EXHIBIT 99.1
HEARTLAND FINANCIAL USA, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan
The purpose of the HEARTLAND FINANCIAL USA, INC. EMPLOYEE
STOCK PURCHASE PLAN (hereinafter referred to as the "Plan") is to
secure for HEARTLAND FINANCIAL USA, INC. and its Related
Corporations (hereinafter referred to as the "Company") and its
stockholders the benefits of the incentive inherent in the
ownership of common stock by Employees. The Plan is intended to
comply with the provisions of Code Section 423 and shall be
administered, interpreted and construed in accordance with such
provisions.
2. Definitions
When used herein, the following terms shall have the
following meanings:
a. Board. Shall mean the Board of Directors of the
Company.
b. Code. Shall mean the Internal Revenue Code of 1986,
and any amendments thereto.
c. Committee. Shall mean the Compensation Committee of
the Board.
d. Compensation. Shall mean "compensation" as defined
under the Heartland Financial Retirement Plan (the "Retirement
Plan") for purposes of non-discretionary employer contribution
allocations.
e. Employee. Shall mean each employee of the Company.
f. Entry Date. Shall mean the first day of each Plan
Year.
g. Fair Market Value. Shall mean such amount as may be
determined by the Committee in its sole discretion.
h. Grant Date. Shall mean the first day of each Plan
Year, or such other date as may be determined by the Committee in
its sole discretion.
i. Investment Date. Shall mean the last day of each Plan
Year, or such other date as may be determined by the Committee in
its sole discretion.
j. Participant. Shall mean an Employee who has met the
requirements of Paragraph 3 and has elected to participate in the
Plan pursuant to Paragraph 4.
k. Payroll Deduction Account. Shall mean the bookkeeping
entry established by the Company for each Participant pursuant to
Paragraph 4.
l. Plan Year. Shall mean January 1 through December 31.
m. Related Corporation. Shall mean a corporation which
would be a parent or subsidiary corporation with respect to the
Company as defined in Code Section 424(e) or (f).
3. Eligibility
Each Employee shall be eligible to participate in the Plan
beginning on the Entry Date coincident with or next following the
date on which the Employee has been employed with the Company for
one year and has completed 1,000 hours of service for the
Company.
4. Participation and Payroll Deductions
a. Enrollment. Each Employee may elect to participate in
the Plan for a Plan Year by completing an enrollment form
prescribed by the Committee and returning it to the Company on or
before the date specified by the Committee, which date shall
precede the Employee's Entry Date. Each Employee shall be
advised of the purchase price determined under Subparagraph
5(b)(ii) before enrolling in the Plan.
b. Amount of Deduction. The enrollment form shall specify
a payroll deduction amount of up to fifteen percent (in whole
numbers) of Compensation which shall be withheld from the
Participant's regular paychecks, including bonus paychecks, for a
Plan Year; provided, however, that no Employee shall be permitted
to specify a deduction in excess of the amount necessary to
purchase 500 Shares for a Plan Year. The Committee in its sole
discretion, may authorize payment in respect of any option
exercised hereunder by personal check.
c. Payroll Deduction Accounts. Each Participant's payroll
deduction shall be credited, as soon as practicable following the
relevant pay date, to a Payroll Deduction Account, pending the
purchase of Shares in accordance with the provisions of the Plan.
All such amounts shall be assets of the Company and may be used
by the Company for any corporate purpose. No interest shall
accrue or be paid on amounts credited to a Payroll Deduction
Account.
d. Subsequent Plan Years. Unless otherwise specified
prior to the beginning of any Plan Year on an enrollment form
prescribed by the Committee, a Participant shall be deemed to
have elected to participate in each subsequent Plan Year for
which the Participant is eligible to the same extent and in the
same manner as at the end of the prior Plan Year.
e. Change in Participation.
(i) At any time during a Plan Year, a Participant may
cease participation in the Plan by completing and filing the
form prescribed by the Committee with the Company. Such
cessation will become effective as soon as practicable
following receipt of such form by the Company, whereupon no
further payroll deductions will be made and the Company
shall pay to such Participant an amount equal to the balance
in the Participant's Payroll Deduction Account as soon as
practicable thereafter. To the extent then eligible, any
Participant who ceased to participate may elect to
participate again on any subsequent Entry Date.
(ii) At any time during the Plan Year (but not more
than once in any calendar quarter) a Participant may
increase or decrease the percentage of Compensation subject
to payroll deduction within the limits provided in
Subparagraph (b) above, by filing the form prescribed by the
Committee with the Company. Such increase or decrease shall
become effective with the first pay period following receipt
of such form to which it may be practicably applied.
(iii) Notwithstanding anything herein to the
contrary, in the event the Committee determines under
Subparagraph 5(b)(ii) to change the purchase price of the
Shares, each Participant shall be advised in advance of the
effective date of such change and afforded the opportunity
to make a change in participation under Subparagraphs
4(e)(i) or 4(e)(ii) before such change in the purchase price
takes effect.
(iv) Any Participant who receives a distribution under
the Retirement Plan on account of a financial hardship, as
determined under such plan, shall be suspended from
participation in the Plan for the same period as such
Participant's participation in the Retirement Plan shall be
suspended.
5. Offerings
a. Maximum Number of Shares. The Committee will implement
the Plan by making offerings of Shares on each Grant Date until
the maximum number of Shares available under the Plan have been
issued pursuant to the exercise of options.
b. Exercise of Options.
(i) Subject to Subparagraph 5(c), on each Investment
Date, each Participant shall be deemed, subject to
Subparagraph 5(d), without any further action, to have
exercised and purchased, the number of Shares determined by
dividing the amount credited to the Participant's Payroll
Deduction Account on such date by the purchase price (as
determined in Subparagraph (b)(ii) below).
(ii) The purchase price for each Share shall be
expressed as a percentage of Fair Market Value on the Grant
Date as shall be determined by the Committee, but in no
event shall such purchase price be less than eighty-five
percent (85%) of the Fair Market Value of such Share on the
Grant Date.
c. Oversubscription of Shares. If the total number of
Shares for which options are exercised on any Investment Date
exceeds the maximum number of Shares available under the Plan,
the Company shall make an allocation of the Shares available for
delivery and distribution among the Participants in as nearly a
uniform manner as shall be practicable.
d. Limitations on Grant and Exercise of Options.
(i) No option granted under this Plan shall permit a
Participant to purchase Shares under all employee stock
purchase plans (as defined under Code Section 423(b)) of the
Company at a rate which, in the aggregate, exceeds $25,000
of the Fair Market Value of such Shares (determined at the
time the option is granted) for each calendar year in which
the option is outstanding at any time.
(ii) No Employee who would own, immediately after the
option is granted, Shares possessing five percent (5%) or
more of the total combined voting power or value of all
classes of Shares of the Company (a "5% Owner") shall be
granted an option. For purposes of determining whether an
Employee is a 5% Owner, the rules of Code Section 424(d)
shall apply in determining the Share ownership of an
individual and Shares which the Employee may purchase under
outstanding options shall be treated as Shares owned by the
Employee.
6. Distributions of Shares
a. Annual Distributions. As soon as practicable following
an Investment Date, Shares deemed purchased pursuant to
Subparagraph 5(b) shall be distributed to the Participant.
b. Termination of Employment. If a Participant's
employment with the Company terminates for any reason during a
Plan Year, all amounts credited to the Participant's Payroll
Deduction Account shall be refunded to the Participant or, in the
event of the Participant's death, to the Participant's estate, as
soon as practicable.
7. Rights as a Stockholder
When a Participant purchases Shares pursuant to the Plan,
the Participant shall have all of the rights and privileges of a
stockholder of the Company with respect to the Shares so
purchased or credited, whether or not certificates representing
such Shares shall have been issued.
8. Options Not Transferable
Options granted under the Plan are not transferable by a
Participant and are exercisable during the Participant's lifetime
only by the Participant.
9. Common Stock
a. Reserved Shares. There shall be reserved for the
issuance and purchase under the Plan an aggregate of 200,000
Shares, subject to adjustment as provided in Section 10. Shares
subject to the Plan may be Shares now or hereafter authorized but
unissued, treasury shares or shares available in the open market,
at the discretion of the Board of Directors.
b. Restrictions on Exercise. In its sole discretion, the
Board may require as conditions to the exercise of any option
that Shares reserved for issuance upon the exercise of an option
shall have been duly listed on any recognized national securities
exchange, and that either a registration statement under the
Securities Act of 1933, as amended, with respect to said Shares
shall be effective, or the Participant shall have represented at
the time of purchase, in form and substance satisfactory to the
Company, that it is the Participant's intention to purchase the
Shares for investment only and not for resale or distribution.
c. Restriction on Sale. Shares purchased hereunder shall
not be transferable by a Participant for a period of twelve (12)
months immediately following the Investment Date on which such
Shares were purchased.
d. Registration of Shares. Shares to be delivered to a
Participant under the Plan will be registered in the name of the
Participant, or, if the Participant so directs by written notice
to the Treasurer of the Company prior to the Investment Date
applicable thereto, in the names of the Participant and one such
other person as may be designated by the Participant, as joint
tenants with rights of survivorship or as tenants by the
entireties, to the extent permitted by applicable law.
e. Right of First Refusal. If any Shares issued under the
Plan are not readily tradable on an established market on the
date an owner intends to sell such Shares, such owner shall first
offer such Shares to the Company for purchase and the Company
shall have thirty (30) days to exercise its right to purchase
such Shares. The owner shall give written notice to the Company
stating that he or she has a bona fide offer for the purchase of
such Shares, stating the number of Shares to be sold, the name
and address of the person(s) offering to purchase the Shares and
the purchase price and terms of payment of such sale. The owner
shall be entitled to receive the same purchase price offered by
such person(s) offering to purchase such Shares. Payment may be
in a lump sum or, if the lump sum exceeds $100,000, in
substantially equal annual or more frequent installments over a
period not exceeding five (5) years in the discretion of the
Committee. If a method of deferred payments is selected, the
unpaid balance shall earn interest at a rate that is
substantially equal to the rate at which the Company could borrow
the amount due and shall be secured by a pledge of the Shares
purchased or such other adequate security as agreed to by the
Company and the owner. For purposes of this subparagraph, Shares
shall be considered not readily tradable on an established market
if such Shares are not publicly tradable or because such Shares
are subject to a trading limitation under any federal or state
securities law or regulation that would make such Shares less
freely tradable than stock not so restricted. For purposes of
this subparagraph, an owner shall include any person who acquires
Shares from any other person and for any reason; including, but
not limited to, by gift, death or sale.
10. Adjustment Upon Changes In Capitalization
In the event of a subdivision or consolidation of the
outstanding Shares, or the payment of a stock dividend hereon,
the number of Shares reserved or authorized to be reserved under
this Plan shall be increased or decreased, as the case may be,
proportionately, and such other adjustments shall be made as may
be deemed necessary or equitable by the Board. In the event of
any other change affecting the Shares, such adjustments shall be
made as may be deemed equitable by the Board, in its sole
discretion, to give proper effect to such event, subject to the
limitations of Code Section 424.
11. Administration
a. Appointment. The Plan shall be administered by the
Committee which shall be comprised of at least two (2) non-
employee disinterested directors appointed by the Board. A
disinterested director is any member of the Board who within the
prior year has not been, and is not being, granted any awards
related to the Shares under the Plan or any other plan of the
Company except for awards which: (i) are calculated in
accordance with a formula as contemplated in paragraph (c)(ii) of
Securities and Exchange Commission Rule 16b-3 ("Rule 16b-3");
(ii) result from participation in an ongoing securities
acquisition plan meeting the conditions of paragraph (d)(2) of
Rule 16b-3; or (iii) arise from an election by a director to
receive all or part of his or her Board fees in securities.
b. Authority. Subject to the express provisions of the
Plan, the Committee shall have authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to
it, and to make all other determinations necessary or advisable
in administering the Plan, all of which determinations shall be
final and binding upon all persons. If and to the extent
required by Rule 16b-3 or any successor exemption under which the
Committee believes it is appropriate for the Plan to qualify, the
Committee may restrict a Participant's ability to participate in
the Plan or sell any Shares received under the Plan for such
period as the Committee deems appropriate or may impose such
other conditions in connection with participation or
distributions under the Plan as the Committee deems appropriate.
c. Duties of Committee. The Committee shall establish and
maintain records of the Plan and of each Payroll Deduction
Account established for any Participant hereunder.
d. Plan Expenses. The Company shall pay the fees and
expenses of accountants, counsel, agents and other personnel and
all other costs of administration of the Plan.
e. Indemnification. To the maximum extent permitted by
law, no member of the Committee shall be personally liable by
reason of any contract or other instrument executed by such
member or on such member's behalf in such member's capacity as a
member of the Committee or for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless,
directly from its own assets (including the proceeds of any
insurance policy the premiums of which are paid from the
Company's own assets), each member of the Committee and each
other officer, employee or director of the Company to whom any
duty or power relating to the administration or interpretation of
the Plan or to the management or control of the assets of the
Plan may be delegated or allocated, against any cost or expense
(including fees, disbursements and other charges of legal
counsel) or liability (including any sum paid in settlement of a
claim with the approval of the Company) arising out of any act or
omission to act in connection with the Plan unless arising out of
such person's own fraud, willful misconduct or bad faith. The
foregoing shall not be deemed to limit the Company's obligation
to indemnify any member of the Committee under the Company's
Certificate of Incorporation or By-laws, or any other agreement
between the Company and such member.
12. Amendment and Termination
a. Amendment. Subject to the provisions of Code Section
423, the Board may amend the Plan in any respect; provided,
however, that the Plan may not be amended in any manner that will
retroactively impair or otherwise adversely affect the rights of
any person to benefits under the Plan which have accrued prior to
the date of such action.
b. Termination. The Plan will terminate on the earlier
of: (i) the Investment Date that Participants become entitled to
purchase a number of Shares greater than the number of reserved
Shares available for purchase; or (ii) ten (10) years from the
effective date hereof. In addition, the Plan may be terminated
at any time, in the sole discretion of the Board.
13. Effective Date
The Plan was adopted by the Board to be effective on January
1, 1996, subject to approval by the holders of the majority of
Shares present and represented at an annual or special meeting of
the stockholders held within twelve (12) months of the date the
Plan is adopted.
14. Governmental and Other Regulations
The Plan and the grant and exercise of options to purchase
Shares hereunder, and the Company's obligations to sell and
deliver Shares upon the exercise of options to purchase Shares,
shall be subject to all applicable federal, state and foreign
laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as, in the opinion of counsel
to the Company, may be required.
15. No Employment Rights
The Plan does not create, directly or indirectly, any right
for the benefit of any Employee or class of Employees to purchase
any Shares under the Plan, or create in any Employee or class of
Employees any right with respect to continuation of employment by
the Company, and it shall not be deemed to interfere in any way
with the Company's right to terminate, or otherwise modify, an
Employee's employment at any time.
16. Withholding
As a condition to receiving Shares hereunder, the Company
may require the Participant to make a cash payment to the Company
of, or the Company may withhold from any Shares distributable
under the Plan, an amount necessary to satisfy all federal,
state, city or other taxes as may be required to be withheld in
respect of such payments pursuant to any law or governmental
regulation or ruling.
17. Offsets
To the extent permitted by law, the Company shall have the
absolute right to withhold any amounts payable to any Participant
under the terms of the Plan to the extent of any amount owed for
any reason by such Participant to the Company and to set off and
apply the amounts so withheld to payment of any such amounts owed
to the Company, whether or not such amounts shall then be
immediately due and payable and in such order or priority as
among such amounts owed as the Committee, in its sole discretion,
shall determine.
18. Notices, Etc.
All elections, designations, requests, notices, instructions
and other communications from a Participant to the Committee or
the Company required or permitted under the Plan shall be in such
form as is prescribed from time to time by the Committee, shall
be mailed by first-class mail or delivered to such location as
shall be specified by the Committee, and shall be deemed to have
been given and delivered only upon actual receipt thereof at such
location.
19. Captions, Etc.
The captions of the Paragraphs and Subparagraphs of this
Plan have been inserted solely as a matter of convenience and in
no way define or limit the scope or intent of any provision of
the Plan. References to Paragraphs herein are to the specified
Paragraphs of this Plan unless another reference is specifically
stated. Wherever used herein, a singular number shall be deemed
to include the plural unless a different meaning is required by
the context.
20. Effect of Plan
The provisions of the Plan shall be binding upon, and inure
to the benefit of, all successors of the Company and each
Participant, including, without limitation, such Participant's
estate and the executors, administrators or trustees thereof,
heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such Participant.
21. Governing Law
The laws of the State of Iowa shall govern all matters
relating to this Plan except to the extent it is superseded by
the laws of the United States.