AIM.Under the MBCA,TBOC, unless reserveda corporation's certificate of formation or a bylaw adopted by the articles of incorporation to the shareholders the power toprovides otherwise, a corporation's shareholders may amend the bylaws regardless of whether they may also be vested in the board.However, the shareholders always retain the power to adopt, amend or repeal the bylaws, even thoughamended by the board of directors may also be delegated such power.directors.
Heartland.Heartland
Under the DGCL, every stockholder of record has the right to inspect, upon written demand under oath stating the stockholder’sstockholder's purpose for inspection, in person or by agent or attorney, the corporation’scorporation's stock ledger, stockholder list, its other books and records and, subject to certain restrictions, the books and records of a subsidiary of the corporation.
AIM.Signature
Under the MBCA,TBOC, a shareholder is entitledof a Texas corporation has the right to inspectexamine the books and copy the following records of the corporation at any reasonable time upon written notice stating a proper purpose if thesuch shareholder gives the corporation written demand(a) has been a shareholder for six months or (b) holds at least ten days before the date on which the shareholder wishes to inspect and copy the following records: (i) records of all proceedings of shareholders for the last three years, (ii) records of all proceedingsfive percent of the board for the last three years, (iii) its articles and all amendments currently in effect, (iv) its bylaws and all amendments currently in effect, (v) annual financial statementsand the financial statement for the most recent interim period prepared in the course of the operation of the corporation for distribution to the shareholders or to a governmental agency as a matter of public record, (vi) reports made to shareholders generally within the last three years, (vii) a statement of the names and usual business addresses of its directors and principal officers (viii) voting trust agreements, (ix) shareholder controlcorporation's outstanding shares.
100
The validity of the Heartland common stock offered by this proxy statement/prospectus has been passed upon for Heartland by Dorsey & Whitney LLP.
67.
EXPERTS
The consolidated financial statements of Heartland Financial USA, Inc. as of December 31, 20162019 and 2015,2018, and for each of the years in the three-year period ended December 31, 2016,2019, and management’smanagement's assessment of the effectiveness of internal control over financial reporting as of December 31, 2016,2019, have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firmKPMG LLP as experts in accounting and auditing.
The audit report on the effectiveness of internal control over financial reporting as of December 31, 2019 contains an explanatory paragraph that states that Illinois Bank & Trust, a wholly owned subsidiary of Heartland, acquired substantially all of the assets and assumed substantially all of the deposits and certain other liabilities of Rockford Bank and Trust Company on November 30, 2019, and management has excluded from its assessment of the effectiveness of the Heartland’s internal control over financial reporting as of December 31, 2019, Rockford Bank and Trust Company’s internal control over financial reporting associated with total assets of $449.0 million as of December 31, 2019 and total revenues of $1.0 million for the one month period ended December 31, 2019. KPMG LLP’s audit of internal control over financial reporting of Heartland also excluded an evaluation of the internal control over financial reporting of Rockford Bank and Trust Company.
WHERE YOU CAN FIND MORE INFORMATION
Heartland files annual, quarterly and current reports, proxy statements and other information with the SEC. Heartland’sHeartland's SEC filings are available to the public through the Internet at the SEC web site at http://www.sec.gov. You may also read and copy any document Heartland files with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference facilities and their copy charges. You may also obtain copies of ourHeartland's SEC filings at the office of The NasdaqNASDAQ Stock Market located at One Liberty Plaza, 165 Broadway, New York, NY 10006. For further information on obtaining copies of Heartland’sHeartland's public filings at The NasdaqNASDAQ Stock Market, you should call 1-212-401-8700.(212) 401-8700.
The SEC allows Heartland to incorporate by reference into this proxy statement/prospectus the information it files with the SEC. This allows Heartland to disclose important information to you by referencing those filed documents. Heartland has previously filed the following documents with the SEC and is incorporating them by reference into this proxy statement/prospectus:
| • | Heartland's Annual Report on Form 10-K for the year ended December 31, 2019; |
| • |
| • | Heartland's Current Reports on Form 8-K dated April 23, 2020; May 21, 2020; June 19, 2020; June 26, 2020; July 15, 2020; July 23, 2020; August 28, 2020; October 22, 2020; October 22, 2020; and October 22, 2020; |
| • | Heartland's definitive Proxy Statement for its annual meeting of stockholders held on May 20, 2020; and |
the description of Heartland’sHeartland's common stock and preferred share purchase rights included in its registration statements on Form 8-A filed with the SEC, including any amendment or reports filed for the purpose of updating such description, and in any other registration statement or report filed by usHeartland under the Exchange Act, including any amendment or report filed for the purpose of updating such description.
Heartland is also incorporating by reference any future filings made by it with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of the registration statement of which this proxy statement/prospectus is a part and prior to the date of the Signature specialannual meeting on February 20, 2018.December 1, 2020. The most recent information that Heartland files with the SEC automatically updates and supersedes more dated information.
101
You can obtain a copy of any documents which are incorporated by reference in this proxy statement/prospectus or any supplement at no cost by writing or telephoning usHeartland at:
Investor Relations
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
(563) 589-2100
You should rely only on the information contained or incorporated by reference in this proxy statement/prospectus or any supplement hereto relating to the offered securities. We haveHeartland common stock. Heartland has not authorized anyone to provide you with different information. You should not assume that the information in this proxy statement/prospectus or any supplement is accurate as of any date other than the date on the front cover of those documents. OurThe business, financial condition, results of operations and prospects of Heartland may have changed since those dates.
102
AGREEMENT AND PLAN OF MERGER
ThisTABLE OF CONTENTS
RECITALS
WHEREAS, Parent is a Texas corporation with authorized capital stock consisting of 100,000 shares of common stock, $100.00 par value per share (the “Parent Common Stock”), 24,553.98 shares of which are issued and outstanding, and 1,000,000 shares of preferred stock, no par value per share, none of which are issued and outstanding;
WHEREAS, AimBank is a Texas banking association duly organized and existing under the laws of the State of Texas with its home office in the Littlefield, Lamb County, Texas, and AimBank has authorized capital stock consisting of 10,000 shares of common stock, par value $100.00 per share (the “AimBank Common Stock”), 1,000 of which are issued and outstanding, and all of which are owned by Parent;
WHEREAS, at least a majority of the Boards of Directors of Parent and at least a majority of the Board of Directors of AimBank, pursuant to the authority given by and in accordance with the provisions of Chapter 10, Subchapter A of the Texas Business Organizations Code (the “TBOC”) and Section 32.301 et. seq. of the Texas Finance Code (the “TFC”), as applicable, have determined that it is advisable and in the best interests of Parent, the shareholders of Parent (the “Parent Shareholders”) and AimBank to consummate the merger of Parent with and into AimBank (the “Merger”) and have approved the terms of this Agreement and authorized its execution;
WHEREAS, as and when required by the provisions of this Agreement, all such action as may be necessary or appropriate will be taken by Parent and AimBank in order to consummate the Merger;
WHERAS, the Board of Directors of Parent, as the sole shareholder of AimBank, has approved this Agreement and the Merger;
WHEREAS, the completion of the Merger will be subject to the requisite approval by the Parent Shareholders of this Agreement and the Merger;
WHEREAS, as a result of the Merger, each outstanding share of Parent Common Stock (other than Dissenting Shares (as defined in Section 8)), will be converted into one share of AimBank Common Stock, and the Parent Shareholders will become shareholders of AimBank;
WHEREAS, the issuance of AimBank Common Stock to the Parent Shareholders in accordance with this Agreement will not be required to be registered under the Securities Act of 1933, as amended, (the “1933 Act”) because the AimBank Common Stock is exempt from such registration requirements pursuant to Section 3(a)(2) of the 1933 Act;
WHEREAS, Heartland Financial USA, Inc., a Delaware corporation (“Heartland”), First Bank & Trust, a Texas banking association and Signature Bancshares, Inc., a Minnesota corporationwholly owned subsidiary of Heartland (“SignatureFB&T”).
WHEREAS, it is anticipated that the Bank Merger Agreement would provide that, immediately following the Merger and without any further action by Heartland, FB&T, Parent, AimBank or any of the shareholders thereof, the outstanding shares of common stock, par value $0.01 per share, of Signature (“SignatureAimBank Common Stock”) will would be converted into the right to receive a combination of cash and shares of common stock, $1.00 par value per share, of Heartland (“Heartland Common Stock”);Heartland; and
WHEREAS, Signature owns all of the issuedParent and outstanding capital stock of Signature Bank, a Minnesota state-chartered bank, and Heartland owns all of the issued and outstanding capital stock of Minnesota Bank & Trust, a Minnesota state-chartered bank (“MB&T”), and Heartland and Signature desire that Signature Bank be merged with and into MB&T immediately after the Merger (the “Bank Merger”) pursuant to a Bank Merger Agreement (the “Bank Merger Agreement”) substantially in the form attached hereto as Exhibit A;
A-1
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:
1. The Merger.
(a) On the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 10), Parent shall merge with and into AimBank in accordance with Section 32.301 of the TFC and Chapter 10 of the TBOC. AimBank shall be the surviving entity in the Merger (the “Surviving Company”) and shall continue its corporate existence under the TFC and applicable Texas law as a Texas state-chartered bank, and the separate existence of Parent shall cease as a result of the Merger.
(b) The Merger and the Bank Merger, individually and together, are intended to be a reorganization within the meaning of Section 368(a) of the Code and Treasury Regulations promulgated thereunder, and this Agreement and the Bank Merger Agreement, individually and together, are intended to be a “plan of reorganization” within the meaning of the Treasury Regulations promulgated under Section 368 of the Code. Each party to this Agreement agrees to treat the Merger as a reorganization within the meaning of Section 368(a) of the Code and agrees to treat this Agreement as a “plan of reorganization” within the meaning of the Treasury Regulations under Section 368 of the Code, unless and until there is a determination, within the meaning of Section 1313 of the Code, that such treatment is not correct.
2. Certificate of Formation and Bylaws. The Certificate of Formation and the Bylaws of AimBank in effect immediately prior to the Effective Time shall be the governing documents of the Surviving Company, except that the Certificate of Formation of AimBank shall be amended and restated in connection with the consummation of the Merger pursuant to 7 TAC § 15.104(b) and the filing of a certificate of merger with the Texas Department of Banking, which shall include an amendment increasing the number of authorized shares of AimBank Common Stock so that a sufficient number of authorized shares of AimBank Common Stock are available for issuance to the Parent Shareholders in the Merger.
3. Principal Place of Business. The principal place of business of the Surviving Company shall be the home office of AimBank located in Littlefield, Texas. All offices of AimBank that were in lawful operation immediately prior to the Effective Time shall continue to be the offices of the Surviving Company upon consummation of the Merger.
4. Board of Directors and Officers.
(a) Board of Directors. On and immediately after the Effective Time, the directors of AimBank duly elected and holding office immediately prior to the Effective Time shall serve as directors of the Surviving Company, each to hold office until the Bank Merger occurs.
(b) Officers. On and immediately after the Effective Time, the officers of AimBank, duly elected and holding office immediately prior to the Effective Time, shall be the officers of the Surviving Company, each to hold office until the Bank Merger occurs.
5. Effects of the Merger. At the Effective Time, the effect of the Merger shall be as provided in Section 32.301 of the TFC and Section 10.008 of the TBOC. Without limiting the generality of the foregoing and subject thereto, at the Effective Time:
(a) For all purposes of the laws of the State of Texas, the separate existence of Parent shall cease, and it will be merged with and into AimBank;
(b) All rights, title and interests to all real estate and other property owned by each of the Constituent Parties will be allocated to and vested, subject to any existing liens or other encumbrances on the property, to AimBank, without (i) reversion or impairment, (ii) any further act or deed or (iii) any transfer or assignment having occurred;
(c) All liabilities and obligations of each of the Constituent Parties will be allocated to and assumed by AimBank, and, except as otherwise provided herein or by law or contract, no other party is liable for such debt or other obligations;
A-2
(d) AimBank shall be the primary obligor for each liability and obligation allocated to it under this Agreement; and
(e) AimBank, as the Surviving Company, will be a party to any proceedings pending by or against Parent.
6. Effect on Common Stock; Closing
(a) To effectuate the Merger, at the Effective Time, and without any further action of Parent or AimBank, each issued and outstanding share of Parent Common Stock (including shares held in the AIM Bancshares, Inc. 401(k) and Employee Stock Ownership Plan, dated January 1, 2007, as amended) will be converted into one share of AimBank Common Stock. The shares of AimBank Common Stock received by the Parent Shareholders pursuant to the conversion provided for in this Section 6(a) will be uncertificated and issued only in book-entry form.
(b) At the Effective Time, each share of Parent Common Stock held as treasury stock of Parent, other than shares held in a fiduciary capacity or in satisfaction of indebtedness previously contracted, will be cancelled, retired and cease to exist, and no exchange or payment will be made with respect thereto.
(c) At the Effective Time, each share of AimBank Common Stock held by Parent as of the Effective Time, shall be cancelled, retired and cease to exist.
(d) The closing of the transactions contemplated by this Agreement (the “Closing”) will take place remotely via the exchange of documents and signatures or at such other location mutually agreed upon by AimBank and Parent. Provided that all of the conditions in Section 9 have been satisfied or waived, the Merger and the Bank Merger will both occur on the same date (the “Closing Date”) with the Merger taking place immediately prior to the Bank Merger.
7. Parent Stock Options. All options to acquire Parent Common Stock outstanding as of the Effective Time (“Parent Options”) will be converted into options to purchase AimBank Common Stock (“AimBank Options”). AimBank Options will have exactly the same terms (including the option exercise price per share) as Parent Options, except that AimBank Common Stock rather than Parent Common Stock will be issued upon the exercise of the AimBank Options.
8. Dissenting Shares. The obligations of the parties under this Agreement shall be subject to:
(a) Notwithstanding any provision of this Agreement to the contrary, any Parent Shareholder (a “Dissenting Shareholder”) who has demanded and perfected a demand for appraisal of his, her or its shares of Parent Common Stock in accordance with Chapter 10, Subchapter H, of the TBOC, and, as of the Effective Time, has neither effectively withdrawn nor lost his, her or its right to such demand will not receive one share of AimBank Common Stock for each of their shares of Parent Common Stock pursuant to Section 6(a), but in lieu thereof the holder thereof will be entitled to only such rights as are granted by Chapter 10, Subchapter H, of Title 1 of the TBOC.
(b) Notwithstanding the provisions of Section 8(a), if any Dissenting Shareholder demanding payment of fair value of such Dissenting Shareholder’s shares of Parent Common Stock (“Dissenting Shares”) under the TBOC will effectively withdraw or lose (through failure to perfect or otherwise) such Dissenting Shareholder’s rights and remedies granted by Chapter 10, Subchapter H, of Title 1 of the TBOC, then, as of the Effective Time or the time of such withdrawal or loss, whichever occurs later, each Dissenting Share will automatically be converted into one share of AimBank Common Stock as provided in Section 6(a), without any further action by the Dissenting Shareholder or AimBank.
9. Conditions Precedent. The obligations of the parties to complete the Merger under this Agreement shall be subject to:
(a) The receipt of approval of this Agreement and the Merger by the requisite vote of the Parent Shareholders;
(b) The receipt of all required regulatory approvals related to the Merger and the Bank Merger, and the lapse of all statutory or regulatory waiting periods required by such required regulatory approvals;
A-3
(c) The receipt of all third party consents necessary to consummate the Merger, if any;
(d) No termination of this Agreement pursuant to Section 11;
(e) Parent and AimBank performing or complying in all material respects with all of the agreements, covenants and conditions required by this Agreement to be performed or complied with by each of them on or prior to the Effective Time, except to the extent that the non-fulfillment of such agreements, covenants and conditions has been waived by the party entitled to waive them; and
(f) The satisfaction (or waiver, if applicable) of all conditions precedent to the obligations of the parties to the Bank Merger Agreement to consummate the transactions contemplated thereby, including the Bank Merger.
10. Effectiveness of Merger. Subject to the satisfaction of each of the conditions precedent set forth in Section 9, the Merger shall become effective on the date and time set forth in the Certificate of Merger as filed with the Texas Department of Banking and the Secretary of State of the State of Texas (the “Effective Time”) pursuant to Section 32.302 of the TFC and Chapter 10 of the TBOC.
11. Termination. This Agreement may be terminated prior to the Effective Time as follows: (a) by mutual consent of the Boards of Directors of Parent and AimBank; (b) by the Constituent Parties if the execution of the Bank Merger Agreement has not occurred on or prior to October 31, 2020; or (c) if the Bank Merger Agreement is executed and subsequently terminated in accordance with its terms prior to the Effective Time. Upon termination pursuant to this Section 11, this Agreement shall be null and void and shall be of no force and effect whatsoever.
12. General Provisions
(a) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one agreement. A facsimile or electronic copy of a signature shall be as binding as an original signature.
(b) Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE PARTIES SUBJECT TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.
(c) Amendment. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of each of the Constituent Parties at any time prior to the Effective Time.
(d) Waiver. Any of the terms or conditions of this Agreement may be waived at any time by either of the parties hereto.
(e) Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but no party to this Agreement shall assign this Agreement, by operation of law or otherwise, in whole or in part, without the prior written consent of the other parties. Any assignment made or attempted in violation of this Subsection 13(e) shall be void and of no effect.
(f) Further Assurances. Each party hereto agrees from time to time, as and when requested by the other party hereto, or by its successors or assigns, to execute and deliver, or cause to be executed and delivered, all such deeds and instruments and to take or cause to be taken such further or other acts, either before or after the Effective Time, as may be deemed necessary or desirable in order to vest in and confirm to the Resulting Bank title to and possession of any assets of Parent or AimBank acquired or to be acquired by reason of or as a result of the Merger and otherwise to carry out the intent and purposes hereof, and the officers and directors of the parties hereto are fully authorized in the name of their respective corporate names to take any and all such actions.
(g) Specific Performance. Each of the parties hereto acknowledges that the other parties would be irreparably damaged and would not have an adequate remedy at law for money damages in the event that any of the covenants contained in this Agreement were not performed in accordance with its
A-4
terms or otherwise were materially breached. Each of the parties hereto therefore agrees that, without the necessity of proving actual damages or posting bond or other security, the other party shall be entitled to temporary and/or permanent injunction or injunctions to prevent breaches of such performance and to specific enforcement of such covenants in addition to any other remedy to which they may be entitled, at law or in equity.
(h) Rules of Construction. Descriptive headings as to the contents of particular sections are for convenience only and shall not control or affect the meaning, construction or interpretation of any provision of this Agreement. Each use herein of the masculine, neuter or feminine gender shall be deemed to include the other genders. Each use herein of the plural shall include the singular and vice versa, in each case as the context requires or as it is otherwise appropriate. The word “or” is used in the inclusive sense.
(i) Articles, Sections, Exhibits and Schedules. All articles and sections referred to herein are articles and sections, respectively, of this Agreement and all exhibits referred to herein are exhibits attached to this Agreement. Any and all schedules, exhibits, annexes, statements, reports, certificates or other documents or instruments referred to herein or attached hereto are and shall be incorporated herein by reference hereto as though fully set forth herein verbatim.
(j) Binding Effect. All of the terms, covenants, representations, warranties and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties hereto and their respective successors, representatives and permitted assigns. Nothing expressed or referred to herein is intended or shall be construed to give any person other than the parties hereto any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provision herein contained, it being the intention of the parties hereto that this Agreement, the assumption of obligations and statements of responsibilities hereunder, and all other conditions and provisions hereof are for the sole benefit of the parties to this Agreement and for the benefit of no other person. Nothing in this Agreement shall act to relieve or discharge the obligation or liability of any third party to any party to this Agreement, nor shall any provision give any third party any right of subrogation or action over or against any party to this Agreement.
(k) Severability. If any provision of this Agreement, or the application thereof, will for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.
(l) Entire Agreement. Except as otherwise set forth herein or therein, this Agreement and the Bank Merger Agreement (including the documents referred to herein and therein), constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, between the parties with respect to such subject matter. To the extent of a conflict between the terms of the Bank Merger Agreement and the terms of this Agreement, the terms of the Bank Merger Agreement shall control.
(m) Third Party Beneficiaries. Nothing in this Agreement will confer any rights or remedies upon any person or entity that is not a party to this Agreement.
[Signature Page Follows]
A-5
IN WITNESS WHEREOF, each of Parent and AimBank has caused this Agreement to be executed on its behalf by its duly authorized officers as of the date first above written.
| | | AIM BANCSHARES, INC. | ||||
| | | | | |||
| | | By: | | | /s/ Scott L. Wade | |
| | | | | Scott L. Wade Chairman of the Board and Chief Executive Officer | ||
| | | | | |||
| | | AIMBANK | ||||
| | | | | |||
| | | By: | | | /s/ Scott L. Wade | |
| | | | | Scott L. Wade Chairman of the Board, President and Chief Executive Officer | ||
A-6
APPENDIX B
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 19, 2020
BY AND AMONG
HEARTLAND FINANCIAL USA, INC.,
FIRST BANK & TRUST,
AIM BANCSHARES, INC.,
AIMBANK
AND
MICHAEL F. EPPS, AS THE SHAREHOLDER REPRESENTATIVE
TABLE OF CONTENTS
| | | | | Page | ||
| | | |||||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
B-i
| | | | | Page | ||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
B-ii
| | | | | Page | ||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | | | |||
| | | |||||
B-iii
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of October 19, 2020, is made and entered into by and among Heartland Financial USA, Inc., a Delaware corporation (“Heartland”), First Bank & Trust, a Texas state-chartered bank and wholly owned subsidiary of Heartland (“FB&T”), AIM Bancshares, Inc., a Texas corporation (“AIM”), AimBank, a Texas state-chartered bank and wholly owned subsidiary of AIM (“AimBank”), and solely in his capacity as the representative of the AIM Shareholders (as defined in Article 1) other than Dissenting Shareholders (as defined in Section 2.8(a)), Michael F. Epps, an individual resident of Texas (the “Shareholder Representative”).
WHEREAS, Heartland and AIM previously entered into an Agreement and Plan of Merger dated as of February 11, 2020 (the “Prior Holding Company Merger Agreement”), pursuant to which Heartland and AIM agreed that AIM would merge with and into Heartland;
WHEREAS, FB&T and AimBank previously entered into a Plan of Merger dated as of February 11, 2020 (the “Prior Bank Merger Agreement”) pursuant to which FB&T and AimBank agreed that AimBank would merge with and into FB&T;
WHEREAS, Heartland, FB&T, AIM and AimBank desire to amend and restate the Prior Holding Company Merger Agreement pursuant to and in accordance with the terms and conditions set forth in this Agreement;
WHEREAS, AIM and AimBank previously entered into an Agreement and Plan of Merger dated as of September 22, 2020 (the “AIM Merger Agreement”), providing for the merger of AIM with and into AimBank (the “AIM Merger”);
WHEREAS, FB&T and AimBank desire to terminate the Prior Bank Merger Agreement as of the date of this Agreement;
WHEREAS, in connection with the amendment and restatement of the Prior Holding Company Merger Agreement by virtue of this Agreement, FB&T and AimBank will be deemed added as parties to the Prior Holding Company Merger Agreement, as amended and restated hereby;
WHEREAS, the respective Boards of Directors of AIM and AimBank have determined that it is advisable and in the best interests of AIM, AimBank and the AIM Shareholders (a) to consummate the AIM Merger and (b) to consummate immediately thereafter the merger of AimBank with and into FB&T (the “Merger”) pursuant to this Agreement;
WHEREAS, the respective Boards of Directors of Heartland and FB&T have determined that it is advisable and in the best interests of Heartland, FB&T and the equity holders of Heartland to consummate the Merger pursuant to this Agreement;
WHEREAS, as a result of the Merger, the outstanding shares of common stock, par value $100.00 per share, of AimBank (“AimBank Common Stock”) will be converted into a combination of cash and shares of common stock, par value $1.00 per share, of Heartland (“Heartland Common Stock”);
WHEREAS, AimBank owns several bank branch offices in the State of New Mexico (the “New Mexico Offices”), and Heartland desires to transfer the assets and liabilities attributable to the New Mexico Offices from FB&T to New Mexico Bank & Trust, a New Mexico state-chartered bank and wholly owned subsidiary of Heartland (“NMB&T”), at such time as Heartland determines after the Closing Date (as defined in Section 2.10) pursuant to a Branch Transfer and Assumption Agreement between FB&T and NMB&T substantially in the form attached hereto as Exhibit A;
WHEREAS, as an inducement to Heartland and FB&T to enter into this Agreement, the directors and executive officers of AIM and AimBank entered into a Shareholder Voting Agreement dated the date hereof (the “Shareholder Voting Agreement”), pursuant to which such persons have agreed to vote approximately 27.3% of the issued and outstanding shares of AIM Common Stock in favor of the AIM Merger and all other transactions contemplated by the AIM Merger Agreement;
WHEREAS, Scott L. Wade, Chairman of the Board, President and Chief Executive Officer of AIM (“Wade”), previously entered into the Wade Employment Agreement (as defined in Article 1), which agreement will remain effective in accordance with its terms;
B-1
WHEREAS, Jeremy Ferrell, Executive Vice President and Chief Operating Officer of AIM (“Ferrell”), previously entered into the Ferrell Employment Agreement (as defined in Article 1), which agreement will remain effective in accordance with its terms;
WHEREAS, each of the officers of AimBank listed on Schedule 1 entered into employment agreements (the “Employment Agreements”), which Employment Agreements will remain effective in accordance with their respective terms and provide for, among other things, the termination of any existing employment agreements, salary continuation agreements, phantom stock agreements, Additional Compensation Agreements and Non-Disclosure and Noncompetition Agreements (as such terms are defined in Article 1) between such officers and AIM or AimBank;
WHEREAS, as an inducement to Heartland and FB&T to enter into this Agreement, AIM will use its commercially reasonable efforts to cause each of the officers of AimBank listed on Schedule 2 (the “Senior Executives”) to enter into on or prior to the Effective Date (as defined in Section 2.2(d)) agreements with FB&T providing for, among other things, (a) payments to be made to the Senior Executives if they remain in the employment of FB&T for the periods specified therein (the “Retention Agreements”), and (b) the termination of any existing employment agreements, salary continuation agreements, phantom stock agreements, Additional Compensation Agreements and Non-Disclosure and Noncompetition Agreements between such officers and AIM or AimBank;
WHEREAS, AimBank has provided commitment letters (the “Stay Bonus Letters”) to each of the employees of AimBank listed on Schedule 3 in order to incentivize such employees to remain employed by AimBank (and its successor) for the periods specified therein;
WHEREAS, AimBank and FB&T have entered into agreements (the “Stay Pay Agreements”) with each of the employees of AimBank listed on Schedule 4 in order to incentivize such employees to remain employed by AimBank (and its successor) for the periods specified therein;
WHEREAS, Heartland, FB&T, AIM and AimBank desire that the AIM Merger and the Merger, whether treated collectively or, if applicable, independently, qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the “Code”), and that each of this Agreement and the AIM Merger Agreement, individually and considered together, is intended to be a “plan of reorganization” within the meaning of the rules and regulations promulgated under Section 368 of the Code; and
WHEREAS, Heartland, FB&T, AIM and AimBank desire that the AIM Merger and the Merger be made on the terms and subject to the conditions set forth in the AIM Merger Agreement and this Agreement, respectively.
NOW, THEREFORE, in consideration of the representations, warranties and covenants contained herein, the parties hereto agree as follows:
DEFINITIONS
“Acquisition Proposal” means any offer, proposal, inquiry or indication of interest (other than an offer, proposal, inquiry or indication of interest by Heartland) contemplating or otherwise relating to any Acquisition Transaction.
“Acquisition Transaction” means other than the transactions contemplated by this Agreement, any transaction or series of transactions involving (a) any merger, consolidation, share exchange, business combination, issuance of securities, acquisition of securities, tender offer, exchange offer or other similar transaction (i) in which Signature or Signature Bankany AIM Entity is a constituent corporation, (ii) in which a Person or “group” (as defined in the Exchange Act and the rules promulgated thereunder) of Persons directly or indirectly acquires beneficial or record ownership of securities representing more than 15% of the outstanding securities of any class of voting securities of Signature or Signature Bankany AIM Entity or (iii) in which Signature or Signature Bankany AIM Entity issues or sells securities representing more than 20% of the outstanding securities of any class of voting
securities of Signature or Signature Bank;such AIM Entity; or (b) any sale (other than sales in the Ordinary Course of Business), lease (other than in the Ordinary Course of Business), exchange, transfer (other than in the Ordinary Course of Business), license (other than nonexclusive licenses in the Ordinary Course of Business), acquisition or disposition of any business or businesses or assets that constitute or account for 20% or more of the consolidated net revenues, net income or assets of Signature.AIM or AimBank.
B-2
““Additional Compensation AgreementActual Cash Consideration” means the Cash Consideration, the Downwardly Adjusted Cash Consideration or the Upwardly Adjusted Cash Consideration, as the case may be, that any holderagreement between AimBank and one of Signature Common Stock will be entitled to receive for each Signature Converted Common Share pursuant to Sections 2.3(a) and 2.4.its employees, which agreement is titled an “Additional Compensation Agreement.”
“Adjusted Tangible Common Equity” means (a) the sum of (i) the total stockholders’ common equity of Signature,AIM, determined in accordance with GAAP as of the close of business on the Determination Date after giving effectas adjusted to reflect a reasonable projection of the Determination Date tooperations of AIM through the Effective Time, Adjustment, (ii) the Determination Date Transaction Expenses, and (iii) the amount, if any, by which the Determination Date Transaction Expenses are less than $2,000,000,Unrealized AimBank HTM Securities Portfolio Gains; less (b) the sum of (x)(A) the book value of the Intangible Assets determined as of the close of business on the Determination Date as adjusted to reflect a reasonable projection of the increase or decrease in the valueoperations of the Intangible AssetsAIM through the Effective Time, (y)and (B) the Tax Effected amount, if any, by which the Determination Date Transaction Expenses exceed $2,250,000,$8,800,000, and (z)(C) the aggregate amount of proceeds,cash, if any, received by Signature fromAIM as payment of the exercise price of AIM Stock Options during the period between June 30, 2020 and the Determination Date. For purposes of the Signature Stock Options betweenforegoing definition, “a reasonable projection of operations” will be based on the date hereofaverage monthly operations of AIM (excluding the incurrence of Determination Date Transaction Expenses) during the six-month period ending on the Determination Date. By way of example and the Effective Time.for clarification purposes only, a sample Adjusted Tangible Common Equity calculation is set forth on Exhibit B.
“Affiliate” has the meaning set forth in Rule 12b‑212b-2 under the Exchange Act.
“Aggregate Holdback Amount” means an amount equal to the sum of (a) $5,000,000 plus (b) the Retained Earnings, if any, plus (c) the amount by which the damages sought in the Reagor-Dykes Litigation as of three (3) Business Days prior the Closing exceed the amount sought in the Reagor-Dykes Litigation as of the date hereof; provided, however, if the Reagor-Dykes Litigation has been brought to Final Resolution prior to the Closing Date, the Aggregate Holdback Amount shall be $0.
“AIM Acquisition” means the acquisition (by merger, exchange, consolidation, acquisition of stock or assets or otherwise) of any corporation, limited liability company, partnership, joint venture or other business organization or division or material assets thereof, or any real estate or assets or deposits that are material to any AIM Entity (except in exchange for indebtedness previously contracted, including OREO).
“AIM Acquisition Agreements” means any merger agreements and other Contracts or documents entered into by AIM, AimBank or any of their Affiliates in connection with the Recent AIM Acquisitions.
“AIM Acquisition Parties” means any parties to the AIM Acquisition Agreements other than AIM, AimBank or any of their Affiliates.
“AIM Common Stock” means the common stock, par value $100.00 per share, of AIM.
“AIM Entities” means, collectively, AIM, AimBank and ABFI.
“AIM Equity Incentive Plan” means the AIM Bancshares, Inc. 2014 Equity Incentive Plan adopted on February 19, 2014, as amended.
“AIM Shareholder” means any holder of issued and outstanding shares of AIM Common Stock.
“AIM Stock Options” means any options to acquire AIM Common Stock granted pursuant to the AIM Equity Incentive Plan and outstanding as of the date hereof.
“AimBank Common Shares Outstanding” means the shares of AimBank Common Stock that are issued and outstanding as of the Effective Time.
“AimBank Converted Common Share” means each share of AimBank Common Stock that will be converted into the Stock Consideration and Actual Cash Consideration pursuant to Sections 2.3(a), 2.4 and 2.5.
“AimBank HTM Securities Portfolio” means the securities portfolio of AimBank that is classified as “held-to-maturity” in accordance with GAAP.
“AimBank Shareholder” means any holder of issued and outstanding shares of AimBank Common Stock.
“AimBank Stock Options” means the AIM Stock Options converted into options to acquire AimBank Common Stock pursuant to Section 7 of the AIM Merger Agreement.
“Ancillary Documents” means the AIM Merger Agreement, the Shareholder Voting Agreement, the BrooksWade Employment Agreement, the SyversonFerrell Employment Agreement, the KSOP Pass-Through Voting Agreement,Employment Agreements, the Retention
B-3
Agreements, the Stay Bonus Letters, the Stay Pay Agreements, the Indemnification Waiver Agreement, the KSOP Trustees’ Certificate, the NDA and any and all other agreements, certificates and documents required to be delivered by either party hereto prior to or at the Closing pursuant to the terms of this Agreement.
“Brooks Employment Agreement” means the Employment Agreement dated as of the date hereof among Heartland, Signature, MB&T and Brooks, which will become effective as of the Effective Time and will supersede and cancel the Employment Agreement dated October 28, 2003, as amended August 15, 2012, between Signature Bank and Brooks that will expire on December 31, 2017.
“Bylaws” mean, with respect to any corporation, those instruments that at that time constitute its bylaws, including any amendments thereto.
“CARES Act” means the Coronavirus Aid, Relief and Economic Security Act.
“Cash Consideration” means an amount equal to $685.00 for each AimBank Common Share Outstanding.
“CharterCause” means (a) any act of (i)(A) fraud or intentional misrepresentation by an employee or (B) embezzlement, misappropriation or conversion of assets or opportunities of any AIM Entity or any of Heartland or its Affiliates by an employee, (ii) the willful violation of any Law (other than traffic violations or similar offenses) by an employee, (iii) the commission of any act of moral turpitude or conviction of a felony by an employee or (iv) the willful or negligent failure of an employee to perform his or her duties in any material respect.
“Charter” means, with respect to any corporation, those instruments that at that time constitute its charter as filed or recorded under the general corporation or other applicable Law of the jurisdiction of incorporation or association, including the articles or certificate of incorporation or association, any amendments thereto and any articles or certificates of merger or consolidation, and (b) with respect to any limited liability company, those agreements and instruments that at that time constitute the limited liability company agreement or operating of such limited liability company agreement executed by the members of the limited liability company, including any amendments thereto.consolidation.
“Closing Date Bell Bank Indebtedness” means all of the principal and interest due as of the Effective Time with respect to the Promissory Note dated December 17, 2014 from Signature, as Borrower, to Bell Bank, as Lender, as amended by the Note Modification Agreement dated September 19, 2017 between Bell Bank and Signature.
“Consent” means any authorization, consent, approval, filing, waiver, exemption or other action by or notice to any Person.
“Contract” means a contract, agreement, lease, commitment or binding understanding, whether oral or written, that is in effect as of the date of this Agreement or any time after the date of this Agreement.
“CRA” means the Community Reinvestment Act.
“Determination Date” means the last Business Dayday of the month immediately preceding the month in which the Effective Time occurs.
“Determination Date to Effective Time AdjustmentBalance Sheet” means an adjustmentthe consolidated balance sheet of the total stockholders’ common equityAIM prepared by AIM in accordance with GAAP as of Signature from the Determination Date through and including the Effective Time based on the average daily financial results of Signature during the six-month period ending on the Determination Date.pursuant to Section 6.9.
“Determination Date Transaction Expenses” means the amount of Transaction Expenses, on a Tax Effected basis, (a) paid and expensed by Signature or Signature Bankany AIM Entity through the close of business on the Determination Date, or (b) reflected as accrued expenses on the Signature Determination Date Balance Sheet.
“Disclosure Schedules” means the Schedules delivered by SignatureAIM and AimBank to Heartland on or prior to the date of this Agreement which will be neither attached to this Agreement nor publicly available.
“Encumbrance” means any charge, claim, community property interest, easement, covenant, condition, equitable interest, lien, option, pledge, security interest, right of first refusal or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“ERISA” means the Employee Retirement Income Security Act of 1974,1974.
“Family First Act” means the Family First Coronavirus Response Act.
“Ferrell Employment Agreement” means the Employment Agreement dated as amended.of the date hereof among Heartland, AIM, FB&T, AimBank and Ferrell, which will become effective as of the Effective Time and provide for payout of deferred compensation amounts under, and the termination of the Deferred Compensation Agreement, dated September 30, 2012, between AimBank and Ferrell, the Non-Disclosure and Noncompetition Agreement, dated March 25, 2014, between AimBank and Ferrell and the Additional Compensation Agreement, dated March 25, 2014, between AimBank and Ferrell.
B-4
“Final Index Price” means the average of the daily closing value of the Index for each of the fifteen (15) consecutive trading days ending on and including the trading day immediately preceding the fifth (5th) Business Day preceding the Closing Date.
“Final Resolution” means that (a) the parties to the Reagor-Dykes Litigation will have entered into a written and binding settlement agreement with respect to the resolution of such Litigation, or (b) a court of competent jurisdiction will have entered a final and nonappealable order or judgment relating to the Reagor-Dykes Litigation.
“Final Resolution Damages” means the amount of (a) the Reagor-Dykes Litigation Damages, less (b) the aggregate amount of all insurance proceeds or court ordered sanctions actually received by Heartland or FB&T from insurance providers or the parties against whom such sanctions have been ordered, respectively, with respect to the Reagor-Dykes Litigation.
“GAAP” means generally accepted accounting principles in the United States applied on a consistent basis during the periods involved.
“Governmental Authorization” means any approval, consent, license, permit, waiver, registration or other authorization issued, granted, given, made available or otherwise required by any Governmental Entity or pursuant to applicable Law.
“Governmental Entity” means any federal, state, local, foreign, international or multinational entity or authority exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government.
“Governmental Order” means any judgment, injunction, writ, order, ruling, award or decree by any Governmental Entity or arbitrator.
“Heartland Closing Date Stock Price” means the closing sale price of a share of Heartland Common Stock on the last trading day immediately preceding the Closing Date as quoted on the NASDAQ Global Select Market on such trading day.
“Heartland Closing Date Stock VWAP” means the volume-weighted average trading prices for the Heartland Common Stock for each of the fifteen (15) consecutive trading days ending on and including the trading day immediately preceding the fifth (5th) Business Day preceding the Closing Date, rounded to three decimal places, as quoted on the NASDAQ Global Select Market on such trading day.
“Indebtedness” means, with respect to any Person, without duplication: (i)(a) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind; (ii)(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments; (iii)(c) all obligations of such Person upon which interest charges are customarily paid (other than trade payables incurred in the Ordinary Course of Business consistent with past practices)Business); (iv)(d) all obligations of such Person under conditional sale or other title retention agreements relating to any property purchased by such Person; (v)(e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding obligations of such Person to creditors for services and supplies incurred in the Ordinary Course of Business); (vi)(f) all lease obligations of such Person that are required to be or otherwise are capitalized on the books and records of such Person in accordance with GAAP; (vii)(g) all obligations of others secured by a lienan Encumbrance on property or assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (viii)(h) all obligations of such Person under interest rate, currency or commodity derivatives or hedging transactions (valued at the termination value thereof); (ix)(i) all letters of credit or performance bonds issued for the account of such Person (excluding letters of credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary courseOrdinary Course of business consistent with past practices)Business); and (x)(j) all guarantees and arrangements having the economic effect of a guarantee of such Person of any Indebtedness of any other Person.
“Indemnification Waiver AgreementAgreements” means an agreement, in a form acceptable to Heartland, dated as of the Closing Date between the KSOP Trustees, on the one hand, and the Surviving Corporation and Heartland, on the other hand, pursuant to which the KSOP Trustees will waive any rights to indemnification from the Surviving Corporation, Heartland or any of their Affiliates provided for in the KSOP Trust (including, for the avoidance of doubt, Section 13.79.01 thereof) or any other document.
“Index” means the KBW NASDAQ Regional Banking Index (KRX) or, if such index is not available, such substitute or similar index as substantially replicates the KBW NASDAQ Regional Banking Index (KRX).
B-5
“Index Ratio” means the Final Index Price divided by the Initial Index Price.
“Initial Heartland Stock Price” means $49.88.
“Initial Index Price” means the closing value of the Index on the date immediately prior to the date of this Agreement.
“Intangible Asset” means any asset of Signature or Signature Bankany AIM Entity that is considered an intangible asset under GAAP, including goodwill.
“Intellectual Property” means: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereon, and all patents, patent applications and patent disclosures, together with all reissues, continuations, continuations-in-part, divisions, extensions and re-examinations thereof; (b) all trademarks whether registered or unregistered, service marks, domain names, corporate names and all combinations thereof, and associated therewith; (c) all copyrights whether registered or unregistered, and all applications, registrations and renewals in connection therewith; (d) all datasets, databases and related documentation; and (e) all other intellectual property and proprietary rights.
“IRS” means the Internal Revenue Service.
“Knowledge of SignatureAIM” or other similar phrase means the knowledge of a director or executive officer of either SignatureAIM or Signature BankAimBank after due inquiry.
“Knowledge of Heartland” or other similar phrase means the knowledge of a director or executive officer of Heartland or FB&T after due inquiry.
“KSOP” means Signature’sthe AIM Bancshares, Inc. 401(k) and EmployeeStock Ownership Plan, dated January 1, 2007, and Trust dated March 31, 2015.most recently amended and restated as of January 1, 2018, as amended through the date hereof.
“KSOP Trust” means the trust established and maintained in connection with the KSOP, which is referred to in the KSOP.
“KSOP Trustees” means the Trustees (as defined in the KSOP).
“KSOP Trustees’ Certificate” means a certificate from the KSOP Trustees stating, in addition to other items reasonably requested by Heartland, that (a) in connection with the AIM Merger and the Merger and the other transactions contemplated hereby and thereby, all pass-through voting requirements with respect to the KSOP have, to the extent applicable, been satisfied and (b) the KSOP Trustees have received an opinion from an independent valuation firm stating that (i) the consideration received by the KSOP pursuant to this Agreement for the shares of SignatureAimBank Common Stock held by the KSOP is not less than the “fair market value”“adequate consideration” (as defined in IRS Revenue Ruling 59-60)Section 3(18) of ERISA) of such shares, and (ii) the terms and conditions of this Agreement and the AIM Merger Agreement, taken as a whole, are fair to and in the best interest of the KSOP from a financial point of view; provided, however, that such certificate may state that (1) neither of the KSOP Trustees is a licensed financial or an investment advisor and (2) the statements contained in clause (b) above are based on the financial expertise of the KSOP Trustees in their capacities as the KSOP Trustees and executive officers and directors of Signature.view.
“Law” means any constitution, law, ordinance, principle of common law, regulation, rule, statute or treaty of any Governmental Entity.
“Liability” means any liability or obligation whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, and regardless of when asserted.
“Litigation” means any claim, action, arbitration, mediation, audit, hearing, investigation, proceeding, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator or mediator.
“Material Adverse Effect” means any change, effect, event or condition, individually or in the aggregate, that has had, or, with the passage of time, couldwould reasonably be expected to have, a material adverse effect on the business, assets, properties, financial condition, or results of operations of Signature and Signature Bank,the AIM Entities, taken as a whole, or Heartland and its Subsidiaries, taken as a whole, as the case may be; provided, however, that “Material Adverse Effect” will not be deemed to include the impact of (a) changes after the date hereof in Laws of general applicability to banks and bank holding companies, (b) changes after the date hereof in GAAP or Regulatory Accounting Principles,regulatory accounting requirements generally applicable to banks and bank holding companies, (c) changes after the date hereof in economic conditions generally affecting banks and bank holding companies, (d) changes caused by the public announcement of the Merger, (e) the escalationany outbreak of hostilities or worsening ofany new declared or undeclared acts of war, (whether or not declared), armed hostilities or terrorism; and
B-6
(f) any action required by this Agreement or actions taken or omitted to be taken by one party to this Agreement with the consent of the other party; and (g) with respect to either Signature or Signature Bank,the AIM Entities, the effects of any action taken with the prior written consent of Heartland; Heartland or as otherwise required by this Agreement; furtherprovided, however, that the effect of any of the changes described in clauses (a) through (c) will not be excluded from the definition of “Material Adverse Effect” to the extent they have a disproportionate impact on Signature and Signature BankAIM Entities as a whole, on the one hand, or Heartland and its Subsidiaries as a whole, on the other hand, as measured relative to similarly situated companies in the financial services industry.
“Net Income” means, with respect to the AIM Entities, revenue less expenses, depreciation, interest and Taxes, in each case, as determined in accordance with GAAP and in a manner consistent with the AIM Financial Statements.
“NDA” means the Confidentiality and Non-Disclosure Agreement dated September 19, 2017August 22, 2019 between Heartland and Signature.AIM.
“Non-Disclosure and Noncompetition Agreement” means any agreement between AimBank and one of its employees, which agreement is titled a “Non-Disclosure and Noncompetition Agreement.”
“Ordinary Course of Business” means the ordinary course of business of Signature and Signature Bankthe AIM Entities consistent with past custom and practice (including with respect to nature, scope, magnitude, quantity and frequency).
“Per Share Holdback Amount” means (a) the Aggregate Holdback Amount, divided by (b) the AimBank Common Shares Outstanding.
“Permitted Encumbrances” means (a) Encumbrances for Taxes and other governmental charges and assessments that are not yet due and payable or which are being contested in good faith by appropriate proceedings (provided required payments have been made and adequate accruals or reserves have been established in connection with any such contest), (b) Encumbrances of carriers, warehousemen, mechanics’ and materialmen and other like Encumbrances arising in the Ordinary Course of Business (provided lien statements have not been filed as of the Closing Date), (c) easements, rights of way and restrictions, zoning ordinances and other similar Encumbrances affecting the Leased Operating Real Property and which do not unreasonably restrict the use thereof in the Ordinary Course of Business, (d) statutory Encumbrances in favor of lessors arising in connection with any property leased to Signature or Signature Bank,any AIM Entity, (e) Encumbrances reflected in the Latest Balance Sheets and the Related Financial Statements or arising under Material Contracts and (f) Encumbrances that will be removed prior to or in connection with the Closing.
“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, Governmental Entity or other entity.
“Plan” means every plan, fund, contract, program and arrangement (whether written or not) for the benefit of present or former employees, including those intended to provide (a) medical, surgical, health care, hospitalization, dental, vision, workers’ compensation, life insurance, death, disability, legal services, severance, sickness or accident benefits (whether or not defined in Section 3(1) of ERISA), (b) pension, profit sharing, stock bonus, retirement, supplemental retirement or deferred compensation benefits (whether or not Tax qualified and whether or not defined in Section 3(2) of ERISA) or (c) salary continuation, unemployment, supplemental unemployment, severance, termination pay, change-in-control, vacation or holiday benefits (whether or not defined in Section 3(3) of ERISA), (i) that is maintained or contributed to by either Signature or Signature Bankany of the AIM Entities or any Commonly Controlled Entity, (ii) that Signature, Signature Bankany of the AIM Entities or any Commonly Controlled Entity has committed to implement, establish, adopt or contribute to in the future, (iii) for which Signature, Signature Bankany of the AIM Entities or any Commonly Controlled Entity is or willmay be financially liable as a result of the direct sponsor’s affiliation with Signature and Signature Bankany of the AIM Entities or their shareholders (whether or not such affiliation exists at the date of this Agreement and notwithstanding that the Plan is not maintained by Signature, Signature Bankany of the AIM Entities or any Commonly Controlled Entity for the benefit of its employees or former employees) or (iv) for or with respect to which any of Signature, Signature Bankthe AIM Entities or aany Commonly Controlled Entity is or willmay become liable under any common law successor doctrine, express successor liability provisions of Law, provisions of a collective bargaining agreement, labor or employment Law or agreement with a predecessor employer. “Plan” does not include any arrangement that has been terminated and completely wound up prior to the date of this Agreement and for which neither Signature nor Signature Banknone of the AIM Entities nor any Commonly Controlled Entity has any present or reasonably predictablepotential future Liability.
B-7
““Reagor-Dykes LitigationRegulatory Accounting Principles” means accounting principlesthe Litigation titled In re: Reagor-Dykes Motors, LP et al, Dennis Faulkner, Trustee of Governmental Entities generally applicableReagor-Dykes Auto Group Creditors Liquidating Trust vs. AimBank (Case No. 18-50214-rlj-11 and Adversary No. 20-05039-rlj) filed in the United States Bankruptcy Court for the Northern District of Texas Lubbock Division, as may be amended, and any related Litigation filed against AimBank.
“Reagor-Dykes Litigation Damages” means the Tax Effected (i) damages (including any consequential, special or punitive damages) as determined by Final Resolution, and (ii) reasonable legal fees and costs incurred by Heartland or FB&T in defending the Reagor-Dykes Litigation after the Closing Date and in pursuing and recovering insurance proceeds or court-ordered sanctions.
“Recent AIM Acquisitions” means the acquisitions by AIM and AimBank of (a) High Plains Bancshares, Inc. and its wholly owned Subsidiary, Muleshoe State Bank, that was completed on April 7, 2017, (b) Platinum Bancshares of Texas, Inc. and its wholly owned Subsidiary, Platinum Bank, that was completed on April 26, 2018, and (c) Union BancShares, Inc. and its wholly owned Subsidiary, FNB New Mexico, that was completed on October 18, 2019.
“Required AIM Shareholder Vote” means the affirmative vote of the holders of at least two-thirds of the issued and outstanding shares of AIM Common Stock entitled to banksvote on the proposal to approve the AIM Merger Agreement and bank holding companies.the AIM Merger.
“Remedies Exception” means except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
“Return” means any return, declaration, report, estimate, information return or statement pertaining to any Taxes.
“Schedule” means any of the Disclosure Schedules, Schedule 1, Schedule 2, Schedule 3 or Schedule 4, none of which will be attached to this Agreement or publicly available.
“Severance Costs” means (a) all amounts paid or payable to any employee or non-employee director of either Signature or Signature Bankany AIM Entity as a result of the execution of this Agreement or the performance and consummation of the transactions contemplated hereby (including any amounts due and payable pursuant to any existing employment, change in control, salary continuation, deferred compensation, non-competition, retention, bonus or other similar agreement, plan or arrangement) and (b) any severance payments required to be made on or after the Closing Date to any employee of Signature or Signature Bank that are required to be made pursuant to an agreement with Signature or Signature Bank to such Person if his or her employment with the surviving corporation in the Merger or Bank Merger, as the case may be, is terminated without “cause” (as defined in such agreement); provided, however, that Severance Costs will not include (i) any payments made by Heartland pursuant to Section 6.5(d), or (ii) any severance amounts paid or payable in connection with the Brooks Employment Agreement or the Syverson Employment Agreement.6.4(d).
““Signature Common Shares Outstanding”means, immediately before the Effective Time, the numberStatutory Declaration of shares of Signature Common Stock issued and outstanding.Trust
“Statutory Trust Agreements” means the Statutory Trust Debentures, the Statutory Trust Declaration of Trust, the Determination DateStatutory Trust Guarantee, the Statutory Trust Indenture and the Statutory Trust Securities.
“Statutory Trust Debentures” means the debentures issued pursuant to Section 6.9.the Statutory Trust Indenture.
““Statutory Trust DebtSignature Equity Incentive Plans” means collectively, the Signature Bancshares,aggregate principal outstanding under the Statutory Trust Debentures.
“Statutory Trust Guarantee” means the Guarantee of AIM (as successor in interest to Union BancShares, Inc. 2003 Combined Incentive and Nonstatutory Stock Option Plan effective) dated as of March 17,26, 2003, between AIM and U.S. Bank National Association, as Guarantee Trustee.
“Statutory Trust Indenture” means the Signature Bancshares,Indenture dated as of March 26, 2003 between AIM (as successor in interest to Union BancShares, Inc. 2013 Nonstatutory Stock Option Plan.), as Issuer, and U.S. Bank National Association, as Trustee.
“Statutory Trust Securities” means the Common Securities and Capital Securities issued pursuant to the Statutory Declaration of Trust.
“Statutory Trust” means Union BancShares Statutory Trust I, a Connecticut statutory trust.
“Subsidiary” means, with respect to any Person, any other Person (other than a natural person), whether incorporated or unincorporated, in which such Person, directly or indirectly (a) has a 50% or more equity interest
B-8
or (b) owns at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions; provided, however, that the term will not include any such entity in which such voting securities or equity interest is owned or controlled in a fiduciary capacity, without sole voting power, or was acquired in securing or collecting a debt previously contracted in good faith.
“Superior Proposal” means any Acquisition Proposal by a third party on terms which the Board of Directors of SignatureAIM determines in its good faith judgment, after consultation with, and receipt of written advice from, its financial advisors (which advice will be communicated to Heartland), to be more favorable from a financial point of view to its shareholders than the Merger and the other transactions contemplated hereby, (a) after taking into account the likelihood of consummation of such transaction on the terms set forth therein, taking into account all legal, financial (including the financing terms of any such proposal), regulatory and other aspects of such proposal, and any other relevant factors permitted under applicable Law, (b) after giving Heartland at least five Business Days to respond to such third-party Acquisition Proposal once the Board of Directors of SignatureAIM has notified Heartland that in the absence of any further action by Heartland it would consider such Acquisition Proposal to be a Superior Proposal, and then (c) after taking into account any amendment or modification to this Agreement proposed by Heartland.
“Tax Effected“Syverson Employment Agreement” means the Employment Agreement datedamount of an expense or cost as calculated on an after-Tax basis to the extent that (a) the Code and applicable Treasury Regulations allow the deduction of such expense or cost and (b) Heartland or FB&T has actually realized the benefit of such Tax deduction through the reduction of its income Tax liability as reported on its Return for the taxable year of the date hereof among Heartland, Signature, MB&T and Syverson, which will become effective aspayment of the Effective Time andapplicable expense or cost, or, if the Return for such taxable year has not yet been filed, Heartland or FB&T determine in their reasonable discretion that such Tax deduction will supersede and cancel the Employment Agreement dated October 28, 2003, as amended August 15, 2012, between Signature Bank and Syverson that will expire on December 31, 2017.reduce its income Tax liability for such taxable year.
“Taxes” means all taxes, charges, fees, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, social security, unemployment, excise, estimated, severance, stamp, occupation, property or other taxes, customs, duties, fees, assessments or charges of any kind whatsoever, including all interest and penalties thereon, and additions to tax or additional amounts imposed by any Governmental Entity.
“Transaction Expenses” means all amounts paid, to be paid, accrued or to be accrued by Signature or Signature Bankany AIM Entity (or by Heartland or MBFB&T, as successorssuccessor to, or ownersowner of, Signature and Signature Bank)any such AIM Entity) that arise out of or in connection with the execution of this Agreement and the performance and consummation of the transactions contemplated hereby (whether arising before, at or after the Effective Time), including (a) legal, accounting and financial advisory fees or commissions, (b) Severance Costs, (c) termination fees or other expenses, up to an aggregate amount of $2,500,000, incurred in connection with the termination of any Contract of Signature or Signature Bankany AIM Entity (including Contracts relating to information technology or card services); provided,however, that any termination fees or other expenses incurred in connection with the termination of any Contract of any AIM Entity in excess of $2,500,000 will be divided equally between Heartland and AimBank; and provided further, however, that AimBank will not be required to pay any such additional termination fees and other expenses in an amount in excess of $300,000, (d) payments made in connection with the termination of any Plans, (unlessunless the amount of such payments has been accrued by Signature)any AIM Entity (but excluding the Option Consideration), (e) the amount of any penalties or other expenses incurred by either Signature or Signature Bankany AIM Entity in connection with the prepayment of Indebtedness by eitherany of them occurring as a result of suchthe transactions contemplated by this Agreement, (f) premiums or other expenses relating to the D&O Insurance, (g) signing bonuses paid to Wade or Ferrell (to the extent not included in Severance Costs), and (g) Liabilities for Taxes arising out of(h) any amounts payable by AIM or incurredAimBank pursuant to the Employment Agreements or in connection with the paymenttermination of such Transaction Expenses; provided, however, that, forthe Additional Compensation Agreements. For the avoidance of doubt, Transaction Expenses will not include (X) any Dissenting Shareholder Payments or (Y) cash bonuses payable by Signature to certain executive officers of Signature Bank in the total amount of $450,000 that were previously approved by the Board of Directors of Signature; provided, further, however, that the aggregate amount payable pursuant to the Stay Bonus Letters (which amount will not exceed $1,100,000) will not constitute a Transaction Expense and will otherwise be disregarded for purposes of such bonuses (together withcalculating AIM’s Adjusted Tangible Common Equity.
“Treasury Regulations” means the regulations promulgated by the Treasury Department under the Code.
“Unrealized AimBank HTM Securities Portfolio Gains” means the amount of any related payroll Taxes) will reduceunrealized gains (net of any losses) of the total stockholders’ common equity of SignatureAimBank HTM Securities Portfolio as of the Determination Date.Date, which amount will be determined based on a methodology mutually agreed upon by Heartland and AIM in accordance with Section 6.9.
B-9
“Wade Employment Agreement” means the Employment Agreement dated as of the date hereof among Heartland, AIM, AimBank and Wade, which will become effective as of the Effective Time and provide for payout of deferred compensation amounts under, and the termination of the Deferred Compensation Agreement, dated September 30, 2012, between AimBank and Wade, the Non-Disclosure and Noncompetition Agreement, dated March 27, 2014, between AimBank and Wade and the Additional Compensation Agreement, dated March 27, 2014, between AimBank and Wade.
The following terms not defined above are defined in the sections indicated below:
Definition | | | Defined |
ABFI | | | 4.1(b) |
ABFI Common Stock | | 4.3(c) | |
Actual Cash Consideration | | | 2.4 |
Affordable Care Act | | 4.26(k) | |
Agreement | | | Preamble |
AIM | | Preamble | |
AIM Annual Financial Statements | | | 4.5(a) |
AIM Board Recommendation | | | 6.2(a) |
AIM Employees | | | 4.25(j) |
AIM Financial Statements | | | 4.5(a) |
AIM IT Systems | | | 4.20(c) |
AIM Merger | | | Recitals |
AIM Merger Agreement | | | Recitals |
AIM Merger Closing Date | | | 2.2(d) |
AIM Merger Effective Date | | | 2.2(d) |
AIM Merger Effective Time | | | 2.2(d) |
AIM Preferred Stock | | | 4.3(a) |
AIM Regulatory Reports | | | 4.10 |
AIM Shareholder Meeting | | | 6.2(a) |
AimBank | | | Preamble |
AimBank Annual Financial Statements | | | 4.5(b) |
AimBank Common Stock | | | Recitals |
AimBank Financial Statements | | | 4.5(b) |
ALLL | | | 4.8 |
Bank Holding Company Act | | | 3.1(a) |
Bank | | 4.19 | |
Bank Regulatory Approvals | | 3.2(b) | |
Blue Sky Laws | | 3.2(b) | |
Bottom Threshold Amount | | 2.4 | |
Change of AIM Board Recommendation | | 6.2(a) | |
Closing | | 2.10 | |
Closing Date | | | 2.10 |
Code | | Recitals | |
D&O Insurance | | 6.7(b) | |
Dissenting Shareholder | | 2.8(a) | |
Dissenting Shares | | 2.8(a) | |
Downwardly Adjusted Cash Consideration | | | 2.4 |
Effective Date | | | 2.2(d) |
Effective Time | | | 2.2(d) |
Employment Agreements | | Recitals | |
Environmental | | 4.18(a)(i) | |
Environmental Law | | 4.18(a)(ii) | |
Exchange | | 3.2(b) |
B-10
Definition | | | Defined |
Exchange Ratio | | 2.3(a) | |
Expenses | | 8.3 | |
FB&T | | Preamble | |
FB&T Common Stock | | 3.4(b) | |
FB&T Subsidiaries | | | 3.1(b) |
FDIA | | | 3.1(b) |
FDIC | | | 3.2(b) |
Ferrell | | | Recitals |
Fractional Share Amount | | | 2.3(b) |
Hazardous Materials | | 4.18(a)(iii) | |
Heartland | | Preamble | |
Heartland 10-K Reports | | | 3.5(a) |
Heartland 10-Q Report | | | 3.5(a) |
Heartland Common Stock | | | Recitals |
Heartland | | 6.4(c) | |
Heartland Regulatory Reports | | 3.7(a) | |
Heartland Series A Preferred Stock | | 3.4(a) | |
Heartland Series B Preferred Stock | | 3.4(a) | |
Heartland Series C Preferred Stock | | 3.4(a) | |
Heartland Series D Preferred Stock | | 3.4(a) | |
Heartland Series E Preferred Stock | | | 3.4(a) |
Indemnified Party | | 6.7(a) | |
Latest AIM Balance Sheet | | | 4.5(a) |
Latest AimBank Balance Sheet | | | 4.5(b) |
Latest Balance Sheets | | | 4.5(c) |
Leased Real Property | | | 4.16(c) |
Letter of Transmittal | | | 2.7(a) |
List | | | 4.18(a)(iv) |
Material Contracts | | | 4.22(a) |
Materially Burdensome Regulatory Condition | | | 7.1(a) |
Merger | | | Recitals |
Merger Consideration | | | 2.3(a) |
NASDAQ | | | 3.2(b) |
New Mexico Offices | | | Recitals |
NMB&T | | | Recitals |
Operating Real Property | | | 4.16(c) |
Option Consideration | | | 2.9 |
OREO | | | 4.7(c) |
Owned Real Property | | | 4.16(b) |
Paying Agent | | | 2.7(a) |
Prior Bank Merger Agreement | | | Recitals |
Prior Holding Company Merger Agreement | | | Recitals |
Proxy Statement/Prospectus | | | 6.2(b) |
Real Property | | | 4.16(c) |
Registration Statement | | | 6.2(b) |
Regulatory Action | | | 4.18(a)(v) |
Related AIM Statements | | | 4.5(a) |
Related AimBank Statements | | | 4.5(b) |
Related Financial Statements | | | 4.5(c) |
Release | | | 4.18(a)(vi) |
B-11
Definition | | | Defined |
Representatives | | | 5.8(a) |
Required Consents | | 5.6 | |
Retained Earnings | | 2.4(b) | |
Retention Agreements | | Recitals | |
Securities Act | | 3.2(b) | |
Senior Executives | | | Recitals |
Shareholder Representative | | Preamble | |
Shareholder Representative Costs | | 6.16(b) | |
Shareholder Voting Agreement | | | Recitals |
Statutory Trust Termination | | 6.9 | |
Stay Bonus Letters | | Recitals | |
Stay Pay Agreements | | Recitals | |
Stephens | | 3.15 | |
Stock Consideration | | 2.3(a) | |
Surviving Corporation | | 2.1 | |
Termination Date | | 8.1(d)(i) | |
TBOC | | 2.1 | |
TDB | | 3.2(b) | |
Texas Certificate of Merger | | 2.2(d) | |
TFC | | 3.2(b) | |
| Third-Party Environmental Claim | | 4.18(a)(vii) | |
Upwardly Adjusted Cash Consideration | | | 2.4 |
Wade | | Recitals | |
MERGER
2.1 The Merger. Under the terms of this Agreement and subject to the satisfaction or waiver of the conditions set forth in Article 7, at the Effective Time, SignatureAimBank will be merged with and into Heartland. Heartland,FB&T. FB&T, in its capacity as the corporation surviving the Merger, is sometimes referred to herein as the “Surviving Corporation.” The Merger will be effected pursuant to the provisions of, and with the effect provided in, Section 252Chapter 10, Subchapter A of Title 1 of the Delaware General Corporation LawTexas Business Organizations Code (the “DGCLTBOC”) and Section 302A.65132.301 of the Minnesota Business Corporation Act (the “MBCA”).Texas Finance Code.
(a)At the Effective Time, SignatureAimBank will be merged with and into Heartland,FB&T, and the separate existence of SignatureAimBank will cease. The Charter and the Bylaws of Heartland,FB&T, as in effect immediately prior to the Effective Time, will be the Charter and the Bylaws of the Surviving Corporation, until the same may be amended as provided therein and in accordance with applicable Law. TheExcept as provided for herein, the directors and officers of HeartlandFB&T immediately prior to the Effective Time will be the directors and officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and will qualify.
(b)At the Effective Time and thereafter, the Surviving Corporation will be responsible and liable for all the Liabilities, Indebtedness and penalties of each of HeartlandFB&T and Signature.AimBank.
(c)At the Effective Time and thereafter, the Surviving Corporation will possess all the rights, privileges, immunities and franchises, of a public as well as of a private nature, of each of HeartlandFB&T and Signature;AimBank; all property, real, personal and mixed, and all Indebtedness due on whatever account, and all and every other interest, of or belonging to or due to each of HeartlandFB&T and Signature,AimBank, will be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; and the title to any real estate or any interest therein, vested in HeartlandFB&T or Signature,AimBank, will not revert or be in any way impaired by reason of the Merger.
B-12
(d)To effect the Merger, the parties hereto will cause a Certificate of Merger substantially in the form attached hereto as Exhibit BC (the “DelawareTexas Certificate of Merger”) and Articles of Merger substantially in the form attached hereto as Exhibit C (the “Minnesota Articles of Merger”) relating to the Merger to be filed with the Secretary of State of Delaware and the Secretary of State of Minnesota, respectively.TDB. The Merger will become effective upon the filing of the DelawareTexas Certificate of Merger and the Minnesota Articles of Merger or, if so designated, at a time designated in such filings.filing. As used herein, the term “Effective Date” will mean the date on which the Merger will become effective as provided in the preceding sentence, and the term “Effective Time” will mean the time on the Effective Date when the Merger will become effective. The Effective Date and the Effective Time will take place on the Closing Date. The Closing Date and the Effective Date will be the same date as the closing date (the “AIM Merger Closing Date”) and the effective date of the AIM Merger (the “AIM Merger Effective Date”), and the Effective Time will occur immediately after the effective time of AIM Merger (the “AIM Merger Effective Time”).
(a)To effectuate the Merger, at the Effective Time, and without any further action of Heartland, SignatureFB&T, AimBank or any holder of Signature Common Stock,AimBank Shareholder, each issued and outstanding share of SignatureAimBank Common Stock (other than(including shares held in the KSOP and excluding shares to be canceled pursuant to Section 2.3(c) and Dissenting Shares)) will be canceled and extinguished and be converted into and become a right to receive (i) subject to Section 2.4 $0.335 in cash (the “and Section 6.16, the Cash Consideration,”), and (ii) subject to Section 2.5, 0.0610207.0 shares (the “Exchange Ratio”) of Heartland Common Stock (the “Stock Consideration,” and, together with the Actual Cash Consideration (as adjusted), the “Merger Consideration”).
(b)No fractional shares of Heartland Common Stock will be issued for SignatureAimBank Converted Common Shares, and in lieu of any fractional share, Heartland will pay to each holder of SignatureAimBank Converted Common Shares
who otherwise would be entitled to receive a fractional share of Heartland Common Stock an amount of cash (without interest) equal to the product of (i) the Heartland Closing Date Stock Price multiplied by (ii) the fractional share interest to which such holder would otherwise be entitled (the “Fractional Share Amount”).
(c)Each share of SignatureAimBank Common Stock held as treasury stock of Signature or held directly or indirectly by Heartland,AimBank, other than shares held in a fiduciary capacity or in satisfaction of Indebtedness previously contracted, will be canceled, retired and cease to exist, and no exchange or payment will be made with respect thereto.
(a) If the Adjusted Tangible Common Equity is less than $27,125,000,$145,000,000 (the “Bottom Threshold Amount”), the Cash Consideration will be reduced by an amount equal to (a)(i) the amount by which the Adjusted Tangible Common Equity is below $27,125,000,the Bottom Threshold Amount, divided by (b)(ii) the SignatureAimBank Common Shares Outstanding (the “Downwardly Adjusted Cash Consideration”). If the Adjusted Tangible Common Equity is greater than $27,350,000,$146,000,000, the Cash Consideration will be increased by an amount equal to (x) the lesser of (A) $1,500,000 and (B) the amount by which the Adjusted Tangible Common Equity is above $27,350,000,$146,000,000, divided by (y) the SignatureAimBank Common Shares Outstanding (the “Upwardly Adjusted Cash Consideration”). The Cash Consideration as reduced by the Downwardly Adjusted Cash Consideration, if any, or increased by the Upwardly Adjusted Cash Consideration, if any, shall be referred to as the “Actual Cash Consideration.”
(b) If the Closing does not occur on or prior to November 30, 2020, then the Net Income between December 1, 2020 and the Closing Date shall be added to the Aggregate Holdback Amount (such amount added to the Aggregate Holdback Amount shall be referred to as the “Retained Earnings”).
2.5 Adjustments to Heartland Common Stock. IfIn the event Heartland changes (or establishes a record date for changing) the number of shares of Heartland Common Stock issued and outstanding prior to the Effective Date as a result of any stock split, recapitalization, reclassification, combination, exchange of shares, readjustment or similar transaction with respect to the outstanding Heartland Common Stock, or Heartland declares a stock dividend or extraordinary cash dividend, and the record date therefor will be prior to the Effective Date, the Exchange Ratio will be proportionately adjusted.
(a)At and after the Effective Time and until surrendered for exchange, each outstanding stock certificate which immediately prior to the AIM Merger Effective Time represented the Signatureshares of AIM Common Stock that are converted into AimBank Converted Common Shares will be deemed for all purposes to
B-13
evidence the right to receive the Merger Consideration allocable to such certificate (“AIM Stock Consideration and the Actual Cash Consideration for each Signature Converted Common Share,Certificate”), and the record holder of such outstanding stock certificateAIM Stock Certificate will, after the Effective Time, be entitled to vote the shares of Heartland Common Stock into which such shares of SignatureAIM Common Stock (that have been converted into AimBank Converted Common Shares) will have been converted, by virtue of the AIM Merger and the Merger, on any matters on which the holders of record of Heartland Common Stock, as of any date subsequent to the Effective Time, will be entitled to vote. In any matters relating to such stock certificates, Heartland may rely conclusively upon the record of shareholders maintained by SignatureAIM containing the names and addresses of the holders of record of SignatureAIM Common Stock at the AIM Effective Time.
(b)At and after the Effective Time, each share of capital stock of HeartlandFB&T Common Stock issued and outstanding immediately prior to the Effective Time will remain an issued and existing share of capital stock of the Surviving CorporationFB&T Common Stock and will not be affected by the Merger.
(c) At and after the Effective Time, each share of Heartland Common Stock issued and outstanding prior to the Effective Time will remain an issued and existing share of Heartland Common Stock and will not be affected by the Merger.
(a)Payment of Merger Consideration; Cancellation of Book Entry Shares and Exchange of Certificates. Within 10 Business Days after the Closing, a paying agent appointed by Heartland (the “Paying Agent”) will cause to be distributed to each holder of shares of Signature Common StockAimBank Shareholder a letter of transmittal or other appropriate materialsdocuments to facilitate the surrender of certificates representingAIM Stock Certificates and the cancellation of such corresponding book entry shares of AimBank Common Stock in exchange for the Merger Consideration allocable to such AIM Stock Consideration and the Actual Cash Consideration for each Signature Converted Common ShareCertificates (a “Letter of Transmittal”). Within 10 Business Days after surrender to Heartland or to a paying agent appointedreceipt by Heartlandthe Paying Agent of any certificate which prior to the Effective Date represented a shareLetter of Signature CommonTransmittal, accompanied by the corresponding AIM Stock Heartland or such paying agentCertificates, the Paying Agent will distribute to such holder of AIM Stock Certificates the Person in whose name such certificate is registered, the Stock Consideration and the Actual CashMerger Consideration, and, if applicable, cash in the amount of any Fractional Share Amount. The Stock Consideration shall be issued in book entry form, unless otherwise requested by an AimBank Shareholder.
(b)Failure To Surrender AIM Stock Certificates. Following the return by the Paying Agent to SurrenderHeartland of the Merger Consideration held by it, any former AimBank Shareholder who has not complied with this Article 2 will thereafter look only to Heartland with respect to the payment of the Merger Consideration, any Fractional Share Amount and any unpaid dividends and distributions on the Heartland Common Stock deliverable in respect of each share of AimBank Common Stock held by such AimBank Shareholder. If the outstanding AIM Stock Certificates. If outstanding certificates formerly representing Signature Converted Common Shares and Letter of Transmittal are not surrenderedprovided to the Paying Agent prior to the date on which the Merger Consideration to which any holder of such sharesAimBank Shareholder is entitled as a result of the Merger would otherwise escheat to or become the property of any Governmental Entity, the unclaimed Merger Consideration will, to the extent permitted by abandoned property and any other applicable Law, become the property of Heartland (and to the extent not in Heartland’s possession will be paid over to Heartland), free and clear of any and all claims or interest of any Person. Notwithstanding the foregoing, neither Heartland nor any other Person will be liable to any former holder of Signature Common StockAimBank Shareholder for any amount delivered to a public official pursuant to applicable abandoned property, escheat or other similar Laws.
(c)Lost Certificates. IfIn the event that any certificate representing Signature Converted Common SharesAIM Stock Certificate will have been lost, stolen or destroyed, Heartland will issue and pay in exchange for such lost, stolen or destroyed certificate, upon the making of an affidavit of that fact by the holder thereof in form reasonably satisfactory to Heartland’s paying agent, the Merger Consideration for each SignatureAimBank Converted Common Share; provided, however, that Heartland or Heartland’s paying agent may, as a condition precedent to the issuance and payment of the Merger Consideration to which the holder of such certificate is entitled as a result of the Merger, require the owner of such lost, stolen or destroyed certificate to deliver a bond in such sum as it may direct, not to exceed the aggregate amount of such shareholder’s portion of the Merger Consideration, as indemnity against any claim that may be made against Heartland, SignatureAIM or any other party with respect to the certificate alleged to have been lost, stolen or destroyed.
(d)Dividends. Until outstanding certificates formerly representing Signature Converted Common Sharesthe AIM Stock Certificates and Letter of Transmittal are surrenderedprovided by the holder thereof as provided inrequired by Section 2.7(a) and (c), no dividend or distribution payable to holders of record of shares of Heartland Common Stock will be paid to any holdersuch AimBank Shareholder. However, upon the provision of such outstanding certificates, but upon surrenderthe
B-14
AIM Stock Certificates and Letter of such outstanding certificatesTransmittal by such holder,AimBank Shareholder, there will be paid to such holderAimBank Shareholder the amount of any dividends or distributions (without interest) theretofore paid with respect to such whole shares of Heartland Common Stock, but not paid to such holder, and whichAimBank Shareholder, if the record date for holders of Heartland Common Stock entitled to receive such dividends or distributions had a record date occurringoccurred on or subsequent to the Effective Time.Date.
(e)Full Satisfaction. The Merger Consideration issued and paid upon the surrender for exchange of each SignatureAimBank Converted Common Share in accordance with the terms and conditions of this Agreement will be deemed to have been issued and paid in full satisfaction of all rights pertaining to such SignatureAimBank Converted Common Share.
(a)Notwithstanding any provision of this Agreement to the contrary, any shares of SignatureAIM Common Stock held by a Person (a “Dissenting Shareholder”) who has demanded and perfected a demand for payment of the fair valueappraisal of his, her or its shares of SignatureAIM Common Stock in accordance with Section 302A.473 of the MBCAAIM Merger Agreement (“Dissenting Shares”), and, as of the AIM Merger Effective Time, has neither effectively withdrawn nor lost his, her or its right to such demand will not represent a right to receive the Merger Consideration for any share of SignatureAimBank Common Stock otherwise issuable pursuant to the AIM Merger Agreement in accordance with Sections 2.3(a), 2.4 and 2.5 of this Agreement, but, in lieu thereof, the holder thereofsuch Person will be entitled to only such appraisal rights as are granted byprovided for in the MBCA.AIM Merger Agreement.
(b)Notwithstanding the provisions of Section 2.8(a), if any Dissenting Shareholder demanding payment of fair value of such Dissenting Shareholder’s shares of Signature Common Stock (“Dissenting Shares”) under the MBCA will effectively withdraw or lose (through failure to perfect or otherwise) such Dissenting Shareholder’s right to demand such payment, then, as of the Effective Time or the time of such withdrawal or loss, whichever occurs later, each Dissenting Share will automatically be converted into and represent only the right to receive the Merger Consideration as provided in Sections 2.3(a), 2.4 and 2.5 upon surrender of the certificate or certificates representing such Dissenting Shares.
(c) AIM, in its capacity as the avoidancesole shareholder of doubt,AimBank, has approved this Agreement and the Dissenting Shareholder PaymentsMerger. Because this Agreement and the Merger do not require approval of the AIM Shareholders who will become the AimBank Shareholders as a result of the AIM Merger, such AimBank Shareholders are not be included inentitled to any appraisal rights granted by Chapter 10, Subchapter H, of Title 1 of the definition of “Transaction Expenses.”TBOC with respect to the Merger.
2.9 SignatureAimBank Stock Options. .At the Effective Time, each option to purchase shares of Signature CommonAimBank Stock (a “Signature Stock Option”) which is outstanding vested and unexercised immediately prior to the Effective Time will be cancelled in exchange for the right to receive from Heartland either (at the discretion of each holder of a Signature Stock Option) a single lump sum cash payment or shares of Heartland Common Stock (but not a mix of cash and Heartland Common Stock) with a value equal to the product of (a) the number of shares of SignatureAimBank Common Stock subject to such SignatureAimBank Stock Option immediately prior to the Effective Time, andmultiplied by (b) the excess of $3.35(i) an amount determined by (A) multiplying the Exchange Ratio by the Heartland Closing Date Stock VWAP plus (B) the Actual Cash Consideration, over (ii) the exercise price per share of such SignatureAimBank Stock Option (the amount determined by the foregoing formula, the “Option Consideration”), less any applicable Taxes required to be withheld with respect to such payment (except to the extent that such withholding requirements are satisfied by withholding from cash amounts otherwise payable to the option holder under this Agreement or any other arrangement in accordance with Section 2.12).2.11. If athe Option Consideration is an amount equal to or less than zero, the holder of a
B-15
this Agreement will be deemed to have been issued and paid in full satisfaction of all rights pertaining to the AimBank Stock Options. By way of example and for clarification purposes only, a sample Option Consideration calculation is set forth on Exhibit D.
2.10 The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place atremotely via the officesexchange of Heartland located at 1398 Central Avenue, Dubuque, Iowa,documents and signatures or at asuch other location otherwisemutually agreed upon by Heartland, FB&T, AIM and Signature.AimBank. The Closing will take place as soon as practicable once the conditions in Article 7 have been satisfied or waived but in any event within 10 Business Days after the date on which all such conditions have been satisfied or waived, unless the parties otherwise agree (the “Closing Date”); provided, however, that in no event will the Closing Date occur prior to January 1, 2018.. The failure of the Closing on an agreed upon place and time will not ipso facto result in termination of this Agreement and will not relieve any party of any obligation under this Agreement.
(a)Subject to the conditions set forth in this Agreement, on the Closing Date, SignatureAIM or AimBank, as applicable, will deliver to Heartland:Heartland and FB&T:
(i)the certificate of Signature,AimBank, dated the Closing Date, required by Section 7.3(c);
(ii)the certificate of Signature,AIM, dated the Closing Date, required by Section 7.3(d);
(iii) the certificate of AimBank, dated the Closing Date, required by Section 7.3(f);
(vi) the AIM Merger has been consummated and made effective;
(vii)certificates representing all outstanding shares of Signature Bank Common Stock, which will be free of any Encumbrance;
(x) a certificate dated as of the most recent practicable date prior to the Closing Date executed by the TDB as to the existence of AimBank;
(xi) Certificates of Account Status issued by the Texas Comptroller of Public Accounts covering each of the AIM Entities;
(xii) a duly executed FIRPTA statement for purposes of satisfying Heartland’s obligations under Section 1.1445-2(c)1.1445-2 of the Treasury Regulations;
(xiii) duly signed copies of any Stay Bonus Letters; and
(b)Subject to the conditions set forth in this Agreement, on the Closing Date, Heartland or FB&T, as applicable, will deliver to Signature:AIM and AimBank:
(i)the certificate of Heartland, dated the Closing Date, required by Section 7.2(c);
(ii)the certificate of Heartland, dated the Closing Date, required by Section 7.2(d); and
B-16
(iii) the certificate of FB&T, dated the Closing Date, required by Section 7.2(e);
(iv) such other certificates, documents and instruments that SignatureAimBank reasonably requests for the purpose of (1) evidencing the accuracy of the representations and warranties of Heartland or FB&T, (2) evidencing the performance and compliance by Heartland and FB&T with agreements contained in this Agreement, (3) evidencing the satisfaction of any condition referred to in Section 7.2 or (4) otherwise facilitating the consummation of the transactions contemplated by this Agreement.Agreement;
(vi) a Certificate of Account Status issued by the Payoff Letters.Texas Comptroller of Public Accounts covering FB&T; and
(vii) a certificate of existence and good standing of Heartland executed by the Secretary of State of the State of Delaware.
2.11 Withholding.2.12 Withholding. The Paying Agent, Heartland or its paying agentand FB&T will be entitled to deduct and withhold from the Merger Consideration or theand Option Consideration otherwise payable pursuant to this Agreement any amounts required to be withheld or deducted with respect to such consideration under any applicable provisions of all Laws relating to Taxes (including the Code). With respect to Option Consideration paid in shares of Heartland Common Stock, Heartland or its paying agent may, in its discretion, satisfy such withholding requirements by withholding from cash amounts otherwise payable to the payee under this Agreement or any other arrangement, or by withholding shares of Heartland common stock having a value (determined consistent with Section 2.9 of this Agreement) equal to the amount of the required withholding. Heartland or its paying agent, as applicable, will remit such withheld amounts (or the cash equivalent value with respect to any such withheld shares of Heartland Common Stock) to the appropriate Governmental Entity in accordance with applicable Law. To the extent that amounts are so withheld and timely remitted to the appropriate Governmental Entity, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of Signature Common Stock or Signature Stock OptionPerson in respect of which such deduction and withholding was made.
REPRESENTATIONS AND WARRANTIES OF HEARTLAND
AND FB&T
Heartland and FB&T (with respect to any matters relating to FB&T) hereby representsrepresent and warrantswarrant to SignatureAIM and AimBank as follows:
(a)Heartland is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and it has the requisite corporate power to carry on its business as now conducted. Heartland is registered as a bank holding company under Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”). Heartland is, and as of the Closing Date will be, the lawful record and beneficial owner of all of the issued and outstanding stock of FB&T, free and clear of any Encumbrance. Heartland is licensed or qualified to do business in every jurisdiction in which the nature of its business or
B-17
its ownership or property requires it to be licensed or qualified, except where the failure to be so licensed or qualified would not have or would not be reasonably expected to have a Material Adverse Effect on Heartland. The copies of the Charter and Bylaws of Heartland which have been provided to Signature prior to the date of this Agreement are correct and complete and reflect all amendments made thereto. Heartland is not in violation of any provisionprovisions of its Charter orand Bylaws.
(b)MB FB&T is a MinnesotaTexas state banking corporationassociation authorized to transactconduct business as a bank in MinnesotaTexas duly organized, validly existing and in good standing under the Laws of the State of Minnesota. MBTexas. FB&T has the requisite corporate power and authority (including all material Governmental Authorizations as are legally required) to carry on its business as now being conducted, to own, lease and operate its properties and assets as now owned, leased or operated and to enter into and to carry on the business and activities now conducted by it. MBFB&T is an insured bank as defined in the Federal Deposit Insurance Act, as amended (the “FDIA”). MBExcept for PrimeWest Mortgage Corporation, Outsource Lease, Inc., FBT Servicing, Inc. and Foreclosed Properties, Inc. (collectively, the “FB&T has noSubsidiaries”), FB&T does not have any Subsidiaries. The nature of the business of MBFB&T does not require it to be qualified to do business in any jurisdiction other than the State of Minnesota. MBTexas. Except for its ownership of FB&T Subsidiaries and permissible bank investments, FB&T has no equity interest, direct or indirect, in any bank or corporation or in any limited liability company, partnership, joint venture or other business enterprise or entity, except as acquired through settlement of Indebtedness, foreclosure, the exercise of creditors’ remedies or in a fiduciary capacity. The copies of the Charter and Bylaws of MB&T which have been provided to Signature prior to the date of this Agreement are correct and complete and reflect all amendments made thereto. MBFB&T is not in violation of any provisionprovisions of its Charter orand Bylaws.
(a) Each of Heartland and FB&T has the requisite corporate power and authority to enter into this Agreement and the Ancillary Documents (to which Heartland or FB&T, as the case may be, is a party), and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and such Ancillary Documents by Heartland and FB&T and the consummation by Heartland and FB&T of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of Heartland.each of Heartland and FB&T and by Heartland as the sole shareholder of FB&T. No other corporate proceedings on the part of Heartland or FB&T are necessary to authorize this Agreement and the Ancillary Documents (to which Heartland or FB&T, as the case may be, is a party), or to consummate the Merger and the transactions contemplated by this Agreement.Agreement and the Ancillary Agreements (to which Heartland or FB&T, as the case may be, is a party). This Agreement and the Ancillary Documents (to which Heartland or FB&T, as the case may be, is a party) have been duly executed and delivered by Heartland and FB&T and constitute a valid and binding obligationobligations of Heartland and FB&T, respectively, enforceable in accordance with their terms, subject to the Remedies Exception. Neither Heartland nor FB&T is not subject to, or obligated under, any provision of (a) its Charter or Bylaws, (b) any Contract, (i) requiring an expenditure by Heartland or any of its Subsidiaries of more than $10,000, (ii) requiring payments to Heartland or any of its Subsidiaries of more than $10,000, or (iii) having a duration of more than six months, (c) any license, franchise or permit or (d) subject to obtaining the approvals referred to in the next sentence,Section 3.2(b), any Law, order, judgment or decree, which would be breached or violated or in respect of which a right of termination or acceleration or any Encumbrance on any of its or MB&T’s assets would be created by its execution, delivery and performance of this Agreement or any of the Ancillary Agreements (to which Heartland or FB&T, as the case may be, is a party) or the consummation by it of the transactions contemplated hereby.hereby or thereby.
(b)Other than in connection with obtaining No Consent of any approvalsGovernmental Entity is necessary on the part of Heartland or waivers fromFB&T for the Board of Governorsconsummation by it of the Federal Reserve System (the “FRB”)transactions contemplated by this Agreement, except for the Merger required under the Bank Holding Company Act, any notices to and approvals from the MinnesotaTexas Department of CommerceBanking (the “TDBMDC”) for the change in controlrequired under Chapter 202 of the ownership of Signature Bank or the Bank Merger required under Section 49.33 of the Revised Statutes of MinnesotaTexas Finance Code (the “TFCMinnesota Banking Statute”), and any notices to and approvals from the Federal Deposit Insurance Corporation (the “FDIC”) for the Bank Merger required under Bank Merger Act (such notices, approvals or waivers under the Bank Holding Company Act, the Minnesota Banking Statute and the Bank Merger Act being herein collectively referred to as the “Bank Regulatory Approvals”); approvals to issue Heartland Common Stock under the Securities Act of 1933 as amended, and the rules and regulations thereunder (the “Securities Act”), under state securities or blue sky laws and the rules and regulations
3.3 Validity of Heartland Common Stock. The shares of Heartland Common Stock to be issued pursuant to this Agreement will be, when issued, duly authorized, validly issued, fully paid and nonassessable and free and clear of any Encumbrance. Such shares of Heartland Common Stock will be authorized for listing on the NASDAQ Global Select Market or other national securities exchange upon official notice of issuance. The shares of Heartland Common Stock to be issued pursuant to this Agreement will be free of any preemptive rights of the shareholders of Heartland or any other Person. The shares of Heartland Common Stock to be issued pursuant to this Agreement will not be subject to any restrictions on transfer arising under the Securities Act; provided,
B-18
however, that any holders of such shares who become employees of Heartland or any of its Subsidiaries will be subject to Heartland’s insider trading policies (including the “black-out” periods relating to the trading of shares of Heartland Common Stock) to the extent such employees are covered by such insider trading policies.
(a) The authorized capital stock of Heartland consists of 40,000,00060,000,000 shares of Heartland Common Stock, and 200,000 shares of Preferred Stock, par value $1.00 per share, of which 16,000 shares have been designated Series A Junior Participating Preferred Stock (“Heartland Series A Preferred Stock”), 81,698 shares have been designated Series B Fixed Rate Cumulative Perpetual Preferred Stock (“Heartland Series B Preferred Stock”), 81,698 shares have been designated Senior Non-Cumulative Perpetual Preferred Stock, Series C (“Heartland Series C Preferred Stock”) and, 3,000 shares have been designated Senior Non-Cumulative Perpetual Convertible Preferred Stock, Series D (“Heartland Series D Preferred Stock”), and 11,500 shares of which have been designated 7.00% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E (“Heartland Series E Preferred Stock”). As of SeptemberJune 30, 2017, (a)2020, (i) 29,946,069(A) 36,844,744 shares of Heartland Common Stock were issued and outstanding (with(and no shares of Heartland Common Stock were held as treasury shares), (ii) 1,275,198(B) 1,809,904 shares of Heartland Common Stock were reserved for issuance pursuant to Heartland’s stock incentive and employee stock purchase plans; (iii)(C) 3,000 shares of Heartland Common Stock were reserved for issuance pursuant to Heartland Series D Preferred Stock; and (iv)(D) no shares of Heartland Common Stock were reserved for issuance to holders of the CIC Bancshares, Inc. 6.5% Subordinated Notes Due 2019 assumed by Heartland on February 5, 2016; and (b)(ii) no shares of Heartland Series A Preferred Stock were issued and outstanding; (c)(iii) no shares of Heartland Series B Preferred Stock were issued and outstanding; (d)(iv) no shares of Heartland Series C Preferred Stock were issued and outstanding, and (e) 745(v) no shares of Heartland Series D Preferred Stock were issued and outstanding, (vi) 11,500 shares of Heartland Series E Preferred Stock were issued and outstanding, and (vii) 4,600,000 depositary shares, each representing a 1/400th interest in a share of Heartland Series E Preferred Stock, were issued and outstanding.
(b) The authorized capital stock of FB&T consists of 15,000 shares of common stock, $10.00 par value per share (“FB&T Common Stock”). Of the authorized shares of FB&T Common Stock, 15,000 shares of FB&T Common Stock are issued and outstanding (with no shares of FB&T Common Stock held as treasury shares).
(a)Prior to the execution of this Agreement, Heartland has made available to SignatureAIM complete and accurate copies of (i) Heartland’s Annual Reports on Form 10‑K10-K for the years ended December 31, 2014, 20152017, 2018 and 2016,2019, as amended (the “Heartland 10‑K10-K Reports”), as filed under the Exchange Act with the Securities and Exchange Commission (the “SEC,”), (ii) all Heartland proxy statements and annual reports to shareholders used in connection with meetings of Heartland shareholders held since January 1, 2014,2016, and (iii) Heartland’s Quarterly Report on Form 10‑Q10-Q for the quarter ended SeptemberJune 30, 20172020 (the “Heartland 10‑Q10-Q Report”), as filed under the Exchange Act with the SEC. As of their respective dates, such documents, (togethertogether with all other material reports and statements (including(and any amendments required to be made with respect thereto) which have not been superseded by the Heartland Form 10‑K Reports, the Heartland Form 10‑Q Report and Heartland’s most recent proxy statement) that Heartland was required to file with the SEC pursuant to the Exchange Act after January 1, 2014,June 30, 2020, (x) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (y) each of the foregoing complied as to form in all material respects with the applicable Laws and rules and regulations of the SEC. Since January 1, 2014,2017, Heartland has filed all reports that it was required to file with the SEC pursuant to the Exchange Act.
(b)Heartland’s financial statements (including any footnotes thereto) contained in the Heartland 10‑K10-K Reports and the Heartland 10‑Q10-Q Report were prepared in accordance with GAAP (except that the financial statements set forth in the Heartland 10‑Q10-Q Report may not contain all notes required by GAAP and are subject to year-end adjustments, none of which is material) and fairly present, in all material respects, the consolidated financial position of Heartland and its Subsidiaries as of the dates thereof and the consolidated results of operations, changes in shareholders’ equity and cash flows for the periods then ended.
B-19
occurrence or development in the business of Heartland or its Subsidiaries that, taken individually or as a whole, has had or would reasonably be expected to have a Material Adverse Effect on Heartland or its Subsidiaries or on the consummation of the transactions contemplated hereby. As of the date hereof, except with respect to the transactions contemplated hereby, and except as otherwise disclosed in reports filed with the SEC prior to the date hereof, since June 30, 2020, Heartland and each of its Subsidiaries has conducted its respective business only in the Ordinary Course of Business.
(a) Since January 1, 2014,2017, each of Heartland and its Subsidiaries has filed each report or other filing it was required to file with any federal or state banking or bank holding company or other Governmental Entity having jurisdiction over it (together with all exhibits thereto, the “Heartland Regulatory Reports”), except for such reports and filings which the failure to so file would not have a Material Adverse Effect on Heartland or on the consummation of the transactions contemplated hereby. As of their respective dates or as subsequently amended prior to the date hereof, each Heartland Regulatory Report was true and correct in all material respects and complied in all material respects with applicable Laws.
(b) Heartland and MB&Tits Subsidiaries are, and at all times since January 1, 20142017 have been, in compliance in all material respects with all Laws, Governmental Orders or Governmental Authorizations.
(c) Since January 1, 2014,2017, each of Heartland and MB&Tits Subsidiaries has held all Governmental Authorizations required for the conduct of its business, except where the failure to hold any such Governmental Authorization would not have a Material Adverse Effect on Heartland.
(d) Neither Heartland nor FB&T is a party to or is subject to any Governmental Order, written agreement or memorandum of understanding with, or a commitment letter or similar submission to, or extraordinary supervisory letter from any Bank Regulator, nor has Heartland or MB&T. FB&T adopted any policies, procedures or board resolutions at the request or suggestion of, any Bank Regulator that would reasonably be expected to impair the ability of Heartland or FB&T to obtain the Bank Regulatory Approvals or to operate the Surviving Corporation in the Ordinary Course of Business after the Closing Date.
(e) No Governmental Entity has initiated since January 1, 2017 or currently has pending any proceeding or enforcement action against Heartland or any of its Subsidiaries.
3.8 Community Reinvestment Act. Each Subsidiary of Heartland that is a bank had a rating of “satisfactory” or better as of its most recent CRA examination, and neither Heartland nor any such Subsidiary has been advised of, or has reason to believe that any facts or circumstances exist that would reasonably be expected to cause any such Subsidiary to be deemed not to be in satisfactory compliance in any respect with the CRA or to be assigned a rating for CRA purposes by any Governmental Entity charged with the supervision or regulation of banks or bank holding companies or engaged in the insurance of bank deposits of lower than “satisfactory.”
B-20
3.11 Litigation. There is no Litigation pending against, or, to the knowledgeKnowledge of Heartland, threatened against Heartland or its Subsidiaries, before or by any Governmental Entity, that (a) in any manner challenges or seeks to prevent, enjoin, alter or materially delay any of the transactions contemplated by this Agreement,Agreement. To the Knowledge of Heartland, there are no facts that would reasonably be expected to give rise to Litigation against Heartland or (b) individuallyany of its Subsidiaries that would have or in the aggregate, couldwould reasonably be expected to have a Material Adverse Effect on Heartland or MB&T.its Subsidiaries, taken as a whole.
3.13 Internal Controls. Heartland and each Signature Converted Common Share that is issued and outstanding as of its Subsidiaries maintains a system of internal control over financial reporting sufficient to provide reasonable assurance regarding the Effective Timereliability of financial reporting and the Option Consideration for each Signature Stock Option cancelledpreparation of financial statements in accordance with GAAP, including reasonable assurance (a) that transactions are executed in accordance with management’s general or specific authorizations and recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability and (b) regarding prevention or timely detection of any unauthorized acquisition, use or disposition of assets that would have a material effect on the Effective Time.financial statements of Heartland or such Subsidiary.
REPRESENTATIONS AND WARRANTIES OF SIGNATUREAIM AND AIMBANK
(a)Signature AIM is a corporation duly organized, validly existing and in good standing under the Laws of the State of Minnesota,Texas, and has the requisite corporate power to carry on its business as now conducted. SignatureAIM is a bank holding company registered under Bank Holding Company Act. Except for Signature Bank, Signature has no Subsidiaries. SignatureAIM is and aslicensed or qualified to do business in every jurisdiction in which the nature of its business or its ownership or property requires it to be licensed or qualified, except where the Closing Date willfailure to be the lawful record and beneficial owner of all of the issued and outstanding stock of Signature Bank, free and clear of any Encumbrance, except as set forth in Schedule 4.1(a).so licensed or qualified would not have or would not be reasonably expected to have a Material Adverse Effect on AIM. The copies of the Charter and Bylaws of Signature,AIM, which have been provided to Heartland prior to the date of this Agreement, are correct and complete and reflect all amendments made thereto. SignatureAIM is not in violation of any provisions of its Charter and Bylaws.
(b)Signature Bank AimBank is a MinnesotaTexas state banking corporationassociation authorized to conduct business as a bank in MinnesotaTexas duly organized, validly existing and in good standing under the Laws of the State of Minnesota. Signature BankTexas. AimBank has
B-21
the requisite corporate power and authority (including all material Governmental Authorizations as are legally required) to carry on its business as now being conducted, to own, lease and operate its properties and assets as now owned, leased or operated and to enter into and to carry on the business and activities now conducted by it. Signature BankAimBank is an insured bank as defined in the FDIA. Signature Bank has noExcept for ABFI, Inc. (“ABFI”), AimBank does not have any Subsidiaries. Signature BankThe nature of the business of AimBank does not require it to be, and it is not, qualified to do business in any jurisdiction other than the StateStates of Minnesota. Signature Bank has not received any written or oral notice or other communication from any Governmental Entity that the nature of the business of Signature Bank requires it to be qualified to do business in any jurisdiction other than the State of Minnesota.Texas and New Mexico. The copies of the Charter and Bylaws of Signature Bank,AimBank, which have been provided to Heartland prior to the date of this Agreement, are correct and complete and reflect all amendments made thereto. Signature BankAimBank is not in violation of any provisions of its Charter and Bylaws.
(c) ABFI is a corporation duly organized, validly existing and in good standing under the Laws of the State of Texas, and has the requisite corporate power to carry on its business as now conducted. AimBank is, and as of the Closing Date will be, the lawful record and beneficial owner of all of the issued and outstanding stock of ABFI, free and clear of any Encumbrance, subject to the earlier termination and dissolution of ABFI. The nature of the business of ABFI does not require it to be, and it is not, qualified to do business in any jurisdiction other than the State of Texas. The copies of the Charter and Bylaws of ABFI, which have been provided to Heartland prior to the date of this Agreement, are correct and complete and reflect all amendments made thereto. ABFI is not in violation of any provisions of its Charter and Bylaws.
(d) The Statutory Trust is duly organized and validly existing under the Laws of the State of Connecticut. AIM is, and as of the Closing Date, will be the lawful record and beneficial owner of all of the Statutory Trust Securities that are common securities. The copies of the Statutory Trust Declaration of Trust which have been provided to Heartland and FB&T prior to the date of this Agreement are correct and complete and reflect all amendments made thereto as of the date of this Agreement. The Statutory Trust is not in violation of any provisions of the Statutory Trust Declaration of Trust.
(a)Signature Each of AIM and AimBank has the requisite corporate power and authority to enter into this Agreement and the Ancillary Documents (to which SignatureAIM or AimBank, as the case may be, is a party), and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and such Ancillary Documents by SignatureAIM or AimBank and the consummation by SignatureAIM and AimBank of the transactions contemplated hereby and thereby have been duly authorized by the Boardrespective Boards of Directors of Signature.AIM and AimBank and by AIM as the sole shareholder of AimBank. Other than the approval of the AIM Merger Agreement and the AIM Merger by holders of at least a majority of the number of issued and outstanding shares of Signature Common Stock as of the record date for the Signature Shareholder Meeting (the “Required SignatureAIM Shareholder Vote,”), no other corporate proceedings on the part of SignatureAIM or AimBank, are necessary to authorize this Agreement or the AIM Merger Agreement or the Ancillary Documents (to which SignatureAIM or AimBank, as the case may be, is a party), or to consummate the AIM Merger, the Merger or any other transactions contemplated hereby or thereby. No “control share acquisition,” “business combination moratorium,” “fair price” or other form of antitakeover statute or regulation under the MBCATBOC or any applicable provisions of the takeover Laws of MinnesotaTexas or any other state (and any comparable provisions of the charterCharter or bylawsBylaws of Signatureeither AIM or Signature Bank)AimBank), or, to the Knowledge of Signature, any other state, apply or will apply to thisthe AIM Merger Agreement, the AIM Merger, the Bank Mergerthis Agreement or the Bank Merger.
(b)This Agreement and the Ancillary Documents (to which Signatureeither AIM or AimBank, as the case may be, is a party) have been duly executed and delivered by SignatureAIM and AimBank, and constitute a valid and binding obligationobligations of Signature,AIM and AimBank, enforceable in accordance with itstheir terms, subject to the Remedies Exception. Neither Signature nor Signature BankExcept as set forth on Schedule 4.2(b), none of the AIM Entities is subject to, or obligated under, any provision of (i) its Charter, Bylaws or other governing documents, (ii) any Contract, (x) requiring an expenditure by Signature or Signature Bank of more than $10,000, (y) requiring payments to Signature or Signature Bank of more than $10,000, or (z) having a duration of more than six months, except for any Contracts for which required Consents must be obtained pursuant to Section 7.3(h) or Contracts that expire or are terminated prior to the Effective Time, (iii) any license, franchise or permit or (iv) subject to obtaining the approvals referred to in Section 4.2(c), any Law, order, judgment or decree, which would be breached or violated, or in respect of which a right of termination or acceleration or any Encumbranceencumbrance on any of its assets would be created, by the execution, delivery or performance of this Agreement and the Ancillary Documents (to which AIM or AimBank, as the case may be, is a party), or the consummation of the transactions contemplated hereby and thereby.
(c)Other than the Bank Regulatory Approvals, the filing of the DelawareTexas Certificate of Merger and the Minnesota Articlesfiling of Mergera certificate of merger with the Texas Secretary of State of Delaware and the Secretary of State of Minnesota, respectively,TDB to effect the AIM Merger, no Governmental Authorization is necessary on the part of either of Signature or Signature BankAIM and AimBank for the consummation by SignatureAIM
B-22
and AimBank of the transactions contemplated by this Agreement and the Ancillary Documents.Documents (to which AIM or AimBank, as the case may be, is a party).
(a)The authorized capital stock of Signature consists of 20,000,000 shares of Signature Common Stock, $0.01 par value per share. As of September 30, 2017, 15,116,679.08shares of Signature Common Stock were issued and outstanding. The authorized capital stock of Signature BankAIM consists of 100,000 shares of AIM Common Stock, $10.00and 1,000,000 shares of preferred stock, no par value per share (“(the “Signature Bank CommonAIM Preferred Stock”). Of the authorized shares of Signature BankAIM Common Stock, 100,00024,553.98 shares are issued and outstanding (with 1,594.10 shares of Signature BankAIM Common Stock held as treasury shares). Of the authorized shares of AIM Preferred Stock, no shares of AIM Preferred Stock are issued and outstanding (with no shares of AIM Preferred Stock held as treasury shares). As of the date hereof, 1,685 shares of AIM Common Stock were reserved for issuance pursuant to outstanding AIM Stock Options.
(b) Until the AIM Merger Effective Date, the authorized capital stock of AimBank consists of 10,000 shares of common stock, $100.00 par value per share. Of the authorized shares of AimBank Common Stock, 1,000 shares of AimBank Common Stock are issued and outstanding (with no shares of AimBank Common Stock held as treasury shares). As of the AIM Merger Effective Time, the authorized capital stock of AimBank will consist of 100,000 shares of AimBank Common Stock, and 24,553.98 shares of AimBank Common Stock will be issued and outstanding.
(c) The authorized capital stock of ABFI consists of 1,000 shares of common stock, $100.00 par value per share (“ABFI Common Stock”). Of the authorized shares of ABFI Common Stock, one (1) share is issued and outstanding (with no shares of ABFI Common Stock held as treasury shares).
(d) The issued and outstanding shares of SignatureAIM Common Stock and Signature BankAimBank Common Stock are duly authorized, validly issued, fully paid and nonassessable and have not been issued in violation of any preemptive rights. Except
(e) As of the date hereof, except for the SignatureAIM Stock Options and except as set forth on Schedule 4.3(e), there are no options, warrants, conversion privileges or other rights or Contracts obligating Signature or Signature Bankany of the AIM Entities to issue, sell, purchase or redeem any shares of its capital stock or securities or obligations of any kind convertible into or exchangeable for any shares of its capital stock, nor are there any stock appreciation, phantom or similar rights outstanding based upon the book value or any other attribute of any of capital stock of Signature or capital stockany of Signature Bank,the AIM Entities, or the earnings or other attributes of Signatureany of the AIM Entities. As of the Effective Time, except for the AimBank Stock Options, there will be no options, warrants, conversion privileges or Signature Bank.other rights or Contracts obligating any of the AIM Entities to issue, sell, purchase or redeem any shares of its capital stock or securities or obligations of any kind convertible into or exchangeable for any shares of its capital stock, nor will there be any stock appreciation, phantom or similar rights outstanding based upon the book value or any other attribute of any capital stock of any of the AIM Entities, or the earnings or other attributes of any of the AIM Entities.
4.4 Outstanding SignatureOwnership of AIM Common Stock and Signature Stock Options. Schedule 4.4 sets forth, for all of the issued and outstanding shares of SignatureAIM Common Stock, (a) the name of the holder of such shares, (b) the number of shares of SignatureAIM Common Stock owned by each such holder, and (c) the domicile address of each such holder.Schedule 4.4 also sets forth, for each Signature Stock Option, (i) the name of the optionee, (ii) the date of grant, (iii) the number of shares of Signature Common Stock subject to such Signature Stock Option, (iv) the number of shares of Signature Common Stock subject to such Signature Stock Option that may currently be acquired upon exercise thereof, and (v) the exercise price per share. Except for the Shareholder Voting Agreement the KSOP Pass-Through Voting Agreement and other documentsas set forth onin Schedule 4.4, there are no shareholder agreements, voting agreements, proxies, voting trusts or other understandings, agreements or commitmentsContracts with or among one or more of such shareholdersholders with respect to the voting, disposition or other incidents of ownership of any shares of SignatureAIM Common Stock, including any agreement that provides for preemptive rights or imposes any limitation or restriction on SignatureAIM Common Stock, including any restriction on the right of a shareholderholder of shares of AIM Common Stock to vote, sell or otherwise dispose of any AIM Common Stock. As of the Effective Time, the information set forth on Schedule 4.4, as such SignatureSchedule reflects immediately prior to the Effective Time, will apply mutatis mutandis with respect to the AimBank Shareholders and the AimBank Common Stock.
(a)Prior to the execution of this Agreement, SignatureAIM has made available to Heartland copies of itsAIM’s audited consolidated balance sheets as of December 31, 2014, 2015,2017, 2018 and 20162019 and the related statements of operations, changes in shareholders’ equity and cash flows for the years then ended (collectively, together with any notes thereto, the “SignatureAIM Annual Financial Statements”). SignatureAIM has made available to Heartland copies of its unaudited consolidated balance sheets as of SeptemberJune 30, 2017,2019 and 2020, and the related statements
B-23
of operations changes in shareholders’ equity and cash flows for the nine-monthsix-month periods then ended. The consolidated balance sheet of SignatureAIM as of SeptemberJune 30, 20172020 is herein referred to as the “Latest SignatureAIM Balance Sheet,” and the related statement of income shareholders’ equity and cash flows for the nine-monthsix-month period then ended are herein referred to as the “Related SignatureAIM Statements.” The Signature Annual AIM Financial Statements, the Latest SignatureAIM Balance Sheet and the Related SignatureAIM Statements are collectively referred to as the “SignatureAIM Financial Statements.” The SignatureAIM Financial Statements are based upon the books and records of Signature and Signature Bankthe AIM Entities, and have been prepared in accordance with GAAP (except as otherwise disclosed in the Signature Financial Statements and except that the Latest SignatureAIM Balance Sheet and the Related SignatureAIM Statements may not contain all notes required by GAAP and are subject to year-end adjustments, none of which is material)are material except as set forth on Schedule 4.5(a)). The SignatureAIM Financial Statements fairly present the consolidated financial position of SignatureAIM as of the dates thereof and the consolidated results of operations, changes in shareholders’ equity and cash flows for the periods then ended.ended, as applicable.
(b)Prior to the execution of this Agreement, SignatureAIM or AimBank has made available to Heartland copies of the auditedunaudited balance sheets of Signature BankAimBank as of December 31, 2014, 20152017, 2018 and 20162019 and the related statements of operations changes in shareholders’ equity and cash flows for the years then ended (collectively, together with any notes thereto, the “Signature BankAimBank Annual Financial Statements”). SignatureAIM or AimBank has made available to Heartland copies of the balance sheet of Signature BankAimBank as of SeptemberJune 30, 20172020 and the related statement of operations for the nine-monthsix-month period then ended. The balance sheet of Signature BankAimBank as of SeptemberJune 30, 20172020 is herein referred to as the “Latest Signature BankAimBank Balance Sheet,” and the related statements of operations changes in shareholder’s equity and
(c)The Latest SignatureAIM Balance Sheet and the Latest Signature BankAimBank Balance Sheet are collectively referred to as the “Latest Balance Sheets,” and the Related SignatureAIM Statements and the Related Signature BankAimBank Statements are collectively referred to as the “Related Financial Statements.”
4.6 Absence of Undisclosed Liabilities. Neither Signature nor Signature BankNone of the AIM Entities has any LiabilitiesLiability and, to the Knowledge of AIM, there is no basis for any nature requiredpresent or future Litigation, charge, complaint or demand against any of the AIM Entities, giving rise to be disclosed in accordance with GAAP, whether or not accrued, contingent or otherwise, whether known or unknown and whether due or to become due,any Liability, except (a) as reflected or expressly reserved against in the Latest Signature Balance Sheet,Sheets, (b) Liabilitiesa Liability that havehas arisen after the date of the Latest Signature Balance SheetSheets in the Ordinary Course of Business (none of which is a material uninsured Liability for breach of Contract, breach of warranty, tort, infringement, Litigation or violation of any Governmental Order, Governmental Authorization or Law), or (c) obligations under any Contract listed on a Disclosure Schedule to this Agreement or under a Contract not required to be listed on such a Disclosure Schedule.Schedule, or (d) as set forth on Schedule 4.6.
(a)The documentation relating to each loan made by Signature Bankany AIM Entity and relating to all security interests, mortgages and other liens with respect to all collateral for each such loan are adequate for the enforcement of the material terms of each such loan and of the related security interests, mortgages and other liens subject to the laws of bankruptcy, insolvency, and other equitable remedies.liens. The terms of each such loan and of the related security interests, mortgages and other liens comply in all material respects with all applicable Laws (including Laws relating to the extension of credit). Notwithstanding any provision to the contrary, Signature makes no representation or warranty as to the collectability of any of Signature Bank’s loans due to the financial ability of any borrower to pay any note or other evidence of Indebtedness executed and delivered to Signature Bank or the realizable value of any collateral or the value of any OREO.
(b)Except as set forth in Schedule 4.7(b), there are no loans, leases, other extensions of credit or commitments to extend credit of Signature or Signature Bankany AIM Entity that havehas been or, to the Knowledge of Signature,AIM, should have been classified by Signature or Signature Bank as non-accrual, as restructured, as 90 days past due, as still accruing and doubtful of collection or any comparable classification. SignatureAIM or AimBank has disclosed to Heartland all of the “substandard,” “doubtful,” “loss,” “special mention,” “nonperforming” or “problem” loans of Signature Bankeach of the AIM Entities on the current “watch list” of Signature Bank,each such AIM Entity, a copy of which is attached as Schedule 4.7(b). Except as set forth on Schedule 4.7(b), neither Signature nor Signature Bank has received any written or oral notice that anyNo borrower with respect to a loan from Signature Bankof any AIM Entity in excess of $50,000$25,000 has: (i) filed, or consented by answer or otherwise to the filing against it of, a petition for relief, reorganization or arrangement, or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency Law; (ii) made an
B-24
assignment for the benefit of its creditors; (iii) consented to the appointment of a custodian, receiver, trustee, liquidator or other Person with similar power over such borrower or any substantial part of such borrower’s property; (iv) been adjudicated insolvent; or (v) taken any action for the purpose of authorizing any of the foregoing.
(c)Except as set forth in Schedule 4.7(c), neither Signature nor Signature Banknone of the AIM Entities has any outstanding loans or assets classified as “Other Real Estate Owned” (“OREO”). Schedule 4.7(c) contains a description of each property classified by Signature or Signature Bankany AIM Entity as OREO. Prior to the execution of this Agreement, SignatureAIM or AimBank has delivered the latest appraisal of each property classified as OREO obtained by Signature or Signature Bank.any AIM Entity. The value of any property classified by Signature or Signature Bankany AIM Entity as OREO and reflected on the Latest Balance Sheet was determined on a “fair value less cost to sell” basis. NeitherNone of Signature nor Signature Bankthe AIM Entities has entered into any Contract obligating it pay for expenses with respect to improvements on, or the development of, any OREO.
(d)Except as set forth in Schedule 4.7(d), Signature Bank does not havenone of the AIM Entities currently has (i) any active outstanding loans or other evidences of indebtedness participated to other parties.advances which were purchased or (ii) any participations in loans or advances which were bought or sold. Except as set forth in on Schedule 4.7(d), Signature Banksince the date of the Latest Balance Sheets, none of the AIM Entities has not at any time sold any of its assets with recourse of any kind to Signature Bank,such AIM Entity, nor entered into any Contract providing for the sale or servicing of any loan or other asset that constitutes a “recourse arrangement” under any
applicable regulationregulations or policy promulgated by a Governmental Entity. Signature BankNone of the AIM Entities has not received any request to repurchase any loan, advance or participation therein or other asset sold to a third party, norand none of the AIM Entities has Signature or Signature Bank been advised in writing by any third-party purchaser of any loan, advance or participation therein or any other asset that such purchaser intends to request that Signature Banksuch AIM Entity repurchase such loan, advance or participation therein or other asset.
(e)Except as set forth in Schedule 4.7(e), there are no Contracts binding upon Signature or Signature Bankany AIM Entity to extend credit, in anthe amount per “one borrower” (as combined and aggregated as set forth in 12 C.F.R. §32.5), of $500,000 or more, as determined by aggregating or combining any direct loans, guarantees and overdrafts in accordance with 12 C.F.R. §32.5. Schedule 4.7(e) lists those borrowers of Signature Bank that are the top 10 borrowers of Signature Bank measured by the outstanding principal amount of loans to such borrowers as of September 30, 2017.more.
4.8 Allowance for Loan and Lease Losses. The allowance for loan and lease losses (“ALLL”) of AimBank is, and will be as of the Effective Time, in material compliance with Signature Bank’s existing methodology of the AIM Entities for determining the adequacy of the ALLL, as well as in material compliance with the standards established by applicable Governmental Entities and GAAP and the Financial Accounting Standards Board. Neither Signature nor Signature BankBoard, and is and will be adequate under all standards. None of the AIM Entities has been notified by any Governmental Entity or by Signature’s or Signature Bank’s independent auditor of such AIM Entity, in writing or otherwise, that: (a) such allowances are inadequate; (b) the practices and policies of Signature or Signature Bankthe AIM Entities in establishing such allowances and in accounting for non-performing and classified assets generally fail to comply with applicable accounting or regulatory requirements; or (c) such allowances are inadequate or inconsistent with the historical loss experience of Signature or Signature Bank.the AIM Entities.
4.9 Deposits. All of the deposits held by Signature BankAimBank (including the records and documentation pertaining to such deposits) have been established and are held in compliance in all material respects with all: (a) applicable policies, practices and procedures of Signature Bank;AimBank; and (b) applicable Law, including anti-money laundering, anti-terrorism or embargoed Persons requirements. Except as set forth on Schedule 4.9, noNo deposit of Signature BankAimBank is a Brokered Deposit (as defined in 12 C.F.R. §337.6(a)(2)) or is subject to any encumbrance,Encumbrance, legal restraint or other legal process (other than garnishments, pledges, set-off rights, escrow limitations and similar actions taken in the Ordinary Course of Business). All of the deposit accounts of Signature BankAimBank are insured up to the applicable limits (or fully insured if there is no limit) through the Deposit Insurance Fund as administered by the FDIC to the fullest extent permitted by applicable Law, and all premiums and assessments required to be paid for such insurance have been paid when due. No legal action or proceeding for the termination or revocation of such insurance is pending, or, to the Knowledge of Signature,AIM, has any such termination or revocation been threatened.
4.10 Reports and Filings. Since January 1, 2014,2017, each of Signature and Signature Bankthe AIM Entities has filed each report or other filing that it was required to file with any federal or state banking, bank holding company or other applicable Governmental Entity having jurisdiction over it, including the FRB, the FDIC and the MDCTDB (together with all exhibits thereto, the “SignatureAIM Regulatory Reports”). Signature, except for such reports and filings which the failure to so file would not have a Material Adverse Effect on any of the AIM Entities or on the consummation of the transactions contemplated hereby. AIM or AimBank has provided or made available to Heartland copies of all of SignatureAIM Regulatory Reports that it is permitted tomay provide consistent with and under applicable Law. As of their respective dates or as
B-25
subsequently amended prior to the date hereof, each of SignatureAIM Regulatory Reports was true and correct in all material respects and complied in all material respects with applicable Laws.
4.11 Subsidiaries. Except as set forth on Subsidiaries; Interests in LLCs; Off Balance Sheet ArrangementsSchedule 4.11.
4.12 Off Balance Sheet Arrangements.(b)Neither Signature nor Signature BankNone of the AIM Entities is a party to or member or partner of, or has any commitment to become a party to or member or partner of, any joint venture, off balance sheet limited liability company, off balance sheet partnership or any similar off balance sheet entity, including any structured finance, special purpose or limited purpose entity or Person, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S‑KS-K under the Securities Act), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or of any material Liabilities of, either Signature or Signature Bank.any of the AIM Entities.
(a)The books of account of each Signature and Signature Bank since January 1, 2007of the AIM Entities are complete and correct in all material respects and have been maintained in accordance with commercially reasonablesound business practices. Since January 1, 2007, eachEach transaction has beenis properly and accurately recorded on the books and records
of each Signature and Signature Bank,of the AIM Entities, and each document upon which entries in books and records of each Signature and Signature Bankof the AIM Entities are based is complete and accurate in all material respects.
(b)Signature and Signature Bank each Each of the AIM Entities maintains a system of internal control over financial reporting sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including reasonable assurance (i)(A) that transactions are executed in accordance with management’s general or specific authorizations and recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, and (ii)(B) regarding prevention or timely detection of any unauthorized acquisition, use or disposition of assets that couldwould have a materially adversematerial effect on the financial statements of Signature or Signature Bank.the AIM Entities.
(c)Since January 1, 2014, (i) neither Signature or Signature Bank2017, (A) none of the AIM Entities nor, to the Knowledge of Signature,AIM, any director, officer, manager, employee, auditor, accountant or representative of Signature or Signature Bank,any of the AIM Entities, has received notice (written or oral) or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Signature, Signature Bankthe AIM Entities or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that either Signature or Signature Bankany of the AIM Entities has engaged in questionableimproper accounting or auditing practices, and (ii)(B) no attorney representing either Signature or Signature Bank,any of the AIM Entities, whether or not employed by Signature or Signature Bank,such AIM Entity, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by either Signature or Signature Bankany of the AIM Entities or its respective officers, directors, members, employees or agents to the Board of Directors of Signature or Signature Bankany of the AIM Entities or other any committee thereof or, to the Knowledge of Signature,AIM, to any officer or director of Signature or Signature Bank.any of the AIM Entities.
(d)Since January 1, 2007, the The minute books and stock or equity records of each of Signature and Signature Bank,the AIM Entities, all of which have been made available to Heartland, except to the extent restricted by applicable Law, are correct in all material respects. Since January 1, 2007, theThe minute books of each Signature and Signature Bankof the AIM Entities contain accurate records of all meetings held and actions taken by the holders of stock or other equity interests, the Boards of Directors and committees of the Boards of Directors of each of Signature and Signature Bankthe AIM Entities (except to the extent minutes have not yet been approved or finalized by such Boards of Directors or committees), and no meeting of any such holders, Boards of Directors or committees has been held for which minutes are not contained in such minute books (except to the extent such minutes have not been approved or finalized by such Boards of Directors or other or committees). AtAs of the Closing,Effective Time, all such books and records will be in the possession of Signature.AimBank.
B-26
that, taken individually or as a whole and together with any other events, occurrences and developments with respect to such business, has had, or would reasonably be expected to have, a Material Adverse Effect on Signaturethe AIM Entities or materially adversely affect the consummation of the transactions contemplated hereby. Except with respect to the transactions contemplated hereby, since the date of the Latest Balance Sheets, each of the AIM Entities has conducted its business only in the Ordinary Course of Business.
(a)issued or sold any of its equity securities, membership units, securities convertible into or exchangeable for its equity securities, warrants, options or other rights to acquire its equity securities or membership units, or any bonds or other securities, except deposit and other bank obligations and investment securities in the Ordinary Course of Business;
(b)redeemed, purchased, acquired or offered to acquire, directly or indirectly, any shares of its capital stock, membership units or other securities;
(c)split, combined or reclassified any of its outstanding shares of capital stock or declared, set aside or paid any dividends or other distribution payable in cash, property or otherwise with respect to any shares of capital stock or other securities of Signature or Signature Bank;any AIM Entity;
(d)incurred any Liability, whether due or to become due, other than in the Ordinary Course of Business and, in the case of Signature Bank,AimBank, consistent with safe and sound banking practices;
(e)discharged or satisfied any Encumbrance or paid any Liability other than in the Ordinary Course of Business and, in the case of Signature Bank,AimBank, consistent with safe and sound banking practices;
(f)mortgaged or subjected to Encumbrance any of its property, business or assets, tangible or intangible except (i) for Permitted Encumbrances, and (ii) for pledges of assets to secure public funds deposits;
(g)sold, transferred or otherwise disposed of any of its assets or canceled any material Indebtedness or claims or waived any rights of material value, other than those assets sold, transferred or otherwise disposed of for fair value in the Ordinary Course of Business and consistent with prudent banking practices;Business;
(h)suffered any theft, damage, destruction or loss of or to any property or properties owned or used by it, whether or not covered by insurance, which would, individually or in the aggregate, have a Material Adverse Effect on Signature;the AIM Entities;
(i)made or granted any bonus or any wage, salary or compensation increase or severance or termination payment to, or promoted, any director, officer, employee, group of employees or consultant, entered into any employment contract or hired any employee, in each case, other than in the Ordinary Course of Business;
(j)made or granted any increase in the benefits payable under any employee benefit plan or arrangement, amended or terminated any existing employee benefit plan or arrangement or adopted any new employee benefit plan or arrangement, except as required by Law;
(k)made any single or group of related capital expenditures or commitments therefor in excess of $50,000$75,000 or entered into any lease or group of related leases with the same party which involves aggregate lease payments payable of more than $50,000$75,000 for any individual lease or involves more than $50,000$100,000 for any group of related leases in the aggregate;
(l)acquired (by merger, exchange, consolidation, acquisition of stock or assets or otherwise) any corporation, limited liability company, partnership, joint venture or other business organization or division or material assets thereof, or assets or deposits that are material to either Signatureany of the AIM Entities;
(m) taken any other action or Signature Bank;entered into any other transaction other than in the Ordinary Course of Business;
B-27
(n) made any change in its accounting methods or practices, other than changes required by Law made in accordance with GAAP or the Regulatory Accounting Principles;regulatory accounting principles generally applicable to depository institutions such as AimBank; or
(a)Neither Signature nor Signature Bank own any The real property (other than OREO). The only real propertyproperties owned by, or demised by a lease to, Signature or Signature Bank isany AIM Entity are listed on Schedule 4.15(a) 4.16(a)(the “Leased Operating Real Property”), and constitutesconstitute all of the real property owned, leased (whether or not occupied and including any leases assigned or leased premises sublet for which Signature or Signature Bankany AIM Entity remains liable), owned, used or occupied by Signature or Signature Bank.any AIM Entity.
(b) Each AIM Entity owns good and marketable title to each parcel of real property identified on Schedule 4.16(a) as being owned by such AIM Entity (the “Owned Real Property”), free and clear of any Encumbrance except for Permitted Encumbrances.
the operation of the business at that location. To the Knowledge of Signature, theThe zoning for the Leasedeach parcel of Operating Real Property permits the existing improvements and the continuation of the business being conducted thereon as a conforming use. Neither Signature nor Signature BankNone of the AIM Entities is in violation of any applicable zoning ordinance or other Law relating to the Owned Real Property or, to the Knowledge of AIM, the Leased Real Property. None of the AIM Entities has received any written or oral notice of any such violation of the zoning code or the existence of any condemnation or other proceeding with respect to any of the Leased Operating Real Property. ToThe buildings and other improvements are located within the Knowledgeboundary lines of Signature, thereeach parcel of Operating Real Property, and do not encroach over applicable setback lines. There are no improvements contemplated to be made by any Governmental Entity, the costs of which are to be assessed as assessments, special assessments, special Taxes or charges against any of the Owned Real Property or, to the Knowledge of AIM, any of the Leased Operating Real Property.
B-28
fixtures, furniture, personal property, land improvements and equipment necessary for the conduct of its business as it is presently being conducted.
(g) Schedule 4.16(g) lists all lease agreements pursuant to which any AIM Entity leases Real Property to any Person other than an AIM Entity. Each such lease agreement is in full force and effect.
(a)Signature and Signature Bank each Each of the AIM Entities owns or possesses valid and binding licenses and other rights to use all Intellectual Property that is listed and described in Schedule 4.164.17 (other than commercially available “shrink wrap” or “click wrap” licenses), and neither Signature nor Signature Banknone of the AIM Entities has received any written notice of conflict or allegation of invalidity with respect thereto that asserts the right of others. Signature and Signature Bank eachEach of the AIM Entities owns or has a valid right to use the Intellectual Property, free and clear of all liens (except any restrictions set forth in Contracts relating to any licensed Intellectual Property), and has performed all the obligations required to be performed by it and is not in default under any Contract relating to any of the foregoing. To the Knowledge of Signature, suchAIM, the Intellectual Property is valid and enforceable.
(b)(i) Signature and Signature Bank eachEach of the AIM Entities owns or is validly licensed to use (in each case, free and clear of any liens,Encumbrances, except any restrictions set forth in Contracts relating to any licensed Intellectual Property) all Intellectual Property used in or necessary for the conduct of its business as currently conducted; (ii) except as set forth in Schedule 4.16,to the Knowledge of AIM, the use of any Intellectual Property by Signature and Signature Bankthe AIM Entities and the conduct of their respective businesses as currently conducted does not infringe on or otherwise violate the legal rights of any Person; (iii) to the Knowledge of Signature,AIM, no Person is challenging, infringing on or otherwise violating any right of either Signature or Signature Bankany of the AIM Entities with respect to any Intellectual Property owned by and/or licensed by Signature or Signature Bank;such AIM Entity; and (iv) neither Signature nor Signature Banknone of the AIM Entities has received any written notice of any pending Litigation against Signature or Signature Bankan AIM Entity with respect to any Intellectual Property used by Signature or Signature Bank,such AIM Entity, and, to the Knowledge of Signature,AIM, no facts or events exist that would give rise to any Litigation against either Signature or Signature Bankany of the AIM Entities with respect to Intellectual Property.
(a)As used in this Section 4.17,4.18, the following terms have the following meanings:
(i)“Environmental Costs” means any and all costs and expenditures, including any fees and expenses of attorneys and of environmental consultants or engineers incurred in connection with investigating, defending, remediating or otherwise responding to any Release of Hazardous Materials, any violation or alleged violation of Environmental Law, any fees, fines, penalties or charges associated with any governmental authorization, or any actions necessary to comply with any Environmental Law.
(ii)“Environmental Law” means any Law, governmental authorizationGovernmental Authorization or governmental orderGovernmental Order relating to pollution, contamination, Hazardous Materials or protection of the environment.
(iii)“Hazardous Materials” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any Law relating to such substance or otherwise relating to the environment or human health or safety, including any waste, material, substance, pollutant or contaminant that mightwould reasonably be expected to cause any injury to human health or safety or to the environment or might
would reasonably be expected to subject the owner or operator of the Leased Operating Real Property to any Environmental Costs or Liability under any Environmental Law.
(iv)“List” means the United States Environmental Protection Agency’s National Priorities List of Hazardous Waste Sites or any other list, schedule, log, inventory or record, however defined, maintained by any Governmental Entity with respect to sites from which there has been a Release of Hazardous Materials.
(v)“Regulatory Action” means any litigationLitigation with respect to either Signature or Signature Bankany of the AIM Entities brought or instigated by any Governmental Entity in connection with any Environmental Costs, Release of Hazardous Materials or any Environmental Law.
B-29
(vi)“Release” means the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material.
(vii)“Third-Party Environmental Claim” means any litigation (other than a Regulatory Action) based on negligence, trespass, strict liability, nuisance, toxic tort or any other cause of action or theory relating to any Environmental Costs, Release of Hazardous Materials or any violation of Environmental Law.
(b)No Third-Party Environmental Claim or Regulatory Action is pending or, to the Knowledge of Signature,AIM, threatened against either Signature or Signature Bank.any AIM Entity.
(c)Neither Signature nor Signature Bank has received written notice that None of the Owned Real Property, the Leased Operating Real Property or any OREO held by any AIM Entity is listed on a List.
(d)All transfer, transportation or disposal of Hazardous Materials by either Signature or Signature Bankany of the AIM Entities to properties not owned, leased or operated by Signature or Signature Banksuch AIM Entity has been in compliance with applicable Environmental Law; and neither Signature nor Signature Banknone of the AIM Entities transported or arranged for the transportation of any Hazardous Materials to any location that is (i) listed on a List, (ii) listed for possible inclusion on any List or (iii) the subject of any Regulatory Action or Third-Party Environmental Claim.
(e) Except as set forth on (e)Schedule 4.18(e)To, to the Knowledge of Signature, the Leased OperatingAIM, no Owned Real Property, OREO or Leased Real Property held by any AIM Entity has neverever been used as a landfill, dump or other disposal, storage, transfer, handling or treatment area for Hazardous Materials, or as a gasoline service station or a facility for selling, dispensing, storing, transferring, disposing or handling petroleum and/or petroleum products.
(f)There has not been any Release of any Hazardous Material by either Signature or Signature Bank,any AIM Entity, or any Person under their respectiveits control, or, to the Knowledge of AIM, by any other Person, on, under, about, from or in connection with the Owned Real Property and any OREO held by any AIM Entity, including the presence of any Hazardous Materials that have come to be located on or under the Owned Real Property or OREO from another location. To the Knowledge of AIM, there has not been any Release of any Hazardous Material by any AIM Entity, or any Person under its control, or, to the Knowledge of AIM, by any other Person, on, under, about, from or in connection with the Leased Real Property, including the presence of any Hazardous Materials that have come to be located on or under the Leased Real Property from another location.
(g) The Operating Real Property and any OREO ownedheld by Signature or Signature Bank.
(h)Signature and Signature Bank each Each of the AIM Entities has obtained all Governmental Authorizations relating to Environmental Laws necessary for the operations of both Signature and Signature Bank,such AIM Entity, and all such Governmental Authorizations relating to the Environmental LawLaws are listed on Schedule 4.17(h)4.18(h). Such Governmental Authorizations relating to the Environmental Law will be valid and in full force and effect upon consummationEach of the transactions contemplated by this Agreement. Signature and Signature Bank eachAIM Entities has filed all material reports and notifications required to be filed under and pursuant to all applicable Environmental Laws.
(i)Neither Signature nor Signature Bank No Encumbrance has received any written notice of an Encumbrance that hasbeen attached or been filed against either Signature or Signature Bankany of the AIM Entities in favor of any Person for (i) any Liability under or violation of any applicable Environmental Law, (ii) any Release of Hazardous Materials or (iii) any imposition of Environmental Costs.
(j) Except as set forth on (j)Schedule 4.18(j)Neither Signature nor Signature Bank has, no Hazardous Materials have been generated, treated, contained, handled, located, used, manufactured, processed, buried, incinerated, deposited or stored Hazardous Materials on, under or about any part of the Leased Operating Real Property or any OREO ownedheld by Signatureany of the AIM Entities, or, Signature Bank.
B-30
(k) To the Knowledge of Signature,AIM, no expenditure will be required in order for Heartland or MBFB&T to comply with any Environmental Law in effect at the time of Closing in connection with the operation or continued operation of the Leased Operating Real Property or any OREO held by any of the AIM Entities in a manner consistent with the present operation thereof.
(a)Since January 1, 2014, Signature and Signature Bank have not received any written or oral notice, of any2017, there has been no unauthorized disclosure of, or access to, any nonpublic personal information of a customer in the possession of Signature or Signature Bankany AIM Entity that couldwould reasonably be expected to result in substantial harm or inconvenience to such customer. ToNone of the KnowledgeAIM Entities has received written notice of Signature, noany facts or circumstances exist that would cause Signature or Signature Bankany AIM Entity to be deemed not to be in satisfactory compliance in any respect with the applicable privacy of customer information requirements contained in any federal and state privacy Laws, including in Title V of the Gramm-Leach-Bliley Act of 1999.
(b)Except as set forth on Schedule 4.19(b), the The records, systems, controls, data and information of Signature and Signature Bankeach AIM Entity are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Signature and Signature Bankthe AIM Entities or their accountantsauthorized representatives (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a Material Adverse Effect on Signature or Signature Bank.the AIM Entities.
(c)All material information technology and computer systems (including software, information technology and telecommunication hardware and other equipment) relating to the transmission, storage, maintenance, organization, presentation, generation, processing or analysis of data and information, whether or not in electronic format, used in or necessary to the conduct of the businesses of each of Signature and Signature Bankthe AIM Entities (collectively, “SignatureAIM IT Systems”) have been properly maintained by technically competent personnel, in accordance with standards set by the manufacturers or otherwise in accordance with standards in the industry, to reasonably ensure proper operation, monitoring and use. The SignatureAIM IT Systems are in good working condition to effectively perform all information technology operations necessary to conduct business as currently conducted. Neither Signature nor Signature BankNone of the AIM Entities has experienced within the past three (3) years any material disruption to, or material interruption in, its conduct of its business attributable to a defect, bug, breakdown or other failure or deficiency of the SignatureAIM IT Systems. Signature and Signature BankThe AIM Entities have taken commercially reasonable measures to provide for the back-up and recovery of the data and information necessary to the conduct of their businesses (including such data and information that is stored on magnetic or optical media in the ordinary course)Ordinary Course of Business) without material disruption to, or material interruption in, the conduct of itstheir respective business. Neither Signature nor Signature BankNone of the AIM Entities is in material breach of any Material Contract related to any SignatureAIM IT Systems.
(a)Signature and Signature Bank each Each of the AIM Entities (i) has timely filed (or has had timely filed on its behalf) each material Return required to be filed or sent by it in respect of any Taxes, each of which was correctly completed and accurately reflected in all material respects any Liability for Taxes of Signature or Signature Bank,the relevant AIM Entity in all material respects, and any Affiliate of such entity, covered by such Return, (ii) timely and properly paid (or had paid on its behalf) all material Taxes due and payable for all Tax periods or portions thereof whether or not shown on such Returns, (iii) established on the books of account of Signature and Signature Bank,the relevant AIM Entity, in accordance with GAAP and consistent with past practices, adequate reserves for the payment of any Taxes not then due and payable and (iv) complied in all material respects with all applicable Laws relating to the withholding of Taxes and the payment thereof in connection with any amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.
B-31
(b) Except as set forth on (b)Schedule 4.21(b)Signature and Signature Bank, each AIM Entity has made (or caused to be made on its behalf) all estimated Tax payments required to have been made to avoid any underpayment penalties.
(c)There are no Encumbrances for Taxes upon any assets of either Signature or Signature Bank,any AIM Entity, except Permitted Encumbrances.
(d)Neither Signature nor Signature Bank No AIM Entity has requested any extension of time within which to file any Return, which Return has not since been filed.
(e)No deficiency for any Taxes has been proposed, asserted or assessed against either Signature or Signature Bankany AIM Entity that has not been resolved and paid in full. No waiver, extension or comparable consent given by either Signature or Signature Bankany AIM Entity regarding the application of the statute of limitations with respect to any Taxes or any Return is outstanding, nor is any request for any such waiver or consent pending. ThereExcept as set forth on Schedule 4.21(e), there has been no Tax audit or other administrative proceeding or court proceeding with regard to any Taxes or any Return of either Signature or Signature Bankany AIM Entity for any Tax year subsequent to the year ended December 31, 2012,2014, nor is any such Tax audit or other proceeding pending, nor has there been any notice, in writing, or by other means to either Signature or Signature Bankthe Knowledge of AIM, to any AIM Entity by any Governmental Entity regarding any such Tax audit or other proceeding, nor ishas any such Tax audit or other proceeding been threatened, in writing, or by other means to the Knowledge of AIM, with regard to any Taxes or Returns. ThereExcept as set forth on Schedule 4.21(e), there are no outstanding subpoenas or requests for information with respect to any of the Returns of either Signature or Signature Bank. Neither Signature nor Signature Bankany AIM Entity. No AIM Entity has entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision under any other Law.
(f) Except as set forth on (f)Schedule 4.21(f)No, no additional material Taxes will be assessed against either Signature or Signature Bankany AIM Entity for any Tax period or portion thereof ending on or prior to the Effective Date that will exceed the estimated reserves for Taxes established by Signature and Signature Bankthe relevant AIM Entity that will be taken into account in determining the Adjusted Tangible Common Equity. There are no unresolved questions, claims or disputes concerning the Liability for Taxes of either Signature or Signature Bank.any AIM Entity.
(g)Schedule 4.20(g)4.21(g) lists all federal, state, local and foreign income Tax Returns filed with respect to Signature and Signature Bankthe AIM Entities for taxable periods ended on or after December 31, 2014, indicates those Returns that have been audited and indicates those Returns that currently are the subject of audit. True and complete copies of the Returns of each of Signature and Signature Bank,AIM Entity, as filed with the IRS and all state or local Tax jurisdictions for the years ended December 31, 2014, 20152016, 2017, 2018 and 20162019 have been delivered to Heartland.
(h)Neither Signature nor Signature Bank No AIM Entity has received notice from a taxing authorityany Liability for Taxes in a jurisdiction where it does not file a Return, nor has any AIM Entity received notice from a taxing authority in such a jurisdiction that it is or may be subject to taxation by that jurisdiction.
(i)Neither Signature nor Signature Bank No AIM Entity is a party to any Contract that would result, separately or in the aggregate, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code, and the consummation of the transactions contemplated by this Agreement will not be a factor causing payments to be made by either Signature or Signature Bankany AIM Entity or any other Person that are not deductible (in whole or in part) as a result of the application of Section 280G of the Code.
(j) No AIM Entity will be required to include in a taxable period ending after the Effective Date taxable income attributable to income that accrued in a taxable period prior to the Effective Date but was not recognized for Tax purposes in such prior taxable period (or to exclude from taxable income in a taxable period ending after the Effective Date any deduction the recognition of which was accelerated from such taxable period to a taxable period prior to the Effective Date) as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting, Code Section 481 or Code Section 108(i) or comparable provisions of state, local or foreign Tax Law, or for any other reason.
B-32
(l) Except for the Tax SharingAllocation Agreement, dated October 15, 2014effective as of January 1, 2018, by and between SignatureAIM and Signature Bank, neither Signature nor Signature BankAimBank, no AIM Entity is a party to any Tax allocation, sharing, indemnity, or reimbursement agreement or arrangement (other than any customary Tax indemnification provisions in ordinary course commercial agreements or other arrangements that are not primarily related to Taxes).
Taxes of any Person (other than Signature or Signature Bank)AIM) under Treasury Regulations Section 1.1502‑61.1502-6 (or any similar provision of Law), as a transferee or successor, by Contract, or otherwise.
(u) Except as set forth on (t)Schedule 4.21(u)There, there is no Contract, plan or arrangement, including this Agreement, pursuant to which any current or former employee of either Signature or Signature Bankany AIM Entity would be entitled to receive any payment as a result of the transactions contemplated by this Agreement that would not be deductible under Section 404 or 162(m) of the Code.
(v) Except as set forth on (u)Schedule 4.21(v)Neither Signature nor Signature Bank, no AIM Entity has been a member of any partnership or joint venture or the holder of a beneficial interest in any trust for any period for which the statute of limitations for any Taxes potentially applicable as a result of such membership or holding has not expired.
B-33
under Section 279 of the Code or (ii) an “applicable high yield discount obligation” under Section 163(i) of the Code, and none of the interest on any such indebtedness will be disallowed as a deduction under any other provision of the Code.
(bb) AIM revoked its election to be an “S corporation” in accordance with the requirements of Section 1362(d)(1) of the Code and Treasury Regulations Section 1.1362-2(a), effective as of January 1, 2018. AIM has been properly treated as a “C corporation” for federal, state and local income Tax purposes for all periods on orand after January 15, 2007.1, 2018.
(ee) The Statutory Trust is, and has been at all times since its inception, a grantor trust under subpart E, Part I of subchapter J of the Code, and not an association or publicly traded partnership taxable as a corporation. All of the AIM Entities have, at all relevant times since the formation of the Statutory Trust, treated the Statutory Trust as a grantor trust for all U.S. federal, state and local Tax purposes. The Statutory Trust has timely filed (or has had timely filed on its behalf) each Return required to be filed or sent by it in respect of any Taxes, each of which was correctly completed and accurately reflected Liability for Taxes (if any) of the Statutory Trust in all material respects. At all times since the issuance of the Statutory Trust Securities that are Capital Securities of the Statutory Trust, the principal amounts, interest and other amounts due and payable on such Capital Securities have been paid in accordance with the terms of the relevant Statutory Trust Indenture and other applicable agreements, without any deferral of interest thereon.
(ff) No AIM Entity has elected to defer any Taxes, including the employer-portion of any payroll Tax for which Heartland, FB&T and their Subsidiaries or any AIM Entity will have future Tax Liability under the CARES Act.
(gg) Except as set forth on Schedule 4.21(gg), no AIM Entity has received or claimed any Tax credits under Section 2301 of the CARES Act. To the extent applicable, each AIM Entity has materially complied
B-34
with all legal requirements and duly accounted for any available Tax credits under Sections 7001 through 7005 of the Families First Act.
(hh) No AIM Entity has filed any amended Return or other claim for a refund as a result of, or in connection with, the carry back of any net operating loss or other attribute to a year prior to the taxable year including the Closing Date under Section 172 of the Code, as amended by Section 2303 of the CARES Act, or any corresponding or similar provision of any other Law.
(a)Schedule 4.21(a)4.22(a) lists the following Contracts to which either Signature or Signature Bankany of the AIM Entities is a party or subject or by which it is bound (such Contracts required to be listed on Schedule 4.21(a)4.22(a), the “Material Contracts”):
(i)any employment, agency, collective bargaining Contract or consulting or independent contractor Contract;
(ii)any written or oral Contract relating to any severance pay for any Person;
(iii)any written or oral Contract with any director, officer, or employee of Signature or Signature Bank creating, modifying, memorializing or otherwise related to any obligation of either Signature or Signature Bankany of the AIM Entities upon a change of control;
(iv)any Contract to repurchase assets previously sold (or to indemnify or otherwise compensate the purchaser in respect of such assets), except for securities sold under a repurchase agreement providing for a repurchase date 30 days or less after the purchase date;
(v)any (A) contract or group of related contracts with the same party for the purchase or sale of products or services, under which the undelivered balance of such products and services has a purchase price in excess of $50,000$75,000 for any individual contract or $100,000$150,000 for any group of related contracts in the aggregate, or (B) other contract or group of related contracts with the same party continuing over a period of more than six months from the date or dates thereof, which is not entered into in the Ordinary Course of Business and is either not terminable by it on 30 days’ or less notice without penalty or involves more than $50,000$75,000 for any individual contract or $100,000$150,000 in the aggregate for any group of related contracts;
(vi)any Contract containing exclusivity, noncompetition or nonsolicitation provisions or that would otherwise prohibit either Signature or Signature Bankany AIM Entity from freely engaging in business anywhere in the world or prohibiting the solicitation of the employees or contractors of any other entity;
(vii)any stock purchase, stock option, restricted stock or restricted stock unit or stock incentive plan;
(viii)any Contract for capital expenditures in excess of $50,000;$75,000;
(ix)any partnership agreement, joint venture agreement, limited liability company agreement, agreement among shareholders, investor rights agreement or other similar Contract or arrangement;
(x)any Contract with a Governmental Entity;
(xi)any Contract pursuant to which either Signature or Signature Bankany AIM Entity grants or makes available, or is granted or receives, any license, or other right requiring an expenditure in excess of $100,000 annually, with respect to any material Intellectual Property in each case that is reasonably necessary to operate the businesses of Signature and Signature Bankthe AIM Entities in the Ordinary Course of Business consistent, in the case of Signature Bank,AimBank, with safe and sound banking practices (other than non-exclusive licenses to commercially available software);
(xii)any Contract relating to Indebtedness of more than $50,000$200,000 of either Signature or Signature Bankany AIM Entity (other than, in the case of Signature Bank,AimBank, deposit agreements:agreements or repurchase agreements (A) entered into in the Ordinary Course of Business consistent with safe and sound banking practices and on the same terms as those contained in the standard deposit agreement of Signature Bank;AimBank, and (B) evidencing deposit Liabilities of Signature Bank)AimBank);
(xiii)any Contract with an indemnity obligation of Signature or Signature Bank that could result in Liability to Signature or Signature Bank in excess of $50,000;
B-35
(xiv) any other Contract material to the businesses of Signature and Signature Bank,the AIM Entities, taken as a whole, which wasis not entered into in the Ordinary Course of Business.
(b)Except as disclosed on Schedule 4.21(b), (i) each Each of Signature and Signature Bankthe AIM Entities has performed all material obligations required to be performed by it prior to the date hereof in connection with the Contracts or commitments set forth on Schedule 4.21(a)4.22(a), and neither Signature nor Signature Banknone of the AIM Entities is in receipt of any written claim of default under any Contract or commitment set forth on Schedule 4.21(a)4.22(a), except for any failures to perform, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect on Signature and Signature Bankthe AIM Entities or materially adversely affect the consummation of the transactions contemplated hereby; (ii) neither Signature nor Signature Bankhereby. None of the AIM Entities has any present expectation or intention of not fully performing any material obligation pursuant to any Contract or commitment set forth on Schedule 4.21(a)4.22(a); and (iii) to. To the Knowledge of Signature,AIM, there has been no cancellation, breach or anticipated breach by any other party to any Contract or commitment set forth on Schedule 4.21(a)4.22(a), except for any cancellation, breach or anticipated breach which would not, individually or in the aggregate, have a Material Adverse Effect on Signature and Signature Bank,the AIM Entities, or materially adversely affect the consummation of the transactions contemplated hereby.
(a) Schedule 4.25(a) lists, as of Signature and Signature Bank.
any other compensation arrangement (including compensation payable or for which such employee may be eligible pursuant to bonus, incentive, deferred compensation or commission arrangements), (vii) the number of hours of PTO, vacation time, and/or sick time that the employee has accrued as of the date hereof and the aggregate dollar amount thereof, (viii) the date of commencement of the employee’s employment, (ix) the employee’s position and/or title, (x) whether such employee is or will be as of the Effective Time on a leave of absence, including any protected leave under federal or state Law, and (x)the amount of paid leave provided to the employee by any of the AIM Entities under the Families First Act, and (xi) whether such employee has any written or oral Contract with Signature or Signature Bankany of the AIM Entities or otherwise is other than an employee at-will. To the Knowledge of Signature, and except as set forth in Schedule 4.24(a),AIM, no executive or managerial employee of either Signature or Signature Bankany of the AIM Entities and no significant group of employees of eitherany of Signature or Signature Bankthe AIM Entities has any plans to terminate his, her or their employment.
(b)Each of Signature and Signature Bank eachthe AIM Entities has materially complied in all material respects with all applicable Laws relating to employment and employment practices and/or the engagement of independent contractors, including but not limited to those Laws relating to the classification of employees as exempt or non-exempt employees or the classification of workers as independent contractors, calculation and payment of wages (including overtime pay, maximum hours of work and child labor restrictions), equal employment opportunity (including Laws prohibiting discrimination and/or harassment or requiring accommodation on the basis of race, color, national origin, religion, gender, disability, age, sexual orientation or any other protected characteristic under any federal, state or local Law), protected leaves of absence (including leave under the Family Medical Leave Act)Act, the Families First Act or other Laws), the protection of whistleblowers, affirmative action and other hiring practices, immigration, occupational safety and health, workers compensation, unemployment
B-36
insurance, the payment of social security and other Taxes, the protection of confidential information, and/or unfair labor practices under the National Labor Relations Act or applicable state Law, and, Signature is not awareto the Knowledge of anyAIM, there are no facts which would constitute a violation of any applicable Law relating to employment and employment practices and/or the engagement of independent contractors. Without limiting the generality of the foregoing, each AIM Entity is in compliance in all material respects with Laws relating to the COVID-19 pandemic, including applicable state health department requirements relating to COVID-19.
(c)To the Knowledge of Signature, except as set forth on Schedule 4.24(c),AIM, no employee of either Signature or Signature Bankany AIM Entity is subject to any secrecy or noncompetition agreement or any other Contract or restriction of any kind that would impede in any way the ability of such employee to carry out fully all activities of such employee in furtherance of the businessbusinesses of either of Signature or Signature Bankany AIM Entity as currently conducted.
(d)Schedule 4.24(d) lists each employee There are no employees of each of Signature and Signature Bankany AIM Entities who, as of the date of this Agreement, who holdshold a temporary work authorization, including H‑1B, L‑1, F‑1H-1B, L-1, F-1 or J‑1J-1 visas or work authorizations (the “Work Permits”), and shows for each such employee the typeauthorizations.
(e) The employment of Work Permit and the length of time remaining on such Work Permit. With respect to each Work Permit, and to the Knowledge of Signature, all of the information that either Signature or Signature Bank provided to the Department of Labor and the Immigration and Naturalization Service or the Department of Homeland Security (collectively, the “Departments”) in the application for such Work Permit was true and complete. Signature and Signature Bank each received the appropriate notice of approval from the Departments with respect to each such Work Permit. Neither Signature nor Signature Bank has received any written notice from the Department that any Work Permit has been revoked. To the Knowledge of Signature, there is no action pending or threatened to revoke or adversely modify the termsemployees of any of the Work Permit. To the Knowledge of Signature, except as set forth in Schedule 4.24(a)4(d), no employee of either of Signature or Signature Bank is (a) a non-immigrant employee whose status would terminate or otherwise be affected by the transactions contemplated by this Agreement, or (b) an alien who is authorized to work in the United States in non-immigrant status. For each employee of either Signature or Signature Bank hired after November 6, 1986, Signature or Signature Bank has retained an Immigration and Naturalization Service Form I‑9, completed in accordance with applicable Law.
(f)Neither Signature nor Signature Bank None of the AIM Entities is subject to any outstanding Governmental Order requiring any action with respect to or related to the employment of any employees, or the engagement of any independent contractors or consultants, including any temporary, preliminary or permanent injunction.
(g)All loans that Signature or Signature Bank haveany AIM Entity has outstanding to any employeeof its employees were made in the Ordinary Course of Business on the same terms as would have been provided to a Person not Affiliated with Signature or Signature Bank,such AIM Entity, and all such loans with a principal balance exceeding $100,000, or that are nonaccrual or on Signature Bank’sthe watch list of any AIM Entity, are set forth in Schedule 4.24(g)4.25(g).
(h)No employee of Signature or Signature Bankany AIM Entity is covered by any collective bargaining agreement, and no collective bargaining agreement is being negotiated. Within the last five years, neither Signature nor Signature Banknone of the AIM Entities has experienced and, to the Knowledge of Signature,AIM, there has not been threatened, any strike, work stoppage, slowdown, lockout, picketing, leafleting, boycott, other labor dispute, union organization attempt, demand for recognition from a labor organization or petition for representation under the National Labor Relations Act or applicable state Law. No grievance, demand for arbitration or arbitration proceeding arising out of or under any collective bargaining agreement is pending or, to the Knowledge of Signature,AIM, threatened.
(i)No Litigation is pending or, to the Knowledge of Signature,AIM, threatened respecting or involvingbetween any AIM Entity and any applicant for employment with Signature or Signature Bankof such AIM Entity or any of its current employee or any former employee, anyemployees, independent contractorcontractors or consultant of Signature or Signature Bank,consultants, or any class or collective of any of the foregoing, including any Litigation in or before:
(i)any federal or state court;
(ii)the Equal Employment Opportunity Commission or any corresponding state or local fair employment practices agency relating to any claim or charge of discrimination or harassment in employment;
(iii)the United States Department of Labor or any corresponding state or local agency relating to any claim or charge concerning hours of work, wages or employment practices;
(iv)the Occupational Safety and Health Administration or any corresponding state or local agency relating to any claim or charge concerning employee safety or health;
(v)the Office of Federal Contract Compliance or any corresponding state agency;
(vi)the IRS or any corresponding state agency;
B-37
(vii)the National Labor Relations Board or any corresponding state agency, whether relating to any unfair labor practice or any question concerning representation; and/or
(viii)any MinnesotaTexas or other state Governmental Entity.
Entity;
and, to the Knowledge of Signature,AIM, there are no facts that would form a reasonable basis for any such Litigation.
(j)Signature Each of the AIM Entities has correctly classified its current and Signature Bank each properly has classified all Signatureformer employees (collectively, the “AIM Employees”) as exempt or non-exempt for purposes ofin compliance with the Fair Labor Standards Act and/or any corresponding state Law.
(k)Except as set forth on Schedule 4.24(k), Signature and Signature Bank each properly Each of the AIM Entities has classified all independent contractors for purposes ofin compliance with the Fair Labor Standards Act and/or any corresponding state Law.
(l)Signature and Signature Bank each Each of the AIM Entities has paid in full to all SignatureAIM Employees all wages, salaries, bonuses and commissions due and payable to such employees under any contract or Law, and except as set forth on Schedule 4.24(l), has fully reserved in its books of account all amounts for wages, salaries, bonuses and commissions due but not yet payable to such employees, and has withheld and paid all material amounts required by Law to be withheld and paid from the compensation paid to SignatureAIM Employees, as Taxes or otherwise, and it not liable for any material arrears of wages or Taxes or any material penalties for failure to comply with the foregoing.
(m)There has been no lay-off of employees or work reduction program undertaken by or on behalf of Signature or Signature Bankany AIM Entity in the past two years, including any termination program for purposes of the Age Discrimination in Employment Act or any plant closing or mass layoff for purposes of the WARN Act, and no such program has been adopted by Signature or Signature Bankany AIM Entity or been publicly announced.
(n)Signature and Signature Bank each Each of the AIM Entities properly has maintained all insurance related to the employment of any SignatureAIM Employee, including workers’ compensation and unemployment insurance coverage, to the extent required by any Law. There are no workers’ compensation or unemployment claims pending against Signature or Signature Bankany of the AIM Entities or, to the Knowledge of Signature,AIM, any facts that would reasonably give rise to such a claim, that are not fully covered by insurance indemnity with respect to the amount of such claims.
(o)Except as set forth on Schedule 4.24(o)4.25(o), tonone of the Knowledge of Signature, neither Signature nor Signature BankAIM Entities is under any obligation related to the garnishment of wages for any Signature Employee.of its employees as of the date of this Agreement.
(p)Signature and Signature Bank each Each of the AIM Entities has implemented commercially reasonable policies and practices for the protection of confidential and proprietary business information, including intellectual property, and has required each SignatureAIM Employee who has or reasonably could have been expected to have access to confidential or proprietary business information of Signatureany of the AIM Entities to acknowledge and Signature Bankagree in writing to execute commercially reasonable Contracts requiringcomply with policies of the AIM Entities regarding the protection of anyall such confidential and proprietary business information of either of Signature or Signature Bank.(which policies AIM believes are reasonable and customary in the banking industry).
(a)Schedule 4.25(a)4.26(a) sets forth all Plans by name and brief description identifying: (i) the type of Plan, (ii) the funding arrangements for the Plan, (iii) the sponsorship of the Plan, (iv) the participating employers in the Plan, and (v) any one or more of the following characteristics that may apply to such Plan: (A) defined contribution plan as defined in Section 3(34) of ERISA or Section 414(i) of the Code, (B) defined benefit plan as defined in Section 3(35) of ERISA or Section 414(j) of the Code, (C) Plan that is or is intended to be Tax qualified under Section 401(a) or 403(a) of the Code, (D) Plan that is or is intended to be an employee stock ownership plan as defined in Section 4975(e)(7) of the Code (and whether or not such Plan has entered into an exempt loan), (E) nonqualified deferred compensation arrangement, (F) employee welfare benefit plan as defined in Section 3(1) of ERISA, (G) multiemployer plan as defined in Section 3(37) of ERISA or Section 414(f) of the Code, (H) multiple employer plan maintained by more than one employer as defined in Section 413(c) of the Code, (I) Plan providing benefits after separation from service or termination of employment, (J) Plan that owns any SignatureAIM or other employer securities as an investment, (K) Plan that provides benefits (or provides increased benefits or vesting) as a result of a change in control of Signature,any AIM Entity, (L) Plan that is maintained pursuant to collective bargaining and (M) Plan that is funded, in whole or in part, through a voluntary employees’ beneficiary association exempt from Tax under Section 501(c)(9) of the Code.
B-38
(b)Schedule 4.25(b) sets forth Other than as relates to the identity of eachAIM Entities, there is no corporation, trade or business (separately for each category below that applies): (i) which is (or was during the preceding five years) under common control with Signature and Signature Bankany of the AIM Entities within the meaning of Section 414(b) or (c) of the Code; (ii) which is (or was during the preceding five years) in an affiliated service group with Signature and Signature Bankany of the AIM Entities within the meaning of Section 414(m) of the Code; (iii) which is (or was during the preceding five years) the legal employer of Persons providing services to Signature or Signature Bankany of the AIM Entities as leased employees within the meaning of Section 414(n) of the Code; and (iv) with respect to which Signature or Signature Bankany of the AIM Entities is a successor employer for purposes of group health or other welfare plan continuation rights (including Section 601 et. seq. of ERISA) or the Family and Medical Leave Act.
(c)Signature AIM or AimBank has made available to Heartland true and complete copies of:of, where applicable: (i) the most recent determination letter, if any, received by Signature and Signature Bankany AIM Entity from the IRS regarding each Plan; (ii) the most recent determination or opinion letter ruling, if any, from the IRS that each trust established in connection with plansPlans which are intended to be tax exempt under Section 501(a) or (c) of the Code are so tax exempt; (iii) all pending applications, if any, for rulings, determinations, opinions, no-action letters and the like filed with any governmental agency (including the DepartmentsDepartment of Labor, IRS, Pension Benefit Guaranty Corporation and the SEC); (iv) the financial statements for each Plan for the three most recent fiscal or Plan years (in audited form if required by ERISA) and, where applicable, Annual Report/Return (Form 5500) with schedules, if any, and attachments for each Plan; (v) the most recently prepared actuarial valuation report for each Plan (including reports prepared for funding, deduction and financial accounting purposes); (vi) plan documents, trust agreements, insurance contracts, service agreements and all related Contracts and material documents (including any employee summaries and material employee communications) with respect to each Plan, if any; and (vii) collective bargaining agreements (including side agreements and letter agreements) relating to the establishment, maintenance, funding and operation of any Plan, if any.
(d)Schedule 4.25(d)4.26(d) identifies each employee of Signature or Signature Bankthe AIM Entities who is: (i) absent from active employment due to short or long term disability; (ii) absent from active employment on a leave pursuant to the Family and Medical Leave Act or a comparable state Law; (iii) absent from active employment on any other leave or approved absence; (iv) absent from active employment due to military service (under conditions that give the employee rights to re-employment); or (v) not an “at will” employee.
(e)With respect to continuation rights arising under federal or state Law as applied to Plans that are group health plans (as defined in Section 601 et. seq. of ERISA), Schedule 4.25(e)4.26(e) identifies: (i) each employee, former employeeAIM Employee or qualifying beneficiary who has elected continuation; and (ii) each employee, former employeeAIM Employee or qualifying beneficiary who has not elected continuation coverage but is still within the period in which such election may be made.
(f)(i) All Plans intended to be Tax qualified under Section 401(a) or Section 403(a) of the Code have received a determination, opinion or advisory letter stating that they are so qualified, and, as a result,qualified; (ii) all trusts established in connection with Plans which are intended to be tax exempt under Section 501(a) or (c) of the Code; (ii)Code have received a determination, opinion or advisory letter stating that they are so tax exempt; (iii) to the extent required either as a matter of Law or to obtain the intended tax treatment and tax benefits, all Plans comply in all material respects with the requirements of ERISA and the Code; (iii)(iv) all Plans have been maintained and administered (both in form and operation) materially in accordance with the documents and instruments governing the Plans and theapplicable Law; (iv)(v) all reports and filings with governmental agencies (including the DepartmentsDepartment of Labor, IRS, Pension Benefit Guaranty Corporation and the SEC) required in connection with each Plan have been timely made; (v)(vi) all disclosures and notices required by Law or Plan provisions to be given to participants and beneficiaries in connection with each Plan have been properly and timely made in all material respects; and (vi)(vii) each of Signature and Signature Bankthe AIM Entities has made a good faith effort to comply with the reporting and taxation requirements for FICA Taxes with respect to any deferred compensation arrangements under Section 3121(v) of the Code.
(g)Except as disclosed on Schedule 4.25(g):
(i)all All contributions, premium payments and other payments required to be made in connection with the Plans have been timely made in accordance with applicable Law;
Law, (ii)a proper accrual has been made on the books of account of Signature or Signature Bankeach of the AIM Entities for all contributions, premium payments and other payments due in the current fiscal year;
year, (iii)no contribution, premium payment or other payment has been made in support of any Plan that is in excess of the allowable deduction for federal income Tax
B-39
purposes for the year with respect to which the contribution was made (whether under Section 162, Section 280G, Section 404, Section 419 or Section 419A of the Code or otherwise);
(v)to the Knowledge of Signature, neither Signature nor Signature BankAIM, none of the AIM Entities has any actual or potential Liability arising under Title IV of ERISA as a result of any Plan that has terminated or is in the process of terminating.
(h)Except as disclosed on Schedule 4.25(h)4.26(h):
(i)no action, suit, charge, complaint, proceeding, hearing, investigation or claim is pending with regard to any Plan other than routine uncontested claims for benefits;
(ii)the consummation of the transactions contemplated by this Agreement will not cause any Plan to increase benefits payable to any participant or beneficiary except to the extent full vesting is required by the Code or ERISA upon the termination of any Plan intended to be Tax qualified under Section 401(a) of the Code;beneficiary;
(iii)the consummation of the transactions contemplated by this Agreement will not: (A) entitle any SignatureAIM Employee to severance pay, unemployment compensation or any other payment, benefit or award, or (B) accelerate or modify the time of payment or vesting, or increase the amount of any benefit, award or compensation due any such employee;
(iv)Neither Signature nor Signature Bank none of the AIM Entities has been notified that any Plan is currently under examination or audit by the DepartmentsDepartment of Labor, the IRS, the Pension Benefit Guaranty Corporation or the SEC;
(v)to the Knowledge of Signature, neither Signature nor Signature BankAIM, none of the AIM Entities has any actual or potential Liability under Section 4201 et. seq. of ERISA for either a complete withdrawal or a partial withdrawal from a multiemployer plan; and
(vi)with respect to the Plans, to the Knowledge of Signature, neither Signature nor Signature BankAIM, none of the AIM Entities has any material Liability (either directly or as a result of indemnification) for (and the transaction contemplated by this Agreement will not cause any Liability for): (A) any excise Taxes under Section 4971 through Section 4980B, Section 4999, Section 5000 or any other section of the Code, or (B) any penalty under Section 502(i), Section 502(l), Part 6 of Title I or any other provision of ERISA, or (C) any excise Taxes, penalties, damages or equitable relief as a result of any prohibited transaction, breach of fiduciary duty or other violation under ERISA or any other applicable Law.
(i)Except as disclosed on Schedule 4.25(i)4.26(i):
(i)all accruals required under FAS 106 and FAS 112 have been properly accrued on the financial statements of each of Signature and Signature Bank;the AIM Entities;
(ii)no condition, Contract or Plan provision limits the right of Signature or Signature Bankany of the AIM Entities to amend, cut back or terminate any Plan (except to the extent such limitation arises under ERISA or the Code); and
(iii)neither Signature nor Signature Bank none of the AIM Entities has any liability for life insurance, death or medical benefits after separation from employment other than:than (A) death benefits under the Plans identified on Schedule 4.25(i)4.26(i), or (B) health care continuation benefits described in Section 4980B of the Code.
(j)Each Plan, or other nonqualified deferred compensation plan of Signature and Signature Bank,any of the AIM Entities, that is subject to Section 409A of the Code has been designed and has been administered in all material respects in compliance with Section 409A and the Treasury Regulations thereunder.
(k)Each Plan that is also a “group health plan” for purposes of the Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148) and the Health Care and Education Reconciliation Act of 2010 (Pub. L. No. 111-152) (collectively, the “Affordable Care Act”) is in material compliance with the applicable terms of the Affordable Care Act. Each of Signature and Signature Bankthe AIM Entities and each Commonly Controlled Entity offer minimum essential health coverage, satisfying affordability and minimum value requirements, to their full time employees (as defined by the Affordable Care Act) sufficient to prevent liability for assessable payments under Sections 4980H(a) and 4980H(b) of the Code. Each Plan that is also a “group health plan” under the Affordable Care Act is operated in material compliance with:
(i)market reform mandates set forth under Public Health Services Act Sections 2701 through 2709 and Sections 2711 through 2719A;
B-40
(ii)fees and reporting requirements for Patient-Centered Outcomes Research under Code Section 4376 and applicable regulations and transitional reinsurance under 45 C.F.R. Sections 153.10 through 153.420;
(iii)income exclusion provisions under Code Sections 105, 106 and 125;
(iv)information reporting rules as set forth under Sections 6051(a)(14), 6055 and 6056 of the Code; and
(v)standards for electronic transactions and operating rules under Sections 1171 and 1173 of the Social Security Act.
4.27 KSOP Trustees.4.26 The Persons set forth on KSOP Trustees; Plan AdministratorSchedule 4.27. Brooks and Syverson are the duly appointed trustees of the KSOP (collectively, the “KSOP Trustees,”), with the power and authority to act (a) on behalf of the KSOP (b)(a) as fiduciariesfiduciary of the KSOP in the manner described in Section 3(21)(A) of ERISA and (c)(b) on behalf of the KSOP to the extent specified in the KSOP and any related trust or other documents. The Plan Administrator (as defined in Section 2.42 of the KSOP) is Signature.
(a) Except as set forth on (a)Schedule 4.30(a)Signature and Signature Bank, each of the AIM Entities is, and at all times since January 1, 20132015 has been, in compliance in all material respects with all Laws, Governmental Orders or Governmental Authorizations, including (to the extent applicable) the Bank Holding Company Act, the FDIA, the Occupational Safety and Health Act of 1970, the Home Owners Loan Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act of 1975, the Fair Housing Act, the Equal Credit Opportunity Act and the Federal Reserve Act, each as amended, and any other applicable Governmental Order or Governmental Authorization regulating or otherwise affecting bank holding companies, banks, banking and banking;mortgage lending; and no claims have been filed by any Governmental Entity against either Signature or Signature Bankany AIM Entity alleging such a violation of any such Law which have not been resolved.resolved to the satisfaction of such Governmental Entity.
(b)Since January 1, 2013, neither Signature nor Signature Bank2015, none of the AIM Entities has been advised of, and neither AIM nor AimBank has any reason to the Knowledge of Signature, nobelieve that, any facts or circumstances exist that could reasonably be expected to cause Signature or Signature Bankany AIM Entity to be deemed to be operating its business in violation of any provision of the Bank Secrecy Act, the USA PATRIOT Act of 2001 or any Governmental Order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering Law or Governmental Order issued with respect to economic sanctions programs by the U.S. Department of the Treasury’s Office of Foreign Assets Control.
(c)Since January 1, 2013,2015, each of Signature and Signature Bankthe AIM Entities has held all material Governmental Authorizations required for the conduct of its business.business, except where the failure to hold any such Governmental Authorization would not have a Material Adverse Effect on any AIM Entity.
B-41
(d)Neither Signature nor Signature Bank nor None of the AIM Entities or any of their respective properties is a party to or is subject to any order, decree, directive, agreement or memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from any Bank Regulator, nor has Signature or Signature Bankany of the AIM Entities adopted any policies, procedures or board resolutions at the request or suggestion of, any Bank Regulator. Signature and Signature BankThe AIM Entities have paid all assessments made or imposed by any Bank Regulator.
(e)Neither Signature nor Signature Bank None of the AIM Entities has been advised by, nor, does it haveto the Knowledge of AIM, do any knowledge of facts exist which couldwould reasonably be expected to give rise to an advisory notice by, any Bank Regulator that such Bank Regulator is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, directive, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission or any request for the adoption of any policy, procedure or board resolution.
(f)(i) No Governmental Entity has initiated since December 31, 20132015 or has pending any proceeding, enforcement action or, to the Knowledge of Signature,AIM, investigation or inquiry into the business, operations, policies, practices or disclosures of either Signature or Signature Bankany of the AIM Entities (other than normal examinations conducted by a Bank Regulator in the Ordinary Course of the Business of Signature and Signature Bank)such AIM Entity), or, to the Knowledge of Signature,AIM, threatened any of the foregoing, and (ii) there is no unresolved violation, criticism, comment or exception
by any Bank Regulator with respect to any report or statement relating to any examinations or inspections of Signature or Signature Bank.any of the AIM Entities.
(a)Schedule 4.314.32 sets forth a true, correct and complete list of all interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which Signature or Signature Bankany AIM Entity is a party or by which any of theirits properties or assets may be bound. SignatureAIM has delivered to Heartland true, correct and complete copies of all such interest rate risk management agreements and arrangements.
(b)All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which Signature or Signature Bankany of the AIM Entities is a party or by which any of theirits properties or assets may be bound were entered into in the Ordinary Course of Business and in accordance in all material respects with prudent banking practice and applicable rules, regulations and policies of Bank Regulators and with counterparties believed to be financially responsible at the time, and are legal, valid and binding obligations enforceable in accordance with their terms (except as may be limited by Remedies Exceptions), and are in full force and effect. Each of Signature and Signature Bankthe AIM Entities has duly performed in all material respects all of its obligations thereunder to the extent that such obligations to perform have accrued; and, to the Knowledge of Signature,AIM, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder.
B-42
(a)To the Knowledge of Signature, all All offers and sales of capital stock of SignatureAIM by SignatureAIM or of AimBank by AimBank were at all relevant times exempt from, or materially complied with, the registration requirements of the Securities Act and any applicable Blue Skystate securities Laws.
(b)Neither Signature nor Signature Bank, None of the AIM Entities, and, to the Knowledge of Signature,AIM, (i) no director or executive officer of Signature or Signature Bank,such AIM Entities and (ii) no Person related to any such director or executive officer by blood, marriage or adoption and residing in the same household and (iii) no Person who has been knowingly provided material nonpublic information by any one or more of these Persons, has purchased or sold, or caused to be purchased or sold, any SignatureAIM Common Stock or other SignatureAIM securities during any period when Signature was in possession of material nonpublic information, or in violation of any applicable provision of federal or state securities Laws.
(b) The representations and warranties of Signature containedAIM and AimBank, as applicable, set forth in the AIM Acquisition Agreements were true and correct as of the dates provided in the AIM Acquisition Agreements, and each of AIM and AimBank, as applicable, has complied in all material respects with its covenants and agreements set forth in the AIM Acquisition Agreements.
(c) To the Knowledge of AIM, the representations and warranties of the AIM Acquisition Parties in the AIM Acquisition Agreements were true and correct as of the dates provided in the AIM Acquisition Agreements, and the AIM Acquisition Parties have complied in all material respects with their covenants and agreements set forth in the AIM Acquisition Agreements.
(d) Except as set forth on Schedule 4.38(d), no indemnification claims have been made against any of the AIM Entities by any Persons in connection with any of the Recent AIM Acquisitions.
4.39 No Other Representations or Warranties. Except for the representations and warranties made by AIM and AimBank in this Agreement do not omitArticle 4, neither AIM or AimBank, nor any material fact necessaryother Person makes any express or implied representation or warranty with respect to makeAIM, AimBank, ABFI or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and AIM and AimBank hereby disclaim any such other representations or warranties. In particular, without limiting the statements contained therein, in light of the circumstances under which they wereforegoing disclaimer, neither AIM or AimBank nor any other Person makes or has made not misleading. There is no fact known to Signature that has not been disclosedany representation or warranty to Heartland, pursuantFB&T or any of their Affiliates or Representatives with respect to (i) any financial projection, forecast, estimate, budget or prospective information relating to AIM, AimBank, ABFI or any of their respective businesses, or (ii) except for the representations and warranties made by AIM and AimBank in this Article 4, any oral or written information presented to Heartland, FB&T or any of their Affiliates or Representatives in the course of their due diligence investigation of AIM and AimBank, the negotiation of this Agreement andor in the Disclosure Schedules that would have or would reasonably be expected to have a Material Adverse Effect on Signature or Signature Bank, or materially adversely affect the consummationcourse of the transactions contemplated hereby.
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business. From the date of this Agreement to the Effective Time, unless Heartland will otherwise agreeconsents in writing (which agreementconsent will not be unreasonably withheld, conditioned or delayed) or as otherwise expressly contemplated or permitted by this Agreement or the AIM Merger Agreement, or except as set forth on Schedule 5.1, or except as may be required by other provisions of this Agreement, including this Section 5.1:applicable Law, any Governmental Order or policies imposed by any Governmental Entity:
(a)the businesses of each of Signature and Signature Bankthe AIM Entities will be conducted only in, and neithernone of Signature nor Signature Bankthe AIM Entities will take any action except in, the Ordinary Course of Business and in accordance with all applicable Laws;Laws.
(b)each of Signature and Signature Bankthe AIM Entities will (i) preserve its business organization and goodwill, and will use commercially reasonable efforts to keep available the services of its officers, employees and consultants and maintain satisfactory relationships with vendors, customers and others having business relationships with it,
B-43
(ii) subject to applicable Laws, confer on a regular and frequent basis with representatives of Heartland or FB&T to report operational matters and the general status of ongoing operations as reasonably requested by Heartland or FB&T and (iii) not take any action that would render, or that reasonably would be expected to render, any representation or warranty made by SignatureAIM or AimBank in this Agreement untrue at the Closing as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representation or warranty;
(c)neither Signature nor Signature Bank none of the AIM Entities will, directly or indirectly,
(i)amend or propose to amend its Charter or Bylaws;
(ii)issue or sell any of its equity securities, securities convertible into or exchangeable for its equity securities, warrants, options or other rights to acquire its equity securities, or any bonds or other securities, except (a)(A) deposit and other bank obligations in the Ordinary Course of Business or (b)(B) pursuant to the exercise of the SignatureAIM Stock Options outstanding as of the date hereof in accordance with their terms;
(iii)redeem, purchase, acquire or offer to acquire, directly or indirectly, any shares of capital stock of or any other ownership interest in Signature or Signature Bank;AIM Entity;
(iv)split, combine or reclassify any outstanding shares of capital stock of Signature or Signature Bank,any AIM Entity, or declare, set aside or pay any dividend or other distribution payable in cash, property or otherwise with respect to shares of capital stock of Signature or Signature Bank,any AIM Entity, except that (a) Signature Bank will be permitted to pay dividends on the shares of Signature Bank Common Stock in the Ordinary Course of Business, and (b) SignatureAimBank will be permitted to pay dividends on shares of SignatureAimBank Common Stock in the Ordinary Course of Business for the sole purpose of providing holders of Signature Common Stock with funds to pay Taxes on income received from Signature;Business;
(v)incur any material Indebtedness, except in the Ordinary Course of Business;
(vi)discharge or satisfy any material Encumbrance on its properties or assets or pay any material liability, except otherwise in the Ordinary Course of Business;
(vii)sell, assign, transfer, mortgage, pledge or subject to any Encumbrance any of its assets, except (A) in the Ordinary Course of Business; provided, that any such sale, assignment or transfer of the Leasedany Operating Real Property will not be considered in the Ordinary Course of Business, (B) Permitted Encumbrances and (C) Encumbrances which do not materially affect the value of, or interfere with the past or future use or ability to convey, the property subject thereto or affected thereby;
(viii)cancel any material Indebtedness or claims or waive any rights of material value, except in the Ordinary Course of Business;
(ix) engage in any AIM Acquisition;
(x)make any single or group of related capital expenditures or commitments therefor in excess of $50,000$75,000 or enter into any lease or group of related leases with the same party which involves aggregate lease payments payable of more than $50,000$75,000 for any individual lease or involves more than $100,000 for any group of related leases in the aggregate; or
(xi)change any of its methods of accounting in effect on the date of the Latest Balance Sheet, other than changes required by GAAP or Regulatory Accounting Principles;regulatory accounting principles;
(xii)cancel or terminate its current insurance policies or allow any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse replacement policies providing coverage equal to or greater than the coverage under the canceled, terminated or lapsed policies for substantially similar premiums are in full force and effect;
(xiii)enter into or modify any employment, severance or similar agreements or arrangements with, or grant any compensation increases to, any director, officer or management employee, except in the Ordinary Course of Business;
(xiv)enter into or modify any independent contractor or consultant Contract except inbetween an AIM Entity and an independent contractor or consultant of such AIM Entity outside of the Ordinary Course of Business;Business in a manner that requires annual payments to such independent contractor or consultant in excess of $100,000;
B-44
(xv)terminate the employment of any Signature Employee,employee of any AIM Entity, other than in the Ordinary Course of Business for disciplinary or performance reasons as determined by Signature or Signature Bank in its reasonable discretion;Business;
(xvi)terminate or amend any bonus, profit sharing, stock option, restricted stock, pension, retirement, deferred compensation, or other employee benefit plan, trust, fund, contract or arrangement for the benefit or welfare of any employees, except as contemplated in this Agreementhereunder or by Law;
(xvii)make, modify or revoke any election with respect to Taxes, consent to any waiver or extension of time to assess or collect any Taxes, file any amended Returns or file any refund claim;
(xviii)enter into any Contract imposing an indemnity obligation of more than $50,000;
(xx) sell any equity securities in its investment portfolio, other than in the Ordinary Course of Business may sell, assign or transfer leases originated by Signature Bank’s Lease Financing Group; orBusiness.
(a)In order to allow Heartland to engage in its due diligence investigation regarding Signature AIM and Signature Bank, SignatureAimBank will permit and will cause Signature BankABFI to permit Heartland and FB&T full access on reasonable notice and at reasonable hours to the properties of Signature and Signature Bank,such AIM Entity, and will disclose and make available (together with the right to copy) to Heartland and to the internal auditors, loan review officers, employees, attorneys, accountants and other representatives of Heartland with a business need to access such informationand FB&T all books, papers and records relating to the assets, stock, properties, operations, obligations and liabilities of Signature and Signature Bank,the AIM Entities, including all books of account (including the general ledgers), Tax records, minute books of directors’ and
shareholders’ meetings, organizational documents, bylaws, Contracts, filings with any regulatory authority, accountants’ work papers, litigation files (including legal research memoranda), documents relating to assets and title thereto (including abstracts, title insurance policies, surveys, environmental reports, opinions of title and other information relating to the real and personal property), Plans, affecting employees, securities transfer records and shareholder lists, and any books, papers and records relating to other assets, business activities or prospects in which Heartland may have a reasonable interest, including its interest in planning for integration and transition with respect to the businesses of Signature and Signature Bank; the AIM Entities; provided, however, that (i) the foregoing rights granted to Heartland and FB&T will in no way affect the nature or scope of the representations, warranties and covenants of SignatureAIM or AimBank set forth herein, and (ii) SignatureAIM and AimBank will be permitted to keep confidential any information that SignatureAIM or AimBank reasonably believes is subject to legal privilege or other legal protection that would be compromised by disclosure to Heartland and (iii) there will be no disclosure of any reports Signature is prohibited by Law from sharing.or FB&T. In addition, SignatureAIM and AimBank will instruct the officers, employees, counsel and accountants of each of Signature and Signature Bankthe AIM Entities to be available for, and respond to any questions of, such representatives of Heartland representativesor FB&T at reasonable hours and with reasonable notice by Heartland or FB&T to such individuals, and to cooperate fully with Heartland or FB&T in planning for the integration of the businesses of Signature and Signature Bankthe AIM Entities with the businessbusinesses of Heartland, FB&T and their Affiliates.
(b) For the purpose of AIM and AimBank verifying the representations and warranties of Heartland and FB&T under this Agreement and compliance with its Affiliates.covenants and obligations hereunder, Heartland and FB&T will make available such documents as are reasonably requested by AIM or AimBank; provided, however, that (i) the foregoing rights granted to AIM and AimBank will in no way affect the nature or scope of the representations, warranties and covenants of Heartland or FB&T set forth herein, and (ii) Heartland and FB&T will be permitted to keep confidential any information that Heartland or FB&T
B-45
reasonably believe is subject to legal privilege or other legal protection that would be compromised by disclosure to AIM or AimBank. AIM and AimBank will use commercially reasonable efforts to minimize any interference with Heartland’s or FB&T’s regular business operations in connection with any request for Heartland or FB&T to make available documents pursuant to this Section 5.2(b).
(c) Any confidential information or trade secrets of each of Signature and Signature Bankparty received by Heartland,the other party, its employees or agents in the course of the consummation of the Merger or Bank Merger will be treated confidentially and held in confidence pursuant to the NDA, and any correspondence, memoranda, records, copies, documents and electronic or other media of any kind containing either such confidential information or trade secrets or both will be destroyed by Heartlandthe receiving party or, at Signature’sthe request of the disclosing party, returned to Signaturethe disclosing party if this Agreement is terminated as provided in Article 8. Such information will not be used by Heartlandany party or its agents to the detriment of Signatureany other party or Signature Bankits Subsidiaries and will at all times be maintained and held in compliance with the NDA.
5.3 Notice of Developments. SignatureTo the extent permitted by applicable Law, AIM or AimBank will promptly notify Heartland of any emergency or other change in the Ordinary Course of Business of eitherany of Signature or Signature Bank to the extent permitted by Law. SignatureAIM Entities. Each party hereto will promptly notify Heartlandthe other parties in writing if Signaturesuch party should discover that any representation or warranty made by it in this Agreement was when made, has subsequently become or will be on the Closing Date untrue in any respect, provided that such inaccuracy would be reasonably anticipated to have a Material Adverse Effect on Signature and Signature Bank.respect. No disclosure pursuant to this Section 5.3 will be deemed to amend or supplement the Disclosure Schedules or to prevent or cure any inaccuracy, misrepresentation, breach of warranty or breach of agreement.
5.4 Certain Loans and Related Matters. SignatureAIM or AimBank will furnishmake available to Heartland a complete and accurate list as of the end of each calendar month beginning with October 2017following the date of this Agreement within 15 Business Days25 days after the end of each such calendar month of (a) all of the periodic internal credit quality reports of Signature Bankany AIM Entity prepared during such calendar month (which reports will be prepared in a manner consistent with past practices), (b) all loans of Signature Bankany AIM Entity classified as non-accrual, as restructured, as 90 days past due, as still accruing and doubtful of collection or any comparable classification, (c) all OREO, including in-substance foreclosures and real estate in judgment, (d) all new loans where the principal amount advanced exceeds
(a)Signature AIM will furnishmake available to Heartland with balance sheets of SignatureAIM and Signature BankAimBank as of the end of each calendar month beginning with October 2017following the date of this Agreement and the related statements of income, within 15 Business Days25 days after the end of each such calendar month. Such financial statements will be prepared on a basis consistent with the Latest Balance SheetsSheet and the Related StatementsFinancial Statement and on a consistent basis during the periods involved, and will fairly present the financial positions of SignatureAIM and Signature BankAimBank as of the dates thereof and the results of operations of SignatureAIM and Signature BankAimBank for the periods then ended.
(b)Signature AIM will make available to Heartland the payroll listings of each of Signature and Signature Bankthe AIM Entities as of the endlast day of each pay period ending after the date of this Agreement, within one week after the end of such pay period.
5.6 Consents and Authorizations.. Signature Each of AIM and AimBank will use its commercially reasonable efforts to obtain (at no cost to Heartland), prior to Closing, all Consents (the “Required Consents”) from Persons other than Governmental Entitiesfor which AIM or AimBank are responsible and necessary or reasonably desirable for the consummation of the transactions contemplated by this Agreement. SignatureAgreement (the “Required Consents”). AIM or AimBank will keep Heartland reasonably advised of the status of obtaining the Required Consents, and Heartland will reasonably cooperate with SignatureAIM and AimBank to obtain the Required Consents.Consents, which will include providing publicly available financial or other information about Heartland and executing and delivering any consent, assignment or other instrument reasonably requested by any Person providing a Required Consent.
B-46
(a)Signature and Signature Bank each, Each AIM Entity, at its own or AIM’s expense, will prepare and timely file (or cause to be prepared and timely filed) all Returns required to be filed by Signature or Signature Bankthe AIM Entity on or before the Effective Date, and timely pay all Taxes reflected thereon. Such Returns will be prepared consistently with past practices of Signature and Signature Bank to the extent such practices comply with applicable Law. No later than 3010 days prior to the due date (including extensions) for filing any income or franchise Tax Returns referred to in the firstforegoing sentence, of this subsection (a), Signature or Signature Bank, as relevant,AIM will deliver such Returns to Heartland for its review comment and approval, which approvalcomment. The relevant AIM Entity will not be unreasonably withheld, conditioned or delayed.consider the comments of Heartland in good faith and will incorporate comments reasonably requested by Heartland in each such Return prior to filing thereof. With respect to any Returns referred to in the first sentence of this subsection (a), other than income and franchise Tax Returns, Signature or Signature Bank, as relevant,AIM will deliver such Returns to Heartland no later than five days prior to the due date (including extensions) for filing such Returns for Heartland’s review, commentcomplete and approval, which approval will not be unreasonably withheld, conditioned or delayed. Signature or Signature Bank, as applicable, will make all changes with respect to allaccurate copies of such Returns, as are reasonably requested by Heartland.filed, to Heartland within five days after the date of filing of such Returns.
(b)Heartland, at its own expense, will prepare and timely file (or cause to be prepared and timely filed) all Returns of Signature and Signature Bankthe AIM Entities required to be filed after the Effective Date. Heartland will prepare and file all such Returns in respect of a taxable period which ends on or prior to the Effective Date that are not required to be filed on or before the Effective Date, and all such Tax Returns in respect of a taxable period which begins before and ends after the Effective Date, consistent with past practices of Signature and Signature Bank,the AIM Entity, to the extent such practices comply with applicable Law. No later than 30 days prior to the due date (including extensions) for filing any income or franchise Returns of Signature referred to in the first sentence of this subsection (b) that Signature will file as an S corporation, Heartland will deliver such Returns to Brooks for his review and comment on behalf of the Persons who were Signature shareholders during the Tax period covered by such Return. Heartland will consider any such comments in good faith and will, to the extent Heartland deems necessary, incorporate any such comments in the applicable Return prior to filing; provided, however, Heartland will make any change to a Return that is required to correct an obvious error or to ensure that the Return complies with applicable Law.
(c)Notwithstanding anything in this Agreement to the contrary, Heartland will not amend, or cause to be amended, any income or franchise Return that Signature filed as an S corporation if such amendment would result in material additional Tax Liability being imposed on any Person that was a holder of Signature Common Stock during the Tax period covered by such Return without the prior written consent of Brooks, acting on behalf of the Persons who were Signature shareholders during the Tax period covered by such Return, which consent will not be unreasonably withheld, conditioned, or delayed; provided, however, no such written consent will be required if the amendment of such Return is required (i) by a determination within the meaning of Section 1313 of the Code and the Treasury Regulations thereunder with respect to another Return, (ii) to correct an obvious error, or (iii) otherwise by applicable Law (other than an interpretation thereof by the IRS pursuant to an audit of such Return).
(e) AIM will be liable for any transfer, value added, excise, stock transfer, stamp, recording, registration and any similar Taxes that become payable in connection with the AIM Merger and other transactions contemplated hereby. The applicable parties will cooperate in preparing and filing such forms and documents as may be necessary to permit any such Transfer Tax to be assessed and paid on or prior to the Effective Date in accordance with any available pre-sale filing procedure, and to obtain any exemption from or refund of any such Transfer Tax.
(a)Neither Signature nor Signature Bank AIM and AimBank will not, and they will each use their bestcommercially reasonable efforts to cause theirABFI and the officers, directors, employees agents and authorized representatives (“Representatives”) of all AIM Entities not to, directly or indirectly, (i) solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any Acquisition Proposal or take any action that would reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any information regarding either Signature or Signature Bankany AIM Entity to any Person in connection with or in response to an Acquisition Proposal or an inquiry or indication of interest that would reasonably be expected to lead to an Acquisition Proposal, (iii) engage in discussions or negotiations with any Person with respect to any Acquisition Proposal or that would reasonably be expected to lead to an Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition Proposal or
B-47
(v) enter into any letter of intent or similar document or any Contract contemplating or otherwise relating to any Acquisition Transaction; provided, however, that prior to the adoption of thisthe AIM Merger Agreement by the Required SignatureAIM Shareholder Vote, this Section 5.8(a) will not prohibit SignatureAIM, the Board of Directors of AIM or its Representativesany Representative of AIM from making any inquiries with respect to any Acquisition Proposal solely for the purpose of clarifying such Acquisition Proposal to enable the Board of Directors of AIM to make a determination that such Acquisition Proposal is a Superior Proposal or from furnishing nonpublic information regarding Signature or Signature Bankthe AIM Entities to, or entering into discussions or negotiations with, any Person in response to a Superior Proposal that is submitted to SignatureAIM by such Person (and not withdrawn) if (1) neither SignatureAIM nor Signature Bank norany other AIM Entities and any of their respective Representatives have violated any of the restrictions set forth in this Section 5.8(a)(i), (2) the Board of Directors of SignatureAIM concludes in good faith, after having consulted with and considered the advice of outside counsel and financial advisors to Signature,AIM, that such action is required in order for the Board of Directors of SignatureAIM to comply with its fiduciary obligations to Signature’s shareholdersthe AIM Shareholders under applicable Law, (3) at least two Business Days prior to furnishing any such nonpublic information to, or entering into discussions or negotiations with, such Person, SignatureAIM gives Heartland written notice of the identity of such Person and of Signature’sAIM’s intention to furnish nonpublic information to, or enter into discussions or negotiations with, such Person, and SignatureAIM receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of SignatureAIM and (4) at least two Business Days prior to furnishing any such nonpublic information to such Person, SignatureAIM furnishes such nonpublic information to Heartland (to the extent such nonpublic information has not been previously furnished by SignatureAIM to Heartland). Without limiting the generality of the foregoing, SignatureAIM acknowledges and agrees that any violation of or the taking of any action inconsistent with any of the restrictions set forth in the preceding sentence by Signature, Signature Bankany AIM Entity or any of their respectiveits Representatives will be deemed to constitute a breach of this Section 5.8(a) by Signature.AIM or AimBank.
(b)Signature AIM will promptly (and in no event later than 24 hours after receipt of any Acquisition Proposal, any inquiry or indication of interest that couldwould reasonably be expected to lead to an Acquisition Proposal or any request for nonpublic information in connection with an Acquisition Proposal)information) advise Heartland orally and in writing of any Acquisition Proposal, any inquiry or indication of interest that couldwould reasonably be expected to lead to an Acquisition Proposal or any request for nonpublic information in connection with an Acquisition Proposal relating to Signature or Signature Bankany of the AIM Entities (including the identity of the Person making or submitting such Acquisition Proposal, inquiry, indication of interest or request, and the terms
thereof) that is made or submitted by any Person prior to the Closing Date. SignatureAIM will keep Heartland fully informed with respect to the status of any such Acquisition Proposal, inquiry, indication of interest or request and any modification or proposed modification thereto.
(c)Signature Each of AIM and Signature BankAimBank will immediately cease and cause to be terminated any existing discussions with any Person that relate to any Acquisition Proposal.
(d)Signature Neither AIM nor AimBank will not release or permit the release of any Person from, or waive or permit the waiver of any provision of, any confidentiality, “standstill” or similar agreement to which SignatureAIM or AimBank is a party, and will enforce or cause to be enforced each such agreement at the request of Heartland. SignatureAIM or AimBank, as the case may be, will promptly request each Person that has executed, within 12 months prior to the date of this Agreement, a confidentiality agreement in connection with its consideration of a possible Acquisition Transaction or equity investment to return all confidential information heretofore furnished to such Person by or on behalf of Signature.AIM or AimBank.
(a) AIM will cause Signature Bankeach AIM Entity to maintain theits ALLL of Signature Bank in compliance with GAAP and Regulatory Accounting Principles and Signature Bank’sits existing methodology for determining the adequacy of the ALLL, as well as the standards established by all applicable Governmental Entities and GAAP. Signaturethe Financial Accounting Standards Board. AIM agrees that the ALLL of Signature Bankeach AIM Entity will be adequate under all standards, and that the ALLL will be consistent with the historical loss experience of Signature Bank.the applicable AIM Entity. Without limiting the generality of the foregoing, Signaturewithout the consent of Heartland or as set forth in Schedule 5.9, AIM will not permit Signature Bankany AIM Entity to reverse any amount of its previously established ALLL. In addition, AIM will continue to provision to its ALLL through the Closing Date in accordance with its ALLL standards consistent with the historical loss experience of the applicable AIM Entity, which shall include provisions of at least $350,000 per calendar month for the remainder of 2020.
B-48
(b) AIM or allow Signature Bank’s ALLLAimBank will cause each AIM Entity to be less than $3,750,000.maintain any purchase discounts relating to loans at levels consistent with the requirements of GAAP and Regulatory Accounting Principles.
5.10 Liquidation of AimBank HTM Securities. AimBank agrees that it will consult with Heartland before liquidating any securities held in the AimBank HTM Securities Portfolio.
5.12 AIM and AimBank Forbearances. Except as expressly permitted by this Agreement or (c)with the prior written consent of Heartland, during the period from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement in accordance with Article 8, neither AIM nor AimBank will, or will permit ABFI to, except as may be required by applicable Law, any Governmental Order or policies imposed by any Governmental Entity, (a) take any action that would render, or that reasonably would be expected to render, any representationprevent, materially impede or warranty madematerially delay the consummation of the transactions contemplated by Signature in this Agreement untrue ator the Closing as though then made and as though the Closing Date had been substituted for the date of thisAIM Merger Agreement, or (b) take, or omit to take, any action that is reasonably likely to result in such representation or warranty.
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 The Bank Merger. To the extent not previously approved, Signature will cause the Board of Directors of Signature Bank to approve the Bank Merger Agreement and the Bank Merger within three Business Days of execution of this Agreement, and will vote all of the shares of Signature Bank Common Stock held by Signature in favor of approval of the Bank Merger Agreement and the Bank Merger. For the avoidance of doubt, the Bank Merger will occur immediately after the Merger, and will be conditioned upon regulatory approval and upon the Required Signature Shareholder Vote.
(a)Signature AIM will call a specialan annual meeting of its shareholders (the “SignatureAIM Shareholder Meeting”) for the purpose of voting upon thisthe AIM Merger Agreement and theAIM Merger and certain other matters (including the election of four directors of AIM). AIM will schedule such meeting based on consultation with Heartland as soon as practicable after the Registration Statement is declared effective. TheSubject to a Change of AIM Board Recommendation, the Board of Directors of SignatureAIM will recommend that the shareholdersAIM Shareholders approve thisthe AIM Merger Agreement and the AIM Merger (the “SignatureAIM Board Recommendation”), and SignatureAIM will use its bestcommercially reasonable efforts (including soliciting proxies for such approval) to obtain the Required SignatureAIM Shareholder Vote. In connection with the Signature Shareholder Meeting and the approval of this Agreement and the transactions contemplated hereunder by the holders of Signature Common Stock, Signature will distribute the Proxy Statement/Prospectus to all holders of Signature Common Stock. In addition, Signature will prepare and distribute to all participants in the KSOP materials (including the Proxy Statement/Prospectus) for the purpose of permitting the KSOP participants to direct the manner in which shares of Signature Common Stock allocated to their accounts in the KSOP are to be voted. The SignatureAIM Board Recommendation may not be withdrawn or modified in a manner adverse to Heartland, and no resolution by the Board of Directors of SignatureAIM or any committee thereof to withdraw or modify the SignatureAIM Board Recommendation in a manner adverse to Signature may be adopted; provided, however, that notwithstanding the foregoing, prior to the adoption of thisthe AIM Merger Agreement by the Required Signature AIM
B-49
Shareholder Vote, the Board of Directors of SignatureAIM may withdraw, qualify or modify the SignatureAIM Board Recommendation or approve, adopt, recommend or otherwise declare advisable any Superior Proposal made after the date hereof and not solicited, initiated or encouraged in breach of Section 5.8(a),5.8, if the Board of Directors of SignatureAIM determines in good faith, after consultation with outside counsel, that failure to do so would be likely to result in a breach of fiduciary duties under applicable Lawlaw (a “Change of SignatureAIM Board Recommendation”). In determining whether to make a Change of SignatureAIM Board Recommendation in response to a Superior Proposal or otherwise, the Board of Directors of SignatureAIM will take into account any changes to the terms of this Agreement proposed by Heartland or FB&T or any other information provided by Heartland or FB&T in response to such notice.AIM’s advice to Heartland in accordance with Section 5.8(b) that AIM has received a Superior Proposal.
(b)For the purposes of (i) holding the SignatureAIM Shareholder Meeting and (ii) registering Heartland Common Stock to be issued to shareholders of SignatureAIM in connection with the Merger with the SEC and with applicable state securities authorities, Heartland will prepare, with the cooperation of SignatureAIM (which will, for the avoidance of doubt, be given the opportunity to participate in the preparation of the Registration Statement and will have the right to approve the content of the Registration Statement relating to Signature and Signature Bank)the AIM Entities), a registration statement on Form S‑4S-4 (such registration statement, together with all and any amendments and supplements thereto, being herein referred to as the “Registration Statement”), which will include a proxy statement/prospectus satisfying all applicable requirements of the Securities Act, the Exchange Act and applicable Blue Sky Laws (such proxy statement/prospectus, together with any and all amendments or supplements thereto, being herein referred to as the “Proxy Statement/Prospectus”). The Proxy Statement/Prospectus will disclose that, if the AIM Merger is consummated, the Merger will also occur immediately thereafter.
(c)Heartland will furnish such information concerning Heartland and its Subsidiaries as is necessary in order to cause the Proxy Statement/Prospectus and the Registration Statement, insofar as they relate to Heartland and its Subsidiaries, to be prepared in accordance with Section 6.3(b)6.2(b). Heartland agrees promptly to notify SignatureAIM if at any time prior to the SignatureAIM Shareholder Meeting any information provided by Heartland in the Proxy Statement/Prospectus becomes incorrect or incomplete in any material respect, and to provide the information needed to correct such inaccuracy or omission.
(d)Signature AIM will promptly furnish Heartland with such information concerning SignatureAIM or Signature BankAimBank as is necessary in order to cause the Proxy Statement/Prospectus and the Registration Statement, insofar as they relate to SignatureAIM or Signature Bank,AimBank, to be prepared in accordance with Section 6.3(b)6.2(b), including the opinion of counsel as to Tax matters required to be filed as an exhibit thereto. SignatureAIM agrees promptly to notify Heartland if at any time prior to the SignatureAIM Shareholder Meeting any information provided by SignatureAIM in the Proxy Statement/Prospectus becomes incorrect or incomplete in any material respect, and to provide Heartland with the information needed to correct such inaccuracy or omission.
(e)Heartland will promptly file the Registration Statement with the SEC and applicable state securities agencies. Heartland will use commercially reasonable efforts to cause (i) the Registration Statement to become effective under the Securities Act and applicable Blue Sky Laws at the earliest practicable date,and (ii) the shares of Heartland Common Stock issuable to the shareholders of SignatureAimBank to be authorized for listing on the NASDAQ Global Select Market or other national securities exchange. At the time the Registration Statement becomes effective, Heartland will use its commercially reasonable efforts to ensure that the Registration Statement complies in all material respects with the provisions of the Securities Act and applicable Blue Sky Laws. SignatureAIM hereby authorizes Heartland to utilize in the Registration Statement the information concerning Signature or Signature Bankthe AIM Entities provided to
Heartland for the purpose of inclusion in the Proxy Statement/Prospectus. Heartland will advise SignatureAIM promptly when the Registration Statement has become effective and of any supplements or amendments thereto, and Heartland will furnish SignatureAIM with copies of all such documents. Prior to the Effective Time or the termination of this Agreement, each party will consult with the other with respect to any material (other than the Proxy Statement/Prospectus) that might constitute a “prospectus” relating to the Merger within the meaning of the Securities Act.
(f)Heartland agrees that none None of the information relating to Heartland and its Subsidiaries that is provided by Heartland for inclusion in: (i) the Proxy Statement/Prospectus, any filings or approvals under applicable federal or state banking Laws or regulations or Blue Skystate securities Laws, or any filing pursuant to the Securities Act will, at the time of mailing the Proxy Statement/Prospectus to Signature’s or Heartland’sAIM’s shareholders, at the time of the Signature Shareholder Meeting or the Heartland AIM
B-50
Shareholder Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; and (ii) the Registration Statement will, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
(g)Signature agrees that none None of the information relating to Signature and Signature Bankthe AIM Entities that is provided by SignatureAIM for inclusion in: (i) the Proxy Statement/Prospectus, any approvals under applicable federal or state banking Laws or regulations or Blue Skystate securities Laws, or any filing pursuant to the Securities Act will, at the time of mailing the Proxy Statement/Prospectus to Signature’sAIM’s shareholders, at the time of the SignatureAIM Shareholder Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; and (ii) the Registration Statement will, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
(h)Heartland will bear the costs of all SEC filing fees with respect to the Registration Statement and the costs of qualifying the shares of Heartland Common Stock under the Blue Sky Laws, to the extent necessary. Heartland will also bear the costs of all NASDAQ listing fees with respect to listing the shares of Heartland Common Stock on the NASDAQ Global Select Market or other national securities exchange pursuant to this Agreement. Heartland will bear all printing and mailing costs in connection with the preparation and mailing of the Proxy Statement/Prospectus to Signature and Heartland shareholders.AIM Shareholders. Heartland and SignatureAIM will each bear their own legal and accounting expenses in connection with the preparation of the Proxy Statement/Prospectus and the Registration Statement.
(a)General. At the request of Heartland, SignatureAIM agrees to terminate any Plans as of the AIM Merger Effective Time on terms reasonably acceptable to Heartland. If any Plans are not so terminated and are assumed by AimBank in the AIM Merger, after the Effective Time, Heartland or FB&T will have the right to continue, amend, merge or terminate any of such Plans in accordance with the terms thereof and subject to any limitation arising under applicable Law, including Tax qualification requirements. SignatureAIM agrees that, at the request of Heartland, Signature Bank, Signatureeach of the AIM Entities and any Commonly Controlled Entity will cease to
be a participating employer of, and will cease making contributions to or otherwise providing benefits under, any Plan, as of the AIM Merger Effective Time. If, after the Effective Time, there are any Plans for which the Surviving Company or any of its SubsidiariesCorporation continues to be a participating employer, Heartland or FB&T will have the right to discontinue such participation in any of such Plans in accordance with the terms thereof and subject to any limitation arising under applicable Law. UntilHowever, until Heartland will takeor FB&T takes such action, however, such Plans will continue in force for the benefit of present and former employees of either of Signature or Signature Bankthe AIM Entities who have any present or future entitlement to benefits under any of the Plans.
B-51
(b)Termination of KSOP. Unless Heartland directs SignatureAIM otherwise in writing, no later than five Business Days prior to the AIM Merger Closing Date, the Board of Directors of SignatureAIM will adopt resolutions, effective immediately prior to the AIM Merger Effective Date, (a)Time, (i) permanently discontinuing contributions to and terminating the KSOP (b) converting the KSOP into a profit sharing plan, and (c)(ii) amending the KSOP, to the extent necessary, to comply with all applicable Laws. Such resolutions will provide that, as soon as administratively feasible following the Closing, but subject to any applicable regulatory requirements and receipt of any necessary regulatory approvals, the Surviving Corporation will, and the Surviving Corporation shall be obligated to, direct the KSOP to distribute to each participant the number of shares of Heartland Common Stock and cash held in such participant’s vested account balance in a single lump sum,accounts, including vested accounts already in pay status. Signaturestatus and cash received in the Merger; provided, however, if so elected by a participant in the KSOP, such a participant may roll over the shares of Heartland Common Stock and cash received in the Merger (and any other cash held in such participant’s accounts) by such participant as a result of his or her participation in the KSOP. AIM and AimBank will also take such other actions in furtherance of the termination of the KSOP as Heartland may reasonably require.
(c)Participation in Heartland Benefit Plans. At a date no later than fifteen (15) Business Days afterAs of the Closing Date, each SignatureAIM Employee will be eligible to participate in the health, vacation and other non-equity based employee benefit plans of Heartland or its SubsidiariesFB&T (the “Heartland Plans”) to the same extent as similarly situated employees of Heartland or FB&T and to the extent permitted by the applicable Heartland Plan or applicable Law; provided, however, that (a)(i) in the case of the Heartland Plan that is a 401(k) plan, AIM Employees will be able to participate in such plan as of the first day of the month following the month in which the Closing occurs, and (ii) nothing in this Section 6.5(c)6.4(c) or elsewhere in this Agreement will limit the right of Heartland or any of its Subsidiaries to amend or terminate a Heartland Plan at any time. With respect to the Heartland Plans, Heartland will, or will cause the Surviving Corporation or its Subsidiaries to: (i)(x) with respect to each Heartland Plan that is a medical/prescription, dental or vision plan, (x)(A) waive any exclusions for pre-existing conditions under such Heartland Plan that would result in a lack of coverage for any condition for which the applicable SignatureAIM Employee would have been entitled to coverage under the corresponding Plan in which such SignatureAIM Employee was an active participant immediately prior to his or her transfer to Heartland Plan; (y)Plan, (B) waive any waiting period under such Heartland Plan, to the extent that such period exceeds the corresponding waiting period under the corresponding Plan in which such SignatureAIM Employee was an active participant immediately prior to his or her transfer to Heartland Plan (after taking into account the service credit provided for herein for purposes of satisfying such waiting period);, and (z) provided(C) so long as the insurance company of Signaturecompanies or Signature Bank providesadministrators for the Plan(s) provide information related to the amount of such credit that is available to Heartland, provide each SignatureAIM Employee with credit for deductibles paid by such SignatureAIM Employee prior to his or her transfer to a Heartland Plan (to the same extent such credit was given under the analogous Plan prior to such transfer) in satisfying any applicable deductible or out-of-pocket requirements under such Heartland Plan for the plan year that includes such transfer and (ii)(y) fully recognize service of the SignatureAIM Employees with either Signatureany of the AIM Entities (including any entities acquired by, or Signature Bankmerged with, any AIM Entity) for purposes of eligibility to participate and vesting credit, and, solely with respect to vacation and severance benefits, benefit accrual in any Heartland Plan in which the SignatureAIM Employees are eligible to participate after the Closing Date, to the extent that such service was recognized for that purpose under the analogous Plan prior to such transfer. Heartland will extend coverage to SignatureAIM Employees for health care, dependent care and limited purpose health care flexible spending accounts established under Section 125 of the Code to the same extent as available to similarly situated employees of Heartland to the extent permitted by suchthe applicable Heartland PlansPlan and applicable Law. Heartland will give effect to any elections made by SignatureAIM Employees with respect to such accounts under any flexible benefits cafeteria plan of either Signature or Signature Bankany AIM Entity to the extent permitted by such Heartland Plan and applicable Law. SignatureAIM Employees will be credited with amounts available for reimbursement equal to such amounts as were credited under any flexible benefits cafeteria plan of either Signatureeach of AIM or Signature BankAimBank to the extent permitted by such Heartland Plan and applicable Law. The foregoing will not apply to the extent it would result in duplication of benefits.
(d)Terminated SignatureAIM Employees. To the extent that Heartland or FB&T terminates the employment of any Signature Employeeemployee of any of the AIM Entities without “cause” (as such term is defined in the sole discretion of Heartland),Cause at, or within sixnine months after, the Effective Time, and such Signature Employee is not otherwise entitled to severance benefits under a separate contractual obligation with either SignatureHeartland or Signature Bank in effect on the date of this Agreement, HeartlandFB&T will offer such Signature Employeeemployee severance benefits approximately equivalentequal to one week of base compensation for each full year of service to Signaturean AIM Entity (including any entities acquired by, or Signature Bank,merged with, any AIM
B-52
Entity), with a minimum of two and a maximum of 12 weeks of severance pay, on termsplus any unused accrued vacation time of such employee up to a maximum of three weeks, subject to the execution of a release of claims against Heartland, the Surviving Corporation and conditionsall AIM Entities in a form reasonably acceptable to be established in the sole discretion of Heartland.
(e)SignatureAIM Employee Retention Program. Prior to the Effective Time, SignatureAIM and Heartland will mutually agree on and establish an employee retention bonus program and will allocate pursuant to such program cash awards to certain Signature Employeesemployees of the AIM Entities, as mutually determined by Heartland and AIM to facilitate the retention of such employees to remain in the employ of one of Signature, Signature Bank and MB&Tthe AIM Entities through the completion of the system’ssystem integration process between Signature and Signature Bank,the AIM Entities, on the one hand, and Heartland, and MB&T, on the other hand; provided that the payments made under the Signature Employee Retention Program will be included in the definition of “Transaction Expenses” unless Heartland provides Signature with Heartland’s written Consent to such payments.hand.
(f)Affordable Care Act Reporting. As of the earlier of the Closing Date or the applicable reporting deadline under the Affordable Care Act, Signature, Signature Bankeach AIM Entity and eachany Commonly Controlled Entity will accurately complete and timely file with the IRS, and timely send to all covered individuals, as applicable, any required IRS Forms 1094‑B, 1095‑B, 1094‑C1094-B, 1095-B, 1094-C and 1095‑C1095-C for the 20162019 calendar year with respect to each Benefit Plan that is subject to the Affordable Care Act.
(g)Limitation on Enforcement. This Agreement is an agreement solely between Signatureamong AIM, AimBank, Heartland and Heartland.FB&T. Nothing in this Agreement, including this Section 6.5,6.4, whether express or implied, confers upon any Signature Employees, employeesemployee of any AIM Employee, any employee of Heartland andor its Subsidiaries or any other Person, any rights or remedies, including: (i) any right to employment or recall, (ii) any right to continued employment for any specified period, or (iii) any right to any particular compensation, benefit or aggregate of benefits, or any other term or condition of employment, of any kind or nature whatsoever.
(a)Heartland agrees that all rights of the present and former directors and officers and employees of either Signature or Signature Bankany of the AIM Entities to indemnification provided for in the Charter or Bylaws or other governing documents of Signature or Signature Bank,such AIM Entity, as applicable, as in effect on the date hereof, or required under any applicable Law (including rights to advancement of expenses and exculpation), and that all such rights of the present and former directors, officers and employees of Signature and Signature Bank (to the extent such rights to indemnification are required) will survive the Merger and continue in full force and effect until expiration of the applicable statute of limitations (each such director officer and employeeofficer being sometimes hereinafter be referred to as an “Indemnified Party”). Without limiting the generality of the foregoing, Heartland agrees that, following the Effective Time, the Surviving CorporationHeartland will indemnify any Person made a party to any proceeding by reason of the fact that such Person was a director, officer, member or employee of either Signature or Signature Bankany of the AIM Entities at or prior to the Effective Time to the fullest extent provided in, and will advance expenses in accordance with, the Charter and Bylaws and other governing documents of Signature or Signature Bank,such AIM Entity, as applicable, in the form previously provided to Heartland and effective as of the date of this Agreement, in each case subject to all the limitations set forth in such Charter Bylaws or other governing documents and applicable Law.Bylaws. Notwithstanding anything to the contrary contained in this Section 6.8,6.7, nothing contained in this Agreement will require Heartland to indemnify, defend or hold harmless any Indemnified Party to a greater extent than either of Signature or Signature Bankany AIM Entity may, as of the date of this Agreement, indemnify, defend and hold harmless such Indemnified Party, and any such indemnification provided pursuant to this Section 6.86.7 will be provided only to the extent that such indemnification is permitted by any applicable federal or state Laws.
B-53
(b)Prior to the AIM Merger Effective Time, SignatureAIM will or, if SignatureAIM is unable to, Heartland as of the Effective Time will, obtain a “tail” insurance policy with a claims period of at least six (6) years, from and after the Effective Time with respect to directors’ and officers’ liability insurance and fiduciary liability insurance (collectively, “D&O Insurance”) with benefits and levels of coverage at least as favorable to the Indemnified Parties as the existing policies of Signature and Signature Bankthe AIM Entities with respect to matters existing or occurring at or prior to the Effective Time
(c)The provisions of this Section 6.86.7 are intended to be for the benefit of, and will be enforceable by, each Indemnified Party as if he or she were a party to this Agreement. The indemnification rights provided to each Indemnified Party pursuant hereto will be in addition to all other indemnification rights provided to such Indemnified Party under any Contract between either Signature or Signature Bankany of the AIM Entities and such Indemnified Party.
6.8 Statutory Trust. If practically feasible, AIM will, prior to the AIM Merger Closing Date, pay in full the outstanding Statutory Trust Debt, together with any related accrued interest, fees and prepayment penalties, and take all actions necessary to terminate all of the Statutory Trust Agreements (collectively, the “Statutory Trust Termination”). If the Statutory Trust Termination does not occur, then upon the Effective Time, Heartland will assume AIM’s obligations and acquire its rights relating to the Statutory Trust, including AIM’s obligations and rights under the Statutory Trust Debentures, Statutory Trust Securities and the other Statutory Trust Agreements. In connection therewith, AIM will assist Heartland in assuming AIM’s obligations and acquiring its rights under the Statutory Trust, and will provide the documentation required to make such assumption of obligations and acquisition of rights effective including any supplemental indentures or certificates that may be required under the Statutory Trust Agreements. Subject to the terms of the Statutory Trust Securities, immediately prior to the AIM Merger Closing Date, AIM will pay, or cause to be paid, to the proper Persons all deferred and accrued but unpaid interest and any outstanding fees relating to the Statutory Trust Debentures and the Statutory Trust. Notwithstanding the foregoing, Heartland, in lieu of assuming AIM’s obligations and rights under the Statutory Trust Indentures, may pay in full on the Closing Date all Liabilities of AIM under the Statutory Trust Debentures, the Statutory Trust Securities and the other Statutory Trust Agreements, subject to the terms and conditions thereof.
(a) As soon as practicable after the Determination Date, SignatureAIM will prepare the Signature Determination Date Balance Sheet. Within five (5) Business Days following the Determination Date, SignatureAIM will prepare and deliver to Heartland its good faith determination of (a) the Adjusted Tangible Common Equity, and a copy of the Signature Determination Date Balance Sheet, together with reasonable support therefor (including Signature’s calculation of the Determination Date to Effective Time Adjustment)Balance Sheet), and (b) the Signature Determination Date Transaction Expenses, together with reasonable support therefor. If SignatureAIM and Heartland agree on the amount of the Adjusted Tangible Common Equity, such amount will be final and conclusive. If Heartland and SignatureAIM disagree as to such calculations and are unable to reconcile their differences in writing within five (5) Business Days, unless otherwise agreed upon by the parties, the items in dispute will be submitted to a mutually acceptable independent national accounting firm in the United States for final determination, and the calculations will be deemed adjusted in accordance with the determination of the independent accounting firm and will become binding, final and conclusive upon all of the parties hereto. The independent
B-54
accounting firm will consider only the items in dispute and will be instructed to act within five (5) Business Days (or such longer period as SignatureAIM and Heartland may agree) to resolve all items in dispute. SignatureAIM and Heartland will share equally the payment of reasonable fees and expenses of the independent accounting firm.
(b) In connection with the determination of the Adjusted Tangible Common Equity, AIM and Heartland will use commercially reasonable efforts to agree on the appropriate methodology for determining the amount of the Unrealized AimBank HTM Securities Portfolio Gains, which may include broker pricing, live bids or other methodologies.
6.10 Appointment of FB&T Directors. At the Effective Time, Heartland and FB&T will cause Wade and at least three other members of the Board of Directors of AIM or AimBank or holders of AIM Common Stock to be determined by Heartland in consultation with AIM to be appointed to the Board of Directors of FB&T. In addition, following the Effective Time, Heartland will cause Wade to be made Vice Chairman of the Board of Directors of FB&T and Ferrell will be made an advisory director of FB&T.
6.13 KSOP Trustees’ Certificate. AIM and AimBank will deliver an executed KSOP Trustees’ Certificate.
6.14 Reservation of Heartland Common Stock. Heartland agrees at all times from the date of this Agreement until the Merger Consideration has been paid in full to reserve a sufficient number of shares of Heartland Common Stock to fulfill its obligations under this Agreement.
6.15 Additional Compensation Agreement. AIM and AimBank will use commercially reasonable efforts to obtain the termination, effective as of the Effective Time, of such Additional Compensation Agreements that AIM and Heartland mutually determine are necessary for compliance with Section 409A of the Code.
(a) If, as of the time of satisfaction of the conditions set forth in Article 7 (other than conditions that by their terms are required to be satisfied at Closing), the Reagor-Dykes Litigation has not been brought to Final Resolution, Heartland will hold back the Per Share Holdback Amount from the Actual Cash Consideration that any AimBank Shareholder is entitled to receive for each AimBank Converted Common Share pursuant to Sections 2.3 and 2.4. The Per Share Holdback Amount and the Aggregate Holdback Amount will be subject to the terms and conditions of this Section 6.16.
(b) Subject to the terms and conditions of this Section 6.16, Heartland will control the Reagor-Dykes Litigation from and after the Closing Date; provided, however, that, prior to the final decision by the United States Bankruptcy Court for the Northern Districts of Texas Lubbock Division on the currently filed motion(s) to dismiss filed as of the date of this Agreement relating to the Reagor-Dykes Litigation, Heartland and FB&T shall not engage any law firm or other legal representation to serve as lead counsel for Heartland and FB&T with respect to the Reagor-Dykes Litigation other than Hirsch and Westheimer P.C., Houston, Texas, without the prior written consent of the Shareholder Representative, which shall not be unreasonably withheld, conditioned or delayed. The Shareholder Representative will be permitted to participate in the Reagor-Dykes Litigation and retain counsel and other advisors for the Shareholder Representative, in each case, reasonably satisfactory to Heartland, with respect to the Reagor-Dykes Litigation. Upon written request and presentation to Heartland of invoices or other reasonable written documentation supporting all out-of-pocket costs and expenses, the time spent by the Shareholder
B-55
Representative on the matters over which it has authority hereunder (which will be reimbursed at a rate of $150.00 per hour), reasonable legal fees and related third-party costs incurred by the Shareholder Representative relating to the Reagor-Dykes Litigation after the Closing Date (the “Shareholder Representative Costs”), the Shareholder Representative will be entitled to reimbursement of such Shareholder Representative Costs from the Aggregate Holdback Amount prior to the distribution of any portion of the Aggregate Holdback Amount to Heartland, FB&T or the former AIM Shareholders pursuant to Section 6.16(c) or Section 6.16(d); provided, however, that once the aggregate of the Shareholder Representative Costs exceeds $300,000, all further Shareholder Representative Costs shall be subject to Heartland’s written approval. Heartland and FB&T will provide to Wade, Ferrell and the Shareholder Representative and his counsel all information reasonably requested with respect to the Reagor-Dykes Litigation. Heartland and FB&T shall keep Wade, Ferrell and the Shareholder Representative reasonably informed and apprised with respect to the Reagor-Dykes Litigation. The Shareholder Representative shall have reasonable access to management of Heartland and FB&T, including, without limitation, Wade and Ferrell, for purposes of consultation and communication regarding the Reagor-Dykes Litigation. Heartland and its Affiliates, on the one hand, and the Shareholder Representative, on the other hand, will cooperate, to the extent reasonably requested by each other, in connection with the Reagor-Dykes Litigation, including by the retention and (upon the reasonable request of Heartland and its Affiliates or the Shareholder Representative, as the case may be) the provision of records, documents and information reasonably relevant to the Reagor-Dykes Litigation, and by making employees and other Persons available on a mutually convenient basis to provide additional information. Heartland, its Affiliates and the Shareholder Representative will act in good faith to obtain Final Resolution. Neither Heartland nor any of its Affiliates will enter into any settlement or compromise of, or consent to the entry of any judgment with respect to, the Reagor-Dykes Litigation without the prior written consent of the Shareholder Representative, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) If, after the Closing Date and prior to the occurrence of Final Resolution, one or more Reagor-Dykes Litigation claims are dismissed by the United States Bankruptcy Court for the Northern Districts of Texas Lubbock Division, Heartland may, in its sole discretion, distribute to the former AIM Shareholders pro rata in accordance with their holdings of AimBank Converted Common Shares immediately prior to the Effective Time, an amount determined by Heartland, in its sole discretion, of the Aggregate Holdback Amount.
(d) After the Closing Date and following the occurrence of Final Resolution, Heartland will promptly, but in any event within five Business Days of Final Resolution, notify the Shareholder Representative of Final Resolution and the amount of the Reagor-Dykes Litigation Damages, if any. Promptly following the Final Resolution and prior to the calculation of the Final Resolution Damages, reimbursement of the Shareholder Representative Costs and the distribution of the Aggregate Holdback Amount in accordance with this Section 6.16, Heartland and its Affiliates shall use commercially reasonable efforts for a reasonable period of time to obtain all insurance proceeds and court ordered sanctions to which Heartland or any of its Affiliates (including any of their respective predecessors, including AimBank) is entitled from any and all insurance providers and the parties against whom such sanctions have been ordered, respectively, with respect to the Reagor-Dykes Litigation, and Heartland and FB&T shall keep the Shareholder Representative reasonably informed with respect to the status of such efforts. If the Aggregate Holdback Amount exceeds the sum of the Shareholder Representative Costs and the Final Resolution Damages, Heartland will promptly following Final Resolution and the determination of the Final Resolution Damages, but in any event within 10 Business Days after the determination of the Final Resolution Damages, distribute to the former AIM Shareholders pro rata in accordance with their holdings of AimBank Converted Common Shares immediately prior to the Effective Time the Aggregate Holdback Amount after deducting the Final Resolution Damages and the Shareholder Representative Costs.
(e) The Shareholder Representative agrees to comply with and act in accordance with this Section 6.16. By approving the AIM Agreement and the transactions contemplated thereby or by surrendering AIM Stock Certificates along with a Letter of Transmittal, each AIM Shareholder will be deemed to have irrevocably (i) authorized and appointed the Shareholder Representative as the AIM Shareholder’s representative to act on behalf of the AIM Shareholder with respect to the matters set forth in this Section 6.16, and (ii) agreed to hold the Shareholder Representative harmless with respect to, and that the Shareholder Representative will not be liable, responsible or accountable in damages or otherwise to the
B-56
AIM Shareholders for, any Liabilities incurred by reason of any error in judgment or any act or failure to act arising out of the activities of the Shareholder Representative on behalf or in respect of the AIM Shareholders or otherwise in his capacity as the Shareholder Representative, including (A) the failure to perform any acts he is not expressly obligated to perform under this Agreement, (B) any acts or failures to act made in good faith or on the advice of legal counsel or other advisors to the Shareholder Representative, or (C) any other matter beyond the control of the Shareholder Representative.
(f) The Aggregate Holdback Amount is the result of arm’s length negotiations between Heartland and FB&T, on the one hand, and AIM and AimBank, on the other hand, without regard to any assessment of the merits of any such claims or availability of any defenses to such claims. AIM and AimBank believe that the Reagor-Dykes Litigation lacks merit based on the relevant facts and circumstances known to AIM and AimBank as of the date of this Agreement and intend to vigorously defend such matters.
6.17 Termination of AIM Merger Agreement. AIM and AimBank will not terminate or amend the AIM Merger Agreement, except in the event that this Agreement is terminated pursuant to Article 8.
CONDITIONS
7.1 Conditions to Obligations of Each Party. The respective obligations of each party to effect the transactions contemplated hereby will be subject to the fulfillment at or prior to the Effective Time of the following conditions:
(a)Regulatory Approvals. The Bank Regulatory Approvals will have been obtained and the applicable waiting periods, if any, under all statutory or regulatory waiting periods will have lapsed. None of such approvalsthe Bank Regulatory Approvals will contain any conditions or restrictions that would (i) be reasonably expected to be materially burdensome on, or impair in any material respect the benefits of the transactions contemplated by this Agreement to Heartland;Heartland or FB&T; (ii) require any Person other than Heartland to be deemed a bank holding company under the Bank Holding Company Act; (iii) require any Person other than Heartland to guaranty, support or maintain the capital of Signature Bank;the Surviving Corporation; (iv) prohibit direct or indirect ownership or operation by Heartland of all or a material portion of the business or assets of Signature, Signature Bankthe AIM Entities or Heartland or any of its Subsidiaries, or compel Heartland or any of its Subsidiaries or either Signature or Signature Bankany AIM Entity to dispose of or to hold separately all or a material portion of theits business or assets of Heartland or any of its Subsidiaries or of either Signature or Signature Bank;such AIM Entity; or (v) require a material modification
of, or impose any material limitation or restriction on, the activities, governance, legal structure, compensation or fee arrangements of Heartland or any of its Subsidiaries.Subsidiaries (any of the foregoing, a “Materially Burdensome Regulatory Condition”); provided, however, that the following will not be deemed to be included in the preceding list and will not be deemed a “Materially Burdensome Regulatory Condition”: (A) any restraint, limitation, term, requirement, provision or condition that applies generally to bank holding companies and banks as provided by Law, written and publicly available supervisory guidance of general applicability, unwritten supervisory guidance of which Heartland has knowledge, in each case, as in effect on the date hereof, or (B) related to the matters set forth on Schedule 7.1(a).
(b)No Injunction. No injunction or other order entered by a state or federal court of competent jurisdiction will have been issued and remain in effect which would impair the consummation of the transactions contemplated hereby.
(c)No Prohibitive Change of Law. There will have been no Law, domestic or foreign, enacted or promulgated, which would materially impair the consummation of the transactions contemplated hereby.
(d)Governmental Action. There will not be any action taken, or any statute, rule, regulation, judgment, order or injunction proposed, enacted, entered, enforced, promulgated, issued or deemed applicable to the transactions contemplated hereby by any Governmental Entity which would reasonably be expected to result, directly or indirectly, in (i) restraining or prohibiting the consummation of the transactions contemplated hereby or obtaining material damages from either Signature or Signature Bankany AIM Entities or Heartland or any of Heartland’s Subsidiaries in connection with the transactions contemplated hereby, (ii) prohibiting direct or indirect ownership or operation by Heartland or FB&T of all or a material portion of the businessbusinesses or assets of Signature or Signature Bankany AIM Entity or of Heartland or any of its Subsidiaries, or to compelling Heartland or any of its Subsidiaries or either Signature or Signature Bankany AIM Entity to dispose of or to hold separately all or a material portion of the business or assets of Heartland or any of its Subsidiaries or of either Signature or Signature Bank,such AIM Entity, as a result of the transactions
B-57
contemplated hereby, or (iii) requiring direct or indirect divestiture by Heartland or FB&T of any of its business or assets or of the business or assets of either Signature or Signature Bank.any AIM Entity.
(e)No Termination. No party hereto will have terminated this Agreement as permitted herein.
(f)Shareholder ApprovalConsummation of AIM Merger. The AIM Merger will have been approved by the Required Signature Shareholder Vote.consummated.
(g)Registration Statement. The Registration Statement will have been declared and will remain effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement will have been issued and no action, lawsuit, proceeding or investigation for that purpose will have been initiated or threatened by the SEC, and all approvals required under Blue Sky Laws relating to the shares of Heartland Common Stock issuable to the shareholders of SignatureAimBank Shareholders hereunder will have been received. The shares of Heartland Common Stock issuable to the shareholders of SignatureAimBank Shareholders will have been authorized for listing on the NASDAQ Global Select Market or other national securities exchange, subject to official notice of issuance.
7.2 Additional Conditions to ObligationObligations of SignatureAimBank. The obligationobligations of SignatureAimBank to consummate the transactions contemplated hereby in accordance with the terms of this Agreement is also subject to the following conditions:
(a)Representations and Warranties. (i) The representations and warranties set forth in Article 3 that are not subject to materiality or Material Adverse Effect qualifications will be true and correct in all material respects at and as of the Closing Date as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representations and warranties, except that any representation or warranty expressly made as of a specified date will only need to have been true on and as of such date, and (ii) the representations and warranties set forth in Article 3 that are subject to materiality or Material Adverse Effect qualifications will be true and correct in all respects at and as of the Closing Date as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representations and warranties, except that any representation or warranty expressly made as of a specified date will only need to have been true on and as of such date.
(b)Agreements. Each of Heartland and FB&T will have performed and complied in all material respects with each of its respective agreements contained in this Agreement.
(c)Heartland Officer’s Certificate. Heartland will have furnished to SignatureAimBank a certificate of the Chief Executive Officer and Chief Financial Officer of Heartland, dated as of the Effective Time,Closing Date, in which such officerofficers will certify to the conditions set forth in Sections 7.2(a) and (b).
(d)Heartland Secretary’s Certificate. Heartland will have furnished to SignatureAimBank (i) copies of the text of the resolutions by which the corporate action on the part of Heartland necessary to approve this Agreement and the transactions contemplated hereby were taken, and (ii) a certificate dated as of the Effective TimeClosing Date executed on behalf of
Heartland by its corporate secretary or one of its assistant corporate secretaries certifying to SignatureAimBank that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded.
(e) FB&T Secretary’s Certificate. FB&T will have furnished to AimBank (i) copies of the text of the resolutions by which the corporate action on the part of FB&T necessary to approve this Agreement and the transactions contemplated hereby were taken, and (ii) a certificate dated as of the Closing Date executed on behalf of FB&T by its corporate secretary or one of its assistant corporate secretaries certifying to AimBank that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded.
B-58
collectively or, if applicable, independently, will qualify as a reorganization underwithin the meaning of Section 368(a)(1)(A) of the Code. In rendering such opinion, such counsel may require and rely upon and may incorporate by reference representations and covenants, including representations and covenants contained in certificates of officers of SignatureAIM, AimBank, Heartland and Heartland.FB&T.
7.3 Additional Conditions to ObligationObligations of Heartland and FB&T. The obligationobligations of Heartland and FB&T to consummate the transactions contemplated hereby in accordance with the terms of this Agreement is also subject to the following conditions:
(a)Representations and Compliance. (i) The representations and warranties set forth in Article 4 that are not subject to materiality or Material Adverse Effect qualifications will be true and correct in all material respects at and as of the Closing Date as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representations and warranties, except that any representation or warranty expressly made as of a specified date will only need to have been true on and as of such date, and (ii) the representations and warranties set forth in Article 4 that are subject to materiality or Material Adverse Effect qualifications will be true and correct in all respects at and as of the Closing Date as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representations and warranties, except that any representation or warranty expressly made as of a specified date will only need to have been true on and as of such date.
(b)Agreements. SignatureAIM and AimBank will have performed and complied in all material respects with each of itstheir respective agreements contained in this Agreement.
(c)Officers’ Certificate of SignatureAimBank. SignatureAimBank will have furnished to Heartland and FB&T a certificate of the Chief Executive Officer and Chief Financial Officer of Signature,AimBank, dated as of the EffectiveClosing Date, in which such officers will certify to the conditions set forth in Sections 7.1(f), 7.3(a) and 7.3(b).
(d)SignatureAIM Secretary’s Certificate. SignatureAIM will have furnished to Heartland and FB&T (i) copies of the text of the resolutions by which the corporate action on the part of SignatureAIM necessary to approve this Agreement and the transactions contemplated hereby were taken, and (ii) a certificate dated as of the Effective TimeClosing Date executed on behalf of SignatureAIM by its corporate secretary or one of its assistant corporate secretaries certifying to Heartland that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded.
(e) AimBank Secretary’s Certificate. AimBank will have furnished to Heartland and FB&T (i) copies of the text of the resolutions by which the corporate action on the part of AimBank necessary to approve this Agreement and the transactions contemplated hereby were taken, and (ii) a certificate dated as of the Closing Date executed on behalf of AimBank by its corporate secretary or one of its assistant corporate secretaries certifying to Heartland and FB&T that such copies are true, correct and complete copies of such resolutions and that such resolutions were duly adopted and have not been amended or rescinded.
(h)Required Consents. Each Required Consent will have been obtained and be in full force and effect, and such actions as Heartland’s counsel may reasonably require will have been taken in connection therewith.effect.
(i)No Equity Claims. No Person (other than a holder of shares of SignatureAIM Common Stock or AimBank Common Stock) will have asserted that such Person (i) is the owner of, or has the right to acquire or to obtain ownership of, any capital stock of,
or any other voting, equity or ownership interest in, either of SignatureAIM or Signature BankAimBank or (ii) is entitled to any of the Merger Consideration.
(j)BrooksWade Employment Agreement. The BrooksWade Employment Agreement will be in full force and effect, and BrooksWade will not have indicated any intention of not fulfilling his obligations under the BrooksWade Employment Agreement.
B-59
(k)SyversonFerrell Employment Agreement. The SyversonFerrell Employment Agreement will be in full force and effect, and SyversonFerrell will not have indicated any intention of not fulfilling his obligations under the SyversonFerrell Employment Agreement.
(l) Employment Agreements. Each Employment Agreement entered into by an officer of AimBank prior to, or simultaneously with, the execution of this Agreement will be in full force and effect, and none of such officers will have indicated any intention of not fulfilling his or her obligations under such Employment Agreement.
(n) Dissenting Shares. The total number of Dissenting Shares will be no greater than 7.5% of the number of issued and outstanding AIM Common Stock as of the AIM Merger Effective Time.
(o) Other Materials. Heartland will have received the materials set forth in Section 2.10(a).
(p) Release of Liens. SignatureAIM will have delivered to Heartland on or prior to the second Business Day prior to the Closing Date (i) a payoff letter from each lender or holder of any Closing Date Indebtedness evidencing that the aggregate amount of such indebtedness outstandingthe Indebtedness pursuant to that certain Amended and Restated Loan and Security Agreement, dated as of September 18, 2017, by and between AIM and InterBank, as amended by the Closing Date (including any interest accrued thereonFirst Amendment to Amended and any prepayment or similar penaltiesRestated Loan and expenses associated with the prepayment and/or redemption of such indebtedness on the Closing Date), including (i) a customary statement that (A) if such aggregate amount is paid to such lender or holder on the Closing Date, such indebtedness will beSecurity Agreement, dated July 1, 2019, by and between AIM and InterBank has been repaid and/or redeemed in full, and (B)(ii) evidence that all Liens securing such Closing Dateany Indebtedness (if any) may thereafter be automaticallythereunder have been released and terminated, (ii) authorizations to file any Uniform Commercial Code termination statements, terminations and releases of outstanding mortgages and security interests as are reasonably necessary to release such Liens, and (iii) a customary statement that, upon the receipt of payment of the such amount, all tangible collateral (including without limitation, all equity certificates) securing the obligations under such indebtedness in possession of each lender or holder with respect thereto will be promptly delivered to Heartland (collectively, the “Payoff Letters”).thereunder.
TERMINATION, AMENDMENT AND WAIVER
8.1 Reasons for Termination. This Agreement, by prompt written notice given to AIM by Heartland, on the one hand, or to Heartland by AIM, on the other partieshand, prior to or at the Closing, may be terminated:
(a)by mutual consent of the Boards of Directors of Heartland and Signature;AIM;
(b)by either party ifHeartland or AIM in the event a Law or Governmental Order will have been enacted, entered, enforced, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement by any Governmental Entity that prohibits the Closing;
(c) by Heartland or
(d) by AIM if:
(i)the Closing has not occurred by June 30, 2018February 28, 2021 (the “Termination Date”); provided, that SignatureAIM will not be entitled to terminate this Agreement pursuant to this clause (d)(i) if (x) Signature’sthe failure of AIM or AimBank to comply fully with its respective obligations under this Agreement has prevented the consummation of the transactions contemplated by this Agreement, (y) SignatureAimBank has refused, after satisfaction of the conditions set forth in Sections 7.1 and 7.2, to close in accordance with Section 2.10 or (z) the circumstances or events underlying the termination rights set forth in clauses (d)(iii) or (d)(iv) of this Section 8.1 will have occurred;
(ii) either of Heartland or FB&T will have breached any representation, warrantyof its representations, warranties or agreement of Heartlandagreements in this Agreement in any material respect and such breach cannot be or is not cured within 30thirty (30) days after written notice of such breach is given by SignatureAIM or AimBank to Heartland;Heartland or FB&T, as the case may be;
(iii)at the SignatureAIM Shareholder Meeting, thisthe AIM Merger Agreement will not have been duly adopted by the Required SignatureAIM Shareholder Vote;
B-60
(iv)(A) SignatureAIM will have delivered to Heartland a written notice of the intent of SignatureAIM to enter into a merger, acquisition or other agreement (including an agreement in principle) to effect a Superior Proposal based on an Acquisition Proposal received by it, (B) five Business Days have elapsed following delivery to Heartland of such written notice by Signature,AIM, (C) during such five Business Day period Signatureeach of the AIM Entities has fully complied with the terms of Section 5.8, including informing Heartland of the terms and conditions of such Acquisition Proposal and the identity of the Person making such Acquisition Proposal, with the intent of enabling Heartland and FB&T to agree, if they so choose, to a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected, (D) at the end of such five Business Daybusiness-day period the Board of Directors of SignatureAIM will have continued reasonably to believe that such Acquisition Proposal constitutes a Superior Proposal, (E) SignatureAIM pays to Heartland the termination fee in accordance with Section 8.4, and (F) SignatureAIM will have entered into a merger, acquisition or other agreement (including an agreement in principle) to effect a Superior Proposal or the Board of Directors of SignatureAIM will have resolved to do so;
(v)at any time withinduring the period beginning five Business Days afterbefore the Determinationanticipated Closing Date and ending three Business Days prior to the anticipated Closing Date, but only if:
(x) the Heartland DeterminationClosing Date Stock Price (as defined below)VWAP is less than $40.21 per share;the product of 0.85 multiplied by the Initial Heartland Stock Price; and
(y) the number obtained by dividing the Heartland DeterminationClosing Date Stock PriceVWAP by the Initial Heartland Stock Price (as defined below) is less than the number obtained by dividing (A)difference of the Final Index Price (as defined below) by (B) the Initial Index Price (as defined below) and subtracting 0.15 from such quotient; Ratio less 0.15; provided, however, that a termination by SignatureAIM pursuant to this Section 8.1(d)(v) will have no force and effect if Heartland agrees in writing (within fivetwo Business Days after receipt of Signature’sAIM’s written notice of such termination) to increase the Exchange Ratio to an amount equal to (i) (X) the Exchange Ratio (determined without regard to the adjustment pursuant to this clause), divided by (Y) the Heartland DeterminationClosing Date Stock Price,VWAP, multiplied by (ii) $40.21.the product of 0.85 multiplied by the Initial Heartland Stock Price. Notwithstanding anything to the contrary above, Heartland, at its option, may elect to retain the original Exchange Ratio, and, in lieu of altering such Exchange Ratio, increase the Actual Cash Consideration so that each holder of SignatureAimBank Common Stock is entitled to receive the same value as of the Effective Time for each share of SignatureAimBank Common Stock as such holder would have received had the original Exchange Ratio been altered in accordance with the preceding sentence.sentence; provided, that, such increase to cash does not affect the intended tax treatment of the Merger and the AIM Merger. If within such five-Business Day period, Heartland delivers written notice to SignatureAIM that Heartland intends to proceed with the Merger by paying such additional consideration as contemplated by the preceding sentence,this Section 8.1(d)(v), and notifies SignatureAIM in writing of the revised Exchange Ratio or the revised Actual Cash Consideration, then no termination will occur pursuant to this Section 8.1(d)(v), and this Agreement will remain in full force and effect in accordance with its terms (except that the Exchange Ratio or the Actual Cash Consideration will be modified in accordance with this Section 8.1(d)(v)).
If Heartland or any company belonging to the Index declares or effects a stock dividend, split-up, combination, exchange of shares or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such company will be appropriately adjusted for the purposes of applying this Section 8.1(d)(v); or
(vi) any of the conditions set forth in Sections 7.1 or 7.3 will have become impossible to satisfy (other than through a failure of either of AIM or AimBank to comply with its obligations under this Agreement); or
(e) by Heartland or FB&T if:
(i) the Closing has not occurred by the Termination Date; (vi)provided, that neither Heartland nor FB&T will be entitled to terminate this Agreement pursuant to this clause (e)(i) if (x) the failure of Heartland or FB&T to comply fully with its respective obligations under this Agreement has prevented the consummation of the transactions contemplated by this Agreement or (y) Heartland or FB&T has refused, after satisfaction of the conditions set forth in Sections 7.1 or 7.3, to close in accordance with Section 2.10;
B-61
(ii) either of AIM or AimBank will have breached any of its representations, warranties or agreements in this Agreement in any material respect and such breach cannot be or is not cured within thirty (30) days after written notice of such breach is given by Heartland or FB&T to AIM or AimBank, as the case may be;
(iii) at the AIM Shareholder Meeting, the AIM Merger Agreement will not have been duly adopted by the Required AIM Shareholder Vote;
(iv) at any time during the period beginning five Business Days before the anticipated Closing Date and ending three Business Days prior to the anticipated Closing Date, but only if:
(x) the Heartland Closing Date Stock VWAP is greater than the product of 1.15 multiplied by the Initial Heartland Stock Price; and
(y) the number obtained by dividing the Heartland Closing Date Stock VWAP by the Initial Heartland Stock Price is greater than the sum of the Index Ratio plus 0.15; provided, however, that a termination by Heartland or FB&T pursuant to this Section 8.1(e)(iv) will have no force and effect if AIM agrees in writing (within five Business Days after receipt of Heartland’s written notice of such termination) to decrease the Exchange Ratio to an amount equal to (i) (X) the Exchange Ratio (determined without regard to the adjustment pursuant to this clause), divided by (Y) the Heartland Closing Date Stock VWAP, multiplied by (ii) the product of 1.15 multiplied by the Initial Heartland Stock Price. Notwithstanding anything to the contrary above, AIM, at its option, may elect to retain the original Exchange Ratio, and, in lieu of altering such Exchange Ratio, decrease the Actual Cash Consideration so that each holder of AimBank Common Stock is entitled to receive the same value as of the Effective Time for each share of AimBank Common Stock as such holder would have received had the original Exchange Ratio been altered in accordance with the preceding sentence. If within such five-Business Day period, AIM delivers written notice to Heartland that AIM intends to proceed with the Merger by decreasing the Merger Consideration as contemplated by this Section 8.1(e)(iv), and notifies Heartland in writing of the revised Exchange Ratio or the revised Actual Cash Consideration, then no termination will occur pursuant to this Section 8.1(e)(iv), and this Agreement will remain in full force and effect in accordance with its terms (except that the Exchange Ratio or the Actual Cash Consideration will be modified in accordance with this Section 8.1(e)(iv)).
If Heartland or any company belonging to the Index declares or effects a stock dividend, split-up, combination, exchange of shares or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such company will be appropriately adjusted for the purposes of applying this Section 8.1(e)(iv); or
(v) any of the conditions set forth in Sections 7.1 or 7.2 will have become impossible to satisfy (other than through a failure of Signatureeither of Heartland or FB&T to comply with its obligations under this Agreement).
8.2 Effect of Termination. Except as provided in Sections 5.2(d), 8.2, 8.3 and 8.4 and any provisions set forth herein that survive the termination of this Agreement, if this Agreement is terminated pursuant to Section 8.1, this Agreement will forthwith become void, there will be no Liability under this Agreement on the part of Heartland, SignatureFB&T, AIM or AimBank or any of their respective Representatives or Subsidiaries, and all rights and obligations of each party hereto will cease; provided, however, that, subject to Sections 8.3 and 8.4, nothing herein will relieve any party from Liability arising out of its own fraud willful misconduct or materialwillful breach of this Agreement.
8.3 Expenses. Except as otherwise provided in this Agreement, all Expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement will be paid by the party incurring such Expenses, whether or not the Merger is consummated. Notwithstanding the foregoing, if this Agreement is terminated pursuant to Sections 8.1(d)(iii), 8.1(e)(ii), or 8.1(e)(iii), then SignatureAIM will pay to Heartland, within five Business Days of presentation by Heartland of reasonably detailed invoices for the same, all Expenses reasonably incurred by Heartland provided that the amount paid will not exceed $750,000or FB&T, and, if this Agreement is terminated pursuant to Section 8.1(d)(ii), then Heartland will pay to Signature,AIM, within five Business Days of presentation by SignatureAIM of reasonably detailed invoices for the same, all Expenses reasonably incurred by Signature AIM and AimBank; provided, however, that neither party’s reimbursement obligation hereunder will exceed $750,000 in the amount paid will not exceed $750,000.aggregate. As used in this Agreement, “Expenses” will consist of all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its
B-62
Affiliates) incurred by a party in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the solicitation of the approval of the AIM Merger by holders of SignatureAIM Common Stock and all other matters related to the consummation of the AIM Merger.
8.4 Signature Termination Fee. If this Agreement is terminated by SignatureAIM pursuant to Section 8.1(d)(iv), or by Heartland or FB&T pursuant to Section 8.1(e)(ii) because of a breach of any portion of Section 5.8 or Section 6.3(a)6.2(a), then SignatureAIM will pay to Heartland (in lieu of any payment that may be due under Section 8.3), a termination fee of $2,400,000$11,000,000 as the sole and exclusive remedy of Heartland and FB&T (including any remedy for specific performance), as agreed-upon liquidated damages.
8.5 Amendment. This Agreement may not be amended except by an instrument in writing approved by the parties to this Agreement and signed on behalf of each of the parties hereto.hereto, provided, however, that Heartland and FB&T may, in their sole discretion, amend Sections 4.15 and 5.1 to increase any of the dollar thresholds contained in those sections or to relax any other requirements in those sections in order to obtain the Regulatory Approvals.
8.6 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto or (b) waive compliance with any of the
agreements of any other parties or with any conditions to its own obligations, in each case only to the extent such obligations, agreements and conditions are intended for its benefit.
GENERAL PROVISIONS
9.1 Press Releases and Announcements. Any public announcement, including any announcement to employees, customers, suppliers or others having dealings with Signature or Signature Bank,any AIM Entity, or similar publicity with respect to this Agreement or the transactions contemplated by this Agreement, will be issued, if at all, at such time and in such manner as Heartland will determine and approve, or as required by applicable Law. Notwithstanding the foregoing, Heartland, on the one hand, and SignatureAIM, on the other hand, agree that (a) a press release for national dissemination announcing the execution of this Agreement in a form prepared by Heartland and reviewed and approved by SignatureAIM (with such approval not to be unreasonably withheld, conditioned or delayed) may be made on the day after execution of this Agreement, or as soon thereafter as practicable, and (b) any press release or customer communication relating to this Agreement and the transactions contemplated hereby issued for dissemination in Minneapolis, MinnesotaLubbock, Texas prior to the Effective Time will be in a form prepared by Heartland and reviewed and approved by SignatureAIM (with such approval not to be unreasonably withheld, conditioned or delayed). Heartland and FB&T will have the right to be present for any in-Person announcement by Signature.AIM. Unless consented to by Heartland or required by Law, SignatureAIM and AimBank will keep and will cause Signature Bank to keep,confidential any non-public information regarding this Agreement and the transactions contemplated by this Agreement confidential.Agreement.
9.2 Notices. All notices and other communications hereunder will be in writing and will be sufficiently given if made by hand delivery, by e-mail, by overnight delivery service, or by registered or certified mail (postage prepaid and return receipt requested) to the parties at the following addresses (or at such other address for a party as will be specified by it by like notice):
if to Heartland or FB&T: | ||||||
| | | | | |||
| | | Heartland Financial USA, Inc. | ||||
| | | 707 17th Street, Suite 2950 | ||||
| | | Denver, Colorado 80202 | ||||
| | | Attention: | | | J. Daniel Patten, Executive Vice President, Finance and Corporate | |
| | | Telephone: | | | (720) 873-3780 | |
| | E-mail: | | | dpatten@htlf.com | ||
| | | | | |||
B-63
with copies to: | ||||||
| | | | | |||
| | | Heartland Financial USA, Inc. | ||||
| | | 9800 Bren Road East | ||||
| | | Suite 200 | ||||
| | | Minnetonka, Minnesota 55343 | ||||
| | Attention: | | | Jay L. Kim, Executive Vice President and General Counsel | ||
| | Telephone: | | | (952) 562-1504 | ||
E-mail:
jkim@htlf.com
| | | | | |||
and | ||||||
| | | | | |||
| | | Dorsey & Whitney LLP | ||||
| | | 50 South Sixth Street, Suite 1500 | ||||
| | | Minneapolis, Minnesota 55402 | ||||
| | | Attention: | | | Jay L. Swanson | |
| | | Telephone: | | | (612) 340-2600 | |
| | | | | swanson.jay@dorsey.com | ||
| | | | | marsalek.john@dorsey.com | ||
| | | | | |||
if to AIM or AimBank: | ||||||
| | | | | |||
| | | AIM Bancshares, Inc. | ||||
| | | 110 College Avenue | ||||
| | | Levelland, Texas 79336 | ||||
| | | Attention: | | | Scott L. Wade, Chairman of the Board, | |
| | | Telephone: | | | (806) 897-4310 | |
| | | E-mail: | | | SWade@aimbankonline.com | |
| | | | | |||
with a copy to: | ||||||
| | | | | |||
| | | Fenimore, Kay, Harrison & Ford, LLP | ||||
| | | 812 San Antonio Street | ||||
| | | Suite 600 | ||||
| | | Austin, Texas 78701 | ||||
| | | Attention: | | | Lowell W. Harrison | |
| | | Telephone: | | | (512) 583-5905 | |
| | | E-mail: | | | LHarrison@fkhfpartners.com | |
All such notices and other communications will be deemed to have been duly given as follows: when delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if delivered by mail; when receipt electronically acknowledged, if e-mailed; and the next day after being delivered to an overnight delivery service.
9.3 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party to this Agreement without the prior written consent of the other partiesparty to this Agreement, except that Heartland may assign any of its rights under this Agreement to one or more of its Subsidiaries, so long as Heartland remains responsible for the performance of all of its obligations under this Agreement. Subject to the foregoing, this Agreement and all of the provisions of this Agreement will be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns.
B-64
9.4 No Third Party Beneficiaries. Except as otherwise provided in Section 6.8(c)6.7(c), which is intended to benefit each Indemnified Party and his or her heirs and representatives, nothing expressed or referred to in this Agreement confers any rights or remedies upon any Person that is not a party or permitted assign of a party to this Agreement.
(a)Prior to or simultaneous with the execution of this Agreement, SignatureAIM delivered to Heartland the Disclosure Schedules, which set forth, among other things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Article 4 or to one or more covenants contained herein (whether or not such section of this Agreement expressly references a schedule thereto). Except as set forth in the Disclosure Schedules, the information contained therein is dated as of the close of business on the Business Day prior to the date of this Agreement or, if delivered pursuant to Section 6.7,6.6, as of such date delivered. Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item as an exception to a representation or warranty will not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would be reasonably likely to have a Material Adverse Effect. In the event of any inconsistency between the statements in this Agreement and statements in a Schedule, the statements in this Agreement will control and the statements in the Schedule will be disregarded.
(b)For purposes of this Agreement, a Schedule relating to a certain section may incorporate by reference disclosures made in other Schedules; provided, however, that any disclosure with respect to a particular Schedule will be deemed adequately disclosed in other Schedules to the extent it is readily apparent from the nature of the disclosure that such disclosure also applies to such other Schedules. Nothing in a Schedule is deemed adequate to disclose an exception to a representation or warranty made in this Agreement unless the Schedule identifies the exception with reasonable particularity.
9.6 Interpretation. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. References to this Agreement include the Exhibits, Schedules and Annexes hereto. References to Sections and Articles refer to Sections and Articles of this Agreement unless otherwise stated. Words such as “herein,” “hereinafter,” “hereof,” “hereto,” “hereby” and “hereunder,” and words of like import, unless the context requires otherwise, refer to this Agreement (including the Exhibits, Schedules and Schedules hereto)Annexes). As used in this Agreement, the masculine, feminine and neuter genders will be deemed to include the others if the context requires. Any singular term in this Agreement will be deemed to include the plural, and any plural term the singular if the context requires. Whenever the words “include”, “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “but not limited to,” whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. Any reference to any money or currency or use of “$” will be in U.S. dollars. Except as the context may otherwise require, references to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided, that with respect to any Contract listed on any Schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate Schedule. References to a statute will be to such statute, as amended from time to time, and to the rules and regulations promulgated thereunder. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Any document described as having been “delivered or made available” by a party for purposes of this Agreement consists of any document or other information that (a) was provided in writing or electronically by one party or its Representatives to the other party and its Representatives prior to the date of this Agreement or (b) was filed by a party with the SEC and publicly available on EDGAR prior to the date of this Agreement.
9.7 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated, and the parties will negotiate in good faith to modify this Agreement and to preserve each party’s anticipated benefits under this Agreement.
B-65
(a) This Agreement, together with the Ancillary Documents, contain the complete agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral. Each party to this Agreement acknowledgesoral, including the Prior Holding Company Merger Agreement. AIM and AimBank acknowledge that its respective counterparty hasHeartland and FB&T have made no representations, warranties, agreements, undertakings or promises, except for thoseunless they are expressly set forth in this Agreement or in any of the Ancillary Documents to which eachHeartland or FB&T, as the case may be, is a party. Heartland and FB&T acknowledge that AIM and AimBank have made no representations, warranties, agreements, undertakings or promises, unless they are expressly set forth in this Agreement or in any of the Ancillary Documents to which AIM and AimBank, as the case may be, is a party.
(b) Without limiting the generality of Section 9.8(a), FB&T and AimBank hereby terminate the Prior Bank Merger Agreement and agree that the Prior Bank Merger Agreement is null and void and will be of no further force and effect.
9.9 Governing Law. THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, OF THE STATE OF MINNESOTADELAWARE WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.
9.10 Submission to Jurisdiction. The parties hereby irrevocably submit to the jurisdiction of the courts of the State of MinnesotaTexas or of the United States of America located in Hennepin County, Minnesotathe State of Texas, solely in respect of the interpretation and enforcement of the provisions of this Agreement and the Ancillary Documents, and in respect of the transactions contemplated hereby and thereby, and hereby waive, and agree not to assert, as a defense in any Litigation relating to the interpretation or enforcement of this Agreement or any of the Ancillary Documents, that either of such parties is not subject thereto or that such Litigation may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any Ancillary Document may not be enforced in or by such courts. The parties hereto irrevocably agree that all claims with respect to such Litigation will be heard and determined in such courts. The parties hereby consent to and grant any such court’s jurisdiction over such parties and over the subject matter of such dispute, and
agree that mailing of process or other papers in connection with any such Litigation in the manner provided in Section 9.2 or in such other manner as may be permitted by Law, will be valid and sufficient service thereof.
9.11 Specific Performance. Each of the parties acknowledges and agrees that the subject matter of this Agreement, including the business,businesses, assets and properties of each of Signature and Signature Bank,AIM Entity, is unique, that the other party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached, and that the remedies at Law would not be adequate to compensate such other parties not in default or in breach. Accordingly, each of the parties agrees that the other party will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in addition to any other remedy to which they may be entitled, at Law or in equity (without any requirement that Heartland or Signature provide any bond or other security). The parties waive any defense that a remedy at Law is adequate and any requirement to post bond or provide similar security in connection with actions instituted for injunctive relief or specific performance of this Agreement.
9.12 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9.12.
B-66
9.13 Investigation of Representations, Warranties and Covenants. No investigation made by or on behalf of the parties hereto or the results of any such investigation will constitute a waiver of any representation, warranty or covenant of any other party.
9.14 Counterparts and Effectiveness. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[The remainder of this page is intentionally blank.]
B-67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first written above.
| | |||||||||
| | HEARTLAND FINANCIAL USA, INC. | ||||||||
| | | | | | |||||
| | | By: | | | /s/ Lynn B. Fuller | ||||
| | | | | Name: | | | Lynn B. Fuller | ||
| | | | | Title: | | | Executive Operating Chairman | ||
| | | FIRST BANK & TRUST | |||||||
| | | | | | |||||
| | | By: | | | /s/ Barry H. Orr | ||||
| | | | | Name: | | | Barry H. Orr | ||
| | | | | Title: | | | Chief Executive Officer | ||
| | | AIM BANCSHARES, INC. | |||||||
| | | | | | |||||
| | | By: | | | /s/ Scott L. Wade | ||||
| | | | | Name: | | | Scott L. Wade | ||
| | | | | Title: | | | Chairman of the Board and | ||
| Chief Executive Officer | |||||||||
| | | AIMBANK | |||||||
| | | | | | |||||
| | | By: | | | /s/ Scott L. Wade | ||||
| | | | | Name: | | | Scott L. Wade | ||
| | |||||||||
| | | | Title: | | | Chairman of the Board, President and Chief Executive Officer | |||
| | | SHAREHOLDER REPRESENTATIVE: | ||||
| | | | | |||
| | | /s/ Michael F. Epps | ||||
| | | Michael F. Epps, | ||||
| | | solely in his capacity as the Shareholder Representative | ||||
[Signature page to Amended and Restated Agreement and Plan of Merger]
B-68
TITLE 1. GENERAL PROVISIONS
CHAPTER 10. MERGERS, INTEREST EXCHANGES, CONVERSIONS, AND SALES OF ASSETS
§ 10.351. APPLICABILITY OF SUBCHAPTER.
(b) This subchapter applies only to a “domestic entity subject to dissenters’ rights,” as defined in Section 1.002. That term includes a domestic for-profit corporation, professional corporation, professional association, and real estate investment trust. Except as provided in Subsection (c), that term does not include a partnership or limited liability company.
(c) The governing documents of a partnership or a limited liability company may provide that its owners are entitled to the rights of dissent and appraisal provided by this subchapter, subject to any modification to those rights as provided by the entity’s governing documents.
§ 10.352. DEFINITIONS.
In this subchapter:
(1) “Dissenting owner” means an owner of an ownership interest in a domestic entity subject to dissenters’ rights who:
(A) provides notice under Section 10.356; and
(B) complies with the requirements for perfecting that owner’s right to dissent under this subchapter.
(2) “Responsible organization” means:
(A) the organization responsible for:
(i) the provision of notices under this subchapter; and
(ii) the primary obligation of paying the fair value for an ownership interest held by a dissenting owner;
(B) with respect to a merger or conversion:
(i) for matters occurring before the merger or conversion, the organization that is merging or converting; and
(ii) for matters occurring after the merger or conversion, the surviving or new organization that is primarily obligated for the payment of the fair value of the dissenting owner’s ownership interest in the merger or conversion;
(C) with respect to an interest exchange, the organization the ownership interests of which are being acquired in the interest exchange;
(D) with respect to the sale of all or substantially all of the assets of an organization, the organization the assets of which are to be transferred by sale or in another manner; and
(E) with respect to an amendment to a domestic for-profit corporation’s certificate of formation described by Section 10.354(a)(1)(G), the corporation.
C-1
§ 10.353. FORM AND VALIDITY OF NOTICE.
(a) Notice required under this subchapter:
(1) must be in writing; and
(2) may be mailed, hand-delivered, or delivered by courier or electronic transmission.
(b) Failure to provide notice as required by this subchapter does not invalidate any action taken.
§ 10.354. RIGHTS OF DISSENT AND APPRAISAL.
(a) Subject to Subsection (b), an owner of an ownership interest in a domestic entity subject to dissenters' rights is entitled to:
(1) dissent from:
(A) a plan of merger to which the domestic entity is a party if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that was entitled to vote on the plan of merger;
(B) a sale of all or substantially all of the assets of the domestic entity if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that was entitled to vote on the sale;
(C) a plan of exchange in which the ownership interest of the owner is to be acquired;
(D) a plan of conversion in which the domestic entity is the converting entity if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that was entitled to vote on the plan of conversion;
(E) a merger effected under Section 10.006 in which:
(i) the owner is entitled to vote on the merger; or
(ii) the ownership interest of the owner is converted or exchanged;
(F) a merger effected under Section 21.459(c) in which the shares of the shareholders are converted or exchanged; or
(G) if the owner owns shares that were entitled to vote on the amendment, an amendment to a domestic for-profit corporation's certificate of formation to:
(i) add the provisions required by Section 3.007(e) to elect to be a public benefit corporation; or
(ii) delete the provisions required by Section 3.007(e), which in effect cancels the corporation's election to be a public benefit corporation; and
(2) subject to compliance with the procedures set forth in this subchapter, obtain the fair value of that ownership interest through an appraisal.
(b) Notwithstanding Subsection (a), subject to Subsection (c), an owner may not dissent from a plan of merger or conversion in which there is a single surviving or new domestic entity or non-code organization, or from a plan of exchange, if:
(1) the ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate:
(A) listed on a national securities exchange; or
(B) held of record by at least 2,000 owners;
C-2
(2) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration that is different from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of fractional shares or interests the owner would otherwise be entitled to receive; and
(3) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration other than:
(A) ownership interests, or depository receipts in respect of ownership interests, of a domestic entity or non-code organization of the same general organizational type that, immediately after the effective date of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are:
(i) listed on a national securities exchange or authorized for listing on the exchange on official notice of issuance; or
(ii) held of record by at least 2,000 owners;
(B) cash instead of fractional ownership interests the owner would otherwise be entitled to receive; or
(C) any combination of the ownership interests and cash described by Paragraphs (A) and (B).
(c) Subsection (b) shall not apply either to a domestic entity that is a subsidiary with respect to a merger under Section 10.006 or to a corporation with respect to a merger under Section 21.459(c).
(d) Notwithstanding Subsection (a), an owner of an ownership interest in a domestic for-profit corporation subject to dissenters' rights may not dissent from an amendment to the corporation's certificate of formation described by Subsection (a)(1)(G) if the shares held by the owner are part of a class or series of shares, on the record date set for purposes of determining which owners are entitled to vote on the amendment:
(1) listed on a national securities exchange; or
(2) held of record by at least 2,000 owners.
§ 10.355. NOTICE OF RIGHT OF DISSENT AND APPRAISAL.
(a) A domestic entity subject to dissenters' rights that takes or proposes to take an action regarding which an owner has a right to dissent and obtain an appraisal under Section 10.354 shall notify each affected owner of the owner's rights under that section if:
(1) the action or proposed action is submitted to a vote of the owners at a meeting; or
(2) approval of the action or proposed action is obtained by written consent of the owners instead of being submitted to a vote of the owners.
(b) If a parent organization effects a merger under Section 10.006 and a subsidiary organization that is a party to the merger is a domestic entity subject to dissenters' rights, the responsible organization shall notify the owners of that subsidiary organization who have a right to dissent to the merger under Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. The notice must also include a copy of the certificate of merger and a statement that the merger has become effective.
(b-1) If a corporation effects a merger under Section 21.459(c), the responsible organization shall notify the shareholders of that corporation who have a right to dissent to the plan of merger under Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. Notice required under this subsection that is given to shareholders before the effective date of the merger may, but is not required to, contain a statement of the merger's effective date. If the notice is not given to the shareholders until on or after the effective date of the merger, the notice must contain a statement of the merger's effective date.
(c) A notice required to be provided under Subsection (a), (b), or (b-1) must:
(1) be accompanied by a copy of this subchapter; and
(2) advise the owner of the location of the responsible organization's principal executive offices to which a notice required under Section 10.356(b)(1) or a demand under Section 10.356(b)(3), or both, may be provided.
C-3
(d) In addition to the requirements prescribed by Subsection (c), a notice required to be provided:
(1) under Subsection (a)(1) must accompany the notice of the meeting to consider the action;
(2) under Subsection (a)(2) must be provided to:
(A) each owner who consents in writing to the action before the owner delivers the written consent; and
(B) each owner who is entitled to vote on the action and does not consent in writing to the action before the 11th day after the date the action takes effect; and
(3) under Subsection (b-1) must be provided:
(A) if given before the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder to whom that offer is made; or
(B) if given after the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder who did not tender the shareholder's shares in that offer.
(e) Not later than the 10th day after the date an action described by Subsection (a)(1) takes effect, the responsible organization shall give notice that the action has been effected to each owner who voted against the action and sent notice under Section 10.356(b)(1).
(f) If the notice given under Subsection (b-1) did not include a statement of the effective date of the merger, the responsible organization shall, not later than the 10th day after the effective date, give a second notice to the shareholders notifying them of the merger's effective date. If the second notice is given after the later of the date on which the tender or exchange offer described by Section 21.459(c)(2) is consummated or the 20th day after the date notice under Subsection (b-1) is given, then the second notice is required to be given to only those shareholders who have made a demand under Section 10.356(b)(3).
§ 10.356. PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF RIGHT OF DISSENT AND APPRAISAL.
(a) An owner of an ownership interest of a domestic entity subject to dissenters' rights who has the right to dissent and appraisal from any of the actions referred to in Section 10.354 may exercise that right to dissent and appraisal only by complying with the procedures specified in this subchapter. An owner's right of dissent and appraisal under Section 10.354 may be exercised by an owner only with respect to an ownership interest that is not voted in favor of the action.
(b) To perfect the owner's rights of dissent and appraisal under Section 10.354, an owner:
(1) if the proposed action is to be submitted to a vote of the owners at a meeting, must give to the domestic entity a written notice of objection to the action that:
(A) is addressed to the entity's president and secretary;
(B) states that the owner's right to dissent will be exercised if the action takes effect;
(C) provides an address to which notice of effectiveness of the action should be delivered or mailed; and
(D) is delivered to the entity's principal executive offices before the meeting;
(2) with respect to the ownership interest for which the rights of dissent and appraisal are sought:
(A) must vote against the action if the owner is entitled to vote on the action and the action is approved at a meeting of the owners; and
(B) may not consent to the action if the action is approved by written consent; and
(3) must give to the responsible organization a demand in writing that:
(A) is addressed to the president and secretary of the responsible organization;
(B) demands payment of the fair value of the ownership interests for which the rights of dissent and appraisal are sought;
C-4
(C) provides to the responsible organization an address to which a notice relating to the dissent and appraisal procedures under this subchapter may be sent;
(D) states the number and class of the ownership interests of the domestic entity owned by the owner and the fair value of the ownership interests as estimated by the owner; and
(E) is delivered to the responsible organization at its principal executive offices at the following time:
(i) not later than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(e) that the action has taken effect, if the action was approved by a vote of the owners at a meeting;
(ii) not later than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(d)(2) that the action has taken effect, if the action was approved by the written consent of the owners;
(iii) not later than the 20th day after the date the responsible organization sends to the owner a notice that the merger was effected, if the action is a merger effected under Section 10.006; or
(iv) not later than the 20th day after the date the responsible organization gives to the shareholder the notice required by Section 10.355(b-1) or the date of the consummation of the tender or exchange offer described by Section 21.459(c)(2), whichever is later, if the action is a merger effected under Section 21.459(c).
(c) An owner who does not make a demand within the period required by Subsection (b)(3)(E) or, if Subsection (b)(1) is applicable, does not give the notice of objection before the meeting of the owners is bound by the action and is not entitled to exercise the rights of dissent and appraisal under Section 10.354.
(d) Not later than the 20th day after the date an owner makes a demand under Subsection (b)(3), the owner must submit to the responsible organization any certificates representing the ownership interest to which the demand relates for purposes of making a notation on the certificates that a demand for the payment of the fair value of an ownership interest has been made under this section. An owner's failure to submit the certificates within the required period has the effect of terminating, at the option of the responsible organization, the owner's rights to dissent and appraisal under Section 10.354 unless a court, for good cause shown, directs otherwise.
(e) If a domestic entity and responsible organization satisfy the requirements of this subchapter relating to the rights of owners of ownership interests in the entity to dissent to an action and seek appraisal of those ownership interests, an owner of an ownership interest who fails to perfect that owner's right of dissent in accordance with this subchapter may not bring suit to recover the value of the ownership interest or money damages relating to the action.
§ 10.357. WITHDRAWAL OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) An owner may withdraw a demand for the payment of the fair value of an ownership interest made under Section 10.356 before:
(1) payment for the ownership interest has been made under Sections 10.358 and 10.361; or
(2) a petition has been filed under Section 10.361.
(b) Unless the responsible organization consents to the withdrawal of the demand, an owner may not withdraw a demand for payment under Subsection (a) after either of the events specified in Subsections (a)(1) and (2).
§ 10.358. RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND DEMAND FOR FAIR VALUE BY DISSENTING OWNER.
(a) Not later than the 20th day after the date a responsible organization receives a demand for payment made by a dissenting owner in accordance with Section 10.356(b)(3), the responsible organization shall respond to the dissenting owner in writing by:
(1) accepting the amount claimed in the demand as the fair value of the ownership interests specified in the notice; or
(2) rejecting the demand and including in the response the requirements prescribed by Subsection (c).
C-5
(b) If the responsible organization accepts the amount claimed in the demand, the responsible organization shall pay the amount not later than the 90th day after the date the action that is the subject of the demand was effected if the owner delivers to the responsible organization:
(1) endorsed certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed assignments of the ownership interests if the ownership interests are uncertificated.
(c) If the responsible organization rejects the amount claimed in the demand, the responsible organization shall provide to the owner:
(1) an estimate by the responsible organization of the fair value of the ownership interests; and
(2) an offer to pay the amount of the estimate provided under Subdivision (1).
(d) If the dissenting owner decides to accept the offer made by the responsible organization under Subsection (c)(2), the owner must provide to the responsible organization notice of the acceptance of the offer not later than the 90th day after the date the action that is the subject of the demand took effect.
(e) If, not later than the 90th day after the date the action that is the subject of the demand took effect, a dissenting owner accepts an offer made by a responsible organization under Subsection (c)(2) or a dissenting owner and a responsible organization reach an agreement on the fair value of the ownership interests, the responsible organization shall pay the agreed amount not later than the 120th day after the date the action that is the subject of the demand took effect, if the dissenting owner delivers to the responsible organization:
(1) endorsed certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed assignments of the ownership interests if the ownership interests are uncertificated.
§ 10.359. RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) A responsible organization shall note in the organization’s ownership interest records maintained under Section 3.151 the receipt of a demand for payment from any dissenting owner made under Section 10.356.
(b) If an ownership interest that is the subject of a demand for payment made under Section 10.356 is transferred, a new certificate representing that ownership interest must contain:
(1) a reference to the demand; and
(2) the name of the original dissenting owner of the ownership interest.
§ 10.360. RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.
A transferee of an ownership interest that is the subject of a demand for payment made under Section 10.356 does not acquire additional rights with respect to the responsible organization following the transfer. The transferee has only the rights the original dissenting owner had with respect to the responsible organization after making the demand.
§ 10.361. PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF APPRAISERS.
(a) If a responsible organization rejects the amount demanded by a dissenting owner under Section 10.358 and the dissenting owner and responsible organization are unable to reach an agreement relating to the fair value of the ownership interests within the period prescribed by Section 10.358(d), the dissenting owner or responsible organization may file a petition requesting a finding and determination of the fair value of the owner's ownership interests in a court in:
(1) the county in which the organization's principal office is located in this state; or
(2) the county in which the organization's registered office is located in this state, if the organization does not have a business office in this state.
(b) A petition described by Subsection (a) must be filed not later than the 60th day after the expiration of the period required by Section 10.358(d).
C-6
(c) On the filing of a petition by an owner under Subsection (a), service of a copy of the petition shall be made to the responsible organization. Not later than the 10th day after the date a responsible organization receives service under this subsection, the responsible organization shall file with the clerk of the court in which the petition was filed a list containing the names and addresses of each owner of the organization who has demanded payment for ownership interests under Section 10.356 and with whom agreement as to the value of the ownership interests has not been reached with the responsible organization. If the responsible organization files a petition under Subsection (a), the petition must be accompanied by this list.
(d) The clerk of the court in which a petition is filed under this section shall provide by registered mail notice of the time and place set for the hearing to:
(1) the responsible organization; and
(2) each owner named on the list described by Subsection (c) at the address shown for the owner on the list.
(e) The court shall:
(1) determine which owners have:
(A) perfected their rights by complying with this subchapter; and
(B) become subsequently entitled to receive payment for the fair value of their ownership interests; and
(2) appoint one or more qualified appraisers to determine the shareholder's shares in the event of, anyfair value of the following corporate actions:
(g) The beneficial owner of an ownership interest subject to dissenters' rights held in a voting trust or by a nominee on the beneficial owner's behalf may file a petition described by Subsection (a) if no agreement between the dissenting owner of the dissenting shareholder in that it:ownership interest and the responsible organization has been reached within the period prescribed by Section 10.358(d). When the beneficial owner files a petition described by Subsection (a):
(1) alters or abolishes a preferential rightthe beneficial owner shall at that time be considered, for purposes of this subchapter, the shares;
ownership interest occurring in anticipation of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description
ownership interest.
(b) The corporation may withhold the remittance described in paragraph (a) from a person who was not
(c) The determination of the fair value of an ownership interest made for purposes of this subchapter may not be used for purposes of making a determination of the fair value of that ownership interest for another purpose or of the fair value of another ownership interest, including for purposes of determining any minority or liquidity discount that might apply to a sale of an ownership interest.
C-7
§ 10.363. POWERS AND DUTIES OF APPRAISER; APPRAISAL PROCEDURES.
(a) An appraiser appointed under Section 10.361 has the power and authority that:
(1) is granted by the court in the order appointing the appraiser; and
(2) may be conferred by a court to a master in chancery as provided by Rule 171, Texas Rules of Civil Procedure.
(b) The appraiser shall:
(1) determine the fair value of an ownership interest of an owner adjudged by the court to be entitled to payment for the ownership interest; and
(2) file with the court a report of that determination.
(c) The appraiser is entitled to examine the books and records of a responsible organization and may conduct investigations as the appraiser considers appropriate. A dissenting owner or responsible organization may submit to an appraiser evidence or other information relevant to the determination of the fair value of the shares, plusownership interest within 30 daysrequired by Subsection (b)(1).
(a) A dissenting owner or responsible organization may object, based on the law or the facts, to all or part of an appraisal report containing the fair value of an ownership interest determined under Section 10.363(b).
(b) If an objection to a dissenterreport is entitled only to the amount remitted by the corporation.
the fair value of the shares, plusownership interest that is the subject of the report. After the hearing, the court shall require the responsible organization to pay to the holders of the ownership interest the amount of the determined value with interest, accruing from the 91st day after the date the applicable action for which the owner elected to dissent was effected until the date of the judgment.
(c) Interest under Subsection (b) accrues at the same rate as is provided for the accrual of prejudgment interest in civil cases.
(d) The responsible organization shall:
(1) immediately pay the amount of the judgment to a holder of an uncertificated ownership interest; and
(2) pay the amount of the judgment to a holder of a certificated ownership interest immediately after the certificate holder surrenders to the responsible organization an endorsed certificate representing the ownership interest. The petition
(e) On payment of the judgment, the dissenting owner does not have an interest in the:
(1) ownership interest for which the payment is made; or
(2) responsible organization with respect to that ownership interest.
§ 10.365. COURT COSTS; COMPENSATION FOR APPRAISER.
(a) An appraiser appointed under Section 10.361 is entitled to a reasonable fee payable from court costs.
(b) All court costs shall be filedallocated between the responsible organization and the dissenting owners in the countymanner that the court determines to be fair and equitable.
§ 10.366. STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY DISSENTING OWNER.
(a) An ownership interest of an organization acquired by a responsible organization under this subchapter:
(1) in the case of a merger, conversion, or interest exchange, shall be held or disposed of as provided in the plan of merger, conversion, or interest exchange; and
C-8
(2) in any other case, may be held or disposed of by the responsible organization in the same manner as other ownership interests acquired by the organization or held in its treasury.
(b) An owner who has demanded payment for the owner’s ownership interest under Section 10.356 is not entitled to vote or exercise any other rights of an owner with respect to the ownership interest except the right to:
(1) receive payment for the ownership interest under this subchapter; and
(2) bring an appropriate action to obtain relief on the ground that the action to which the registereddemand relates would be or was fraudulent.
§ 10.367. RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.
(a) The rights of a dissenting owner terminate if:
(1) the owner withdraws the demand under Section 10.356;
(2) the owner's right of dissent is terminated under Section 10.356;
(3) a petition is not filed within the period required by Section 10.361; or
(4) after a hearing held under Section 10.361, the court adjudges that the owner is not entitled to elect to dissent from an action under this subchapter.
(b) On termination of the corporation is located, exceptright of dissent under this section:
(1) the dissenting owner and all persons claiming a right under the owner are conclusively presumed to have approved and ratified the action to which the owner dissented and are bound by that a surviving foreign corporation that receives a demand relatingaction;
(2) the owner's right to be paid the shares of a constituent domestic corporation shall file the petition in the county in this state in which
(3) the owner's status as parties all
(6) the dissenting owner is entitled to receive dividends or other distributions made after the date of the owner's payment demand under Section 10.356, to owners of the same class and series of ownership interests held by a dissenter. Thethe owner as if the demand had not been made, subject to any change in or adjustment to the ownership interests because of an action taken by the domestic entity after the date of the demand.
§ 10.368. EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.
In the absence of fraud in the transaction, any right of an owner of an ownership interest to dissent from an action and obtain the fair value of the ownership interest under this subchapter is the exclusive remedy for recovery of:
(1) the value of the ownership interest; or
(2) money damages to the owner with respect to the action.
C-9
FAIRNESS OPINION OF FINANCIAL ADVISOR TO AIM
October 8, 2020
Board of Directors
AIM Bancshares, Inc.
110 College Avenue
Levelland, TX 79336
Ladies and Gentlemen:
Magstar Capital, LLC (“we” or “Magstar”) understands that Heartland Financial USA, Inc., a Delaware corporation (“Heartland”), First Bank & Trust, a Texas state-chartered bank and wholly owned subsidiary of Heartland (“FB&T”), AIM Bancshares, Inc., a Texas corporation (“AIM”), AimBank, a Texas state-chartered bank and wholly owned subsidiary of AIM (“AimBank”), and Michael F. Epps, solely in his capacity as the representative of the AIM Shareholders other than Dissenting Shareholders (the “Shareholder Representative”) are about to enter into an Amended and Restated Agreement and Plan of Merger to be dated on or about October 8, 2020 (the "Agreement"). AIM owns all of the issued and outstanding capital stock of AimBank, a Texas state-chartered bank (“AimBank”), and Heartland owns all of the issued and outstanding capital stock of FB&T. Pursuant and subject to the terms of the Agreement, (a) AIM will merge with and into AimBank (the “AIMMerger”) pursuant to an Agreement and Plan of Merger in the form attached as Exhibit A to the Agreement between AIM and AimBank, and (b) consummate immediately thereafter the merger of AimBank with and into FB&T (the “Merger”) pursuant to the Agreement. Capitalized terms used herein that are not otherwise defined shall have the same meanings attributed to them in the Agreement. This letter supersedes our letter, dated February 10, 2020, relating to the matters described herein.
Pursuant and subject to the terms of the Agreement, at the Effective Time, and without any further action of Heartland, FB&T, AimBank or any AimBank Shareholder, each issued and outstanding share of AimBank Common Stock (including shares held in the KSOP and excluding shares to be canceled pursuant to Section 2.3(c) of the Agreement) will be canceled and extinguished and be converted into and become a right to receive (i) subject to Section 2.4 and Section 6.16 of the Agreement, the Cash Consideration, and (ii) subject to Section 2.5 of the Agreement, 207.0 shares (the “Exchange Ratio”) of Heartland Common Stock (the “Stock Consideration” and, together with the Cash Consideration (as adjusted), the “Merger Consideration”). Pursuant to the Agreement, the “Cash Consideration” means an amount equal to $685.00 for each AimBank Common Share Outstanding. The Cash Consideration is subject to adjustment pursuant to Sections 2.4 and 6.16 of the Agreement, as determinedto which such adjustments we express no opinion.
We note that pursuant to Section 2.4 of the Agreement, if the Adjusted Tangible Common Equity is less than $145,000,000 (the “Bottom Threshold Amount”), the Cash Consideration will be reduced by the court is binding on all shareholders,
D-1
Board of Directors
AIM Bancshares, Inc.
Page 2 of 6
We further note pursuant to Section 6.16 of the Agreement, if, as of the time of satisfaction of the conditions set forth in Article 7 of the Agreement (other than conditions that by their terms are required to be satisfied at Closing), the Reagor-Dykes Litigation (as defined in the Agreement) has not been brought to Final Resolution, Heartland will hold back the Per Share Holdback Amount from the Actual Cash Consideration that any AimBank Shareholder is entitled to receive for each AimBank Converted Common Share pursuant to Sections 2.3 and 2.4. Pursuant to the Agreement, the “Per Share Holdback Amount” means (a) the Aggregate Holdback Amount, divided by (b) the AimBank Common Shares Outstanding. The Per Share Holdback Amount and the Aggregate Holdback Amount will be subject to the terms and conditions of Section 6.16 of the Agreement. Pursuant to the Agreement, the “Aggregate Holdback Amount” means an amount equal to the sum of (a) $5,000,000 plus (b) the Retained Earnings, if any, plus (c) the amount by which the damages sought in the Reagor-Dykes Litigation as of three (3) Business Days prior to the Closing exceed the amount sought in the Reagor-Dykes Litigation as of the date hereof; provided however, if the Reagor-Dykes Litigation has been brought to Final Resolution prior to the Closing Date, the Aggregate Holdback Amount shall be $0.
We note that at the Effective Time, each AimBank Stock Option which is outstanding and unexercised immediately prior to the Effective Time will be cancelled in exchange for the right to receive from Heartland a single lump sum cash payment equal to the product of (a) the number of shares of AimBank Common Stock subject to such AimBank Stock Option immediately prior to the Effective Time, multiplied by (b) the excess of (i) an amount determined by (A) multiplying the Exchange Ratio by the Heartland Closing Date Stock VWAP plus (B) the Actual Cash Consideration, over (ii) the exercise price per share of such AimBank Stock Option (the amount determined by the foregoing formula, the “Option Consideration”), less any applicable Taxes required to be withheld with respect to such payment in accordance with Section 2.11 of the Agreement. If the Option Consideration is an amount equal to or less than zero, the holder of such AimBank Stock Option will not be entitled to any cash payment in exchange for such AimBank Stock Option pursuant to Section 2.9 of the Agreement, and (x) such AimBank Stock Option will terminate as of the Effective Time without any consideration paid for such termination and (y) any and all rights of such holder with respect to the AimBank Stock Option or the AIM Equity Plan will be deemed released. You have advised us that as of the date hereof, the aggregate value of the Option Consideration is approximately $6.029 million (based on 1,660 options outstanding with a weighted average strike price of $5,059.42, and assuming a $33.57 closing price of Heartland Common Stock as of October 7, 2020).
No fractional shares of Heartland Common Stock will be issued for AimBank Converted Common Shares, and in lieu of any fractional share, Heartland will pay to each holder of AimBank Converted Common Shares who otherwise would be entitled to receive a fractional share of Heartland Common Stock an amount of cash (without interest) equal to the product of (i) the Heartland Closing Date Stock Price multiplied by (ii) the fractional share interest to which such holder would otherwise be entitled (the “Fractional Share Amount”).
Since the actual Merger Consideration, as described in the Agreement, and any adjustments thereto, cannot be determined byuntil dates after the court, plus interest, exceeds the amount,date of this opinion, potential future adjustments to Merger Consideration, if any, remitted under subdivision 5,
D-2
6
You have requested Sheshunoff & Co. Investment Banking (“Sheshunoff”) to render itsour opinion as to the fairness, from a financial point of view, of the Merger Consideration to the shareholdersholders of Signature Bancshares, Inc. (“Signature”), a bank holding company incorporatedAimBank Common Stock. This opinion addresses only the fairness of the Merger Consideration to be paid in Minnesota,connection with the Merger and we are not opining on any individual stock, cash, option, or other components of the consideration to be paid to Signature shareholderspayable in the proposed merger of Signatureconnection with and into Heartland Financial USA, Inc., a Delaware corporation (“Heartland”) (the “Merger”). Signature’s subsidiary, Signature Bank, will be merged into Heartland’s wholly-owned subsidiary, Minnesota Bank & Trust, immediately after the Merger.
set forth herein, we have:
| (i) | |
| (ii) | reviewed unaudited financial statements for AIM and AimBank for the nine-month period ended September 30, 2020; |
| (iv) | reviewed audited financial statements for AIM, AimBank, Heartland and FB&T, as of and for the year ending December 31, 2019; |
| (v) | reviewed certain historical annual reports of AIM, AimBank, Heartland and FB&T, including for the year ending December 31, 2019; |
| (vi) | reviewed certain historical publicly available business and financial information concerning each of AIM, AimBank, Heartland and FB&T; |
| (vii) | reviewed certain internal financial statements and other financial and operating data of AIM, AimBank, Heartland and FB&T including, without limitation, internal financial analyses and forecasts prepared by management of AIM, AimBank, Heartland and FB&T, and held discussions with senior management of AIM, AimBank, Heartland and FB&T regarding recent developments and regulatory matters; |
| (viii) | reviewed financial projections prepared by certain members of senior management of AIM, AimBank, Heartland and FB&T; |
| (ix) | discussed with certain members of senior management of AIM, AimBank, Heartland and FB&T, the business, financial condition, results of operations and future prospects of AIM, AimBank, Heartland and FB&T; the history and past and current operations of AIM, AimBank, Heartland and FB&T; AIM’s, AimBank’s, Heartland’s and FB&T’s historical financial performance; and their assessment of the |
| (x) | reviewed and analyzed materials detailing the |
| (xi) | assessed general economic, market and financial conditions; |
| (xii) | analyzed the |
| (xiii) | reviewed certain S&P CapIQ consensus income and balance sheet estimates for Heartland for 2020, 2021 and 2022; |
| (xiv) | reviewed historical market prices and trading volumes of Heartland’s Common Stock; |
| (xv) | reviewed materials and financial information relating to Reagor-Dykes Litigation provided by AIM and its legal advisors; |
| (xvi) | reviewed publicly available financial information and stock market data related to selected public financial institutions/commercial banks that we deemed relevant to our analysis; |
D-3
Board of Directors
AIM Bancshares, Inc.
Page 4 of 6
| (xvii) | |
| (xviii) | |
| (xix) | |
In addition, where appropriate, Sheshunoffperforming our review, we have assumed and relied upon publicly availablethe accuracy and completeness of all of the financial and other information that is believedwas available to be reliable, accurate,us from public sources, that was provided to us by AIM, AimBank, Heartland, and complete; however,FB&T or their respective representatives or that was otherwise reviewed by us for purposes of rendering this opinion. We have further relied on the assurances of the respective management of AIM, AimBank, Heartland, and FB&T and that they are not aware of any facts or circumstances that would make any of such information inaccurate or misleading. We have not been asked to and have not undertaken an independent verification of any of such information, and we cannot guaranteedo not assume any responsibility or liability for the reliability, accuracy or completeness of any such publicly available information.
We are not materially and adversely impact the future financial position or results of operations of Heartland after the Merger. Sheshunoff is not an expertexperts in the evaluation of loan and lease portfolios for the purposes of assessing the adequacy of the allowanceallowances for loan and lease losses andwith respect thereto or otherwise. We have assumed that such allowances for SignatureAIM, AimBank, Heartland, and HeartlandFB&T are, respectively,in the aggregate, adequate to cover such losses. In addition, welosses, and will be adequate on a pro forma basis for the combined entity. We were not requested to make, and have not reviewed any individual credit files or made, an independent evaluation, appraisalphysical inspection or physical inspectionappraisal of the assets, properties, facilities, or individual propertiesliabilities (contingent or otherwise) of SignatureAIM, AimBank, Heartland, and FB&T, the collateral securing any such assets or Heartland nor has Sheshunoff beenliabilities, or the collectability of any such assets, and we were not furnished with any such evaluations or appraisals. Sheshunoffappraisals, nor did we review any loan or credit files of AIM, AimBank, Heartland, or FB&T. We also did not perform an onsiteconduct a review of Signatureany credit mark which may be taken in connection with the Merger nor have we evaluated the adequacy of any contemplated credit mark to be so taken.
In arriving at our opinion, we have not evaluated the solvency of AIM, AimBank, Heartland, or FB&T, under any state or federal law relating to bankruptcy, insolvency or similar matters. Accordingly, we express no
D-4
Board of Directors
AIM Bancshares, Inc.
Page 5 of 6
opinion regarding the liquidation value of AIM, AimBank, Heartland, or FB&T, or any other entity. We have also assumed that AIM, AimBank, Heartland, and FB&T would remain as a going concern for all periods relevant to our analysis. Accordingly, we express no opinion with respect to the foregoing. Further, without limiting the generality of the foregoing, we have undertaken no independent analysis or evaluation of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which AIM, AimBank, Heartland, or FB&T is a party or may be subject (including the Reagor-Dykes Litigation), and with your consent and the assumption that the Reagor-Dykes Litigation will be brought to Final Resolution prior to the Closing Date, our opinion makes no other assumption concerning, and therefore does not consider, the possible assertion of actual or potential claims, outcomes or damages arising out of any such matters, including the Aggregate Holdback Amount or its adequacy with respect to the Reagor-Dykes Litigation or otherwise. We have also assumed that neither AIM, AimBank, Heartland, nor FB&T is a party to any material pending transaction, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the Merger contemplated by the Agreement.
As we have discussed with you, we would have typically completed a comparable transaction analysis by reviewing comparable transactions over a period of several years in arriving at an opinion similar to the opinion contained herein. However, given the unprecedented impact of COVID-19 on financial institutions and financial institution holding companies, we have had to necessarily alter our comparable transaction analysis in arriving at the opinion contained herein to only include comparable transactions in the preparation of this opinion.financial institution and financial institution holding company industry that have occurred subsequent to the COVID-19 pandemic.
Our opinion does not consider, include or address: (i) the legal, tax, accounting, or regulatory consequences of the Merger on AIM, Heartland or their respective shareholders; (ii) any advice or opinions provided by any other advisor to the Board of Directors of AIM or Heartland; (iii) any other strategic alternatives that might be available to AIM; or (iv) whether Heartland has sufficient cash or other sources of funds to enable it to pay any consideration contemplated by the Merger.
Our opinion does not constitute a recommendation to AIM as to whether or not it should enter into the Agreement or to any shareholders of AIM as to how such shareholders should vote at any meetings of shareholders called to consider and all regulatory approvals,vote upon the Merger. Our opinion does not address the underlying business decision to proceed with the Merger or the fairness of the amount or nature of the compensation, if required, willany, to be received in a timely fashion and withoutby any conditionsof the officers, directors or requirementsemployees of AIM or AimBank relative to the amount of consideration to be paid with respect to the Merger. Our opinion should not be construed as implying that the Merger Consideration is necessarily the highest or best price that could adversely affectbe obtained in the operationsMerger or in an acquisition, sale, merger, or combination transaction with a third party. We do not express any opinion as to the prices, trading range or volume at which Heartland Common Stock may trade following the announcement of the proposed Merger, following the consummation of the Merger, or the prices at which shares of Heartland Common Stock may be purchased or sold at any time. We render no opinion as to the value of Heartland Common Stock when such stock is actually received by shareholders of AIM. Other than as specifically set forth herein, we are not expressing any opinion with respect to the terms and provisions of the Agreement or the enforceability of any such terms or provisions. Our opinion is not a solvency opinion and does not in any way address the solvency or financial condition of Heartland afterAIM or Heartland.
D-5
Board of Directors
AIM Bancshares, Inc.
Page 6 of 6
This opinion was approved by Magstar’s fairness opinion committee. This letter is directed solely to the completionBoard of Directors of AIM and is not to be used for any other purpose or quoted or referred to, in whole or in part, in any registration statement, prospectus, proxy statement, or any other document, except in each case in accordance with our prior written consent; provided, however, that we hereby consent to the Merger.inclusion and reference to this letter in any registration statement, proxy statement or information statement to be delivered to the holders of AIM’s common stock in connection with the Merger if, and only if, this letter is quoted in full or attached as an exhibit to such document, this letter has not been withdrawn prior to the date of such document, and any description of or reference to Magstar or the analyses performed by Magstar or any summary of this opinion in such filing is in a form acceptable to Magstar and its counsel in the exercise of their reasonable judgment.
In arriving at this opinion, Magstar did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of Signature since the dateeach analysis and factor. Accordingly, Magstar believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the last financial statement reviewed by us. Signature’s management has advised us that they know of no additional information that would have a material effect onprocess underlying this opinion. This opinion does not address any legal, regulatory, tax or accounting matters,
Magstar, as to which Signature has informed us that they have received such advice as they deem necessary from qualified professionals.
We will receive compensation from AIM in negotiationsconnection with our services, which will include, without limitation, a fairness opinion fee that is contingent upon the issuance of this opinion letter, and a completion fee that is contingent upon the consummation of the terms and conditions of the Agreement, the Company placed no limit on the scope of our analyses. In addition, SignatureMerger. AIM has also agreed to reimburse Sheshunoff’s expensesindemnify us, Hillworth and to indemnify Sheshunoff and its officers, employees andour affiliates for certain liabilities that may arise out of this engagement. In the past two years, Magstar has provided investment banking or financial advisory services to AIM or AimBank and has received compensation for such services. Magstar or its affiliates may in the future provide investment banking and financial advisory services to Heartland and receive compensation for such services, although to our knowledge none are expected at this time. During the past two years, certain registered representatives of Magstar, who are also separate owners and employees of Hillworth, have been engaged by, and provided services to AIM through Hillworth.
| | | Sincerely, | |
| | | ||
| | | MAGSTAR CAPITAL, LLC | |
| | |  |
D-6
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 20. | Indemnification of Directors and Officers. |
Heartland is incorporated under the laws of the State of Delaware. Section 145 of the General Corporation Law of the State of Delaware or DGCL, empowers a Delaware corporation to indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such officer or director acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’scorporation's best interests, and, for criminal proceedings, had no reasonable cause to believe his or her conduct was illegal. A Delaware corporation may indemnify officers and directors against expenses (including attorneys’attorneys' fees) in connection with the defense or settlement of an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director actually and reasonably incurred.
As permitted by Delaware law, Heartland has included in its certificate of incorporation a provision to eliminate the personal liability of ourits directors for monetary damages for breach of their fiduciary duties as directors, subject to certain limitations. In addition, Heartland’sHeartland's certificate of incorporation and bylaws provide that it is required to indemnify its officers and directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary and Heartland may advance expenses to its officers and directors as incurred in connection with proceedings against them for which they may be indemnified.
| Item 21. | Exhibits and Financial Statement Schedules. |
Number | | | Description |
| | | ||
Amended and Restated Agreement and Plan of Merger, dated as of | |||
| | ||
| | ||
| | ||
| | ||
| | ||
| |||
| |||
| |||
II-1
Number | | | Description |
| |||
| |||
| Consent of KPMG | ||
| Consent of Dorsey & Whitney | ||
| Consent of | ||
| | | Consent of Magstar Capital, LLC* | |
| Power of | ||
| |||
| * | Previously Filed. | ||
| ** | Filed |
| Item 22. | Undertakings. |
The undersigned registrant hereby undertakes:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement. |
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
II-2
| (ii) | |
Each prospectus required to be filed pursuant to Rule 424(b)(2), 424(b)(5), or 424(b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), 415(a)(1)(vii), or 415(a)(1)(x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of the securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
| (5) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the |
| (6) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
| (7) | To respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Items 4, 10 (b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
| (8) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dubuque, State of Iowa, on January 16, 2018.October 23, 2020.
| | | HEARTLAND FINANCIAL USA, INC. | ||||
| | | | | |||
| | | By: | | | /s/ | |
| | | | Executive Vice President, General Counsel, and | |||
Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities indicated on January 16, 2018.October 23, 2020.
Signature | | | Title |
/s/ | | President, Chief Executive Officer | |
Bruce K. Lee | | ||
| | | ||
/s/ Bryan R. McKeag* | | | Executive Vice President and Chief Financial Officer (principal financial officer) |
Bryan R. McKeag | | ||
| | | ||
/s/ Janet M. Quick* | | | Executive Vice President and Deputy Chief Financial Officer (principal accounting officer) |
Janet M. Quick | | ||
| | | ||
/s/ | | | Executive Operating Chairman and Director |
Lynn B. Fuller | | ||
| | | ||
/s/ Robert B. Engel* | | | Director |
Robert B. Engel | | | |
| | | ||
/s/ Mark C. Falb* | | | Director |
Mark C. Falb | | | |
| | | ||
/s/ Thomas L. Flynn* | | | Director |
Thomas L. Flynn | | | |
| | | ||
/s/ | | | Director |
Jennifer K. | | | |
| | | ||
/s/ R. Michael McCoy* | | | Director |
R. Michael McCoy | | | |
| | | ||
/s/ | | | Director |
Susan G. Murphy | | | |
| | | ||
/s/ Barry H. Orr* | | | Director |
Barry H. Orr | | | |
| | | ||
/s/ John K. Schmidt* | | | Director |
John K. Schmidt | | |
II-4