EXHIBIT 99.1
HEARTLAND FINANCIAL USA, INC.
1993 STOCK OPTION PLAN
1. Purpose of the Plan
The HEARTLAND FINANCIAL USA, INC. 1993 STOCK OPTION PLAN
(hereinafter referred to as the "Plan") is intended to provide a
means whereby key policy-making directors and employees of
HEARTLAND FINANCIAL USA, INC. and its Related Corporations
(hereinafter referred to as the "Company") may sustain a sense of
proprietorship and personal involvement in the continued
development and financial success of the Company, and to
encourage them to remain with and devote their best efforts to
the business of the Company, thereby advancing the interests of
the Company and its shareholders. Accordingly, the Company may
permit certain directors and employees to acquire common stock of
the Company (hereinafter referred to as "Shares") or otherwise
participate in the financial success of the Company, on the terms
and conditions established herein.
2. Definitions
The following terms shall be defined as set forth below:
a. Board. Shall mean the Board of Directors of the
Company.
b. Cause. Shall mean the commitment of fraud, the
misappropriation of or intentional material damage to the
property or business of the Company, the substantial failure to
fulfill the duties and responsibilities of a regular position
and/or comply with Company policies, rules or regulations, or the
conviction of a felony.
c. Change of Control. Shall mean:
(i) the consummation of the acquisition by
any person (as such term is defined in Section
13(d) or 14(d) of the '34 Act of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the '34 Act) of fifty-one
percent (51%) or more of the combined voting power
of the then outstanding voting securities of the
Company; or
(ii) the individuals who, as of the date
hereof, are members of the Board cease for any
reason to constitute a majority of the Board,
unless the election, or nomination for election by
the stockholders, of any new director was approved
by a vote of a majority of the Board, and such new
director shall, for purposes of this Agreement, be
considered as a member of the Board; or
(iii) approval by stockholders of the
Company of: (1) a merger or consolidation if the
stockholders, immediately before such merger or
consolidation, do not, as a result of such merger
or consolidation, own, directly or indirectly,
more than fifty-one percent (51%) of the combined
voting power of the then outstanding voting
securities of the entity resulting from such
merger or consolidation in substantially the same
proportion as their ownership of the combined
voting power of the voting securities of the
Company outstanding immediately before such merger
or consolidation; or (2) a complete liquidation or
dissolution or an agreement for the sale or other
disposition of all or substantially all of the
assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because fifty-one percent (51%) or more
of the combined voting power of the then outstanding securities
of the Company are acquired by: (1) a trustee or other fiduciary
holding securities under one or more employee benefit plans
maintained for employees of the entity; or (2) any corporation
which, immediately prior to such acquisition, is owned directly
or indirectly by the stockholders in the same proportion as their
ownership of stock immediately prior to such acquisition.
d. Code. Shall mean the Internal Revenue Code of 1986,
and any amendments thereto.
e. Committee. Shall mean the Compensation Committee of
the Board.
f. Compete. Shall mean within a period of two (2) years
after the termination of service, the direct or indirect
competition with the business of the Company, including, but not
by way of limitation, the direct or indirect owning, managing,
operating, controlling, financing or serving as an officer,
employee, director or consultant to, or by soliciting or
inducing, or attempting to solicit or induce, any employee or
agent of the Company to terminate employment and become employed
by any person, firm, partnership, corporation, trust or other
entity which owns or operates, a bank, savings and loan
association, credit union, brokerage firm, or similar financial
institution within a fifty (50) mile radius of the office of the
Company in which the individual is principally located, except
with the express prior written consent of the Company.
g. Disability. Shall mean a physical or mental disability
which impairs the individual's ability to substantially perform
his or her current duties for a period of at least six (6)
consecutive months, as determined by the Committee.
h. Early Retirement. Shall mean age fifty-five (55)
and ten (10) years of service.
i. ERISA. Shall mean the Employee Retirement Income
Security Act of 1974, and any amendment thereto.
j. Incentive Stock Option. Shall mean an award under the
Plan that satisfies the general requirements of Code Section 422,
namely: (i) grantees must be employees; (ii) the exercise price
may not be less than the fair market value of the underlying
Shares at the date of grant; (iii) no more than $100,000 worth of
Shares may become exercisable in any year; (iv) the maximum
duration of an award may be ten (10) years; (v) awards must be
exercised within three (3) months after termination of
employment; and (vi) Shares received upon exercise must be
retained for the greater of two (2) years from the date of grant
or one (1) year from the date of exercise.
k. Nonqualified Options. Shall mean an award under the
Plan that is not an Incentive Stock Option.
l. Normal Retirement. Shall mean age sixty-five (65).
m. Related Corporation. Shall mean a corporation which
would be a parent or subsidiary corporation with respect to the
Company as defined in Section 424(e) or (f), respectively, of the
Code.
n. Rule 16b-3. Shall mean Rule 16b-3 of the '34 Act, and
any amendments thereto.
o. Stock Appreciation Rights. Shall mean rights entitling
the grantee to receive the appreciation in the market value of a
stated number of Shares.
p. '33 Act. Shall mean the Securities Act of 1933, and
any amendments thereto.
q. '34 Act. Shall mean the Securities Exchange Act of
1934 and any amendments thereto.
3. Administration of the Plan
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 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. The Committee shall have sole
authority to:
(i) select the directors and employees from
among those eligible to whom Shares shall be sold
under the Plan;
(ii) establish the number of such Shares that
may be sold to each such director or employee and
the time when certificates for such Shares shall
be issued;
(iii) prescribe the legend to be affixed
to the certificate representing such Shares;
(iv) select the directors and employees from
among those eligible to whom rights to participate
in the appreciation of Shares shall be granted;
(v) interpret the Plan; and
(vi) adopt such rules, regulations, forms and
agreements, not inconsistent with the provisions
of the Plan, as it may deem advisable to carry out
the Plan.
All decisions made by the Committee in administering the Plan
shall be subject to Board ratification and approval.
4. Shares Subject to the Plan
The aggregate number of Shares that may be acquired by
directors and employees under the Plan shall be 600,000 Shares.
Any Shares that remain unissued at the termination of the Plan
shall cease to be subject to the Plan, but until termination of
the Plan, the Company shall at all times make available
sufficient Shares to meet the requirements of the Plan. The
aggregate number of Shares which may be sold under the Plan shall
be adjusted to reflect a change in capitalization of the Company,
such as a stock dividend or stock split.
5. Stock Options
a. Type of Options. The Company may issue options that
constitute Incentive Stock Options to employees and Nonqualified
Options to directors and employees under the Plan. The grant of
each option shall be confirmed by a stock option agreement that
shall be executed by the Company and the optionee as soon as
practicable after such grant. The stock option agreement shall
expressly state or incorporate by reference the provisions of the
Plan and state whether the option is an Incentive Option or a
Nonqualified Option.
b. Terms of Options. Except as provided in Subparagraphs
(c) and (d) below, each option granted under the Plan shall be
subject to the terms and conditions set forth by the Committee in
the stock option agreement including, but not limited to, option
price and option term.
c. Additional Terms Applicable to All Options. Each
option shall be subject to the following terms and conditions:
(i) Written Notice. An option may be
exercised only by giving written notice to the
Company specifying the number of Shares to be
purchased.
(ii) Method of Exercise. The aggregate
option price shall be paid in any one or a
combination of cash, personal check, Shares
already owned or Plan awards which the optionee
has an immediate right to exercise.
(iii) Term of Option. No option may be
exercised more than ten (10) years after the date
of grant. No option may be exercised more than
six (6) months after the optionee terminates
employment with the Company, except in the event
of Disability or death as provided in Subparagraph
(c)(iv) below.
(iv) Disability or Death of Optionee. If an
optionee terminates employment due to Disability
or death prior to exercise in full of any options,
he or she or his or her beneficiary, executor,
administrator or personal representative shall
have the right to exercise the options within a
period of twelve (12) months after the date of
such termination to the extent that the right was
exercisable at the date of such termination as
provided in the stock option agreement, or subject
to such other terms as may be determined by the
Committee.
(v) Transferability. No option may be
transferred by an optionee.
d. Additional Terms Applicable to Incentive Options. Each
Incentive Option shall be subject to the following terms and
conditions:
(i) Option Price. The option price per
Share shall be 100% of the fair market value of
such Share on the date the option is granted.
Notwithstanding the preceding sentence, the option
price per Share granted to an individual
(hereinafter referred to as a "10% Shareholder")
who, at the time such option is granted, owns
stock possessing more than 10% of the total
combined voting power of all classes of stock of
the Company shall not be less than 110% of the
fair market value of such Share on the date the
option is granted.
(ii) Term of Option. No option granted to a
10% Shareholder may be exercised more than five
(5) years after the date of grant.
Notwithstanding any other provisions hereof, no
option may be exercised more than three (3) months
after the optionee terminates employment with the
Company, except in the event of Disability or
death as provided in Subparagraph (c)(iv) above.
(iii) Annual Exercise Limit. The
aggregate fair market value of Shares which become
exercisable during any calendar year shall not
exceed $100,000. For purposes of the preceding
sentence, the fair market value of each Share
shall be determined on the date the option with
respect to such Share is granted.
6. Stock Appreciation Rights
a. Grants. Stock Appreciation Rights ("SARs") may be
granted separately or in tandem with or by reference to an option
granted prior to or simultaneously with the grant of such rights,
to such eligible directors and employees as may be selected by
the Committee.
b. Terms of Grant. SARs may be granted in tandem with or
with reference to a related option, in which event the grantee
may elect to exercise either the option or the SAR, but not both,
as to the same Share subject to the option and the SAR, or the
SAR may be granted independently of a related option. In either
event, the SAR shall be exercisable not more than ten (10) years
after the date of grant. SARs shall not be transferable, except
that SARs may be exercised by the executor, administrator or
personal representative of the deceased grantee within twelve
months of the death of the grantee and SARs may be exercised
during the individual's continued employment with the Company and
for a period not in excess of ninety (90) days following
termination of employment due to Disability, Normal Retirement or
Early Retirement, to the extent that the SAR was or became
exercisable at the date of such termination.
c. Payment on Exercise. Upon exercise of a SAR, the
grantee shall be paid the excess of the then fair market value of
the number of Shares to which the SAR relates over the fair
market value of such number of Shares at the date of grant of the
SAR or of the related option, as the case may be. Such excess
shall be paid in cash or in Shares having a fair market value
equal to such excess or in such combination thereof as the
Committee shall determine. The exercise of an SAR may only be
made in accordance with applicable restrictions pursuant to
paragraph (e) of Rule 16b-3 or any similar successor provision.
7. 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 Paragraph, 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 Paragraph, 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.
8. Amendment or Termination of the Plan
The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, but (except as provided in Paragraph
4 hereof) no amendment shall be made without approval of the
stockholders of the Company which shall: (i) materially increase
the aggregate number of Shares with respect to which awards may
be made under the Plan; (ii) materially increase the aggregate
number of Shares which may be subject to awards to individuals
who are not employees or directors; or (iii) change the class of
persons eligible to participate in the Plan; provided, however,
that no such amendment, suspension or termination shall impair
the rights of any individual, without his or her consent, in any
award theretofore made pursuant to the Plan.
Notwithstanding anything in this Plan to the contrary, to
the extent that the Plan provides for formula awards, as defined
in paragraph (c)(2)(ii) of Rule 16b-3, such provisions may not be
amended more than once every six (6) months, other than to
comport with changes in the Code, ERISA, or the rules thereunder.
9. Term of Plan
The Plan shall be effective upon the date of its adoption by
the Board; provided that, Incentive Options may be granted only
if the Plan is approved by the shareholders within twelve (12)
months before or after the date of adoption. Unless sooner
terminated under the provisions of Paragraph 8, Shares and SARs
shall not be granted under the Plan after the expiration of ten
(10) years from the effective date of the Plan. However, awards
may be exercisable after the end of the term of the Plan.
10. Rights as Shareholder
Upon delivery of any Share to a director or employee, such
director or employee shall have all of the rights of a
shareholder of the Company with respect to such Share, including
the right to vote such Share and to receive all dividends or
other distributions paid with respect to such Share.
11. Merger or Consolidation
In the event the Company is merged or consolidated with
another corporation and the Company is not the surviving
corporation, the surviving corporation may agree to exchange
options and SARs issued under this Plan for options and SARs
(with the same aggregate option price) to acquire and participate
in that number of shares in the surviving corporation that have a
fair market value equal to the fair market value (determined on
the date of such merger or consolidation) of Shares that the
grantee is entitled to acquire and participate in under this Plan
on the date of such merger or consolidation. In the event of a
Change of Control, options and SARs may become immediately and
fully exercisable at the discretion of the Committee.
12. Employment Relationship
A director or employee shall be considered to be in the
employment of the Company or related corporation as long as he or
she remains a director or employee of the Company or related
corporation. Nothing herein shall confer on any director or
employee the right to continued employment with the Company or
related corporation or affect the right of the Company or related
corporation to terminate such employment.
13. Withholding of Tax
To the extent the award, issuance or exercise of Shares or
SARs results in the receipt of compensation by a director or
employee, the Company is authorized to withhold from any other
cash compensation then or thereafter payable to such director or
employee any tax required to be withheld by reason of the receipt
of the compensation. Alternatively, the director or employee may
tender a personal check in the amount of tax required to be
withheld.
14. Delivery and Registration of Stock
The Company's obligation to deliver Shares with respect to
an award shall, if the Committee so requests, be conditioned upon
the receipt of a representation as to the investment intention of
the individual to whom such Shares are to be delivered, in such
form as the Committee shall determine to be necessary or
advisable to comply with the provisions of the '33 Act or any
other federal, state or local securities legislation or
regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the
Shares or other action eliminating the necessity of such
representation under securities legislation. The Company shall
not be required to deliver any Shares under the Plan prior to (i)
the admission of such Shares to listing on any stock exchange on
which Shares may then be listed, and (ii) the completion of such
registration or other qualification of such Shares under any
state or federal law, rule or regulation, as the Committee shall
determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3. Any
provision of the Plan which is inconsistent with said rule shall,
to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.