1
Addendum to Purchase and Assumption Agreement
Between Colonial Trust Company and Dubuque Bank and Trust Company
and Heartland Financial USA, Inc.
Dated March 26, 2004
This Addendum to Purchase and Assumption Agreement ("Addendum") is entered
into as of the date hereinafter provided by and among Colonial Trust Company
("Colonial"), Dubuque Bank and Trust Company, ("DB&T"), Heartland Financial USA,
Inc. ("Heartland"), and Arizona Bank & Trust Company ("AB&T").
RECITALS:
A. Colonial, DB&T and Heartland entered into a Purchase and Assumption
Agreement dated March 26, 2004 (the "Agreement") in regard to the purchase
and assumption by DB&T from Colonial of Colonial's Wealth Management Group.
B. Pursuant to Section 2.1 of the Agreement, at the Closing under the
Agreement, Colonial will transfer to DB&T all of the Fiduciary Accounts and
Agency Accounts.
C. Pursuant to Section 6.10 of the Agreement, Colonial has agreed to use its
Best Efforts to cause DB&T to succeed Colonial as the applicable fiduciary
on all of the Fiduciary Accounts and Agency Accounts.
D. Pursuant to Section 10.4(f) of the Agreement, at the Closing under the
Agreement, Colonial will provide to DB&T an opinion of Colonial's counsel
which provides, among other things, that ". . . . immediately after closing
DB&T will be the duly authorized and lawfully acting successor fiduciary
under each of the Fiduciary Accounts and the Agency Accounts . . ."
transferred to DB&T at closing.
E. It is anticipated that there will be a number of Fiduciary Accounts and
Agency Accounts for which the documents necessary to the transfer and
assumption of the accounts to DB&T will not be completed by the Closing
Date. It is the desire of the parties to enter into an agreement for the
handling of those accounts for which the transfer of the accounts are not
completed as of the Closing Date.
F. DB&T has requested that the Fiduciary Accounts and Agency Accounts be
transferred to AB&T, an Arizona bank and trust company, its affiliate.
AGREEMENT:
1. Notwithstanding anything herein to the contrary or in the Agreement to the
contrary, the Fiduciary Accounts and Agency Accounts, together with the
Personal Trust Assets, shall be transferred to and assumed by AB&T. AB&T
agrees to accept and assume such Accounts and to be bound by the terms and
conditions of the Account agreements; provided, AB&T does not otherwise
assume any other liability under the Agreement nor is it taking the place
of DB&T under the Agreement.
2
2. AB&T hereby makes the following representations and warranties:
a. Organization. AB&T is an Arizona banking association with trust
powers, validly existing in such capacity and in good standing under
the laws of the State of Arizona, and it has the requisite corporate
power and authority to execute, deliver and perform this Agreement,
subject to the receipt of all required regulatory approvals.
b. Authorization. The execution, delivery and performance of this
Addendum and the consummation of the Contemplated Transactions by
AB&T have been duly and validly authorized and approved by all
requisite corporate action and such authorization is reflected in
the minutes of the meetings of the board of directors of AB&T. AB&T
shall continuously maintain for a reasonable period of time all
components of the Agreement as official records of AB&T or any
successor thereto. This Addendum is a valid and binding obligation
of AB&T, enforceable in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court (or, if applicable, the administrative agency) before
which any Proceedings therefore may be brought.
c. No Conflicts. AB&T hereby represents that the execution and
delivery of this Addendum by AB&T and the consummation by AB&T of
the Contemplated Transactions will not: (a) conflict with any of the
provisions of the charter, bylaws or other governing instruments of
AB&T; or (b) conflict with, violate or result in a breach of any
Legal Requirement, Order or Contract applicable to AB&T, or to which
it is a party or pursuant to which any of its properties is bound.
d. Litigation and Related Matters. There are no Proceedings pending,
or, to the Knowledge of AB&T, Threatened against AB&T that might
impair the consummation of the Contemplated Transactions. AB&T is
not aware of any facts that would reasonably afford a basis for any
such Proceeding.
e. Consents. Other than the approval of the shareholders of Colonial
as described in Sections 8.3 and 9.3 of the Agreement, the FDIC, the
Iowa Superintendent of Banking and the Arizona State Banking
Department, and subject to the expiration of any applicable waiting
periods, no consent, approval or authorization of any Regulatory
Authority is required for the execution, delivery and performance by
AB&T of this Addendum and the consummation by it of the Contemplated
Transactions.
f. Compliance with Legal Requirements and Orders. AB&T has no notice
of any violation of, and is in compliance with, all applicable Legal
Requirements material to the conduct of its business and every Order
to which it is subject, a violation of which would adversely affect
AB&T's ability to perform its obligations under this Addendum and
the Agreement.
3
g. Information for Regulatory Approvals. The information furnished
or to be furnished by AB&T in any regulatory application or
amendment thereto filed by AB&T pursuant to Section 7.1 of the
Agreement will be true and complete in all material respects as of
the date so furnished.
h. No Broker's or Finder's Fees. No agent, broker, investment
banker, or other Person acting on behalf of or under authority of
AB&T or any of its Affiliates is or will be entitled to any broker's
or finder's fee or any other commission or similar fee directly or
indirectly in connection with any of the Contemplated Transactions.
3. Assuming that the transactions contemplated by the Agreement do close,
but that transfer to AB&T of one or more of the Fiduciary Accounts or
Agency Accounts are not completed by the Closing Date (the "Incomplete
Accounts"), then it is agreed as follows:
a. AB&T shall assume the administrative functions as to all of the
Incomplete Accounts as of the Closing Date and Colonial shall
delegate to AB&T to the extent permitted by applicable law all
fiduciary functions as to Incomplete Accounts. To the extent that
applicable law or applicable regulatory authority requires Colonial
to retain certain fiduciary functions, Colonial and AB&T shall
thereupon reasonable agree upon the functions that will be retained
by Colonial. Failing an agreement, Colonial will set forth those
fiduciary functions that are being retained by written instrument
provided to AB&T on the Closing Date. Colonial shall deliver to AB&T
and AB&T shall assume any and all documents, files, instruments and
other items relative to the Incomplete Accounts.
b. Upon the completion of all documents necessary to the transfer
and assumption of an Incomplete Account, then such Incomplete
Account shall be transferred by Colonial to AB&T and AB&T shall
automatically assume without further action on AB&T's part all of
the responsibilities relative to the Account, including the position
as the fiduciary on the applicable Account.
c. All applicable fees on an Incomplete Account for the period
beginning on the Closing Date and continuing thereafter shall be
paid to DB&T.
d. DB&T shall pay to Colonial on the last day of each month the
purchase price applicable to any and all Incomplete Accounts which
are completed and transferred by Colonial to AB&T during such month.
Colonial will only be paid for such accounts that are actually
transferred to and assumed by AB&T. The applicable purchase price
for an account shall be determined consistent with Section 2.8(a) of
the Agreement as follows:
(1) 1.88 times the amount of the annual recurring fees during
the last twelve (12) months ending on the last day of the month
immediately preceding the month in which the transfer of the
applicable account is consummated as to all Fiduciary Accounts
or Agency Accounts in existence on January 20, 2004; and
4
(2) 1.00 times the amount of the estimated annual recurring fees
that are attributable to all Fiduciary Accounts or Agency
Accounts that come into existence after January 20, 2004.
The annual recurring fees on accounts applicable to Section 2(d)(1)
that have been in existence for less than 12 months shall be
determined as provided for in the Agreement.
e. In the event that an Incomplete Account is closed or transferred
to a third party, then Colonial and AB&T shall cooperate to
accomplish any necessary closing or transfer of such account.
f. DB&T and AB&T shall be responsible for all fiduciary functions as
to the Incomplete Accounts on and after the date such Accounts are
assigned and transferred to AB&T (as to each Incomplete Account, the
"Assignment Date").
g. DB&T agrees to indemnify, save, defend and hold harmless Colonial
and its directors, shareholders and representatives and their
respective heirs, successors and assigns (collectively, the
"Colonial Insiders") from and against, and shall reimburse the
Colonial Insiders with respect to, any and all Losses, imposed on,
incurred by or asserted against the Colonial Insiders (or any of
them) in any way relating to or arising from or out of the operation
or administration by AB&T of an Incomplete Account after the Closing
Date, other than any liabilities arising out of the failure or
alleged failure of the Colonial Insiders to fulfill their fiduciary
duties as to an Incomplete Account prior to the Assignment Date of
such Incomplete Account.
h. Colonial agrees to indemnify, save, defend and hold harmless DB&T
and AB&T and their respective directors, shareholders and
representatives and their respective heirs, successors and assigns
(collectively, including DB&T and AB&T, the "Heartland Insiders")
from and against, and shall reimburse the Heartland Insiders with
respect to, any and all Losses, imposed on, incurred by or asserted
against the Heartland Insiders (or any of them) in any way relating
to or arising from the failure or alleged failure of the Colonial
Insiders to fulfill their fiduciary duties as to an Incomplete
Account prior to the Assignment Date of such Incomplete Account.
i. AB&T agrees to perform its functions as to the Incomplete
Accounts with the same degree of care as it utilizes in providing
those services on its own accounts.
j. In the event that all of the Incomplete Accounts are not
transferred and assigned to AB&T by a date that is 120 days after
the Closing Date of the Agreement, then Colonial may, at anytime
after such 120 days and at its sole option, terminate this Addendum
relative to any or all of the remaining Incomplete Accounts and
either enter into administrative /agency agreements with another
company, transfer and assign the applicable accounts to another
trustee or resign as trustee of the applicable accounts, all in
Colonial's sole discretion.
5
4. Colonial agrees that it will continue after the Closing Date to pursue
with due diligence the transfer to AB&T of the Incomplete Accounts.
5. Colonial, DB&T and AB&T further agree to continue to use their Best
Efforts to preserve the fiduciary relationships with customers relative
to the Incomplete Accounts. Neither Colonial, DB&T or AB&T will enter
into any agreement relative to an Incomplete Account that will
materially change or modify the fiduciary relationship, the fee
arrangement or otherwise without the consent of the other parties.
6. Nothing contained herein shall release or modify in any way the
obligations of DB&T and/or Heartland as contained in the Agreement.
7. All defined terms contained is this Addendum shall have the same
meanings as provided in the Agreement.
8. This Addendum conforms to the requirements of Section 14.3 of the
Agreement in order to accomplish a modification of the Agreement
binding on the parties thereto.
6
Dated this 26th day of April, 2004.
Colonial Trust Company Heartland Financial USA, Inc.
By /s/John K. Johnson__________ By /s/ Paul Peckosh_____________
John K. Johnson, President Paul Peckosh, Senior VP
Dubuque Bank & Trust Company Arizona Bank & Trust Company
By /s/ Paul Peckosh______________ By /s/ William F. Frank
Paul Peckosh, Executive VP William F. Frank,
President and Chief
Executive Officer