<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 18, 2000.
REGISTRATION NO. 333-36564
REGISTRATION NO. 333-36564-01
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MIDWEST BANC HOLDINGS, INC. MBHI CAPITAL TRUST I
(Exact Name of Co-Registrants as Specified in Charters)
<TABLE>
<S> <C> <C> <C>
DELAWARE 36-3252484 DELAWARE APPLIED FOR
(State or Other (I.R.S. Employer (State or Other (I.R.S. Employer
Jurisdiction of Identification Number) Jurisdiction of Identification Number)
Incorporation or Incorporation or
Organization) Organization)
</TABLE>
501 WEST NORTH AVENUE
MELROSE PARK, ILLINOIS 60160
(708) 865-1053
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Co-Registrants' Principal Executive Offices)
EDWARD H. SIBBALD
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
501 WEST NORTH AVENUE
MELROSE PARK, ILLINOIS 60160
(708) 865-1053
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service for Co-Registrants)
Copies to:
<TABLE>
<S> <C>
JENNIFER R. EVANS, ESQ. MATTHEW C. BOBA, ESQ.
JENNIFER D. KING, ESQ. CHAPMAN AND CUTLER
VEDDER, PRICE, KAUFMAN & KAMMHOLZ 111 WEST MONROE
222 NORTH LASALLE STREET, SUITE 2600 CHICAGO, ILLINOIS 60603
CHICAGO, ILLINOIS 60601 (312) 845-3000
(312) 609-7500
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED MAY 18, 2000
1,000,000 PREFERRED SECURITIES
MBHI CAPITAL TRUST I
% CUMULATIVE PREFERRED SECURITIES
FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED
ON A SUBORDINATED BASIS BY
MIDWEST BANC LOGO
------------------------------------------
The preferred securities represent undivided beneficial interests in the assets
of MBHI Capital Trust I. The trust will invest all of the proceeds of this
offering of preferred securities to purchase % junior subordinated
debentures of Midwest Banc Holdings, Inc.
For each of the preferred securities that you own, you will receive cumulative
cash distributions at an annual rate of % on March 31, June 30, September
30 and December 31 of each year, beginning September 30, 2000, from payments on
the debentures. We may defer payments of distributions at any time for up to 20
consecutive quarters. The preferred securities are effectively subordinated to
all senior and subordinated indebtedness of Midwest Banc Holdings and its
subsidiaries. The debentures mature and the preferred securities must be
redeemed by , 2030. The trust may redeem the preferred securities,
at a redemption price of $25 per preferred security plus accrued and unpaid
distributions, at any time on or after , 2005, or earlier under
circumstances specified in this prospectus.
Application has been made to have the preferred securities listed on the
American Stock Exchange under the symbol MBH.Pr.
INVESTING IN THE PREFERRED SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OBLIGATIONS OF ANY BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
------------------------------------------
<TABLE>
<CAPTION>
PER PREFERRED
SECURITY TOTAL
------------- -----------
<S> <C> <C>
Public offering price....................................... $25.00 $25,000,000
Proceeds to the trust....................................... $25.00 $25,000,000
</TABLE>
This is a firm commitment underwriting. Midwest Banc Holdings will pay
underwriting commissions of $ per preferred security, or a total of
$ , for arranging the investment in its junior subordinated
debentures.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
HOWE BARNES INVESTMENTS, INC.
, 2000
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE> 3
[MAP]
[Reflects locations of Midwest Banc Holdings'
banking centers and lists addresses of same.]
i
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 1
Selected Consolidated Financial Data........................ 6
Risk Factors................................................ 7
Special Note Regarding Forward-Looking Statements........... 12
Use of Proceeds............................................. 13
Capitalization.............................................. 14
Accounting and Regulatory Treatment......................... 15
Management.................................................. 16
Description of the Trust.................................... 17
Description of the Preferred Securities..................... 18
Description of the Debentures............................... 29
Book-Entry Issuance......................................... 37
Description of the Guarantee................................ 38
Relationship among the Preferred Securities, the Debentures
and the Guarantee......................................... 41
Federal Income Tax Consequences............................. 42
ERISA Considerations........................................ 45
Underwriting................................................ 46
Legal Matters............................................... 47
Where You Can Find Information.............................. 47
Experts..................................................... 48
Documents Incorporated by Reference......................... 48
</TABLE>
------------------------------------------
You should only rely on the information contained or incorporated by
reference in this prospectus. We have not, and our underwriters have not,
authorized any person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not, and our underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date on the front cover of this prospectus only.
ii
<PAGE> 5
This page intentionally left blank.
iii
<PAGE> 6
SUMMARY
This summary highlights information contained elsewhere in, or incorporated
by reference into, this prospectus. Because this is a summary, it may not
contain all of the information that is important to you. Therefore, you should
also read the more detailed information set forth in this prospectus, our
financial statements and the other information that is incorporated by reference
in this prospectus.
MIDWEST BANC HOLDINGS, INC.
We are a community-based bank holding company headquartered in Melrose
Park, Illinois. We provide a wide range of community banking services, including
traditional deposit and lending activities, personal and corporate trust
services, residential mortgage origination, insurance and retail securities
brokerage services.
Our principal operating subsidiaries are four Illinois community banks. The
banks operate out of 17 locations with 12 banking centers in the Chicago
metropolitan area and five banking centers in Western Illinois. Our banks serve
individuals, small- to medium-sized businesses, government and public entities
and not-for-profit organizations. The markets served by our subsidiaries provide
a mix of real estate, commercial, agricultural and consumer lending
opportunities, as well as a stable core deposit base. The following table
highlights information about our banks:
<TABLE>
<CAPTION>
YEAR BANKING ASSETS (IN MILLIONS)
BANK HEADQUARTERS AFFILIATED CENTERS ATMS AT MARCH 31, 2000
---- ------------ ---------- ------- ---- --------------------
<S> <C> <C> <C> <C> <C>
Midwest Bank and Trust Company... Elmwood Park, IL 1959 5 11 $578.3
Midwest Bank of Hinsdale......... Hinsdale, IL 1991 3 4 $285.6
Midwest Bank of McHenry County... Union, IL 1987 4 3 $268.5
Midwest Bank of Western Monmouth, IL
Illinois....................... 1993 5 8 $195.0
</TABLE>
In addition, two banks have subsidiaries that provide insurance and
investment brokerage services, and we have a subsidiary that provides data
processing services to the three banks operating within the Chicago metropolitan
area.
At March 31, 2000, we had $1.3 billion in assets, $690.9 million in loans,
$985.9 million in deposits and $68.5 million in stockholders' equity. Our first
quarter 2000 net income was $3.4 million, an increase of 34.9% over net income
of $2.5 million for the quarter ended March 31, 1999. Basic and diluted earnings
per share were $0.31 for the quarter ended March 31, 2000, compared to $0.23 for
the similar period in 1999. Our return on average assets was 1.07% for the first
quarter of 2000, up from 0.95% for the same period of 1999, while our return on
average equity increased to 20.86% for the first quarter 2000 from 13.44% for
the prior year period.
Our common stock is quoted on the Nasdaq National Market under the symbol
MBHI. Our executive offices are located at 501 W. North Avenue, Melrose Park, IL
60160 and our telephone number is (708) 865-1053.
We have accomplished significant profitable growth within our markets over
the past ten years. Total assets have increased from $341.5 million at December
31, 1989 to $1.3 billion at December 31, 1999, while net income has increased
from $2.5 million for 1989 to $11.9 million for 1999. We attribute this success
to our selective banking center expansion and our strategy to be positioned as a
lower cost provider of premium rate deposits and competitively priced loan
products within our core markets. The rate of
1
<PAGE> 7
growth in our total assets, loans, deposits and net income over the most recent
one-, three- and ten-year periods are shown below:
<TABLE>
<CAPTION>
1999 ANNUAL THREE YEAR AVERAGE TEN YEAR AVERAGE
PERCENTAGE GROWTH ANNUAL GROWTH RATE ANNUAL GROWTH RATE
----------------- ------------------ ------------------
<S> <C> <C> <C>
Total assets............................... 17.3% 19.9% 26.8%
Total loans................................ 23.9% 17.9% 25.2%
Total deposits............................. 11.7% 12.8% 21.6%
Net income................................. 14.3% 20.9% 37.4%
</TABLE>
Our strategy is to continue to take advantage of opportunities to expand
our business through internal growth as well as possible branch acquisitions,
while maintaining our historically low net overhead ratio. We are seeking to
increase loans as a percentage of total earning assets and to leverage our
customer base by increasing our emphasis on fee-based products and services. Key
aspects of our growth strategy include:
- Increasing loan growth and net interest margins by leveraging our
expertise and strong commercial customer base;
- Building a well-defined sales and service culture to maximize revenues
per household and ensure the highest levels of customer service;
- Improving our overall revenue effectiveness and cost-efficiency,
streamlining decision-making and further centralizing and standardizing
critical support activities;
- Accelerating fee income growth from nonbank financial
services -- primarily insurance and investment brokerage; and
- Expanding our market position through the opening of new banking centers
and the highly selective acquisition of other banks and branches.
As part of our expansion strategy, we opened new banking centers in
McHenry, Island Lake, and Roselle, Illinois during the past 18 months, and
acquired a banking center in Aledo, Illinois in December 1999. Also in 1999, we
began a strategic repositioning to eliminate unprofitable operations, to enhance
our revenues while managing our costs more effectively, and to realign certain
management responsibilities to develop an orderly succession plan and streamline
decision-making. To support our growth, over the last year we have added a
senior credit officer, several experienced loan officers, a sales manager, two
experienced banking center managers, an investment portfolio manager and a
training officer.
MBHI CAPITAL TRUST I
The trust is a newly formed financing subsidiary of Midwest Banc Holdings.
Upon issuance of the preferred securities offered by this prospectus, the
purchasers in this offering will own all of the issued and outstanding preferred
securities of the trust. In exchange for our capital contribution to the trust,
we will own all of the common securities of the trust. The trust exists
exclusively for the following purposes:
- issuing the preferred securities to the public for cash;
- issuing the common securities to us;
- investing the proceeds from the sale of the preferred and common
securities in an equivalent amount of % junior subordinated
debentures due , 2030, issued by us; and
- engaging in activities that are incidental to those listed above.
The trust's address is 501 West North Avenue, Melrose Park, Illinois 60160,
and its telephone number is (708) 865-1053.
2
<PAGE> 8
THE OFFERING
The issuer................... MBHI Capital Trust I
Securities being offered..... 1,000,000 preferred securities, which represent
preferred undivided beneficial interests in the
assets of the trust. Those assets will consist
solely of the debentures and payments received on
the debentures.
The trust will sell the preferred securities to
the public for cash. The trust will use that cash
to buy the debentures from us.
Offering price............... $25 per preferred security.
When distributions will be
paid to you.................. If you purchase the preferred securities, you are
entitled to receive cumulative cash distributions
at a % annual rate. Distributions will
accumulate from the date the trust issues the
preferred securities and are to be paid quarterly
on March 31, June 30, September 30 and December
31 of each year beginning September 30, 2000. As
long as the preferred securities are represented
by a global security, the record date for
distributions on the preferred securities will be
the business day prior to the distribution date.
We may defer the payment of cash distributions,
as described below.
When the preferred securities
must be redeemed............. The debentures will mature and the preferred
securities must be redeemed on ,
2030. We have the option, however, to shorten the
maturity date to a date not earlier than
, 2005. We will not shorten the
maturity date unless we have received the prior
approval of the Board of Governors of the Federal
Reserve System, if required.
Redemption of the preferred
securities before
, 2030 is
possible..................... The trust must redeem the preferred securities
when the debentures are paid at maturity or upon
any earlier redemption of the debentures. We may
redeem all or part of the debentures at any time
on or after , 2005. In addition, we
may redeem, at any time, all of the debentures
if:
- the interest we pay on the debentures is no
longer deductible by us for federal tax
purposes; or the trust becomes subject to
federal income tax; or the trust becomes or
will become subject to certain other taxes
or governmental charges;
- there is a change in existing laws or
regulations that requires the trust to
register as an investment company; or
- there is a change in the capital adequacy
guidelines of the Federal Reserve that
results in the preferred securities not
being counted as Tier 1 capital.
We may also redeem debentures at any time, and
from time to time, in an amount equal to the
liquidation amount of any preferred securities we
repurchase, plus a proportionate amount of common
securities, but only in exchange for a like
amount of the preferred securities and common
securities then owned by us.
3
<PAGE> 9
Redemption of the debentures prior to maturity
will be subject to the prior approval of the
Federal Reserve, if approval is then required. If
your preferred securities are redeemed by the
trust, you will receive the liquidation amount of
$25 per preferred security plus any accrued and
unpaid distributions to the date of redemption.
We have the option to extend
the interest payment
period....................... The trust will rely solely on payments made by us
under the debentures to pay distributions on the
preferred securities. As long as we are not in
default under the indenture relating to the
debentures, we may, at one or more times, defer
interest payments on the debentures for up to 20
consecutive quarters, but not beyond
, 2030. If we defer interest payments
on the debentures:
- the trust will also defer distributions on
the preferred securities;
- the distributions you are entitled to will
accumulate; and
- these accumulated distributions will earn
additional interest at an annual rate of
%, compounded quarterly. At the end of
any deferral period, we will pay to the
trust all accrued and unpaid interest under
the debentures. The trust will then pay all
accumulated and unpaid distributions to you.
You will still be taxed if
distributions on the
preferred securities are
deferred..................... If a deferral of payment occurs, you will still
be required to recognize the deferred amounts as
income for United States federal income tax
purposes in advance of receiving these amounts,
even if you are a cash basis taxpayer.
Our guarantee of payment..... We guarantee the trust will use its assets to pay
the distributions on the preferred securities and
the liquidation amount upon liquidation of the
trust. However, the guarantee does not apply when
the trust does not have sufficient funds to make
the payments. If we do not make payments on the
debentures, the trust will not have sufficient
funds to make payments on the preferred
securities. In this event, your remedy is to
institute a legal proceeding directly against us
for enforcement of payments under the debentures.
We may distribute the
debentures directly to you... We may, at any time, dissolve the trust and
distribute the debentures to you, subject to the
prior approval of the Federal Reserve, if
required. If we distribute the debentures, we
will use our reasonable efforts to list them on a
national securities exchange or comparable
automated quotation system.
How the securities will rank
in right of payment.......... Our obligations under the preferred securities,
debentures and guarantee are unsecured and will
rank as follows with regard to right of payment:
- the preferred securities will rank equally
with the common securities of the trust. The
trust will pay distributions on the
preferred securities and the common
securities pro rata. However, if we default
with respect to the debentures, then no
distributions on the common securities of
the trust or our
4
<PAGE> 10
common stock will be paid until all
accumulated and unpaid distributions on the
preferred securities have been paid;
- our obligations under the debentures and the
guarantee are unsecured and generally will
rank junior in priority to our existing and
future senior and other subordinated
indebtedness; and
- because we are a bank holding company, the
junior subordinated debentures and the
guarantee will effectively be subordinated
to all depositors' claims, as well as
existing and future liabilities of our
subsidiaries.
Voting rights of the
preferred securities......... Except in limited circumstances, holders of the
preferred securities will have no voting rights.
American Stock Exchange
symbol....................... MBH.Pr
You will not receive
certificates................. The preferred securities will be represented by a
global security that will be deposited with and
registered in the name of The Depository Trust
Company, New York, New York, or its nominee. This
means that you will not receive a certificate for
the preferred securities, and your beneficial
ownership interests will be recorded through the
DTC book-entry system.
How the proceeds of this
offering will be used........ The trust will invest all of the proceeds from
the sale of the preferred securities in the
debentures. We estimate that the net proceeds to
us from the sale of the debentures to the trust,
after deducting underwriting expenses and
commissions, will be approximately $23.9 million.
We expect to use approximately $12.3 million of
the net proceeds from the sale of the debentures
to repay all of the indebtedness currently
outstanding under our revolving credit line. We
also anticipate that upon completion of this
offering we will contribute approximately $9.0
million of the net proceeds to our banks as
capital to support their internal growth. The
remaining net proceeds will be available to us
for general corporate purposes, including, but
not limited to, additional capital contributions
to the banks to support future growth and to
finance potential future expansion. Pending
allocation of these remaining proceeds to
specific uses, the funds may be invested in
marketable securities.
Before purchasing the preferred securities being offered, you should
carefully consider the "Risk Factors" beginning on page 7.
5
<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data presented below for, and as of the
end of, each of the years in the five-year period ended December 31, 1999, are
derived from our historical financial statements. Our consolidated financial
statements are audited by Crowe, Chizek and Company LLP, independent certified
public accountants. The summary data presented below for the three-month periods
ended March 31, 2000 and 1999, are unaudited. In our opinion, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair statement
of results as of or for the three-month periods indicated have been included.
This information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the notes thereto incorporated by reference into this
prospectus from our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000. Results for past periods are not necessarily indicative of
results to be expected for any future period, and results for the three-month
period ended March 31, 2000, are not necessarily indicative of results for the
entire year.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Total interest income............. $24,824 $18,911 $84,146 $74,827 $67,326 $57,298 $47,603
Total interest expense............ 13,615 10,207 44,262 41,014 35,311 28,918 22,619
---------- ---------- ---------- ---------- -------- -------- --------
Net interest income............... 11,209 8,704 39,884 33,813 32,015 28,380 24,984
Provision for loan losses......... 355 474 2,203 1,326 2,454 1,718 1,542
---------- ---------- ---------- ---------- -------- -------- --------
Net interest income after
provision for loan losses....... 10,854 8,230 37,681 32,487 29,561 26,662 23,442
Other income...................... 1,577 1,900 6,734 6,787 5,563 4,410 3,522
Other expenses.................... 7,210 6,209 25,774 22,895 21,076 19,167 17,781
---------- ---------- ---------- ---------- -------- -------- --------
Income before income taxes........ 5,221 3,921 18,641 16,379 14,048 11,905 9,183
Provision for income taxes........ 1,818 1,399 6,750 5,974 5,537 4,597 3,151
---------- ---------- ---------- ---------- -------- -------- --------
Net income........................ $3,403 $2,522 $11,891 $10,405 $8,511 $7,308 $6,032
========== ========== ========== ========== ======== ======== ========
PER SHARE DATA(1):
Earnings (basic).................. $ 0.31 $ 0.23 $ 1.08 $ 0.94 $ 0.85 $ 0.73 $ 0.60
Earnings (diluted)................ 0.31 0.23 1.07 0.94 0.85 0.73 0.60
Cash dividends declared........... 0.125 0.075 0.35 0.145 0.055 0.055 0.055
Book value at end of period....... 6.37 6.83 6.22 6.88 5.29 4.29 3.83
Tangible book value at end of
period.......................... 6.15 6.60 6.00 6.65 5.05 4.03 3.55
BALANCE SHEET DATA:
Total assets...................... $1,331,895 $1,089,266 $1,256,462 $1,071,314 $908,642 $786,070 $660,315
Total earning assets.............. 1,257,236 1,033,093 1,184,546 1,014,691 855,675 737,338 611,597
Total loans....................... 690,880 537,914 646,455 521,880 488,099 420,655 359,639
Allowance for loan losses......... 7,444 6,609 7,567 6,576 6,143 5,342 4,603
Total deposits.................... 985,913 895,225 970,954 869,152 794,362 701,205 590,671
Borrowings........................ 222,400 106,900 177,150 107,800 42,575 27,495 16,077
Stockholders' equity.............. 68,547 75,848 67,694 77,629 52,960 42,962 38,387
SELECTED FINANCIAL DATA:
Return on average assets(2)....... 1.07% 0.95% 1.04% 1.04% 1.01% 1.01% 1.02%
Return on average equity(2)....... 20.86 13.44 16.39 14.60 18.36 19.36 18.65
Net interest margin(2)............ 3.80 3.48 3.75 3.61 4.11 4.27 4.67
Nonperforming loans to total
loans........................... 0.31 0.81 0.37 0.90 0.66 1.03 0.60
Net loan charge-offs to average
loans(2)........................ 0.29 0.33 0.21 0.18 0.36 0.26 0.28
Allowance for loan losses to total
loans........................... 1.08 1.23 1.17 1.26 1.26 1.27 1.28
Average equity to average
assets.......................... 5.11 7.04 6.31 7.11 5.51 5.20 5.49
Tier 1 risk-based capital ratio... 9.90 12.90 11.11 13.47 9.60 9.57 7.64
Total risk-based capital ratio.... 10.88 14.00 12.20 14.64 10.78 10.76 8.66
EARNINGS TO FIXED CHARGES:
Including interest on deposits.... 1.38x 1.38x 1.42x 1.40x 1.40x 1.41x 1.41x
Excluding interest on deposits.... 2.59x 3.65x 3.47x 4.29x 6.21x 6.61x 6.38x
</TABLE>
- -------------------------
(1) Per share data have been adjusted for stock splits in 1997 and 1996.
(2) Data for the three-month periods have been annualized. The data for the
three months ended March 31, 2000 are not necessarily indicative of results
for the entire year.
6
<PAGE> 12
RISK FACTORS
An investment in the preferred securities involves a number of risks. We
urge you to read all of the information contained in this prospectus. In
addition, we urge you to consider carefully the following factors in evaluating
an investment in the trust before you purchase the preferred securities offered
by this prospectus.
Because the trust will rely on the payments it receives on the debentures
to fund all payments on the preferred securities, and because the trust may
distribute the debentures in exchange for the preferred securities, purchasers
of the preferred securities are making an investment decision that relates to
the debentures being issued by Midwest Banc Holdings as well as the preferred
securities. Purchasers should carefully review the information in this
prospectus about the preferred securities, the debentures and the guarantee.
RISKS RELATED TO AN INVESTMENT IN THE PREFERRED SECURITIES
IF WE DO NOT MAKE INTEREST PAYMENTS UNDER THE DEBENTURES, THE TRUST WILL BE
UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS. THE GUARANTEE WILL NOT
APPLY BECAUSE THE GUARANTEE COVERS PAYMENTS ONLY IF THE TRUST HAS FUNDS
AVAILABLE.
The trust will depend solely on our payments on the debentures to pay
amounts due to you on the preferred securities. If we default on our obligation
to pay the principal or interest on the debentures, the trust will not have
sufficient funds to pay distributions or the liquidation amount on the preferred
securities. In that case, you will not be able to rely on the guarantee for
payment of these amounts because the guarantee only applies if the trust has
sufficient funds to make distributions on or to pay the liquidation amount of
the preferred securities. Instead, you or the property trustee will have to
institute a direct action against us to enforce the property trustee's rights
under the indenture relating to the debentures.
TO THE EXTENT WE MUST RELY ON DIVIDENDS FROM OUR SUBSIDIARIES TO MAKE INTEREST
PAYMENTS ON THE DEBENTURES TO THE TRUST, OUR AVAILABLE CASH FLOW MAY BE
RESTRICTED.
We are a holding company and substantially all of our assets are held by
our subsidiaries. Our ability to make payments on the debentures when due will
depend primarily on available cash resources at the bank holding company and
dividends from our subsidiaries. Dividend payments or extensions of credit from
our banking subsidiaries are subject to regulatory limitations, generally based
on capital levels and current and retained earnings, imposed by the various
regulatory agencies with authority over such subsidiaries. The ability of each
banking subsidiary to pay dividends is also subject to its profitability,
financial condition, capital expenditures and other cash flow requirements. We
cannot assure you that our subsidiaries will be able to pay dividends in the
future.
THE DEBENTURES AND THE GUARANTEE RANK LOWER THAN OUR OTHER INDEBTEDNESS AND OUR
HOLDING COMPANY STRUCTURE EFFECTIVELY SUBORDINATES ANY CLAIMS AGAINST US TO
THOSE OF OUR SUBSIDIARIES' CREDITORS.
Our obligations under the debentures and the guarantee are unsecured and
will rank junior in priority of payment to our existing and future senior and
subordinated indebtedness, which totaled $269.0 million at March 31, 2000. The
issuance of the debentures and the preferred securities does not limit our
ability or the ability of our subsidiaries to incur additional indebtedness,
guarantees or other liabilities.
Because we are a holding company, the creditors of our subsidiaries,
including depositors, also will have priority over you in any distribution of
our subsidiaries' assets in liquidation, reorganization or otherwise.
Accordingly, the debentures and the guarantee will be effectively subordinated
to all existing and future liabilities of our subsidiaries, and you should look
only to our assets for payments on the preferred securities and the debentures.
7
<PAGE> 13
WE HAVE THE OPTION TO DEFER INTEREST PAYMENTS ON THE DEBENTURES FOR SUBSTANTIAL
PERIODS.
We may, at one or more times, defer interest payments on the debentures for
up to 20 consecutive quarters. If we defer interest payments on the debentures,
the trust will defer distributions on the preferred securities during any
deferral period. During a deferral period, you will be required to recognize as
income for federal income tax purposes the amount approximately equal to the
interest that accrues on your proportionate share of the debentures held by the
trust in the tax year in which that interest accrues, even though you will not
receive these amounts until a later date.
You will also not receive the cash related to any accrued and unpaid
interest from the trust if you sell the preferred securities before the end of
any deferral period. During a deferral period, accrued but unpaid distributions
will increase your tax basis in the preferred securities. If you sell the
preferred securities during a deferral period, your increased tax basis will
decrease the amount of any capital gain or increase the amount of any capital
loss that you may have otherwise realized on the sale. A capital loss, except in
certain limited circumstances, cannot be applied to offset ordinary income. As a
result, deferral of distributions could result in ordinary income, and a related
tax liability for the holder, and a capital loss that may only be used to offset
a capital gain.
We do not currently intend to exercise our right to defer interest payments
on the debentures. However, if we exercise our right in the future, the market
price of the preferred securities would likely be adversely affected. The
preferred securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest on the debentures. If you sell the preferred
securities during an interest deferral period, you may not receive the same
return on investment as someone who continues to hold the preferred securities.
Due to our right to defer interest payments, the market price of the preferred
securities may be more volatile than the market prices of other securities
without the deferral feature.
WE HAVE MADE ONLY LIMITED COVENANTS IN THE INDENTURE AND THE TRUST AGREEMENT.
The indenture governing the debentures and the trust agreement governing
the trust do not require us to maintain any financial ratios or specified levels
of net worth, revenues, income, cash flow or liquidity, and therefore do not
protect holders of the debentures or the preferred securities in the event we
experience significant adverse changes in our financial condition or results of
operations. In addition, neither the indenture nor the trust agreement limits
our ability or the ability of any subsidiary to incur additional indebtedness.
Therefore, you should not consider the provisions of these governing instruments
as a significant factor in evaluating whether we will be able to comply with our
obligations under the debentures or the guarantee.
WE MAY REDEEM THE DEBENTURES BEFORE , 2030.
Under certain circumstances, we may redeem the debentures before their
stated maturity, including the following:
- We may redeem the debentures, in whole or in part, at any time on or
after , 2005.
- We may redeem the debentures in whole, but not in part, within 180 days
after certain occurrences at any time during the life of the trust. These
occurrences may include adverse tax, investment company or bank
regulatory developments.
You should assume that we will exercise our redemption option if we are
able to obtain capital at a lower cost than we must pay on the debentures or if
it is otherwise in our interest to redeem all or some of the debentures. If
debentures are redeemed, the trust must redeem preferred securities having an
aggregate liquidation amount equal to the aggregate principal amount of
debentures redeemed, and you may be required to reinvest your principal at a
time when you may not be able to earn a return that is as high as you were
earning on the preferred securities.
8
<PAGE> 14
WE CAN DISTRIBUTE THE DEBENTURES TO YOU, WHICH MAY HAVE ADVERSE TAX CONSEQUENCES
FOR YOU AND WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF THE PREFERRED
SECURITIES.
The trust may be dissolved at any time before maturity of the debentures on
, 2030. As a result, and subject to the terms of the trust
agreement, the trustees may distribute the debentures to you.
We cannot predict the market prices for the debentures that may be
distributed in exchange for preferred securities upon liquidation of the trust.
The preferred securities, or the debentures that you may receive if the trust is
liquidated, may trade at a discount to the price that you paid to purchase the
preferred securities. Because you may receive debentures, your investment
decision with regard to the preferred securities will also be an investment
decision with regard to the debentures. You should carefully review all of the
information contained in this prospectus regarding the debentures.
Under current interpretations of United States federal income tax laws
supporting classification of the trust as a grantor trust for tax purposes, a
distribution of the debentures to you upon the dissolution of the trust would
not be a taxable event to you. Nevertheless, if the trust is classified for
United States income tax purposes as an association taxable as a corporation at
the time it is dissolved, the distribution of the debentures would be a taxable
event to you. In addition, if there is a change in law, a distribution of
debentures upon the dissolution of the trust could be a taxable event to you.
THERE IS NO CURRENT PUBLIC MARKET FOR THE PREFERRED SECURITIES AND THEIR MARKET
PRICE MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
There is currently no public market for the preferred securities. Although
we have applied to list the preferred securities on the American Stock Exchange,
there is no guarantee that an active or liquid trading market will develop for
the preferred securities or that the listing of the preferred securities will
continue on the American Stock Exchange. If an active trading market does not
develop, the market price and liquidity of the preferred securities will be
adversely affected. Even if an active public market does develop, there is no
guarantee that the market price for the preferred securities will equal or
exceed the price you pay for the preferred securities.
Future trading prices of the preferred securities may be subject to
significant fluctuations in response to prevailing interest rates, our future
operating results and financial condition, the market for similar securities and
general economic and market conditions. The initial public offering price of the
preferred securities has been set at the liquidation amount of the preferred
securities and may be greater than the market price following the offering.
The market price for the preferred securities, or the debentures that you
may receive in a distribution, is also likely to decline during any period that
we are deferring interest payments on the debentures.
YOU MUST RELY ON THE PROPERTY TRUSTEE TO ENFORCE YOUR RIGHTS IF THERE IS AN
EVENT OF DEFAULT UNDER THE INDENTURE.
You may not be able to directly enforce your rights against us if an event
of default under the indenture occurs. If an event of default under the
indenture occurs and is continuing, this event will also be an event of default
under the trust agreement. In that case, you must rely on the enforcement by the
property trustee of its rights as holder of the debentures against us. The
holders of a majority in liquidation amount of the preferred securities will
have the right to direct the property trustee to enforce its rights. If the
property trustee does not enforce its rights following an event of default and a
request by the record holders to do so, any record holder may, to the extent
permitted by applicable law, take action directly against us to enforce the
property trustee's rights. If an event of default occurs under the trust
agreement that is attributable to our failure to pay interest or principal on
the debentures, or if we default under the guarantee, you may proceed directly
against us. You will not be able to exercise directly any other remedies
available to the holders of the debentures unless the property trustee fails to
do so.
9
<PAGE> 15
AS A HOLDER OF PREFERRED SECURITIES YOU HAVE LIMITED VOTING RIGHTS.
Holders of preferred securities have limited voting rights. Your voting
rights pertain primarily to amendments to the trust agreement. In general, only
we can replace or remove any of the trustees. However, if an event of default
under the trust agreement occurs and is continuing, the holders of at least a
majority in aggregate liquidation amount of the preferred securities may replace
the property trustee and the Delaware trustee.
RISKS RELATED TO AN INVESTMENT IN MIDWEST BANC HOLDINGS, INC.
CREDIT LOSSES ARE INHERENT IN OUR BUSINESS AND OUR ALLOWANCE FOR LOAN LOSSES MAY
NOT BE ADEQUATE TO COVER ACTUAL LOAN LOSSES.
Credit losses are inherent in the lending business and could have a
material adverse effect on our operating results and our ability to make
payments on the debentures. We make various assumptions and judgments about the
collectibility of our loan portfolio and provide an allowance for loan losses
based on a number of factors. The amount of future losses is susceptible to
changes in economic, operating and other conditions, including changes in
interest rates, beyond our control. Such losses may exceed current estimates. If
our assumptions are wrong, our allowance for loan losses may not be sufficient
to cover our losses, thereby having an adverse effect on our operating results,
and may cause us to increase the allowance in the future. Additions to our
allowance for loan losses would decrease our net income.
COMMERCIAL AND COMMERCIAL REAL ESTATE LOANS REPRESENT A SIGNIFICANT PORTION OF
OUR LOAN PORTFOLIO, AND REPAYMENT OF THESE LOANS MAY BE DEPENDENT ON FACTORS
OUTSIDE OUR CONTROL OR THE CONTROL OR OUR BORROWERS.
As of March 31, 2000, commercial real estate loans totaled $345.4 million,
or 50.0%, of our total loan portfolio. Commercial real estate lending typically
involves higher loan principal amounts and the repayment of the loans generally
is dependent, in large part, on sufficient income and cash flow from the
properties securing the loans to cover operating expenses and debt service.
Economic events or governmental regulations outside of the control of the
borrower or lender could negatively impact the future cash flow and market
values of the affected properties.
Commercial loans were $183.5 million, or 26.6% of our total loan portfolio,
as of March 31, 2000. Our commercial loans are primarily made based on the
identified cash flow of the borrower and, to a lesser extent, based on the
underlying collateral provided by the borrower. Most often, this collateral is
accounts receivable, inventory, and machinery. In the case of loans secured by
accounts receivable, the availability of funds for the repayment of these loans
may be substantially dependent on the ability of the borrower to collect amounts
due from its customers. Virtually all loans in this category also include the
personal guaranty of the borrower or principal owner. Credit support provided by
the borrower for most of these loans and the probability of repayment depends on
the liquidation of the pledged collateral and enforcement of a personal
guarantee, if necessary. The collateral securing these loans may depreciate over
time, may be difficult to appraise and may fluctuate in value based on the
success of the business.
WE MAY EXPERIENCE DIFFICULTIES IN MANAGING OUR GROWTH.
We have achieved significant growth during the past five years and our
strategy contemplates further growth and expansion. Although successfully
managed in the past, our growth strategy involves a variety of risks, including
our ability to:
- to attract the management talent needed to maintain adequate depth of
management throughout our organization as we continue to grow in the
future;
- maintain adequate sources of funding at attractive pricing;
10
<PAGE> 16
- maintain adequate underwriting practices and policies, as well as
monitoring systems, to maintain credit quality and manage a growing loan
portfolio in the future; and
- implement appropriate policies, procedures and operating systems
necessary to support a larger organization while preserving our
historically low net overhead ratios.
Failure to address these issues successfully as we grow could adversely
affect our results of operations and financial condition.
THERE IS NO ASSURANCE THAT WE WILL CONTINUE TO EXPAND.
In addition to developing additional business in our existing markets, we
may expand our markets by establishing new banks or additional branches. If we
expand in this manner, our banks are likely to have higher operating expenses
relative to operating income, which may limit increases in short-term
profitability and could adversely affect our ability to make payments on the
preferred securities. Our ability to achieve profitable growth by establishing
new banks or branch offices is dependent on our identifying advantageous office
locations and generating sufficient levels of deposits and loans from those
locations to become profitable within a reasonable time period, typically 12 to
18 months. Though a successful strategy in the past, we cannot assure investors
that we will be able to establish additional banks or branches on a profitable
basis in the future.
WE RELY HEAVILY ON OUR MANAGEMENT AND THE UNEXPECTED LOSS OF KEY OFFICERS MAY
ADVERSELY AFFECT OUR OPERATIONS.
Our success has been and will continue to be greatly influenced by our
ability to retain the services of existing senior management and, as we expand,
to attract and retain qualified additional senior and middle management. We
recently announced that leadership of the company will be transferred to a new
chief executive officer in connection with the planned retirement of Robert L.
Woods, our current President and Chief Executive Officer effective July 1, 2000.
Uncertainties that may be associated with this management succession, the
unexpected loss of services of any of our key management personnel, or an
inability to recruit and retain qualified personnel in the future, could have an
adverse effect on our operations and financial results. Currently, we or the
banks are beneficiaries under $1,000,000 to $2,000,000 individual key-man life
insurance policies on four key members of management, including Brad A. Luecke,
the current President of Midwest Bank and Trust Company who has been named to
succeed Mr. Woods as President and Chief Executive Officer of Midwest Banc
Holdings.
We also depend upon the experience of the officers of our subsidiaries, the
managers of our banking facilities and on their relationships with the
communities they serve. We may not be able to retain our current key personnel
or attract additional qualified key persons as needed.
CHANGES IN LOCAL ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR LOAN PORTFOLIO.
Most of our lending and deposit activities are concentrated primarily in
selected communities in greater Chicago and Western Illinois. Adverse changes in
the economy of the Chicago metropolitan area and Western Illinois would likely
reduce our growth rate and could have a negative effect on our business.
Negative effects may include the demand for new loans, the availability of new
deposits as a source of funding, the ability of customers to repay loans and the
value of the collateral pledged as security for loans.
The majority of our agricultural loans and loans to agribusinesses are
concentrated in West Central Illinois and managed by Midwest Bank of Western
Illinois. The concentration of these loans in a specific local geographic area
could affect our ability to be repaid if adverse local weather, soil or economic
conditions interfere with present and projected farming, marketing and
harvesting operations.
11
<PAGE> 17
WE HAVE NO CONTROL OVER INTEREST RATES AND OTHER CONDITIONS WHICH IMPACT OUR
RESULTS OF OPERATIONS.
Our primary source of income is the spread between the interest rates
earned on investments and loans and the interest rates paid on deposits and
other interest-bearing liabilities. Like most banking institutions, our net
interest spread and margin will be affected by general economic conditions and
other factors, including fiscal and monetary policies of the federal government,
that influence market interest rates and our ability to respond to changes in
such rates. At any given time, our asset and liabilities mix may be affected
differently by a given change in interest rates. As a result, an increase or
decrease in rates, combined with the length of loan maturities or the mix of
adjustable and fixed rate loans in our portfolio, could have a positive or
negative effect on our net income, capital and liquidity.
THERE IS STRONG COMPETITION IN THE FINANCIAL SERVICES INDUSTRY; WE MAY BE AT A
COMPETITIVE DISADVANTAGE BECAUSE SOME COMPETITORS HAVE GREATER CAPITAL RESOURCES
THAN WE DO AND MAY BE SUBJECT TO LESS REGULATION THAN WE ARE.
We compete for loan and deposit customers with other banks and thrifts, as
well as other financial services organizations such as credit unions, finance
companies, brokerage firms, insurance companies and money market mutual funds,
all of whom aggressively solicit customers within our market areas by
advertising through direct mail, electronic media, including the Internet, and
other means. Many of the competitors in our markets have been in business for
many years, have established customer bases and are substantially larger than
us. In addition, many of these entities have greater capital resources than we
do, and some of these are not subject to the same degree of regulation. As a
result, such nonbank competitors have advantages over us in providing certain
services.
WE HAVE A CONTINUING NEED FOR TECHNOLOGICAL CHANGE, BUT MAY HAVE FEWER RESOURCES
THAN OUR COMPETITORS TO CONTINUE TO INVEST IN TECHNOLOGICAL IMPROVEMENTS.
The financial services industry is undergoing rapid technological changes
with frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. Our future
success and ability to implement our growth strategy will depend in part upon
our ability to address the needs of our customers by using technology to provide
products and services that will satisfy customer demands for convenience as well
as to create additional efficiencies in our operations. Many of our competitors
have substantially greater resources to invest in technological improvements. We
cannot provide you with assurance that we will be able to effectively implement
new technology-driven products and services or be successful in marketing such
products and services to our customers.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and information incorporated by reference in this
prospectus contains forward-looking statements which describe our future plans,
strategies and expectations. Our ability to predict results or the actual effect
of future plans or strategies is inherently uncertain. Forward-looking
statements are based on assumptions, many of which are beyond our control, and
involve risks which may cause our actual results, performance or achievements to
differ materially from the results, performance or achievements that we
anticipate. These forward-looking statements are intended to be covered by the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
Factors that might affect forward-looking statements include, among other
things:
- a deterioration in the economy or business conditions, either nationally
or in our market areas that could increase credit-related losses and
expenses;
- increases in defaults by borrowers and other loan delinquencies resulting
in increases in our provision for loan losses and related expenses;
- fluctuations in interest rates and loan and deposit pricing, which could
reduce our net interest margins, asset valuations and expense
expectations;
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<PAGE> 18
- uncertainties that may be associated with the recently announced
management succession effective upon the retirement of our current
president and chief executive officer;
- higher than anticipated costs related to our new banking centers or
slower than anticipated earning asset growth which could extend
anticipated breakeven periods at these locations;
- failure to enter new markets successfully, an inability to capitalize on
growth opportunities or difficulties in managing our growth, including
possible limitations on our management depth;
- unanticipated difficulties, costs or delays related to our pending
acquisition of an investment services business;
- the timing, impact and other uncertainties of possible future expansion
opportunities and our success or failure in the integration of acquired
operations, if any;
- significant increases in competition, including nonbank competitors that
are not subject to the same degree of regulation;
- legislative or regulatory changes applicable to bank holding companies or
our banking or other subsidiaries; and
- changes in tax rates, tax laws or tax law interpretations.
We undertake no obligation to publicly update or otherwise revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
events discussed in any forward-looking statements in this prospectus might not
occur.
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of the preferred
securities in the debentures. We anticipate that the net proceeds from the sale
of the debentures will be $23.9 million after deducting underwriting commissions
and offering expenses estimated to be $200,000.
We expect to use approximately $12.3 million of the net proceeds to repay
all of the indebtedness currently outstanding under our revolving credit line
with a commercial bank. The credit facility provides for maximum borrowings of
$25.0 million and matures on January 31, 2002. Interest is payable on
outstanding principal balances, at the option of the company, at either the 30-,
60-, 90-, or 180-day LIBOR plus 95 basis points or the prime rate less 25 basis
points. The borrowings outstanding under the line of credit as of May 9, 2000,
mature on various dates in June and July, 2000 and bear interest at an average
annual rate of 7.03%. After this credit facility is repaid, we plan to keep the
credit line available for future borrowings.
We also anticipate that, upon the completion of this offering, we will
contribute approximately $10.0 million of the net proceeds from the sale of the
debentures to the capital of our banking subsidiaries to support their internal
growth. We will use the remaining net proceeds for general corporate purposes,
including, but not limited to, additional capital contributions to our banks to
support future growth and to finance potential future expansion. Until these
remaining proceeds are allocated to specific uses, the funds may be used to
purchase marketable securities.
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<PAGE> 19
CAPITALIZATION
The following table sets forth our total deposits, indebtedness and
capitalization at March 31, 2000, on a historical basis and as adjusted for the
offering and the application of the estimated net proceeds from the
corresponding sale of the debentures as if such sale had been consummated on
March 31, 2000. This data should be read in conjunction with the consolidated
financial statements and notes thereto incorporated by reference into this
prospectus from our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and from our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000. See "Documents Incorporated by Reference."
<TABLE>
<CAPTION>
MARCH 31, 2000
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
INDEBTEDNESS:
Short-term borrowings (including securities sold under
agreement to repurchase and federal funds purchased)...... $ 46,607 $ 46,607
Other borrowings
Federal Home Loan Bank advances........................... 210,000 210,000
Revolving credit lines with commercial bank(1)............ 12,250 --
Other notes............................................... 150 150
Total indebtedness................................... $269,007 $256,757
======== ========
Guaranteed preferred beneficial interests in the company's
junior subordinated debt.................................. -- $ 25,000
======== ========
STOCKHOLDERS' EQUITY:
Preferred stock............................................. $ -- $ --
Common stock................................................ 114 114
Capital surplus............................................. 29,704 29,704
Retained earnings........................................... 58,901 58,901
Accumulated other comprehensive income...................... (11,414) (11,414)
Treasury stock at cost (612,000 shares)..................... (8,758) (8,758)
-------- --------
Total stockholders' equity........................ $ 68,547 $ 68,547
======== ========
CAPITAL RATIOS(2):
Leverage Ratio(3)........................................... 5.86% 7.85%
Tier 1 Capital Ratio(4)..................................... 9.90 13.14
Total Risk Based Capital Ratio(4)........................... 10.88 14.12
</TABLE>
- -------------------------
(1) The notes payable under the revolving credit facility will be repaid in
their entirety with proceeds from the sale of the debentures to the trust.
(2) The capital ratios, as adjusted, are computed including the estimated net
proceeds from the sale of the preferred securities, in a manner consistent
with Federal Reserve regulations.
(3) The leverage ratio is core capital divided by average quarterly assets,
after deducting intangible assets and net deferred tax assets in excess of
regulatory maximum limits.
(4) The preferred securities have been structured to qualify as Tier 1 capital.
However, in calculating the amount of Tier 1 qualifying capital, the
preferred securities, together with any outstanding cumulative preferred
stock of Midwest Banc Holdings that may be outstanding in the future, can
only be included up to the amount constituting 25% of total Tier 1 capital.
As adjusted for this offering, Midwest Banc Holding's Tier 1 capital as of
March 31, 2000, would have been approximately $100.2 million, of which $25.0
million would have been attributable to the preferred securities.
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<PAGE> 20
ACCOUNTING AND REGULATORY TREATMENT
The trust will be treated, for financial reporting purposes, as our
subsidiary and, accordingly, the accounts of the trust will be included in our
consolidated financial statements. The preferred securities will be presented as
a separate line item in our consolidated balance sheet under the caption
"Guaranteed preferred beneficial interests in the company's junior subordinated
debt," or other similar caption. In addition, appropriate disclosures about the
preferred securities, the guarantee and the debentures will be included in the
notes to our consolidated financial statements. For financial reporting
purposes, we will record distributions payable on the preferred securities in
our consolidated statements of income.
Our future reports filed under the Securities Exchange Act of 1934 will
include a footnote to the consolidated financial statements stating that:
- the trust is wholly-owned;
- the sole assets of the trust are the debentures, specifying the
debentures' outstanding principal amount, interest rate and maturity
date; and
- our obligations described in this prospectus, in the aggregate,
constitute a full, irrevocable and unconditional guarantee on a
subordinated basis by us of the obligations of the trust under the
preferred securities.
We have not included separate financial statements of the trust in this
prospectus. We do not consider that separate financial statements would be
material to holders of preferred securities because we will own all of the
trust's voting securities, the trust has no independent operations and we
guarantee the payments on the preferred securities to the extent described in
this prospectus.
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<PAGE> 21
MANAGEMENT
The names and ages of the executive officers of Midwest Banc Holdings as of
May 4, 2000, offices held by these officers on that date and other positions
held with Midwest Banc Holdings and its principal operating subsidiaries, are
set forth below.
<TABLE>
<CAPTION>
POSITIONS WITH MIDWEST BANC HOLDINGS
NAME AGE AND PRINCIPAL OPERATING SUBSIDIARIES
---- --- ------------------------------------
<S> <C> <C>
E. V. Silveri........... 69 Chairman of the Board of Directors, Midwest Banc Holdings,
Midwest Bank and Trust Company, and First Midwest Data Corp.
and Director of Midwest Bank of Hinsdale.
Robert L. Woods(1)...... 70 President and Chief Executive Officer of Midwest Banc
Holdings; Chairman of Midwest Bank of Hinsdale; Director of
First Midwest Data Corp.
Brad A. Luecke(1)....... 49 Executive Vice President of Midwest Banc Holdings;
President, Chief Executive Officer and Director of Midwest
Bank and Trust Company; Director of Midwest Bank of
Hinsdale; Director of First Midwest Data Corp.
Edward H. Sibbald....... 51 Senior Vice President and Chief Financial Officer of Midwest
Banc Holdings; Director of Midwest Bank of Western Illinois;
Director of Midwest Bank of McHenry County
Stephen M. Karaba....... 42 Senior Vice President, Midwest Banc Holdings; President and
Director, Midwest Bank of McHenry County; Director of
Midwest One Financial Services, L.L.C.; Director of Midwest
Bank of Western Illinois.
Christopher J. Gavin.... 38 Senior Vice President, Midwest Banc Holdings; President,
Chief Executive Officer and Director, Midwest Bank of
Western Illinois; Director of Porter Insurance Agency, Inc.
Mary M. Henthorn(2)..... 42 President, Chief Executive Officer and Director of Midwest
Bank of Hinsdale.
Michelle T. Holman...... 40 Senior Vice President, Midwest Banc Holdings and Director of
First Midwest Data Corp.
Sheldon Bernstein(1).... 53 Executive Vice President-Lending, Midwest Bank and Trust
Company.
</TABLE>
- -------------------------
(1) On May 4, 2000, the Company announced that Mr. Woods has decided to retire
from his position as President and Chief Executive Officer of Midwest Banc
Holdings effective July 1, 2000. Mr. Woods will continue to serve as a
director and will assume the position of Vice Chairman. Mr. Luecke will
succeed Mr. Woods as President and Chief Executive Officer and will also
serve as Vice Chairman and CEO of Midwest Bank and Trust Company. Also
effective July 1, 2000, Mr. Bernstein will become President and Chief
Operating Officer of Midwest Bank and Trust Company.
(2) Ms. Henthorn is the daughter of Mr. Woods.
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<PAGE> 22
DESCRIPTION OF THE TRUST
The trust is a statutory business trust formed pursuant to the Delaware
Business Trust Act under a trust agreement executed by us, as sponsor for the
trust, and the trustees, and a certificate of trust filed with the Delaware
Secretary of State. The trust agreement will be amended and restated in its
entirety in the form filed as an exhibit to the registration statement of which
the prospectus is a part, as of the date the preferred securities are initially
issued. The trust agreement will be qualified under the Trust Indenture Act of
1939.
The holders of the preferred securities issued pursuant to the offering
described in this prospectus will own all of the issued and outstanding
preferred securities of the trust which have certain prior rights over the other
securities of the trust. We will not initially own any of the preferred
securities. We will acquire common securities in an amount equal to at least 3%
of the total capital of the trust and will initially own, directly or
indirectly, all of the issued and outstanding common securities. The common
securities, together with the preferred securities, are called the trust
securities. The trust exists exclusively for the purposes of:
- issuing the preferred securities to the public for cash;
- issuing its common securities to us in exchange for our capitalization of
the trust;
- investing the proceeds from the sale of the trust securities in an
equivalent amount of debentures; and
- engaging in other activities that are incidental to those listed above.
The rights of the holders of the trust securities are as set forth in the
trust agreement, the Delaware Business Trust Act and the Trust Indenture Act.
The trust agreement does not permit the trust to borrow money or make any
investment other than in the debentures. Other than with respect to the trust
securities, Midwest Banc Holdings has agreed to pay for all debts and
obligations and all costs and expenses of the trust, including the fees and
expenses of the trustees and any income taxes, duties and other governmental
charges, and all costs and expenses related to these charges, to which the trust
may become subject, except for United States withholding taxes that are properly
withheld.
The number of trustees of the trust will initially be five. Three of the
trustees will be persons who are employees or officers of or who are affiliated
with Midwest Banc Holdings. They are the administrative trustees. The fourth
trustee will be an entity that maintains its principal place of business in the
State of Delaware. It is the Delaware trustee. Initially, Wilmington Trust
Company, a Delaware banking corporation, will act as Delaware trustee. The fifth
trustee will also initially be Wilmington Trust Company, which will serve as
institutional trustee under the trust agreement and as indenture trustee for the
purposes of compliance with the provisions of the Trust Indenture Act. It is the
property trustee. Also for purposes of compliance with the Trust Indenture Act,
Wilmington Trust Company will act as guarantee trustee and indenture trustee
under the guarantee agreement and the indenture. See "Description of the
Debentures" and "Description of the Guarantee." We, as holder of all of the
common securities, will have the right to appoint or remove any trustee unless
an event of default under the indenture has occurred and is continuing, in which
case only the holders of the preferred securities may remove the Delaware
trustee or the property trustee. The trust has a term of approximately 31 years
but may terminate earlier as provided in the trust agreement.
The property trustee will hold the debentures for the benefit of the
holders of the trust securities and will have the power to exercise all rights,
powers and privileges under the indenture as the holder of the debentures. In
addition, the property trustee will maintain exclusive control of a segregated
noninterest-bearing "payment account" established with Wilmington Trust Company
to hold all payments made on the debentures for the benefit of the holders of
the trust securities. The property trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
trust securities out of funds from the payment account. The guarantee trustee
will hold the guarantee for the benefit of the holders of the preferred
securities. We will pay all fees and expenses related to the trust and the
offering of the preferred securities, including the fees and expenses of the
trustees.
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DESCRIPTION OF THE PREFERRED SECURITIES
The preferred securities will be issued pursuant to the trust agreement,
which will be amended and restated in connection with this offering, and which
will be qualified as an indenture under the Trust Indenture Act. Wilmington
Trust Company will act as property trustee for the preferred securities under
the trust agreement for purposes of complying with the provisions of the Trust
Indenture Act. The terms of the preferred securities will include those stated
in the trust agreement and those made part of the trust agreement by the Trust
Indenture Act. A form of the trust agreement, as to be amended and restated, has
been filed as an exhibit to the registration statement of which this prospectus
forms a part.
GENERAL
The trust agreement authorizes the administrative trustees, on behalf of
the trust, to issue the trust securities, which are comprised of the preferred
securities to be sold to the public and the common securities. We will own all
of the common securities issued by the trust. The preferred securities will
represent preferred undivided beneficial interests in the assets of the trust,
and the holders of the preferred securities will be entitled to a preference
over the common securities upon an event of default with respect to
distributions and amounts payable on redemption or liquidation. The trust is not
permitted to issue any securities other than the trust securities or incur any
other indebtedness.
The preferred securities will rank equally, and payments on the preferred
securities will be made proportionally, with the common securities, except as
described under " -- Subordination of Common Securities of the Trust" below.
The property trustee will hold legal title to the debentures in trust for
the benefit of the holders of the trust securities. We will guarantee the
payment of distributions out of money held by the trust, and payments upon
redemption of the preferred securities or liquidation of the trust, to the
extent described under "Description of the Guarantee." The guarantee agreement
does not cover the payment of any distribution or the liquidation amount when
the trust does not have sufficient funds available to make these payments.
DISTRIBUTIONS
Source of Distributions. The funds of the trust available for distribution
to holders of the preferred securities will be limited to payments made under
the debentures, which the trust will purchase with the proceeds from the sale of
the trust securities. Distributions will be paid through the property trustee,
which will hold the amounts received from our interest payments on the
debentures in the payment account for the benefit of the holders of the trust
securities. If we do not make interest payments on the debentures, the property
trustee will not have funds available to pay distributions on the preferred
securities.
Payment of Distributions. Distributions on the preferred securities will be
payable at the annual rate of % of the $25 stated liquidation amount,
payable quarterly on March 31, June 30, September 30 and December 31 of each
year, to the holders of the preferred securities on the relevant record dates.
So long as the preferred securities are represented by a global security, as
described below, the record date will be the business day immediately preceding
the relevant distribution date. The first distribution date for the preferred
securities will be September 30, 2000.
Distributions will accumulate from the date of issuance, will be cumulative
and will be computed on the basis of a 360-day year of twelve 30-day months. If
the distribution date is not a business day, then payment of the distributions
will be made on the next day that is a business day, without any additional
interest or other payment for the delay. However, if the next business day is in
the next calendar year, payment of the distribution will be made on the business
day immediately preceding the scheduled distribution date. "Business day" means
any day other than a Saturday, a Sunday, a day on which banking institutions in
New York, New York are authorized or required by law, regulation or executive
order to remain closed or a day on which the corporate trust office of the
property trustee or the indenture trustee is closed for business.
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Extension Period. As long as no event of default under the indenture has
occurred and is continuing, we have the right to defer the payment of interest
on the debentures at any time for a period not exceeding 20 consecutive
quarters. However, no extension period may extend beyond , 2030 or
end on a date other than an interest payment date, which dates are the same as
the distribution dates. If we defer the payment of interest, quarterly
distributions on the preferred securities will also be deferred during any such
extension period. Any deferred distributions under the preferred securities will
accumulate additional amounts at the annual rate of %, compounded quarterly
from the relevant distribution date. The term "distributions" as used in this
prospectus includes those accumulated amounts.
During an extension period, we may not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock (other than the reclassification of any class of our capital stock
into another class of capital stock) or allow any of our subsidiaries to
do the same with respect to their capital stock (other than the payment
of dividends or distributions to us);
- make any payment of principal, interest or premium on or repay,
repurchase or redeem any debt securities that rank equally with or junior
in interest to the debentures or allow any of our subsidiaries to do the
same;
- make any guarantee payments with respect to any other guarantee by us of
any other debt securities of any of our subsidiaries if the guarantee
ranks equally with or junior to the debentures (other than payments under
the guarantee); or
- redeem, purchase or acquire less than all of the debentures or any of the
preferred securities.
After the termination of any extension period and the payment of all amounts
due, we may elect to begin a new extension period, subject to the above
requirements.
We do not currently intend to exercise our right to defer distributions on
the preferred securities by deferring the payment of interest on the debentures.
REDEMPTION OR EXCHANGE
General. Subject to the prior approval of the Federal Reserve, if required,
we will have the right to redeem the debentures:
- in whole at any time, or in part from time to time, on or after
, 2005; or
- at any time, in whole, within 180 days following the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event, as
defined below; or
- at any time, to the extent of any preferred securities we repurchase plus
a proportionate amount of the common securities we hold.
Mandatory Redemption. Upon our repayment or redemption, in whole or in
part, of any debentures, whether on , 2030 or earlier, the property
trustee will apply the proceeds to redeem the same amount of the trust
securities, upon not less than 30 days' nor more than 60 days' notice, at the
redemption price. The redemption price will equal 100% of the aggregate
liquidation amount of the trust securities plus accumulated but unpaid
distributions to the date of redemption. If less than all of the debentures are
to be repaid or redeemed on a date of redemption, then the proceeds from such
repayment or redemption will be allocated to redemption of preferred securities
and common securities proportionately.
Distribution of Debentures in Exchange for Preferred Securities. Upon prior
approval of the Federal Reserve, if required, we will have the right at any time
to dissolve, wind-up or terminate the trust and, after satisfaction of the
liabilities of creditors of the trust as provided by applicable law, including,
without limitation, amounts due and owing the trustees of the trust, cause the
debentures to be distributed directly
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to the holders of trust securities in liquidation of the trust. See
"-- Liquidation Distribution Upon Termination."
After the liquidation date fixed for any distribution of debentures in
exchange for preferred securities:
- those trust securities will no longer be deemed to be outstanding;
- certificates representing debentures in a principal amount equal to the
liquidation amount of those preferred securities will be issued in
exchange for the preferred securities certificates;
- we will use our reasonable efforts to list the debentures on the American
Stock Exchange or other exchange as the preferred securities are then
listed or traded;
- any certificates representing trust securities that are not surrendered
for exchange will be deemed to represent debentures with a principal
amount equal to the liquidation amount of those preferred securities,
accruing interest at the rate provided for in the debentures from the
last distribution date on the preferred securities.
- all rights of the trust securityholders other than the right to receive
debentures upon surrender of a certificate representing trust securities
will terminate.
There can be no assurance as to the market prices for the preferred
securities or the debentures that may be distributed if a dissolution and
liquidation of the trust were to occur. The preferred securities that an
investor may purchase, or the debentures that an investor may receive on
dissolution and liquidation of the trust, may trade at a discount to the price
that the investor paid to purchase the preferred securities.
Redemption upon a Tax Event, Investment Company Event or Capital Treatment
Event. If a Tax Event, an Investment Company Event or a Capital Treatment Event
occurs, we will have the right to redeem the debentures in whole, but not in
part, and thereby cause a mandatory redemption of the trust securities in whole
at the redemption price. If one of these events occurs and we do not elect to
redeem the debentures, or to dissolve the trust and cause the debentures to be
distributed to holders of the trust securities, then the preferred securities
will remain outstanding and additional interest may be payable on the
debentures. See "Description of the Debentures -- Redemption or Exchange."
"Tax Event" means the receipt by the trust and us of an opinion of counsel
experienced in such matters stating that there is more than an insubstantial
risk that:
- interest payable by us on the debentures is not, or within 90 days of the
date of the opinion will not be, deductible by us, in whole or in part,
for federal income tax purposes;
- the trust is, or will be within 90 days after the date of the opinion,
subject to federal income tax with respect to income received or accrued
on the debentures; or
- the trust is, or will be within 90 days after the date of opinion,
subject to more than an immaterial amount of other taxes, duties,
assessments or other governmental charges, as a result of any amendment
to any tax laws or regulations.
"Investment Company Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that the trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act, as a result of a change in law or regulation
or a change in interpretation or application of law or regulation.
"Capital Treatment Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that there is more
than an insubstantial risk of impairment of our ability to treat the preferred
securities as Tier 1 capital for purposes of the current capital adequacy
guidelines of the Federal Reserve, as a result of any amendment to any laws or
any regulations.
For all of the events described above, we or the trust must request and
receive an opinion with regard to the event within a reasonable period of time
after we become aware of the possible occurrence of an event of this kind.
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Redemption of Debentures in Exchange for Preferred Securities We
Repurchase. Upon prior approval of the Federal Reserve, if required, we will
also have the right at any time, and from time to time, to redeem debentures in
exchange for any preferred securities we may have repurchased in the market. If
we elect to surrender any preferred securities beneficially owned by us in
exchange for redemption of a like amount of debentures, we will also surrender a
proportionate amount of common securities in exchange for debentures. Preferred
securities owned by other holders will not be called for redemption at any time
when we elect to exchange trust securities we own to redeem debentures.
The common securities we surrender will be in the same proportion to the
preferred securities we surrender as are the common securities then remaining
outstanding to the preferred securities then remaining outstanding. In exchange
for the trust securities surrendered by us, the trustee will cause to be
distributed to us debentures with a principal amount equal to the liquidation
amount of the trust securities, plus any accumulated but unpaid distributions,
if any, then held by the trustee allocable to those trust securities. After the
date of redemption involving an exchange by us, the trust securities we
surrender and the debentures distributed to us in exchange will no longer be
deemed outstanding.
REDEMPTION PROCEDURES
Preferred securities will be redeemed at the redemption price with the
applicable proceeds from our contemporaneous redemption of the debentures.
Redemptions of the preferred securities will be made and the redemption price
will be payable on each redemption date only to the extent that the trust has
funds available for the payment of the redemption price.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the date of redemption to each holder of trust securities to be
redeemed at its registered address. Unless we default in payment of the
redemption price on the debentures, interest will cease to accumulate on the
debentures called for redemption on and after the date of redemption.
If the trust gives notice of redemption of its trust securities, then the
property trustee, to the extent funds are available, will irrevocably deposit
with the depositary for the trust securities funds sufficient to pay the
aggregate redemption price and will give the depositary for the trust securities
irrevocable instructions and authority to pay the redemption price to the
holders of the trust securities. See "Book-Entry Issuance." If the preferred
securities are no longer in book-entry only form, the property trustee, to the
extent funds are available, will deposit with the designated paying agent for
such preferred securities funds sufficient to pay the aggregate redemption price
and will give the paying agent irrevocable instructions and authority to pay the
redemption price to the holders upon surrender of their certificates evidencing
the preferred securities. Notwithstanding the foregoing, distributions payable
on or prior to the date of redemption for any trust securities called for
redemption will be payable to the holders of the trust securities on the
relevant record dates for the related distribution dates.
If notice of redemption has been given and we have deposited funds as
required, then on the date of the deposit all rights of the holders of the trust
securities called for redemption will cease, except the right to receive the
redemption price, but without interest on such redemption price after the date
of redemption. The trust securities will also cease to be outstanding on the
date of the deposit. If any date fixed for redemption of trust securities is not
a business day, then payment of the redemption price payable on that date will
be made on the next day that is a business day without any additional interest
or other payment in respect of the delay. However, if the next business day is
in the next succeeding calendar year, payment of the interest will be made on
the immediately preceding business day.
If payment of the redemption price in respect of trust securities called
for redemption is improperly withheld or refused and not paid by the trust, or
by us pursuant to the guarantee, distributions on the trust securities will
continue to accumulate at the applicable rate from the date of redemption
originally established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
redemption price. See "Description of the Guarantee."
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Payment of the redemption price on the preferred securities and any
distribution of debentures to holders of preferred securities will be made to
the applicable recordholders as they appear on the register for the preferred
securities on the relevant record date. As long as the preferred securities are
represented by a global security, the record date will be the business day
immediately preceding the date of redemption or liquidation date, as applicable.
If less than all of the trust securities are to be redeemed, then the
aggregate liquidation amount of the trust securities to be redeemed will be
allocated proportionately to those trust securities based upon the relative
liquidation amounts. The particular preferred securities to be redeemed will be
selected by the property trustee from the outstanding preferred securities not
previously called for redemption by a method the property trustee deems fair and
appropriate. This method may provide for the redemption of portions equal to $25
or an integral multiple of $25 of the liquidation amount of the preferred
securities. The property trustee will promptly notify the registrar for the
preferred securities in writing of the preferred securities selected for
redemption and, in the case of any preferred securities selected for partial
redemption, the liquidation amount to be redeemed.
Subject to applicable law, and if we are not exercising our right to defer
interest payments on the debentures, we may, at any time, purchase outstanding
preferred securities.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the preferred
securities and common securities will be made based on the liquidation amount of
these securities. However, if an event of default under the indenture has
occurred and is continuing, no distributions on or redemption of the common
securities may be made. Furthermore, no payments may be made on the common
securities unless payment in full in cash of all accumulated and unpaid
distributions on all of the outstanding preferred securities for all
distribution periods terminating on or before that time, or in the case of
payment of the redemption price, payment of the full amount of the redemption
price on all of the outstanding preferred securities then called for redemption,
has been made or provided. All funds available to the property trustee will
first be applied to the payment in full in cash of all distributions on, or the
redemption price of, the preferred securities then due and payable.
In the case of the occurrence and continuance of any event of default under
the trust agreement resulting from an event of default under the indenture, we,
as holder of the common securities, will be deemed to have waived any right to
act with respect to that event of default under the trust agreement until the
effect of the event of default has been cured, waived or otherwise eliminated.
Until the event of default under the trust agreement has been so cured, waived
or otherwise eliminated, the property trustee will act solely on behalf of the
holders of the preferred securities and not on our behalf, and only the holders
of the preferred securities will have the right to direct the property trustee
to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
We will have the right at any time to dissolve, wind-up or terminate the
trust and cause the debentures to be distributed to the holders of the preferred
securities. This right is subject, however, to us receiving approval of the
Federal Reserve, if required.
In addition, the trust will automatically terminate upon expiration of its
term and will terminate earlier on the first to occur of:
- our bankruptcy, dissolution or liquidation;
- the distribution of a like amount of the debentures to the holders of
trust securities, if we have given written direction to the property
trustee to terminate the trust;
- redemption of all of the preferred securities as described under
"-- Redemption or Exchange -- Mandatory Redemption"; or
- the entry of a court order for the dissolution of the trust.
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With the exception of a redemption as described under "-- Redemption or
Exchange -- Mandatory Redemption," if an early termination of the trust occurs,
the trust will be liquidated by the administrative trustees as expeditiously as
they determine to be possible. After satisfaction of liabilities to creditors of
the trust as provided by applicable law, the trustees will distribute to the
holders of trust securities debentures:
- in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of the trust securities;
- with an interest rate identical to the distribution rate on the trust
securities; and
- with accrued and unpaid interest equal to accumulated and unpaid
distributions on the trust securities.
However, if the property trustee determines that the distribution is not
practical, then the holders of trust securities will be entitled to receive, in
lieu of debentures, a proportionate amount of the liquidation distribution. The
liquidation distribution will be the amount equal to the aggregate of the
liquidation amount plus accumulated and unpaid distributions to the date of
payment. If the liquidation distribution can be paid only in part because the
trust has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by the trust on the trust
securities will be paid on a proportional basis based on liquidation amounts to
us, as the holder of the common securities, and to the holders of the preferred
securities. However, if an event of default under the indenture has occurred and
is continuing, the preferred securities will have a priority over the common
securities. See "-- Subordination of Common Securities."
Under current United States federal income tax law and interpretations and
assuming that the trust is treated as a grantor trust, as is expected, a
distribution of the debentures should not be a taxable event to holders of the
preferred securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or another circumstance, however, the distribution
could be a taxable event to holders of the preferred securities. See "Federal
Income Tax Consequences -- Receipt of Debentures or Cash Upon Liquidation of the
Trust." If we do not elect to redeem the debentures prior to maturity or to
liquidate the trust and distribute the debentures to holders of the preferred
securities, the preferred securities will remain outstanding until the repayment
of the debentures.
If we elect to dissolve the trust and thus cause the debentures to be
distributed to holders of the preferred securities in liquidation of the trust,
we will continue to have the right to shorten the maturity of the debentures.
See "Description of the Debentures -- General."
LIQUIDATION VALUE
The amount of the liquidation distribution payable on the preferred
securities in the event of any liquidation of the trust is $25 per preferred
security plus accumulated and unpaid distributions to the date of payment, which
may be in the form of a distribution of debentures having a liquidation value
and accrued interest of an equal amount. See "-- Liquidation Distribution Upon
Termination."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under the
trust agreement with respect to the preferred securities:
- the occurrence of an event of default under the indenture (see
"Description of the Debentures -- Debenture Events of Default");
- a default by the trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30 days;
- a default by the trust in the payment of any redemption price of any of
the trust securities when it becomes due and payable;
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- a default in the performance, or breach, in any material respect, of any
covenant or warranty of the trustees in the trust agreement, other than
those defaults covered in the previous two points, and continuation of
the default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the trustee(s) by the holders of at
least 25% in aggregate liquidation amount of the outstanding preferred
securities, a written notice specifying the default or breach and
requiring it to be remedied and stating that the notice is a "Notice of
Default" under the trust agreement; or
- the occurrence of events of bankruptcy or insolvency with respect to the
property trustee and our failure to appoint a successor property trustee
within 60 days.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to the holders of the preferred securities, the
administrative trustees and to us, unless the event of default has been cured or
waived. Midwest Banc Holdings and the administrative trustees are required to
file annually with the property trustee a certificate as to whether or not they
are in compliance with all the conditions and covenants applicable to them under
the trust agreement.
If an event of default under the indenture has occurred and is continuing,
the preferred securities will have preference over the common securities upon
termination of the trust. See "-- Subordination of Common Securities" and
"-- Liquidation Distribution Upon Termination." The existence of an event of
default under the trust agreement does not entitle the holders of preferred
securities to accelerate the maturity thereof, unless the event of default is
caused by the occurrence of an event of default under the indenture and both the
indenture trustee and holders of at least 25% in principal amount of the
debentures fail to accelerate the maturity thereof.
REMOVAL OF THE TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, we may remove any trustee at any time. If an event of default under
the indenture has occurred and is continuing, only the holders of a majority in
liquidation amount of the outstanding preferred securities may remove the
property trustee or the Delaware trustee. The holders of the preferred
securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with us as the
holder of the common securities. No resignation or removal of a trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts the appointment in accordance with the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default under the indenture has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property may
at the time be located, we will have the power to appoint at any time or times,
and upon written request of the property trustee will appoint, one or more
persons or entity either (1) to act as a co-trustee, jointly with the property
trustee, of all or any part of the trust property, or (2) to act as separate
trustee of any trust property. In either case these trustees will have the
powers that may be provided in the instrument of appointment, and will have
vested in them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In case an event of
default under the indenture has occurred and is continuing, the property trustee
alone will have power to make the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees may be a
successor trustee to any of the trustees, including a successor resulting from a
merger or consolidation. However, any successor trustee must meet all of the
qualifications and eligibility standards to act as a trustee.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. The trust may, at our request, with the consent of the
administrative trustees and without the consent of the holders of the preferred
securities, the property trustee or the Delaware trustee, undertake a
transaction listed above if the following conditions are met:
- the successor entity either (a) expressly assumes all of the obligations
of the trust with respect to the preferred securities, or (b) substitutes
for the preferred securities other securities having substantially the
same terms as the preferred securities (referred to as "successor
securities") so long as the successor securities rank the same in
priority as the preferred securities with respect to distributions and
payments upon liquidation, redemption and otherwise;
- we appoint a trustee of the successor entity possessing substantially the
same powers and duties as the property trustee in its capacity as the
holder of the debentures;
- the successor securities are listed or traded or will be listed or traded
on any national securities exchange or other organization on which the
preferred securities are then listed, if any;
- the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities (including any
successor securities) in any material respect;
- the successor entity has a purpose substantially identical to that of the
trust;
- prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion from
independent counsel that (a) any transaction of this kind does not
adversely affect the rights, preferences and privileges of the holders of
the preferred securities (including any successor securities) in any
material respect, and (b) following the transaction, neither the trust
nor the successor entity will be required to register as an "investment
company" under the Investment Company Act; and
- we own all of the common securities of the successor entity and guarantee
the obligations of the successor entity under the successor securities at
least to the extent provided by the guarantee.
Notwithstanding the foregoing, the trust may not, except with the consent of
every holder of the preferred securities, enter into any transaction of this
kind if the transaction would cause the trust or the successor entity not to be
classified as a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as described below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by the Trust
Indenture Act and the trust agreement, the holders of the preferred securities
will have no voting rights.
The trust agreement may be amended from time to time by us and the
trustees, without the consent of the holders of the preferred securities, in the
following circumstances:
- with respect to acceptance of appointment by a successor trustee;
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under
the trust agreement, as long as the amendment is not inconsistent with
the other provisions of the trust agreement and does not have a material
adverse effect on the interests of any holder of trust securities; or
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the trust will be classified for federal income
tax purposes as a grantor trust at all times that any trust
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securities are outstanding or to ensure that the trust will not be
required to register as an "investment company" under the Investment
Company Act.
With the consent of the holders of a majority of the aggregate liquidation
amount of the outstanding trust securities, we and the trustees may amend the
trust agreement if the trustees receive an opinion of counsel to the effect that
the amendment or the exercise of any power granted to the trustees in accordance
with the amendment will not affect the trust's status as a grantor trust for
federal income tax purposes or the trust's exemption from status as an
"investment company" under the Investment Company Act. However, without the
consent of each holder of trust securities, the trust agreement may not be
amended to (a) change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the trust securities as of a specified date, or (b)
restrict the right of a holder of trust securities to institute suit for the
enforcement of the payment on or after that date.
As long as the property trustee holds any debentures, the trustees will
not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or executing any trust or
power conferred on the property trustee with respect to the debentures;
- waive any past default that is waivable under the indenture;
- exercise any right to rescind or annul a declaration that the principal
of all the debentures will be due and payable; or
- consent to any amendment or termination of the indenture or the
debentures, where the consent is required, without obtaining the prior
approval of the holders of a majority in aggregate liquidation amount of
all outstanding preferred securities. However, where a consent under the
indenture requires the consent of each holder of the affected debentures,
no consent will be given by the property trustee without the prior
consent of each holder of the preferred securities.
The trustees may not revoke any action previously authorized or approved by a
vote of the holders of the preferred securities except by subsequent vote of the
holders of the preferred securities. The property trustee will notify each
holder of preferred securities of any notice of default with respect to the
debentures. In addition to obtaining the foregoing approvals of the holders of
the preferred securities, prior to taking any of the foregoing actions, the
trustees must obtain an opinion of counsel experienced in these matters to the
effect that the trust will not be classified as an association taxable as a
corporation for federal income tax purposes on account of the action.
Any required approval of holders of trust securities may be given at a
meeting of holders of the trust securities convened for the purpose or pursuant
to written consent. The property trustee will cause a notice of any meeting at
which holders of the trust securities are entitled to vote, or of any matter
upon which action by written consent of the holders is to be taken, to be given
to each holder of record of trust securities.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel its preferred securities in accordance with
the trust agreement.
Notwithstanding the fact that holders of preferred securities are entitled
to vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by Midwest Banc Holdings, the trustees or
any affiliate of Midwest Banc Holdings or any trustee, will, for purposes of the
vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The preferred securities will be represented by one or more global
preferred securities registered in the name of The Depository Trust Company, New
York, New York ("DTC"), or its nominee. A global preferred security is a
security representing interests of more than one beneficial holder. Ownership of
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beneficial interests in the global preferred securities will be reflected in DTC
participant account records through DTC's book-entry transfer and registration
system. Participants are brokers, dealers, or others having accounts with DTC.
Indirect beneficial interests of other persons investing in the preferred
securities will be shown on, and transfers will be effected only through,
records maintained by DTC participants. Except as described below, preferred
securities in definitive form will not be issued in exchange for the global
preferred securities. See "Book-Entry Issuance."
No global preferred security may be exchanged for preferred securities
registered in the names of persons other than DTC or its nominee unless:
- DTC notifies the indenture trustee that it is unwilling or unable to
continue as a depositary for the global preferred security and we are
unable to locate a qualified successor depositary;
- we execute and deliver to the indenture trustee a written order stating
that we elect to terminate the book-entry system through DTC; or
- there shall have occurred and be continuing an event of default under the
indenture.
Any global preferred security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for definitive certificates registered in the
names as DTC shall direct. It is expected that the instructions will be based
upon directions received by DTC with respect to ownership of beneficial
interests in the global preferred security. If preferred securities are issued
in definitive form, the preferred securities will be in denominations of $25 and
integral multiples of $25 and may be transferred or exchanged at the offices
described below.
Unless and until it is exchanged in whole or in part for the individual
preferred securities represented thereby, a global preferred security may not be
transferred except as a whole by DTC to a nominee of DTC, by a nominee of DTC to
DTC or another nominee of DTC or by DTC or any nominee to a successor depositary
or any nominee of the successor.
Payments on global preferred securities will be made to DTC, as the
depositary for the global preferred securities. If the preferred securities are
issued in definitive form, distributions will be payable by check mailed to the
address of record of the persons entitled to the distribution, and the transfer
of the preferred securities will be registrable, and preferred securities will
be exchangeable for preferred securities of other denominations of a like
aggregate liquidation amount, at the corporate office of the property trustee,
or at the offices of any paying agent or transfer agent appointed by the
administrative trustees. In addition, if the preferred securities are issued in
definitive form, the record dates for payment of distributions will be the 15th
day of the month in which the relevant distribution date occurs. For a
description of the terms of DTC arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-Entry
Issuance."
Upon the issuance of one or more global preferred securities, and the
deposit of the global preferred security with or on behalf of DTC or its
nominee, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective aggregate liquidation amounts of the individual
preferred securities represented by the global preferred security to the
designated accounts of persons that participate in the DTC system. These
participant accounts will be designated by the dealers, underwriters or agents
selling the preferred securities. Ownership of beneficial interests in a global
preferred security will be limited to persons or entities having an account with
DTC or who may hold interests through participants. With respect to interests of
any person or entity that is a DTC participant, ownership of beneficial
interests in a global preferred security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by DTC or its
nominee. With respect to persons or entities who hold interests in a global
preferred security through a participant, the interest and any transfer of the
interest will be shown only on the participant's records. The laws of some
states require that certain purchasers of securities take physical delivery of
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a global preferred security.
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So long as DTC or another depositary, or its nominee, is the registered
owner of the global preferred security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the preferred
securities represented by the global preferred security for all purposes under
the trust agreement. Except as described in this prospectus, owners of
beneficial interests in a global preferred security will not be entitled to have
any of the individual preferred securities represented by the global preferred
security registered in their names, will not receive or be entitled to receive
physical delivery of any the preferred securities in definitive form and will
not be considered the owners or holders of the preferred securities under the
trust agreement.
None of us, the property trustee, any paying agent or the securities
registrar for the preferred securities will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the global preferred security representing the
preferred securities or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of the
liquidation amount or distributions in respect of a global preferred security,
immediately will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
liquidation amount of the global preferred security as shown on the records of
DTC or its nominee. We also expect that payments by participants to owners of
beneficial interests in the global preferred security held through the
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." The payments will be the responsibility of
the participants. See "Book-Entry Issuance."
PAYMENT AND PAYING AGENCY
Payments in respect of the preferred securities shall be made to DTC, which
shall credit the relevant accounts of participants on the applicable
distribution dates, or, if any of the preferred securities are not held by DTC,
the payments shall be made by check mailed to the address of the holder as
listed on the register of holders of the preferred securities. The paying agent
for the preferred securities will initially be the property trustee and any
co-paying agent chosen by the property trustee and acceptable to us and the
administrative trustees. The paying agent for the preferred securities may
resign as paying agent upon 30 days' written notice to the administrative
trustees, the property trustee and us. If the property trustee no longer is the
paying agent for the preferred securities, the administrative trustees will
appoint a successor to act as paying agent. The successor must be a bank or
trust company acceptable to us and the property trustee.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as the registrar and the transfer agent for
the preferred securities. Registration of transfers of preferred securities will
be effected without charge by or on behalf of the trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The trust and its registrar and transfer agent will not be
required to register or cause to be registered the transfer of preferred
securities after they have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, until the occurrence and continuance of an event of
default under the trust agreement, undertakes to perform only the duties set
forth in the trust agreement. After an event of default under the trust
agreement, the property trustee must exercise the same degree of care and skill
as a prudent person exercises or uses in the conduct of its own affairs. The
property trustee is under no obligation to exercise any of the powers vested in
it by the trust agreement at the request of any holder of preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred. If no event of default under the trust
agreement has occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous or
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inconsistent provisions in the trust agreement or is unsure of the application
of any provision of the trust agreement, and the matter is not one on which
holders of preferred securities are entitled to vote upon, then the property
trustee will take the action directed in writing by us. If the property trustee
is not so directed, then it will take the action it deems advisable and in the
best interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
- the trust will not be deemed to be an "investment company" required to be
registered under Investment Company Act;
- the trust will not be classified as an association taxable as a
corporation for federal income tax purposes; and
- the debentures will be treated as indebtedness of Midwest Banc Holdings
for federal income tax purposes.
In this regard, we and the administrative trustees are authorized to take any
action not inconsistent with applicable law, the certificate of trust or the
trust agreement, that we and the administrative trustees determine to be
necessary or desirable for these purposes.
Holders of the preferred securities have no preemptive or similar rights.
The trust agreement and the trust securities will be governed by Delaware law.
DESCRIPTION OF THE DEBENTURES
Concurrently with the issuance of the preferred securities, the trust will
invest the proceeds from the sale of the trust securities in the debentures
issued by us. The debentures will be issued as unsecured debt under the
indenture between us and Wilmington Trust Company, as indenture trustee. The
indenture will be qualified under the Trust Indenture Act.
The following discussion is subject to, and is qualified in its entirety by
reference to, the indenture and to the Trust Indenture Act. We urge prospective
investors to read the form of the indenture, which is filed as an exhibit to the
registration statement of which this prospectus forms a part.
GENERAL
The debentures will be limited in aggregate principal amount to
$25,773,200. This amount represents the sum of the aggregate stated liquidation
amounts of the trust securities. The debentures will bear interest at the annual
rate of % of the principal amount. The interest will be payable quarterly on
March 31, June 30, September 30 and December 31 of each year, beginning
September 30, 2000, to the person in whose name each debenture is registered at
the close of business on the 15th day of the last month of the calendar quarter.
It is anticipated that, until the liquidation, if any, of the trust, the
debentures will be held in the name of the property trustee in trust for the
benefit of the holders of the trust securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. If any date on which interest is
payable on the debentures is not a business day, then payment of interest will
be made on the next day that is a business day without any additional interest
or other payment in respect of the delay. However, if the next business day is
in the next calendar year, payment of interest will be made on the immediately
preceding business day. Accrued interest that is not paid on the applicable
interest payment date will bear additional interest on the amount due at the
annual rate of %, compounded quarterly.
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The debentures will mature on , 2030, the stated maturity date.
We may shorten this date once at any time to any date not earlier than
, 2005, subject to the prior approval of the Federal Reserve, if
required.
We will give notice to the indenture trustee and the holders of the
debentures, no more than 180 days and no less than 90 days prior to the
effectiveness of any change in the stated maturity date. We will not have the
right to redeem the debentures from the trust until after , 2005,
except if (a) a Tax Event, an Investment Company Event or a Capital Treatment
Event has occurred, or (b) we repurchase preferred securities in the market, in
which case we can elect to redeem debentures specifically in exchange for a like
amount of preferred securities owned by us plus a proportionate amount of common
securities.
The debentures will be unsecured and will rank junior to all of our senior
and subordinated debt, including indebtedness we may incur in the future.
Because we are a holding company, our right to participate in any distribution
of assets of any of our subsidiaries, upon any subsidiary's liquidation or
reorganization or otherwise, and thus the ability of holders of the debentures
to benefit indirectly from any distribution by a subsidiary, is subject to the
prior claim of creditors of the subsidiary, except to the extent that we may be
recognized as a creditor of the subsidiary. The debentures will, therefore, be
effectively subordinated to all existing and future liabilities of our
subsidiaries, and holders of debentures should look only to our assets for
payment. The indenture does not limit our ability to incur or issue secured or
unsecured senior and junior debt. See "-- Subordination."
The indenture does not contain provisions that afford holders of the
debentures protection in the event of a highly leveraged transaction or other
similar transaction involving us, nor does it require us to maintain or achieve
any financial performance levels or to obtain or maintain any credit rating on
the debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
As long as no event of default under the indenture has occurred and is
continuing, we have the right under the indenture to defer the payment of
interest on the debentures at any time for a period not exceeding 20 consecutive
quarters. However, no extension period may extend beyond the stated maturity of
the debentures or end on a date other than a date interest is normally due. At
the end of an extension period, we must pay all interest then accrued and
unpaid, together with interest thereon at the annual rate of %, compounded
quarterly. During an extension period, interest will continue to accrue and
holders of debentures, or the holders of preferred securities if they are then
outstanding, will be required to accrue and recognize as income for federal
income tax purposes the accrued but unpaid interest amounts in the year in which
such amounts accrued. See "Federal Income Tax Consequences -- Interest Payment
Period and Original Issue Discount."
During an extension period, we may not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of our capital
stock (other than the reclassification of any class of capital stock into
another class of capital stock) or allow any of our subsidiaries to do
the same with respect to their capital stock (other than payment of
dividends or distributions to us);
- make or allow any of our subsidiaries to make any payment of principal,
interest or premium on, or repay, repurchase or redeem any debt
securities issued by us that rank equally with or junior to the
debentures;
- make or allow any of our subsidiaries to make any guarantee payments with
respect to any other guarantee by us of any other debt securities of any
of our subsidiaries if the guarantee ranks equally with or junior to the
debentures (other than payments under the guarantee); or
- redeem, purchase or acquire less than all of the debentures or any of the
preferred securities.
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Prior to the termination of any extension period, so long as no event of
default under the indenture is continuing, we may further defer the payment of
interest subject to the above stated requirements. Upon the termination of any
extension period and the payment of all amounts then due, we may elect to begin
a new extension period at any time. We do not currently intend to exercise our
right to defer payments of interest on the debentures.
We must give the property trustee, the administrative trustees and the
indenture trustee notice of our election of an extension period at least two
business days prior to the earlier of (a) the next date on which distributions
on the trust securities would have been payable except for the election to begin
an extension period, or (b) the date we are required to give notice of the
record date, or the date the distributions are payable, to the American Stock
Exchange, or other applicable self-regulatory organization, or to holders of the
preferred securities, but in any event at least one business day prior to the
record date.
Other than as described above, there is no limitation on the number of
times that we may elect to begin an extension period.
ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES
If the trust is required to pay any additional taxes, duties, assessments
or other governmental charges as a result of the occurrence of a Tax Event, we
will pay as additional interest on the debentures any amounts which may be
required so that the net amounts received and retained by the trust after paying
any additional taxes, duties, assessments or other governmental charges will not
be less than the amounts the trust would have received had the additional taxes,
duties, assessments or other governmental charges not been imposed.
REDEMPTION
Subject to prior approval of the Federal Reserve, if required, we may
redeem the debentures prior to maturity:
- on or after , 2005, in whole at any time or in part from time
to time;
- in whole at any time within 180 days following the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event; or
- at any time, to the extent of any preferred securities we repurchase plus
a proportionate amount of the common securities we hold.
In each case we will pay a redemption price equal to the accrued and unpaid
interest on the debentures so redeemed to the date fixed for redemption, plus
100% of the principal amount of the redeemed debentures.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of debentures to be redeemed
at its registered address. Redemption of less than all outstanding debentures
must be effected proportionately, by lot or in any other manner deemed to be
fair and appropriate by the indenture trustee. Unless we default in payment of
the redemption price for the debentures, on and after the redemption date
interest will no longer accrue on the debentures or the portions of the
debentures called for redemption.
The debentures will not be subject to any sinking fund.
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities -- Liquidation
Distribution Upon Termination," under certain circumstances and with the Federal
Reserve's approval, the debentures may be distributed to the holders of the
preferred securities in liquidation of the trust after satisfaction of
liabilities to creditors of the trust. If this occurs, we will use our
reasonable efforts to list the debentures on the American Stock Exchange or
other stock exchange or national quotation system on which the
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preferred securities are then listed, if any. There can be no assurance as to
the market price of any debentures that may be distributed to the holders of
preferred securities.
RESTRICTIONS ON PAYMENTS
We are restricted from making certain payments (as described below) if we
have chosen to defer payment of interest on the debentures, if an event of
default has occurred and is continuing under the indenture, or if we are in
default with respect to our obligations under the guarantee.
If any of these events occur, we will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our
capital stock (other than the reclassification of any class of our
capital stock into another class of capital stock) or allow any of our
subsidiaries to do the same with respect to their capital stock (other
than payment of dividends or distributions to us);
- make or allow any of our subsidiaries to make any payment of principal,
interest or premium on, or repay or repurchase or redeem any of our debt
securities that rank equally with or junior to the debentures;
- make or allow any of our subsidiaries to make any guarantee payments with
respect to any guarantee by us of the debt securities of any of our
subsidiaries if the guarantee ranks equally with or junior to the
debentures (other than payments under the guarantee); or
- redeem, purchase or acquire less than all of the debentures or any of the
preferred securities.
SUBORDINATION
The debentures are subordinated and junior in right of payment to all of
our senior and subordinated debt (as defined below). Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up or reorganization of Midwest Banc Holdings, whether voluntary or involuntary
in bankruptcy, insolvency, receivership or other proceedings in connection with
any insolvency or bankruptcy proceedings, the holders of our senior and
subordinated debt will first be entitled to receive payment in full of principal
and interest before the holders of debentures will be entitled to receive or
retain any payment in respect of the debentures.
If the maturity of any debentures is accelerated, the holders of all of our
senior and subordinated debt outstanding at the time of the acceleration will
also be entitled to first receive payment in full of all amounts due to them,
including any amounts due upon acceleration, before the holders of the
debentures will be entitled to receive or retain any principal or interest
payments on the debentures.
No payments of principal or interest on the debentures may be made if there
has occurred and is continuing a default in any payment with respect to any of
our senior or subordinated debt or an event of default with respect to any of
our senior or subordinated debt resulting in the acceleration of the maturity of
the senior or subordinated debt, or if any judicial proceeding is pending with
respect to any default.
The term "debt" means, with respect to any person, whether recourse is to
all or a portion of the assets of the person and whether or not contingent:
- every obligation of the person for money borrowed;
- every obligation of the person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses;
- every reimbursement obligation of the person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account
of the person;
- every obligation of the person issued or assumed as the deferred purchase
price of property or services, excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business;
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- every capital lease obligation of the person; and
- every obligation of the type referred to in the first five points of
another person and all dividends of another person the payment of which,
in either case, the first person has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise.
The term "senior debt" means the principal of, and premium and interest,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to us, on, debt, whether incurred on or prior to
the date of the indenture or incurred after the date. However, senior debt will
not be deemed to include:
- any debt where it is provided in the instrument creating the debt that
the obligations are not superior in right of payment to the debentures or
to other debt which is equal with, or subordinated to, the debentures;
- any of our debt that when incurred and without regard to any election
under the federal bankruptcy laws, was without recourse to us;
- any debt of ours to any of our subsidiaries;
- any debt to any of our employees;
- any debt that by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of
the debentures as a result of the subordination provisions of the
indenture would be greater than they otherwise would have been as a
result of any obligation of the holders to pay amounts over to the
obligees on the trade accounts payable or accrued liabilities arising in
the ordinary course of business as a result of subordination provisions
to which the debt is subject; and
- debt which constitutes subordinated debt.
The term "subordinated debt" means the principal of, and premium and
interest, including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to us, on, debt. Subordinated debt
includes debt incurred on or prior to the date of the indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other debt of ours, other than the debentures. However, subordinated debt
will not be deemed to include:
- any of our debt which when incurred and without regard to any election
under the federal bankruptcy laws was without recourse to us;
- any debt of ours to any of our subsidiaries;
- any debt to any of our employees;
- any debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of the debt by the holders of
the debentures as a result of the subordination provisions of the
indenture would be greater than they otherwise would have been as a
result of any obligation of the holders to pay amounts over to the
obligees on the trade accounts payable or accrued liabilities arising in
the ordinary course of business as a result of subordination provisions
to which the debt is subject;
- debt which constitutes senior debt; and
- any debt of ours under debt securities (and guarantees in respect of
these debt securities) initially issued to any trust, or a trustee of a
trust, partnership or other entity affiliated with us that is, directly
or indirectly, our financing vehicle in connection with the issuance by
that entity of preferred securities or other securities which are
intended to qualify for "Tier 1" capital treatment.
We expect from time to time to incur additional indebtedness, and there is
no limitation under the indenture on the amount we may incur. We had
consolidated senior and subordinated debt of $269.0 million at March 31, 2000.
Although a portion of these amounts is expected to be repaid with a
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portion of the proceeds from the sale of the debentures, we expect to incur
additional senior or subordinated debt in the future.
PAYMENT AND PAYING AGENTS
Generally, payment of principal of and interest on the debentures will be
made at the office of the indenture trustee in Wilmington, Delaware. However, we
have the option to make payment of any interest by (a) check mailed to the
address of the person entitled to payment at the address listed in the register
of holders of the debentures, or (b) wire transfer to an account maintained by
the person entitled thereto as specified in the register of holders of the
debentures, provided that proper transfer instructions have been received by the
applicable record date. Payment of any interest on debentures will be made to
the person in whose name the debenture is registered at the close of business on
the regular record date for the interest payment, except in the case of
defaulted interest.
Any moneys deposited with the indenture trustee or any paying agent for the
debentures, or then held by us in trust, for the payment of the principal of or
interest on the debentures and remaining unclaimed for two years after the
principal or interest has become due and payable, will be repaid to us on June
30 of each year. If we hold any of this money in trust, then it will be
discharged from the trust to us and the holder of the debenture will thereafter
look, as a general unsecured creditor, only to us for payment.
REGISTRAR AND TRANSFER AGENT
The indenture trustee will act as the registrar and the transfer agent for
the debentures. Debentures may be presented for registration of transfer, with
the form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed, at the office of the registrar. Provided that we
maintain a transfer agent in Wilmington, Delaware, we may rescind the
designation of any transfer agent or approve a change in the location through
which any transfer agent acts. We may at any time designate additional transfer
agents with respect to the debentures.
If we redeem any of the debentures, neither we nor the indenture trustee
will be required to (a) issue, register the transfer of or exchange any
debentures during a period beginning at the opening of business 15 days before
the day of the mailing of and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (b) transfer or exchange any
debentures so selected for redemption, except, in the case of any debentures
being redeemed in part, any portion not to be redeemed.
MODIFICATION OF INDENTURE
We and the indenture trustee may, from time to time without the consent of
the holders of the debentures, amend, waive our rights under or supplement the
indenture for purposes which do not materially adversely affect the rights of
the holders of the debentures. Other changes may be made by us and the indenture
trustee with the consent of the holders of a majority in principal amount of the
outstanding debentures. However, without the consent of the holder of each
outstanding debenture affected by the proposed modification, no modification
may:
- extend the maturity date of the debentures; or
- reduce the principal amount or the rate or extend the time of payment of
interest; or
- reduce the percentage of principal amount of debentures required to amend
the indenture.
As long as any of the preferred securities remain outstanding, no
modification of the indenture may be made that requires the consent of the
holders of the debentures, no termination of the indenture may occur, and no
waiver of any event of default under the indenture may be effective, without the
prior consent of the holders of a majority of the aggregate liquidation amount
of the preferred securities.
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DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following events with
respect to the debentures that has occurred and is continuing constitutes an
event of default under the indenture:
- our failure to pay any interest on the debentures for 30 days after the
due date, except where we have properly deferred the interest payment;
- our failure to pay any principal on the debentures when due whether at
maturity, upon redemption or otherwise;
- our failure to observe or perform in any material respect any other
covenants or agreements contained in the indenture for 90 days after
written notice to us from the indenture trustee or the holders of at
least 25% in aggregate outstanding principal amount of the debentures; or
- our bankruptcy, insolvency or reorganization or dissolution of the trust.
The holders of a majority of the aggregate outstanding principal amount of
the debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the indenture trustee. The indenture
trustee, or the holders of at least 25% in aggregate outstanding principal
amount of the debentures, may declare the principal due and payable immediately
upon an event of default under the indenture. The holders of a majority of the
outstanding principal amount of the debentures may rescind and annul the
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration, has been deposited with the indenture trustee.
The holders may not annul the declaration and waive a default if the default is
the non-payment of the principal of the debentures which has become due solely
by the acceleration. Should the holders of the debentures fail to annul the
declaration and waive the default, the holders of at least 25% in aggregate
liquidation amount of the preferred securities will have this right.
If an event of default under the indenture has occurred and is continuing,
the property trustee will have the right to declare the principal of and the
interest on the debentures, and any other amounts payable under the indenture,
to be immediately due and payable and to enforce its other rights as a creditor
with respect to the debentures.
We are required to file annually with the indenture trustee a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If an event of default under the indenture has occurred and is continuing
and the event is attributable to the failure by us to pay interest on or
principal of the debentures on the date on which the payment is due and payable,
then a holder of preferred securities may institute a direct action against us
to compel us to make the payment. We may not amend the indenture to remove the
foregoing right to bring a direct action without the prior written consent of
all of the holders of the preferred securities. If the right to bring a direct
action is removed, the trust may become subject to the reporting obligations
under the Securities Exchange Act of 1934.
The holders of the preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the debentures unless there has been an event of
default under the trust agreement. See "Description of the Preferred Securities
- -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not consolidate with or merge into any other entity or convey or
transfer our properties and assets substantially as an entirety to any entity,
and no entity may be consolidated with or merged into us
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or sell, convey, transfer or otherwise dispose of its properties and assets
substantially as an entirety to us, unless:
- if we consolidate with or merge into another person or convey or transfer
our properties and assets substantially as an entirety to any person, the
successor person is organized under the laws of the United States or any
State or the District of Columbia, and the successor person expressly
assumes by supplemental indenture our obligations on the debentures;
- immediately after the transaction, no event of default under the
indenture, and no event which, after notice or lapse of time, or both,
would become an event of default under the indenture, has occurred and is
continuing; and
- other conditions as prescribed in the indenture are met.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect and we will be deemed to
have satisfied and discharged our obligations under the indenture when all
debentures not previously delivered to the indenture trustee for cancellation:
- have become due and payable;
- will become due and payable at their stated maturity within one year or
are to be called for redemption within one year, and we deposit or cause
to be deposited with the indenture trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the debentures not previously delivered to the indenture
trustee for cancellation, for the principal and interest due to the date
of the deposit or to the stated maturity or redemption date, as the case
may be.
We may still be required to provide officers' certificates, opinions of
counsel and pay fees and expenses due after these events occur.
GOVERNING LAW
The indenture and the debentures will be governed by and construed in
accordance with the law State of Illinois.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to these provisions, the indenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of debentures, unless offered reasonable indemnity by the holder against
the costs, expenses and liabilities which might be incurred. The indenture
trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the indenture
trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
MISCELLANEOUS
We have agreed, pursuant to the indenture, for so long as preferred
securities remain outstanding:
- to maintain directly or indirectly 100% ownership of the common
securities of the trust, except that certain successors that are
permitted pursuant to the indenture may succeed to our ownership of the
common securities;
- not to voluntarily terminate, wind up or liquidate the trust without
prior approval of the Federal Reserve, if required;
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- to use our reasonable efforts to cause the trust (a) to remain a business
trust (and to avoid involuntary termination, winding up or liquidation),
except in connection with a distribution of debentures, the redemption of
all of the trust securities of the trust or mergers, consolidations or
amalgamations, each as permitted by the trust agreement; and (b) to
otherwise continue not to be treated as an association taxable as a
corporation or partnership for federal income tax purposes; and
- to use our reasonable efforts to cause each holder of trust securities to
be treated as owning an individual beneficial interest in the debentures.
BOOK-ENTRY ISSUANCE
GENERAL
DTC will act as securities depositary for the preferred securities and may
act as securities depositary for all of the debentures in the event of the
distribution of the debentures to the holders of preferred securities. Except as
described, the preferred securities will be issued only as registered securities
in the name of Cede & Co. (DTC's nominee). One or more global preferred
securities will be issued for the preferred securities and will be deposited
with DTC.
DTC is a limited purpose trust company organized under New York banking
law, a "banking organization" within the meaning of the New York banking law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its direct participants and by
the New York Stock Exchange, the American Stock Exchange and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to indirect participants, such as securities brokers and dealers,
banks and trust companies that clear through or maintain custodial relationships
with direct participants, either directly or indirectly. The rules applicable to
DTC and its participants are on file with the SEC.
Purchases of preferred securities within the DTC system must be made by or
through direct participants, which will receive a credit for the preferred
securities on DTC's records. The ownership interest of each actual purchaser of
each preferred security ("beneficial owner") is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the direct or indirect
participants through which the beneficial owners purchased preferred securities.
Transfers of ownership interests in the preferred securities are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interest in preferred securities, except if use of the
book-entry-only system for the preferred securities is discontinued.
DTC will have no knowledge of the actual beneficial owners of the preferred
securities; DTC's records reflect only the identity of the direct participants
to whose accounts the preferred securities are credited, which may or may not be
the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be accurate, but we and the
trust assume no responsibility for the accuracy thereof. Neither we nor the
trust have any responsibility for the performance by DTC or its participants of
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their respective obligations as described in this prospectus or under the rules
and procedures governing their respective operations.
NOTICES AND VOTING
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the preferred securities. If less than all of the preferred securities are being
redeemed, the amount to be redeemed will be determined in accordance with the
trust agreement.
Although voting with respect to the preferred securities is limited to the
holders of record of the preferred securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to preferred securities. Under its usual procedures, DTC would mail an
omnibus proxy to the property trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the preferred securities are credited on
the record date.
DISTRIBUTION OF FUNDS
The property trustee will make distribution payments on the preferred
securities to DTC. DTC's practice is to credit direct participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the payment date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices and will be the
responsibility of the participant and not of DTC, the property trustee, the
trust or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of distributions to DTC is the responsibility
of the property trustee, disbursement of the payments to direct participants is
the responsibility of DTC, and disbursements of the payments to the beneficial
owners is the responsibility of direct and indirect participants.
SUCCESSOR DEPOSITARIES AND TERMINATION OF BOOK-ENTRY SYSTEM
DTC may discontinue providing its services with respect to any of the
preferred securities at any time by giving reasonable notice to the property
trustee or us. If no successor securities depositary is obtained, definitive
certificates representing the preferred securities are required to be printed
and delivered. We also have the option to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary). After an event of
default under the indenture, the holders of a majority in liquidation amount of
preferred securities may determine to discontinue the system of book-entry
transfers through DTC. In these events, definitive certificates for the
preferred securities will be printed and delivered.
DESCRIPTION OF THE GUARANTEE
The preferred securities guarantee agreement will be executed and delivered
by us concurrently with the issuance of the preferred securities for the benefit
of the holders of the preferred securities. The guarantee agreement will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company, the guarantee trustee, will act as trustee for purposes of complying
with the provisions of the Trust Indenture Act, and will also hold the guarantee
for the benefit of the holders of the preferred securities. Prospective
investors are urged to read the form of the guarantee agreement, which has been
filed as an exhibit to the registration statement of which this prospectus forms
a part.
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GENERAL
We agree to pay in full on a subordinated basis, to the extent described in
the guarantee agreement, the guarantee payments (as defined below) to the
holders of the preferred securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the trust may have or assert other than
the defense of payment.
The following payments with respect to the preferred securities are called
the "guarantee payments" and, to the extent not paid or made by the trust and to
the extent that the trust has funds available for those distributions, will be
subject to the guarantee:
- any accumulated and unpaid distributions required to be paid on the
preferred securities;
- with respect to any preferred securities called for redemption, the
redemption price; and
- upon a voluntary or involuntary dissolution, winding up or termination of
the trust (other than in connection with the distribution of debentures
to the holders of preferred securities in exchange for preferred
securities), the lesser of:
(a) the amount of the liquidation distribution; and
(b) the amount of assets of the trust remaining available for distribution
to holders of preferred securities in liquidation of the trust.
We may satisfy our obligations to make a guarantee payment by making a direct
payment of the required amounts to the holders of the preferred securities or by
causing the trust to pay the amounts to the holders.
The guarantee agreement is a guarantee, on a subordinated basis, of the
guarantee payments, but the guarantee only applies to the extent the trust has
funds available for those distributions. If we do not make interest payments on
the debentures purchased by the trust, the trust will not have funds available
to make the distributions and will not pay distributions on the preferred
securities.
STATUS OF THE GUARANTEE
The guarantee constitutes our unsecured obligation that ranks subordinate
and junior in right of payment to all of our senior and subordinated debt in the
same manner as the debentures and senior to our capital stock. We expect to
incur additional indebtedness in the future, although we have no specific plans
in this regard presently, and neither the indenture nor the trust agreement
limits the amounts of the obligations that we may incur.
The guarantee constitutes a guarantee of payment and not of collection. If
we fail to make guarantee payments when required, holders of preferred
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
any other person or entity.
The guarantee will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon distribution of the
debentures to the holders of the preferred securities. Because we are a bank
holding company, our right to participate in any distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Our obligations
under the guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of our subsidiaries, and claimants should look only to
our assets for payments under the guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the preferred securities, in which case no vote will be
required, the guarantee may be amended only with the
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prior approval of the holders of a majority of the aggregate liquidation amount
of the outstanding preferred securities. See "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement."
EVENTS OF DEFAULT; REMEDIES
An event of default under the guarantee agreement will occur upon our
failure to make any required guarantee payments or to perform any other
obligations under the guarantee. The holders of a majority in aggregate
liquidation amount of the preferred securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the guarantee trustee in respect of the guarantee and may direct the exercise of
any power conferred upon the guarantee trustee under the guarantee agreement.
Any holder of preferred securities may institute and prosecute a legal
proceeding directly against us to enforce its rights under the guarantee without
first instituting a legal proceeding against the trust, the guarantee trustee or
any other person or entity.
We are required to provide to the guarantee trustee annually a certificate
as to whether or not we are in compliance with all of the conditions and
covenants applicable to us under the guarantee agreement.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and effect upon:
- full payment of the redemption price of the preferred securities;
- full payment of the amounts payable upon liquidation of the trust; or
- distribution of the debentures to the holders of the preferred
securities.
If at any time any holder of the preferred securities must restore payment of
any sums paid under the preferred securities or the guarantee, the guarantee
will continue to be effective or will be reinstated with respect to such
amounts.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance of
our default in performance of the guarantee, undertakes to perform only those
duties as are specifically set forth in the guarantee. When an event of default
has occurred and is continuing, the guarantee trustee must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to those provisions, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at the request of any holder of any preferred securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
EXPENSE AGREEMENT
We will, pursuant to the Agreement as to Expenses and Liabilities entered
into by us and the trust under the trust agreement, irrevocably and
unconditionally guarantee to each person or entity to whom the trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the trust, other than obligations of the trust to pay to the holders of the
preferred securities or other similar interests in the trust of the amounts due
to the holders pursuant to the terms of the preferred securities or other
similar interests, as the case may be. Third party creditors of the trust may
proceed directly against us under the expense agreement, regardless of whether
they had notice of the expense agreement.
GOVERNING LAW
The guarantee will be governed by the laws of the State of Illinois.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE
DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We irrevocably guarantee, as and to the extent described in this
prospectus, payments of distributions and other amounts due on the preferred
securities, to the extent the trust has funds available for the payment of these
amounts. We and the trust believe that, taken together, our obligations under
the debentures, the indenture, the trust agreement, the expense agreement and
the guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of payment of distributions
and other amounts due on the preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes a guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of the obligations of the trust under the preferred securities.
If and to the extent that we do not make payments on the debentures, the
trust will not pay distributions or other amounts due on the preferred
securities. The guarantee does not cover payment of distributions when the trust
does not have sufficient funds to pay the distributions. In this event, the
remedy of a holder of preferred securities is to institute a legal proceeding
directly against us for enforcement of payment of the distributions to the
holder. Our obligations under the guarantee are subordinated and junior in right
of payment to all of our other indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
debentures, these payments will be sufficient to cover distributions and other
payments due on the preferred securities, primarily because:
- the aggregate principal amount of the debentures will be equal to the sum
of the aggregate stated liquidation amount of the trust securities;
- the interest rate and interest and other payment dates on the debentures
will match the distribution rate and distribution and other payment dates
for the preferred securities;
- we will pay for any and all costs, expenses and liabilities of the trust,
except the obligations of the trust to pay to holders of the preferred
securities the amounts due to the holders pursuant to the terms of the
preferred securities; and
- the trust will not engage in any activity that is not consistent with the
limited purposes of the trust.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the trust or any
other person. A default or event of default under any of our senior or
subordinated debt would not constitute a default or event of default under the
trust agreement. In the event, however, of payment defaults under, or
acceleration of, our senior or subordinated debt, the subordination provisions
of the indenture provide that no payments may be made in respect of the
debentures until the obligations have been paid in full or any payment default
has been cured or waived. Failure to make required payments on the debentures
would constitute an event of default under the trust agreement.
LIMITED PURPOSE OF THE TRUST
The preferred securities evidence preferred undivided beneficial interests
in the assets of the trust. The trust exists for the exclusive purposes of
issuing the trust securities, investing the proceeds thereof in debentures and
engaging in only those other activities necessary, advisable or incidental
thereto. A principal difference between the rights of a holder of a preferred
security and the rights of a holder of a debenture is that a holder of a
debenture is entitled to receive from us the principal amount of and interest
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accrued on debentures held, while a holder of preferred securities is entitled
to receive distributions from the trust (or from us under the guarantee) if and
to the extent the trust has funds available for the payment of the
distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the trust involving the liquidation of the debentures, the holders of the
preferred securities will be entitled to receive, out of assets held by the
trust, the liquidation distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Termination."
Upon our voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the debentures, would be a subordinated creditor of ours.
Therefore, the property trustee would be subordinated in right of payment to all
of our senior and subordinated debt, but is entitled to receive payment in full
of principal and interest before any of our stockholders receive payments or
distributions. Since we are the guarantor under the guarantee and have agreed to
pay for all costs, expenses and liabilities of the trust other than the
obligations of the trust to pay to holders of the preferred securities the
amounts due to the holders pursuant to the terms of the preferred securities,
the positions of a holder of the preferred securities and a holder of the
debentures relative to our other creditors and to our stockholders in the event
of liquidation or bankruptcy are expected to be substantially the same.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of the material federal income tax considerations
that may be relevant to the purchasers of preferred securities represents the
opinion of Vedder, Price, Kaufman & Kammholz, counsel to Midwest Banc Holdings
and the trust insofar as it relates to matters of law and legal conclusions. The
conclusions expressed herein are based upon current provisions of the Internal
Revenue Code of 1986, regulations thereunder and current administrative rulings
and court decisions, all of which are subject to change at any time, with
possible retroactive effect. Subsequent changes may cause tax consequences to
vary substantially from the consequences described below. Furthermore, the
authorities on which the following summary is based are subject to various
interpretations, and it is therefore possible that the federal income tax
treatment of the purchase, ownership and disposition of preferred securities may
differ from the treatment described below.
No attempt has been made in the following discussion to comment on all
federal income tax matters affecting purchasers of preferred securities.
Moreover, the discussion generally focuses on holders of preferred securities
who are individual citizens or residents of the United States and who acquire
preferred securities on their original issue at their offering price and hold
preferred securities as capital assets. The discussion has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors or persons that will hold the preferred securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. The following summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of preferred
securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the preferred securities.
Accordingly, each prospective investor should consult, and should rely
exclusively on, the investor's own tax advisors in analyzing the federal, state,
local and foreign tax consequences of the purchase, ownership or disposition of
preferred securities.
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CLASSIFICATION OF THE DEBENTURES
Based on the advice of counsel, we intend to take the position that the
debentures will be classified for federal income tax purposes as indebtedness of
Midwest Banc Holdings under current law, and, by acceptance of a preferred
security, each holder covenants to treat the debentures as indebtedness and the
preferred securities as evidence of an indirect beneficial ownership interest in
the debentures. No assurance can be given, however, that this position will not
be challenged by the Internal Revenue Service or, if challenged, that it will
not be successful. The remainder of this discussion assumes that the debentures
will be classified for federal income tax purposes as indebtedness of Midwest
Banc Holdings.
CLASSIFICATION OF THE TRUST
With respect to the preferred securities, Vedder, Price, Kaufman &
Kammholz, counsel for Midwest Banc Holdings and the trust, has rendered its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the trust agreement and indenture, the trust will
be classified for federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for federal income tax
purposes, each holder of preferred securities generally will be treated as
owning an undivided beneficial interest in the debentures, and each holder will
be required to include in its gross income any interest with respect to the
debentures at the time such interest is accrued or is received, in accordance
with the holder's method of accounting. If the debentures were determined to be
subject to the original issue discount ("OID") rules, each holder would instead
be required to include in its gross income any OID accrued with respect to its
allocable share of the debentures whether or not cash were actually distributed
to the holder.
INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
United States persons (including cash basis taxpayers) that hold debt
instruments issued with OID must generally include such OID in income as it
accrues on a constant yield method even if there is not a corresponding receipt
of cash attributable to such income. A debt instrument such as the debentures
will generally be treated as issued with OID if the stated interest on the
instrument does not constitute "qualified stated interest." Qualified stated
interest is generally any one of a series of stated interest payments on an
instrument that are unconditionally payable at least annually at a single fixed
rate. In determining whether stated interest on an instrument is unconditionally
payable and thus constitutes qualified stated interest, remote contingencies as
to the timely payment of stated interest are ignored. In the case of the
debentures, we have concluded that the likelihood of exercising our option to
defer payments of interest is remote. This is in part because we have a history
of declaring dividends on our common stock and we would be unable to continue
paying these dividends, which could adversely affect the market for our common
stock, if we deferred our payments under the debentures.
If the option to defer any payment of interest was determined not to be
"remote" or if Midwest Banc Holdings actually exercises its option to defer the
payment of interest, the debentures would be treated as issued with OID at the
time of issuance or at the time of such exercise, as the case may be, and all
stated interest would thereafter be treated as OID as long as the debentures
remained outstanding. In such event, all of a United States person's taxable
interest income in respect of the debentures would constitute OID that would
have to be included in income on a constant yield method before the receipt of
the cash attributable to such income, regardless of such person's method of tax
accounting, and actual distributions of stated interest would not be reported as
taxable income. Consequently, a holder of preferred securities would be required
to include such OID in gross income even though Midwest Banc Holdings would not
make any actual cash payments during an extension period.
The above information is based on recently promulgated Treasury
Regulations, which have not been interpreted by any court decisions or addressed
in any ruling or other pronouncements of the IRS, and it is possible that the
IRS could take a position contrary to the conclusions herein.
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Because income on the preferred securities will constitute interest,
corporate holders of preferred securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the preferred securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of preferred securities other than a holder who purchased the
preferred securities upon original issuance may be considered to have acquired
their undivided interests in the debentures with "market discount" or
"acquisition premium" as these phrases are defined for federal income tax
purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
preferred securities.
RECEIPT OF DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under the circumstances described under "Description of the Preferred
Securities -- Redemption or Exchange" and "-- Liquidation Distribution Upon
Termination," the debentures may be distributed to holders of preferred
securities upon a liquidation of the trust. Under current federal income tax
law, such a distribution would be treated as a nontaxable event to the holder
and would result in the holder having an aggregate tax basis in the debentures
received in the liquidation equal to the holder's aggregate tax basis in the
preferred securities immediately before the distribution. A holder's holding
period in debentures received in liquidation of the trust would include the
period for which the holder held the preferred securities.
If, however, a Tax Event occurs which results in the trust being treated as
an association taxable as a corporation, the distribution would likely
constitute a taxable event to holders of the preferred securities. Under certain
circumstances described herein, the debentures may be redeemed for cash and the
proceeds of the redemption distributed to holders in redemption of their
preferred securities. Under current law, such a redemption should, to the extent
that it constitutes a complete redemption, constitute a taxable disposition of
the redeemed preferred securities, and, for federal income tax purposes, a
holder should recognize gain or loss as if the holder sold the preferred
securities for cash.
DISPOSITION OF PREFERRED SECURITIES
A holder that sells preferred securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the preferred
securities and the holder's adjusted tax basis in the preferred securities. A
holder's adjusted tax basis in the preferred securities generally will be its
initial purchase price increased by OID previously includible in the holder's
gross income to the date of disposition and decreased by payments received on
the preferred securities to the date of disposition. A gain or loss of this kind
will generally be a capital gain or loss and will be a long-term capital gain or
loss if the preferred securities have been held for more than one year at the
time of sale.
The preferred securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
debentures. A holder that disposes of its preferred securities between record
dates for payments of distributions thereon will be required to include accrued
but unpaid interest on the debentures through the date of disposition in income
as ordinary income, and to add the amount to its adjusted tax basis in its
proportionate share of the underlying debentures deemed disposed of. To the
extent the selling price is less than the holder's adjusted tax basis a holder
will recognize a capital loss. The adjusted basis would include, in the form of
OID, all accrued but unpaid interest. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for federal income
tax purposes.
EFFECT OF POSSIBLE CHANGES IN TAX LAWS
Congress and the Clinton Administration have considered certain proposed
tax law changes in the past that would, among other things, generally deny
corporate issuers a deduction for interest in respect of certain debt
obligations if the debt obligations have a maximum term in excess of 15 years
and are not
44
<PAGE> 50
shown as indebtedness on the issuer's applicable consolidated balance sheet.
Other proposed tax law changes would have denied interest deductions if the term
was in excess of 20 years. Although these proposed tax law changes have not been
enacted into law, there can be no assurance that tax law changes will not be
reintroduced into future legislation which, if enacted after the date hereof,
may adversely affect the federal income tax deductibility of interest payable on
the debentures. Accordingly, there can be no assurance that a Tax Event will not
occur. A Tax Event would permit us, upon approval of the Federal Reserve if then
required to cause a redemption of the preferred securities before, as well as
after, , 2005. See "Description of the Debentures -- Redemption" and
"Description of the Preferred Securities -- Redemption or Exchange -- Redemption
upon a Tax Event, Investment Company Event or Capital Treatment Event."
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of qualified stated interest, or, if applicable, OID, accrued on
the preferred securities held of record by individual citizens or residents of
the United States, or certain trusts, estates and partnerships, will be reported
to the Internal Revenue Service on Forms 1099-INT, or, where applicable, Forms
1099-OID, which forms should be mailed to the holders by January 31 following
each calendar year. Payments made on, and proceeds from the sale of, the
preferred securities may be subject to a "backup" withholding tax (currently at
31%) unless the holder complies with certain identification and other
requirements. Any amounts withheld under the backup withholding rules will be
allowed as a credit against the holder's federal income tax liability, provided
the required information is provided to the Internal Revenue Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE PARTICULAR
SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED SECURITIES
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974, or Section 4975 of the Internal Revenue Code, generally
may purchase preferred securities, subject to the investing fiduciary's
determination that the investment in preferred securities satisfies ERISA's
fiduciary standards and other requirements applicable to investments by the
plan.
In any case, we and/or any of our affiliates may be considered a "party in
interest" (within the meaning of ERISA) or a "disqualified person" (within the
meaning of Section 4975 of the Internal Revenue Code) with respect to certain
plans. These plans generally include plans maintained or sponsored by, or
contributed to by, any such persons with respect to which we or any of our
affiliates are a fiduciary or plans for which we or any of our affiliates
provide services. The acquisition and ownership of preferred securities by a
plan (or by an individual retirement arrangement or other plans described in
Section 4975(e)(1) of the Internal Revenue Code) with respect to which we or any
of our affiliates are considered a party in interest or a disqualified person
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Internal Revenue Code, unless the preferred securities are acquired
pursuant to and in accordance with an applicable exemption.
As a result, plans with respect to which we or any of our affiliates or any
of its affiliates is a party in interest or a disqualified person should not
acquire preferred securities unless the preferred securities are acquired
pursuant to and in accordance with an applicable exemption. Any other plans or
other entities whose assets include plan assets subject to ERISA or Section 4975
of the Internal Revenue Code proposing to acquire preferred securities should
consult with their own counsel.
45
<PAGE> 51
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among
Midwest Banc Holdings, MBHI Capital Trust I and the underwriters listed on the
table below for whom Howe Barnes Investments, Inc. is acting as representative,
the underwriters have severally agreed to purchase from MBHI Capital Trust I an
aggregate of 1,000,000 preferred securities in the amounts set forth below
opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------
<S> <C>
Howe Barnes Investments, Inc................................
---------
Total.................................................. 1,000,000
=========
</TABLE>
The underwriting agreement requires the underwriters to accept and pay for
all of the preferred securities if any are purchased. In addition, the
underwriting agreement requires that certain conditions must be satisfied on the
part of Midwest Banc Holdings and MBHI Capital Trust I before the underwriters
are obligated to purchase the preferred securities. These conditions include the
accuracy of specific representations and warranties and the receipt of opinions
of counsel and reports from accountants as to certain matters relating to
Midwest Banc Holdings, MBHI Capital Trust I and the preferred securities.
The table below shows the price and proceeds on a per security and
aggregate basis.
<TABLE>
<CAPTION>
PER PREFERRED SECURITY TOTAL
---------------------- -----
<S> <C> <C>
Price to investors.......................................... $25 $25,000,000
Proceeds to MBHI Capital Trust I............................ 25 25,000,000
Underwriting commissions....................................
Proceeds to Midwest Banc Holdings...........................
</TABLE>
All of the proceeds to MBHI Capital Trust I will be used to purchase the
junior subordinated debentures from Midwest Banc Holdings. Midwest Banc Holdings
has agreed to pay the underwriters % of the public offering price per
preferred security, as compensation for arranging the investment in the junior
subordinated debentures.
The underwriters propose to offer the preferred securities in part directly
to the public at the initial public offering price set forth above, and in part
to securities dealers at this price less a concession not in excess of $ per
preferred security. The underwriters may allow, and the dealers may reallow, a
concession not in excess of $ per preferred security to brokers and dealers.
After the preferred securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
underwriters.
Midwest Banc Holdings and MBHI Capital Trust I have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. Generally, the indemnification provisions in the
underwriting agreement provide for full indemnification of the underwriters in
actions related to the disclosure in this prospectus unless such disclosure was
provided by the underwriters specifically for use in this prospectus.
46
<PAGE> 52
In connection with the offering, the underwriters may purchase and sell the
preferred securities in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of bids or purchases for the purpose of preventing or
retarding a decline in the market price of the preferred securities. Syndicate
short positions involve the sale by the underwriters of a greater number of
securities than they agreed to purchase from Midwest Banc Holdings in the
offering. The underwriters also may impose a penalty bid, which means the
syndicate may reclaim selling concessions that had been allocated to syndicate
members or other broker-dealers for preferred securities they were credited for
selling in the offering if those securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the securities, which may be higher than
the price that might otherwise prevail in the open market. These activities, if
commenced, may be discontinued at any time. These transactions may be effected
in the over-the-counter market or otherwise.
The underwriters have advised MBHI Capital Trust I that they will not
confirm any sales of preferred securities to any discretionary accounts. In
connection with the offer and sale of the preferred securities, the underwriters
will comply with Rule 2810 under the NASD Conduct Rules.
LEGAL MATTERS
Legal matters, including matters relating to federal income tax
considerations, for Midwest Banc Holdings and the trust will be passed upon by
Vedder, Price, Kaufman & Kammholz, Chicago, Illinois, counsel to Midwest Banc
Holdings and the trust. Certain legal matters will be passed upon for the
underwriters by Chapman and Cutler, Chicago, Illinois. Vedder, Price, Kaufman &
Kammholz and Chapman and Cutler will rely on the opinion of Richards, Layton &
Finger, P.A. as to matters of Delaware law.
WHERE YOU CAN FIND INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 filed by
Midwest Banc Holdings and the trust with the SEC under the Securities Act, with
respect to the preferred securities, the debentures and the guarantee. This
prospectus does not contain all the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to Midwest Banc
Holdings and the securities offered by this prospectus, reference is made to the
registration statement, including the exhibits to the registration statement and
documents incorporated by reference. Statements contained in this prospectus
concerning the provisions of such documents are necessarily summaries of such
documents and each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the SEC.
We file periodic reports, proxy statements and other information with the
SEC. Our filings are available to the public over the Internet at the SEC's web
site at http://www.sec.gov. You may also inspect and copy these materials at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 75 Park Place, Room 1400, New York, New York 10007.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information.
The trust is not currently subject to the information reporting
requirements of the Securities Exchange Act of 1934 and although the trust will
become subject to such requirements upon the effectiveness of the registration
statement, it is not expected that the trust will be required to file separate
reports under the Securities Exchange Act.
Each holder of the trust securities will receive a copy of our annual
report at the same time as we furnish the annual report to the holders of our
common stock.
47
<PAGE> 53
EXPERTS
The consolidated financial statements of Midwest Banc Holdings and its
subsidiaries as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999, are incorporated herein by reference
to our Annual Report on Form 10-K for the year ended December 31, 1999. These
consolidated financial statements have been incorporated herein by reference in
reliance upon the report of Crowe, Chizek and Company LLP, independent certified
public accountants, which is incorporated herein by reference, and upon the
authority of that firm as experts in accounting and auditing.
DOCUMENTS INCORPORATED BY REFERENCE
We "incorporate by reference" into this prospectus the information in
documents we file with the SEC, which means that we can disclose important
information to you through those documents. The information incorporated by
reference is an important part of this prospectus. Some information contained in
this prospectus updates the information incorporated by reference and some
information that we file subsequently with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below:
(a) our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, filed with the SEC on March 30, 2000;
(b) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000,
filed with the SEC on May 8, 2000; and
(c) our Current Report on Form 8-K dated May 3, 2000 filed with the SEC on
May 9, 2000.
We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the initial filing of the registration statement that contains this prospectus
and before the time that all of the securities offered in this prospectus are
sold.
You may request a copy of these filings at no cost by contacting us at the
following address:
Midwest Banc Holdings, Inc.
501 West North Avenue
Melrose Park, Illinois 60160
Attn: Edward H. Sibbald
(708) 865-1053
48
<PAGE> 54
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1,000,000 PREFERRED SECURITIES
MBHI CAPITAL TRUST I
% CUMULATIVE PREFERRED SECURITIES
FULLY, IRREVOCABLY AND UNCONDITIONALLY
GUARANTEED ON A SUBORDINATED BASIS BY
MIDWEST BANC LOGO
-------------------------------
PROSPECTUS
-------------------------------
HOWE BARNES INVESTMENTS, INC.
______________, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 55
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All amounts shown are estimates, except
the SEC registration fee and the NASD and the American Stock Exchange filing
fees:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 6,600
NASD filing fee............................................. 3,000
American Stock Exchange listing fee......................... 10,000
Trustees' fees.............................................. 10,000
Printing and mailing expenses............................... 35,000
Fees and expenses of counsel................................ 100,000
Accounting and related expenses............................. 30,000
Blue Sky fees and expenses.................................. 2,500
Miscellaneous............................................... 2,900
--------
Total.................................................. $200,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the Delaware General Corporation Law, Sections 11 and 13
of Midwest Banc Holdings' Certificate of Incorporation provide as follows:
Section 11. The corporation shall, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended from time
to time, indemnify all persons who it may indemnify pursuant thereto.
Section 13. No director of the corporation shall be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided, however, that this provision shall
not eliminate or limit the liability of a director (i) for any breach of a
director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law; (iii) under Section 174 of the Delaware
General Corporation Law; or (iv) for any transaction for which the director
derived an improper personal benefit.
Additional provisions regarding indemnification are included in the
Company's By-laws. Article VIII of Midwest Banc Holdings' Bylaws provides as
follows:
Section 8.1 Indemnification. The Corporation shall indemnify, to the
full extent that it shall have the power under the Delaware General
Corporation Law to do so and in a manner permitted by such law, any person
made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against liabilities and expenses reasonably incurred or paid by
such person in connection with such action, suit or proceeding. The words
"liabilities" and "expenses" shall include, without limitations:
liabilities, losses, damages, judgments, fines, penalties, amounts paid in
settlement, expenses, attorneys' fees and costs. Expenses incurred in
defending a civil, criminal, administrative, investigative or other action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding in accordance with the
provisions of Section 145 of the Delaware General Corporation Law, as
amended.
II-1
<PAGE> 56
The indemnification and advancement of expenses provided by this
By-law shall not be deemed exclusive of any other rights to which any
person indemnified may be entitled under any by-law, statute, agreement,
vote of stockholders, or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
such director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.
The Corporation may purchase and maintain insurance on behalf of any
person referred to in the preceding paragraph against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
By-law or otherwise.
For purposes of this By-law, reference to "the Corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation, as director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
By-law with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence
had continued.
The provisions of this By-law shall be deemed to be a contract between
the Corporation and each director, officer, employee and agent who serves
in any such capacity at any time while this By-law and the relevant
provisions of the Delaware General Corporation Law, as amended, or other
applicable law, if any, are in effect, and any repeal or modification of
any such law or of this By-law shall not affect any rights or obligations
then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon such state of facts.
For purposes of this By-law, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to any employee benefit
plan, its participants, or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the best interest of
the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner not opposed to the best interests of the
Corporation.
Midwest Banc Holdings also carries Directors' and Officers' liability
insurance in the amount of $10 million.
The Amended and Restated Trust Agreement will provide for indemnification
of the Delaware Trustee and each of the administrative trustees by Midwest Banc
Holdings against any loss, damage, claims, liability, penalty or expense of any
kind incurred by the trustees in connection with the performance of their duties
or powers under the agreement in a manner reasonably believed by the trustee to
be within the scope of its authority under the agreement, except that none of
these trustees will be so indemnified for any loss, damage or claim incurred by
reason of such trustee's gross negligence, bad faith or willful misconduct.
Similarly, the agreement provides for indemnification of the Property Trustee
except that the Property Trustee is not indemnified from liability for its own
negligent action, negligent failure to act or willful misconduct. Under the
agreement, Midwest Banc Holdings agrees to advance those expenses incurred by
any trustee in defending any such claim, demand, action, suit or proceeding.
II-2
<PAGE> 57
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for Preferred Securities.*
4.1 Form of Indenture.
4.2 Form of Junior Subordinated Debenture (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust.
4.4 Trust Agreement.
4.5 Form of Amended and Restated Trust Agreement.*
4.6 Form of Preferred Securities Certificate (included as an
exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities (included
as an exhibit to Exhibit 4.5).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Vedder, Price, Kaufman & Kammholz as to certain
tax matters.
12.1 Calculation of ratios of earnings to fixed charges.
23.1 Consent of Crowe, Chizek and Company LLP.*
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in
opinions filed as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger, P.A. (included in
opinion filed as Exhibit 5.2).
24.1 Powers of Attorney (included as part of signature pages).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Trust Agreement.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Guarantee Agreement.
</TABLE>
- -------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer, or controlling person of the Registrants 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, each Registrant will, unless in the opinion of its counsel the
II-3
<PAGE> 58
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 Act and will be governed by the final
adjudication of such issue.
(i) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-4
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the MBHI
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Melrose Park, State of Illinois, on May 18,
2000.
MBHI CAPITAL TRUST I
By: MIDWEST BANC HOLDINGS, INC.
as Depositor
By: /s/ ROBERT L. WOODS
------------------------------------
Robert L. Woods
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Midwest Banc
Holdings, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Melrose Park, State of Illinois, on May 18,
2000.
MIDWEST BANC HOLDINGS, INC.
By: /s/ ROBERT L. WOODS
------------------------------------
Robert L. Woods, President
and Chief Executive Officer
By: /s/ EDWARD H. SIBBALD
------------------------------------
Edward H. Sibbald, Senior Vice
President
and Chief Financial Officer
S-1
<PAGE> 60
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Robert L. Woods and Edward H. Sibbald, and each
of them, his or her true and lawful attorney-in-fact and agent, each with full
power of substitution and re-substitution, for him or her and in his or her
name, place and stead, in any and all capacities (including in his or her
capacity as a director or officer of Midwest Banc Holdings, Inc.) to sign any or
all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or any of them, or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on May 18, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ E. V. SILVERI* Chairman of the Board
- ------------------------------------------
E. V. Silveri
/s/ ROBERT L. WOODS President, Chief Executive Officer and Director
- ------------------------------------------
Robert L. Woods
/s/ ANGELO A. DIPAOLO* Director
- ------------------------------------------
Angelo A. DiPaolo
/s/ DANIEL NAGLE* Director
- ------------------------------------------
Daniel Nagle
/s/ JOSEPH RIZZA* Director
- ------------------------------------------
Joseph Rizza
/s/ LEROY PASASCO* Director
- ------------------------------------------
LeRoy Pasasco
/s/ ROBERT D. SMALL* Director
- ------------------------------------------
Robert D. Small
/s/ LEON WOLIN* Director
- ------------------------------------------
Leon Wolin
/s/ EDWARD H. SIBBALD Senior Vice President and Chief Financial Officer
- ------------------------------------------
Edward H. Sibbald
/s/ DANIEL R. KADOLPH Vice President, Comptroller and Treasurer and Chief
- ------------------------------------------ Accounting Officer
Daniel R. Kadolph
</TABLE>
- -------------------------
*Signed pursuant to power of attorney.
<TABLE>
<CAPTION>
<C> <S>
By: /s/ ROBERT L. WOODS
- ------------------------------------------
Robert L. Woods
</TABLE>
S-2
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for Preferred Securities.*
4.1 Form of Indenture.
4.2 Form of Junior Subordinated Debenture (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust.
4.4 Trust Agreement.
4.5 Form of Amended and Restated Trust Agreement.*
4.6 Form of Preferred Securities Certificate (included as an
exhibit to Exhibit 4.5).
4.7 Form of Preferred Securities Guarantee Agreement.
4.8 Form of Agreement as to Expenses and Liabilities (included
as an exhibit to Exhibit 4.5).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Vedder, Price, Kaufman & Kammholz as to certain
tax matters.
12.1 Calculation of ratios of earnings to fixed charges.
23.1 Consent of Crowe, Chizek and Company LLP.*
23.2 Consent of Vedder, Price, Kaufman & Kammholz (included in
opinions filed as Exhibits 5.1 and 8.1).
23.3 Consent of Richards, Layton & Finger, P.A. (included in
opinion filed as Exhibit 5.2).
24.1 Powers of Attorney (included as part of signature pages).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Trust Agreement.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
trustee under the Guarantee Agreement.
</TABLE>
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* Filed herewith.
<PAGE> 1
EXHIBIT 1.1
$25,000,000 PREFERRED SECURITIES
MBHI CAPITAL TRUST I
_____% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT OF $25 PER PREFERRED SECURITY)
UNDERWRITING AGREEMENT
May ___, 2000
Howe Barnes Investments, Inc.
As Representative of the several Underwriters
named in Schedule A
135 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Midwest Banc Holdings, Inc., a Delaware corporation (the "Company"), and
its subsidiary, Midwest Banc Capital Trust I, a statutory business trust
organized under the Delaware Business Trust Act, as amended (the "Delaware Act")
(the "Trust" and, together with the Company, the "Offerors"), propose, subject
to the terms and conditions stated herein, to issue and sell to you (the
"Underwriters"), an aggregate of $25,000,000, representing 1,000,000 securities
of the Trust's _____% Cumulative Preferred Securities, with a liquidation
preference of $25.00 per preferred security (the "Preferred Securities"). The
Offerors propose that the Trust issue the Preferred Securities pursuant to a
Trust Agreement, as amended and restated, among Wilmington Trust Company, as
Property Trustee and Delaware Trustee, the administrative trustees named therein
(the "Administrative Trustees") and the Company (the "Trust Agreement"). The
Preferred Securities will be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise (the
"Guarantee") pursuant to a Guarantee Agreement (the "Guarantee Agreement"), to
be dated May ___, 2000, between the Company and Wilmington Trust Company, as
trustee (the "Guarantee Trustee"), and entitled to the benefits of certain
backup undertakings described in the Prospectus (as defined herein) with respect
to the Company's agreement pursuant to the Expense Agreement (as defined herein)
to pay all expenses relating to administration of the Trust.
The proceeds of the sale of the Preferred Securities will be used to
purchase junior subordinated deferrable interest debentures (the "Junior
Subordinated Debentures") issued by the Company pursuant to an Indenture, to be
dated May ___, 2000, between the Company and Wilmington Trust Company, as
trustee (the "Indenture").
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File Nos. 333-36564 and
333-36564-01) and a related preliminary prospectus for the registration of the
Preferred Securities, the Guarantee
<PAGE> 2
and the Junior Subordinated Debentures, under the Securities Act of 1933, as
amended (the "Act") and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations thereunder. The registration
statement, as amended, at the time it was declared effective, including the
information (if any) deemed to be part thereof pursuant to Rule 430A under the
Act, is herein referred to as the "Registration Statement." The form of
prospectus first filed by the Offerors with the Commission pursuant to Rules
424(b) and 430A under the Act is referred to herein as the "Prospectus." Each
preliminary prospectus included in the Registration Statement prior to the time
it becomes effective or filed with the Commission pursuant to Rule 424(a) under
the Act is referred to herein as a "Preliminary Prospectus." If the Company
elects to rely on Rule 434 of the Act, all references to "Prospectus" shall be
deemed to include, without limitation, the form of prospectus and the term
sheet, taken together, provided to the Underwriters by the Company in accordance
with Rule 434 of the Act ("Rule 434 Prospectus"). Any registration statement
(including any amendment or supplement thereto or information which is deemed
part thereof) filed by the Company under Rule 462(b) ("Rule 462(b) Registration
Statement") shall be deemed to be part of the "Registration Statement" as
defined herein, and any prospectus (including any amendment or supplement
thereto or information which is deemed part thereof) included in such
registration statement shall be deemed to be part of the "Prospectus," as
defined herein, as appropriate. The Securities Exchange Act of 1934, as amended,
is referred to herein as the "Exchange Act." Any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Form S-3 under the
Act (the "Incorporated Documents"), as of the date of such Preliminary
Prospectus or Prospectus, as the case may be. Any document filed by either the
Company or the Trust under the Exchange Act after the effective date of the
Registration Statement or the date of the Prospectus and incorporated by
reference in the Prospectus shall be deemed to be included in the Registration
Statement and the Prospectus as of the date of such filing. Copies of the
Registration Statement, including all exhibits thereto, together with copies of
all documents incorporated by reference therein, any amendments thereto and all
Preliminary Prospectuses have been delivered to you.
The Offerors hereby confirm their agreement with respect to the purchase of
the Preferred Securities by the Underwriters as follows:
Section 1. Representations and Warranties of the Offerors. (a) The Offerors
jointly and severally represent and warrant to, and agree with, each of the
Underwriters that:
(i) The Registration Statement has been declared effective under the
Act, and no post-effective amendment to the Registration Statement has been
filed with the Commission as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been instituted or threatened by the
Commission.
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Trust Indenture Act and the
rules and regulations of the Commission promulgated thereunder, and did not
contain an untrue statement of a material fact or omit to state a material
fact
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<PAGE> 3
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the Offerors make no representation or warranty as
to information contained in or omitted in reliance upon, and in conformity
with, written information furnished to the Offerors by or on behalf of any
Underwriter, expressly for use in the preparation thereof.
(iii) The Registration Statement conforms, and the Prospectus and any
amendments or supplements thereto will conform, in all material respects to
the requirements of the Act and the Trust Indenture Act and the rules and
regulations thereunder. Neither the Registration Statement nor any
amendment thereto, and neither the Prospectus nor any supplement thereto,
contains or will contain, as the case may be, any untrue statement of a
material fact or omits or will 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 were made, not misleading; provided,
however, that the Offerors make no representation or warranty as to (i)
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Offerors by or on
behalf of any Underwriter, expressly for use in the preparation thereof or
(ii) information in those parts of the Registration Statement which
constitute the Statement of Eligibility and Qualification ("Form T-1")
under the Trust Indenture Act.
The Incorporated Documents, when they were or will be filed with the
Commission, conformed or will conform in all material respects to the
requirements of the Exchange Act and none of such documents contained or
will contain an untrue statement of a material fact or omitted or will omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(iv) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations or banking
associations in good standing under the laws of their respective places of
incorporation, with corporate power and authority to own their respective
properties and conduct their respective businesses as described in the
Prospectus; the Company and each of its non-bank subsidiaries are duly
qualified to do business as foreign corporations under the corporation law
of, and are in good standing as such in, each jurisdiction in which such
qualification is required except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect
upon the condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole; and no proceeding of which
the Company has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
(v) (A) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act with full trust
power and authority to own property and to conduct its business as
described in the Registration Statement and Prospectus and is authorized to
do business in each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a material adverse
effect on the Trust's condition (financial or otherwise) or results of
operations taken as a whole;
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<PAGE> 4
(B) the Trust has conducted and will conduct no business other than the
transactions contemplated by the Trust Agreement and described in the
Prospectus; (C) the Trust is not a party to or otherwise bound by any
agreement other than those described in the Prospectus; (D) the Trust is
and will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation; and (E)
the Trust is and will be treated as a consolidated subsidiary of the
Company pursuant to generally accepted accounting principles.
(vi) The Company owns directly or indirectly 100 percent of the issued
and outstanding capital stock of each of its subsidiaries, free and clear
of any claims, liens, encumbrances or security interests, except for any
such stock pledged against borrowings of the Company or any of its
subsidiaries, and all of such capital stock has been duly authorized and
validly issued and is fully paid and nonassessable. The Company's
subsidiaries consist exclusively of the following: Midwest Bank and Trust
Company, Midwest Bank, Midwest Bank of McHenry County, Midwest Bank of
Western Illinois, Porter Insurance Agency, Inc., Midwest One Financial
Services, L.L.C. and First Midwest Data Corp. Midwest Bank and Trust
Company, Midwest Bank, Midwest Bank of McHenry County and Midwest Bank of
Western Illinois are collectively hereinafter referred to as the "Banks."
(vii) All of the issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable,
were offered and sold in compliance with all federal and state securities
laws, and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities. Except as
otherwise stated in the Registration Statement and Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, the Junior Subordinated
Debentures, the common securities of the Trust held by the Company (the
"Common Securities") or the Preferred Securities. Neither the filing of the
Registration Statement nor the registration of the Preferred Securities,
the Guarantee or the Junior Subordinated Debentures gives rise to any
rights for or relating to the registration of any capital stock or other
securities of the Company or the Trust. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement and
the Prospectus.
(viii) Each of this Agreement, the Indenture, the Trust Agreement, the
Guarantee Agreement and the Agreement as to Expenses and Liabilities (the
"Expense Agreement") has been duly authorized, executed and delivered by
the Company and/or the Trust, as the case may be, and constitutes a valid,
legal and binding obligation of the Company and/or the Trust, as the case
may be, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity and, with respect to Section 7
hereof, by the public policy underlying the federal or state securities
laws. The execution, delivery and performance of this Agreement, the
Indenture, the Trust Agreement, the Guarantee Agreement and the Expense
Agreement and the consummation of the transactions herein or therein
contemplated will not result in
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<PAGE> 5
a breach of the Company's or any of its subsidiary's charter or bylaws, the
Trust Agreement or the Trust's certificate of trust filed with the State of
Delaware on May 5, 2000 (the "Certificate of Trust") or breach of violation
of any of the terms and provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, loan agreement, lease,
franchise, license or other agreement or instrument to which the Trust, the
Company or any of the Company's subsidiaries is a party or by which the
Trust, the Company or any of the Company's subsidiaries is bound or to
which any property or assets of the Trust, the Company or any of the
Company's subsidiaries is subject, the Company's or any of its subsidiary's
charter or bylaws, the Trust Agreement or the Trust's certificate of trust
filed with the State of Delaware on May ___, 2000 (the "Certificate of
Trust") or any order, rule, regulation or decree of any court or
governmental agency or body having jurisdiction over the Company, any of
its subsidiaries or the Trust or having jurisdiction over any of the
properties of the Company, any of its subsidiaries or the Trust which
breach, violation or default would have a material adverse effect upon the
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries taken as a whole. No consent, approval, authorization
or order of, or filing with, any court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
Indenture, the Trust Agreement, the Guarantee Agreement and the Expense
Agreement or for the consummation of the transactions contemplated hereby
or thereby, including the issuance or sale of the Junior Subordinated
Debentures by the Company and the Common Securities and the Preferred
Securities by the Trust, except such as may be required under the Act, all
of which have been obtained or made, and under state securities or blue sky
laws and clearance of such offering of the Preferred Securities by the
several Underwriters with the National Association of Securities Dealers,
Inc. ("NASD") and except where any failure to obtain such consents,
approvals, authorizations or orders or make such filings will not have a
material adverse effect upon the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries taken as a whole.
Each of the Company and the Trust, as the case may be, has full power and
authority to enter into this Agreement, the Indenture, the Trust Agreement,
the Guarantee Agreement and the Expense Agreement, as the case may be, and
to authorize, issue and sell the Junior Subordinated Debentures or the
Common Securities and the Preferred Securities, as the case may be, as
contemplated by this Agreement; and each of the Indenture, the Trust
Agreement and the Guarantee Agreement has been duly qualified under the
Trust Indenture Act and will conform in all material respects to the
statements relating thereto in the Registration Statement and the
Prospectus.
(ix) The Junior Subordinated Debentures have been duly authorized by
the Company and at the Closing Date will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as described in the Prospectus, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity, will be in the form
contemplated by, and entitled to the benefits of, the Indenture, will
conform to the statements relating thereto in the
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<PAGE> 6
Prospectus, and will be owned by the Trust free and clear of any security
interest, pledge, lien, encumbrance, claim or equity.
(x) The Common Securities have been duly authorized by the Trust
Agreement and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Prospectus, will be validly
issued and (subject to the terms of the Trust Agreement) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust and
will conform to all statements relating thereto contained in the
Prospectus; and at the Closing Date all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company free
and clear of any security interest, pledge, lien, encumbrance, claim or
equity.
(xi) The Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable undivided beneficial interests in the Trust,
will be entitled to the benefits of the Trust Agreement and will conform to
the statements relating thereto contained in the Prospectus.
(xii) The Indenture, the Trust Agreement, the Guarantee Agreement and
the Expense Agreement are in substantially the respective forms filed as
exhibits to the Registration Statement.
(xiii) The Company's obligations under the Guarantee Agreement are
subordinated and junior in right of payment to all Senior and Subordinated
Debt (as defined in the Indenture) of the Company.
(xiv) The Junior Subordinated Debentures are subordinate and junior in
right of payment to all Senior Indebtedness of the Company.
(xv) Each of the Administrative Trustees of the Trust is an officer or
director of the Company and has been duly authorized by the Company to
execute and deliver the Trust Agreement.
(xvi) The consolidated financial statements of the Company included or
incorporated by reference in the Registration Statement present fairly the
consolidated financial position of the Company as of the respective dates
of such financial statements, and the consolidated results of operations
and cash flows of the Company for the respective periods covered thereby,
are in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
in the Prospectus. The financial information included and incorporated by
reference in the Prospectus under "Selected Consolidated Financial Data"
presents fairly, on the basis stated in the Prospectus, the information set
forth therein.
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<PAGE> 7
(xvii) The accountants who have expressed their opinions with respect
to certain of the financial statements included or incorporated by
reference in the Registration Statement are independent accountants as
required by the Act.
(xviii) Neither the Company nor any subsidiary is in violation of its
respective charter; the Trust is not in violation of the Trust Agreement or
its Certificate of Trust; and none of the Trust, the Company or the
subsidiaries is in violation or otherwise in default under any consent
decree, or in default with respect to any provision of any material lease,
loan agreement, franchise, license, permit or other contract obligation to
which it is a party which would have a material adverse effect upon the
condition (financial or otherwise) or results of operations of the Trust,
the Company and the Company's subsidiaries, taken as a whole ("Material
Adverse Effect"); and there does not exist any state of facts which
constitutes an event of default as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of default,
in each case, except for defaults which neither singly nor in the aggregate
would have a Material Adverse Effect.
(xix) There are no legal or governmental proceedings pending, or to
the Trust's or Company's knowledge, threatened to which the Trust, the
Company or any of the Company's subsidiaries is or may reasonably be
expected to be a party or of which property owned or leased by the Trust,
the Company or any of the Company's subsidiaries is or may be the subject,
or related to environmental or discrimination matters which if adversely
determined would have a Material Adverse Effect that are not disclosed in
the Prospectus, or which question the validity of this Agreement or any
action taken or to be taken pursuant hereto or thereto.
(xx) The Company is a bank holding company duly registered with the
Board of Governors of the Federal Reserve System ("Federal Reserve") under
the Bank Holding Company Act of 1956, as amended. The conduct of the
business of the Company and each of its subsidiaries is in compliance in
all respects with applicable federal, state, local and foreign laws and
regulations, except where the failure to be in compliance would not have a
material adverse effect upon the condition (financial or otherwise) or
results of operation of the Company and its subsidiaries taken as a whole.
The Company and its subsidiaries own or possess or have obtained all
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease or own, as the case may be, and to
operate their properties and to carry on their businesses as presently
conducted except where the failure to have obtained such licenses, permits,
consents, orders, approvals and other authorization would not have a
material adverse effect upon the condition (financial or otherwise) or
results of operation of the Company and its subsidiaries taken as a whole,
and neither the Company nor its subsidiaries have received any notice of
proceedings related to revocation or modification of any such licenses,
permits, consents, orders, approvals or authorizations which singly or in
the aggregate, if the subject of an unfavorable ruling or finding, would
result in a material adverse effect upon the condition (financial or
otherwise) or results of operation of the Company and its subsidiaries
taken as a whole. Neither the Company nor any Bank is a party or subject to
any agreement or memorandum with, or directive or order issued by, the
Federal Reserve, the Illinois Office of Banks and Real Estate or any other
bank regulatory authority, which
-7-
<PAGE> 8
imposes any restrictions or requirements not generally applicable to bank
holding companies or commercial banks.
(xxi) The Company and each of its subsidiaries have good and
marketable title to all the properties and assets reflected as owned in the
financial statements hereinabove described (or elsewhere in the
Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except for such properties as are pledged against the borrowings
of the Company or any of its subsidiaries and except those, if any,
reflected in such financial statements (or elsewhere in the Prospectus) or
which are not material to the Company and its subsidiaries taken as a
whole. The Company and each of its subsidiaries hold their respective
leased properties which are material to the Company and its subsidiaries
taken as a whole under valid and binding leases.
(xxii) The Offerors have not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Preferred Securities.
(xxiii) There is no material contract or other document of a character
required to be described in the Registration Statement or the Prospectus
(or the Incorporated Documents) or to be filed as an exhibit to the
Registration Statement (or the Incorporated Documents) which is not
described or filed as required.
(xxiv) The Trust and the Company have filed all necessary federal and
state income and franchise tax returns and has paid all taxes shown as due
thereon, and there is no tax deficiency that has been or to the knowledge
of the Trust or the Company, threatened to be asserted against the Trust or
the Company or any of their properties or assets that would or could be
expected to have a Material Adverse Effect. The Company and its
subsidiaries have also filed all required applications, reports, returns
and other documents and information with all state and federal banking
authorities and agencies.
(xxv) The Trust and the Company, together with the Company's
subsidiaries, owns and possesses all right, title and interest in and to,
or has duly licensed from third parties, all patents, patent rights, trade
secrets, inventions, know-how, trademarks, trade names, copyrights, service
marks and other proprietary rights ("Trade Rights") material to the
business of the Trust and the Company and each of the Company's
subsidiaries taken as a whole. Neither the Trust, the Company nor any of
its subsidiaries has received any notice of infringement, misappropriation
or conflict from any third party as to such material Trade Rights which has
not been resolved or disposed of and to the Trust's and the Company's
knowledge neither the Trust, the Company nor any of the Company's
subsidiaries has infringed, misappropriated or otherwise conflicted with
material Trade Rights of any third parties, which infringement,
misappropriation or conflict would have a Material Adverse Effect.
-8-
<PAGE> 9
(xxvi) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to you was or will be, when made,
inaccurate, untrue or incorrect.
(xxvii) Neither the Company nor its subsidiaries nor, to the Company's
knowledge, any employee or agent of the Company or its subsidiaries has
made any payment of funds of the Company or its subsidiaries or received or
retained any funds in violation of any law, rule or regulation.
(xxviii) Since the respective dates as of which information is given
in the Registration Statement, as it may be amended or supplemented, (A)
there has not been any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
condition, financial or otherwise, of the Trust, the Company and the
subsidiaries taken as a whole, or the business affairs, management,
financial position, shareholders' equity or results of operations of the
Trust, the Company and the Company's subsidiaries, taken as a whole,
whether or not occurring in the ordinary course of business, including,
without limitation, any material increase in the amount or number of
classified assets of the Banks, any decrease in net interest margin for any
month to a level below 3.50%, or any material decrease in the volume of
loan originations, the amount of deposits or the amount of loans, (B) there
has not been any transaction not in the ordinary course of business entered
into by the Trust, the Company or any of the Company's subsidiaries which
is material to the Trust, the Company and the Company's subsidiaries, taken
as a whole, other than transactions described or contemplated in the
Registration Statement, (C) the Trust, the Company and the Company's
subsidiaries have not incurred any material liabilities or obligations,
which are not in the ordinary course of business or which could result in a
material reduction in the future earnings of the Trust, the Company and the
Company's subsidiaries, taken as a whole, (D) the Trust, the Company and
the Company's subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance, (E) since March 31, 2000, there has not been any change in the
capital stock of the Company or the Company's subsidiaries, or any material
increase in the short-term or long-term debt (including capitalized lease
obligations) of the Company and the Company's subsidiaries, taken as a
whole, and (F) except as described or contemplated in the Prospectus, since
March 31, 2000, there has not been any declaration or payment of any
dividends or any distributions of any kind with respect to the capital
stock of the Company or its subsidiaries other than any dividends or
distributions described or contemplated in the Prospectus.
(xxix) The Administrative Trustees on behalf of the Trust, the Company
and each of the Company's holds and is operating in compliance with all
required licenses, approvals, certificates and permits from governmental
and regulatory authorities, foreign and domestic, which are necessary to
the conduct of its business as described in the Prospectus. Without
limiting the generality of the foregoing, the Company has all necessary
approvals of the Federal Reserve to own the stock of its subsidiaries. None
of the Trust, the Company or any of the Company's subsidiaries has received
notice of or has
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<PAGE> 10
knowledge of any basis for any proceeding or action relating specifically
to the Trust, the Company or any of the Company's subsidiaries for the
revocation or suspension of any such consent, authorization, approval,
order, license, certificate or permit or any other action or proposed
action by any regulatory authority having jurisdiction over the Trust, the
Company or any of the Company's subsidiaries that would have a material
adverse effect on the Trust, the Company or any of the Company's
subsidiaries.
(xxx) The Offerors' registration statement pursuant to Section 12(b)
of the Exchange Act with respect to the Preferred Securities, has been
declared effective by the Commission; the Preferred Securities have been
approved for quotation and trading, upon notice of issuance, on the
American Stock Exchange under the symbol "MBH.Pr."
(xxxi) The Offerors have not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Preferred Securities other than any Preliminary Prospectus or
the Prospectus or other materials permitted by the Act to be distributed by
the Company.
(xxxii) The deposit accounts of the Banks are insured by the Federal
Deposit Insurance Corporation (the "FDIC") to the fullest extent provided
by law. No proceeding for the termination of such insurance is pending or
is threatened. Neither the Company nor any of its subsidiaries has received
or is subject to any directive or order from the Federal Reserve, the FDIC,
or the Illinois Office of Banks and Real Estate, or any other regulatory
authority to make any material change in the method of conducting their
respective businesses that has not been complied with in all material
respects.
(xxxiii) Neither the Offerors nor any of their affiliates does any
business, directly or indirectly, with the government of Cuba or with any
person or entity located in Cuba.
(xxxiv) None of the Trust, the Company or any of the Company's
subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or an "investment adviser" within the meaning of the
Investment Advisers Act of 1940, as amended.
(xxxv) The Company and its subsidiaries maintain, and the Trust will
maintain, a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to records is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxvi) Other than as contemplated by this Agreement and as disclosed
in the Registration Statement, the Company has not incurred any liability
for any finder's or
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broker's fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xxxvii) No report or application filed by the Company or any of its
subsidiaries with the Federal Reserve, the FDIC, or the Illinois Office of
Banks and Real Estate, as of the date it was filed, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading when made or failed to comply with the applicable requirements
of the Federal Reserve, the FDIC, or the Illinois Office of Banks and Real
Estate, as the case may be.
(xxxviii) The proceeds from the sale of the Preferred Securities will
constitute "Tier 1" capital (as defined in 12 C.F.R. Part 325), subject to
applicable regulatory restrictions on the amount thereof that can be
included in Tier 1 capital.
(b) Any certificate signed by or on behalf of the Trust or the Company and
delivered to the Underwriters or counsel to the Underwriters shall be deemed to
be a representation and warranty of the Trust or the Company to each Underwriter
as to the matters covered thereby.
Section 2. Purchase, Sale and Delivery of Preferred Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Trust agrees to issue
and sell to each Underwriter, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Trust, at a purchase price per Preferred
Security of $25.00, the number of Preferred Securities set forth opposite the
name of such Underwriter in Schedule A hereto. As compensation to the
Underwriters for their commitments hereunder and in view of the fact that the
proceeds of the sale of the Preferred Securities (together with the entire
proceeds from the sale by the Trust to the Company of the Common Securities)
will be used to purchase the Junior Subordinated Debentures, the Company hereby
agrees to pay at the Closing Date (defined below) to the Representative a
commission of _____ per Preferred Security sold by the Trust hereunder.
The Preferred Securities will be delivered by the Company to the
Representative against payment of the purchase price therefor at the offices
Vedder, Price, Kaufman & Kammholz, Chicago, Illinois, or such other location as
may be mutually acceptable, at 9:00 a.m., central time on May ___, 2000, or such
other time and date as the Representative and the Company may agree upon in
writing, such time and date of delivery being herein referred to as the "Closing
Date." The purchase price shall be payable by wire transfer of immediately
available funds to an account, such account to be designated by the Trust at
least two business days preceding the Closing Date. The Underwriters' commission
shall be payable by wire transfer of immediately available funds to an account,
such account to be designated by the Underwriters at least two business days
preceding the Closing Date. Delivery of the Preferred Securities may be made by
credit through full fast transfer to the accounts at The Depository Trust
Company designated by you. Certificates representing the Preferred Securities,
in definitive form and in such denominations and registered in such names as you
may request upon at least two business days' prior notice to the Company shall
be prepared and will be made available for checking and packaging, not later
than 10:30 a.m., central time, on the business day next preceding the Closing
Date at the offices of
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Howe Barnes Investments, Inc., 135 South LaSalle Street, Chicago, Illinois
60603, or such other location as may be mutually acceptable.
It is understood that any Underwriter may (but shall not be obligated to)
make payment to the Company on behalf of the other Underwriter for the Preferred
Securities to be purchased by such Underwriter. Any such payment shall not
relieve such other Underwriter of any of its obligations hereunder. Nothing
herein contained shall constitute the Underwriters an unincorporated association
or partner with either or both Offerors.
Section 3. Offering by Underwriters. (a) It is understood that the several
Underwriters propose to make a public offering of the Preferred Securities as
soon as the Underwriters deem it advisable to do so. The Preferred Securities
are to be initially offered to the public at the initial public offering price
set forth in the Prospectus. The Underwriters may from time to time thereafter
change the public offering price and other selling terms.
(b) The Representative, on behalf of the several Underwriters, represents
and warrants to the Company that the information set forth (i) on the cover page
of the Prospectus with respect to price, underwriting compensation and terms of
the offering and (ii) under "Underwriting" in the Prospectus was furnished to
the Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and is correct and complete in all
material respects.
Section 4. Covenants of the Offerors. The Offerors jointly and severally
covenant and agree with the several Underwriters that:
(a) The Company and the Administrative Trustees on behalf of the Trust
will prepare and timely file with the Commission under Rule 424(b) under
the Act a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A
under the Act, and will not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Underwriters shall
not previously have been advised and furnished with a copy and as to which
the Underwriters shall have reasonably objected in writing promptly after
reasonable notice thereof or which is not in compliance with the Act or the
rules and regulations thereunder.
(b) If the Offerors elect to rely on Rule 434 of the Act, the Offerors
will prepare a term sheet that complies with the requirements of Rule 434.
If the Offerors elect not to rely on Rule 434, the Offerors will provide
the Underwriters with copies of the form of prospectus, in such numbers as
the Underwriters may reasonably request, and file with the Commission such
prospectus in accordance with Rule 424(b) of the Act by the close of
business in New York City on the second business day immediately succeeding
the date of pricing of the offering of the Preferred Securities (the
"Pricing Date"). If the Offerors elect to rely on Rule 434, the Offerors
will provide the Underwriters with copies of the form of Rule 434
Prospectus, in such numbers as the Underwriters may reasonably request, by
the close of business in New York on the business day immediately
succeeding the Pricing Date.
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<PAGE> 13
(c) The Offerors will advise the Underwriters promptly of any request
of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus, of the
suspension of the qualification of the Preferred Securities for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for that purpose, and the Offerors will use their best efforts
to prevent the issuance of any such stop order preventing or suspending the
use of the Prospectus or suspending such qualification and to obtain as
soon as possible the lifting thereof, if issued.
(d) The Offerors will cooperate with you and your counsel in order to
qualify the Preferred Securities for sale under the securities laws of such
jurisdictions as the Underwriters may reasonably have designated and to
continue such qualifications in effect for so long as the Underwriters may
reasonably request for distribution of the Preferred Securities (or obtain
exemptions from the application of such laws). The Offerors will, from time
to time, prepare and file such statements, reports and other documents as
may be requested by the Underwriters for that purpose.
(e) The Offerors will furnish the Underwriters with as many copies of
any Preliminary Prospectus as the Underwriters may reasonably request and,
during the period when delivery of a prospectus is required under the Act,
the Offerors will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Underwriters may, from time to time, reasonably request. The Offerors will
deliver to the Underwriters, at or before the Closing Date, two signed
copies of the Registration Statement and all amendments thereto including
all exhibits filed therewith, together with the Incorporated Documents, and
will deliver to the Underwriters such number of conformed copies of the
Registration Statement, without exhibits, and of all amendments thereto,
together with the Incorporated Documents, as the Underwriters may
reasonably request.
(f) If at any time when a prospectus relating to the Preferred
Securities is required to be delivered under the Act any event occurs as a
result of which the Prospectus, including any amendments or supplements,
would include an 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 the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements thereto and including
any revised prospectus which the Offerors propose for use by the
Underwriters in connection with the offering of the Preferred Securities
which differs from the prospectus on file with the Commission at the time
of effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with
the Act, the Offerors promptly will advise you thereof and will promptly
prepare and file with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance; and, in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the Registration
Statement, the Offerors upon request, but at the expense of such
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<PAGE> 14
Underwriter, will prepare promptly such prospectus or prospectuses as may
be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act.
(g) Not later than September 1, 2001 the Company will make generally
available to its security holders an earnings statement (which need not be
audited) covering a period of at least 12 months beginning after the
effective date of the Registration Statement, which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act.
(h) During the period of five years hereafter, the Company will
furnish you with a copy (i) as soon as practicable after the filing
thereof, of each report filed by the Company with the Commission, any
securities exchange or the NASD; (ii) as soon as practicable after the
release thereof, of each material press release in respect of the Company;
and (iii) as soon as available, of each report of the Company mailed to
stockholders.
(i) The Offerors will use the net proceeds received by it from the
sale of the Preferred Securities in the manner specified in the Prospectus.
(j) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A and/or Rule 434, then on the Pricing Date, the Offerors will prepare,
and file or transmit for filing with the Commission in accordance with such
Rule 430A, Rule 424(b) and/or Rule 434, copies of an amended Prospectus,
or, if required by such Rule 430A and/or Rule 434, a post-effective
amendment to the Registration Statement (including an amended Prospectus),
containing all information so omitted. If required, the Offerors will
prepare and file, or transmit for filing, a Rule 462(b) Registration
Statement not later than the date of the execution of the Pricing
Agreement. If a Rule 462(b) Registration Statement is filed, the Offerors
shall make payment of, or arrange for payment of, the additional
registration fee owing to the Commission required by Rule 111.
(k) The Offerors will comply with all registration, filing and
reporting requirements of the Exchange Act and the American Stock Exchange.
Section 5. Costs and Expenses. The Offerors will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of the
obligations of the Offerors under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the Offerors;
the fees and disbursements of counsel for the Offerors; the cost of preparing,
printing and filing of the Registration Statement, Preliminary Prospectuses and
the Prospectus, including all Incorporated Documents and any amendments and
supplements thereto and the printing, mailing and delivery to the Underwriters
and dealers of copies thereof and of this Agreement, the Selected Dealers
Agreement, any blue sky memorandum, if deemed necessary by the Underwriters,
after consultation with the Offerors, and any supplements or amendments thereto
(excluding, except as provided below, fees and expenses of counsel to the
Underwriters); the filing fees of the Commission; the filing fees and expenses
(including legal fees and disbursements of counsel for the Underwriters)
incident to securing any required review by NASD
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<PAGE> 15
of the terms of the sale of the Preferred Securities; the fees and expenses of
the Indenture Trustee, including the fees and disbursements of counsel for the
Indenture Trustee in connection with the Indenture and Junior Subordinated
Debentures; the fees and expenses of the Property Trustee and the Delaware
Trustee, including the fees and disbursements of counsel for the Property
Trustee and the Delaware Trustee in connection with the Trust Agreement and the
Certificate of Trust; the fees and expenses of the Guarantee Trustee, including
the fees and disbursements of counsel for the Guarantee Trustee in connection
with the Guarantee and Guarantee Agreement; listing fees, if any, transfer taxes
and the expenses, including the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Preferred
Securities under state securities or blue sky laws; the fees and expenses
incurred in connection with the listing of the Preferred Securities on the
American Stock Exchange; the costs of preparing certificates representing Junior
Subordinated Debentures or Preferred Securities; the costs and fees of any
registrar or transfer agent and all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 5. The Offerors shall not be required to pay for
any of the Underwriters' expenses (other than those related to qualification of
the Preferred Securities under state securities or blue sky laws and those
incident to securing any required review by the NASD of the terms of the sale of
the Preferred Securities which shall be paid by the Offerors as provided above)
except that, if this Agreement shall not be consummated because the conditions
in Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Underwriters pursuant to Section 9 hereof, or by reason of any failure,
refusal or inability on the part of the Offerors to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on either of their parts to be performed, unless such failure to satisfy
said condition or to comply with said terms shall be due to the default or
omission of any Underwriter, then the Offerors promptly upon request by the
Underwriters shall reimburse the several Underwriters for all actual,
accountable out-of-pocket expenses, including fees and disbursements of counsel
reasonably incurred in connection with investigating, marketing and proposing to
market the Preferred Securities or in contemplation of performing their
obligations hereunder, up to $15,000; but the Offerors shall not in any event be
liable to any of the several Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Preferred Securities.
Section 6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Preferred Securities on the
Closing Date are subject to the condition that all representations and
warranties of the Offerors contained herein are true and correct, at and as of
the Closing Date, and the condition that each Offeror shall have performed all
of its covenants and obligations hereunder and to the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
4(a) hereof; no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, or any part thereof shall have
been issued and no proceedings for that purpose shall have been initiated
or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to
the reasonable satisfaction of the Underwriters.
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<PAGE> 16
(b) The Underwriters shall have received on the Closing Date the
opinion of Vedder, Price, Kaufman & Kammholz, counsel for the Offerors,
dated the Closing Date, addressed to the Underwriters, to the effect that:
(i) (A) the Company is validly existing as a corporation in good
standing under the laws of the State of Delaware with corporate power
and authority to own its properties and conduct its business as
described in the Prospectus; and, to the best of such counsel's
knowledge the Company is duly qualified to do business as a foreign
corporation under the corporation law of, and is in good standing as
such in, every jurisdiction where such qualification is required
except where the failure so to qualify would not have a material
adverse effect upon the condition (financial or otherwise) or results
of operations of the Company and its subsidiaries taken as a whole;
(B) an opinion to the same general effect as clause (A) of
this subparagraph (i) in respect of each non-bank subsidiary of the
Company;
(ii) the Company owns directly or indirectly 100 percent of the
outstanding capital stock of each subsidiary;
(iii) the issued and outstanding capital stock of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable;
(iv) the Registration Statement has become effective under the
Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b) and/or
Rule 434, if applicable), the Prospectus and each amendment or
supplement thereto (except for the financial statements and other
statistical or financial data included therein as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act; all documents incorporated
by reference in the Prospectus, when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act; and such counsel have no reason to
believe that any of such documents, when they were so filed, contained
an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which such statements were made when such
documents were so filed, not misleading, such counsel need express no
opinion as to the financial statements or other financial or
statistical data contained in any such document); such counsel have no
reason to believe that either the Registration Statement (including
the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable) or the Prospectus, or the Registration Statement or the
Prospectus as amended or supplemented (except as aforesaid), as of
their
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<PAGE> 17
respective effective or issue dates, contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as amended or supplemented, if
applicable, as of the issue date and as of the Closing Date, contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made (except for
the financial statements and other statistical or financial data
included therein as to which such counsel need express no opinion);
and such counsel does not know of any legal or governmental
proceedings pending or threatened required to be described in the
Prospectus which are not described as required, nor of any contracts
or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed, as required;
(v) the statements under the captions "Description of the Trust,"
"Description of the Preferred Securities," "Description of the
Debentures," "Book-Entry Issuance," "Description of the Guarantee,"
"Relationship Among the Preferred Securities, the Debentures and the
Guarantee" and "Federal Income Tax Consequences" in the Prospectus,
insofar as such statements constitute a summary of documents referred
to therein or matters of law, are accurate summaries and fairly
present, in all material respects, the information called for with
respect to such documents and matters;
(vi) the holders of the Company's outstanding securities are not
entitled to any preemptive or other rights to subscribe for the Junior
Subordinated Debentures or the Preferred Securities under the
Company's bylaws and, to the knowledge of such counsel, no such rights
exist under any other agreement or arrangement;
(vii) all of the issued and outstanding Common Securities of the
Trust are owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable
right;
(viii) the Trust Agreement, the Indenture, the Guarantee, the
Form T-1 Statement of Eligibility of Wilmington Trust Company to act
as trustee under the Indenture, the Form T-1 Statement of Eligibility
of Wilmington Trust Company to act as trustee under the Trust
Agreement, and the Form T-1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Guarantee Agreement have
been duly qualified under the Trust Indenture Act;
(ix) the Junior Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Indenture
Trustee in the manner provided for in the Indenture and delivered
against payment therefor, will constitute valid and binding
obligations of the Company, enforceable against the
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Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity;
(x) the Junior Subordinated Debentures are subordinate and junior
in right of payment to all "Senior and Indebtedness" (as defined in
the Indenture) of the Company;
(xi) under current law, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; accordingly, for United States
federal income tax purposes each beneficial owner of Preferred
Securities will be treated as owning an undivided beneficial interest
in the Junior Subordinated Debentures, and stated interest on the
Junior Subordinated Debentures generally will be included in income by
a holder of Preferred Securities at the time such interest income is
paid or accrued in accordance with such holder's regular method of tax
accounting;
(xii) to the best of such counsel's knowledge and information
after due inquiry, (A) the Trust is not required to be authorized to
do business in any other jurisdiction other than Delaware, except
where the failure to be so authorized would not have a material
adverse effect on the Trust's condition (financial or otherwise) or
results of operations taken as a whole and (B) the Trust is not a
party to or otherwise bound by any material agreement other than those
described in the Prospectus;
(xiii) the Trust Agreement has been duly executed and delivered
by the Administrative Trustees;
(xiv) the Company has full corporate power and authority and the
Trust has full trust power and authority to enter into this Agreement,
the Indenture, the Trust Agreement, the Guarantee Agreement and the
Expense Agreement, as applicable, and to issue the Junior Subordinated
Debentures or the Common Securities and Preferred Securities, as the
case may be, and to effect the transactions contemplated by this
Agreement, the Indenture, the Trust Agreement, the Guarantee Agreement
and the Expense Agreement, as applicable, and each of this Agreement,
the Indenture, the Trust Agreement, the Guarantee Agreement and the
Expense Agreement have been duly authorized, executed and delivered by
the Company and the Trust, as applicable, and constitutes a valid,
legal and binding obligation of the Company and the Trust, as
applicable, enforceable in accordance with its terms (except as rights
to indemnity hereunder may be limited by federal or state securities
laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity). The
execution, delivery and performance of this Agreement, the Indenture,
the Trust Agreement, the Guarantee Agreement, the Preferred
Securities, the Common Securities, the
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<PAGE> 19
Junior Subordinated Debentures and the Expense Agreement and the
consummation of the transactions herein or therein contemplated will
not, to the best of such counsel's knowledge, result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, rule or regulation (except that such
counsel need express no opinion regarding any blue sky or state
securities laws), any lease, contract, indenture, mortgage, loan
agreement or other agreement or instrument known to such counsel to
which the Company, the Trust or any of the Company's subsidiaries is a
party or by which it is bound or to which any of its property is
subject, the Company's or any of its subsidiaries' charter or bylaws,
or the Certificate of Trust or any permit, judgment, order or decree
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company, the Trust or any of the
Company's subsidiaries or any of their respective properties, except
for any breach, violation or default which would not have a material
adverse effect on the Company or the Trust; and no consent, approval,
authorization, order of, designation, declaration or filing by or
with, any court or any regulatory, administrative or governmental
agency or body is required for the execution, delivery and performance
of this Agreement, the Indenture, the Trust Agreement, the Guarantee
Agreement, the Expense Agreement, the Common Securities, the Preferred
Securities, or the Junior Subordinated Debentures, or for the
consummation of the transactions contemplated hereby or thereby (other
than as may be required by federal or state laws governing banks or
bank holding companies, the NASD, or by state securities and blue sky
laws, as to which such counsel need express no opinion), including the
issuance or sale of the Junior Subordinated Debentures by the Company
and the Common Securities and Preferred Securities by the Trust,
except (a) such as may be required under the Act, which have been
obtained or made, and (b) the qualification of the Trust Agreement,
the Guarantee Agreement and the Indenture under the Trust Indenture
Act and the regulations thereunder, all of which have been effected.
The filing of the Registration Statement and the registration of the
Junior Subordinated Debentures, the Guarantee and the Preferred
Securities under the Act does not give rise to any rights for or
relating to the registration of any shares of capital stock or other
securities of the Company;
(xv) neither the Company nor the Trust is, and immediately upon
completion of the sale of Preferred Securities contemplated hereby,
neither the Company nor the Trust will be, an "investment company" or
a company "controlled" by an investment company under the Investment
Company Act of 1940, as amended; and
(xvi) to the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is in violation of its respective
charter or bylaws.
(xvii) the Banks have been duly chartered to conduct the business
of banking in their state of domicile and the Company has all
necessary power and authority to own the Banks. The Company and the
Banks have all necessary consents and approvals under applicable
federal and state laws and regulations
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relating to banks and bank holding companies ("banking laws") to own
their respective assets and carry on their respective businesses as
currently conducted;
(xviii) the proceeds from the sale of the Preferred Securities
will constitute "Tier 1" capital (as defined in 12 C.F.R. Part 325),
subject to applicable regulatory limitations on the amount thereof
that can be included in Tier 1 capital.
In rendering such opinion, such counsel may state that insofar as their
opinion under clause (v) above relates to the accuracy and completeness of the
Prospectus and Registration Statement, including the Incorporated Documents, it
is based upon a general review with the Offerors' representatives and
independent accountants of the information contained therein, without
independent verification by such counsel of the accuracy or completeness of such
information. Such counsel may also rely upon the opinions of other competent
counsel and, as to factual matters, on certificates of officers of the Offerors
and of federal or state agencies or officials, in which case their opinion is to
state that they are so doing and copies of said opinions or certificates are to
be attached to the opinion unless said opinions or certificates (or, in the case
of certificates, the information therein) have been furnished to the
Representative in other form.
(c) The Underwriters shall have received on the Closing Date the
opinion of Richards, Layton & Finger, P.A., counsel to Wilmington Trust
Company, as Property Trustee under the Trust Agreement, Indenture Trustee
under the Indenture, and Guarantee Trustee under the Guarantee Agreement,
dated the Closing Date, addressed to the Underwriters, to the effect that:
(i) Wilmington Trust Company is duly incorporated and is validly
existing in good standing as a banking corporation under the laws of
the State of Delaware;
(ii) Wilmington Trust Company has the power and authority to
execute, deliver and perform its obligations under the Trust
Agreement, the Indenture and the Guarantee Agreement;
(iii) each of the Trust Agreement, the Indenture and the
Guarantee Agreement has been duly authorized, executed and delivered
by Wilmington Trust Company and constitutes a legal, valid and binding
obligation of Wilmington Trust Company, enforceable against Wilmington
Trust Company, in accordance with its terms;
(iv) the execution, delivery and performance by Wilmington Trust
Company of the Trust Agreement, the Indenture and the Guarantee
Agreement do not conflict with or constitute a breach of the charter
or bylaws of Wilmington Trust Company; and
(v) no consent, approval or authorization of, or registration
with or notice to, any governmental authority or agency of the State
of Delaware or the United States of America governing the banking or
trust powers of Wilmington
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Trust Company is required for the execution, delivery or performance
by Wilmington Trust Company of the Trust Agreement, the Indenture and
the Guarantee Agreement.
(d) The underwriters shall have received on the Closing Date the
opinion of Richards, Layton & Finger, P.A., as special counsel for the
Offerors that:
(i) the Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, and all
filings required as of the date hereof under the Delaware Act with
respect to the creation and valid existence of the Trust as a business
trust have been made;
(ii) under the Trust Agreement and the Delaware Act, the Trust
has the trust power and authority to own property and to conduct its
business, all as described in the Prospectus;
(iii) the Trust Agreement constitutes a valid and binding
obligation of the Company, the Property Trustee and each of the
Administrative Trustees, and is enforceable against the Company, the
Property Trustee and each of the Administrative Trustees in accordance
with its terms;
(iv) under the Trust Agreement and the Delaware Act, the Trust
has the trust power and authority (a) to execute and deliver, and to
perform its obligations under, this Agreement, and (b) to issue, and
to perform its obligations under, the Preferred Securities and the
Common Securities;
(v) under the Trust Agreement and the Delaware Act, the execution
and delivery by the Trust of this Agreement, and the performance by
the Trust of its obligations under this Agreement, have been duly
authorized by all necessary trust action on the part of the Trust;
(vi) under the Delaware Act, the certificate attached to the
Trust Agreement as [Exhibit E] is an appropriate form of certificate
to evidence ownership of the Preferred Securities. The Preferred
Securities and the Common Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications hereinafter expressed in this paragraph (vi), fully
paid and non-assessable undivided beneficial interests in the assets
of the Trust. The respective holders of the Preferred Securities and
the Common Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. Such counsel may
note that the respective holders of the Preferred Securities and the
Common Securities may be obligated, pursuant to the Trust Agreement,
to make certain payments under the Trust Agreement;
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<PAGE> 22
(vii) under the Trust Agreement and the Delaware Act, the
issuance of the Preferred Securities and the Common Securities is not
subject to preemptive or similar rights; and
(viii) the issuance and sale by the Trust of the Preferred
Securities and the Common Securities, the purchase by the Trust of the
Junior Subordinated Debentures, the execution, delivery and
performance by the Trust of this Agreement and the Guarantee
Agreement, the consummation by the Trust of the transactions
contemplated by this Agreement and compliance by the Trust with its
obligations under this Agreement do not violate (A) any of the
provisions of the Certificate of Trust or the Trust Agreement or (B)
any applicable Delaware law or Delaware administrative regulations.
(e) The Underwriters shall have received from Chapman and Cutler,
Chicago, Illinois, counsel for the Underwriters, an opinion dated the
Closing Date, with respect to the formation of the Trust, the validity of
the Preferred Securities, the Indenture, the Trust Agreement, the Guarantee
Agreement, the Expense Agreement, this Agreement, the Registration
Statement, the Prospectus, and other related matters as the Underwriters
may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters.
(f) The Underwriters shall have received on the date hereof, and the
Closing Date a signed letter, dated as of the date hereof, and the Closing
Date, respectively, in form and substance satisfactory to the Underwriters,
from Crowe, Chizek and Company to the effect that they are independent
public accountants with respect to the Trust, the Company and the Company's
subsidiaries within the meaning of the Act and the related rules and
regulations and containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Incorporated Documents).
(g) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any change or any
development involving a reasonably foreseeable change, in or affecting the
general affairs, management, financial position, shareholders' equity or
results of operations of the Offerors otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in your reasonable
judgment, is material and adverse to the Offerors and makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Preferred Securities being delivered at the Closing Date,
on the terms and in the manner contemplated in the Prospectus.
(h) The Underwriters shall have received on the Closing Date, a
certificate or certificates of the chief executive officer and the
principal financial officer of the Company, to the effect that, as of the
Closing Date each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to Rule
424(b) within the applicable period prescribed for such filing by the
rules and
-22-
<PAGE> 23
regulations under the Act and in accordance with Section 4 of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been initiated or are, to his knowledge, threatened by
the Commission.
(ii) The representations and warranties of the Company set forth
in Section 1 of this Agreement are true and correct at and as of the
Closing Date, and the Company has performed all of its obligations
under this Agreement to be performed at or prior to the Closing Date.
(i) The Underwriters shall have received on the Closing Date a
certificate or certificates of the Administrative Trustees, to the effect
that, as of the Closing Date each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to Rule
424(b) within the applicable period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 4
of this Agreement; no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been initiated or are, to his knowledge, threatened by
the Commission.
(ii) The representations and warranties of the Trust set forth in
Section 1 of this Agreement are true and correct at and as of the
Closing Date and the Trust has performed all of its obligations under
this Agreement to be performed at or prior to the Closing Date.
(j) The Offerors shall have furnished to the Underwriters such further
certificates and documents as the Underwriters may reasonably have
requested, including with respect to (i) the treatment of the Junior
Subordinated Debentures as indebtedness of the Company and (ii) the
deductibility of the interest on the Junior Subordinated Debenture.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Underwriters and to Chapman and Cutler,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Underwriters by notifying the Company and the Trust of such termination in
writing or by telegram at or prior to the Closing Date. In such event, the
Offerors and the Underwriters shall not be under any obligation to each other
(except to the extent provided in Sections 5 and 7 hereof).
Section 7. Indemnification. (a) The Offerors jointly and severally agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act or the Exchange Act
against any losses, claims, damages or liabilities, joint
-23-
<PAGE> 24
or several, to which such Underwriter or such controlling person may become
subject under the Act, the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Offerors), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
including the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A and/or Rule 434, if applicable, any
preliminary prospectus, the Prospectus, the Incorporated Documents or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Offerors will not be
liable in any such case to the extent that (i) any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus, the Incorporated Documents or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Offerors by or on behalf of any Underwriter through
the Representative, specifically for use therein; or (ii) if such statement or
omission was contained or made in any preliminary prospectus and corrected in
the Prospectus and (1) any such loss, claim, damage or liability suffered or
incurred by any Underwriter (or any person who controls any Underwriter)
resulted from an action, claim or suit by any person who purchased Preferred
Securities which are the subject thereof from such Underwriter in the offering
and (2) such Underwriter failed to deliver or provide a copy of the Prospectus
to such person at or prior to the confirmation of the sale of such Preferred
Securities in any case where such delivery is required by the Act. In addition
to its other obligations under this Section 10(a), the Offerors agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section 10(a),
it will reimburse the Underwriters on a quarterly basis for all reasonable legal
and other expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability
of the Offerors' obligation to reimburse the Underwriters for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is held by a court of competent jurisdiction to have been
improper, each recipient thereof will promptly return it to the Offerors. This
indemnity agreement will be in addition to any liability which the Offerors may
otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Offerors, the trustees, and its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Offerors within
the meaning of the Act or the Exchange Act, against any losses, claims, damages
or liabilities to which the Offerors, or any such director, officer or
controlling person may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter),
-24-
<PAGE> 25
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto in reliance upon any written
information furnished to the Offerors by such Underwriter through the
Representative specifically for use in the preparation thereof; and will
reimburse any legal or other expenses reasonably incurred by the Offerors, or
any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) The Company agrees to indemnify the Trust against all loss, liability,
claim damage and expense whatsoever, which may become due from the Trust under
paragraph (a).
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defense in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representative in the case of paragraph (a)
representing all indemnified parties not having different or additional defenses
or potential conflicting interests among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a
-25-
<PAGE> 26
reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
(e) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors and the
Underwriters from the offering of the Preferred Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Offerors and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Offerors and the Underwriters shall be deemed to be in the same proportion in
the case of the Offerors as the total price paid to the Offerors for the
Preferred Securities by the Underwriters (net of underwriting discount but
before deducting expenses), and in the case of the Underwriters as the
underwriting discount received by them bears to the total of such amounts paid
to the Offerors and received by the Underwriters as underwriting discount in
each case as contemplated by the Prospectus. The relative fault of the Offerors
and the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, no Underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Preferred Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section are several in proportion to their respective
underwriting commitments and not joint.
-26-
<PAGE> 27
(f) The provisions of this Section shall survive any termination of the
Agreement.
Section 8. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Offerors to sell and deliver the Preferred
Securities hereunder, and of each Underwriter to purchase the Preferred
Securities hereunder, that, except as hereinafter in this paragraph provided,
each of the Underwriters shall purchase and pay for all Preferred Securities
agreed to be purchased by such Underwriter hereunder upon tender to the
Representative of all such Preferred Securities in accordance with the terms
hereof. If any Underwriter or Underwriters default in their obligations to
purchase Preferred Securities hereunder on the Closing Date and the aggregate
number of Preferred Securities which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Preferred Securities which the Underwriters are obligated to purchase on the
Closing Date, the Representative may make arrangements satisfactory to the
Offerors for the purchase of such Preferred Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
date the nondefaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Preferred Securities
which such defaulting Underwriters agreed but failed to purchase on such date.
If any Underwriter or Underwriters so default and the aggregate number of
Preferred Securities with respect to which such default or defaults occur is
more than the above percentage and arrangements satisfactory to the
Representative and the Offerors for the purchase of such Preferred Securities by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Offerors, except for the expenses to be paid by the Offerors pursuant to
Section 5 hereof and except to the extent provided in Section 7 hereof.
In the event that Preferred Securities to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, the
Representative or the Offerors shall have the right to postpone the Closing Date
for not more than seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
Section 9. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by you prior to the Closing Date, if (i) trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on such exchange, or (ii) a banking moratorium shall have been
declared by Illinois, New York, or United States authorities, or (iii) there
shall have been any material adverse change in financial markets or in
political, economic or financial conditions from the date hereof which, in the
opinion of the Representative, either renders it impracticable or inadvisable to
proceed with the offering and sale of the Preferred Securities on the terms set
forth in the Prospectus or materially and adversely affects the market for the
Preferred Securities, or (iv) there shall have been an outbreak of major armed
hostilities between the United States and any foreign power which in the
reasonable opinion of the Representative makes it impractical or inadvisable to
offer or sell the Preferred Securities. Any termination pursuant to this
paragraph shall be without liability on the part of any Underwriter to
-27-
<PAGE> 28
the Offerors or on the part of the Offerors to any Underwriter (except for
expenses to be paid or reimbursed pursuant to Section 7 hereof and except to the
extent provided in Section 5 hereof).
Section 10. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Offerors, the Trustees, any of the Company's officers and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Offerors or any of its or their partners,
officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Preferred Securities sold hereunder.
Section 11. Notices. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or sent by facsimile
transmission and confirmed to you c/o Daniel E. Coughlin, Howe Barnes
Investments, Inc., 135 South LaSalle Street, Chicago, Illinois 60603, with a
copy to Matthew C. Boba, Chapman and Cutler, 111 West Monroe Street, Chicago,
Illinois 60603; and if sent to the Company will be mailed, delivered or
telegraphed and confirmed to the Company, Attention: Edward H. Sibbald at its
corporate headquarters with a copy to Jennifer R. Evans, Vedder, Price, Kaufman
& Kammholz, 222 North LaSalle Street, Chicago, Illinois 60601.
Section 12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in Section 7, and no other person will have
any right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares as such from any of the Underwriters merely by reason of
such purchase.
Section 13. Representation of Underwriters. You will act as Representative
for the several Underwriters in connection with this financing, and any action
under or in respect of this Agreement taken by you will be binding upon all the
Underwriters.
Section 14. Partial Unenforceability. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
Each provision of this Agreement shall be interpreted in such a manner to
be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Illinois.
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<PAGE> 29
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Offerors and the several Underwriters
including you, all in accordance with its terms.
Very truly yours,
MIDWEST BANC HOLDINGS, INC.
By
-----------------------------------
Its
--------------------------------
MBHI CAPITAL TRUST I, a Delaware business
trust
By
-----------------------------------
----------------
Administrative Trustee
The foregoing Agreement is hereby
confirmed and accepted as of the date first
above written.
HOWE BARNES INVESTMENTS, INC.
Acting as Representative of the several
Underwriters named in Schedule A
By
----------------------------------------
Daniel E. Coughlin
Senior Vice President
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<PAGE> 30
SCHEDULE A
SCHEDULE OF UNDERWRITERS
NUMBER OF
PREFERRED SECURITIES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Howe Barnes Investments, Inc.....................
---------
TOTAL: 1,000,000
=========
<PAGE> 1
EXHIBIT 4.5
- --------------------------------------------------------------------------------
MBHI CAPITAL TRUST I
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
MIDWEST BANC HOLDINGS, INC., AS DEPOSITOR,
WILMINGTON TRUST COMPANY, AS PROPERTY TRUSTEE,
WILMINGTON TRUST COMPANY, AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF JUNE , 2000
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINED TERMS............................................................................................2
Section 101. Definitions............................................................................2
ARTICLE II
ESTABLISHMENT OF THE TRUST..............................................................................10
Section 201. Name..................................................................................10
Section 202. Office of the Delaware Trustee; Principal Place of Business...........................10
Section 203. Initial Contribution of Trust Property; Organizational Expenses.......................11
Section 204. Issuance of the Preferred Securities..................................................11
Section 205. Issuance of the Common Securities; Subscription and Purchase of
Debentures............................................................................11
Section 206. Declaration of Trust..................................................................11
Section 207. Authorization to Enter into Certain Transactions......................................12
Section 208. Assets of Trust.......................................................................15
Section 209. Title to Trust Property...............................................................15
ARTICLE III
PAYMENT ACCOUNT.........................................................................................16
Section 301. Payment Account.......................................................................16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION...............................................................................16
Section 401. Distributions.........................................................................16
Section 402. Redemption............................................................................17
Section 403. Subordination of Common Securities....................................................19
Section 404. Payment Procedures....................................................................20
Section 405. Tax Returns and Reports...............................................................20
Section 406. Payment of Taxes, Duties, etc. of the Trust...........................................20
Section 407. Payments Under Indenture..............................................................20
ARTICLE V
TRUST SECURITIES CERTIFICATES...........................................................................21
Section 501. Initial Ownership.....................................................................21
Section 502. The Trust Securities Certificates.....................................................21
Section 503. Execution, Authentication and Delivery of Trust Securities
Certificates..........................................................................21
Section 503A. Global Preferred Security.............................................................22
Section 504. Registration of Transfer and Exchange of Preferred Securities
Certificates..........................................................................23
Section 505. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates....................24
Section 506. Persons Deemed Securityholders........................................................25
Section 507. Access to List of Securityholders' Names and Addresses................................25
Section 508. Maintenance of Office or Agency.......................................................25
Section 509. Appointment of Paying Agent...........................................................25
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 510. Ownership of Common Securities by Depositor...........................................26
Section 511. Trust Securities Certificates.........................................................26
Section 512. Notices to Clearing Agency............................................................27
Section 513. Rights of Securityholders.............................................................27
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING...............................................................28
Section 601. Limitations on Voting Rights..........................................................28
Section 602. Notice of Meetings....................................................................29
Section 603. Meetings of Preferred Securityholders.................................................29
Section 604. Voting Rights.........................................................................29
Section 605. Proxies, etc..........................................................................29
Section 606. Securityholder Action by Written Consent..............................................30
Section 607. Record Date for Voting and Other Purposes.............................................30
Section 608. Acts of Securityholders...............................................................30
Section 609. Inspection of Records.................................................................31
ARTICLE VII
REPRESENTATIONS AND WARRANTIES..........................................................................31
Section 701. Representations and Warranties of the Bank and the Property
Trustee.31..............................................................................
Section 702. Representations and Warranties of the Delaware Bank and the
Delaware Trustee......................................................................32
Section 703. Representations and Warranties of Depositor...........................................34
ARTICLE VIII
TRUSTEES................................................................................................34
Section 801. Certain Duties and Responsibilities...................................................34
Section 802. Certain Notices.......................................................................36
Section 803. Certain Rights of Property Trustee....................................................36
Section 804. Not Responsible for Recitals or Issuance of Securities................................38
Section 805. May Hold Securities...................................................................38
Section 806. Compensation; Indemnity; Fees.........................................................38
Section 807. Corporate Property Trustee Required; Eligibility of Trustees..........................39
Section 808. Conflicting Interests.................................................................39
Section 809. Co-Trustees and Separate Trustee......................................................40
Section 810. Resignation and Removal; Appointment of Successor.....................................41
Section 811. Acceptance of Appointment by Successor................................................42
Section 812. Merger, Conversion, Consolidation or Succession to Business...........................43
Section 813. Preferential Collection of Claims Against Depositor or Trust..........................43
Section 814. Reports by Property Trustee...........................................................43
Section 815. Reports to the Property Trustee.......................................................44
Section 816. Evidence of Compliance with Conditions Precedent......................................44
Section 817. Number of Trustees....................................................................44
Section 818. Delegation of Power...................................................................45
Section 819. Voting................................................................................45
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER.....................................................................45
Section 901. Termination Upon Expiration Date......................................................45
Section 902. Early Termination.....................................................................45
Section 903. Termination...........................................................................46
Section 904. Liquidation...........................................................................46
Section 905. Mergers, Consolidations, Amalgamations or Replacements of the
Trust.................................................................................47
ARTICLE X
MISCELLANEOUS PROVISIONS................................................................................48
Section 1001. Limitation of Rights of Securityholders...............................................48
Section 1002. Amendment.............................................................................49
Section 1003. Separability..........................................................................50
Section 1004. Governing Law.........................................................................50
Section 1005. Payments Due on Non-Business Day......................................................50
Section 1006. Successors............................................................................50
Section 1007. Headings..............................................................................51
Section 1008. Reports, Notices and Demands..........................................................51
Section 1009. Agreement Not to Petition.............................................................51
Section 1010. Trust Indenture Act; Conflict with Trust Indenture Act................................52
Section 1011. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture...............................................................52
</TABLE>
iv
<PAGE> 5
EXHIBITS
- --------
Exhibit A Certificate of Trust
Exhibit B Form of Common Securities Certificate
Exhibit C Form of Expense Agreement
Exhibit D Form of Preferred Securities Certificate
Exhibit E Form of Preferred Securities Certificate of Authentication
Exhibit F Certificate Depositary Agreement
v
<PAGE> 6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Amended and Restated Trust Agreement
- ------------------- ------------------------------------
<S> <C>
310(a)(1).......................................................................................................807
310(a)(2).......................................................................................................807
310(a)(3).......................................................................................................807
310(a)(4)................................................................................................207(a)(ii)
310(b)..........................................................................................................808
311(a)..........................................................................................................813
311(b)..........................................................................................................813
312(a)..........................................................................................................507
312(b)..........................................................................................................507
312(c)..........................................................................................................507
313(a).......................................................................................................814(a)
313(a)(4)....................................................................................................814(b)
313(b).......................................................................................................814(b)
313(c).........................................................................................................1008
313(d).......................................................................................................814(c)
314(a)..........................................................................................................815
314(b)...............................................................................................Not Applicable
314(c)(1).......................................................................................................816
314(c)(2).......................................................................................................816
314(c)(3)............................................................................................Not Applicable
314(d)...............................................................................................Not Applicable
314(e).....................................................................................................101, 816
315(a)...............................................................................................801(a), 803(a)
315(b)....................................................................................................802, 1008
315(c).......................................................................................................801(a)
315(d).....................................................................................................801, 803
316(a)(2)............................................................................................Not Applicable
316(b)...............................................................................................Not Applicable
316(c)..........................................................................................................607
317(a)(1)............................................................................................Not Applicable
317(a)(2)............................................................................................Not Applicable
317(b)..........................................................................................................509
318(a).........................................................................................................1010
</TABLE>
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect the interpretation of any of its terms or provisions.
vi
<PAGE> 7
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of June __, 2000, among
(i) MIDWEST BANC HOLDINGS, INC., a Delaware corporation (including any
successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee (the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (the "Delaware Trustee," and, in its separate corporate capacity and not
in its capacity as Delaware Trustee, the "Delaware Bank") (iv) ROBERT L. WOODS,
an individual, EDWARD H. SIBBALD, an individual, and DANIEL R. KADOLPH, an
individual, each of whose address is c/o Company (each an "Administrative
Trustee" and collectively the "Administrative Trustees") (the Property Trustee,
the Delaware Trustee and the Administrative Trustees referred to collectively as
the "Trustees"), and (v) the several Holders (as hereinafter defined).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, and Robert L. Woods,
Edward H. Sibbald and Daniel R. Kadolph, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into of that certain Trust
Agreement, dated as of May 4, 2000 (the "Original Trust Agreement"), and by the
execution and filing by the Delaware Trustee, the Depositor and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on May 5, 2000, the form of which is attached as
Exhibit A; and
WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and the
Administrative Trustees desire to amend and restate the Original Trust Agreement
in its entirety as set forth herein to provide for, among other things, (i) the
issuance of the Common Securities (as defined herein) by the Trust (as defined
herein) to the Depositor; (ii) the issuance and sale of the Preferred Securities
(as defined herein) by the Trust pursuant to the Underwriting Agreement (as
defined herein); (iii) the acquisition by the Trust from the Depositor of all of
the right, title and interest in the Debentures (as defined herein); and (iv)
the appointment of the Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Securityholders (as defined herein),
hereby amends and restates the Original Trust Agreement in its entirety and
agrees as follows:
ARTICLE I
DEFINED TERMS
<PAGE> 8
SECTION 101. DEFINITIONS.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this Article I and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this Trust
Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of the
Indenture.
"Administrative Trustee" means each of Robert L. Woods, Edward H. Sibbald
and Daniel R. Kadolph, solely in his or her capacity as Administrative Trustee
of the Trust formed and continued hereunder and not in his or her individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, any Person 10% or more of whose outstanding voting securities
or other ownership interests are directly or indirectly owned, controlled or
held with power to vote by the specified Person; (b) any Person directly or
indirectly controlling, controlled by, or under common control with the
specified Person; (c) a partnership in which the specified Person is a general
partner; (d) any officer or director of the specified Person; and (e) if the
specified Person is an individual, any entity of which the specified Person is
an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to the
Preferred Securities appointed by the Property Trustee pursuant to Section 503.
"Bank" has the meaning specified in the Preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
2
<PAGE> 9
(a) the entry of a decree or order by a court having jurisdiction in the
premises adjudging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation or reorganization of or in respect of such
Person under the United States Bankruptcy Code of 1978, as amended, or any other
similar applicable federal or state law, and the continuance of any such decree
or order unvacated and unstayed for a period of 90 days; or the commencement of
an involuntary case under the United States Bankruptcy Code of 1978, as amended,
in respect of such Person, which shall continue undismissed for a period of 90
days or entry of an order for relief in such case; or the entry of a decree or
order of a court having jurisdiction in the premises for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee
or assignee in bankruptcy or insolvency of such Person or of its property, or
for the winding up or liquidation of its affairs, and such decree or order shall
have remained in force unvacated and unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy
proceeding against it, or the filing by such Person of a petition or answer or
consent seeking liquidation or reorganization under the United States Bankruptcy
Code of 1978, as amended, or other similar applicable federal or state law, or
the consent by such Person to the filing of any such petition or to the
appointment on the ground of insolvency or bankruptcy of a receiver or custodian
or liquidator or trustee or assignee in bankruptcy or insolvency of such Person
or of its property, or shall make a general assignment for the benefit of
creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
"Board Resolution" means a copy of a resolution certified by the Secretary
of the Depositor to have been duly adopted by the Depositor's Board of
Directors, or such committee of the Board of Directors or officers of the
Depositor to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a day on
which banking institutions in The City of New York are authorized or required by
law, executive order or regulation to remain closed, or a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depositary Agreement" means the agreement among Depositor,
Trust and DTC, as the initial Clearing Agency, dated as of the Closing Date,
substantially in the form attached as Exhibit F as the same may be amended and
supplemented from time to time.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Change in 1940 Act Law" shall have the meaning set forth in the definition
of "Investment Company Event."
3
<PAGE> 10
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC
shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"Company" means Midwest Banc Holdings, Inc.
"Corporate Trust Office" means the office at which, at any particular time,
the corporate trust business of the Property Trustee or the Debenture Trustee,
as the case may be, shall be principally administered, which office at the date
hereof, in each such case, is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration.
"Debenture Event of Default" means an "Event of Default" as defined in
Section 7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as specified in Section 1.1 of
the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a state chartered trust
company organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.
4
<PAGE> 11
"Debentures" means the $25,773,200 aggregate principal amount of the
Depositor's % Junior Subordinated Debentures due 2030, issued pursuant to
the Indenture.
"Definitive Preferred Securities Certificates" means Preferred
Securities Certificates issued in certified, fully registered form as provided
in Section 513.
"Delaware Bank" has the meaning specified in the Preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Delaware Code Sections 3801 et seq. as it may be amended from time to
time.
"Delaware Trustee" means the commercial bank or trust company identified as
the "Delaware Trustee" in the Preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor trustee appointed as herein provided.
"Depositary" means DTC or any successor thereto.
"Depositor" has the meaning specified in the Preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 401.
"DTC" means The Depository Trust Company.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when it becomes
due and payable, and continuation of such default for a period of 30 days; or
(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c), above) and
5
<PAGE> 12
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the defaulting Trustee or
Trustees by the Holders of at least 25% in aggregate liquidation preference of
the Outstanding Preferred Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit C, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extended Interest Payment Period" has the meaning specified in Section 4.1
of the Indenture.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership
and transfer of which shall be made through book entries by a Clearing Agency as
described herein.
"Guarantee" means the Preferred Securities Guarantee Agreement executed
and delivered by the Depositor and Wilmington Trust Company, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Preferred Securities, as amended from time to
time.
"Indenture" means the Indenture, dated as of June __, 2000, between the
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
"Investment Company Act," means the Investment Company Act of 1940, as
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust and the Depositor
of an Opinion of Counsel, rendered by a law firm having a recognized national
tax and securities law practice, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
shall be considered and "investment company" that is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred
6
<PAGE> 13
Securities under this Trust Agreement, provided, however, that the Depositor or
the Trust shall have requested and received such an Opinion of Counsel with
regard to such matters within a reasonable period of time after the Depositor or
the Trust shall have become aware of the possible occurrence of any such event.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having an aggregate Liquidation Amount equal to the aggregate
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture and the proceeds of which shall be used to pay the Redemption
Price of such Trust Securities; and (b) with respect to a distribution of
Debentures to Holders of Trust Securities in connection with a termination or
liquidation of the Trust, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such Debentures
are distributed. Each Debenture distributed pursuant to clause (b) above shall
carry with it accrued interest in an amount equal to the accrued and unpaid
interest then due on such Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be distributed
to Holders of Trust Securities in connection with a termination and liquidation
of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section 904(d).
"Officers' Certificate" means a certificate signed by the President or
an Executive Vice President and by the Chief Financial Officer of the Depositor,
and delivered to the appropriate Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 816 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
7
<PAGE> 14
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of independent, outside
legal counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, who shall be reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the Recitals to
this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of
the date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in lieu
of which other Preferred Securities have been executed and delivered pursuant to
Sections 504, 505, 511 and 513;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the
Depositor or any Trustee shall be disregarded and deemed not to be Outstanding,
except that (a) in determining whether any Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Preferred Securities that such Trustee knows to be so owned shall
be so disregarded; and (b) the foregoing shall not apply at any time when all of
the outstanding Preferred Securities are owned by the Depositor, one or more of
the Trustees and/or any such Affiliate. Preferred Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee's
right as to such Preferred Securities so owned.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures shall be held and from which the Property Trustee shall make
payments to the Securityholders in accordance with Sections 401 and 402.
8
<PAGE> 15
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate", means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
D.
"Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee," in the Preamble to this Trust Agreement solely in its
capacity as Property Trustee of the Trust heretofore formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust Security
or Trust Securities is registered in the Securities Register; any such Person is
a beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.
9
<PAGE> 16
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939, as
amended, is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of the Property
Trustee under the Guarantee; (c) any cash on deposit in, or owing to, the
Payment Account; and (d) all proceeds and rights in respect of the foregoing and
any other property and assets for the time being held or deemed to be held by
the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of June
, 2000, among the Trust, the Depositor and the Underwriters named therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SECTION 201. NAME.
The Trust continued hereby shall be known as "MBHI Capital Trust I," as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may engage in the transactions contemplated
hereby, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration, or such
other address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Securityholders and the Depositor. The principal executive
office of the Trust is c/o Midwest Banc Holdings, Inc., 501 West North Avenue,
Melrose Park, Illinois 60160.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.
10
<PAGE> 17
The Trustees acknowledge receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $25, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Trustee, promptly reimburse
such Trustee for any such expenses paid by such Trustee. The Depositor shall
make no claim upon the Trust Property for the payment of such expenses.
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.
On June , 2000, the Depositor and an Administrative Trustee, on behalf of
the Trust and pursuant to the Original Trust Agreement, executed and delivered
the Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver in accordance with the
Underwriting Agreement, Preferred Securities Certificates, registered in the
name of Persons entitled thereto in an aggregate amount of 1,000,000 Preferred
Securities having an aggregate Liquidation Amount of $25,000,000 against receipt
of the aggregate purchase price of such Preferred Securities of $25,000,000,
which amount such Administrative Trustee shall promptly deliver to the Property
Trustee.
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF DEBENTURES.
Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502 and deliver to the Depositor, Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of Common
Securities having an aggregate Liquidation Amount of $773,200 against payment by
the Depositor of such amount. Contemporaneously therewith, an Administrative
Trustee, on behalf of the Trust, shall subscribe to and purchase from the
Depositor Debentures, registered in the name of the Property Trustee on behalf
of the Trust and having an aggregate principal amount equal to $25,773,200 and,
in satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Trust, shall deliver to the Depositor the sum of $25,773,200.
SECTION 206. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures;
and (b) to engage in those activities necessary, advisable or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to
have all the rights, powers and duties to the extent set forth herein, and the
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it shall hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Business Trust Act.
11
<PAGE> 18
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section 207 and Article VIII, and in accordance with the
following provisions (i) and (ii), the Administrative Trustees shall have the
authority to enter into all transactions and agreements determined by the
Administrative Trustees to be appropriate in exercising the authority, express
or implied, otherwise granted to the Administrative Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including without
limitation, the acts set forth in the following provision (i) and the Property
Trustee shall have the authority to act, each as set forth below:
(i) As among the Trustees, each Administrative Trustee, acting singly
or jointly, shall have the power and authority to act on behalf
of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities and the
compliance with the Underwriting Agreement in connection
therewith;
(B) to cause the Trust to enter into, and to execute, deliver
and perform on behalf of the Trust, the Expense Agreement
and such other agreements or documents as may be necessary
or desirable in connection with the purposes and function of
the Trust;
(C) assisting in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of
this Trust Agreement as a trust indenture under the Trust
Indenture Act;
(D) assisting in the listing of the Preferred Securities upon
the American Stock Exchange or such other securities
exchange or exchanges as shall be determined by the
Depositor, the registration of the Preferred Securities
under the Exchange Act, the compliance with the listing
requirements of the American Stock Exchange or the
applicable securities exchanges and the preparation and
filing of all periodic and other reports and other documents
pursuant to the foregoing;
(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the
Debentures to the Securityholders in accordance with this
Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust
Agreement;
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(G) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(H) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and
of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect
the purposes for which the Trust was created; and
(I) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement for the benefit of the Securityholders
(without consideration of the effect of any such action on
any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power, duty
and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
(D) the distribution of amounts owed to the Securityholders in
respect of the Trust Securities in accordance with the terms
of this Trust Agreement;
(E) the exercise of all of the rights, powers and privileges of
a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with
the terms of this Trust Agreement;
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(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust;
(I) after an Event of Default, the taking of any action incidental to
the foregoing as the Property Trustee may from time to time
determine is necessary or advisable to give effect to the terms
of this Trust Agreement and protect and conserve the Trust
Property for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder);
(J) registering transfers of the Trust Securities in accordance with
this Trust Agreement; and
(K) except as otherwise provided in this Section 207(a)(ii), the
Property Trustee shall have none of the duties, liabilities,
powers or the authority of the Administrative Trustees set forth
in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement; (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein; (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes; (iv) incur any indebtedness for borrowed money or issue any
other debt; or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement
on the appropriate form in relation to the Preferred Securities,
the Debentures, and the Guarantee, including any amendments
thereto;
(ii) the determination of the states in which to take appropriate
action to qualify or, register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and
advise the Trustees of actions they must take on behalf of the
Trust, and
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prepare for execution and filing any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor
deems necessary or advisable in order to comply with the
applicable laws of any such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the American Stock Exchange or
a national stock exchange or other organizations for listing upon
notice of issuance of any Preferred Securities and to file or
cause an Administrative Trustee to file thereafter with such
exchange or organization such notifications and documents as may
be necessary from time to time;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement
on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Trustees are
authorized and directed to conduct the affairs of the Trust and to operate the
Trust so that the Trust shall not be deemed to be an "investment company"
required to be registered under the Investment Company Act, shall be classified
as a "grantor trust" and not as an association taxable as a corporation for
United States federal income tax purposes and so that the Debentures shall be
treated as indebtedness of the Depositor for United States federal income tax
purposes. In this connection, subject to Section 1002, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law or this Trust Agreement, that each of the Depositor and the
Trustees determines in their discretion to be necessary or desirable for such
purposes.
SECTION 208. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.
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prepare for execution and filing any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor
deems necessary or advisable in order to comply with the
applicable laws of any such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the American Stock Exchange or
a national stock exchange or other organizations for listing upon
notice of issuance of any Preferred Securities and to file or
cause an Administrative Trustee to file thereafter with such
exchange or organization such notifications and documents as may
be necessary from time to time;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement
on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Exchange Act,
including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Trustees are
authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust shall not be deemed to be an
"investment company" required to be registered under the Investment
Company Act, shall be classified as a "grantor trust" and not as an
association taxable as a corporation for United States federal income
tax purposes and so that the Debentures shall be treated as
indebtedness of the Depositor for United States federal income tax
purposes. In this connection, subject to Section 1002, the Depositor
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law or this Trust Agreement, that each of
the Depositor and the Trustees determines in their discretion to be
necessary or desirable for such purposes.
SECTION 208. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Securityholders
in accordance with this Trust Agreement.
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ARTICLE III
PAYMENT ACCOUNT
SECTION 301. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 401. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be cumulative, and shall
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from June __, 2000, and, except
during any Extended Interest Payment Period with respect to the Debentures,
shall be payable quarterly in arrears on the last calendar day of March, June,
September and December of each year, commencing on September 30, 2000. If any
date on which a Distribution is otherwise payable on the Trust Securities is not
a Business Day, then the payment of such Distribution shall be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day (and without any reduction of interest or any other
payment in respect of any such acceleration), in each case with the same force
and effect as if made on such date (each date on which distributions are payable
in accordance with this Section 401(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and, as a practical matter, the Distributions on the Trust
Securities shall be payable at a rate of _____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any full
period shall be computed on the basis of a 360-day year of twelve 30-day months.
The amount of Distributions for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day months.
During any Extended Interest Payment
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Period with respect to the Debentures, Distributions on the Preferred Securities
shall be deferred for a period equal to the Extended Interest Payment Period.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds on hand and
immediately available by 12:30 p.m. on each Distribution Date in the Payment
Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the record holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be the 15th day of March, June, September or December for Distributions
payable on the last calendar day of the respective month; provided, however,
that for any Trust Securities held in global form, Distributions shall be
payable to the record holder thereof as of one Business Day immediately
preceding the Distribution Date.
SECTION 402. REDEMPTION.
(a) On each Debenture Redemption Date and on the maturity of the
Debentures, the Trust shall be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Securities Register. The Property
Trustee shall have no responsibility for the accuracy of any CUSIP number
contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Trust Security to be redeemed and
that Distributions thereon shall cease to accumulate on and
after said date, except as provided in Section 4.2(d); and
(vi) the place or places at which Trust Securities are to be
surrendered for the payment of the Redemption Price; and
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(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
Debentures. Redemptions of the Trust Securities shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that the Trust
has immediately available funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 402(c), the Property Trustee, subject to Section
402(c), shall, with respect to Preferred Securities held in global form, deposit
with the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Trust Securities that are not held in global form, the Property Trustee, subject
to Section 402(c), shall deposit with the Paying Agent funds sufficient to pay
the applicable Redemption Price and shall give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the record holders
thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Register for the
Trust Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, (i) all rights of Securityholders
holding Trust Securities so called for redemption shall cease, except the right
of such Securityholders to receive the Redemption Price, (ii) such Securities
shall cease to be Outstanding, (iii) the Clearing Agency for the Preferred
Securities or its nominee, as the registered Holder of the Global Preferred
Securities Certificate, shall receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
with respect to Preferred Securities held by the Clearing Agency or its nominee,
and (iv) any Trust Securities Certificates not held by the Clearing Agency for
the Preferred Securities or its nominee as specified in clause (iii) above will
be deemed to represent Debentures having a principal amount equal to the stated
Liquidation Amount of the Trust Securities represented thereby and bearing
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Trust Securities until such certificates are presented to
the Securities Registrar for transfer or reissuance. In the event that any date
on which any Redemption Price is payable is not a Business Day, then payment of
the Redemption Price payable on such date shall be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day (and without any reduction of interest or any other payment in respect of
any such acceleration), in each case with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly withheld or refused and
not paid either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities shall continue to accumulate, at the then
applicable rate, from the Redemption Date originally established by the Trust
for such Trust Securities to the date such Redemption Price is actually paid, in
which case the actual payment date shall be the date fixed for redemption for
purposes of calculating the Redemption Price.
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(e) Payment of the Redemption Price on the Trust Securities shall be made
to the record holders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be the date 15 days
prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or an integral multiple of
$25 in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $25; provided, however, in the event the redemption
relates only to Preferred Securities purchased and held by the Depositor that
are being redeemed prior to _________, 2005, in exchange for a Like Amount of
Debentures, the Property Trustee shall select those particular Preferred
Securities for redemption. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
SECTION 403. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 402(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the record holder of Common Securities, the
Depositor, shall be deemed to have waived any right to act with respect to any
such Event of Default under this Trust Agreement until the effect of all such
Events of Default with respect to the Preferred Securities shall have been
cured,
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waived or otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Preferred Securities shall have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the record holders of the Preferred Securities and not the record holder of
the Common Securities, and only the Holders of the Preferred Securities shall
have the right to direct the Property Trustee to act on their behalf.
SECTION 404. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which will credit the relevant accounts on the applicable Distribution
Dates. Payments in respect of the Common Securities shall be made in such manner
as shall be mutually agreed between the Property Trustee and the Common
Securityholder.
SECTION 405. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
forms required to be filed in respect of the Trust in each taxable year of the
Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service forms required to
be furnished to such Securityholder or the information required to be provided
on such form. The Administrative Trustees shall provide the Depositor with a
copy of all such returns and reports promptly after such filing or furnishing.
The Property Trustee shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Securityholders under the Trust Securities.
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Interest (as defined in
Section 1.1 of the Indenture), the Property Trustee, at the direction of an
Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or
governmental charges of whatsoever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority.
SECTION 407. PAYMENTS UNDER INDENTURE.
Any amount payable hereunder to any record holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder has
directly received under the Indenture pursuant to Section 513(b) or (c) hereof.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 501. INITIAL OWNERSHIP.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 203 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
SECTION 502. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $25 Liquidation Amount and multiples thereof (which may, in the case of the
Common Securities, include fractional amounts). The Trust Securities
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504, 511
and 513.
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES.
(a) On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 204 and 205, to be executed on behalf of the Trust by at least one of
the Administrative Trustees and delivered to or upon the written order of the
Depositor, signed by its Chief Executive Officer, President, any Vice President
or its Treasurer without further corporate action by the Depositor, in
authorized denominations.
(b) A Preferred Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee in substantially the form of Exhibit E attached hereto. The signature
shall be conclusive evidence that the Preferred Securities Certificate has been
authenticated under this Trust Agreement. Each Preferred Security Certificate
shall be dated the date of its authentication.
Upon the written order of the Trust signed by one of the Administrative
Trustees, the Property Trustee shall authenticate and make available for
delivery the Preferred Securities Certificates.
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The Property Trustee may appoint an Authenticating Agent acceptable to the
Trust to authenticate the Preferred Securities. An Authenticating Agent may
authenticate the Preferred Securities whenever the Property Trustee may do so.
Each reference in this Trust Agreement to authentication by the Property Trustee
includes authentication by such agent. An Authenticating Agent has the same
rights as the Property Trustee to deal with the Company or the Trust.
SECTION 503A. GLOBAL PREFERRED SECURITY.
(a) Any Global Preferred Security issued under this Trust Agreement shall
be registered in the name of the nominee of the Clearing Agency and delivered to
such custodian therefor, and such Global Preferred Security shall constitute a
single Preferred Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, no Global
Preferred Security may be exchanged for Preferred Securities registered in the
names of persons other than the Depositary or its nominee unless (i) the
Depositary notifies the Debenture Trustee that it is unwilling or unable to
continue as a depositary for such Global Preferred Securities and the Depositor
is unable to locate a qualified successor depositary, (ii) the Depositor
executes and delivers to the Debenture Trustee a written order stating that it
elects to terminate the book-entry system through the Depositary or (iii) there
shall have occurred and be continuing a Debenture Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part for a
beneficial interest in a Global Preferred Security, then either (i) such Global
Preferred Security shall be so surrendered for exchange or cancellation as
provided in this Article V or (ii) the Liquidation amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the Liquidation Amount of such other
Preferred Securities to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of
the Securities Registrar, whereupon the Property Trustee, in accordance with the
rules and procedures of the Depositary for such Global Preferred Security (the
"Applicable Procedures"), shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees shall
execute and the Property Trustee shall, subject to Section 504(b) and as
otherwise provided in this Article V, authenticate and deliver any Preferred
Securities issuable in exchange for such Global Preferred Security (or any
portion thereof) in accordance with the instructions of the Clearing Agency. The
Property Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Preferred Security executed, authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V or
otherwise, shall be executed, authenticated and delivered in the form of, and
shall be, a Global Preferred Security, unless such Global Preferred Security is
registered in the name of a Person other than the Clearing Agency for such
Global Preferred Security or a nominee thereof.
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(e) The Clearing Agency or its nominee, as the registered owner of a Global
Preferred Security, shall be considered the Holder of the Preferred Securities
represented by such Global Preferred Security for all purposes under this Trust
Agreement and the Preferred Securities, and owners of beneficial interests in
such Global Preferred Security shall hold such interests pursuant to the
Applicable Procedures and, except as otherwise provided herein, shall not be
entitled to receive physical delivery of any such Preferred Securities in
definitive form and shall not be considered the Holders thereof under this Trust
Agreement. Accordingly, any such owner's beneficial interest in the Global
Preferred Securities shall be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee. Neither the Property Trustee, the Securities Registrar nor Depositor
shall have any liability in respect of any transfers effected by the Clearing
Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.
(a) The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 508, a register or registers for the purpose of
registering Trust Securities Certificates and, subject to the provisions of
Section 503A, transfers and exchanges of Preferred Securities Certificates
(herein referred to as the "Securities Register") in which the registrar
designated by the Depositor (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates (subject
to Section 510 in the case of the Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities Certificates as
herein provided. The Property Trustee shall be the initial Securities Registrar.
(b) Subject to the provisions of Section 503A, upon surrender for
registration of transfer of any Preferred Securities Certificate at the office
or agency maintained pursuant to Section 508, the Administrative Trustees or any
one of them shall execute and deliver, in the name of the designated transferee
or transferees, one or more new Preferred Securities Certificates in authorized
denominations of a like aggregate Liquidation Amount dated the date of execution
by such Administrative Trustee or Trustees. The Securities Registrar shall not
be required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a record holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.
(c) Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange, subject to the provisions of Section 503A,
shall be accompanied by a written instrument of transfer in form satisfactory to
the Property Trustee and the Securities Registrar duly
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executed by the Holder or his attorney duly authorized in writing. Each
Preferred Securities Certificate surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by the Property Trustee
in accordance with its customary practice. The Trust shall not be required to
(i) issue, register the transfer of, or exchange any Preferred Securities during
a period beginning at the opening of business 15 calendar days before the date
of mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing; or
(ii) register the transfer of or exchange any Preferred Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
(d) No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, subject to the provisions of
Section 503A, but the Securities Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities Certificates.
(e) Preferred Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Trust Agreement. Any
transfer or purported transfer of any Preferred Security not made in accordance
with this Trust Agreement shall be null and void. A Preferred Security that is
not a Global Preferred Security may be transferred, in whole or in part, to a
Person who takes delivery in the form of another Preferred Security that is not
a Global Preferred Security as provided in Section 504(a). A beneficial interest
in a Global Preferred Security may be exchanged for a Preferred Security that is
not a Global Preferred Security only as provided in Section 503A.
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.
If (a) any mutilated Trust Securities certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate; and (b) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser,
the Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this Section 505, the
Administrative Trustees or the Securities Registrar may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section 505 shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
SECTION 506. PERSONS DEEMED SECURITYHOLDERS.
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The Trustees, the Paying Agent and the Securities Registrar shall treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
neither the Trustees nor the Securities Registrar shall be bound by any notice
to the contrary.
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) within five Business Days of March
15, June 15, September 15 and December 15 of each year, a list, in such form as
the Property Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date; and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee in order to enable the Property Trustee to discharge
its obligations under this Trust Agreement, in each case to the extent such
information is in the possession or control of the Administrative Trustees or
the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or under
the Trust Securities, and the corresponding rights of the Trustee shall be as
provided in the Trust Indenture Act. Each Holder, by receiving and holding a
Trust Securities Certificate, and each owner shall be deemed to have agreed not
to hold the Depositor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.
The Administrative Trustees shall maintain, or cause to be maintained, in
The City of New York, or other location designated by the Administrative
Trustees, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate the Corporate Trust Office of the Property Trustee, Wilmington Trust
Company, as the principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor and to
the Securityholders of any change in the location of the Securities Register or
any such office or agency.
SECTION 509. APPOINTMENT OF PAYING AGENT.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
obligations under this Trust
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Agreement in any material respect. The Paying Agent shall initially be the
Property Trustee, and any co-paying agent chosen by the Property Trustee, and
acceptable to the Administrative Trustees and the Depositor. Any Person acting
as Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees, the Property Trustee and the
Depositor. In the event that the Property Trustee shall no longer be the Paying
Agent or a successor Paying Agent shall resign or its authority to act be
revoked, the Administrative Trustees shall appoint a successor that is
acceptable to the Property Trustee and the Depositor to act as Paying Agent
(which shall be a bank or trust company). The Administrative Trustees shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Administrative Trustees to execute and deliver to the Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree with
the Trustees that as Paying Agent, such successor Paying Agent or additional
Paying Agent shall hold all sums, if any, held by it for payment to the
Securityholders in trust for the benefit of the Securityholders entitled thereto
until such sums shall be paid to such Securityholders. The Paying Agent shall
return all unclaimed funds to the Property Trustee and, upon removal of a Paying
Agent, such Paying Agent shall also return all funds in its possession to the
Property Trustee. The provisions of Sections 801, 803 and 806 shall apply to the
Property Trustee also in its role as Paying Agent, for so long as the Property
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the Paying
Agent shall include any co-paying agent unless the context requires otherwise.
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common Securities (other than a transfer in
connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE."
SECTION 511. TRUST SECURITIES CERTIFICATES.
(a) Upon their original issuance, Preferred Securities Certificates shall
be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of the
Clearing Agency and registered in the name of the Clearing Agency's nominee.
Unless and until it is exchangeable in whole or in part for the Preferred
Securities in definitive form, a global security may not be transferred except
as a whole by the Clearing Agency to a nominee of the Clearing Agency or by a
nominee of the Clearing Agency to the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor of
such Clearing Agency or a nominee of such successor.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 512. NOTICES TO CLEARING AGENCY.
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To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Trustees shall
give all such notices and communications specified herein to be given to the
Clearing Agency, and shall have no obligations to provide notice to the owners
of the beneficial interest in the Global Preferred Securities.
SECTION 513. RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 209, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights. When issued and delivered to Holders
of the Preferred Securities against payment of the purchase price therefor, the
Preferred Securities shall be fully paid and nonassessable interests in the
Trust. The Holders of the Preferred Securities, in their capacities as such,
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Preferred Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable, provided that the payment of principal and interest on such
Debentures shall remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain outstanding, upon a
Debenture Event of Default arising from the failure to pay interest or principal
on the Debentures, the Holders of any Preferred Securities then Outstanding
shall, to the fullest extent permitted by law, have the right to directly
institute proceedings for enforcement of payment to such Holders of principal of
or interest on the Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
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(a) Except as provided in this Section 601, in Sections 512, 810 and 1002
and in the Indenture and as otherwise required by law, no record Holder of
Preferred Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Trust or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Trust Securities Certificates, be construed so as
to constitute the Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property Trustee on behalf of
the Trust, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures; (ii) waive any past default which is waivable under Article VII
of the Indenture; (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Outstanding Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior written consent of each holder
of Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Outstanding Preferred
Securities, except by a subsequent vote of the Holders of the Outstanding
Preferred Securities. The Property Trustee shall notify each Holder of the
Outstanding Preferred Securities of any notice of default received from the
Debenture Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that the Trust shall continue to be classified as a grantor trust and not
as an association taxable as a corporation for United States federal income tax
purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise; or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class shall be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would cease
to be classified as a grantor trust or would be classified as an association
taxable as a corporation for United States federal income tax purposes.
SECTION 602. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred
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Securityholder of record, at his registered address, at least 15 days and not
more than 90 days before the meeting. At any such meeting, any business properly
before the meeting may be so considered whether or not stated in the notice of
the meeting. Any adjourned meeting may be held as adjourned without further
notice.
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS.
(a) No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter in respect of which Preferred Securityholders are entitled to
vote upon the written request of the Preferred Securityholders of 25% of the
Outstanding Preferred Securities (based upon their aggregate Liquidation Amount)
and the Administrative Trustees or the Property Trustee may, at any time in
their discretion, call a meeting of Preferred Securityholders to vote on any
matters as to which the Preferred Securityholders are entitled to vote.
(b) Preferred Securityholders of record of 50% of the Outstanding Preferred
Securities (based upon their aggregate Liquidation Amount), present in person or
by proxy, shall constitute a quorum at any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding more
than a majority of the Preferred Securities (based upon their aggregate
Liquidation Amount) held by the Preferred Securityholders of record present,
either in person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 604. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities (with any fractional multiple
thereof rounded up or down as the case may be to the closest integral multiple)
in respect of any matter as to which such Securityholders are entitled to vote.
SECTION 605. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy, shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Only Holders of record shall be entitled to vote. When Trust Securities are held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Trust Securities, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on
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behalf of a Securityholder shall be deemed valid unless challenged at or prior
to its exercise, and, the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding more than a majority of all
outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees or the Property Trustee may from time
to time fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of Distribution or other action, as the case may
be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
SECTION 608. ACTS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Securityholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders or
owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section 608.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.
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(c) The ownership of Preferred Securities shall be proved by the Securities
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such liquidation amount.
(f) A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person.
SECTION 609. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection at the principal
executive office of the Trust (as indicated in Section 202) by record holders of
the Trust Securities during normal business hours for any purpose reasonably
related to such record holder's interest as a record holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE.
The Bank and the Property Trustee, each severally on behalf of and as to
itself, as of the date hereof, and each Successor Property Trustee at the time
of the Successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (in the case of a Successor Property Trustee, the term "Bank"
as used herein shall be deemed to refer to such Successor Property Trustee in
its separate corporate capacity), hereby represents and warrants (as applicable)
for the benefit of the Depositor and the Securityholders that:
(a) the Bank is a state chartered trust company duly organized, validly
existing and in good standing under the laws of the State of Delaware;
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(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and has
taken all necessary action to authorize the execution, delivery and performance
by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and constitutes the valid and legally binding agreement
of the Property Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the Property Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Property Trustee and does not require any approval of
stockholders of the Bank and such execution, delivery and performance shall not
(i) violate the Bank's charter or by-laws; (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of, any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Bank is a party or by which it is bound; or (iii) violate any
law, governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking or trust powers of the Bank
or the Property Trustee (as appropriate in context) or any order, judgment or
decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by the Property
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Property Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust powers of the Bank or the
Property Trustee, as the case may be, under the laws of the United States or the
State of Delaware;
(f) there are no proceedings pending or, to the best of the Property
Trustee's knowledge, threatened against or affecting the Bank or the Property
Trustee in any court or before any governmental authority, agency or arbitration
board or tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and authority of
the Property Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement; and
(g) the Property Trustee is a Person eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000.
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE.
The Delaware Bank and the Delaware Trustee, each severally on behalf of and
as to itself, as of the date hereof, and each Successor Delaware
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Trustee at the time of the Successor Delaware Trustee's acceptance of
appointment as Delaware Trustee hereunder (the term "Delaware Bank" being used
to refer to such Successor Delaware Trustee in its separate corporate capacity),
hereby represents and warrants (as applicable) for the benefit of the Depositor
and the Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) the Delaware Bank has full corporate power, authority and legal right
to execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Delaware Trustee and constitutes the valid and legally binding agreement
of the Delaware Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware Trustee of this
Trust Agreement has been duly authorized by all necessary corporate or other
action on the part of the Delaware Trustee and does not require any approval of
stockholders of the Delaware Bank and such execution, delivery and performance
shall not (i) violate the Delaware Bank's charter or by-laws; (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any indenture,
mortgage, credit agreement, license or other agreement or instrument to which
the Delaware Bank or the Delaware Trustee is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust powers
of the Delaware Bank or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Delaware Bank or the Delaware
Trustee;
(e) neither the authorization, execution or delivery by the Delaware
Trustee of this Trust Agreement nor the consummation of any of the transactions
by the Delaware Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing federal law governing the banking or trust powers of the Delaware Bank
or the Delaware Trustee, as the case may be, under the laws of the United States
or the State of Delaware; and
(f) there are no proceedings pending or, to the best of the Delaware
Trustee's knowledge, threatened against or affecting the Delaware Bank or the
Delaware Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power and
authority of the Delaware Trustee to enter into or perform its obligations as
one of the Trustees under this Trust Agreement.
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SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date or the
Option Closing Date, if applicable, on behalf of the Trust have been duly
authorized and, shall have been, duly and validly executed, issued and delivered
by the Administrative Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement and the
Securityholders shall be, as of such date, entitled to the benefits of this
Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Trust (or the Trustees on behalf of the Trust) under the laws of the State
of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Bank, the Property Trustee or the
Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for its
act or omissions hereunder except as a result of its own gross negligence or
willful misconduct. The Property Trustee's liability shall be determined under
the Trust Indenture Act. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section 801. To the extent that, at law or in equity, the
Delaware Trustee or an Administrative Trustee has duties (including fiduciary
duties) and liabilities relating thereto to the Trust or to the Securityholders,
the Delaware Trustee or such Administrative Trustee shall not be liable to the
Trust or to any Securityholder for such Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Delaware Trustee
or the Administrative Trustees otherwise existing at law or in equity, are
agreed by the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee or the Administrative Trustees, as the case
may be.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the
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Property Trustee or a Paying Agent to make payments in accordance with the terms
hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that
it shall look solely to the revenue and proceeds from the Trust Property to the
extent legally available for distribution to it as herein provided and that the
Trustees are not personally liable to it for any amount distributable in respect
of any Trust Security or for any other liability in respect of any Trust
Security. This Section 801(b) does not limit the liability of the Trustees
expressly set forth elsewhere in this Trust Agreement or, in the case of the
Property Trustee, in the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in Liquidation Amount of the Trust Securities relating
to the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this
Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the
Payment Account shall be to deal with such Property in a similar
manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Trust
Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to
Section 301 and except to the extent otherwise required by law;
and
(d) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.
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SECTION 802. CERTAIN NOTICES.
(a) Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. For purposes of
this Section 802 the term "Event of Default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 1008, notice of the Depositor's
election to begin or further extend an Extended Interest Payment Period on the
Debentures (unless such election shall have been revoked) within the time
specified for transmitting such notice to the holders of the Debentures pursuant
to the Indenture as originally executed.
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action; or (ii) in
construing any of the provisions of this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with other provisions contained herein;
or (iii) the Property Trustee is unsure of the application of any provision of
this Trust Agreement, then, except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this Trust Agreement,
the Property Trustee shall deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of action to be taken and the
Property Trustee shall take such action, or refrain from taking such action, as
the Property Trustee shall be instructed in writing to take, or to refrain from
taking, by the Depositor; provided, however, that if the Property Trustee does
not receive such instructions of the Depositor within 10 Business Days after it
has delivered such notice, or such reasonably shorter period of time set forth
in such notice (which to the extent practicable shall not be less than 2
Business Days), it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement as it shall deem
advisable and in the best interests of the Securityholders, in which event the
Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
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(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officer's Certificate which,
upon receipt of such request, shall be promptly delivered by the Depositor or
the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording, filing
or registration of any instrument (including any financing or continuation
statement, any filing under tax or securities laws or any filing under tax or
securities laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice (which
counsel may be counsel to the Depositor or any of its Affiliates) and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and, in accordance with such advice, such counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, and the Property Trustee shall not be liable for the default or
misconduct of such other agents or attorneys, provided that the Property Trustee
shall be responsible for its own negligence or recklessness with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
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Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action; (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received; and (iii) shall
be protected in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of this
Trust Agreement shall be deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Property Trustee shall be construed to be a duty.
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The Recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
SECTION 805. MAY HOLD SECURITIES.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813 and except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
SECTION 806. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay to the Trustees from time to time compensation for all services
rendered by them hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), in the case of the Property Trustee, as set forth in a written agreement
between the Depositor and the Property Trustee;
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement
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or advance as may be attributable to its, his or her gross negligence, bad faith
or willful misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claims, liability,
penalty or expense of any kind or nature whatsoever, arising out of or in
connection with the acceptance or administration of this Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except any such expense, disbursement or advance as may be
attributable to such Trustee's negligence, bad faith or willful misconduct for
(or, in the case of the Administrative Trustees or the Delaware Trustee, any
such expense, disbursement or advance as may be attributable to its, his or her
gross negligence, bad faith or willful misconduct).
Each Trustee may claim a Lien or charge on Trust Property as a result of
any amount due and unpaid pursuant to this Section 806. The Property Trustee and
the Delaware Trustee may be the same Person.
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section 807,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 807, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware; or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 808. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent
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and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Trust Agreement.
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.
(a) Unless a Debenture Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Depositor shall have power
to appoint, and upon the written request of the Property Trustee, the Depositor
shall for such purpose join with the Property Trustee in the execution, delivery
and performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Property Trustee either to act as
co-trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to the extent required by law to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 809. If the Depositor does not
join in such appointment within 15 days after the receipt by it of a request so
to do, or in case a Debenture Event of Default has occurred and is continuing,
the Property Trustee alone shall have power to make such appointment. Any
co-trustee or separate trustee appointed pursuant to this Section 809 shall
either be (i) a natural person who is at least 21 years of age and a resident of
the United States; or (ii) a legal entity with its principal place of business
in the United States that shall act through one or more persons authorized to
bind such entity.
(b) Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed and delivered and all
rights, powers, duties and obligations hereunder in respect of
the custody of securities, cash and other personal property held
by, or required to be deposited or pledged with, the Trustees
specified hereunder, shall be exercised, solely by such Trustees
and not by such co-trustee or separate trustee.
(ii) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Property Trustee or by the
Property Trustee and such co-trustee or separate trustee jointly,
as shall be provided in the instrument appointing such co-trustee
or separate trustee, except to the extent that under any law of
any jurisdiction in which any particular act is to be performed,
the Property
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Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or separate
trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the
Depositor, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
809, and, in case a Debenture Event of Default has occurred and
is continuing, the Property Trustee shall have the power to
accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon
the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery
and performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed
may be appointed in the manner provided in this Section 809.
(iv) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee
or any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of any act
of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article VIII shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the Relevant
Trustee may resign at any time with respect to the Trust Securities by giving
written notice thereof to the Securityholders. If the instrument of acceptance
by the successor Trustee required by Section 811 shall not have been delivered
to the Relevant Trustee within 30 days after the giving of such notice of
resignation, the Relevant Trustee may petition, at the expense of the Depositor,
any court of competent jurisdiction for the appointment of a successor Relevant
Trustee with respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
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Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time.
(d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and the successor
Trustee shall comply with the applicable requirements of Section 811. If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then Outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 811. If no successor
Relevant Trustee with respect to the Trust Securities shall have been so
appointed by the Common Securityholder or the Preferred Securityholders and
accepted appointment in the manner required by Section 811, any Securityholder
who has been a Securityholder of Trust Securities on behalf of himself and all
others similarly situated may petition a court of competent jurisdiction for the
appointment Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust office if it is the Property
Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them; or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 807).
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
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(a) In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust Securities
shall execute and deliver an instrument hereto wherein each successor Relevant
Trustee shall accept such appointment and which shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Relevant Trustee all the rights, powers, trusts and duties of the
retiring Relevant Trustee with respect to the Trust Securities and the Trust and
upon the execution and delivery of such instrument the resignation or removal of
the retiring Relevant Trustee shall become effective to the extent provided
therein and each such successor Relevant Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities and
the Trust; but, on request of the Trust or any successor Relevant Trustee such
retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Trust.
(b) Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the immediately preceding paragraph, as the case may be.
(c) No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article VIII.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article VIII, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.
If and when the Property Trustee or the Delaware Trustee shall be or become
a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 814. REPORTS BY PROPERTY TRUSTEE.
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(a) Not later than July 31 of each year commencing with July 31, 2001, the
Property Trustee shall transmit to all Securityholders in accordance with
Section 1008, and to the Depositor, a brief report dated as of June 30 with
respect to:
(i) its eligibility under Section 807 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with the American Stock Exchange, and
each national securities exchange or other organization upon which the Trust
Securities are listed, and also with the Commission and the Depositor.
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 817. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that the Holder of all
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
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(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 817(a), or if the
number of Trustees is increased pursuant to Section 817(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 810.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 810, the Administrative Trustees in office, regardless
of their number (and notwithstanding any other provision of this Agreement),
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this Trust
Agreement.
SECTION 818. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
207(a); and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
SECTION 819. VOTING.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
SECTION 901. TERMINATION UPON EXPIRATION DATE.
Unless earlier dissolved, the Trust shall automatically dissolve on,
June 30, 2031 (the "Expiration Date") subject to distribution of the Trust
Property in accordance with Section 904.
SECTION 902. EARLY TERMINATION.
The first to occur of any of the following events is an "Early Termination
Event:"
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<PAGE> 53
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the Depositor
at any time (which direction is wholly optional and within the discretion of the
Depositor, subject to Depositor having received prior approval of the Board of
Governors of the Federal Reserve System if so required under applicable
guidelines, policies or regulations thereof) to dissolve the Trust and
distribute the Debentures to Securityholders in exchange for the Preferred
Securities in accordance with Section 904;
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Debentures (whether upon a Debenture Redemption
Date or the maturity of the Debenture); or
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
SECTION 903. TERMINATION.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 904, or upon the
redemption of all of the Trust Securities pursuant to Section 402, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; (c) the discharge
of all administrative duties of the Administrative Trustees, including the
performance of any tax reporting obligations with respect to the Trust or the
Securityholders; and (d) the filing of a Certificate of Cancellation by an
Administrative Trustee under the Business Trust Act.
SECTION 904. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Debentures,
subject to Section 904(d). Notice of liquidation shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not later than 30 nor more
than 60 days prior to the Liquidation Date to each Holder of Trust Securities at
such Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities shall no longer be deemed to be Outstanding and
any Trust Securities Certificates not
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<PAGE> 54
surrendered for exchange shall be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 904(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property
Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the Liquidation
Date, (i) the Trust Securities shall no longer be deemed to be outstanding; (ii)
certificates representing a Like Amount of Debentures shall be issued to holders
of Trust Securities Certificates upon surrender of such certificates to the
Administrative Trustees or their agent for exchange; (iii) the Depositor shall
use its reasonable efforts to have the Debentures listed on the American Stock
Exchange or on such other securities exchange or other organization as the
Preferred Securities are then listed or traded; (iv) any Trust Securities
Certificates not so surrendered for exchange shall be deemed to represent a Like
Amount of Debentures, accruing interest at the rate provided for in the
Debentures from the last Distribution Date on which a Distribution was made on
such Trust Securities Certificates until such certificates are so surrendered
(and until such certificates are so surrendered, no payments of interest or
principal shall be made to holders of Trust Securities Certificates with respect
to such Debentures); and (v) all rights of Securityholders holding Trust
Securities shall cease, except the right of such Securityholders to receive
Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this Section
904, whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical, the Trust
Property shall be liquidated, and the Trust shall be dissolved, wound-up or
terminated, by the Property Trustee in such manner as the Property Trustee
determines. In such event, on the date of the dissolution, winding-up or other
termination of the Trust, Securityholders shall be entitled to receive out of
the assets of the Trust available for distribution to Securityholders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the Liquidation Amount per Trust Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If, upon any such dissolution, winding-up
or termination, the Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro rata
basis (based upon Liquidation Amounts). The holder of the Common Securities
shall be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up
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<PAGE> 55
or termination pro rata (determined as aforesaid) with Holders of Preferred
Securities, except that, if a Debenture Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities.
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities; or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities) so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Debentures; (iii) the Successor Securities are listed or traded, or any
Successor Securities shall be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which the Preferred
Securities are then listed, if any; (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect; (v)
such successor entity has a purpose substantially identical to that of the
Trust; (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of Counsel
to the effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect; and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity shall be required to register as an
"investment company" under the Investment Company Act; and (vii) the Depositor
owns all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust
shall not, except with the consent of holders of 100% in Liquidation Amount of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
ARTICLE X
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MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding-up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 1002. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) as provided
in Section 811 with respect to acceptance of appointment by a successor Trustee;
(ii) to cure any ambiguity, correct or supplement any provision herein or
therein which may be inconsistent with any other provision herein or therein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, that shall not be inconsistent with the other provisions
of this Trust Agreement; or (iii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust shall be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust shall not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (ii), such action shall not adversely affect in any material respect
the interests of any Securityholder, and any amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust Securityholders representing not less
than a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding; and (ii) upon receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment shall not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the Trust's
exemption from status of an "investment company" under the Investment Company
Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 603 or 606 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date; or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 603 or 606 hereof), this
paragraph (c) of this Section 1002 may not be amended.
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<PAGE> 57
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail or
cease to be classified as a grantor trust for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be required
to enter into any amendment to this Trust Agreement which affects its own
rights, duties or immunities under this Trust Agreement. The Property Trustee
shall be entitled to receive an Opinion of Counsel and an Officers' Certificate
stating that any amendment to this Trust Agreement is in compliance with this
Trust Agreement.
SECTION 1003. SEPARABILITY.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 1004. GOVERNING LAW.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF).
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day which is a Business Day, except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day (and without any reduction of interest
or any other payment in respect of any such acceleration), in each case with the
same force and effect as though made on the date fixed for such payment, and no
distribution shall accumulate thereon for the period after such date.
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<PAGE> 58
SECTION 1006. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee(s),
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article XII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 1007. HEADINGS.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 1008. REPORTS, NOTICES AND DEMANDS.
Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to Midwest Banc
Holdings, Inc., 501 West North Avenue, Melrose Park, Illinois, 60160, Attention:
Chief Financial Officer, facsimile no.: (708) 865-7273. Any notice to Preferred
Securityholders shall also be given to such owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication to
or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration; (b) with respect to the Delaware
Trustee, to Wilmington Trust Company at the above address; and (c) with respect
to the Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of MBHI Capital Trust I."
Such notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
SECTION 1009. AGREEMENT NOT TO PETITION.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they
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shall not file, or join in the filing of, a petition against the Trust under any
bankruptcy, insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code of 1978, as amended)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor or any of the Trustees takes action in violation of this Section 1009,
the Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor (which expense shall be paid prior to the filing), it
shall file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Depositor or such Trustee against the Trust or
the commencement of such action and raise the defense that the Depositor or such
Trustee has agreed in writing not to take such action and should be stopped and
precluded therefrom. The provisions of this Section 1009 shall survive the
termination of this Trust Agreement.
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS
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TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST
AND SUCH SECURITYHOLDER AND SUCH OTHERS.
[SIGNATURE PAGE FOLLOWS]
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MIDWEST BANC HOLDINGS, INC.
By:
----------------------------------------
Name: Robert L. Woods
Title: President and CEO
WILMINGTON TRUST COMPANY, as
Property Trustee
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as
Delaware Trustee
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Robert L. Woods, as Administrative Trustee
--------------------------------------------
Edward H. Sibbald, as Administrative Trustee
--------------------------------------------
Daniel R. Kadolph, as Administrative Trustee
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<PAGE> 62
EXHIBIT A
CERTIFICATE OF TRUST
OF
MBHI CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF MBHI Capital Trust I (the "Trust"), is
being duly executed and filed by Wilmington Trust Company, a Delaware banking
corporation, Robert L. Woods, Edward H. Sibbald and Daniel R. Kadolph, each an
individual, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801 et seq.) (the "Act").
1. NAME. The name of the business trust formed hereby is MBHI Capital
Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on May
5, 2000.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of Trust
in accordance with Section 3811(a)(1) of the Act.
WILMINGTON TRUST COMPANY, as
trustee
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
--------------------------------
Robert L. Woods, as Trustee
--------------------------------
Edward H. Sibbald, as Trustee
--------------------------------
Daniel R. Kadolph, as Trustee
A-1
<PAGE> 63
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER NUMBER OF COMMON SECURITIES
----- -----
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
MBHI CAPITAL TRUST I
COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
MBHI CAPITAL TRUST I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that MIDWEST BANC
HOLDINGS, INC. (the "Holder") is the registered owner of
( ) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
accordance with Section 510 of the Trust Agreement (as defined below), the
Common Securities are not transferable and any attempted transfer hereof shall
be void. The designations, rights, privileges, restrictions, preferences, and
other terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall in
all respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of June , 2000, as the same may be
amended from time to time (the "Trust Agreement"), including the designation of
the terms of the Common Securities as set forth therein. The Trust shall furnish
a copy of the Trust Agreement to the Holder without charge upon written request
to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this th day of June, 2000.
MBHI CAPITAL TRUST I
By:
--------------------------------------
Name: Edward H. Sibbald, Trustee
--------------------------------
Title: Administrative Trustee
--------------------------------
B-1
<PAGE> 64
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
June __, 2000, between MIDWEST BANC HOLDINGS, INC., a Delaware corporation (the
"Company"), and MBHI CAPITAL TRUST I, a Delaware business trust (the "Trust").
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
Securities") to, and receive _____% Junior Subordinated Debentures (the
"Debentures") from, the Company and to issue and sell MBHI Capital Trust I
_____% Cumulative Preferred Securities (the "Preferred Securities") with such
powers, preferences and special rights and restrictions as are set forth in the
Amended and Restated Trust Agreement of the Trust dated as of June __, 2000, as
the same may be amended from time to time (the "Trust Agreement");
WHEREAS, the Company shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges shall be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
SECTION 1.1 Guarantee by the Company.
Subject to the terms and conditions hereof, the Company, including in
its capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This
C-1
<PAGE> 65
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
SECTION 1.2 Term of Agreement.
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise); and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any obligation, under the
Preferred Securities Guarantee Agreement dated the date hereof by the Company
and Wilmington Trust Company as guarantee trustee or under this Agreement for
any reason whatsoever. This Agreement is continuing, irrevocable, unconditional
and absolute.
SECTION 1.3 Waiver of Notice.
The Company hereby waives notice of acceptance of this Agreement and of
any obligation to which it applies or may apply, and the Company hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 1.4 No Impairment.
The obligations, covenants, agreements and duties of the Company under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the obligations or for the performance of any other obligation under,
arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
<PAGE> 66
SECTION 1.5 Enforcement.
A Beneficiary may enforce this Agreement directly against the Company,
and the Company waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against the
Company.
ARTICLE II
SECTION 2.1 Binding Effect.
All guarantees and agreements contained in this Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Beneficiaries.
SECTION 2.2 Amendment.
So long as there remains any Beneficiary or any Preferred Securities of
any series are outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to any of the holders of the Preferred
Securities.
SECTION 2.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by facsimile):
MBHI Capital Trust I
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Facsimile No.: (302) 427-7664
Attention: Corporate Trust Administration
Midwest Banc Holdings, Inc.
501 West North Avenue
Melrose Park, Illinois 60160
Facsimile No.: (708) 865-7273
Attention: Chief Financial Officer
SECTION 2.4 This agreement shall be governed by and construed and
interpreted in
<PAGE> 67
accordance with the laws of the State of Illinois (without regard to conflict
of laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
MIDWEST BANC HOLDINGS, INC.
By:
Name: Robert L. Woods
--------------------------------
Title: President and CEO
MBHI CAPITAL TRUST I
By:
Name: Edward H. Sibbald
--------------------------------
Title: Administrative Trustee
<PAGE> 68
EXHIBIT D
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
MBHI CAPITAL TRUST I
% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
CUSIP
MBHI Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust and
designated the % Cumulative Preferred Securities (liquidation amount $25
per Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 504 of the Trust Agreement (as
defined herein). The designations, rights, privileges, restrictions,
preferences, and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Trust Agreement of the Trust dated as of June , 2000,
as the same may be amended from time to time (the "Trust Agreement"), including
the designation of the terms of Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Preferred Securities Guarantee
Agreement entered into by Midwest Banc Holdings, Inc., a Delaware corporation,
and Wilmington Trust Company as guarantee trustee, dated as of June , 2000, as
the same may be amended from time to time (the "Guarantee"), to the extent
provided therein. The Trust shall furnish a copy of the Trust Agreement and the
Guarantee to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Unless the Certificate of Authentication has been manually executed by the
Authentication Agent, this certificate is not valid or effective.
D-1
<PAGE> 69
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed
this Certificate this th day of June, 2000.
MBHI CAPITAL TRUST I
By:
----------------------------
Robert L. Woods, as Trustee
By:
----------------------------
Edward H. Sibbald, as Trustee
By:
-----------------------------
Daniel R. Kadolph, as Trustee
D-2
<PAGE> 70
LEGEND
FOR CERTIFICATES EVIDENCING
GLOBAL PREFERRED SECURITIES ONLY:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration
of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
D-3
<PAGE> 71
EXHIBIT E
FORM OF CERTIFICATE OF AUTHENTICATION
This is one of the % Cumulative Preferred Securities referred to in the
within-mentioned Amended and Restated Trust Agreement.
WILMINGTON TRUST COMPANY,
as Authentication Agent and Registrar
By:
----------------------------------
AUTHORIZED SIGNATURE
E-1
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to incorporating by reference our report on the financial statements
of Midwest Banc Holdings, Inc. as of December 31, 1999 and 1998 and for the
three years then ended in Amendment No. 1 of the Registration Statement on Form
S-3 and Prospectus of Midwest Banc Holdings, Inc. and MBHI Capital Trust I. Our
report is dated January 15, 2000 and is included in the 1999 Form 10-K of
Midwest Banc Holdings, Inc. We also consent to the reference to us under
"Experts" in the Registration Statement and Prospectus.
/s/ Crowe, Chizek and Company LLP
-----------------------------------
Crowe, Chizek and Company LLP
Oak Brook, Illinois
May 17, 2000
