecopied, if confirmed
      immediately thereafter by also mailing a copy of any notice, request or other
      communication by U.S. mail as provided in this Section, to the parties’
addresses set forth in the Merger Agreement, and in the case of Paying Agent
      to:

     

    [_______________]
      Bank

    [_______________________]

    [_______________________]

    Telephone: ([____])
      [___-____]

    Telecopier: ([____])
      [___-____]

    Attention: [_____________],
      President

     

    or
      to
      such other Person or place as such party shall furnish in writing to each of
      the
      others. 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, 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.

     

    Section
      7.  Termination.
      If at
      any time prior to the Closing, Southwest, Heartland and AB&T choose to
      terminate this Agreement, Southwest, Heartland and AB&T shall jointly notify
      the Paying Agent of such termination. If this Agreement is terminated prior
      to
      the Closing, all items then or thereafter in possession of the Paying Agent
      as a
      result of this Agreement shall be promptly returned to Southwest, the Bank
      Shareholders, Heartland or AB&T, as appropriate. The Paying Agent shall be
      entitled to rely on any such joint notice as conclusive evidence of termination.
      Notwithstanding the foregoing, this Agreement shall terminate six (6)
      months after the Closing Date (the “Termination
      Date”),
      and
      thereafter Heartland and AB&T shall be responsible for any obligations owed
      to the former shareholders of Southwest pursuant to the terms of the Merger
      Agreement. All items then in, or thereafter coming into, the possession of
      the
      Paying Agent at or after the Termination Date and as a result of this Agreement,
      and any unexpended funds held pursuant to this Agreement shall be delivered
      to
      Heartland on behalf of Heartland and AB&T. The indemnification provision of
      this Agreement shall survive termination of the Agreement for a period of
      one (1) year after the Termination Date.

     

    Section
      8.  Supplemental
      Instructions.
      The
      instructions contained in this Agreement relating to the Paying Agent’s
      activities in accepting Certificates and paying cash to Bank Shareholders may
      be
      modified or supplemented at any time by joint notice from Southwest, Heartland
      and AB&T. 

     

    Section
      9.  Entire
      Agreement; Amendment and Modification.
      This
      Agreement and the Merger Agreement and any documents executed by the parties
      pursuant to this Agreement or the Merger Agreement and referred to herein or
      therein, constitute the entire understanding and agreement of the parties hereto
      and supersede all other prior agreements and understandings, written or oral,
      relating to such subject matter between the parties. This Agreement may be
      amended, modified or supplemented at any time only by the written approval
      of
      Southwest, Heartland, AB&T and the Paying Agent.

     

    Section
      10.  Waivers.
      The
      waiver by any party hereto of any right hereunder or of any failure to perform
      or breach by any other party hereto shall not be deemed a waiver of any other
      right hereunder or of any other failure or breach by any other party, whether
      of
      the same or a similar nature or otherwise. No waiver shall be deemed to have
      occurred unless set forth in a writing executed by or on behalf of the waiving
      parties.

     

    Section
      11.  Counterparts.
      This
      Agreement and any amendments thereto may be executed in any number of
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same agreement.

     

    Section
      12.  Governing
      Law.
      All
      questions concerning the construction, validity and interpretation of this
      Agreement and the performance of the obligations imposed by this Agreement
      shall
      be governed by the internal laws of the State of Iowa applicable to Contracts
      made and wholly to be performed in such state without regard to conflicts of
      laws.

     

    Section
      13.  Jurisdiction
      and Service of Process.
      Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement may be brought against any of the parties in
      the
      courts of the State of Iowa, County of Dubuque or, if it has or can acquire
      jurisdiction, in the United States District Court serving the County of Dubuque,
      and each of the parties consents to the jurisdiction of such courts (and of
      the
      appropriate appellate courts) in any such action or proceeding and waives any
      objection to venue laid therein. Process in any action or proceeding referred
      to
      in the preceding sentence may be served on any party anywhere in the
      world.

     

    Section
      14.  Severability.
      The
      provisions of this Agreement shall be regarded as divisible and separate; if
      any
      of said provisions should be declared invalid or unenforceable by a court of
      competent jurisdiction, the validity and enforceability of the remaining
      provisions shall not be affected thereby. Furthermore, if the scope and any
      restriction or requirement contained in this Agreement is too broad to permit
      enforcement of such restriction or requirement to its fullest extent, then
      such
      restriction or requirement shall be enforced to the maximum extent permitted
      by
      law, and each of the parties hereto consents and agrees that any court of
      competent jurisdiction may so modify such scope in any proceeding brought to
      enforce such restriction or requirement.

     

    Section
      15.  Assignments,
      Successors and No Third Party Rights.
      None
      of
      the parties to this Agreement may assign any of its rights under this Agreement
      without the prior written consent of the other parties. Subject to the preceding
      sentence, this Agreement and every representation, warranty, covenant, agreement
      and provision hereof shall be binding upon, and inure to the benefit of, the
      parties hereto and their respective successors and permitted assigns. Nothing
      expressed or referred to in this Agreement will be construed to give any Person
      other than the parties to this Agreement any legal or equitable right, remedy
      or
      claim under or with respect to this Agreement or any provision of this
      Agreement.

     

    
 

     

    [This
      Space Left Intentionally Blank]

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    In
      Witness Whereof,
      the
      parties hereto have caused this Agreement to be executed on the day and year
      first written above. 

     

    
      	
              Bank
                of the Southwest

               

               

              By: 

              Name: 

              Title: 

            	
              Heartland
                Financial USA, Inc.

               

               

              By: 

              Name: 

              Title: 

            
	
              Arizona
                Bank & Trust

               

               

              By: 

              Name: 

              Title: 

            	 
	 	 
	
              The
                undersigned acknowledges receipt of the foregoing instructions and
                agrees
                to perform its duties thereunder as Paying Agent.

            
	
              [___________________]
                Bank

               

               

              By: 

              Name: 

              Title: 

            	 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit C

     

    Form
      of Voting Agreement

     

    This
      Voting Agreement
      (this
“Agreement”)
      is
      entered into as of December 30,
      2005, among Heartland
      Financial USA, Inc.,
      a
      Delaware corporation (“Heartland”),
      Bank
      of the Southwest,
      an
      Arizona chartered commercial bank with its main office located in Tempe, Arizona
      (“Southwest”),
      and
each
      of
      the Bank’s directors who owns voting stock of the Bank (collectively referred to
      in this Agreement as the “Principal
      Stockholders,”
and
      individually as a “Principal
      Stockholder.”)

     

    Recitals

     

    A. As
      of the
      date hereof, each Principal Stockholder is the owner of the number of shares
      of
      the Bank’s common stock, no
      par
      value per share ("Bank
      Stock"),
      as is
      set forth opposite such Principal Stockholder’s name on the signature page
      attached hereto and such number of shares represents approximately the
      percentage of the issued and outstanding shares of the Bank’s voting stock which
      is also set forth thereon opposite such Principal Stockholder’s
      name.

     

    B. Heartland
      is contemplating the acquisition of the Bank by means of a merger (the
“Merger”)
      of
the
      Bank
      with and into Arizona
      Bank & Trust, an Arizona chartered commercial bank with its main office
      located in Chandler, Arizona, and a majority controlled subsidiary of Heartland
      (“AB&T”),
      pursuant to an Agreement and Plan of Merger dated of even date herewith (the
      “Merger
      Agreement”).

     

    C. Heartland
      and AB&T are unwilling to expend the substantial time, effort and expense
      necessary to implement the Merger, including applying for and obtaining
      necessary approvals of regulatory authorities, unless all of the Principal
      Stockholders enter into this Agreement.

     

    D. Each
      Principal Stockholder believes it is in his or her best interest as well as
      the
      best interest of the Bank for Heartland and AB&T to consummate the
      Merger.

     

    Agreements

     

    In
      consideration of the foregoing premises, which are incorporated herein by this
      reference, and the covenants and agreements of the parties herein contained,
      and
      as an inducement to Heartland and AB&T to enter into the Merger Agreement
      and to incur the expenses associated with the Merger, the parties hereto,
      intending to be legally bound, hereby agree as follows:

     

    Section 1. Definitions;
      Construction.
      All
      terms
      that are capitalized and used herein (and are not otherwise specifically defined
      herein) shall be used in this Agreement as defined in the Merger Agreement.
      The
      parties hereby incorporate by this reference the principles of construction
      set
      forth in Section 1.2 of the Merger Agreement.

     

    Section 2. Representations
      and Warranties.
      Each
      Principal Stockholder represents and warrants that as of the date hereof, he
      or
      she:

     

    (a)  owns
      beneficially or owns of record the number of shares of Bank Stock as is set
      forth opposite such Principal Stockholder’s name on the signature page attached
      hereto, all of which shares are free and clear of all liens, pledges, security
      interests, claims, encumbrances, options, voting agreements, proxies, agreements
      to sell and commitments of every kind (collectively, “Encumbrances”);

     

    (b)  has
      the
      sole, or joint with any other Principal Stockholder, voting power with respect
      to such shares of Bank Stock, and except as described in the Merger Agreement,
      that he or she does not own or hold any rights to acquire any additional shares
      of the Bank’s capital stock (by exercise of stock option or otherwise) or any
      interest therein or any voting rights with respect to any additional shares;
      and

     

    (c)  has
      all
      necessary power and authority to enter into this Agreement and further
      represents and warrants that this Agreement is the legal, valid and binding
      agreement of such Principal Stockholder, and is enforceable against such
      Principal Stockholder in accordance with its terms.

     

    Section 3. Voting
      Agreement.
      Each
      Principal Stockholder hereby agrees that at any meeting of the Bank’s
      stockholders however called, and in any action by written consent of the Bank’s
      stockholders, such Principal Stockholder shall vote, or cause to be voted,
      all
      shares of Bank Stock now or at any time hereafter owned or controlled by him
      or
      her:

     

    (a)  in
      favor
      of the Merger and the other Contemplated Transactions as described in the Merger
      Agreement;

     

    (b)  against
      any acquisition of control of any capital stock of the Bank through purchase,
      merger, consolidation or otherwise, or the acquisition by any method of a
      substantial portion of the assets of the Bank, in any such case by any party
      other than Heartland or AB&T (an “Alternate
      Proposal”);

     

    (c)  against
      any action or agreement that would reasonably be expected to result in a
      material breach of any covenant, representation or warranty or any other
      obligation of the Bank under the Merger Agreement; and

     

    (d)  against
      any action or agreement that would reasonably be expected to impede or interfere
      with the Contemplated Transactions, including any: (i) change
      in the Bank’s board of directors; (ii) change
      in the Bank’s present capitalization; or (iii) other
      material change in the Bank’s corporate structure or business, in each such case
      except as otherwise agreed to in writing by Heartland and AB&T.

     

    Section 4. Additional
      Covenants.
      Except
      as required by law, each Principal Stockholder agrees that he or she
      will:

     

    (a)  not,
      and
      will not permit any of his or her Affiliates, prior to the Effective Time to
      sell, assign, transfer or otherwise dispose of, create an Encumbrance with
      respect to, or permit to be sold, assigned, transferred or otherwise disposed
      of, any Bank Stock owned of record or beneficially by such Principal
      Stockholder, whether such shares of Bank Stock are owned of record or
      beneficially by such Principal Stockholder on the date of this Agreement or
      are
      subsequently acquired by any method, except: (i) for
      transfers by will or by operation of law (in which case this Agreement shall
      bind the transferee); (ii) with
      the prior written consent of Heartland and AB&T (which consent shall not be
      unreasonably withheld), for any sales, assignments, transfers or other
      dispositions necessitated by hardship; or (iii) as
      Heartland and AB&T may otherwise agree in writing;

     

    (b)  not,
      and
      will not permit any of his or her Affiliates, directly or indirectly (including
      through its Representatives), to initiate, solicit or encourage any discussions,
      inquiries or proposals with any third party relating to an Alternate Proposal,
      or provide any such person with information or assistance or negotiate with
      any
      such person with respect to an Alternate Proposal or agree to or otherwise
      assist in the effectuation of any Alternate Proposal; 

     

    (c)  not
      vote
      or execute any written consent to rescind or amend in any manner any prior
      vote
      or written consent to approve or adopt the Merger Agreement or any of the other
      Contemplated Transactions; 

     

    (d)  at
      the
      request of Heartland and AB&T, use his or her best efforts to cause any
      necessary meeting of the Bank’s stockholders to be duly called and held, or any
      necessary consent of stockholders to be obtained, for the purpose of approving
      or adopting the Merger Agreement and the other Contemplated Transactions;

     

    (e)  cause
      any
      of his or her Affiliates to cooperate fully with Heartland and AB&T in
      connection with the Merger Agreement and the Contemplated Transactions;
      and

     

    (f)  execute
      and deliver such additional instruments and documents and take such further
      action as may be reasonably necessary to effectuate and comply with his or
      her
      respective obligations under this Agreement.

     

    Section 5. Termination.
      Notwithstanding any other provision of this Agreement, this Agreement shall
      automatically terminate on the earlier of: (a) the
      date of termination of the Merger Agreement as set forth in
      Article 11 thereof,
      as such termination provisions may be amended by the Bank, Heartland and
      AB&T from time to time; and (b) the
      Effective Time. 

     

    Section 6. Remedies.
      Each
      Principal Stockholder understands and acknowledges that if he or she should
      breach any of his or her covenants contained in this Agreement, the damage
      to
      Heartland and AB&T would be indeterminable in view of the inability to
      measure the ultimate value and benefit to Heartland and AB&T resulting from
      Heartland’s contemplated future ownership and control of the Bank, and,
      therefore, that neither Heartland nor AB&T would have an adequate remedy at
      law to compensate Heartland and AB&T for any such breach. Each Principal
      Stockholder agrees that in addition to any other remedy available to Heartland
      and AB&T at law or in equity, each of Heartland and AB&T shall be
      entitled to specific performance of this Agreement by such Principal Stockholder
      upon application to any court having jurisdiction over the parties. Accordingly,
      each Principal Stockholder: (a) irrevocably
      waives, to the extent permitted by law, any defense that he or she might have
      based on the adequacy of a remedy at law which might be asserted as a bar to
      specific performance, injunctive relief or other equitable relief; and
      (b) agrees
      to the granting of injunctive relief without the posting of any bond and further
      agrees that if any bond shall be required, such bond shall be in a nominal
      amount. 

     

    Section 7. Amendment
      and Modification.
      This
      Agreement may be amended, modified or supplemented at any time by the written
      approval of such amendment, modification or supplement by the Bank, Heartland,
      AB&T and the Principal Stockholder directly affected by such amendment,
      modification or supplement.

     

    Section 8. Entire
      Agreement.
      This
      Agreement evidences the entire agreement among the parties hereto with respect
      to the matters provided for herein and there are no agreements, representations
      or warranties with respect to the matters provided for herein other than those
      set forth herein and in the Merger Agreement and written agreements related
      thereto. Except for the Merger Agreement, this Agreement supersedes any
      agreements among any of the Bank, its stockholders, Heartland or AB&T
      concerning the acquisition, disposition or control of any Bank
      Stock.

     

    Section 9. Absence
      of Control.
      Subject
      to any specific provisions of this Agreement, it is the intent of the parties
      to
      this Agreement that neither Heartland nor AB&T by reason of this Agreement
      shall be deemed (until consummation of the Contemplated Transactions) to
      control, directly or indirectly, any other party and shall not exercise, or
      be
      deemed to exercise, directly or indirectly, a controlling influence over the
      management or policies of any such other party. Pursuant to Section 2.10 of
      the Merger Agreement, nothing contained herein shall be deemed to grant
      Heartland an ownership interest in any shares of Bank Stock.

     

    Section 10. Informed
      Action.
      Each
      Principal Stockholder acknowledges that he or she has had an opportunity to
      be
      advised by counsel of his or her choosing with regard to this Agreement and
      the
      transactions and consequences contemplated hereby. Each Principal Stockholder
      further acknowledges that he or she has received a copy of the Merger Agreement
      and is familiar with its terms.

     

    Section 11. Severability.
      The
      parties agree that if any provision of this Agreement shall under any
      circumstances be deemed invalid or inoperative, this Agreement shall be
      construed with the invalid or inoperative provisions deleted and the rights
      and
      obligations of the parties shall be construed and enforced
      accordingly.

     

    Section 12. Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute but one and
      the
      same instrument.

     

    Section 13. Governing
      Law.
      All
      questions concerning the construction, validity and interpretation of this
      Agreement and the performance of the obligations imposed by this Agreement
      shall
      be governed by the internal laws of the State of Iowa applicable to agreements
      made and wholly to be performed in such state without regard to conflicts of
      laws.

     

    Section 14. Jurisdiction
      and Service of Process.
      Any
      action or proceeding seeking to enforce any provision of, or based on any right
      arising out of, this Agreement shall be brought only in the courts of the State
      of Iowa, County of Dubuque or, if it has or can acquire jurisdiction, in the
      United States District Court serving the County of Dubuque, and each of the
      parties consents to the jurisdiction of such courts (and of the appropriate
      appellate courts) in any such action or proceeding and waives any objection
      to
      venue laid therein. Process in any action or proceeding referred to in the
      preceding sentence may be served on any party anywhere in the
      world.

     

    Section 15. Successors;
      Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of the Bank and
      Heartland, and their successors and permitted assigns, and the Principal
      Stockholders and their respective spouses, executors, personal representatives,
      administrators, heirs, legatees, guardians and other legal representatives.
      This
      Agreement shall survive the death or incapacity of any Principal Stockholder.
      This Agreement may be assigned only by Heartland, and then only to a subsidiary
      of Heartland.

     

    

     

    [This
      Space Left Intentionally Blank]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Agreement individually, or have caused this
      Agreement to be executed by their respective officers, on the day and year
      first
      written above.

     

    
      	
              Bank
                of the Southwest

               

               

              By: 

              Name: 

              Title: 

            	
              Heartland
                Financial USA, Inc.

               

               

              By: 

              Name: 

              Title: 

            
	
              Arizona
                Bank & Trust

               

               

              By: 

              Name: 

              Title: 

            	 

    

    

     

    

     

    [Signature
      Page of Voting Agreement ]

     

    
      	
               

              Principal
                Stockholders

            	
               

              Shares
                Owned

            	
              Percentage
                Ownership

            
	
               

              Signature

               

              Printed
                Name

            	
               

              [______]

            	
               

              [____]%

            
	
               

              Signature

               

              Printed
                Name

            	
               

              [______]

            	
               

              [____]%

            
	
               

              Signature

               

              Printed
                Name

            	
               

              [______]

            	
               

              [____]%

            
	
               

              Signature

               

              Printed
                Name

            	
               

              [______]

            	
               

              [____]%

            
	
               

              Signature

               

              Printed
                Name

            	
               

              [______]

            	
               

              [____]%

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Exhibit D

       

      Form
        of Consulting and Non-Competition Agreement

       

      This
        Consulting And Non-Competition Agreement (this
        “Agreement”),
        is
        entered into as of December 30, 2005, among Heartland
        Financial USA, Inc.,
        a
        Delaware corporation (“Heartland”);
        Arizona
        Bank & Trust,
        an
        Arizona chartered commercial bank with its main office located in Chandler,
        Arizona, and a majority controlled subsidiary of Heartland (“AB&T”);
        and
Paul
        Muscenti
        (“Consultant”).

       

      Recitals

       

      A. Heartland,
        AB&T and Bank
        of
        the Southwest,
        an
        Arizona chartered commercial bank with its main office located in Tempe,
        Arizona
        (“Southwest”),
        have
        entered into an Agreement and Plan of Merger of even date herewith (the
“Merger
        Agreement”)
        providing for the merger of Southwest with and into AB&T (the “Merger”).

       

      B. Consultant
        is currently the Chairman of the Board of Southwest and is familiar with
        the
        business, operations and properties of Southwest.

       

      C. For
        purposes of facilitating a smooth transition in ownership and control, an
        effective consolidation of Southwest’s operations with those of AB&T and the
        continued success of the combined operations of AB&T and Southwest,
        Heartland wishes to secure Consultant’s services for a period following the
        Closing.

       

      D. Consultant
        is willing to make his services available to Heartland on the terms and
        conditions hereinafter set forth.

       

      Agreements

       

      In
        consideration of the foregoing premises and the following mutual promises,
        covenants and agreements, the parties hereby agree as follows:

       

      Section
        1.  Engagement.
        Heartland
        offers to engage Consultant, and Consultant hereby accepts such engagement,
        to
        provide services to Heartland and AB&T as a consultant for the period
        established under Section
        4(a)
        (the
“Term”).

       

      Section
        2.  Services.
        During
        the Term, Consultant shall serve as a director and as the vice chairman of
        AB&T. He shall also hold himself available during regular business hours to
        perform such services in connection with the transition of the ownership
        and
        operation of the business and assets of Southwest acquired by Heartland pursuant
        to the Merger Agreement, as the respective executive officers of Heartland
        or
        AB&T may reasonably request, and to perform such other services as AB&T
        or Heartland may reasonably request to promote the success of AB&T,
provided,
        however,
        that
        Consultant shall not be required to work any more than an average of
        twenty-five (25) hours per week in performing the services described in
        this Agreement. The services which may be required of Consultant hereunder
        may
        include, business development; providing general business advice with respect
        to
        the gathering of deposits and the making of loans by AB&T; promoting sound
        banking practices of AB&T; promoting Heartland and AB&T and their
        respective products and services in communities that are served by Heartland
        and
        AB&T and their respective Affiliates (as defined in the Merger Agreement);
        promoting the recognition and acceptance of Heartland and AB&T among
        Southwest’s customers; and otherwise facilitating the transition of ownership
        and control and the effective consolidation of Southwest’s operations with those
        of Heartland and AB&T. Either or both of Heartland and AB&T may, in
        their respective sole and absolute discretion, engage other employees or
        independent contractors to perform any or all of the services for which
        Consultant is available under this Section.

       

      Section
        3.  Compensation.
        As
        compensation for the consulting services to be provided under Section
        2
        and for
        compliance with the covenants in Section
        5,
        Consultant shall receive the following compensation, expense reimbursement
        and
        other benefits:

       

      (a)  Consulting
        Fees.
        Consultant shall receive annual consulting fees of Eighty Five Thousand Dollars
        ($85,000) (the “Consulting
        Fees”).
        The
        annual Consulting Fees shall be payable in equal monthly installments with
        each
        installment to be paid in arrears on the first business day of each month.
        Consultant shall be eligible, at the discretion of AB&T’s board of
        directors, to receive cash bonuses on comparable terms as members of AB&T’s
        senior management, based upon the performance of AB&T.

       

      (b)  Stock
        Options.
        Consultant shall be considered for grants of options to purchase shares of
        Heartland stock, all subject to the discretion of the Compensation Committee
        of
        Heartland’s board of directors.

       

      (c)  Automobile
        Allowance.
        AB&T
        shall pay to Consultant on a monthly basis the sum of Eight Hundred Dollars
        ($800) as an automobile allowance. Consultant shall be responsible for all
        expenses for fuel, maintenance, repairs and insurance relating to his
        automobile. The payment to Consultant of this automobile allowance shall
        be
        reflected annually, as the same may be required, on any tax form provided
        by
        AB&T to Consultant and shown as additional compensation for income tax
        purposes.

       

      (d)  Country
        Club Dues.
        Because
        Consultant intends to engage in business development and customer relations
        through customer entertainment at his country club, Heartland agrees during
        the
        Term to reimburse Consultant for his monthly country club dues.

       

      (e)  Reimbursement
        of Expenses.
        If in
        connection with the performance of business development and customer relations,
        and/or other services hereunder at the request of Heartland or AB&T,
        Consultant incurs out-of-pocket costs for expenses for travel, meals and
        lodging
        or other reasonable expenses of a type for which other providers of professional
        services to Heartland or AB&T would be reimbursed, he shall be entitled to
        reimbursement therefor by Heartland or AB&T in accordance with the
        reasonable standards and procedures established by Heartland or AB&T and, in
        the case of either, expressly communicated to Consultant.

       

      Section
        4.  Term;
        Termination; Payments on Termination. 

       

      (a)  Term.
        The Term
        shall be for a term of two (2) years beginning on the Effective Date, and
        shall automatically extend for one (1) additional year on the second anniversary
        of the Effective Date (the “Automatic
        Extension”),
        unless the Automatic Extension is terminated by either party effective by
        written notice to that effect delivered to the other not less than ninety
        (90)
        days prior to the second anniversary of the Effective Date. If the Automatic
        Extension is terminated, then Consultant’s employment hereunder shall terminate
        as of the last day of the original two (2) year Term. The parties agree
        that the Effective Date under this Agreement shall be the Closing Date, as
        defined in the Merger Agreement, provided,
        however,
        that if
        the Merger Agreement is terminated, this Agreement shall also terminate
        automatically and simultaneously. 

       

      (b)  Voluntary
        Termination by Consultant.
        If
        Consultant voluntarily terminates his services under this Agreement, then
        AB&T shall only be required to pay Consultant his Consulting Fees as shall
        have accrued through the effective date of such termination, and AB&T shall
        have no further obligations to Consultant.

       

      (c)  Premature
        Termination by AB&T.
        

       

      (i) If
        this
        Agreement is terminated by AB&T prior to the last day of the Term for any
        reason other than a termination for Cause (as defined below), then
        notwithstanding any mitigation of damages by Consultant, AB&T shall pay
        Consultant an amount equal to the remaining Consulting Fees that Consultant
        would have been entitled to receive through the second anniversary of the
        Effective Date. 

       

      (ii) Payment
        to Consultant of such remaining Consulting Fees will be made on a monthly
        basis
        during the remaining Term. At the election of AB&T, payments may be made in
        a lump sum discounted to their present value using the prime rate of interest
        as
        of the date of termination. Such payments shall not be reduced in the event
        Consultant obtains other employment following the termination of employment
        by
        AB&T.

       

      (d)  Termination
        for Cause.
        This
        Agreement may be terminated for cause as hereinafter defined. “Cause”
shall
        mean: (i) Consultant’s
        death; (ii) Consultant’s
        “Permanent
        Disability,”
which
        shall mean Consultant’s inability, as a result of physical or mental incapacity,
        substantially to perform his duties hereunder for a period of three (3)
        consecutive months; (iii) a
        material violation by Consultant of any applicable law or regulation with
        respect to the business of AB&T or Heartland; (iv) Consultant
        being found guilty of a felony or an act of dishonesty in connection with
        the
        performance of his duties as a consultant of AB&T, or which disqualifies
        Consultant from serving as a director of AB&T; or (v) the
        willful or negligent failure of Consultant to perform his duties hereunder
        in
        any material respect. If there is a dispute regarding Consultant’s Permanent
        Disability, each of Consultant and AB&T shall choose a physician who
        together will choose a third physician to make a final determination thereof.
        Upon a termination of Consultant’s employment with AB&T for Cause, then
        AB&T shall only be required to pay Consultant his Consulting Fees as shall
        have accrued through the effective date of such termination, and AB&T shall
        have no further obligations to Consultant.

       

      (e)  Payments
        Upon Death.
        If any
        accrued but unpaid Consulting Fees are due and owing under this Agreement
        at the
        death of Consultant, then AB&T shall pay such fees to any beneficiary who
        Consultant may designate in writing, or failing such designation, to the
        executor of his estate, in full settlement and satisfaction of all claims
        and
        demands on behalf of Consultant under the terms of this Agreement. 

       

      (f)  Payments
        Prior to Permanent Disability.
        Consultant shall be entitled to the compensation and benefits provided for
        under
        this Agreement for any period during the Term and prior to the establishment
        of
        Consultant’s Permanent Disability. Notwithstanding anything contained in this
        Agreement to the contrary, until the date specified in a notice of termination
        relating to Consultant’s Permanent Disability, Consultant shall be entitled to
        return to his positions with AB&T as set forth in this Agreement in which
        event no Permanent Disability of Consultant will be deemed to have
        occurred.

       

      Section
        5.  Restrictive
        Covenants. 

       

      (a)  Confidential
        Information.
        Consultant
        acknowledges that, during the course of his engagement with AB&T, Consultant
        may produce and have access to confidential and/or proprietary non-public
        information concerning AB&T and its Affiliates, including marketing
        materials, customers lists, records, data, trade secrets, proprietary business
        information, pricing lists and policies, strategic planning, commitments,
        plans,
        procedures, litigation, pending litigation and other information not generally
        available to the public (collectively, “Confidential
        Information”).
        Consultant agrees not to directly or indirectly use, disclose, copy or make
        lists of Confidential Information for the benefit of anyone other than Heartland
        or AB&T, either during or after his engagement under this Agreement, except
        to the extent that such information is or thereafter becomes lawfully available
        from public sources, or such disclosure is authorized in writing by Heartland
        or
        AB&T, required by law or any competent administrative agency or judicial
        authority, or otherwise as reasonably necessary or appropriate in connection
        with performance by Consultant of his duties hereunder. Consultant agrees
        that,
        if he receives a subpoena or other court order or is otherwise required by
        law
        to provide information to a governmental authority or other person concerning
        the activities of AB&T or any of its Affiliates, or his activities in
        connection with the business of AB&T or any of its Affiliates, Consultant
        will immediately notify AB&T of such subpoena, court order or other
        requirement and deliver forthwith to AB&T a copy thereof and any attachments
        and non-privileged correspondence related thereto. Consultant shall take
        reasonable precautions to protect against the inadvertent disclosure of
        Confidential Information. Consultant agrees to abide by AB&T’s reasonable
        policies, as in effect from time to time, respecting avoidance of interests
        conflicting with those of AB&T and its Affiliates. In this regard,
        Consultant shall not directly or indirectly render services to any person
        or
        entity in connection with the design, development, marketing, sale or
        administration of any service, product, plan or program where Consultant’s
        service would involve the use or disclosure of Confidential Information.
        Consultant agrees not to use any Confidential Information to guide him in
        searching publications or other publicly available information, selecting
        a
        series of items of knowledge from unconnected sources and fitting them together
        to claim that he did not violate any agreements set forth in this Agreement.
        

       

      (b)  Documents
        and Property.
        All
        records, files, documents and other materials or copies thereof relating
        to the
        business of AB&T and its Affiliates, which Consultant shall prepare,
        receive, or use, shall be and remain the sole property of AB&T and, other
        than in connection with performance by Consultant of his duties hereunder,
        shall
        not be removed from the premises of AB&T or any of its Affiliates without
        AB&T’s prior written connect, and shall be promptly returned to AB&T
        upon Consultant’s termination of engagement together with all copies, magnetic
        disks or tapes, recordings, abstracts, notes or reproductions of any kind
        made
        from or about the documents, software and tangible items or information they
        contain.

       

      (c)  Non-Competition
        and Non-Solicitation.
        

       

      (i)  AB&T
        and Consultant have jointly reviewed the customer lists and operations of
        AB&T and have agreed that the primary service area of AB&T’s lending and
        deposit taking functions in which Consultant will actively participate will
        extend to an area that encompasses Maricopa County, Arizona (the “Restrictive
        Area”).
        Therefore, as an essential ingredient of and in consideration of this Agreement
        and his engagement by Heartland and AB&T, Consultant agrees that during the
        Term and for the one year period following the end of the Term (the
“Restrictive
        Period”),
        he
        will not, except with the express prior written consent of Heartland and
        AB&T, directly or indirectly, do any of the following (all of which are
        collectively referred to in this agreement as the “Restrictive
        Covenant”):

       

      (A)  become
        an
        officer, employee, consultant, director or trustee of, or provide services,
        directly or indirectly, in any capacity whatsoever to, any person, firm,
        partnership, corporation or trust which owns or operates, a bank, savings
        and
        loan association, credit union or similar financial institution (a “Financial
        Institution”)
        with
        an office located, or to be located at an address identified in a filing
        with
        any regulatory authority, within the Restrictive Area; provided
        however, that
        the
        ownership by Consultant of shares of the capital stock of any Financial
        Institution which shares are listed on a securities exchange or quoted on
        the
        National Association of Securities Dealers Automated Quotation System and
        which
        do not represent more than one percent (1%) of the institution’s outstanding
        capital stock, shall not violate any terms of this Agreement;

       

      (B)  solicit
        or offer employment to any officer or employee of AB&T or any of its
        Affiliates;

       

      (C)  initiate
        any information, advice or recommendation with respect to any officer or
        employee of AB&T or any of its Affiliates that is intended, or that a
        reasonable person acting in like circumstances would expect, to have the
        effect
        of causing any such officer or employee to terminate his or her employment
        and
        accept employment or become affiliated with, or provide services for
        compensation in any capacity whatsoever to, such other entity or person;
        or

       

      (D)  except
        as
        a representative of AB&T or any of its Affiliates, directly or indirectly,
        engage in the sale or marketing of any financial institution products or
        services, insurance products, investment products, investment advisory services
        or investment brokerage services to any person or entity who is currently,
        or
        becomes after the Effective Time (as defined in the Merger Agreement), a
        customer of AB&T or any of its Affiliates.

       

      (d)  Remedies
        for Breach of Restrictive Covenants.
        Consultant
        has reviewed the provisions of this Agreement with legal counsel and Consultant
        acknowledges and expressly agrees that the covenants contained in this Section
        are reasonable with respect to their duration, geographical area and scope.
        Consultant further acknowledges that the restrictions contained in this Section
        are reasonable and necessary for the protection of the legitimate business
        interests of Heartland and AB&T, that they create no undue hardships, that
        any violation of these restrictions would cause substantial injury to Heartland
        and AB&T and such interests, that Heartland would not have agreed to enter
        into the Merger Agreement and Heartland and AB&T would not have agreed to
        employ Consultant without receiving Consultant’s agreement to be bound by these
        restrictions and that such restrictions were a material inducement to Heartland
        to enter into the Merger Agreement and for Heartland and AB&T to hire
        Consultant. In the event of any violation or threatened violation of these
        restrictions, Heartland or AB&T, in addition to and not in limitation of,
        any other rights, remedies or damages available to either of them under this
        Agreement or otherwise at law or in equity, shall be entitled to preliminary
        and
        permanent injunctive relief to prevent or restrain any such violation by
        Consultant and any and all persons directly or indirectly acting for or with
        him, as the case may be. 

       

      Section
        6.  No
        Employment Relationship Created.
        The
        relationship between Heartland, AB&T and Consultant shall be that of client
        and independent contractor. Neither Heartland nor AB&T shall assume, and
        each specifically disclaims, any obligations of an employer to an employee
        which
        may exist under applicable law. Consultant shall be treated as an independent
        contractor for all purposes of federal, state and local income taxes and
        payroll
        taxes. Consultant shall be responsible for payment of all taxes, including
        federal, state and local taxes arising out of Consultant’s activities in
        accordance with this Agreement, including federal and state personal income
        tax
        and social security tax, all as may be required by applicable law or regulation
        and Heartland or AB&T, as applicable, shall file the appropriate IRS
        Form 1099s. Consultant shall have the full authority to select the means,
        manner and method of performing the services to be performed under this
        Agreement. Consultant shall not be considered by reason of the provisions
        of
        this Agreement or otherwise as being an employee of Heartland or AB&T.
        Except as expressly provided in this Agreement, Consultant shall not be eligible
        to participate in any employee benefit plans offered by Heartland or AB&T or
        any of their Affiliates to their respective employees.

       

      Section
        7.  Successors
        and Assigns.
        This
        Agreement will inure to the benefit of and be binding upon Consultant, his
        legal
        representatives and testate or intestate distributees, and Heartland and
        AB&T, and their respective successors and assigns, including, in the case of
        Heartland or AB&T, any successor by merger or consolidation or a statutory
        receiver or any other person or firm or corporation to which all or
        substantially all of the respective assets and business of Heartland or AB&T
        may be sold or otherwise transferred.

       

      Section
        8.  Entire
        Agreement; Modifications; Survival.
        This
        Agreement constitutes the entire agreement between the parties respecting
        the
        subject matter hereof, and supersedes all prior negotiations, undertakings,
        agreements and arrangements with respect thereto, whether written or oral.
        Consultant agrees that any employment or consulting agreement or arrangement
        between Consultant and Southwest shall terminate at the Effective Time and
        that
        Consultant is entitled to receive no payments thereunder except for accrued
        compensation for services rendered. Except as otherwise explicitly provided
        herein, this Agreement may not be amended or modified except by written
        agreement signed by Consultant and Heartland. Consultant further acknowledges
        and agrees that Section
        5
        shall
        survive the termination of this Agreement. 

       

      Section
        9.  Enforcement.
        The
        provisions of this Agreement shall be regarded as divisible and separate;
        if any
        of said provisions should be declared invalid or unenforceable by a court
        of
        competent jurisdiction, the validity and enforceability of the remaining
        provisions shall not be affected thereby. Furthermore, if the scope and any
        restriction or requirement contained in this Agreement is too broad to permit
        enforcement of such restriction or requirement to its fullest extent, then
        such
        restriction or requirement shall be enforced to the maximum extent permitted
        by
        law, and Consultant consents and agrees that any court of competent jurisdiction
        may so modify such scope in any proceeding brought to enforce such restriction
        or requirement.

       

      Section
        10.  Governing
        Law.
        All
        questions concerning the construction, validity and interpretation of this
        Agreement and the performance of the obligations imposed by this Agreement
        shall
        be governed by the internal laws of the State of Arizona applicable to contracts
        made and wholly to be performed in such state without regard to conflicts
        of
        laws.

       

      Section
        11.  Jurisdiction
        and Service of Process.
        Any
        action or proceeding seeking to enforce, challenge or avoid any provision
        of, or
        based on any right arising out of, this Agreement shall be brought only in
        the
        courts of the State of Arizona, County of Maricopa or, if it has or can acquire
        jurisdiction, in the United States District Court serving the County of
        Maricopa, and each of the parties consents to the exclusive jurisdiction
        of such
        courts (and of the appropriate appellate courts) in any such action or
        proceeding and waives any objection to jurisdiction or venue laid therein.
        Process in any action or proceeding referred to in the preceding sentence
        may be
        served on any party anywhere in the world.

       

      Section
        12.  Legal
        Fees.
        All
        reasonable legal fees paid or incurred by Heartland, AB&T or Consultant
        pursuant to any dispute or question of interpretation relating to this Agreement
        shall be paid or reimbursed by the party who or which is not successful on
        the
        merits pursuant to a legal judgment or settlement.

       

      Section
        13.  Waiver.
        No
        waiver by either party at any time of any breach by the other party of, or
        compliance with, any condition or provision of this Agreement to be performed
        by
        the other party, shall be deemed a waiver of any similar or dissimilar
        provisions or conditions at the same time or any prior or subsequent
        time.

       

      Section
        14.  Notices.
        Notices
        pursuant to this Agreement shall be in writing and shall be deemed given
        when
        received; and, if mailed, shall be mailed by United States registered or
        certified mail, return receipt requested, postage prepaid; and if to Heartland,
        addressed to the principal headquarters of Heartland, attention: President;
        if
        to AB&T, addressed to the principal headquarters of AB&T, attention:
        President; or, if to Consultant, to the address set forth below Consultant’s
        signature on this Agreement, or to such other address as the party to be
        notified shall have given to the other.

       

      Section
        15.  Construction.
        In
        this
        Agreement, unless otherwise stated or the context otherwise requires, the
        following uses apply: (a) “including”
means
        “including,
        but not limited to”;
        (b) all references to sections are to sections in this Agreement unless
        otherwise specified; (c) all words used in this Agreement will be construed
        to be of such gender or number as the circumstances and context require;
        (d) the captions and headings of sections appearing in this Agreement have
        been inserted solely for convenience of reference and shall not be considered
        a
        part of this Agreement nor shall any of them affect the meaning or
        interpretation of this Agreement or any of its provisions; and (e) any
        reference to a document or set of documents in this Agreement, and the rights
        and obligations of the parties under any such documents, shall mean such
        document or documents as amended from time to time, and any and all
        modifications, extensions, renewals, substitutions or replacements
        thereof.

       

      

       

      

       

      [This
        Space Left Intentionally Blank]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      In
        Witness Whereof,
        the
        parties have executed this Agreement as of the date first above
        written.

       

      Arizona
        Bank & Trust    

      

      

      By:             

      William
        F. Frank

      President
        and Chief Executive Officer       

       

       

      Paul Muscenti

       

      
        By:  

                   

        Paul
          Muscenti
        Consultant       

      

      

       

      Heartland
        Financial USA, Inc.

      

      

      By:      

      Lynn
        B.
        Fuller  

      Chairman,
        President and Chief Executive Officer

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