<PAGE>
Registration No. 333-
Registration No. 333-
As filed with the Securities and Exchange Commission on September 16, 1999
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HEARTLAND FINANCIAL USA, INC. HEARTLAND FINANCIAL CAPITAL TRUST I
(Exact name of the registrant and co-registrant as specified in their charters)
<TABLE>
<CAPTION>
DELAWARE 42-1405748 DELAWARE 51-6512637
<S> <C> <C> <C>
(State or other jurisdiction of (I.R.S. Employer (State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.) of incorporation or organization) Identification No.)
</TABLE>
1398 CENTRAL AVENUE 1398 CENTRAL AVENUE
DUBUQUE, IOWA 52001 DUBUQUE, IOWA 52001
(319) 589-2000 (319) 589-2000
(Addresses, including zip codes, and telephone numbers of registrant's and
co-registrant's principal executive offices)
JOHN K. SCHMIDT
EXECUTIVE VICE PRESIDENT
HEARTLAND FINANCIAL USA, INC.
1398 CENTRAL AVENUE
DUBUQUE, IOWA 52001
(319) 589-2000
(Name, address and telephone number of agent for service)
WITH COPIES TO:
JOHN E. FREECHACK, ESQ. DAVE M. MUCHNIKOFF, P.C.
KRISTA A. ENDRES, ESQ. SILVER, FREEDMAN & TAFF, L.L.P.
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG 1100 NEW YORK AVENUE, N.W.
333 W. WACKER DRIVE, SUITE 2700 SUITE 7000
CHICAGO, ILLINOIS 60606 WASHINGTON, D.C. 20005-3934
(312) 984-3100 (202) 414-6100
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON
AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are to be 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. / /
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Title of Each Class of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of Registration
Registered Registered Price per Unit Aggregate Offering Price Fee(1)
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<S> <C> <C> <C> <C>
___% Capital Securities of Heartland 1,000,000 $25.00 $25,000,000 $6,950.00
Financial Capital Trust I
___% Junior Subordinated Debentures(2) of
Heartland Financial USA, Inc. (2)
Guarantee(3) of Capital Securities (3)
</TABLE>
(1) The registration fee is calculated in accordance with Rule 457 (a),
(i) and (n).
(2) The Debentures will be purchased by Heartland Financial Capital Trust
I with the proceeds from the sale of Capital Securities. Such
securities may later be distributed for no additional consideration to
the holders of the Capital Securities of Heartland Financial Capital
Trust I upon its dissolution.
(3) This Registration Statement is deemed to cover the Debentures of
Heartland Financial USA, Inc., the rights of holders of Debentures of
Heartland Financial USA, Inc. under the Indenture, and the rights of
holders of the Capital Securities under the Trust Agreement, the
Guarantee and the Expense Agreement entered into by Heartland Financial
USA, Inc. No separate consideration will be received for the Guarantee.
THE REGISTRANTS HEREBY AMEND THE 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.
<PAGE>
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.
SUBJECT TO COMPLETION, DATED SEPTEMBER ___, 1999
PROSPECTUS
1,000,000 CAPITAL SECURITIES
HEARTLAND FINANCIAL CAPITAL TRUST I
______% CUMULATIVE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
HEARTLAND FINANCIAL USA, INC.
-------------------
The capital securities represent undivided beneficial interests in the assets
of Heartland Financial Capital Trust I. The trust will invest the proceeds of
this offering of capital securities in the _____% junior subordinated
debentures of Heartland Financial USA, Inc.
For each of the capital 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 December 31, 1999, from
payments on the debentures. We may defer payments of distributions at any
time for up to 20 consecutive quarters. The capital securities are
effectively subordinated to all senior and subordinated indebtedness of
Heartland Financial USA, Inc. and its subsidiaries. The debentures mature and
the capital securities must be redeemed by September 30, 2029. The trust may
redeem the capital securities, at a redemption price of $25 per capital
security plus accrued and unpaid distributions, at any time on or after
December 31, 2004, or earlier under certain circumstances.
Application has been made to have the capital securities listed on the
American Stock Exchange under the symbol "HFT.Pr" upon completion of this
offering.
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.
INVESTING IN THE CAPITAL SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 10.
-------------------
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<CAPTION>
PER CAPITAL
SECURITY TOTAL
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<S> <C> <C>
Public offering price......................................................... $ 25.00 $ 25,000,000
Underwriting fees to be paid by Heartland Financial USA, Inc.................. $ $
Proceeds to the trust......................................................... $ 25.00 $ 25,000,000
</TABLE>
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.
-------------------
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
HOWE BARNES INVESTMENTS, INC.
-------------------
_____________, 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C>
Cautionary Statements.............................. 2
Summary............................................ 3
Summary Consolidated Financial Data................ 9
Risk Factors....................................... 10
Use of Proceeds.................................... 17
Capitalization..................................... 18
Accounting and Regulatory Treatment................ 19
Management......................................... 20
Description of the Trust........................... 22
Description of the Capital Securities.............. 23
Description of the Debentures...................... 34
Book-Entry Issuance................................ 42
Description of the Guarantee....................... 44
Relationship Among the Capital
Securities, the Debentures and
the Guarantee.................................... 46
Federal Income Tax Consequences.................... 48
ERISA Considerations............................... 51
Underwriting....................................... 51
Legal Matters...................................... 52
Where You Can Find Information..................... 53
Experts............................................ 53
Incorporation of Documents
by Reference..................................... 53
</TABLE>
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of the
capital securities being offered, including over-allotting the capital
securities and bidding for and purchasing capital securities at a level above
that which otherwise might prevail in the open market. For a description of
these activities, see "Underwriting." Such stabilizing transactions, if
commenced, may be discontinued at any time. In connection with this offering,
certain underwriters (and selling group members) may engage in passive market
making transactions in the capital securities on the American Stock Exchange
or otherwise in accordance with Rule 103 of the Securities and Exchange
Commission's Regulation M. See "Underwriting."
<PAGE>
CAUTIONARY STATEMENTS
This prospectus contains forward-looking statements which describe our
future plans, strategies and expectations. All forward-looking statements are
based on assumptions and involve risks and uncertainties, many of which are
beyond our control and which may cause our actual results, performance or
achievements to differ materially from the results, performance or
achievements that we anticipate. Factors that might affect forward-looking
statements include, among other things:
- the demand for our products;
- our inability to sustain or improve the performance of our
subsidiaries;
- our ability to enter new markets successfully and
capitalize on growth opportunities;
- our inability to identify suitable future acquisition candidates;
- the timing, impact and other uncertainties of our future
acquisitions and our success or failure in the integration of
their operations;
- increased costs or other difficulties relating to our pending
acquisition of National Bancshares, Inc.;
- our inability to achieve the financial goals in our strategic plans,
including any financial goals related to both contemplated and
consummated acquisitions;
- increases in defaults by borrowers and other loan delinquencies
resulting in increases in our provision for losses on loans and
related expenses;
- our ability to manage growth, including the successful expansion
of the customer support, administrative infrastructure and
internal management systems necessary to manage such growth;
- adverse changes in the economy or business conditions, either
nationally or in our market areas that could increase
credit-related losses and expenses;
- the consequences of continued bank acquisitions and mergers in our
market areas, resulting in fewer but much larger and financially
stronger competitors, and actions taken by our competitors which
could increase competition for financial services to our detriment;
- fluctuations in interest rates and market prices, which could
reduce our net interest margins, asset valuations and expense
expectations;
- changes in legislative or regulatory requirements applicable to
bank holding companies and our present and future banking and
other subsidiaries;
- changes in tax requirements, including tax rate changes, new tax
laws and revised tax law interpretations;
- general economic conditions;
- year 2000 (Y2K) computer, embedded chip and related data processing
issues; and
- other factors discussed in "Risk Factors."
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.
You should 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.
2
<PAGE>
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. UNLESS THE CONTEXT CLEARLY
SUGGESTS OTHERWISE, REFERENCES IN THIS PROSPECTUS TO "OUR," "US," "WE,"
"HEARTLAND FINANCIAL" OR "THE COMPANY" INCLUDE HEARTLAND FINANCIAL USA, INC.,
ITS WHOLLY OWNED, DIRECT AND INDIRECT SUBSIDIARIES AND NEW MEXICO BANK AND
TRUST.
HEARTLAND FINANCIAL USA, INC.
BACKGROUND
We are a diversified financial services holding company headquartered in
Dubuque, Iowa. We offer full-service community banking through six banking
subsidiaries with a total of 24 banking locations in Iowa, Illinois,
Wisconsin and New Mexico. In addition, we have separate subsidiaries in the
consumer finance, vehicle leasing/fleet management, insurance agency and
investment management businesses. Our primary strategy is to balance our
focus on increasing profitability with asset growth and diversification
through acquisitions, DE NOVO bank formations, branch openings and expansion
into non-bank subsidiary activities. At June 30, 1999, we had total assets of
$1.0 billion, net loans and leases of $693.1 million, deposits of $729.9
million and stockholders' equity of $85.5 million.
Our largest bank subsidiary, Dubuque Bank and Trust Company, was
organized in 1935 and was reorganized into the current holding company
structure with Heartland Financial in 1982. From this beginning, we have
grown significantly and have expanded geographically, acquiring entities or
establishing DE NOVO operations in selected other markets in Iowa, Illinois,
Wisconsin and New Mexico. The following table details our principal operating
subsidiaries:
<TABLE>
<CAPTION>
NUMBER ASSETS AT
YEAR OF JUNE 30, 1999
NAME HEADQUARTERS AFFILIATED LOCATIONS (IN MILLIONS) BUSINESS
- --------------------------- ----------------- ---------- --------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
BANKING SUBSIDIARIES:
Dubuque Bank and Trust Dubuque, IA 1982 8 $582.7 Community banking
Company and trust services
Galena State Bank and Trust Galena, IL 1992 3 133.9 Community banking
Company and trust services
First Community Bank, FSB Keokuk, IA 1994 3 99.6 Community banking
and trust services
Riverside Community Bank Rockford, IL 1995 2 66.3 Community banking
Wisconsin Community Bank Cottage Grove, WI 1997 4 79.9 Community banking
and trust services
New Mexico Bank & Trust Albuquerque, NM 1998 4 60.0 Community banking
and trust services
NON-BANKING SUBSIDIARIES:
Citizens Finance Co. Dubuque, IA 1988 4 14.3 Consumer finance
ULTEA, Inc. Madison, WI 1996 2 41.0 Vehicle leasing/fleet
management
</TABLE>
On July 23, 1999, we acquired Bank One Corporation's branch in Monroe,
Wisconsin, which had approximately $94.5 million in deposits at the time of
the acquisition. In addition, on August 17, 1999, we announced the expansion
of our New Mexico operations through the pending acquisition of National
Bancshares, Inc., the one-bank holding company of First National Bank of
Clovis, located in Clovis, New Mexico. At June 30, 1999, National Bancshares
had $111.9 million in assets, $97.9 million in deposits and $68.6 million in
loans, primarily agricultural loans.
3
<PAGE>
Our principal executive offices are located at 1398 Central Avenue,
Dubuque, Iowa 52001, and our telephone number is (319) 589-2000.
OPERATING STRATEGY
Our primary operating strategy is to differentiate ourselves as a
growing consortium of strong community banks through community involvement,
active boards of directors, local presidents and local decision making. As
part of our operating strategy, we encourage all of our directors, officers
and employees to maintain a strong ownership interest in Heartland Financial.
As of June 30, 1999, these individuals owned approximately 54% of our
outstanding common stock.
We believe that the personal and professional service that we offer to
our customers provides an appealing alternative to the "megabanks" that have
resulted from the recent mergers and acquisitions in the financial services
industry. While we employ a community banking philosophy, we believe that our
size, combined with our full line of financial products and services, is
sufficient to effectively compete in our market areas. At the same time, we
realize that to remain price competitive we must manage expense levels by
centralizing our back office support functions to gain economies of scale.
In order to accomplish our strategic objectives, we have focused on
improving the performance of our existing subsidiaries while simultaneously
pursuing an acquisition and expansion strategy. With respect to our existing
subsidiaries, we have primarily focused on the following strategies:
- de-emphasizing lower-yielding, single-family mortgage loans
while increasing the emphasis on commercial and consumer loans
which yield higher risk-adjusted returns;
- improving our bank subsidiaries' funding costs by reducing the
levels of higher-cost certificates of deposit, increasing the
percentage of lower-cost transaction accounts such as checking,
savings and money market accounts, emphasizing relationship
banking and capitalizing on cross-selling opportunities;
- emphasizing the expansion of our non-traditional sources of
income, including trust and investment services, consumer
finance and vehicle leasing and fleet management;
- centralizing back office support functions to enable us to
operate as efficiently as possible; and
- continually evaluating new technology and acquiring it when
the expected return justifies the cost.
EXPANSION STRATEGY
Another aspect of our primary strategy is to diversify both our market
area and asset base while increasing profitability through acquisitions and
through expansion of our current subsidiaries. Our goal is to expand through
the acquisition of established financial services organizations, primarily
commercial banks or thrifts, when suitable candidates can be identified and
acceptable business terms negotiated. We have also formed DE NOVO banking
institutions in market areas where we have identified market potential and
management with banking expertise and philosophies similar to our own. In
evaluating expansion and acquisition opportunities, we have focused on
geographic areas in the Midwest or Southwest with growth potential.
Our acquisitions have historically focused on traditional community
banks and thrifts located in stable or growing areas of Iowa, Wisconsin and
Illinois. For example, in 1994 we acquired Keokuk Bancshares, Inc., the
holding company of First Community Bank, FSB. First Community, with its
headquarters in Keokuk, Iowa, had assets of $97.9 million at the time of the
acquisition. In March 1997, we acquired Cottage Grove State Bank
(subsequently renamed Wisconsin Community Bank,) a Wisconsin state bank
located in the Madison metropolitan area with $39.0 million in assets at the
time of acquisition. As discussed above, in July 1999, we significantly
increased our Wisconsin operations when we acquired a branch office of Bank
One in Monroe, Wisconsin, and as a result, obtained $94.5 million in
deposits, $38.8 million in loans and $46.7 million in trust assets.
4
<PAGE>
We continually seek and evaluate opportunities to establish branches,
loan production offices or other business facilities as a means of expanding
our presence in current or new market areas. We established Riverside
Community Bank in Rockford, Illinois as a DE NOVO bank in October 1995. Since
then, it has grown to approximately $66.3 million in total assets. We also
opened a new branch of Riverside Community Bank in southeastern Rockford in
July 1999. In addition, Wisconsin Community Bank established offices in Green
Bay, Sheboygan and Eau Claire in 1999.
We also look for opportunities beyond the Midwest and beyond the
categories of community banks and thrifts when we believe that the
opportunity will provide a desirable strategic fit without posing undue
risks. In May 1998, we enhanced our geographic diversity by establishing New
Mexico Bank & Trust as a DE NOVO institution, in Albuquerque, New Mexico.
This is a joint venture with local investors, executive officers and
directors in which we became the 80% owner. Prior to May 5, 2003, each of the
investors has the right to require us to purchase their shares at a price
that will provide the investor with a 10% compounded return on their
investment. On May 5, 2003, we are required to purchase any remaining
outstanding shares at a price determined by an appraisal of New Mexico Bank &
Trust. The purchase price is payable in cash, our common stock or a
combination of both. In no event may we pay a price that will give the
investors less than a 10% return on their investment. In the event that New
Mexico Bank & Trust has over $200 million in assets and a 12% return on
equity at the time of the repurchase, then we must pay a price that will give
the investors at least a 15% return on their investment.
In the third quarter of 1998, we further diversified our asset base by
significantly enlarging our motor vehicle fleet leasing operations through
the acquisition of Lease Associates Group of Milwaukee, Wisconsin. The merger
of that company with our vehicle leasing and fleet management subsidiary,
ULTEA, Inc., created the largest fleet management company based in Wisconsin,
with total assets of $41.0 million at June 30, 1999. ULTEA specializes in
motor vehicle fleet leasing and management for small to medium sized
companies with strong credit histories.
We also acquired Citizens Finance, a consumer finance company, in
November 1988. Citizens Finance specializes in making consumer loans to
borrowers with past credit problems or limited credit histories. While it is
headquartered in Dubuque, Citizens Finance has opened locations in Madison
and Appleton, Wisconsin and Rockford, Illinois. Citizens Finance has
experienced significant growth during 1999 with total assets increasing to
$14.3 million at June 30, 1999.
In August 1999, we agreed to acquire National Bancshares, Inc., the
one-bank holding company of First National Bank of Clovis. The bank has four
locations, with $111.9 million in assets and $97.9 million in deposits. The
total purchase price for National Bancshares will be approximately $23.3
million, of which up to $5.8 million may be paid in our common stock. The
largest stockholder of National Bancshares, owning approximately 30% of its
outstanding capital stock, is also a director and stockholder of New Mexico
Bank & Trust. The acquisition is expected to close by the end of 1999 or
during the first quarter of 2000, pending stockholder and regulatory
approvals. We expect to merge the Clovis bank into New Mexico Bank & Trust
after the closing of the acquisition. As a result of this acquisition, our
ownership interest in New Mexico Bank & Trust will rise to approximately 86%.
At June 30, 1999 we had an 8.49% leverage ratio, a 10.21% tier 1
risk-based ratio and a total risk based ratio of 11.32%. As adjusted for this
offering, as well as for the acquisition of the Bank One branch in Monroe,
Wisconsin and the proposed acquisition of National Bancshares, these ratios
would have been 7.71%, 9.26% and 10.39%, respectively at June 30, 1999. In
addition, the combined assets of New Mexico Bank & Trust at June 30, 1999,
adjusted for the proposed acquisition of National Bancshares, would increase
from $60.0 million to $179.9 million.
5
<PAGE>
HEARTLAND FINANCIAL CAPITAL TRUST I
The trust, which is the issuer of the capital securities, is a statutory
business trust we formed under the Delaware Business Trust Act. Upon issuance
of the capital securities offered by this prospectus, the purchasers in this
offering will own all of the issued and outstanding capital 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 for the following
purposes:
- issuing the capital securities to the public for cash;
- issuing the common securities to us;
- investing the proceeds from the sale of the capital and common
securities in an equivalent amount of ____% junior subordinated
debentures due September 30, 2029 issued by us; and
- engaging in other activities that are incidental to those listed
above.
The trust's address is 1398 Central Avenue, Dubuque, Iowa 52001, and its
telephone number is (319) 589-2000.
THE OFFERING
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<S> <C>
The issuer................................ Heartland Financial Capital Trust I
Securities being offered.................. 1,000,000 capital securities,
which represent preferred
undivided beneficial interests in
the assets of the trust. Those
assets will consist solely of the
debentures and payments received
thereunder.
The trust will sell the capital
securities to the public for cash.
The trust will use that cash to
buy the debentures from us.
Offering price............................ $25 per capital security.
Payment of distributions.................. If you purchase the capital
securities, you are entitled to
receive cumulative cash
distributions at a _____% annual
rate. Distributions will
accumulate from the date the trust
issues the capital securities and
will be paid quarterly on March
31, June 30, September 30 and
December 31 of each year beginning
December 31, 1999. The record date
for distributions on the capital
securities will be the business
day prior to the distribution
date. Please note that we may
defer the payment of cash
distributions, as more fully
described below.
Maturity.................................. The debentures will mature and the
capital securities must be redeemed
on September 30, 2029. We have the
option, however, to shorten the
maturity date to a date not earlier
than September 30, 2004. 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 capital securities is
possible.............................. The trust must redeem the capital
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 September 30, 2004. In
addition, we may redeem, at any
time, all of the debentures if:
</TABLE>
6
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<TABLE>
<CAPTION>
<S> <C>
- 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;
- there is a change in the
Investment Company Act of
1940 that requires the trust
to register under that law;
or
- there is a change in the
capital adequacy guidelines
of the Federal Reserve that
results in the capital
securities not being counted
as Tier 1 capital.
Redemption of the debentures prior
to maturity will be subject to the
prior approval of the Federal
Reserve, if required. If the
capital securities are redeemed by
the trust, you will receive the
liquidation amount of $25 per
capital 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 capital 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 September 30, 2029. If we
defer interest payments on the
debentures:
- the trust will also defer
distributions on the capital
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 capital 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 capital 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 capital securities. In this
event, your remedy is to institute
a legal proceeding directly against
us for enforcement of payments
under the debentures.
</TABLE>
7
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<TABLE>
<CAPTION>
<S> <C>
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 capital
securities, debentures and
guarantee are unsecured and will
rank as follows with regard to
right of payment:
- the capital securities will
rank equally with the
common securities of the
trust. The trust will pay
distributions on the
capital securities and
the common securities pro
rata. However, if we
default with respect to
the debentures, then no
distributions on the
common securities will be
paid until all
accumulated and unpaid
distributions on the
capital 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 holding
company, the junior
subordinated debentures
and the guarantee will
effectively be
subordinated to all
existing and future
liabilities of our
subsidiaries.
Voting rights of the capital
securities............................ Except in limited circumstances,
holders of the capital securities
will have no voting rights.
Proposed American Stock Exchange
symbol.............................. "HFT.Pr"
Book-entry................................ The capital 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 capital
securities.
Use of proceeds........................... The trust will invest all of the
proceeds from the sale of the
capital securities in the
debentures. We will use the net
proceeds from the sale of the
debentures, which we estimate to be
approximately $____ million, to
repay approximately $15.0 million
of indebtedness existing on our
revolving credit line currently
outstanding with The Northern Trust
Company. We will use the remaining
net proceeds for general corporate
purposes, including, but not
limited to, investments in and
extensions of credit to our
subsidiaries, possible common stock
repurchases and financing potential
acquisitions.
</TABLE>
Before purchasing the capital securities offered by this prospectus, you
should carefully consider the "Risk Factors" beginning on page 10.
8
<PAGE>
SUMMARY 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, 1998,
are derived from our consolidated financial statements, which have been
audited by KPMG LLP, independent certified public accountants. The summary
data presented below for the six-month periods ended June 30, 1999 and 1998,
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 six-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, 1998 and our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1999 and June 30, 1999. Results for past periods are not
necessarily indicative of results to be expected for any future period, and
results for the six-month period ended June 30, 1999 are not necessarily
indicative of results for the entire year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------------------- ---------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Interest income....................... $ 33,739 $ 31,599 $ 64,517 $ 59,261 $ 51,886 $ 49,149 $ 43,373
Interest expense...................... 18,556 17,245 36,304 31,767 27,644 25,529 20,128
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net interest income................... 15,183 14,354 28,213 27,494 24,242 23,620 23,245
Provision for loan and lease losses... 1,296 585 951 1,279 1,408 820 811
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net interest income after provision
for loan and lease losses.......... 13,887 13,769 27,262 26,215 22,834 22,800 22,434
Noninterest income.................... 12,824 5,849 17,297 8,565 7,364 4,981 4,965
Noninterest expense................... 20,715 13,087 31,781 22,927 19,507 17,323 17,244
---------- ---------- ---------- ---------- ---------- ---------- -----------
Pre-tax income........................ 5,996 6,531 12,778 11,853 10,691 10,458 10,155
Provision for income taxes............ 1,784 1,959 3,757 3,338 2,685 2,884 3,015
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net income............................ $ 4,212 $ 4,572 $ 9,021 $ 8,515 $ 8,006 $ 7,574 $ 7,140
---------- ---------- ---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- ---------- ---------- -----------
BALANCE SHEET:
Total assets.......................... $1,027,833 $ 880,037 $ 953,785 $ 852,060 $ 736,552 $ 677,313 $ 626,490
Securities and federal funds sold..... 219,774 250,437 259,964 234,666 183,966 171,726 162,968
Loans and leases, net of unearned
interest........................... 693,058 558,654 590,133 556,406 484,085 454,905 422,216
Allowance for loan and lease losses... 9,171 8,100 7,945 7,362 6,191 5,580 5,124
Deposits.............................. 729,914 660,551 717,877 623,532 558,343 534,587 513,239
Stockholders' equity.................. 85,467 76,499 84,270 77,772 70,259 64,506 56,930
KEY RATIOS:
Return on average total assets (1).... 0.87% 1.08% 1.01% 1.09% 1.16% 1.18% 1.18%
Return on average stockholders'
equity (1)......................... 10.03 11.79 11.26 11.59 12.00 12.28 12.82
Net interest margin (1)(2)(3)......... 3.59 3.78 3.58 3.89 3.98 4.13 4.32
Efficiency ratio (2)(4)............... 74.82 67.06 71.58 64.77 63.03 59.15 59.40
Nonperforming assets to total assets.. 0.25 0.34 0.28 0.34 0.34 0.28 0.17
Allowance for loan and lease
losses to total loans and leases... 1.32 1.45 1.35 1.32 1.28 1.23 1.21
Net charge-offs (recoveries) to
average loans and leases........... 0.01 (0.03) 0.07 0.08 0.17 0.08 0.03
Average equity to average assets...... 8.66 9.17 9.01 9.39 9.66 9.59 9.22
Earnings to fixed charges:
Excluding interest on deposits..... 2.45x 2.76x 2.65x 2.97x 3.38x 3.97x 5.30x
Including interest on deposits..... 1.32 1.38 1.35 1.37 1.39 1.41 1.50
</TABLE>
- --------------------------------------
(1) The six-month ratios are annualized.
(2) Exclusive of the interest recorded on the debt of ULTEA, the net interest
margin for the six-month period ended June 30, 1999 was 3.83%. Similarly,
the efficiency ratio was 67.43% for the six-month period ended June 30,
1999 when considering only the banking subsidiaries.
(3) Tax-equivalent using a 34% rate.
(4) Noninterest expense divided by the sum of net interest income before
provision for loan losses and noninterest income.
9
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE CAPITAL 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 US, OUR BUSINESS AND THE TRUST BEFORE YOU PURCHASE THE CAPITAL
SECURITIES OFFERED BY THIS PROSPECTUS.
BECAUSE THE TRUST WILL RELY ON THE PAYMENTS IT RECEIVES ON THE
DEBENTURES TO FUND ALL PAYMENTS ON THE CAPITAL SECURITIES, AND BECAUSE THE
TRUST MAY DISTRIBUTE THE DEBENTURES IN EXCHANGE FOR THE CAPITAL SECURITIES,
PURCHASERS OF THE CAPITAL SECURITIES ARE MAKING AN INVESTMENT DECISION THAT
RELATES TO THE DEBENTURES AS WELL AS THE CAPITAL SECURITIES. PURCHASERS
SHOULD CAREFULLY REVIEW THE INFORMATION IN THIS PROSPECTUS ABOUT THE CAPITAL
SECURITIES, THE DEBENTURES AND THE GUARANTEE.
RISKS RELATED TO AN INVESTMENT IN HEARTLAND FINANCIAL
RISKS RELATED TO OUR CURRENT BUSINESS ACTIVITIES
Our business strategy centers around increasing our commercial banking
activities. In order to realize this objective, one of our main strategies is
to replace lower-yielding one- to four-family residential mortgage loans with
commercial and consumer loans and leases with higher risk-adjusted returns.
As this process takes place, a gradual increase in our consolidated credit
risk is likely to occur, which means that there is a greater risk that
borrowers will be unable to repay their loans from us or make all required
lease payments to us. Borrower defaults resulting in losses in excess of our
allowance for loan and lease losses could have a material adverse effect on
our business, profitability and financial condition.
ONE- TO FOUR-FAMILY RESIDENTIAL MORTGAGE LOANS. One- to four-family
residential mortgage loans comprised $160.1 million, or 23.0%, of our loan
and lease portfolio at June 30, 1999, and are secured primarily by properties
located in the Midwest. Our concentration of these loans results in lower
yields and lower profitability for us. These loans are generally made on the
basis of the borrower's ability to make repayments from his or her employment
and the value of the property securing the loan.
COMMERCIAL REAL ESTATE LENDING. At June 30, 1999, commercial real estate
loans totaled $202.5 million, or 29.1%, of our total loan and lease
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 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.
From time to time, we have purchased participation interests in commercial
real estate loans. We apply the same approval standards and procedures to
participation interests as to the loans we originate directly. There is no
assurance, however, that we may not experience future delinquencies from
these participation interests. At June 30, 1999, participation interests
included in our total commercial real estate loan and lease portfolio totaled
$43.7 million.
COMMERCIAL LOANS AND LEASES. Our commercial loans and leases are
primarily made based on the identified cash flow of the borrower and
secondarily on the underlying collateral provided by the borrower. Most
often, this collateral is accounts receivable, inventory, machinery or real
estate. Credit support provided by the borrower for most of these loans and
leases and the probability of repayment is based on the liquidation of the
pledged collateral and enforcement of a personal guarantee, if any exists. As
a result, 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. The collateral securing other loans and equipment leases may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. Commercial loans and leases were $123.2
million, or 17.7% of our total loan and lease portfolio, as of June 30, 1999.
This amount does not include $37.2 million of leases held by ULTEA. These
leases require the lessee to pay an amount over the life of the lease equal
to the total of all costs related to the purchase and use of the automobile
and ULTEA's fleet management fees less the amount received
10
<PAGE>
upon sale of the leased automobile. In the event the lessee fails to pay the
total required payment, ULTEA may incur a loss.
COMMERCIAL CONSTRUCTION LENDING. At June 30, 1999, commercial
construction loans, including land acquisition and development, totaled $28.3
million, or 4.1%, of our total loan and lease portfolio. Construction and
land acquisition and development lending involve additional risks because
funds are advanced upon the security of the project, which is of uncertain
value prior to its completion. Because of the uncertainties inherent in
estimating construction costs, as well as the market value of the completed
project and the effects of governmental regulation of real property, it is
relatively difficult to evaluate accurately the total funds required to
complete a project and the related loan-to-value ratio. As a result,
commercial construction loans often involve the disbursement of substantial
funds with repayment dependent, in part, on the success of the ultimate
project and the ability of the borrower to sell or lease the property, rather
than the ability of the borrower or guarantor to repay principal and
interest. If our appraisal of the value of the completed project proves to be
overstated, we may have inadequate security for the repayment of the loan
upon completion of construction of the project.
AGRICULTURAL LENDING. At June 30, 1999, agricultural real estate loans
totaled $56.6 million, or 8.1%, of our total loan and lease portfolio.
Agricultural real estate lending involves a greater degree of risk and
typically involves larger loans to single borrowers than lending on
singlefamily residences. Payments on agricultural real estate loans are
dependent on the profitable operation or management of the farm property
securing the loan. The success of the farm may be affected by many factors
outside the control of the farm borrower, including adverse weather
conditions that prevent the planting of a crop or limit crop yields (such as
hail, drought and floods), loss of livestock due to disease or other factors,
declines in market prices for agricultural products (both domestically and
internationally) and the impact of government regulations (including changes
in price supports, subsidies and environmental regulations). In addition,
many farms are dependent on a limited number of key individuals whose injury
or death may significantly affect the successful operation of the farm. If
the cash flow from a farming operation is diminished, the borrower's ability
to repay the loan may be impaired. The primary crops in our market areas are
corn and soybean. Accordingly, adverse circumstances affecting corn and
soybean crops could have an adverse effect on our agricultural real estate
loan portfolio.
We also originate agricultural operating loans. At June 30, 1999, these
loans totaled $27.6 million, or 4.0%, of our total loan and lease portfolio.
As with agricultural real estate loans, the repayment of operating loans is
dependent on the successful operation or management of the farm property.
Likewise, agricultural operating loans involves a greater degree of risk than
lending on residential properties, particularly in the case of loans that are
unsecured or secured by rapidly depreciating assets such as farm equipment or
assets such as livestock or crops. The primary livestock in our market areas
include dairy cows, hogs and feeder cattle. In these cases, any repossessed
collateral for a defaulted loan may not provide an adequate source of
repayment of the outstanding loan balance as a result of the greater
likelihood of damage, loss or depreciation.
National Bancshares, Inc. had $32.1 million in agricultural operating
loans and $8.0 million in agricultural real estate loans at June 30, 1999.
These loans were heavily concentrated in the cattle industry as well as in
grain operations. Because National Bancshares' underwriting standards are
different than ours, this portion of the loan portfolio may initially involve
more risk. At June 30, 1999, National Bancshares had $1.1 million in
nonperforming loans, which was 1.6% of its total loan portfolio.
CONSUMER LENDING. At June 30, 1999, consumer loans totaled $88.3
million, or 12.7%, of our total loan and lease portfolio. Consumer loans
typically have shorter terms and lower balances with higher yields as
compared to one- to four-family residential mortgage loans, but generally
carry higher risks of default. Consumer loan collections are dependent on the
borrower's continuing financial stability, and thus are more likely to be
affected by adverse personal circumstances. Furthermore, the application of
various federal and state laws, including bankruptcy and insolvency laws, may
limit the amount which can be recovered on these loans. Our consumer loan
portfolio at June 30, 1999 included $16.8 million of consumer loans made by
Citizens Finance to borrowers with past credit problems or limited credit
histories. Lending to these borrowers entails a greater risk of default than
does lending to individuals who have a better credit history. We expect to
incur a higher level of credit losses on Citizens Finance's loans as compared
to our other consumer loans.
11
<PAGE>
WE MAY EXPERIENCE DIFFICULTIES IN MANAGING OUR GROWTH
As part of our general strategy, we may acquire banks and related
businesses that we believe provide a strategic fit with our business. To the
extent that we grow through acquisitions, we cannot assure you that we will
be able to adequately and profitably manage such growth. Acquiring other
banks and businesses, including our proposed acquisition of National
Bancshares, will involve risks commonly associated with acquisitions,
including:
- potential exposure to unknown or contingent liabilities of
banks and businesses we acquire;
- exposure to potential asset quality issues of the acquired
bank or related business;
- difficulty and expense of integrating the operations and
personnel of banks and businesses we acquire;
- potential disruption to our business;
- potential diversion of our management's time and attention;
- the possible loss of key employees and customers of the
banks and businesses we acquire; and
- incurrence of goodwill if we account for an acquisition as a
purchase.
In addition to acquisitions, we may expand into additional communities
or attempt to strengthen our position in our current markets by undertaking
additional DE NOVO bank formations or branch openings. Based on our
experience, we believe that it generally takes up to two years for new
banking facilities to first achieve operational profitability, due to the
impact of organization and overhead expenses and the start-up phase of
generating loans and deposits. To the extent that we undertake additional
branching and DE NOVO bank and business formations, we are likely to continue
to experience the effects of higher operating expenses relative to operating
income from the new operations, which may have an adverse effect on our
levels of reported net income, return on average equity and return on average
assets.
OUR ALLOWANCE FOR LOAN AND LEASE LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL
LOAN LOSSES
As a lender, we are exposed to the risk that our customers will be
unable to repay their loans according to their terms and that any collateral
securing the payment of their loans may not be sufficient to assure
repayment. 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
potential losses based on a number of factors. If our assumptions are wrong,
our allowance for loan and lease 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 and lease losses would decrease our net income.
CHANGES IN LOCAL ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR LOAN PORTFOLIO
Most of our business is located in adjoining portions of Iowa, Illinois
and Wisconsin with a substantial amount concentrated in the Dubuque, Iowa
area. Unfavorable or worsening economic conditions in these areas could have
a material adverse effect on us in a number of ways. The ability of our
borrowers to repay their loans and the value of the collateral securing these
loans would be negatively impacted by adverse changes in local economic
conditions. In addition, these regions are heavily dependent on the
agricultural industry, which has a history of fluctuating economic conditions.
12
<PAGE>
INTEREST RATES AND OTHER CONDITIONS IMPACT OUR RESULTS OF OPERATIONS
Our profitability is in part a function of 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 assets
and liabilities will be such that they are affected differently by a given
change in interest rates. As a result, an increase or decrease in rates, the
length of loan terms 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. At June 30, 1999, we had a liability sensitive gap at one year
and in time periods exceeding one year. With a liability sensitive gap, a
decrease in interest rates will generally have a positive effect on net
interest income, while increases in interest rates will generally have a
negative effect on net interest income.
WE RELY HEAVILY ON OUR MANAGEMENT
We are dependent upon the efforts and services of Lynn B. Fuller, our
president and chief executive officer and our other senior officers. The loss
of the services of Mr. Fuller, or any of our other senior officers, could
have a material adverse effect on our operations. Because Mr. Fuller has
taken on increased responsibilities at the holding company level, we are in
the process of searching for a replacement president of Dubuque Bank and
Trust, our largest bank subsidiary, where Mr. Fuller has been president since
1987. Until this occurs, Mr. Fuller will continue to hold this position.
Our success also depends on the experience of the officers of our
subsidiaries, the managers of our banking facilities and on their
relationships with the communities they serve. The loss of these key persons
could negatively impact the affected banking operations. We may not be able
to retain our current key personnel or attract additional qualified key
persons as needed.
WE HAVE A CONTINUING NEED FOR TECHNOLOGICAL CHANGE
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 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.
UNCERTAINTY EXISTS WITH RESPECT TO THE YEAR 2000
The year 2000 has posed a unique set of challenges to those industries
reliant on information technology. As a result of methods employed by early
programmers, many software applications and operational programs may be
unable to distinguish the year 2000 from the year 1900. If not effectively
addressed, this problem could result in the production of inaccurate data,
or, in the worst cases, the inability of the systems to continue to function
altogether. Financial institutions are particularly vulnerable due to the
industry's dependence on electronic data processing systems. We could
experience interruptions in our business and suffer significant losses if we,
or a supplier or vendor with whom we contract, are unable to achieve year
2000 readiness before January 1, 2000. In addition, our bank subsidiaries'
customers may withdraw their deposits due to uncertainty of the impact of
year 2000 issues, resulting in decreased liquidity.
13
<PAGE>
THERE IS STRONG COMPETITION IN THE FINANCIAL SERVICES INDUSTRY
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.
WE ARE SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION
The banking industry is heavily regulated under both federal and state
law. These regulations are primarily intended to protect customers, not our
creditors or stockholders. We are also subject to extensive regulation by the
Federal Reserve Board, in addition to other regulatory and self-regulatory
organizations. Regulations affecting banks and financial services companies
undergo continuous change, and we cannot predict the ultimate effect of such
changes, which could have a material adverse effect on our profitability or
financial condition. Regulations and laws may be modified at any time, and
new legislation may be enacted that adversely affects us and our subsidiaries.
RISKS RELATED TO AN INVESTMENT IN THE CAPITAL 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 capital 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
capital 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 capital 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 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 approximately $195.4 million at June
30, 1999. The issuance of the debentures and the capital securities does not
limit our ability or the ability of our subsidiaries to incur additional
indebtedness, guarantees or other liabilities.
14
<PAGE>
Because we are a holding company, the creditors of our subsidiaries 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 capital securities and the debentures.
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 capital 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 capital securities before the end of
any deferral period. During a deferral period, accrued but unpaid
distributions will increase your tax basis in the capital securities. If you
sell the capital 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 capital securities would likely be adversely
affected. The capital 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 capital securities during an interest deferral period, you may not
receive the same return on investment as someone who continues to hold the
capital securities. Due to our right to defer interest payments, the market
price of the capital 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 capital 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 SEPTEMBER 30, 2029
Under the following circumstances, we may redeem the debentures before
their stated maturity:
- We may redeem the debentures, in whole or in part, at any
time on or after September 30, 2004.
- We may redeem the debentures in whole, but not in part, within
90 days after certain occurrences at any time during the life
of the trust. These occurrences may include adverse tax,
Investment Company Act 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 the debentures. If
15
<PAGE>
the debentures are redeemed, the trust must redeem capital 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 capital securities.
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
CAPITAL SECURITIES
The trust may be dissolved at any time before maturity of the debentures
on September 30, 2029. 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 capital securities upon liquidation of the trust.
The capital 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 capital securities. Because you may receive debentures, your investment
decision with regard to the capital 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 United States federal income tax laws, 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 CAPITAL SECURITIES AND THEIR MARKET
PRICE MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS
There is currently no public market for the capital securities. Although
we have applied to list the capital securities on the American Stock
Exchange, there is no guarantee that an active or liquid trading market will
develop for the capital securities or that listing of the capital securities
will continue on the American Stock Exchange. If an active trading market
does not develop, the market price and liquidity of the capital securities
will be adversely affected. Even if an active public market does develop,
there is no guarantee that the market price for the capital securities will
equal or exceed the price you pay for the capital securities.
Future trading prices of the capital 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 capital securities has been set at the liquidation amount of the
capital securities and may be greater than the market price following the
offering.
The market price for the capital 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. If this were the
case, the capital securities or the debentures would not trade at a price
that accurately reflects the value of accumulated but unpaid interest 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 capital
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
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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.
AS A HOLDER OF CAPITAL SECURITIES YOU HAVE LIMITED VOTING RIGHTS
Holders of capital 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 capital securities
may replace the property trustee and the Delaware trustee.
THE CAPITAL SECURITIES ARE NOT FDIC INSURED
Neither the Federal Deposit Insurance Corporation nor any other
governmental agency has insured the capital securities.
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of the capital
securities in the debentures. We will use the net proceeds from the sale of
the debentures, which we estimate to be approximately $____ million, to repay
$15.0 million of indebtedness existing on our revolving credit line currently
outstanding with The Northern Trust Company. The interest rate on the
revolving line of credit is currently a weighted average of the rates on
overnight Federal fund transactions plus 60 to 90 basis points, based on our
total debt to tangible net worth ratio. The interest rate fluctuates daily
because the interest rate is tied to Federal funds. Under the loan agreement,
we are required to reduce the total outstanding principal on this revolving
credit line by $15.0 million by December 31, 1999. The revolving line of
credit matures on July 23, 2000. We used $20.0 million of the proceeds of
this revolving credit line to capitalize Wisconsin Community Bank after the
acquisition of the Monroe bank branch in July 1999, and used the balance for
other general corporate purposes.
We will use the remaining net proceeds from the sale of the debentures
for general corporate purposes, including, but not limited to, investments in
and extensions of credit to our subsidiaries, possible common stock
repurchases and financing of potential acquisitions, including the
acquisition of National Bancshares, Inc., the holding company for First
National Bank of Clovis.
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<PAGE>
CAPITALIZATION
The following table sets forth our total deposits, indebtedness and
capitalization at June 30, 1999, on an 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
June 30, 1999. These 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, 1998 and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999 (See "Incorporation of Documents by
Reference").
<TABLE>
<CAPTION>
JUNE 30, 1999
ACTUAL AS ADJUSTED
------------- -------------
(Dollars in thousands)
<C> <C>
DEPOSITS:
Noninterest-bearing deposits............................................. $ 80,580 $ 80,580
Interest-bearing deposits................................................ 649,334 649,334
------------- -------------
Total deposits...................................................... $ 729,914 $ 729,914
------------- -------------
------------- -------------
INDEBTEDNESS:
Short-term borrowings (including short-term portion of Federal
Home Loan Bank advances and contracts payable)...................... $ 140,992 $ 140,992
Other borrowings
Federal Home Loan Bank advances..................................... 19,112 19,112
Notes payable on leased assets...................................... 14,109 14,109
Credit lines with The Northern Trust Company(1)..................... 20,000 20,000
Contracts payable to previous stockholders of
Lease Associates Group for acquisition.......................... 643 643
Contracts payable to previous stockholders of
Wisconsin Community Bank for acquisition........................ 583 583
Company obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely subordinated debentures.......... - 25,000
------------- -------------
Total indebtedness.................................................. $ 195,439 $ 220,439
------------- -------------
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, authorized 200,000 shares.............. $ - $ -
Common stock, $1.00 par value, authorized 12,000,000
shares; issued 9,707,252 shares..................................... 9,707 9,707
Capital surplus.......................................................... 15,281 15,281
Retained earnings........................................................ 62,844 62,844
Accumulated other comprehensive income................................... (381) (381)
Treasury stock at cost (118,433 shares).................................. (1,984) (1,984)
------------- -------------
Total stockholders' equity.......................................... 85,467 85,467
------------- -------------
TOTAL DEPOSITS, INDEBTEDNESS AND STOCKHOLDERS' EQUITY.................... $ 1,010,820 $ 1,035,820
------------- -------------
------------- -------------
</TABLE>
- -----------------------------
(1) In July 1999, we entered into an Amended and Restated Loan Agreement with
The Northern Trust Company to establish a term credit line as well as to
increase the availability under an existing revolving credit line. Under
this agreement, we incurred an additional $20.0 million of indebtedness,
a majority of the proceeds were used to fund the acquisition of Bank
One's branch in Monroe, Wisconsin. The total principal amount outstanding
under the loan agreement with Northern Trust was $40.0 million at
September 13, 1999. We will repay $15.0 million of this amount with the
net proceeds from the sale of the debentures.
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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 capital securities will be
presented as a separate line item in our consolidated balance sheet under the
caption "Company obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely subordinated debentures," and appropriate
disclosures about the capital 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
capital 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 and
specifying the debentures' 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
capital securities.
The capital securities have been structured to qualify as Tier 1
capital. However, the capital securities cannot be used to constitute,
together with any outstanding cumulative preferred stock of Heartland
Financial, more than 25% of Heartland Financial's total Tier 1 capital. As
adjusted for this offering as well as for the acquisition of Bank One's
branch in Monroe, Wisconsin and the pending acquisition of National
Bancshares, Heartland Financial's Tier 1 capital as of June 30, 1999 would
have been approximately $88.3 million, of which $22.1 million would have been
attributable to the capital securities. At the close of this offering, we
anticipate that the total net proceeds will qualify as Tier 1 capital.
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<PAGE>
MANAGEMENT
The names and ages of the executive officers of Heartland Financial as
of September 1, 1999, offices held by these officers on that date and other
positions held with Heartland Financial and its principal operating
subsidiaries are set forth below.
<TABLE>
<CAPTION>
POSITIONS WITH HEARTLAND FINANCIAL
NAME AGE AND PRINCIPAL OPERATING SUBSIDIARIES
---------------- -------------------------- ------------------------------------------------------
<S> <C> <C>
Lynn B. Fuller 50 Director, President and Chief Executive Officer of
Heartland Financial and Dubuque Bank and Trust;
Director of Galena State Bank, First Community Bank,
Riverside Community Bank, Wisconsin Community Bank,
New Mexico Bank & Trust and Keokuk Bancshares;
Director and President of Citizens Finance; Director
and Chairman of ULTEA
Lynn S. Fuller 74 Chairman of the Board of Heartland Financial;
Director and Vice Chairman of the Board of Dubuque
Bank and Trust; Director of Citizens Finance
James A. Schmid 76 Vice Chairman of the Board of Heartland Financial;
Chairman of the Board of Dubuque Bank and Trust;
Director of Citizens Finance
John K. Schmidt 40 Executive Vice President and Chief Financial Officer
of Heartland Financial; Senior Vice President and
Chief Financial Officer of Dubuque Bank and Trust;
Treasurer of Citizens Finance and ULTEA
Kenneth J. Erickson 48 Senior Vice President of Heartland Financial; Senior
Vice President, Lending of Dubuque Bank and Trust;
Senior Vice President of Citizens Finance; Senior
Vice President and Director of ULTEA
Edward H. Everts 48 Senior Vice President, Heartland Financial; Senior
Vice President of Operations and Retail Banking of
Dubuque Bank and Trust
Douglas J. Horstmann 46 Senior Vice President, Lending of Dubuque Bank and
Trust
Paul J. Peckosh 54 Senior Vice President, Trust of Dubuque Bank and Trust
</TABLE>
Mr. Lynn B. Fuller is the son of Mr. Lynn S. Fuller. There are no other
family relationships among any of the directors or executive officers of
Heartland Financial.
LYNN B. FULLER has been a director of Heartland Financial and of Dubuque
Bank and Trust since 1984 and has been President of Heartland Financial and
Dubuque Bank and Trust since 1987. In May 1999, Mr. Fuller became Chief
Executive Officer of Heartland Financial, a position which he has held at
Dubuque Bank and Trust since 1986. He has been a director of Galena State
Bank since its acquisition by Heartland Financial in 1992 and of Keokuk
Bancshares and First Community Bank since the merger in 1994. Mr. Fuller
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joined Dubuque Bank and Trust in 1971 as a consumer loan officer and was
named Dubuque Bank and Trust's Executive Vice President and Chief Executive
Officer in 1986. He was named Chairman and director of Riverside Community
Bank in conjunction with the opening of the DE NOVO operation in 1995,
director of Wisconsin Community Bank in conjunction with the purchase of
Cottage Grove State Bank in 1997 and director of New Mexico Bank & Trust in
conjunction with the opening of the DE NOVO bank in 1998.
LYNN S. FULLER has been a director of Heartland Financial since its
formation in 1981 and of Dubuque Bank and Trust since 1964. Mr. Fuller began
his banking career in 1946 in Minnesota, and he returned to Iowa in 1949 to
serve as Executive Vice President and Cashier of Jackson State Savings Bank
in Maquoketa. Mr. Fuller joined Dubuque Bank and Trust in 1964. He was later
named President of Dubuque Bank and Trust and held this position until 1987.
Mr. Fuller currently serves as the Chairman of the Board of Heartland and
Vice Chairman of Dubuque Bank & Trust.
JAMES A. SCHMID has been a director of Heartland Financial since its
formation in 1981 and of Dubuque Bank and Trust since 1966. Mr. Schmid also
currently serves as the Vice Chairman of Heartland Financial and as the
Chairman of the Board of Dubuque Bank and Trust.
JOHN K. SCHMIDT has been Heartland Financial's Executive Vice President
and Chief Financial Officer since 1991. He has been employed by Dubuque Bank
and Trust since September 1984 and became Dubuque Bank and Trust's Vice
President, Finance in 1986, and Senior Vice President and Chief Financial
Officer in January, 1991. Mr. Schmidt is a certified public accountant and
worked at KPMG Peat Marwick in Des Moines, Iowa, from 1982 until joining
Dubuque Bank and Trust.
KENNETH J. ERICKSON has been Senior Vice President of Heartland
Financial since 1992 and Senior Vice President, Lending of Dubuque Bank and
Trust since 1989. Mr. Erickson joined Dubuque Bank and Trust in 1975 and was
appointed Vice President, Commercial Loans in 1985.
EDWARD H. EVERTS was appointed as Senior Vice President of Heartland
Financial in 1996. Mr. Everts joined Dubuque Bank and Trust as Senior Vice
President, Operations and Retail Banking in 1992. Prior to his service with
Dubuque Bank and Trust, Mr. Everts was Vice President and Lead Retail Banking
Manager of First Bank, Duluth, Minnesota.
DOUGLAS J. HORSTMANN has been Senior Vice President, Lending, of Dubuque
Bank and Trust since 1989. Mr. Horstmann joined Dubuque Bank and Trust in
1980 and was appointed Vice President, Commercial Loans in 1985. Prior to
joining Dubuque Bank and Trust, Mr. Horstmann was an examiner for the Iowa
Division of Banking.
PAUL J. PECKOSH has been Senior Vice President, Trust, of Dubuque Bank
and Trust since 1991. Mr. Peckosh joined Dubuque Bank and Trust in 1975 as
Assistant Vice President, Trust and was appointed Vice President, Trust in
1980. Mr. Peckosh is an attorney and graduated from the Marquette University
School of Law in 1970.
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<PAGE>
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 capital
securities are initially issued. The trust agreement will be qualified under
the Trust Indenture Act of 1939.
The holders of the capital securities issued pursuant to the
offering described in this prospectus will own all of the issued and
outstanding capital securities. We will not initially own any of the capital
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 (together
with the capital securities, the "trust securities"). The trust exists for
the purposes of:
- issuing the capital 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, Heartland Financial 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 Heartland Financial (the "administrative trustees"). The fourth
trustee will be an entity that maintains its principal place of business in the
State of Delaware (the "Delaware trustee"). Initially, First Union Trust
Company, National Association, a national banking association ("First Union"),
will act as Delaware trustee. The fifth trustee will be a financial institution
that is unaffiliated with us and 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 (the "property trustee"). Initially, First
Union will also be the property trustee. For the purpose of compliance with the
Trust Indenture Act, First Union will also 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 shall have occurred
and be continuing, in which case only the holders of the capital securities may
remove the indenture 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 "property account" 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 property account. The guarantee trustee will hold the
22
<PAGE>
guarantee for the benefit of the holders of the capital securities. We will
pay all fees and expenses related to the trust and the offering of the
capital securities, including the fees and expenses of the trustees.
DESCRIPTION OF THE CAPITAL SECURITIES
The capital securities will be issued pursuant to the trust
agreement, which will be qualified as an indenture under the Trust Indenture
Act. First Union will act as property trustee for the capital securities
under the trust agreement for purposes of complying with the provisions of
the Trust Indenture Act. The terms of the capital 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 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 capital securities to be sold to the public and the common securities. We
will own all of the common securities issued by the trust. The capital
securities will represent preferred undivided beneficial interests in the
assets of the trust, and the holders of the capital 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 capital securities will rank equally, and payments on the
capital 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 capital 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 capital 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 property 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 capital securities.
PAYMENT OF DISTRIBUTIONS. Distributions on the capital 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 capital securities on the relevant record
dates. The record date will be the business day immediately preceding the
relevant distribution date. The first distribution date for the capital
securities will be December 31, 1999.
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
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<PAGE>
York, New York or Wilmington, Delaware are authorized or required by law 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.
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 September 30, 2029 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 capital securities will also be deferred during any such
extension period. Any deferred distributions under the capital 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 capital 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 capital securities by extending the interest payment
period 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
September 30, 2004; or
- at any time, in whole, within 90 days following the occurrence of a
Tax Event, an Investment Company Event or a Capital Treatment Event,
as defined below.
MANDATORY REDEMPTION. Upon our repayment or redemption, in whole or in
part, of any debentures, whether on September 30, 2029 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 and Additional Interest (as defined below) 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 the capital securities and the common securities
proportionately.
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<PAGE>
"Additional Interest" means the additional amounts as may be necessary
to be paid by us in order that the amount of distributions then due and payable
by the trust on the outstanding trust securities will not be reduced as a result
of any additional taxes, duties and other governmental charges to which the
trust has become subject.
DISTRIBUTION OF DEBENTURES. 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 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 capital securities:
- those capital securities will no longer be deemed to be outstanding;
- any certificates representing capital securities will be deemed to
represent debentures with a principal amount equal to the
liquidation amount of those capital securities, and bearing accrued
and unpaid interest in an amount equal to the accumulated and unpaid
distributions on the capital securities until the certificates are
surrendered to the administrative trustees in exchange for
certificates representing the debentures.
There can be no assurance as to the market prices for the capital
securities or the debentures that may be distributed if a dissolution and
liquidation of the trust were to occur. The capital 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 capital 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
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 capital securities will
remain outstanding and Additional Interest may be payable on the debentures. See
"Description of 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
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<PAGE>
capital 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.
REDEMPTION PROCEDURES
Capital securities will be redeemed at the redemption price with the
applicable proceeds from our contemporaneous redemption of the debentures.
Redemptions of the capital 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. See "--Subordination of
Common Securities."
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 upon surrender of their certificates
evidencing the trust securities. See "Book-Entry Issuance." If the capital
securities are no longer in book-entry form, the property trustee, to the
extent funds are available, will deposit with the designated paying agent for
such capital 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 capital 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."
Payment of the redemption price on the capital securities and any
distribution of debentures to holders of capital securities will be made to
the applicable recordholders as they appear on the register for the capital
securities on the relevant record date. 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
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liquidation amounts. The particular capital securities to be redeemed will be
selected by the property trustee from the outstanding capital 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
capital securities. The property trustee will promptly notify the registrar
for the capital securities in writing of the capital securities selected for
redemption and, in the case of any capital 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 capital securities.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the
capital 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. Further, no payments may be
made on the common securities unless payment in full in cash of all
accumulated and unpaid distributions (including Additional Interest, if any
is required) on all of the outstanding capital 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 capital 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 (including Additional Interest, if any is required) on, or the
redemption price of, the capital 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 capital securities and not on our
behalf, and only the holders of the capital 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
capital 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 its trust securities, if we have given written direction to the
property trustee to terminate the trust;
- redemption of all of the capital securities as described under
"--Redemption or Exchange--Mandatory Redemption;" or
- the entry of a court order for the dissolution of the trust.
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:
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- 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 to us, as the holder of the common
securities, and the holders of the capital securities on a proportional basis
based on liquidation amounts. However, if an event of default under the
indenture has occurred and is continuing, the capital 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 capital 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 capital
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 capital securities, the capital 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 capital 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 capital
securities in the event of any liquidation of the trust is $25 per capital
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 capital 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;
- 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
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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 capital 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 capital securities, the
administrative trustees and to us, unless the event of default has been cured or
waived. Heartland Financial 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 capital 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
capital 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 capital securities may remove the property
trustee or the Delaware trustee. The holders of the capital 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.
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
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described below. The trust may, at our request, with the consent of the
administrative trustees and without the consent of the holders of the capital
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 capital securities, or
(b) substitutes for the capital securities other securities having
substantially the same terms as the capital securities (referred to
as "successor securities") so long as the successor securities rank
the same in priority as the capital 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 will be listed on any national
securities exchange or other organization on which the capital
securities are then listed;
- the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the capital 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 capital 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 capital 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
capital 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 capital
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
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- 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
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 trust 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
trust securities.
The trustees may not revoke any action previously authorized or approved by a
vote of the holders of the trust securities except by subsequent vote of the
holders of the trust securities. The property trustee will notify each holder
of trust securities of any notice of default with respect to the debentures.
In addition to obtaining the foregoing approvals of the holders of the trust
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 capital securities will be
required for the trust to redeem and cancel its capital securities in
accordance with the trust agreement.
Notwithstanding the fact that holders of capital securities are
entitled to vote or consent under any of the circumstances described above,
any of the capital securities that are owned by Heartland Financial, the
trustees or any affiliate of Heartland Financial or any trustee, will, for
purposes of the vote or consent, be treated as if they were not outstanding.
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GLOBAL CAPITAL SECURITIES
The capital securities will be represented by one or more global
capital securities registered in the name of The Depository Trust Company,
New York, New York ("DTC") or its nominee. A global capital security is a
security representing interests of more than one beneficial holder.
Beneficial interests in the global capital securities will be shown on, and
transfers will be effected only through, records maintained by participants.
Participants are brokers, dealers, or others with accounts with DTC. Except
as described below, capital securities in definitive form will not be issued
in exchange for the global capital securities. See "Book-Entry Issuance."
No global capital security may be exchanged for capital 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 capital 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 capital 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 capital security. If capital securities are issued in
definitive form, the capital 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 capital securities represented thereby, a global capital 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 capital securities will be made to DTC, as the
depositary for the global capital securities. If the capital securities are
issued in definitive form, distributions will be payable, the transfer of the
capital securities will be registrable, and capital securities will be
exchangeable, for capital 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. However, payment of any distribution may be made
at the option of the administrative trustees by check mailed to the address
of record of the persons entitled to the distribution or by wire transfer. In
addition, if the capital 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 capital securities, and the
deposit of the global capital 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 capital securities represented by the global capital security to
the accounts of persons that have accounts with DTC. These accounts will be
designated by the dealers, underwriters or agents with respect to the capital
securities. Ownership of beneficial interests in a global capital security
will be limited to persons or entities with an account with DTC or who may
hold interest through any person or entity with an account that may hold
interests through participants. With respect to interests of any person or
entity with an account with DTC, ownership of beneficial interests in a
global capital security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the applicable
depositary or its nominee. With respect to persons or entities who hold
interest in a global capital security through a participant, the interest and
any transfer of the interest will be shown on the
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participant's records. The laws of some states require that certain
purchasers of securities take physical delivery of these securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a global capital security.
So long as DTC or another depositary, or its nominee, is the
registered owner of the global capital security, the depositary or the
nominee, as the case may be, will be considered the sole owner or holder of
the capital securities represented by the global capital security for all
purposes under the trust agreement. Except as described in this prospectus,
owners of beneficial interests in a global capital security will not be
entitled to have any of the individual capital securities represented by the
global capital security registered in their names, will not receive or be
entitled to receive physical delivery of any the capital securities in
definitive form and will not be considered the owners or holders of the
capital securities under the trust agreement.
None of us, the property trustee, any paying agent or the securities
registrar for the capital 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 capital security
representing the capital 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 capital
security, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the
aggregate liquidation amount of the global capital 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 capital 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 capital securities shall be made to DTC,
which shall credit the relevant accounts of participants on the applicable
distribution dates, or, if any of the capital 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 capital securities. The paying agent
for the capital 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 capital 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 capital 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 capital securities. Registration of transfers of capital
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 capital 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
capital securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred. If no event of
default
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under the trust agreement has occurred and is continuing and the property
trustee is required to decide between alternative causes of action, construe
ambiguous 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 capital 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 the 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 Heartland
Financial 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 capital securities have no preemptive or similar rights.
The trust agreement and the capital securities will be governed by Delaware law.
DESCRIPTION OF THE DEBENTURES
Concurrently with the issuance of the capital 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 First Union, as trustee (the "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
$25.77 million. 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 December 31, 1999, to the person in whose name each
debenture is registered at the close of business on the business day
immediately preceding the day interest is due. 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 the interest will
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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. The term "interest," includes quarterly interest payments,
interest on quarterly interest payments not paid on the applicable interest
payment date and additional interest, as applicable.
The debentures will mature on September 30, 2029, the stated
maturity date. We may shorten this date once at any time to any date not
earlier than September 30, 2004, 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 September 30, 2004,
except if a Tax Event, an Investment Company Event or a Capital Treatment
Event has occurred, or to the extent we have repurchased capital securities.
The debentures will be unsecured and will rank junior to all of our
senior and subordinated indebtedness. 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 capital
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
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- redeem, purchase or acquire less than all of the debentures or any of
the capital securities.
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 capital 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 or
other governmental charges as a result of the occurrence of a Tax Event, we
will pay as additional amounts 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 or other governmental charges will not be
less than the amounts the trust would have received had the additional taxes,
duties or other governmental charges not been imposed.
REDEMPTION OR EXCHANGE
Subject to prior approval of the Federal Reserve, if required, we
may redeem the debentures prior to maturity:
- on or after September 30, 2004, in whole at any time or in part
from time to time;
- in whole at any time within 90 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 capital securities we repurchase.
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 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 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 Capital
Securities--Liquidation Distribution Upon Termination," under certain
circumstances and with the Federal Reserve's approval, the debentures may be
distributed to the
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holders of the capital 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
capital 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
capital 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, an event of
default has occurred and is continuing under the indenture or we are in
default with respect to our obligations under the guarantee.
If either of these events shall have occurred, 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 capital 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, reorganization, assignment for the benefit of creditors,
marshaling of assets or any bankruptcy, insolvency, debt restructuring or
similar proceedings in connection with any insolvency or bankruptcy
proceedings of Heartland Financial, 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 such holders, including any amounts due upon acceleration,
before the holders of the debentures will be entitled to receive or retain
any payment in respect of the principal of or interest 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 entity, whether recourse
is to all or a portion of the assets of the entity and whether or not
contingent:
- every obligation of the entity for money borrowed;
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- every obligation of the entity 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 entity with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of the entity;
- every obligation of the entity 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;
- every capital lease obligation of the entity; and
- every obligation of the type referred to in the first five points of
another entity and all dividends of another entity the payment of
which, in either case, the first entity 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. Senior
debt also includes all indebtedness, whether incurred on or prior to the date
of the indenture or thereafter incurred, for claims in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements. 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, 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;
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- 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 approximately $195.4 million at
June 30, 1999. We also incurred additional indebtedness of $20.0 million
after this date under the loan agreement with The Northern Trust Company.
Although a portion of these amounts are expected to be repaid with a portion
of the proceeds from the sale of the debentures, additional senior or
subordinated debt can be expected to be incurred 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) 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 May 31 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
debentures during a period beginning at the opening of business 15 days
before the day of selection for redemption of debentures and ending at the
close of business on the day of 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.
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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 capital 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 capital securities.
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 other
covenants 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 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 capital 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.
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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 CAPITAL 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 capital 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 capital 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 capital 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 Capital
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 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, or substitutes securities having
substantially similar terms;
- 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.
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GOVERNING LAW
The indenture and the debentures will be governed by and construed in
accordance with the laws of the State of Delaware.
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 capital
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;
- 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 capital 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 capital securities. Except
as described, the capital securities will be issued only as registered
securities in the name of Cede & Co. (DTC's nominee). One or more global
capital securities will be issued for the capital 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
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certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. 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 capital securities within the DTC system must be made by or
through direct participants, which will receive a credit for the capital
securities on DTC's records. The ownership interest of each actual purchaser
of each capital security ("beneficial owner") is in turn to be recorded on
the direct and indirect participant's 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
capital securities. Transfers of ownership interests in the capital
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 capital
securities, except if use of the book-entry system for the capital securities
is discontinued.
DTC will have no knowledge of the actual beneficial owners of the capital
securities; DTC's records reflect only the identity of the direct
participants to whose accounts the capital 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 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 capital securities. If less than all of the capital securities are being
redeemed, the amount to be redeemed will be determined in accordance with the
trust agreement.
Although voting with respect to the capital securities is limited to the
holders of record of the capital securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to capital 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 capital securities are
credited on the record date.
DISTRIBUTION OF FUNDS
The property trustee will make distribution payments on the capital
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
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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
capital securities at any time by giving reasonable notice to the property
trustee and us. If no successor securities depositary is obtained, definitive
capital securities representing the capital 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 capital securities may determine to discontinue the
system of book-entry transfers through DTC. In these events, definitive
certificates for the capital securities will be printed and delivered.
DESCRIPTION OF THE GUARANTEE
The capital securities guarantee agreement will be executed and delivered
by us concurrently with the issuance of the capital securities for the
benefit of the holders of the capital securities. The guarantee agreement
will be qualified as an indenture under the Trust Indenture Act. First Union,
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 capital 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.
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 capital securities, as and when due, regardless of any defense
or counterclaim that the trust may have or assert other than the defense of
payment.
The following payments with respect to the capital 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 capital securities;
- with respect to any capital securities called for
redemption, the redemption price; and
- upon a voluntary or involuntary dissolution, winding up
or liquidation of the trust (other than in connection
with the distribution of debentures to the holders of
capital securities or a redemption of all of the capital
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 capital 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 capital 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 capital securities.
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STATUS OF THE GUARANTEE
The guarantee constitutes our unsecured obligation that ranks 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 capital
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 capital securities. Because we are a
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 capital securities, in which case no vote
will be required, the guarantee may be amended only with the prior approval
of the holders of a majority of the aggregate liquidation amount of the
outstanding capital securities. See "Description of the Capital
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 capital 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 capital 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 capital securities;
- full payment of the amounts payable upon liquidation of the trust;
or
- distribution of the debentures to the holders of the capital
securities.
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If at any time any holder of the capital securities must restore payment of
any sums paid under the capital 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 capital 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
capital securities or other similar interests in the trust of the amounts due
to the holders pursuant to the terms of the capital 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 Delaware.
RELATIONSHIP AMONG THE CAPITAL 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 capital
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 capital 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 capital 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 capital
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 capital 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.
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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 capital 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 capital
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 capital securities the
amounts due to the holders pursuant to the terms of the
capital 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 CAPITAL SECURITIES
A holder of any capital 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 capital 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 capital 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 accrued on debentures held, while a holder of capital 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, windingup or liquidation
of the trust involving the liquidation of the debentures, the holders of the
capital securities will be entitled to receive, out of assets held by the
trust, the liquidation distribution in cash. See "Description of the Capital
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 capital securities the amounts due to the holders pursuant to
the terms of the capital securities, the positions of a holder of the capital
securities and a holder of the debentures relative to our
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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 capital securities represents the
opinion of Barack Ferrazzano Kirschbaum Perlman & Nagleberg counsel to
Heartland Financial 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 capital 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 capital securities.
Moreover, the discussion generally focuses on holders of capital securities
who are individual citizens or residents of the United States and who acquire
capital securities on their original issue at their offering price and hold
capital 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 capital 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 capital 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 capital 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 capital securities.
CLASSIFICATION OF THE DEBENTURES
In accordance with the opinion of Barack Ferrazzano Kirschbaum Perlman &
Nagleberg, we intend to take the position that the debentures will be
classified for federal income tax purposes as indebtedness of Heartland
Financial under current law, and, by acceptance of a capital security, each
holder covenants to treat the debentures as indebtedness and the capital
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 Heartland Financial.
CLASSIFICATION OF THE TRUST
With respect to the capital securities, Barack Ferrazzano Kirschbaum
Perlman & Nagleberg, tax counsel for Heartland Financial 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 capital 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
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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 making these dividends 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 Heartland Financial 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
capital securities would be required to include such OID in gross income even
though Heartland Financial 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.
Because income on the capital securities will constitute interest,
corporate holders of capital securities will not be entitled to a
dividends-received deduction with respect to any income recognized with
respect to the capital securities.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of capital securities other than a holder who purchased the
capital 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
capital securities.
RECEIPT OF DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under the circumstances described under "Description of the Capital
Securities--Redemption or Exchange" and "--Liquidation Distribution Upon
Termination," the debentures may be distributed to holders of capital
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 capital 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 capital securities.
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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 capital 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 capital securities. Under current law, such a redemption should, to
the extent that it constitutes a complete redemption, constitute a taxable
disposition of the redeemed capital securities, and a holder for federal
income tax purposes, should recognize gain or loss as if the holder sold the
capital securities for cash.
DISPOSITION OF CAPITAL SECURITIES
A holder that sells capital securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the capital
securities and the holder's adjusted tax basis in the capital securities. A
holder's adjusted tax basis in the capital 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 capital 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 capital securities have been held for more than one year
at the time of sale.
The capital 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 capital 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 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 capital securities before, as well as after, September 30, 2004. See
"Description of the Debentures--Redemption or Exchange" and "Description of
the Capital 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 capital 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 capital 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.
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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 CAPITAL SECURITIES. HOLDERS OF CAPITAL
SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL 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 capital securities, subject to the investing
fiduciary's determination that the investment in capital 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 capital 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 capital 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 capital securities unless the capital 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 capital
securities should consult with their own counsel.
UNDERWRITING
Heartland Financial, the trust, and the underwriters named below have
entered into an underwriting agreement with respect to the capital
securities. The underwriters, and the amount of capital securities that each
of them has agreed to purchase, are as follows:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER CAPITAL SECURITIES
----------- ------------------
<S> <C>
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated........
Howe Barnes Investments, Inc...........................................
---------
Total.......................................................... 1,000,000
---------
---------
</TABLE>
The underwriters have agreed to purchase the capital securities on a
firm-commitment basis. That means that they will purchase all of the capital
securities if they purchase any of them. If one underwriter defaults under
the underwriting agreement, the purchase commitment of the other underwriter
may be increased or the underwriting agreement may be terminated.
The underwriters have agreed to purchase the capital securities at the
price stated on the cover page of this prospectus. Because the trust will use
the proceeds from the sale of the capital securities to purchase the
debentures from us, we have agreed to pay the underwriters the following fees:
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<TABLE>
<CAPTION>
Underwriting Fees
<S> <C>
Per Capital Security............. $
Total............................ $
</TABLE>
In addition to the underwriting fees, we estimate that we will spend
approximately $_____________ for printing, depository and trustees' fees,
legal and accounting fees, and other expenses of the offering.
The underwriters will initially offer the capital securities to the
public at the price stated on the cover page. The underwriters may offer
capital securities to selected dealers at the public-offering price less a
concession of up to $_______ per capital security. Those dealers may reallow
a discount not in excess of $______ per capital security to other brokers and
dealers. After the initial offering of the capital securities, the
underwriters may change the offering price, concession, discount and other
selling terms.
In connection with the offering, the underwriters and their affiliates
may engage in transactions, effected in accordance with Rule 104 of the SEC's
Regulation M, that are intended to stabilize, maintain or otherwise affect
the market price of the capital securities. These transactions may include
transactions in which the underwriters create a short position for their own
account by selling more capital securities than they are committed to
purchase from the trust. In such a case, to cover all or part of the short
position, the underwriters may purchase capital securities in the open market
following completion of the initial offering. The underwriters also may
engage in stabilizing transactions in which they bid for, and purchase, the
capital securities at a level above that which might otherwise prevail in the
open market for the purpose of preventing or retarding a decline in the
market price of the capital securities. Any of these transactions may result
in the maintenance of a price for the capital securities at a level above
that which might otherwise prevail in the open market. Neither Heartland
Financial nor the underwriters make any representation or prediction as to
the direction or magnitude of any effect that the transactions described
above may have on the market price of the capital securities. The
underwriters are not required to engage in any of these transactions. These
transactions may be effected on the American Stock Exchange, and, if
commenced, may be discontinued at any time without notice.
Heartland Financial and the trust have agreed to indemnify the
underwriters against liabilities arising from the offering of the capital
securities, including civil liabilities under the Securities Act of 1933, or
to contribute to payments that the underwriters may be required to make in
connection with those liabilities.
The underwriters have advised us that they do not intend to confirm any
sales of trust preferred securities to any discretionary accounts. The
underwriters will comply with Rule 2810 under the NASD Conduct Rules when
they offer and sell the trust preferred securities because the National
Association of Securities Dealers, Inc. may view the trust preferred
securities as interests in a direct participation. The underwriters and their
affiliates may provide investment banking services for us or our affiliates
in the future for which they would expect to receive customary fees and
commissions.
LEGAL MATTERS
Legal matters, including matters relating to federal income tax
considerations, for Heartland Financial and the trust will be passed upon by
Barack Ferrazzano Kirschbaum Perlman & Nagelberg, Chicago, Illinois, counsel
to Heartland Financial and the trust. Certain legal matters will be passed
upon for the underwriters by Silver, Freedman & Taff, L.L.P., Washington,
D.C. Barack Ferrazzano Kirschbaum Perlman & Nagelberg and Silver, Freedman &
Taff, L.L.P. may rely on the opinion of Richards, Layton & Finger, P.A. as to
matters of Delaware law.
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WHERE YOU CAN FIND INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 filed
by Heartland Financial and the trust with the Securities and Exchange
Commission under the Securities Act, with respect to the capital 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 Heartland Financial 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 Securities and Exchange Commission.
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. The address of that site is 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 of 1934.
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 capital 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 capital securities to the extent described in
this prospectus.
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.
EXPERTS
The consolidated financial statements of Heartland Financial and its
subsidiaries as of December 31, 1998 and 1997, and for each of the years in
the three-year period ended December 31, 1998, are incorporated herein by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998. These consolidated financial statements have been
incorporated herein by reference in reliance upon the report of KPMG LLP,
independent certified public accountants, which is incorporated herein by
reference, and upon the authority of that firm as experts in accounting and
auditing.
INCORPORATION OF DOCUMENTS BY REFERENCE
We "incorporate by reference" into this prospectus the information in
documents we file with the Securities and Exchange Commission, 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, 1998, filed with the SEC on March
31, 1999;
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(b) our Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, filed with the SEC on May 16,
1999;
(c) our Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999, filed with the SEC on August 16,
1999; and
(d) our Current Report on Form 8-K filed on August 26,
1999, relating to the acquisition of National
Bancshares, Inc.
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:
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
Attn: Jacquie M. Manternach
(319) 589-2000
54
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
1,000,000 CAPITAL SECURITIES
HEARTLAND FINANCIAL CAPITAL TRUST I
______% CUMULATIVE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
GUARANTEED AS DESCRIBED IN THIS PROSPECTUS BY
HEARTLAND FINANCIAL USA, INC.
-----------------
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
HOWE BARNES INVESTMENTS, INC.
-----------------
_______, 1999
-----------------
Until , 1999 (25 days after the date of this prospectus), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition
to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in
connection with the sale and distribution of the securities being registered,
other than underwriting discounts and commissions. All amounts shown are
estimates, except the SEC registration fee and the NASD and the American
Stock Exchange filing fees:
<TABLE>
<S> <C>
SEC registration fee...............................................$ 6,950
American Stock Exchange filing fee................................. 16,500
NASD filing fee.................................................... 3,000
Trustees' fees..................................................... 4,000
Printing and mailing expenses...................................... 15,000
Fees and expenses of counsel....................................... 100,000
Accounting and related expenses.................................... 20,000
Blue Sky fees and expenses......................................... 2,000
Miscellaneous...................................................... 2,550
----------
Total..............................................................$ 170,000
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with the Delaware General Corporation Law,
ArticlesI X and X of Heartland Financial's Certificate of Incorporation
provides as follows:
ARTICLE IX: Each person who is or was a director
or officer of the corporation and each person who serves
or served at the request of the corporation as a director,
officer or partner of another enterprise, shall be
indemnified by the corporation in accordance with, and to
the fullest extent authorized by, the General Corporation
Law of the State of Delaware, as the same now exists or
may be hereafter amended. No amendment to or repeal of
this Article IX shall apply to or have any effect on the
rights of any individual referred to in this Article IX
for or with respect to acts or omissions of such
individual occurring prior to such amendment or repeal.
ARTICLE X: To the fullest extent permitted by the
General Corporation Law of Delaware, as the same now
exists or may be hereafter amended, a director of the
corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary
duty as a director. No amendment to or repeal of this
Article X shall apply to or have any effect on the
liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions
of such director occurring prior to the effective date of
such amendment or repeal.
Article VIII of Heartland Financial's Bylaws further
provides as follows:
SECTION 8.1 DIRECTORS AND OFFICERS. (a) The corporation shall
indemnify any person who was or is a party or is threatened to be made party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he or she is or
was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such
action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests
of the corporation, and, with
II-1
<PAGE>
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of
NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
(c) To the extent that any person referred to in paragraphs (a) and
(b) of this Section 8.1 has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to therein or in defense
of any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) of this Section
8.1 (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in paragraphs (a) and (b) of
this Section 8.1. Such determination shall be made (i) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (ii) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred in defending any
civil, criminal, administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the
corporation as provided in this Section 8.1. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by or
granted pursuant to this Section 8.1 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office.
(g) The corporation shall have power to purchase and maintain
insurance on behalf of any person who 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 any liability
asserted against him or her and incurred by him or her in any such capacity,
or arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under the
provisions of this Section 8.1.
II-2
<PAGE>
(h) For purposes of this Section 8.1, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
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 an employee
benefit plan, its participants, or beneficiaries; and a person who acted in
good faith and in a manner he or she reasonably believed to be in the
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" as referred to in this Section 8.1.
(i) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 8.1 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(j) Unless otherwise determined by the board of directors,
references in this section to "the corporation" shall not 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 a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the resulting
or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
SECTION 8.2 EMPLOYEES AND AGENTS. The board of directors may, by
resolution, extend the indemnification provisions of the foregoing Section
8.1 to any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding by reason
of the fact that he or she is or was an employee or agent of the corporation,
or is or was serving at the request of the corporation as an employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
Heartland Financial also carries Directors' and Officers' liability
insurance in the amount of $1.0 million.
II-3
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
1.1 Form of Underwriting Agreement for Capital Securities
2.1 Agreement and Plan of Merger Among Heartland Financial USA, Inc., NBI Acquisition Corporation and
National Bancshares, Inc. (incorporated by reference to exhibit 2.1 to the Form 8-K, filed
August 26, 1999)
4.1 Form of Indenture
4.2 Form of 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 Capital Securities Certificate (included as an exhibit to Exhibit 4.5)
4.7 Form of Capital Securities Guarantee Agreement
4.8 Form of Agreement of Expenses and Liabilities (included as an exhibit to Exhibit 4.5)
5.1 Opinion of Barack Ferrazzano Kirschbaum Perlman & Nagelberg
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Tax Opinion of Barack Ferrazzano Kirschbaum Perlman & Nagelberg
10.1 Amended and Restated Credit Agreement, Dated as of July 23,
1999 between Heartland Financial USA, Inc. and The Northern
Trust Company (incorporated by reference to exhibit 10.16 of
Form 10-Q filed on August 16, 1999)
12.1 Calculations of ratios of earnings to fixed charges and ratios
of earnings to combined fixed charges and preferred stock
dividends
23.1 Consent of KPMG LLP
23.2 Consent of Barack Ferrazzano Kirschbaum Perlman & Nagelberg
(included in opinion filed as Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in opinion filed as Exhibit 5.2)
23.4 Consent of Barack Ferrazzano Kirschbaum Perlman & Nagelberg (included in opinion filed as
Exhibit 8.1)
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 First Union Trust Company,
National Association, as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of First Union Trust Company,
National Association, as trustee under the Trust Agreement
25.3 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of First Union Trust Company,
National Association, as trustee under the Guarantee Agreement
</TABLE>
II-4
<PAGE>
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 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) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(j) The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the SEC under
Section 305(b)(2) of that Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dubuque, State of Iowa, on September 15, 1999.
HEARTLAND FINANCIAL USA, INC.
By:/s/ Lynn B. Fuller
---------------------------------------------------------
Lynn B. Fuller, President and Chief Executive Officer
By:/s/ John K. Schmidt
---------------------------------------------------------
John K. Schmidt, Executive Vice President
and Chief Financial and Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, the
Trust certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dubuque, State of Iowa, on
September 15, 1999.
HEARTLAND FINANCIAL CAPITAL TRUST I
By:/s/ Lynn B. Fuller
------------------------------
Lynn B. Fuller, Trustee
By:/s/ John K. Schmidt
------------------------------
John K. Schmidt, Trustee
By:/s/ Jacquie M. Manternach
------------------------------
Jacquie M. Manternach, Trustee
S-1
<PAGE>
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Lynn B. Fuller and John K.
Schmidt, 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
Heartland Financial USA, 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 al
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 September 15, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Lynn S. Fuller Chairman of the Board
------------------------------------
Lynn S. Fuller
/s/ James A. Schmid Vice Chairman of the Board
------------------------------------
James A. Schmid
/s/ Lynn B. Fuller President, Chief Executive Officer and
------------------------------------
Lynn B. Fuller Director
/s/ Gregory R. Miller Director
------------------------------------
Gregory R. Miller
/s/ Evangeline K. Jansen Director
------------------------------------
Evangeline K. Jansen
/s/ Mark C. Falb Director
------------------------------------
Mark C. Falb
/s/ Robert Woodward Director
------------------------------------
Robert Woodward
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Filed
Number Description of Exhibit Incorporated Herein by Reference to Herewith
- -------------- ---------------------------------------- ---------------------------------------- ------------
<S> <C> <C> <C>
1.1 Form of Underwriting Agreement for X
Capital Securities
2.1 Agreement and Plan of Merger Among Exhibit 2.1 to the Current Report on
Heartland Financial USA, Inc., NBI Form 8-K filed August 26, 1999
Acquisition Corporation and National
Bancshares, Inc.
4.1 Form of Indenture X
4.2 Form of Subordinated Debenture X
(included as an exhibit to Exhibit 4.1)
4.3 Certificate of Trust X
4.4 Trust Agreement X
4.5 Form of Amended and Restated Trust X
Agreement
4.6 Form of Capital Securities Certificate X
(included as an exhibit to Exhibit 4.5)
4.7 Form of Capital Securities Guarantee X
Agreement
4.8 Form of Agreement of Expenses and X
Liabilities (included as an exhibit to
Exhibit 4.5)
5.1 Opinion of Barack Ferrazzano X
Kirschbaum Perlman & Nagelberg
5.2 Opinion of Richards, Layton & Finger, X
P.A.
8.1 Tax Opinion of Barack Ferrazzano X
Kirshbaum Perlman & Nagelberg
10.1 Amended and Restated Credit Agreement, Exhibit 10.16 to the Form 10-Q filed
Dated as of July 23, 1999 between on August 16, 1999
Heartland Financial USA, Inc. and The
Northern Trust Company
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Filed
Number Description of Exhibit Incorporated Herein by Reference to Herewith
- -------------- ---------------------------------------- ---------------------------------------- ------------
<S> <C> <C> <C>
12.1 Calculations of ratios of earnings to X
fixed charges and ratios of earnings
to combined fixed charges and
preferred stock dividends
23.1 Consent of KPMG LLP X
23.2 Consent of Barack Ferrazzano X
Kirschbaum Perlman & Nagelberg
(included in opinion filed as Exhibit
5.1)
23.3 Consent of Richards, Layton & Finger, X
P.A. (included in opinion filed as
Exhibit 5.2)
23.4 Consent of Barack Ferrazzano Kirshbaum X
Perlman & Nagelberg
(included in opinion filed as Exhibit
8.1)
24.1 Powers of Attorney
(included as part of Signature Pages)
25.1 Form T-1 Statement of Eligibility X
under the Trust Indenture Act of 1939,
as amended, of First Union Trust
Company, National Association, as
trustee under the Indenture
25.2 Form T-1 Statement of Eligibility X
under the Trust Indenture Act of 1939,
as amended, of First Union Trust
Company, National Association, as
trustee under the Trust Agreement
25.3 Form T-1 Statement of Eligibility X
under the Trust Indenture Act of 1939,
as amended, of First Union Trust
Company, National Association, as
trustee under the Guarantee Agreement
</TABLE>
<PAGE>
DRAFT
EXHIBIT 1.1
1,000,000 CAPITAL SECURITIES
HEARTLAND FINANCIAL CAPITAL TRUST I
________ % CUMULATIVE CAPITAL SECURITIES
(LIQUIDATION PREFERENCE OF $25 PER CAPITAL SECURITY)
FORM OF UNDERWRITING AGREEMENT
------------------------------
_________ _____, 1999
Dain Rauscher Wessels, a division of
Dain Rauscher Incorporated
Howe Barnes Investments, Inc.
c/o Dain Rauscher Incorporated
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
Heartland Financial USA, Inc., a Delaware corporation (the "Company"),
and its subsidiary, Heartland Financial Capital Trust I, a statutory business
trust organized under the Delaware Business Trust Act (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 1,000,000 of the Trust's ____% Cumulative
Capital Securities, with a liquidation preference of $25.00 per capital security
(the "Capital Securities"). The Offerors propose that the Trust issue the
Capital Securities pursuant to an amended and restated trust agreement, by First
Union Trust Company, National Association, a national banking association
("First Union"), as Property Trustee and Delaware Trustee, the administrative
trustees named therein (the "Administrative Trustees") and the Company and by
the holders from time to time of undivided beneficial interests in the Trust
(the "Trust Agreement"). The Capital Securities will be guaranteed by the
Company (the "Guarantee") as set forth in a Capital Securities Guarantee
Agreement (the "Guarantee Agreement"), to be dated ________ __, 1999, between
the Company and First Union, as trustee (the "Guarantee Trustee").
The proceeds of the sale of the Capital Securities will be used to
purchase junior subordinated deferrable interest debentures (the "Junior
Subordinated Debentures") issued by the Company pursuant to that certain
Indenture, to be dated _________ __, 1999, between the Company and First Union,
as trustee (the "Indenture").
1
<PAGE>
The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File Nos. 333-_______
and 333-______) for the registration of the Capital Securities, the Guarantee
and the Junior Subordinated Debentures under the Securities Act of 1933, as
amended (the "Act") and the rules and regulations thereunder and the
qualification of the Indenture, the Trust Agreement and the Guarantee under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the
rules and regulations thereunder. If the Offerors have elected to rely upon Rule
430A under the Act, they will prepare and file a prospectus (or a term sheet
meeting the requirements of Rule 434) pursuant to Rule 424(b) that discloses the
information previously omitted from the prospectus in reliance upon Rule 430A.
Such registration statement, as amended at the time it is or was declared
effective by the Commission, and, in the event of any amendment thereto after
the effective date and prior to the Closing Date (as hereinafter defined), such
registration statement as so amended (but only from and after the effectiveness
of such amendment), including a registration statement (if any) filed pursuant
to Rule 462(b) under the Act increasing the size of the offering registered
under the Act and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rules 430A(b) and 434(d)
under the Act, is hereinafter called the "Registration Statement". The
prospectus included in the Registration Statement at the time it is or was
declared effective by the Commission is hereinafter called the "Prospectus,"
except that if any prospectus (including any term sheet meeting the requirements
of Rule 434 under the Act provided by the Offerors for use with a prospectus
subject to completion within the meaning of Rule 434 under the Act in order to
meet the requirements of Section 10(a) of the Act) filed by the Offerors with
the Commission pursuant to Rule 424(b) under the Act (and Rule 434 under the
Act, if applicable) or any other such prospectus provided to the Underwriters by
the Offerors for use in connection with the offering of the Capital Securities
(whether or not required to be filed by the Offerors with the Commission
pursuant to Rule 424(b) under the Act) differs from the prospectus on file at
the time the Registration Statement is or was declared effective by the
Commission, the term "Prospectus" shall refer to such differing prospectus
(including any term sheet within the meaning of Rule 434 under the Act) from and
after the time such prospectus is filed with the Commission or transmitted to
the Commission for filing pursuant to such Rule 424(b) (and Rule 434, if
applicable) or from and after the time it is first provided to the Underwriters
by the Offerors for such use. The term "Preliminary Prospectus" as used herein
means the preliminary prospectus included in any Registration Statement prior to
the time it becomes or became effective under the Act and any prospectus subject
to completion as described in Rule 430A or 434 under the Act. References to the
Registration Statement, the Prospectus and the Preliminary Prospectus include
all information incorporated therein by reference. Copies of the Registration
Statement, including all exhibits and schedules thereto, any amendments thereto
and all Preliminary Prospectuses have been delivered to the Underwriters.
The Offerors hereby confirm their agreement with respect to the
purchase of the Capital Securities by the Underwriters as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS.
2
<PAGE>
(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, to the
Company's knowledge, 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 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 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 and the
Prospectus conform in all material respects to the requirements of the Act and
the rules and regulations thereunder and the Trust Indenture Act and the rules
and regulations thereunder. Neither the Registration Statement, as of its
effective date and the date of any amendment thereto, nor the Prospectus
contains 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
Statements of Eligibility and Qualification ("Form T-1") under the Trust
Indenture Act. Each Preliminary Prospectus and the Prospectus will be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"), except to the extent permitted by Regulation S-T.
(iv) The documents of the Company incorporated by
reference in the Registration Statement and the Prospectus, when they were filed
with the Commission, conformed in all material respects to the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the Commission thereunder, and none of such documents
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
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misleading; and any further documents so filed and incorporated by reference
in the Registration Statement and the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission will
conform in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(v) 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), earnings, business, prospects,
assets, results of operations or properties taken as a whole; the Trust has
conducted and will conduct no business other than the transactions contemplated
by the Trust Agreement and described in the Prospectus; the Trust is not a party
to or otherwise bound by any agreement other than this Agreement and those
described in the Prospectus; 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 the Trust is and will be treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting principles.
(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware and is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), supervised by the Board
of Governors of the Federal Reserve System (the "FRB"). The subsidiaries of the
Company are Dubuque Bank and Trust Company ("DB&T"), DB&T Insurance, Inc., DB&T
Community Development Corp., Galena State Bank and Trust Company ("GSB"),
Riverside Community Bank ("RCB"), First Community Bank, FSB ("FCB"), KFS
Services Inc., Wisconsin Community Bank ("WCB"), DBT Investment Corporation, New
Mexico Bank & Trust ("NMB"), Citizens Finance Co., ULTEA, Inc. and Keokuk
Bancshares, Inc. (each a ASubsidiary" and collectively the ASubsidiaries"). DB&T
is a commercial bank chartered under the laws of the State of Iowa. GSB and RCB
are commercial banks chartered under the laws of the State of Illinois. FCB is a
capital stock savings bank having a valid charter from the federal government of
the United States. FCB is a member in good standing of the Federal Home Loan
Bank of Des Moines. WCB is a commercial bank chartered under the laws of the
State of Wisconsin. NMB is a commercial bank chartered under the laws of the
State of New Mexico. None of DB&T, GSB, RCB, WCB and NMB are Federal Reserve
Bank members. Each Subsidiary has been duly incorporated or organized and is
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and the Subsidiaries has the corporate power
and authority to own or lease its properties and conduct its business as
described in the Prospectus; is, to the Company's knowledge, in compliance with
all federal and state regulatory rules and guidelines; and is duly qualified to
transact business in all jurisdictions in which the conduct of its business or
its ownership or leasing of property requires
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such qualification and the failure so to qualify would have a material
adverse effect on the business or condition, financial or otherwise, of the
Company and the Subsidiaries, taken as a whole. All outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company free and clear of all liens, encumbrances and
security interests, except as disclosed in the Registration Statement and
Prospectus and except that approximately 20% of the outstanding shares of
capital stock of NMB are not owned, directly or indirectly, by the Company.
No options, warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any obligations into, shares
of capital stock or ownership interests in any of the Subsidiaries are
outstanding.
(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 Capital Securities. Neither the filing of the Registration Statement nor
the registration of the Capital 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 and the Guarantee 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 and the Guarantee Agreement and the consummation of the transactions
herein or therein contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, (x) 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 Subsidiaries is a party or by which the Trust, the Company or any of the
Subsidiaries is bound or to which any property or assets of the Trust, the
Company or any of the Subsidiaries is subject or any order, rule, regulation,
order, agreement or decree of any court or governmental agency or body having
jurisdiction over the Company, any Subsidiary or the Trust or any of the
properties of the Company, any Subsidiary or the Trust or (y) the Company's or
any Subsidiary's charter or bylaws or the Trust Agreement or the Trust's
certificate of trust filed with the State of
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Delaware on ________ __, 1999 (the "Certificate of Trust"). 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 and the
Guarantee 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 Capital
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. Each of the Company and the Trust has full power and authority to enter
into this Agreement, the Indenture, the Trust Agreement and the Guarantee
Agreement, as the case may be, and to authorize, issue and sell the Junior
Subordinated Debentures or the Common Securities and the Capital 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 in all material
respects to the statements relating thereto in the 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 in all material respects 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 Capital 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 in all material respects to the statements
relating thereto contained in the Prospectus; and holders of Capital
Securities will be entitled to the same limitation of personal liability
under Delaware law as extended to stockholders of private corporations for
profit.
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(xii) The Indenture, the Trust Agreement and the
Guarantee Agreement are in substantially the respective forms filed as exhibits
to the Registration Statement.
(xiii) The Company's obligations under the
Guarantee 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 and Subordinated Debt
of the Company.
(xv) Each of the Administrative Trustees of the
Trust is an officer of the Company and has been duly authorized by the Company
to execute and deliver the Trust Agreement.
(xvi) The financial statements, together with the
related notes and schedules, contained or incorporated by reference in the
Registration Statement and Prospectus present fairly the consolidated financial
position, results of operations, shareholders' equity and cash flows of the
Company and its consolidated Subsidiaries on the basis stated therein at the
indicated dates and for the indicated periods. Such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as expressly stated
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made, except as otherwise stated therein. The selected
financial and statistical data included in the Registration Statement and the
Prospectus present fairly the information shown therein on the basis stated in
the Registration Statement and the Prospectus and have been compiled on a basis
consistent with the financial statements presented therein.
(xvii) There is no action, suit or proceeding
pending or, to the knowledge of the Trust or the Company, threatened or
contemplated against any of the Trust, the Company or any Subsidiary before any
court or administrative or regulatory agency which, if determined adversely to
the Trust, the Company or such Subsidiary would, individually or in the
aggregate, result in a material adverse change in the business or condition
(financial or otherwise), results of operations, shareholders' equity or
prospects of the Trust, or of the Company and it Subsidiaries taken as a whole,
except as set forth in the Registration Statement or the Prospectus.
(xviii) There are no contracts or documents of the
Trust or the Company or any Subsidiary that are required by the Act or by the
rules and regulations thereunder to be filed as exhibits to the Registration
Statement or any document incorporated by reference therein which contracts or
documents have not been so filed.
(xix) The Company and the Subsidiaries have good
and marketable title to all properties and assets reflected as owned in the
financial statements hereinabove described (or as described as owned in the
Prospectus), in each case free and clear of all liens,
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encumbrances and defects, except such as are described in the Prospectus or
do not substantially affect the value of such properties and assets and do
not materially interfere with the use made and proposed to be made of such
properties and assets by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
(xx) 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, or of 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, or of the
Company and the Subsidiaries taken as a whole, whether or not occurring in the
ordinary course of business, including, without limitation, any material
increase in delinquencies or the amount or number of classified assets of the
Company, any decrease in net interest margin for any month, 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
Subsidiaries which is material to the Trust, or the Company and the Subsidiaries
taken as a whole, other than transactions described or contemplated in the
Registration Statement, (C) the Trust, the Company and the 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, or the Company and the Subsidiaries taken as a whole,
(D) the Trust, the Company and the 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) there has not been any change in the capital stock of the
Company or the Subsidiaries (other than upon the exercise of options and
warrants described in the Registration Statement), or any material increase
in the short-term or long-term debt (other than the Junior Subordinated
Debentures) (including capitalized lease obligations) of the Company and the
Subsidiaries taken as a whole, and (F) 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 the Subsidiaries other than any dividends or
distributions described or contemplated in the Registration Statement and the
Company's regular quarterly common stock dividend.
(xxi) Neither the Company nor any of the
Subsidiaries is in violation of its respective charter or bylaws; 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 of or otherwise in
default under any statute, or any rule, regulation, order, supervisory
agreement, judgment, decree or authorization of any court or governmental or
administrative agency or body having jurisdiction over the Trust, the Company or
any of the Subsidiaries or any of their properties, or any indenture, mortgage,
deed of trust, loan agreement, lease, franchise, license or
8
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other agreement or instrument to which the Trust, the Company or any of the
Subsidiaries is a party or by which any of them are bound or to which any
property or assets of the Trust, the Company or any of the Subsidiaries is
subject, which violation or default would have a material adverse effect on
the business, condition (financial or otherwise), results of operations,
shareholders' equity or prospects of the Trust, or of the Company and the
Subsidiaries taken as a whole.
(xxii) The Trust, the Company and each of the
Subsidiaries holds and is operating in compliance in all material respects with
all licenses, approvals, certificates and permits from governmental and
regulatory authorities 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 federal or state approvals to own the stock of the
Subsidiaries. None of the Trust, the Company or any Subsidiary has received
notice of or has knowledge of any basis for any proceeding or action relating
specifically to the Trust, the Company or the 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 the Subsidiaries
that would have a material adverse effect on the Trust, the Company or any
Subsidiary.
(xxiii) KPMG LLP, which have certified certain of
the financial statements filed with the Commission and incorporated by reference
into the Registration Statement, are independent public accountants with respect
to the Company as required by the Act and the rules and regulations thereunder.
(xxiv) 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 in, stabilization or
manipulation of the price of the Capital Securities.
(xxv) The Offerors' registration statement
pursuant to Section 12(b) of the Exchange Act with respect to the Capital
Securities has been declared effective by the Commission; and the Capital
Securities have been approved for designation upon notice of issuance on the
American Stock Exchange under the symbol "_____."
(xxvi) The Offerors have not distributed and will
not distribute any prospectus or other offering material in connection with the
offering and sale of the Capital Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to be
distributed by the Company.
(xxvii) The deposit accounts of each of DB&T, GSB,
RCB, FCB, WCB and NMB 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, to the knowledge of the Company, is
threatened. Neither the Company nor any Subsidiary has received or is subject to
any directive, order or supervisory agreement or arrangement from the
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FRB, the FDIC, the Office of Thrift Supervision (the AOTS"), or any other
state or federal 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.
(xxviii) The Offerors are in material compliance with
all provisions of Florida Statutes Section 517.075 (Chapter 92-198, laws of
Florida). Neither of 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.
(xxix) The Trust, the Company and the Subsidiaries
have filed all federal, state, local and foreign tax returns or reports required
to be filed (including extensions), and have paid in full all taxes indicated by
said returns or reports and all assessments received by it or any of them to the
extent that such taxes have become due and payable (including extensions),
except where the Trust, the Company and the Subsidiaries are contesting in good
faith such taxes and assessments. The Company and the Subsidiaries have also
filed all required applications, reports, returns and other documents and
information with all state and federal savings bank authorities and agencies.
(xxx) The Trust, the Company and each of the
Subsidiaries owns or licenses all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and other similar rights
necessary for the conduct of their businesses as described in the Prospectus,
except where the failure to so own would not have a material adverse effect on
the Trust, the Company or any Subsidiary, taken as a whole. Neither the Trust
nor the Company has any knowledge of any infringement by them or the
Subsidiaries of any patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others, and none
of the Trust, the Company or any of the Subsidiaries has received any notice or
claim of conflict with the asserted rights of others with respect to any of the
foregoing.
(xxxi) None of the Trust, the Company or any of the
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.
(xxxii) 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
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respect to any differences.
(xxxiii) 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 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.
(xxxiv) No report or application filed by the
Company or any of its Subsidiaries with the FRB, the FDIC, the OTS or any
other state or federal regulatory authority, as of the date it was filed or
amended, 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 in all
material respects with the applicable requirements of the FRB, the FDIC, the
OTS, or any other state or federal regulatory authority, as the case may be.
(xxxv) Based upon current guidelines of the FRB,
the Junior Subordinated Debentures will constitute "tier 1" capital (as
defined in 12 C.F.R. Part 225), subject to applicable regulatory restrictions
on the amount thereof that can be included in tier 1 capital.
(xxxvi) The Offerors meet all of the requirements
for the use of Form S-3 to register the Capital Securities, the Guarantee and
the Junior Subordinated Debentures under the Act.
(xxxvii) National Bancshares, Inc. ("National") has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of New Mexico and is duly registered as a bank
holding company under the BHC Act. The First National Bank of Clovis ("Clovis
Bank") has been duly organized and is validly existing as a national banking
association under the laws of the United States. The deposit accounts of Clovis
Bank are insured by the FDIC to the fullest extent provided by law. Each of
National and Clovis Bank has the corporate power and authority to own or lease
its properties and conduct its business as described in the Prospectus and is
duly qualified to transact business in all jurisdictions in which the conduct of
its business or its ownership or leasing of property requires such qualification
and the failure so to comply or qualify would have a material adverse effect on
its business or condition, financial or otherwise. All outstanding shares of
capital stock of Clovis Bank have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned, directly or indirectly, by
National, free and clear of all liens, encumbrances and security interests,
except as disclosed in the Prospectus. No options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to convert
any obligations into, shares of capital stock or ownership interests in Clovis
Bank are outstanding.
(xxxviii) The Offerors have provided the
Underwriters with copies of the audited consolidated balance sheets of
National as of December 31, 1998 and 1997 and the related audited
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the years in the three-year period ended December 31,
1998, together with the related notes and schedules, and copies of the
unaudited consolidated balance sheets of National
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as of June 30, 1999 and December 31, 1998 and the related unaudited
consolidated statements of income, cash flows and changes in shareholders'
equity for the three and six month periods ended June 30, 1999 and 1998,
together with the related notes and schedules (collectively the "National
Financial Statements"). The National Financial Statements present fairly the
consolidated financial position, results of operations, shareholders' equity and
cash flows of National and its consolidated subsidiaries on the basis stated
therein at the indicated dates and for the indicated periods. The National
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as expressly stated therein, and all adjustments necessary for a fair
presentation of results for such periods have been made, except as otherwise
stated therein.
(xxxix) Except as disclosed in the Prospectus, there
are no issues known to the Offerors that make consummation of the transactions
contemplated by the Agreement and Plan of Merger, dated August 17, 1999 (the
"Merger Agreement"), among the Company, NBI Acquisition Corporation and
National, improbable.
(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.
2. PURCHASE, SALE AND DELIVERY OF CAPITAL 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 Capital
Security of $25.00, the number of Capital 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 Capital 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 to the
Underwriters a commission of $____ per Capital Security sold by the Trust
hereunder.
The Capital Securities will be delivered by the Company to the
Underwriters against payment of the purchase price therefor at the offices of
Silver, Freedman & Taff, L.L.P., 1100 New York Avenue, N.W., 7th Floor,
Washington, D.C. 20005, or such other location as may be mutually acceptable,
at 10:00 a.m. Eastern time on _________ __, 1999, or such other time and date
as the Underwriters 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 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 designated by the Underwriters
at least two business days preceding the Closing Date. Delivery of the
Capital Securities may be
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made by credit through full fast transfer to the accounts at The Depository
Trust Company ("DTC") designated by the Underwriters. Certificates
representing the Capital Securities, in definitive form and in such
denominations and registered in such names as the Underwriters 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 Dain Rauscher Incorporated, Dain Rauscher Plaza, 60
South Sixth Street, Minneapolis, Minnesota, 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
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 as an unincorporated
association or partner with either or both Offerors.
3. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to make a public offering of the Capital Securities as soon
as the Underwriters deem it advisable to do so. The Capital 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.
4. COVENANTS OF THE OFFERORS. The Offerors jointly and severally
covenant and agree with the several Underwriters that:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts
to cause the Registration Statement and any post-effective amendments thereto
to become effective as promptly as possible; the Company will notify the
Underwriters promptly of the time when the Registration Statement or any
post-effective amendment to the Registration Statement has become effective
or any supplement to the Prospectus (including any term sheet within the
meaning of Rule 434 under the Act) has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or
Prospectus or additional information; if the Company has elected to rely on
Rule 430A under the Act, the Company will prepare and file a Prospectus (or
term sheet within the meaning of Rule 434 under the Act) containing the
information omitted therefrom pursuant to Rule 430A under the Act with the
Commission within the time period required by, and otherwise in accordance
with the provisions of, Rules 424(b), 430A and 434, if applicable; the
Offerors will prepare and file with the Commission, promptly upon the
Underwriters' request, any amendments or supplements to the Registration
Statement or Prospectus (including any term sheet within the meaning of Rule
434 under the Act) that, in their opinion, may be necessary or advisable in
connection with their distribution of the Capital Securities; and the
Offerors will not file any amendment or supplement to the Registration
Statement or Prospectus (including any term sheet within the meaning of Rule
434 under the Act) to which the Underwriters shall reasonably object by
notice to the Company after having
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been furnished a copy a reasonable time prior to the filing.
(b) 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 Capital 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.
(c) The Offerors will cooperate with the Underwriters
and the Underwriters' counsel in order to qualify the Capital Securities for
sale under the securities laws of such jurisdictions as the Underwriters' may
reasonably have designated in writing and to continue such qualifications in
effect for so long as the Underwriters may reasonably request for
distribution of the Capital Securities (or obtain exemptions from the
application of such laws), provided that neither Offeror shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. 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.
(d) 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 conformed copies
of the Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Underwriters such number of conformed
copies of the Registration Statement, without exhibits, and of all amendments
thereto, as the Underwriters may reasonably request.
(e) If, during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or if for any other reason it shall be necessary at any time to
amend or supplement the Prospectus to comply with any law, the Offerors promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein in light of the circumstances when it is so delivered, not
misleading, or so that the Prospectus will comply with law.
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(f) The Offerors will make generally available to their
security holders, as soon as it is practicable to do so, but in any event not
later than 18 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 thereunder and will advise
the Underwriters in writing when such statement has been so made available.
(g) The Company will, for five years from the Closing
Date, deliver to each Underwriter, as soon as they are available, copies of its
annual report and copies of all other documents, reports and information
furnished by the Company to its security holders or filed with any securities
exchange pursuant to the requirements of such exchange or with the Commission
pursuant to the Act or the Exchange Act. The Company will deliver to each
Underwriter similar reports with respect to significant subsidiaries, as that
term is defined in the rules and regulations under the Act, which are not
consolidated in the Company's financial statements.
(h) The Offerors will apply the net proceeds from the
sale of the Junior Subordinated Debentures and the Capital Securities
substantially in accordance with the purposes set forth under "Use of Proceeds"
in the Prospectus.
(i) The Offerors will use their best efforts to maintain
the listing of the Capital Securities on the American Stock Exchange.
(j) The Offerors shall promptly notify the Underwriters
if any issues arise that make consummation of the transactions contemplated by
the Merger Agreement materially less probable.
5. COSTS AND EXPENSES.
(a) 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, the
Preliminary Prospectus(es) and the Prospectus and any amendments and
supplements thereto and the printing, mailing and delivery to the
Underwriters and dealers of copies thereof and of this Agreement, any
selected dealers agreement, any blue sky memorandum 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 the NASD of the
terms of the sale of the Capital Securities; the fees and expenses of the
Indenture Trustee, including the fees
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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 Capital Securities under
state securities or Blue Sky laws; the fees and expenses incurred in
connection with the listing of the Capital Securities on the American Stock
Exchange; the costs of preparing certificates representing Junior
Subordinated Debentures or Capital 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. Notwithstanding anything to the contrary in
the foregoing sentence, the Offerors shall not be required to pay more than
an aggregate of (i) $______ of fees and expenses (x) related to qualification
of the Capital Securities under state securities or Blue Sky laws or (y)
incident to securing any required review by the NASD of the terms of the sale
of the Capital Securities and (ii) $______ of 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.
The Offerors shall not be required to pay for any of the Underwriters'
expenses (other than those related to qualification of the Capital 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 Capital
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(b) 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 Capital Securities or in
contemplation of performing their obligations hereunder; 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 Capital Securities.
(b) Upon successful completion of the offering
contemplated by this Agreement, the Offerors will pay all reasonable and
customary costs, expenses and fees incident to tombstone advertisements of the
offering and incurred with the approval of the Company.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Capital
Securities on the
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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 (or any required post-effective amendment to the
Registration Statement shall have been filed and declared effective in
accordance with the requirements of Rule 430A); 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.
(b) The Underwriters shall have received on the Closing
Date the opinions of Barack Ferrazzano Kirschbaum Perlman & Nagelberg, counsel
for the Offerors, dated the Closing Date, addressed to the Underwriters, in the
form attached hereto as EXHIBIT 1.
Such counsel shall also state that on the basis of such counsel's
review and participation in conferences in connection with the preparation of
the Registration Statement and the Prospectus, such counsel has no reason to
believe that, as of its effective date, the Registration Statement or any
further amendment thereto made by the Offerors prior to the Closing Date,
including any document incorporated by reference in the Registration Statement,
as the case may be (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) 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 or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the Offerors
prior to the Closing Date, including any document incorporated by reference in
the Prospectus (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading or that, as
of the Closing Date, either the Registration Statement or the Prospectus or any
further amendment or supplement thereto made by the Offerors prior to the
Closing Date (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) contains an untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and they do not know
of any amendment to the Registration Statement (or any document incorporated
therein by reference) required to be filed.
In rendering the above opinions, counsel may rely (i) as to matters
of law other than
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federal law, upon the opinion or opinions of local counsel provided that the
extent of such reliance is specified in such opinion and that such counsel
shall state that such opinion or opinions of local counsel are satisfactory
to them and they believe they and the Underwriters are justified in relying
thereon and (ii) as to matters of fact, upon the representations of the Trust
and the Company contained in this Agreement and upon certificates of trustees
or officers of the Trust, the Company and of public officials.
(c) The Underwriters shall have received on the Closing
Date the opinions of _________________________, dated the Closing Date addressed
to the Underwriters, to the effect that:
(i) The statements set forth in the
Prospectus under the caption "Federal Income Tax Consequences" constitute a
fair and accurate summary of the matters addressed therein, based upon
current law and the assumptions stated or referred to therein.
(ii) 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 Capital
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
Capital Securities at the time such interest income is paid or accrued in
accordance with such holder's regular method of tax accounting.
(iii) For federal income tax purposes, (a) the
Junior Subordinated Debentures will constitute indebtedness of the Company
and (b) the interest on the Junior Subordinated Debentures will be deductible
by the Company on an economic accrual basis in accordance with Section 163(e)
of the Internal Revenue Code of 1986, as amended, and Treasury Regulation
Section 1.163-7.
(d) The Underwriters shall have received on the Closing
Date the opinion of Richards, Layton & Finger, counsel to First Union, 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) First Union is a national banking
association, duly organized and validly existing under the laws of the United
States.
(ii) First Union 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
First Union and constitutes a legal, valid and binding obligation of First
Union, enforceable against First Union in accordance
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with its terms.
(iv) The execution, delivery and performance by
First Union of the Trust Agreement, the Indenture and the Guarantee Agreement do
not conflict with or constitute a breach of the articles of association or
by-laws of First Union.
(v) No consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency governing
the banking or trust powers of First Union is required for the execution,
delivery or performance by First Union of the Trust Agreement, the Indenture and
the Guarantee Agreement.
(e) The Underwriters shall have received on the Closing
Date the opinion of Richards, Layton & Finger, as special Delaware counsel for
the Offerors, dated the Closing Date, addressed to the Underwriters, to the
effect 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 (i) to execute and deliver, and
to perform its obligations under, this Agreement, and (ii) to issue, and to
perform its obligations under, the Capital 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 D is an appropriate form of
certificate to evidence ownership of the Capital Securities. The Capital
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 and are entitled to the benefits of the
Trust Agreement. The Common Securities have been duly
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authorized by the Trust Agreement and are duly and validly issued undivided
beneficial interests in the assets of the Trust and are entitled to the
benefits of the Trust Agreement. The holders of the Capital 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 Capital Securities
may be obligated, pursuant to the Trust Agreement, to make certain payments
under the Trust Agreement.
(vii) Under the Trust Agreement and the Delaware
Act, the issuance of the Capital Securities and the Common Securities is not
subject to preemptive or similar rights.
(viii) The issuance and sale by the Trust of the
Capital 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 regulation.
(ix) No authorization, approval, consent or order
of any Delaware court or any Delaware governmental authority or Delaware agency
is required to be obtained by the Trust solely in connection with the issuance
and sale by the Trust of the Common Securities or the Capital Securities or the
performance by the Trust of its obligations under the Trust Agreement or this
Agreement.
(x) The Capital Security holders (other than
those Capital Security holders who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Trust, and the Trust
will not be liable for any income tax imposed by the State of Delaware or any
political subdivisions or taxing authority thereof.
(f) The Underwriters shall have received from Silver,
Freedman & Taff, L.L.P., counsel for the Underwriters, an opinion dated the
Closing Date, with respect to the formation of the Trust, the validity of the
Capital Securities, the Indenture, the Trust Agreement, the Guarantee 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. In rendering the above opinions, counsel may
rely (i) as to matters of law other than federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and (ii) as to matters of fact, upon the representations of the
Trust and the Company contained in this Agreement and upon certificates of
trustees or officers of the Trust, the Company and of public officials.
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(g) The Underwriters shall have received on each of the
date hereof and the Closing Date signed letters, dated as of the date hereof and
the Closing Date in form and substance reasonably satisfactory to the
Underwriters, from KPMG LLP, (i) to the effect that they are independent public
accountants with respect to the Trust, the Company and the Subsidiaries within
the meaning of the Act and the related rules and regulations, (ii) 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 (iii) confirming that the Trust is and will be treated as a
consolidated subsidiary of the Company pursuant to generally accepted accounting
principles.
(h) 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 the Underwriters'
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 Capital Securities being delivered at the Closing Date on the terms and
in the manner contemplated in the Prospectus.
(i) The Underwriters shall have received on the Closing
Date a certificate or certificates of the chief executive officer and the chief
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 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.
(iii) The signers of said certificate have
carefully examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet within
the meaning of Rule 434 under the Act), and (a) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Prospectus, as amended or supplemented, does not include any untrue statement
of material fact or omit to state a material fact necessary to make
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the statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended
or supplemented prospectus which has not been so set forth, (C) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its Subsidiaries
has incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock (other than any dividends or
distributions described or contemplated in the Registration Statement and the
Prospectus and the Company's regular quarterly common stock dividend), and
except as disclosed in the Prospectus, there has not been any change in the
capital stock, or any material change in the short-term or long-term debt, or
any issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any Subsidiary, or any material
adverse change or any development involving a prospective material adverse
change (whether or not arising in the ordinary course of business), in the
general affairs, condition (financial or otherwise), business, key personnel,
property, prospects, net worth or results of operations of the Company or any
Subsidiary, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the signer,
threatened or contemplated, any action, suit or proceeding to which the
Company or any Subsidiary is a party before or by any court or governmental
agency, authority or body, or any arbitrator, which might result in any
material adverse change in the condition (financial or otherwise), business,
prospects or results of operations of the Company or any Subsidiary.
(j) 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.
(iii) The signers of said certificate have
carefully examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet within the
meaning of Rule 434 under the Act), and (a) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of a
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material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Prospectus,
as amended or supplemented, does not include any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (B)
since the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented prospectus which
has not been so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the Trust
has not incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of any kind
with respect to its capital securities, and except as disclosed in the
Prospectus, there has not been any change in the capital securities, or any
material change in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital
securities, of the Trust or any material adverse change or any development
involving a prospective material adverse change (whether or not arising in the
ordinary course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or results
of operations of the Trust, and (D) except as stated in the Registration
Statement and the Prospectus, there is not pending, or, to the knowledge of the
signer, threatened or contemplated, any action, suit or proceeding to which the
Trust is a party before or by any court or governmental agency, authority or
body, or any arbitrator, which might result in any material adverse change in
the condition (financial or otherwise), business, prospects or results of
operations of the Trust.
(k) The Offerors shall have furnished to the Underwriters
such further certificates and documents as the Underwriters may reasonably have
requested.
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 Silver,
Freedman & Taff, L.L.P., 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 Trust of such termination in writing or by
telegram at or prior to the Closing Date. In such event, the Trust and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 7 hereof).
7. INDEMNIFICATION.
(a) The Offerors jointly and severally agree to
indemnify and hold harmless each Underwriter, each officer and director
thereof, and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to
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which such Underwriter or such persons may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus or the Prospectus,
including any amendments or supplements thereto (including any term sheet
within the meaning of Rule 434 under the Act), (ii) 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 light of the
circumstances under which they were made, or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Capital Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, 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 action or claim as such expenses are incurred; provided, however, that
the Offerors shall not be liable (1) in any such case to the extent that 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 or
the Prospectus, including any amendments or supplements thereto, in reliance
upon and in conformity with written information furnished to the Offerors by
any Underwriter specifically for use therein or (2) in the case of any matter
covered by clause (iii) above to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such losses, claims,
damages or liabilities resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Offerors and the trustees and directors and officers who
have signed the Registration Statement, and each person, if any, who controls
the Offerors within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Offerors or any such person may become
subject under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings 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, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, and will reimburse any legal or other expenses
reasonably incurred by the Offerors or any such person in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Trust or the Company by or through the
Underwriters specifically for use therein. The obligations of the
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Underwriters under this Section 7(b) are several in proportion to their
respective underwriting obligations and not joint.
(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 subsection (a).
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution provided for
in Section 7(e) shall be available with respect to a proceeding to any party who
shall fail to give notice of such proceeding as provided in this Section 7(d) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice, but the failure to give such notice shall not relieve the indemnifying
party or parties from any liability which it or they may have to the indemnified
party otherwise than on account of the provisions of Section 7(a) or (b). In
case any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay promptly as
incurred the reasonable fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
or other indemnified parties which are different from or additional to those
available to the indemnifying party. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one separate
firm at any time for all such indemnified parties. Such firm shall be designated
in writing by the Underwriters and shall be reasonably satisfactory to the
Offerors in the case of parties indemnified pursuant to Section 7(a) and shall
be designated in writing by the Offerors and shall be reasonably satisfactory to
the Underwriters in the case of parties indemnified pursuant to Section 7(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
25
<PAGE>
(e) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors on the
one hand and the Underwriters on the other from the offering of the Capital
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Offerors on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Offerors on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Offerors bears to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth on the cover page of the Prospectus. The relative
fault 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 on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Offerors and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
7(e) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7(e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereto) referred to above in this Section 7(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Capital Securities purchased by such Underwriter;
and 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 in this Section 7(e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Offerors under this Section 7
shall be in addition to any liability which the Offerors may otherwise have, and
the obligations of the Underwriters under this Section 7 shall be in addition to
any liability which the Underwriters may otherwise have.
26
<PAGE>
8. NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered, telegraphed or
sent via facsimile transmission and confirmed as follows: if to the
Underwriters, to them c/o Dain Rauscher Incorporated, 60 South Sixth Street,
Minneapolis, Minnesota 55402, Attention: J. David Welch, Managing Director, with
a copy to Dave M. Muchnikoff, P.C., Silver, Freedman & Taff, L.L.P., 1100 New
York Avenue, N.W., 7th Floor, Washington, D.C. 20005; if to the Company, to
Heartland Financial USA, Inc., 1398 Central Avenue, Dubuqe, Iowa 52001,
Attention: John K. Schmidt, Executive Vice President and Chief Financial
Officer, with a copy to John Freechack, Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, 333 West Wacker Drive, Suite 2700, Chicago, Illinois 60606, and if to
the Trust, to it c/o Heartland Financial USA, Inc., 1398 Central Avenue, Dubuqe,
Iowa 52001, Attention: John K. Schmidt, with a copy to First Union, One Rodney
Square, 920 King Street, First Floor, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration. All notices given by facsimile transmission
shall be electronically confirmed and a copy of such notice shall be sent
promptly via U.S. mail. All notices given by telegram shall be promptly
confirmed by letter sent by U.S. mail. Any notice to the Trust shall also be
copied to the Company at the address previously stated, Attention: John K.
Schmidt. Any party may change its address for notice purposes by written notice
to the other parties.
9. TERMINATION. This Agreement may be terminated by the
Underwriters by notice to the Offerors as follows:
(a) at any time prior to the earlier of (i) the time the
Capital Securities are released by the Underwriters for sale or (ii) 10:00 A.M.,
Eastern time, on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of
the following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change in or affecting the condition, financial or
otherwise, of the Trust, or of 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, or of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency after the date hereof or other national or
international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in the Underwriters' judgment, make the offering or delivery of
the Capital Securities impracticable or inadvisable, (iii) suspension of
trading in securities on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on either such Exchange, or a halt or
suspension of trading in securities generally which are quoted on Nasdaq or
(iv) declaration of a banking moratorium by either federal authorities or by
state authorities in Iowa, Illinois, Wisconsin, New Mexico or New
27
<PAGE>
York; or
(c) as provided in Section 6 of this Agreement.
10. WRITTEN INFORMATION. For all purposes under this Agreement
(including, without limitation, Section 1, Section 3 and Section 7 hereof),
the Offerors understand and agree with each of the Underwriters that the
following constitutes the only written information furnished to the Offerors
by the Underwriters specifically for use in preparation of the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto: (i) the per share "Public Offering Price" and per share
"Underwriting Fees to be Paid by the Company" set forth on the cover page of
the Prospectus, and (ii) the information set forth under the caption
"Underwriting" in the Preliminary Prospectus and the Prospectus.
11. SUCCESSORS. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Trust and the Company
and their respective successors, executors, administrators, heirs and assigns,
and the trustees and controlling persons and the officers and directors of any
such controlling person referred to herein, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Capital Securities merely because of such purchase.
12. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Offerors or controlling persons thereof and (c) delivery of and
payment for the Capital Securities under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner
as 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 Delaware.
If the foregoing letter is in accordance with the Underwriters'
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Offerors and the Underwriters in accordance with its terms.
28
<PAGE>
[The remainder of this page intentionally left blank.]
Very truly yours,
HEARTLAND FINANCIAL CAPITAL TRUST I,
a Delaware business trust
By:________________________________
_____________, Administrative Trustee
HEARTLAND FINANCIAL USA, INC.
By:________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
DAIN RAUSCHER WESSELS, A DIVISION OF
DAIN RAUSCHER INCORPORATED
HOWE BARNES INVESTMENTS, INC.
By: Dain Rauscher Incorporated
By:
----------------------------------
Matthew L. Johnson, Vice President
SCHEDULE A
SCHEDULE OF UNDERWRITERS
<TABLE>
<CAPTION>
Number of
Capital Securities Capital Securities
Underwriter to be purchased
<S> <C>
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated..........................................
Howe Barnes Investments, Inc.......................... ----------
1,000,000
Total................................................. ----------
----------
</TABLE>
29
<PAGE>
EXHIBIT I
(FORM OF OPINION OF COMPANY COUNSEL)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware and is
duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). Each Subsidiary of the Company has been duly
incorporated or organized, is validly existing and in good standing under the
laws of the jurisdiction of its formation. Each of the Company and its
Subsidiaries has the corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus; is, to such counsel's knowledge, in compliance with all
federal and state regulatory rules and guidelines; and is duly qualified to
transact business in all jurisdictions in which the conduct of its business or
its ownership or leasing of property requires such qualification and the failure
so to qualify would have a material adverse effect on the business or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole.
(ii) DB&T, GSB, RCB, WCB and NMB have each been duly chartered
under the laws of their states of organization to conduct the business of a bank
and FCB has been duly chartered under federal law to conduct the business of a
savings association. The Company and its Subsidiaries have all necessary
consents and approvals under applicable federal and state laws and regulations
to own their respective assets and carry on their respective businesses as
currently conducted. The deposit accounts of each of DB&T, GSB, RCB, WCB, NMB
and FCB are insured by the Federal Deposit Insurance Corporation (the "FDIC") up
to the maximum applicable amount in accordance with the rules and regulations of
the FDIC, and, to the knowledge of such counsel, no proceedings for the
termination or revocation of such insurance are pending or threatened.
(iii) All of the issued and outstanding shares of the capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable, and the holders thereof are not subject to personal liability
by reason of being such holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company or the Junior
Subordinated Debentures or the Capital Securities pursuant to the Company's
certificate of incorporation, bylaws or any agreement or other instrument or
arrangement known to such counsel to which the Company is a party or by which
the Company is bound. Neither the filing of the Registration Statement nor the
offering or sale of the Junior Subordinated Debentures or Capital Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of capital stock or other securities of the Company.
The authorized capital stock of the Company is comprised of 12,000,000 shares of
common stock, par value $1.00 per share __________, of which were issued and
outstanding as of ________, 1999 and 200,000 shares of preferred stock par value
$1.00 per share, none of which were issued and outstanding as of _________,
1999.
<PAGE>
(iv) All of the issued and outstanding shares of capital stock of
each of the Company's Subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable, and, to such counsel's knowledge,
except as otherwise described in the Registration Statement and Prospectus,
except for directors' qualifying shares, and except for NMB, the Company owns of
record and beneficially all of the issued and outstanding shares of the capital
stock of each of the Subsidiaries. All of the shares of the capital stock of the
Subsidiaries which are owned by the Company are so owned free and clear of any
security interests, claims, liens, proxies, equities or other encumbrances. To
such counsel's knowledge, except as described in the Registration Statement and
Prospectus, there are no preemptive rights or options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the Company
or any of its Subsidiaries any shares of the capital stock of any Subsidiary of
the Company.
(v) 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.
(vi) National Bancshares, Inc. ("National") has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of New Mexico and is duly registered as a bank holding company
under the BHC Act. The First National Bank of Clovis ("Clovis Bank") has been
duly organized and is validly existing as a national banking association under
the laws of the United States. The deposit accounts of Clovis Bank are insured
by the FDIC up to the maximum applicable amount in accordance with the rules and
regulations of the FDIC. Each of National and Clovis Bank has the corporate
power and authority to own or lease its properties and conduct its business as
described in the Prospectus and is duly qualified to transact business in all
jurisdictions in which the conduct of its business or its ownership or leasing
of property requires such qualification and the failure so to comply or qualify
would have a material adverse effect on its business or condition, financial or
otherwise.
(vii) Based upon current guidelines of the Federal Reserve Board,
the liquidation amount of the Capital Securities will constitute "tier 1"
capital (as defined in 12 C.F.R. Part 225), subject to applicable regulatory
limitations on the amount thereof that can be included in tier 1 capital.
(viii) The Trust Agreement, the Indenture and the Guarantee Agreement
have each 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 Company in accordance with their terms, except to the
extent that
<PAGE>
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 Trust Agreement has been duly authorized, executed and
delivered by the Company and the Administrative Trustees, and is a valid and
binding obligation of the Company and each of the Administrative Trustees,
enforceable against the Company and each of the Administrative Trustees in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, and subject to general principles of equity.
(xi) The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, and
subject to general principles of equity.
(xii) The Indenture has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and subject to general
principles of equity.
(xiii) The Company has full corporate power and authority to enter
into this Agreement, the Indenture, the Trust Agreement and the Guarantee
Agreement, to issue the Junior Subordinated Debentures and to effect the
transactions contemplated by this Agreement, the Indenture, the Trust
Agreement and the Guarantee Agreement. The Trust has full trust power and
authority to enter into this Agreement and the Trust Agreement, to issue the
Capital Securities and to effect the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture and the Guarantee Agreement.
The execution, delivery and performance of this Agreement, the Indenture, the
Trust Agreement, the Guarantee Agreement, the Expense Agreement, the Capital
Securities, the Common Securities and the Junior Subordinated Debentures and
the consummation of the transactions herein or therein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, rule or regulation, any lease,
contract, indenture, mortgage, loan agreement or other agreement or
instrument known to such counsel to which the Company or the Trust is a party
or by which either is bound or to which any of their property is subject, the
Company's or any Subsidiary's charter or bylaws, or the Trust's Certificate
of Trust or the Trust Agreement or any permit, judgment, order or decree
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or the Trust or any of its respective
properties, except for any breach, violation or default which would not have
a material adverse effect on the Company and the Trust, taken as a whole; and
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,
<PAGE>
the Guarantee Agreement, the Capital Securities, the Junior Subordinated
Debentures, or the Guarantee 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 Capital
Securities by the Trust, except (a) such as may be required under the Act,
which has been obtained, or under state securities or blue sky laws, 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.
(xiv) The Junior Subordinated Debentures are subordinate and junior
in right of payment to all ASenior and Subordinated Debt" (as defined in the
Indenture) of the Company.
(xv) Neither the Company nor the Trust is an Ainvestment company"
or a company Acontrolled" by an Ainvestment company" within the meaning of the
1940 Act.
(xvi) To such counsel's knowledge and information after due inquiry,
the Trust is not a party to or otherwise bound by any agreement other than those
described in the Prospectus.
(xvii) To such counsel's knowledge and information after due inquiry,
the Offerors are not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or any other instrument known
to such counsel to which either of the Offerors is a party or by which either of
them may be bound, or to which any of the property or assets of either the
Company or the Trust is subject.
(xviii) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that purpose
has been instituted or, to the knowledge of such counsel, threatened by the
Commission.
(xix) The statements (a) in the Prospectus under the caption
"Risk Related to an Investment in Heartland Financial -- We are subject to
significant government regulation," (b) in the Registration Statement in Item
15 and (c) in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 under the caption "Supervision and Regulation,"
insofar as such statements constitute a summary of matters of law, are
accurate summaries and fairly present the information called for with respect
to such matters. The statements in the Prospectus under the captions "Risks
Related to an Investment in the Capital Securities," "Description of the
Trust," "Description of the Capital Securities," Description of the
Debentures," "Description of the Guarantee" and "Relationship Among the
Capital Securities, the Debentures and the Guarantee," insofar as such
statements constitute a summary of matters of law or of the legal matters,
documents or proceedings referred to therein, are accurate summaries and
fairly present the information called for with respect to such matters.
<PAGE>
(xx) The statements, other than those referred to in paragraph
(xviii) of counsel's opinion, in the Registration Statement and the Prospectus
describing (a) statutes, rules and regulations, (b) legal and governmental
proceedings or rulings, and (c) contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does not
know of any statutes, rules or regulations or legal or governmental proceedings,
pending or threatened, required to be described in the Registration Statement
and the Prospectus that are not described as required, or of any contracts or
documents of a character required to be described in the Registration Statement
or Prospectus or included as exhibits to the Registration Statement that are not
described or included as required.
(xxi) The reports of the Company incorporated by reference in the
Registration Statement and the Prospectus or any further amendment or supplement
thereto made by the Company (other than the financial statements, other
financial data and related schedules therein, as to which such counsel need
express no opinion), when they were filed with the Commission, complied as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder. Such counsel does not know
of any contracts, agreements, documents or instruments required to be filed as
exhibits to any such reports or described in any such reports which are not so
filed or described as required; and, insofar as any statements in any such
report constitute summaries of any contract, agreement, document or instrument
to which the Company or any Subsidiary is a party, such statements are accurate
summaries and fairly present the information called for with respect to such
matters.
(xxii) To such counsel's knowledge, neither the Company nor any of
its Subsidiaries is in violation of its respective charter or bylaws.
(xxiii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto (including any term sheet within the
meaning of Rule 434 under the Act), comply as to form in all material respects
with the requirements of the Act and the rules and regulations thereunder and
the Trust Indenture Act and the rules and regulations thereunder.
<PAGE>
EXHIBIT 4.1
FORM OF
INDENTURE
BETWEEN
HEARTLAND FINANCIAL USA, INC.
AND
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE
____% SUBORDINATED DEBENTURES DUE 2029
DATED AS OF _________ __, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CROSS-REFERENCE TABLE...........................................................................................vii
INDENTURE.........................................................................................................1
RECITALS..........................................................................................................1
ARTICLE I DEFINITIONS............................................................................................2
SECTION 1.1 DEFINITIONS OF TERMS...................................................................2
ARTICLE II ISSUE, DESCRIPTION, TERMS, CONDITIONS, REGISTRATION
AND EXCHANGE OF THE DEBENTURES..................................................................................10
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT......................................................10
SECTION 2.2 MATURITY..............................................................................10
SECTION 2.3 FORM AND PAYMENT......................................................................10
SECTION 2.4 INTENTIONALLY LEFT BLANK..............................................................11
SECTION 2.5 INTEREST..............................................................................11
SECTION 2.6 EXECUTION AND AUTHENTICATIONS.........................................................11
SECTION 2.7 REGISTRATION OF TRANSFER AND EXCHANGE.................................................12
SECTION 2.10 CANCELLATION..........................................................................14
SECTION 2.11 BENEFIT OF INDENTURE..................................................................15
ARTICLE III REDEMPTION OF DEBENTURES............................................................................15
SECTION 3.1 REDEMPTION............................................................................15
SECTION 3.2 SPECIAL EVENT REDEMPTION..............................................................16
SECTION 3.3 OPTIONAL REDEMPTION BY COMPANY........................................................16
SECTION 3.4 NOTICE OF REDEMPTION..................................................................16
SECTION 3.5 PAYMENT UPON REDEMPTION...............................................................17
SECTION 3.6 NO SINKING FUND.......................................................................18
ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD.................................................................18
SECTION 4.1 EXTENSION OF INTEREST PAYMENT PERIOD..................................................18
SECTION 4.2 NOTICE OF EXTENSION...................................................................19
SECTION 4.3 LIMITATION ON TRANSACTIONS............................................................19
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY...................................................................20
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST.....................................................20
SECTION 5.2 MAINTENANCE OF AGENCY.................................................................20
SECTION 5.3 PAYING AGENTS.........................................................................20
SECTION 5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE......................................21
SECTION 5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS..............................................21
SECTION 5.6 LIMITATION ON TRANSACTIONS............................................................22
SECTION 5.7 COVENANTS AS TO THE TRUST.............................................................22
ii
<PAGE>
SECTION 5.8 COVENANTS AS TO PURCHASES.............................................................23
SECTION 5.9 WAIVER OF USURY, STAY OR EXTENSION LAWS...............................................23
ARTICLE VI DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE..................................................................................23
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES
OF DEBENTUREHOLDERS...................................................................23
SECTION 6.2 PRESERVATION OF INFORMATION COMMUNICATIONS
WITH DEBENTUREHOLDERS.................................................................23
SECTION 6.3 REPORTS BY THE COMPANY................................................................24
SECTION 6.4 REPORTS BY THE TRUSTEE................................................................24
ARTICLE VII REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT.............................................................................................25
SECTION 7.1 EVENTS OF DEFAULT.....................................................................25
SECTION 7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE................................................................26
SECTION 7.3 APPLICATION OF MONEYS COLLECTED.......................................................28
SECTION 7.4 LIMITATION ON SUITS...................................................................28
SECTION 7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER............................................................................29
SECTION 7.6 CONTROL BY DEBENTUREHOLDERS...........................................................29
SECTION 7.7 UNDERTAKING TO PAY COSTS..............................................................30
ARTICLE VIII FORM OF DEBENTURE AND ORIGINAL ISSUE...............................................................31
SECTION 8.1 FORM OF DEBENTURE.....................................................................31
SECTION 8.2 ORIGINAL ISSUE OF DEBENTURES..........................................................31
ARTICLE IX CONCERNING THE TRUSTEE...............................................................................31
SECTION 9.1 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE....................................31
SECTION 9.2 NOTICE OF DEFAULTS....................................................................32
SECTION 9.3 CERTAIN RIGHTS OF TRUSTEE.............................................................33
SECTION 9.4 TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.............................................34
SECTION 9.5 MAY HOLD DEBENTURES...................................................................34
SECTION 9.6 MONEYS HELD IN TRUST..................................................................34
SECTION 9.7 COMPENSATION AND REIMBURSEMENT........................................................34
SECTION 9.8 RELIANCE ON OFFICERS' CERTIFICATE.....................................................35
SECTION 9.9 DISQUALIFICATION: CONFLICTING INTERESTS...............................................35
SECTION 9.10 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...............................................35
SECTION 9.11 RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR.............................................................................36
SECTION 9.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................................................37
SECTION 9.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
COMPANY...............................................................................38
iii
<PAGE>
ARTICLE X CONCERNING THE DEBENTUREHOLDERS.......................................................................38
SECTION 10.1 EVIDENCE OF ACTION BY HOLDERS.........................................................38
SECTION 10.2 PROOF OF EXECUTION BY DEBENTUREHOLDERS................................................39
SECTION 10.3 WHO MAY BE DEEMED OWNERS..............................................................39
SECTION 10.4 CERTAIN DEBENTURES OWNED BY COMPANY
DISREGARDED...........................................................................39
SECTION 10.5 ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS............................................40
ARTICLE XI SUPPLEMENTAL INDENTURES..............................................................................40
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT
OF DEBENTUREHOLDERS...................................................................40
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF
DEBENTUREHOLDERS......................................................................41
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURES.....................................................41
SECTION 11.4 DEBENTURES AFFECTED BY SUPPLEMENTAL
INDENTURES............................................................................42
SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES..................................................42
ARTICLE XII SUCCESSOR CORPORATION...............................................................................42
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC..........................................................42
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.....................................................43
SECTION 12.3 EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE............................................43
ARTICLE XIII SATISFACTION AND DISCHARGE.........................................................................44
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE...............................................44
SECTION 13.2 DISCHARGE OF OBLIGATIONS..............................................................44
SECTION 13.3 DEPOSITED MONIES TO BE HELD IN TRUST..................................................45
SECTION 13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS...............................................45
SECTION 13.5 REPAYMENT TO COMPANY..................................................................45
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS..........................................................................................45
SECTION 14.1 NO RECOURSE...........................................................................45
ARTICLE XV MISCELLANEOUS PROVISIONS.............................................................................46
SECTION 15.1 EFFECT ON SUCCESSORS AND ASSIGNS......................................................46
SECTION 15.2 ACTIONS BY SUCCESSOR..................................................................46
SECTION 15.3 SURRENDER OF COMPANY POWERS...........................................................46
SECTION 15.4 NOTICES...............................................................................46
SECTION 15.5 GOVERNING LAW.........................................................................47
SECTION 15.6 TREATMENT OF DEBENTURES AS DEBT.......................................................47
SECTION 15.7 COMPLIANCE CERTIFICATES AND OPINIONS..................................................47
SECTION 15.8 PAYMENTS ON BUSINESS DAYS.............................................................47
SECTION 15.9 CONFLICT WITH TRUST INDENTURE ACT.....................................................48
SECTION 15.10 COUNTERPARTS..........................................................................48
iv
<PAGE>
SECTION 15.11 SEPARABILITY..........................................................................48
SECTION 15.12 ASSIGNMENT............................................................................48
SECTION 15.13 ACKNOWLEDGMENT OF RIGHTS..............................................................48
SECTION 15.14 ADDITIONAL PROVISIONS FOR THE PAYMENT
OF EXPENSES...........................................................................49
ARTICLE XVI SUBORDINATION OF DEBENTURES.........................................................................49
SECTION 16.1 AGREEMENT TO SUBORDINATE..............................................................49
SECTION 16.2 DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR
ADDITIONAL SENIOR OBLIGATIONS.........................................................50
SECTION 16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY..................................................50
SECTION 16.4 SUBROGATION...........................................................................51
SECTION 16.5 TRUSTEE TO EFFECTUATE SUBORDINATION...................................................52
SECTION 16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR
INDEBTEDNESS..........................................................................53
SECTION 16.8 SUBORDINATION MAY NOT BE IMPAIRED.....................................................53
</TABLE>
v
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
SECTION OF TRUST INDENTURE ACT
OF 1939, AS AMENDED SECTION OF INDENTURE
- ------------------------------- --------------------
<S> <C>
310(a) 9.10
310(b) 9.9
9.11
310(c) Not Applicable
311(a) 9.14
311(b) 9.14
311(c) Not Applicable
312(a) 6.1
312(b) 6.2(a)
312(c) 6.2(c)
6.2(c)
313(a) 6.4(a)
313(b) 6.4(b)
313(c) 6.4(a)
6.4(b)
313(d) 6.4(c)
314(a) 6.3(a)
314(b) Not Applicable
314(c) 15.7
314(d) Not Applicable
314(e) 15.7
314(f) Not Applicable
315(a) 9.1(a)
9.3
315(b) 9.2
315(c) 9.1(a)
315(d) 9.1(b)
315(e) 7.7
316(a) 1.1
7.6
316(b) 7.4(b)
316(c) 10.1(b)
317(a) 7.2
317(b) 5.3
318(a) 15.9
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Indenture.
vi
<PAGE>
INDENTURE
INDENTURE, dated as of _________ __, 1999, between HEARTLAND
FINANCIAL USA, INC., a Delaware corporation (the "Company") and FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association with its
principal place of business in the State of Delaware (the "Trustee");
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of securities to be known as its ____% Subordinated Debentures due
2029 (hereinafter referred to as the "Debentures"), the form and substance of
such Debentures and the terms, provisions and conditions thereof to be set
forth as provided in this Indenture;
WHEREAS, Heartland Financial Capital Trust I, a Delaware statutory
business trust (the "Trust"), has offered to the public up to $25,000,000
aggregate liquidation amount of its Capital Securities (as defined herein)
and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of up to
$_______ aggregate liquidation amount of its Common Securities (as defined
herein), in up to $__________ aggregate principal amount of the Debentures;
WHEREAS, the Company has requested that the Trustee execute and
deliver this Indenture;
WHEREAS, all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this Indenture have been duly authorized in all respects;
WHEREAS, to provide the terms and conditions upon which the
Debentures are to be authenticated, issued and delivered, the Company has
duly authorized the execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Debentures by the holders thereof, it is mutually covenanted and agreed
as follows for the equal and ratable benefit of the holders of the Debentures:
1
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS OF TERMS.
The terms defined in this Section 1.1 (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for
all purposes of this Indenture and of any indenture supplemental hereto shall
have the respective meanings specified in this Section 1.1 and shall include
the plural as well as the singular. All other terms used in this Indenture
that are defined in the Trust Indenture Act, or that are by reference in the
Trust Indenture Act defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires), shall have the
meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the date of the execution of this instrument.
All accounting terms used herein and not expressly defined shall have the
meanings assigned to such terms in accordance with Generally Accepted
Accounting Principles.
"Accelerated Maturity Date" means if the Company elects to
accelerate the Maturity Date in accordance with Section 2.2(b), the date
selected by the Company which is prior to the Scheduled Maturity Date, but is
not earlier than September 30, 2004.
"Additional Interest" shall have the meaning set forth in
Section 2.5.
"Additional Senior Obligations" means all indebtedness of the
Company whether incurred on or prior to the date of this Indenture or
thereafter incurred, for claims in respect of financial derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; provided, however, that Additional Senior Obligations
does not include claims in respect of Senior Debt or Subordinated Debt or
obligations which, by their terms, are expressly stated to be not superior in
right of payment to the Debentures or to rank pari passu in right of payment
with the Debentures. For purposes of this definition, "claim" shall have the
meaning assigned thereto in Section 101(4) of the United States Bankruptcy
Code of 1978, as amended.
"Administrative Trustees" shall have the meaning set forth in the
Trust Agreement.
"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; (b) 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; (c) any Person directly or indirectly controlling, controlled by, or
under common control with the specified Person; (d) a partnership in which
the specified Person is a general partner; (e) any officer or director of the
specified Person; and (f) if the specified Person is an individual, any
entity of which the specified Person is an officer, director or general
partner.
2
<PAGE>
"Authenticating Agent" means an authenticating agent with respect to
the Debentures appointed by the Trustee pursuant to Section 2.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or
any duly authorized committee of such Board or any other duly designated
officers of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification.
"Business Day" means, with respect to the Debentures, any day other
than a Saturday or a Sunday or a day on which federal or state banking
institutions in New York, New York or Wilmington, Delaware are authorized or
required by law, executive order or regulation to close, or a day on which
the Corporate Trust Office of the Trustee or the Property Trustee is closed
for business.
"Capital Securities" means undivided beneficial interests in the
assets of the Trust which rank pari passu with Common Securities issued by
the Trust; provided, however, that upon the occurrence of an Event of
Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Capital Securities.
"Capital Securities Guarantee" means any guarantee that the Company
may enter into with the Trustee or other Persons that operate directly or
indirectly for the benefit of holders of Capital Securities.
"Capital Treatment Event" means the receipt by the Company and the
Trust of an Opinion of Counsel, rendered by a law firm having a recognized
national bank regulatory practice, to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk of impairment of the Company's ability to treat the
Capital Securities (or any substantial portion thereof) as Tier 1 capital (or
the then equivalent thereof), for purposes of the capital adequacy guidelines
of the Federal Reserve, as then in effect and applicable to the Company;
provided, however, that the Trust or the Company shall have requested and
received such an Opinion of Counsel with regard to such matters within a
reasonable period of time after the Trust or the Company shall have become
aware of the possible occurrence of any such event.
3
<PAGE>
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer,
the treasurer or any vice president of the Company. The Certificate need not
comply with the provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the
definition of "Investment Company Event."
"Commission" means the Securities and Exchange Commission.
"Common Securities" means undivided beneficial interests in the
assets of the Trust which rank pari passu with the Capital Securities;
provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to
the rights of holders of Capital Securities.
"Company" means Heartland Financial USA, Inc., a corporation duly
organized and existing under the laws of the State of Delaware, and, subject
to the provisions of Article XII, shall also include its successors and
assigns.
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
"Corporate Trust Office" means the office of the Trustee at which,
at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at One Rodney
Square, 920 King Street, 1st Floor, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Custodian" means any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
"Debentureholder," "holder of Debentures," "registered holder," or
other similar term, means the Person or Persons in whose name or names a
particular Debenture shall be registered on the books of the Company or the
Trustee kept for that purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in
Section 2.7(b).
"Debt" means with respect to any Person, whether recourse is to all
or a portion of the assets of such Person and whether or not contingent,
(i) every obligation of such Person for money borrowed; (ii) every obligation
of such Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit,
4
<PAGE>
bankers' acceptances or similar facilities issued for the account of such
Person; (iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business);
(v) every capital lease obligation of such Person; and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another
Person and all dividends of another Person the payment of which, in either
case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Trust Agreement and the Debentures held by the Property Trustee are
to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Trust Agreement.
"Event of Default" means, with respect to the Debentures, any event
specified in Section 7.1, which has continued for the period of time, if any,
and after the giving of the notice, if any, therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as
amended, as in effect at the date of execution of this instrument.
"Extended Interest Payment Period" shall have the meaning set forth
in Section 4.1.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Generally Accepted Accounting Principles" means such accounting
principles as are generally accepted at the time of any computation required
hereunder.
"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America that, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on
any such Governmental Obligation held by such custodian for the account of
the holder of such depositary receipt; provided, however, that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Governmental Obligation or the
specific payment of principal of or interest on the Governmental Obligation
evidenced by such depositary receipt.
5
<PAGE>
"Herein," "hereof," and "hereunder," and other words of similar
import, refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment
of interest on the Debentures, means the date specified in the Debenture or
in an indenture supplemental hereto with respect to the Debentures as the
fixed date on which an installment of interest with respect to the Debentures
is due and payable.
"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
Company 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 an "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 Capital
Securities under the Trust Agreement; provided, however, that the Trust or
the Company shall have requested and received such an Opinion of Counsel with
regard to such matters within a reasonable period of time after the Trust or
the Company shall have become aware of the possible occurrence of any such
event.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional
Interest, if any.
"Ministerial Action" shall have the meaning set forth in Section 3.2.
"Officers' Certificate" means a certificate signed by the Chief
Executive Officer, President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
that is delivered to the Trustee in accordance with the terms hereof. Each
such certificate shall include the statements provided for in Section 15.7,
if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of independent,
outside legal counsel for the Company that is delivered to the Trustee in
accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 15.7, if and to the extent required by the
provisions thereof.
6
<PAGE>
"Outstanding," when used with reference to the Debentures, means,
subject to the provisions of Section 10.4, as of any particular time, all
Debentures theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the Trustee or any
paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Debentures or
portions thereof for the payment or redemption of which moneys or
Governmental Obligations in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company (if the
Company shall act as its own paying agent); provided, however, that if such
Debentures or portions of such Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in
Article III provided, or provision satisfactory to the Trustee shall have
been made for giving such notice; and (c) Debentures in lieu of or in
substitution for which other Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.7; provided, however, that in
determining whether the holders of the requisite percentage of Debentures
have given any request, notice, consent or waiver hereunder, Debentures held
by the Company or any Affiliate of the Company shall not be included;
provided, further, that the Trustee shall be protected in acting upon any
request, notice, consent or waiver unless a Responsible Officer of the
Trustee shall have actual knowledge that the holder of such Debenture is the
Company or an Affiliate thereof.
"Person" means any individual, corporation, partnership, trust,
limited liability company, joint venture, joint-stock company, unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Debenture" means every previous Debenture evidencing
all or a portion of the same debt as that evidenced by such particular
Debenture; and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 2.9 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Redemption Price" shall have the meaning set forth in Section 3.2.
"Responsible Officer" when used with respect to the Trustee means
any officer within the Corporate Trust Office of the Trustee with direct
responsibility for the administration of this Indenture, including any vice
president, any assistant vice president, any assistant secretary or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom corporate trust matter is referred because
of his or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means September 30, 2029.
"Securities Act," means the Securities Act of 1933, as amended, as
in effect at the date of execution of this instrument.
7
<PAGE>
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding),
on Debt, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Debentures or to
other Debt which is pari passu with, or subordinated to, the Debentures;
provided, however, that Senior Debt shall not be deemed to include (i) any
Debt of the Company which when incurred and without respect to any election
under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company; (ii) any Debt of the Company to
any of its subsidiaries; (iii) Debt to any employee of the Company; (iv) 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 such Debt by the holders of the Debentures as
a result of the subordination provisions of this Indenture would be greater
than they otherwise would have been as a result of any obligation of such
holders to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject; and (v) Debt which
constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in Section 16.1.
"Special Event" means a Tax Event, an Investment Company Event or a
Capital Treatment Event.
"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding),
on Debt, whether incurred on or prior to the date of this Indenture or
thereafter incurred, which is by its terms expressly provided to be junior
and subordinate to Senior Debt of the Company (other than the Debentures);
provided, however, that Subordinated Debt will not be deemed to include (i)
any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978,
as amended, was without recourse to the Company, (ii) any Debt of the Company
to any of its subsidiaries, (iii) any Debt to any employee of the Company,
(iv) 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 such Debt by the holders of the
Subordinated 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 such holders to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the ordinary course
of business as a result of subordination provisions to which such Debt is
subject, (v) Debt which constitutes Senior Debt and (vi) any Debt of the
Company 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 the Company that is, directly or
indirectly, a financing vehicle of the Company in connection with the
issuance by that entity of preferred securities or other securities which are
intended to qualify for Tier 1 capital treatment.
8
<PAGE>
"Subsidiary" means, with respect to any Person, (i) any corporation
at least a majority of whose outstanding Voting Stock shall at the time be
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries; (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries; (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner; and (iv) any limited
liability company, a majority of the membership interests of which are held
by such Person or one or more of its Subsidiaries.
"Tax Event" means the receipt by the Company and the Trust of an
Opinion of Counsel, rendered by a law firm having a recognized national tax
and securities practice, to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of
the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or shall be within 90 days after
the date of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the Debentures; (ii)
interest payable by the Company on the Debentures is not, or within 90 days
after the date of such Opinion of Counsel, shall not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes;
or (iii) the Trust is, or shall be within 90 days after the date of such
Opinion of Counsel, subject to more than a de minimis amount of other taxes,
duties, assessments or other governmental charges; provided, however, that
the Trust or the Company shall have requested and received such an Opinion of
Counsel with regard to such matters within a reasonable period of time after
the Trust or the Company shall have become aware of the possible occurrence
of any of the events described in clauses (i) through (iii) above.
"Trust" means Heartland Financial Capital Trust I, a Delaware
statutory business trust.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated [ ], 1999, of the Trust.
"Trustee" means First Union Trust Company, National Association and,
subject to the provisions of Article IX, shall also include its successors
and assigns, and, if at any time there is more than one Person acting in such
capacity hereunder, "Trustee" shall mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939, as
amended, subject to the provisions of Sections 11.1, 11.2, and 12.1, as in
effect at the date of execution of this instrument.
"Trust Securities" means the Common Securities and Capital
Securities, collectively.
"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting
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power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other
equivalents having such power only by reason of the occurrence of a
contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS,
REGISTRATION AND EXCHANGE OF THE DEBENTURES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
There is hereby authorized Debentures designated the "[ ]%
Subordinated Debentures due 2029," limited in aggregate principal amount to
$__________, which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Debentures pursuant to
Section 2.6.
SECTION 2.2 MATURITY.
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to accelerate the Maturity Date
to be a date prior to the Scheduled Maturity Date in accordance with
Section 2.2(c), the Accelerated Maturity Date.
(b) The Company may at any time before the day which is 90 days
before the Scheduled Maturity Date and not earlier than September 30, 2004,
elect to shorten the Maturity Date only once to the Accelerated Maturity Date
provided that the Company has received the prior approval of the Federal
Reserve if then required under applicable capital guidelines, policies or
regulations of the Federal Reserve.
(c) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice to the Trustee
and the Trust (unless the Trust is not the holder of the Debentures, in which
case the Trustee will give notice to the holders of the Debentures) of the
acceleration of the Maturity Date and the Accelerated Maturity Date at least
90 days and no more than 180 days before the Accelerated Maturity Date.
SECTION 2.3 FORM AND PAYMENT.
The Debentures shall be issued in fully registered certificated form
without interest coupons. Principal and interest on the Debentures issued in
certificated form shall be payable, the transfer of such Debentures shall be
registrable and such Debentures shall be exchangeable for Debentures bearing
identical terms and provisions at the office or agency of the Trustee;
provided, however, that
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payment of interest may be made at the option of the Company by check mailed
to the holder at such address as shall appear in the Debenture Register or by
wire transfer to an account maintained by the holder as specified in the
Debenture Register, provided that the holder provides proper transfer
instructions by the regular record date. Notwithstanding the foregoing, so
long as the holder of any Debentures is the Property Trustee, the payment of
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Property Trustee shall be
made at such place and to such account as may be designated by the Property
Trustee.
SECTION 2.4 INTENTIONALLY LEFT BLANK.
SECTION 2.5 INTEREST.
(a) Each Debenture shall bear interest at the rate of [ ]% per annum
(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date"), commencing on December 31, 1999 to the Person in
whose name such Debenture or any Predecessor Debenture is registered, at the
close of business on the regular record date for such interest installment,
which shall be the fifteenth day of the last month of the calendar quarter.
(b) The amount of interest payable for any period shall be computed
on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for
which interest is computed, shall be computed on the basis of the number of
days elapsed in a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on the Debentures is not a Business Day,
then payment of interest payable on such date shall be made on the next
succeeding day which 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 the date such payment was originally
payable.
(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing
authority, then, in any case, the Company shall pay as additional interest
("Additional Interest") on the Debentures held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such taxes,
duties, assessments or other governmental charges shall be equal to the
amounts the Trust and the Property Trustee would have received had no such
taxes, duties, assessments or other government charges been imposed.
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SECTION 2.6 EXECUTION AND AUTHENTICATIONS.
(a) The Debentures shall be signed on behalf of the Company by its
President or one of its Vice Presidents, under its corporate seal, if any,
attested by its Secretary or one of its Assistant Secretaries. Signatures may
be in the form of a manual or facsimile signature. The Company may use the
facsimile signature of any Person who shall have been a President or Vice
President thereof, or of any Person who shall have been a Secretary or
Assistant Secretary thereof, notwithstanding the fact that at the time the
Debentures shall be authenticated and delivered or disposed of such Person
shall have ceased to be the President or a Vice President, or the Secretary
or an Assistant Secretary, of the Company (and any such signature shall be
binding on the Company). The seal of the Company may be in the form of a
facsimile of such seal and may be impressed, affixed, imprinted or otherwise
reproduced on the Debentures. The Debentures may contain such notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Debenture shall be dated the date of its authentication by the Trustee. A
Debenture shall not be valid until authenticated manually by an authorized
signatory of the Trustee, or by an Authenticating Agent. Such signature shall
be conclusive evidence that the Debenture so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
(b) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by
the Company to the Trustee for authentication, together with a written order
of the Company for the authentication and delivery of such Debentures signed
by its Chairman, President or any Vice President and its Treasurer or any
Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and deliver such Debentures.
(c) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form
and terms thereof have been established in conformity with the provisions of
this Indenture.
(d) The Trustee shall not be required to authenticate such
Debentures if the issue of such Debentures pursuant to this Indenture shall
affect the Trustee's own rights, duties or immunities under the Debentures
and this Indenture or otherwise in a manner that is not reasonably acceptable
to the Trustee.
SECTION 2.7 REGISTRATION OF TRANSFER AND EXCHANGE.
(a) Debentures may be exchanged upon presentation thereof at the
office or agency of the Company designated for such purpose in New York, New
York, Wilmington, Delaware or at the office of the Debenture Registrar, for
other Debentures and for a like aggregate principal amount in denominations
of integral multiples of $25, upon payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, all as provided in this
Section 2.7. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in exchange therefor the Debenture or Debentures that
the Debentureholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
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(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in New York, New York or Wilmington,
Delaware or at the office of the Debenture Registrar or such other location
designated by the Company a register or registers (herein referred to as the
"Debenture Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall register the Debentures and the transfers of
Debentures as in this Article II provided and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Debentures and transfer of Debentures as herein provided shall
initially be the Trustee and thereafter as may be appointed by the Company as
authorized by Board Resolution (the "Debenture Registrar"). Upon surrender
for transfer of any Debenture at the office or agency of the Company
designated for such purpose, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Debenture or Debentures for a like aggregate
principal amount. All Debentures presented or surrendered for exchange or
registration of transfer, as provided in this Section 2.7, shall be
accompanied (if so required by the Company or the Debenture Registrar) by a
written instrument or instruments of transfer, in form satisfactory to the
Company or the Debenture Registrar, duly executed by the registered holder or
by such holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration
of transfer of Debentures, or issue of new Debentures in case of partial
redemption, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than
exchanges pursuant to Section 2.8, the second paragraph of Section 3.5 and
Section 11.4 not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of less than all the Outstanding Debentures and ending at the
close of business on the day of such mailing; nor (ii) to register the
transfer of or exchange any Debentures or portions thereof called for
redemption.
(e) Debentures may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Indenture. Any
transfer or purported transfer of any Debenture not made in accordance with
this Indenture shall be null and void.
SECTION 2.8 TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company may
execute, and the Trustee shall authenticate and deliver, temporary Debentures
(printed, lithographed, or typewritten). Such temporary Debentures shall be
substantially in the form of the definitive Debentures in lieu of which they
are issued, but with such omissions, insertions and variations as may be
appropriate for temporary Debentures, all as may be determined by the
Company. Every temporary Debenture shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially
the same manner, and with like effect, as the definitive Debentures. Without
unnecessary delay the Company shall execute and shall furnish definitive
Debentures and thereupon any or all temporary Debentures may be surrendered
in exchange therefor (without charge to the holders), at the office or agency
of the Company designated for the purpose in New York, New York
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or Wilmington, Delaware and the Trustee shall authenticate and such office or
agency shall deliver in exchange for such temporary Debentures an equal
aggregate principal amount of definitive Debentures, unless the Company
advises the Trustee to the effect that definitive Debentures need not be
executed and furnished until further notice from the Company. Until so
exchanged, the temporary Debentures shall be entitled to the same benefits
under this Indenture as definitive Debentures authenticated and delivered
hereunder.
SECTION 2.9 MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.
(a) In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request the
Trustee (subject as aforesaid) shall authenticate and deliver, a new
Debenture bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Debenture, or in lieu of and in substitution
for the Debenture so destroyed, lost, stolen or mutilated. In every case the
applicant for a substituted Debenture shall furnish to the Company and the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company and the Trustee evidence to their
satisfaction of the destruction, loss or theft of the applicant's Debenture
and of the ownership thereof. The Trustee may authenticate any such
substituted Debenture and deliver the same upon the written request or
authorization of the Chairman, President or any Vice President and the
Treasurer or any Assistant Treasurer of the Company. Upon the issuance of any
substituted Debenture, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses
of the Trustee) connected therewith. In case any Debenture that has matured
or is about to mature shall become mutilated or be destroyed, lost or stolen,
the Company may, instead of issuing a substitute Debenture, pay or authorize
the payment of the same (without surrender thereof except in the case of a
mutilated Debenture) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as they may require to
save them harmless, and, in case of destruction, loss or theft, evidence to
the satisfaction of the Company and the Trustee of the destruction, loss or
theft of such Debenture and of the ownership thereof.
(b) Every replacement Debenture issued pursuant to the provisions of
this Section 2.9 shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Debenture
shall be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debentures duly issued hereunder. All Debentures shall
be held and owned upon the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures, and shall preclude (to the extent
lawful) any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
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SECTION 2.10 CANCELLATION.
All Debentures surrendered for the purpose of payment, redemption,
exchange or registration of transfer shall, if surrendered to the Company or
any paying agent, be delivered to the Trustee for cancellation, or, if
surrendered to the Trustee, shall be canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly required or permitted by any of
the provisions of this Indenture. On request of the Company at the time of
such surrender, the Trustee shall deliver to the Company canceled Debentures
held by the Trustee. In the absence of such request the Trustee may dispose
of canceled Debentures in accordance with its standard procedures and deliver
a certificate of disposition to the Company. If the Company shall otherwise
acquire any of the Debentures, however, such acquisition shall not operate as
a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.
SECTION 2.11 BENEFIT OF INDENTURE.
Nothing in this Indenture or in the Debentures, express or implied,
shall give or be construed to give to any Person, other than the parties
hereto and the holders of the Debentures (and, with respect to the provisions
of Article XVI, the holders of Senior Indebtedness) any legal or equitable
right, remedy or claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto
and of the holders of the Debentures (and, with respect to the provisions of
Article XVI, the holders of Senior Indebtedness).
SECTION 2.12 AUTHENTICATION AGENT.
(a) So long as any of the Debentures remain Outstanding there may be
an Authenticating Agent for any or all such Debentures, which the Trustee
shall have the right to appoint. Said Authenticating Agent shall be
authorized to act on behalf of the Trustee to authenticate Debentures issued
upon exchange, transfer or partial redemption thereof, and Debentures so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication of
Debentures by the Trustee shall be deemed to include authentication by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall be a corporation that has a combined capital and surplus,
as most recently reported or determined by it, sufficient under the laws of
any jurisdiction under which it is organized or in which it is doing business
to conduct a trust business, and that is otherwise authorized under such laws
to conduct such business and is subject to supervision or examination by
federal or state authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.
(b) Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee
may at any time (and upon request by the Company shall) terminate the agency
of any Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint
an eligible successor
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Authenticating Agent acceptable to the Company. Any successor Authenticating
Agent, upon acceptance of its appointment hereunder, shall become vested with
all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.1 REDEMPTION.
Subject to the Company having received prior approval of the Federal
Reserve, if then required under the applicable capital guidelines, policies
or regulations of the Federal Reserve, the Company may redeem the Debentures
issued hereunder on and after the dates set forth in and in accordance with
the terms of this Article III.
SECTION 3.2 SPECIAL EVENT REDEMPTION.
Subject to the Company having received the prior approval of the
Federal Reserve, if then required under the applicable capital guidelines,
policies or regulations of the Federal Reserve, if a Special Event has
occurred and is continuing, then, notwithstanding Section 3.3(a) yet subject
to Section 3.3(b), the Company shall have the right upon not less than 30
days nor more than 60 days notice to the holders of the Debentures to redeem
the Debentures, in whole but not in part, for cash within 90 days following
the occurrence of such Special Event (the "90-Day Period") at a redemption
price equal to 100% of the principal amount to be redeemed plus any accrued
and unpaid interest thereon to the date of such redemption (the "Redemption
Price"), provided that if at the time there is available to the Company the
opportunity to eliminate, within the 90-Day Period, a Tax Event by taking
some ministerial action (a "Ministerial Action"), such as filing a form or
making an election, or pursuing some other similar reasonable measure which
has no adverse effect on the Company, the Trust or the holders of the Trust
Securities issued by the Trust, the Company shall pursue such Ministerial
Action in lieu of redemption. The Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or such earlier
time as the Company determines, provided that the Company shall deposit with
the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m.,
New York time, on the date such Redemption Price is to be paid.
SECTION 3.3 OPTIONAL REDEMPTION BY COMPANY.
(a) Subject to the provisions of Section 3.3(b), except as otherwise
may be specified in this Indenture, the Company shall have the right to
redeem the Debentures, in whole or in part, from time to time, on or after
September 30, 2004, at a Redemption Price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the
date of such redemption. Any redemption pursuant to this Section 3.3(a) shall
be made upon not less than 30 days' nor more than 60 days' notice to the
holder of the Debentures, at the Redemption Price. If the Debentures are only
partially redeemed pursuant to this Section 3.3, the Debentures shall be
redeemed pro rata or by lot or in such other manner as the Trustee shall deem
appropriate and fair in its discretion. The
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Redemption Price shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company determines
provided that the Company shall deposit with the Trustee an amount sufficient
to pay the Redemption Price by 10:00 a.m., New York time, on the date such
Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the
delisting of the Capital Securities issued by the Trust from American Stock
Exchange or any national securities exchange or other organization on which
the Capital Securities are then listed, the Company shall not be permitted to
effect such partial redemption and may only redeem the Debentures in whole.
SECTION 3.4 NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to
redeem all or, as the case may be, a portion of the Debentures in accordance
with the right reserved so to do, the Company shall, or shall cause the
Trustee to upon receipt of 45 days' written notice from the Company (which
notice shall, in the event of a partial redemption, include a representation
to the effect that such partial redemption will not result in the delisting
of the Capital Securities as described in Section 3.3(b) above), give notice
of such redemption to holders of the Debentures to be redeemed by mailing,
first class postage prepaid, a notice of such redemption not less than 30
days and not more than 60 days before the date fixed for redemption to such
holders at their last addresses as they shall appear upon the Debenture
Register unless a shorter period is specified in the Debentures to be
redeemed. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the registered
holder receives the notice. In any case, failure duly to give such notice to
the holder of any Debenture designated for redemption in whole or in part, or
any defect in the notice, shall not affect the validity of the proceedings
for the redemption of any other Debentures. In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction. Each such notice of redemption shall
specify the date fixed for redemption and the Redemption Price and shall
state that payment of the Redemption Price shall be made at the office or
agency of the Company or at the Corporate Trust Office, upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption shall be paid as specified in said notice and that from and after
said date interest shall cease to accrue. If less than all the Debentures are
to be redeemed, the notice to the holders of the Debentures shall specify the
particular Debentures to be redeemed. If the Debentures are to be redeemed in
part only, the notice shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the redemption date, upon
surrender of such Debenture, a new Debenture or Debentures in principal
amount equal to the unredeemed portion thereof shall be issued.
(b) If less than all the Debentures are to be redeemed, the Company
shall give the Trustee at least 45 days' notice in advance of the date fixed
for redemption as to the aggregate principal amount of Debentures to be
redeemed, and thereupon the Trustee shall select, pro rata or by lot or in
such other manner as it shall deem appropriate and fair in its discretion,
the portion or portions (equal to $25 or any integral multiple thereof) of
the Debentures to be redeemed and shall thereafter promptly notify the
Company in writing of the numbers of the Debentures to be redeemed, in whole
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or in part. The Company may, if and whenever it shall so elect pursuant to
the terms hereof, by delivery of instructions signed on its behalf by its
Chairman, its President or any Vice President, instruct the Trustee or any
paying agent to call all or any part of the Debentures for redemption and to
give notice of redemption in the manner set forth in this Section 3.4, such
notice to be in the name of the Company or its own name as the Trustee or
such paying agent may deem advisable. In any case in which notice of
redemption is to be given by the Trustee or any such paying agent, the
Company shall deliver or cause to be delivered to, or permit to remain with,
the Trustee or such paying agent, as the case may be, such Debenture
Register, transfer books or other records, or suitable copies or extracts
therefrom, sufficient to enable the Trustee or such paying agent to give any
notice by mail that may be required under the provisions of this Section 3.4.
SECTION 3.5 PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been completed
as above provided, the Debentures or portions of Debentures to be redeemed
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable Redemption Price, and interest
on such Debentures or portions of Debentures shall cease to accrue on and
after the date fixed for redemption, unless the Company shall default in the
payment of such Redemption Price with respect to any such Debenture or
portion thereof. On presentation and surrender of such Debentures on or after
the date fixed for redemption at the place of payment specified in the
notice, said Debentures shall be paid and redeemed at the Redemption Price
(but if the date fixed for redemption is an interest payment date, the
interest installment payable on such date shall be payable to the registered
holder at the close of business on the applicable record date pursuant to
Section 3.3).
(b) Upon presentation of any Debenture that is to be redeemed in
part only, the Company shall execute and the Trustee shall authenticate and
the office or agency where the Debenture is presented shall deliver to the
holder thereof, at the expense of the Company, a new Debenture of authorized
denomination in principal amount equal to the unredeemed portion of the
Debenture so presented.
SECTION 3.6 NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 EXTENSION OF INTEREST PAYMENT PERIOD.
The Company shall have the right, at any time and from time to time
during the term of the Debentures so long as no Event of Default has occurred
and is continuing, to defer payments of interest by extending the interest
payment period of such Debentures for a period not exceeding 20
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consecutive quarters (the "Extended Interest Payment Period"), during which
Extended Interest Payment Period no interest shall be due and payable;
provided that no Extended Interest Payment Period may extend beyond the
Maturity Date or end on a date other than an Interest Payment Date. To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 4.1, shall bear interest thereon at the Coupon Rate compounded
quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Company shall calculate (and deliver such calculation to the Trustee) and
pay all interest accrued and unpaid on the Debentures, including any
Additional Interest and Compounded Interest (together, "Deferred Interest")
that shall be payable to the holders of the Debentures in whose names the
Debentures are registered in the Debenture Register on the first record date
after the end of the Extended Interest Payment Period. Before the termination
of any Extended Interest Payment Period, the Company may further extend such
period so long as no Event of Default has occurred and is continuing,
provided that such period together with all such further extensions thereof
shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date
of the Debentures or end on a date other than an Interest Payment Date. Upon
the termination of any Extended Interest Payment Period and upon the payment
of all Deferred Interest then due, the Company may commence a new Extended
Interest Payment Period, subject to the foregoing requirements. No interest
shall be due and payable during an Extended Interest Payment Period, except
at the end thereof, but the Company may prepay at any time all or any portion
of the interest accrued during an Extended Interest Payment Period.
SECTION 4.2 NOTICE OF EXTENSION.
(a) If the Property Trustee is the only registered holder of the
Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative Trustees,
the Property Trustee and the Trustee of its selection of such Extended
Interest Payment Period two Business Days before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by the
Trust are payable; or (ii) the date the Trust is required to give notice of
the record date, or the date such Distributions are payable, to the American
Stock Exchange or other applicable self-regulatory organization or to holders
of the Capital Securities issued by the Trust, but in any event at least one
Business Day before such record date.
(b) If the Property Trustee is not the only holder of the Debentures
at the time the Company selects an Extended Interest Payment Period, the
Company shall give the holders of the Debentures and the Trustee written
notice of its selection of such Extended Interest Payment Period at least two
Business Days before the earlier of (i) the next succeeding Interest Payment
Date; or (ii) the date the Company is required to give notice of the record
or payment date of such interest payment to the American Stock Exchange or
other applicable self-regulatory organization or to holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the 20 quarters
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.
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SECTION 4.3 LIMITATION ON TRANSACTIONS.
If (i) the Company shall exercise its right to defer payment of
interest as provided in Section 4.1; (ii) there shall have occurred and be
continuing any Event of Default; or (iii) the Company is in default with
respect to its obligations under the Capital Securities Guarantee, then (a)
the Company will not, and will not permit any Subsidiary to, declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock (other than (I) as a result of a reclassification of its capital stock
for another class of its capital stock or (II) declarations or payments of
dividends or distributions on capital stock by a Subsidiary of the Company to
the Company); (b) the Company shall not and will not permit any Subsidiary to
make any payment of interest, principal or premium, if any, or repay,
repurchase or redeem any debt securities issued by the Company which rank
pari passu with or junior to the Debentures or make any guarantee payment
with respect to any guarantee by the Company of the debt securities of any
Subsidiary of the Company if such guarantee ranks pari passu with or junior
to the Debentures; provided, however, that notwithstanding the foregoing the
Company may make payments pursuant to its obligations under the Capital
Securities Guarantee; and (c) the Company shall not redeem, purchase or
acquire less than all of the outstanding Debentures or any of the Capital
Securities.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST.
The Company shall duly and punctually pay or cause to be paid the
principal of and interest on the Debentures at the time and place and in the
manner provided herein.
SECTION 5.2 MAINTENANCE OF AGENCY.
So long as any of the Debentures remain Outstanding, the Company
shall maintain, or shall cause to be maintained, an office or agency in New
York, New York or Wilmington, Delaware, and at such other location or
locations as may be designated as provided in this Section 5.2, where (i)
Debentures may be presented for payment; (ii) Debentures may be presented as
hereinabove authorized for registration of transfer and exchange; and (iii)
notices and demands to or upon the Company in respect of the Debentures and
this Indenture may be given or served, such designation to continue with
respect to such office or agency until the Company shall, by written notice
signed by its President or an Executive Vice President and delivered to the
Trustee, designate some other office or agency for such purposes or any of
them. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, notices and demands.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside of New York, New York or
Wilmington, Delaware
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where the Debentures may be presented for registration or transfer and for
exchange in the manner provided herein, and the Company may from time to time
rescind such designation as the Company may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any such office or agency
in New York, New York or Wilmington, Delaware for the purposes above
mentioned. The Company shall give the Trustee prompt written notice of any
such designation or rescission thereof.
SECTION 5.3 PAYING AGENTS.
(a) The Company shall be the initial paying agent. If the Company
shall appoint one or more paying agents for the Debentures, other than the
Trustee, the Company shall cause each such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 5.3:
(i) that it shall hold all sums held by it as such agent for the
payment of the principal of or interest on the Debentures
(whether such sums have been paid to it by the Company or by
any other obligor of such Debentures) in trust for the
benefit of the Persons entitled thereto;
(ii) that it shall give the Trustee prompt written notice of any
failure by the Company (or by any other obligor of such
Debentures) to make any payment of the principal of or
interest on the Debentures when the same shall be due and
payable;
(iii) that it shall, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(ii) above,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent; and
(iv) that it shall perform all other duties of paying agent as set
forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
the Debentures, it shall on or before each due date of the principal of or
interest on such Debentures, set aside, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay such
principal or interest so becoming due on Debentures until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and shall
promptly notify the Trustee of such action, or any failure (by it or any
other obligor on such Debentures) to take such action. Whenever the Company
shall have one or more paying agents for the Debentures, it shall, prior to
each due date of the principal of or interest on any Debentures, deposit with
the paying agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such paying agent is the
Trustee) the Company shall promptly notify the Trustee of this action or
failure so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary,
(i) the agreement to hold sums in trust as provided in this Section 5.3 is
subject to the provisions of Section 13.3 and 13.4; and (ii) the Company may
at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or direct any paying agent to
pay, to the Trustee all sums
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held in trust by the Company or such paying agent, such sums to be held by
the Trustee upon the same terms and conditions as those upon which such sums
were held by the Company or such paying agent; and, upon such payment by any
paying agent to the Trustee, such paying agent shall be released from all
further liability with respect to such money.
SECTION 5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, shall appoint, in the manner provided in Section 9.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS.
The Company shall not, while any of the Debentures remain
outstanding, consolidate with, or merge into, or merge into itself, or
convey, transfer or lease all or substantially all of its property and assets
to any other entity and no entity shall consolidate with or merge into the
Company or convey, transfer or lease substantially all of its properties and
assets to the Company, unless the provisions of Article XII hereof are
complied with.
SECTION 5.6 LIMITATION ON TRANSACTIONS.
If Debentures are issued to the Trust or a Trustee of the Trust in
connection with the issuance of Trust Securities by the Trust and (i) there
shall have occurred any event that would constitute an Event of Default; (ii)
the Company shall be in default with respect to any of its obligations under
the Capital Securities Guarantee relating to the Trust; or (iii) the Company
shall have given notice of its election to defer payments of interest on such
Debentures by extending the interest payment period as provided in this
Indenture and such period, or any extension thereof, shall be continuing,
then (a) the Company shall not and will not permit any Subsidiary to declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (I) as a result of a reclassification of its
capital stock or (II) declarations or payments of dividends or distributions
on capital stock by a Subsidiary of the Company to the Company); and (b) the
Company shall not and will not permit any Subsidiary to make any payment of
interest, principal or premium, if any, or repay, repurchase or redeem any
debt securities issued by the Company which rank pari passu with or junior to
the Debentures or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any Subsidiary of the Company if
such guarantee ranks pari passu with or junior in interest to the Debentures;
provided, however, that the Company may make payments pursuant to its
obligations under the Capital Securities Guarantee; and (c) the Company shall
not redeem, purchase or acquire less than all of the outstanding Debentures
or any of the Capital Securities.
SECTION 5.7 COVENANTS AS TO THE TRUST.
For so long as such Trust Securities of the Trust remain
outstanding, the Company shall (i) maintain 100% direct or indirect ownership
of the Common Securities of the Trust; provided, however, that any permitted
successor of the Company under this Indenture may succeed to the
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Company's ownership of the Common Securities; (ii) not voluntarily terminate,
wind up or liquidate the Trust, except upon prior approval of the Federal
Reserve if then so required under applicable capital guidelines, policies or
regulations of the Federal Reserve and use its 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 certain 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 United
States federal income tax purposes; and (iii) use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an individual
beneficial interest in the Debentures. In connection with the distribution of
the Debentures to the holders of the Capital Securities issued by the Trust
upon a Dissolution Event, the Company shall use its best efforts to list such
Debentures on the American Stock Exchange or on such exchange or self
regulatory organization as the Capital Securities are then listed.
SECTION 5.8 COVENANTS AS TO PURCHASES.
Prior to ________, 2004, the Company shall not purchase any Debentures,
in whole or in part, from the Trust.
SECTION 5.9 WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performances of this Indenture, and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTUREHOLDERS.
The Company shall furnish or cause to be furnished to the Trustee
(a) on a quarterly basis on each regular record date (as described in Section
2.5) a list, in such form as the Trustee may reasonably require, of the names
and addresses of the holders of the Debentures as of such regular record
date, provided that the Company shall not be obligated to furnish or cause to
furnish such list at any time that the list shall not differ in any respect
from the most recent list furnished to the Trustee by the Company (in the
event the Company fails to provide such list on a quarterly basis,
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the Trustee shall be entitled to rely on the most recent list provided by the
Company); and (b) at such other times as the Trustee may request in writing
within 30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished; provided, however, that, in either case, no such
list need be furnished if the Trustee shall be the Debenture Registrar.
SECTION 6.2 PRESERVATION OF INFORMATION COMMUNICATIONS WITH DEBENTUREHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 6.1 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as registrar for the
Debentures (if acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b)
of the Trust Indenture Act with other Debentureholders with respect to their
rights under this Indenture or under the Debentures.
SECTION 6.3 REPORTS BY THE COMPANY.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then
to file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange or the applicable
self-regulatory organization as may be prescribed from time to time in such
rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from
to time by the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations, including Section 314(a)(4) of the Trust Indenture Act.
(c) The Company covenants and agrees to transmit by mail, first
class postage prepaid, or the reputable over-night delivery service that
provides for evidence of receipt, to the Debentureholders, as their names and
addresses appear upon the Debenture Register, within 30 days
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after the filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 6.3 as may be required by rules and
regulations prescribed from time to time by the Commission.
SECTION 6.4 REPORTS BY THE TRUSTEE.
(a) On or before July 15 in each year in which any of the Debentures
are Outstanding, the Trustee shall transmit by mail, first class postage
prepaid, to the Debentureholders, as their names and addresses appear upon
the Debenture Register, a brief report dated as of the preceding May 15, if
and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the Trustee with the Company,
with each stock exchange or applicable self-regulatory organization upon
which any Debentures are listed (if so listed) and also with the Commission.
The Company agrees to notify the Trustee when any Debentures become listed on
any stock exchange applicable self-regulatory organization.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT.
(a) Whenever used herein with respect to the Debentures, "Event of
Default" means any one or more of the following events that has occurred and
is continuing:
(i) the Company defaults in the payment of any installment of
interest upon any of the Debentures, as and when the same
shall become due and payable, and continuance of such default
for a period of 30 days; provided, however, that a valid
extension of an interest payment period by the Company in
accordance with the terms of this Indenture shall not
constitute a default in the payment of interest for this
purpose;
(ii) the Company defaults in the payment of the principal on the
Debentures as and when the same shall become due and payable
whether at maturity, upon redemption, by declaration or
otherwise;
(iii) the Company fails to observe or perform any other of its
covenants or agreements with respect to the Debentures for a
period of 90 days after the date on which written notice of
such failure, requiring the same to be remedied and stating
that such notice
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is a "Notice of Default" hereunder, shall have been given to
the Company by the Trustee, by registered or certified mail,
or to the Company and the Trustee by the holders of at least
25% in principal amount of the Debentures at the time
Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case; (ii) consents
to the entry of an order for relief against it in an
involuntary case; (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its
property; or (iv) makes a general assignment for the benefit
of its creditors;
(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in
an involuntary case; (ii) appoints a Custodian of the Company
for all or substantially all of its property; or (iii) orders
the liquidation of the Company, and the order or decree
remains unstayed and in effect for 60 days; or
(vi) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence
except in connection with (i) the distribution of Debentures
to holders of Trust Securities in liquidation of their
interests in the Trust; (ii) the redemption of all of the
outstanding Trust Securities of the Trust; or (iii) certain
mergers, consolidations or amalgamations, each as permitted by
the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Debentures shall have already become due and payable, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Debentures then Outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by such Debentureholders) may declare the
principal of all the Debentures to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, notwithstanding anything contained in this Indenture or in the
Debentures.
(c) At any time after the principal of the Debentures shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, the holders of a majority in aggregate principal amount of the
Debentures then Outstanding hereunder, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum sufficient to
pay all matured installments of interest upon all the Debentures and the
principal of any and all Debentures that shall have become due otherwise than
by acceleration (with interest upon such principal, and, to the extent that
such payment is enforceable under applicable law, upon overdue installments
of interest, at the rate per annum expressed in the Debentures to the date of
such payment or deposit) and the amount payable to the Trustee under Section
9.6; and (ii) any and all Events of Default under this Indenture, other than
the nonpayment of principal on Debentures that shall not have become due by
their terms, shall have been remedied
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or waived as provided in Section 7.6. No such rescission and annulment shall
extend to or shall affect any subsequent default or impair any right
consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right
with respect to Debentures under this Indenture and such proceedings shall
have been discontinued or abandoned because of such rescission or annulment
or for any other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
SECTION 7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
(a) The Company covenants that (1) in case it shall default in the
payment of any installment of interest on any of the Debentures, and such
default shall have continued for a period of 90 Business Days; or (2) in case
it shall default in the payment of the principal of any of the Debentures
when the same shall have become due and payable, whether upon maturity of the
Debentures or upon redemption or upon declaration or otherwise, then, upon
demand of the Trustee, the Company shall pay to the Trustee, for the benefit
of the holders of the Debentures, the whole amount that then shall have been
become due and payable on all such Debentures for principal or interest, or
both, as the case may be, with interest upon the overdue principal and (to
the extent that payment of such interest is enforceable under applicable law
and, if the Debentures are held by the Trust or a trustee of the Trust,
without duplication of any other amounts paid by the Trust or trustee in
respect thereof) upon overdue installments of interest at the rate per annum
expressed in the Debentures; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, and the
amount payable to the Trustee under Section 9.7.
(b) If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or other
obligor upon the Debentures and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company or
other obligor upon the Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or
judicial proceedings affecting the Company or the creditors or property of
either, the Trustee shall have power to intervene in such proceedings and
take any action therein that may be permitted by the court and shall (except
as may be otherwise provided by law) be entitled to file such proofs of claim
and other papers and documents as may be necessary or advisable in order to
have the claims of the Trustee and of the holders of the Debentures allowed
for the entire amount due and payable by the Company under this Indenture at
the date of institution of such proceedings and for any additional amount
that may become due and payable by the Company after such date, and to
collect and receive any moneys or other property payable or deliverable on
any such claim, and to distribute the same after the deduction of the amount
payable
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to the Trustee under Section 9.7; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the holders of
the Debentures to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to such
Debentureholders, to pay to the Trustee any amount due it under Section 9.7.
(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to Debentures,
may be enforced by the Trustee without the possession of any of such
Debentures, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for payment to the Trustee of any
amounts due under Section 9.7, be for the ratable benefit of the holders of
the Debentures. In case of an Event of Default hereunder, the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Debentures or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Debentureholder in any such
proceeding.
SECTION 7.3 APPLICATION OF MONEYS COLLECTED.
Any moneys or other assets collected by the Trustee pursuant to this
Article VII with respect to the Debentures shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys or other assets on account of principal or
interest, upon presentation of the Debentures, and notation thereon the
payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of
all amounts payable to the Trustee under Section 9.6;
SECOND: To the payment of all Senior Indebtedness of the Company
if and to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal and interest, in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Debentures for principal and interest, respectively.
SECTION 7.4 LIMITATION ON SUITS.
(a) Except as set forth herein, no holder of any Debenture shall
have any right by virtue or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity
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or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless (i) such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof with respect to
the Debentures specifying such Event of Default, as hereinbefore provided;
(ii) the holders of not less than 25% in aggregate principal amount of the
Debentures then Outstanding shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as trustee
hereunder; (iii) such holder or holders shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby; (iv) the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
failed to institute any such action, suit or proceeding; and (v) during such
60 day period, the holders of a majority in principal amount of the
Debentures do not give the Trustee a direction inconsistent with the request.
(b) Notwithstanding anything contained herein to the contrary or any
other provisions of this Indenture, the right of any holder of the Debentures
to receive payment of the principal of and interest on the Debentures, as
therein provided, on or after the respective due dates expressed in such
Debenture (or in the case of redemption, on the redemption date), or to
institute suit for the enforcement of any such payment on or after such
respective dates or redemption date, shall not be impaired or affected
without the consent of such holder and by accepting a Debenture hereunder it
is expressly understood, intended and covenanted by the taker and holder of
every Debenture with every other such taker and holder and the Trustee, that
no one or more holders of Debentures shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other of such
Debentures, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of
all holders of Debentures. For the protection and enforcement of the
provisions of this Section 7.4, each and every Debentureholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER.
(a) Except as otherwise provided in Section 2.9, all powers and
remedies given by this Article VII to the Trustee or to the Debentureholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any other powers and remedies available to the Trustee or the holders of
the Debentures, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of
the Debentures to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or on
acquiescence therein; and, subject to the provisions of Section 7.4, every
power and
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remedy given by this Article VII or by law to the Trustee or the
Debentureholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Debentureholders.
SECTION 7.6 CONTROL BY DEBENTUREHOLDERS.
The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding, determined in accordance with Section
10.4, shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred on the Trustee; provided, however, that such
direction shall not be in conflict with any rule of law or with this
Indenture. Subject to the provisions of Section 9.1, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Officers of the Trustee, determine
that the proceeding so directed would involve the Trustee in personal
liability. The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding affected thereby, determined in accordance
with Section 10.4, may on behalf of the holders of all of the Debentures
waive any past default in the performance of any of the covenants contained
herein and its consequences, except (i) a default in the payment of the
principal of or interest on, any of the Debentures as and when the same shall
become due by the terms of such Debentures otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal has been deposited with the Trustee
(in accordance with Section 7.1(c)); (ii) a default in the covenants
contained in Section 5.7; or (iii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the holder
of each Outstanding Debenture affected; provided, however, that if the
Debentures are held by the Trust or a trustee of the Trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in liquidation preference of Trust Securities of the Trust shall
have consented to such waiver or modification to such waiver; provided
further, that if the consent of the holder of each Outstanding Debenture is
required, such waiver shall not be effective until each holder of the Trust
Securities of the Trust shall have consented to such waiver. Upon any such
waiver, the default covered thereby shall be deemed to be cured for all
purposes of this Indenture and the Company, the Trustee and the holders of
the Debentures shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 7.7 UNDERTAKING TO PAY COSTS.
All parties to this Indenture agree, and each holder of any
Debentures by such holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section 7.7
shall not apply to any suit instituted by the Trustee, to any suit instituted
by any Debentureholder, or group of Debentureholders holding more than 10% in
aggregate principal amount of the Outstanding Debentures, or to any suit
instituted by any
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Debentureholder for the enforcement of the payment of the principal of or
interest on the Debentures, on or after the respective due dates expressed in
such Debenture or established pursuant to this Indenture.
SECTION 7.8 DIRECT ACTION; RIGHT OF SET-OFF.
In the event that an Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest
on or principal of the Debentures on the payment date on which such payment
is due and payable, then a holder of Capital Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on such Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Capital Securities of
such holder (a "Direct Action"). In connection with such Direct Action, the
Company will have a right of set-off under this Indenture to the extent of
any payment made by the Company to such holder of the Capital Securities with
respect to such Direct Action. The Company may not amend this Indenture to
remove this right to institute a suit directly against the Company without
the prior consent of the holders of all the Capital Securities.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
SECTION 8.1 FORM OF DEBENTURE.
The Debenture and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the forms contained as Exhibit A
to this Indenture, attached hereto and incorporated herein by reference.
SECTION 8.2 ORIGINAL ISSUE OF DEBENTURES.
Debentures in the aggregate principal amount of $__________ may,
upon execution of this Indenture, be executed by the Company and delivered to
the Trustee for authentication. The Trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the Company, signed
by its President, or any Vice President and its Treasurer or an Assistant
Treasurer, without any further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.1 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Debentures such duties and only such
duties as are specifically set forth in this Indenture, and no implied
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covenants shall be read into this Indenture against the Trustee. In case an
Event of Default has occurred that has not been cured or waived, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in their exercise, as a prudent
Person would exercise or use under the circumstances in the conduct of its
own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(1) the duties and obligations of the Trustee shall with
respect to the Debentures be determined solely by the express
provisions of this Indenture, and the Trustee shall not be
liable with respect to the Debentures except for the
performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of the Trustee,
the Trustee may with respect to the Debentures conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the 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 principal amount of the Debentures at the time Outstanding
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under
this Indenture with respect to the Debentures; and
(iv) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Indenture or
adequate indemnity against such risk is not reasonably assured
to it.
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SECTION 9.2 NOTICE OF DEFAULTS.
Within five business days after actual knowledge by a Responsible
Officer of the Trustee of the occurrence of any default hereunder with
respect to the Debentures, the Trustee shall transmit by mail to all holders
of the Debentures, as their names and addresses appear in the Debenture
Register, notice of such default, unless such default shall have been cured
or waived; provided, however, that, except in the case default in the payment
of the principal or interest (including any Additional Interest and
Compounded Interest, if any) on any Debenture, the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of the directors and/or Responsible
Officers of the Trustee determines in good faith that the withholding of such
notice is in the interests of the holders of such Debentures; and provided,
further, that in the case of any default of the character specified in
Section 7.1(a)(iii), no such notice to holders of Debentures need be sent
until at least 30 days after the occurrence thereof. For the purposes of this
Section 9.2, the term "default" means any event which is, or after notice or
lapse of time or both, would become, an Event of Default with respect to the
Debentures.
SECTION 9.3 CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 9.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
security 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) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an instrument
signed in the name of the Company by its President or any Vice President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer thereof (unless other evidence in respect thereof is specifically
prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a default
or an Event of Default, other than an Event of Default specified in Section
7.1(a)(i); or (ii), unless and until it receives written notification of such
Event of Default from the Company or by holders of at least 25% of the
principal amount of the Debentures at the time Outstanding;
(d) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation,
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upon the occurrence of an Event of Default (that has not been cured or
waived) to exercise with respect to the Debentures such of the rights and
powers vested in it by this Indenture, and to use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(f) The Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture;
(g) The 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,
security, or other papers or documents, unless requested in writing to do so
by the holders of not less than a majority in principal amount of the
Outstanding Debentures (determined as provided in Section 10.4); provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee,
shall be repaid by the Company upon demand; and
(h) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 9.4 TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.
(a) The Recitals contained herein and in the Debentures shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application
by the Company of any of the Debentures or of the proceeds of such
Debentures, or for the use or application of any moneys paid over by the
Trustee in accordance with any provision of this Indenture, or for the use or
application of any moneys received by any paying agent other than the Trustee.
SECTION 9.5 MAY HOLD DEBENTURES.
The Trustee or any paying agent or registrar for the Debentures, in
its individual or any other capacity, may become the owner or pledgee of
Debentures with the same rights it would have if it were not Trustee, paying
agent or Debenture Registrar.
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SECTION 9.6 MONEYS HELD IN TRUST.
Subject to the provisions of Section 13.5, all moneys received by
the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any moneys received by it hereunder except
such as it may agree with the Company to pay thereon.
SECTION 9.7 COMPENSATION AND REIMBURSEMENT.
(a) The Company covenants and agrees to pay to the Trustee, and the
Trustee shall be entitled to, such compensation (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust), as the Company and the Trustee may from time to time agree in
writing, for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and, except as otherwise expressly provided
herein, the Company shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify the Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any loss,
liability, claim, action, suit, cost or expense incurred without negligence
or bad faith on the part of the Trustee and arising out of or in connection
with the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section 9.7 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Debentures upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Debentures.
SECTION 9.8 RELIANCE ON OFFICERS' CERTIFICATE.
Except as otherwise provided in Section 9.1, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting to take any action hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in
the absence of negligence or bad faith on the part of the Trustee, be deemed
to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee and such certificate, in the absence of negligence
or bad faith on the part of the Trustee, shall be full warrant to the Trustee
for any action taken, suffered or omitted to be taken by it under the
provisions of this Indenture upon the faith thereof.
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SECTION 9.9 DISQUALIFICATION: CONFLICTING INTERESTS.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee
and the Company shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
SECTION 9.10 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee with respect to the Debentures
issued hereunder which shall at all times be a corporation organized and
doing business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such
laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, and subject to supervision or examination by
federal, state, territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 9.10, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The Company
may not, nor may any Person directly or indirectly controlling, controlled
by, or under common control with the Company, serve as Trustee. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.10, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.11.
SECTION 9.11 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee or any successor hereafter appointed, may at any
time resign by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee with respect to Debentures by written
instrument, in duplicate, executed by order of the Board of Directors, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee with
respect to Debentures, or any Debentureholder who has been a bona fide holder
of a Debenture or Debentures for at least six months may, subject to the
provisions of Section 9.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur
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(i) the Trustee shall fail to comply with the provisions of
Section 9.9 after written request therefor by the Company or
by any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.10 and shall fail to resign
after written request therefor by the Company or by any
such Debentureholder; or the Trustee shall become incapable
of acting, or shall be adjudged a bankrupt or insolvent, or
commence a voluntary bankruptcy proceeding, or a receiver
of the Trustee or of its property shall be appointed or
consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee
with respect to all Debentures and appoint a successor
trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee, or, subject to the
provisions of Section 9.9, unless the Trustee's duty to
resign is stayed as provided herein, any Debentureholder
who has been a bona fide holder of a Debenture or
Debentures for at least six months may, on behalf of that
holder and all others similarly situated, petition any
court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such
court may thereupon after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures at the time Outstanding may at any time remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee
with the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures pursuant to any of the
provisions of this Section 9.11 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section 9.11
may be appointed with respect to the Debentures, and at any time there shall
be only one Trustee with respect to the Debentures.
SECTION 9.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor trustee with
respect to the Debentures, every successor trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee; but,
on the request of the Company or the successor trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers, and trusts of
the retiring Trustee and shall duly
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assign, transfer and deliver to such successor trustee all property and money
held by such retiring Trustee hereunder.
(b) Upon request of any successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts
referred to in paragraph (a) of this Section 9.12.
(c) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and
eligible under this Article IX.
(d) Upon acceptance of appointment by a successor trustee as
provided in this Section 9.12, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be transmitted at the expense of the Company.
SECTION 9.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under the provisions of Section 9.9 and
eligible under the provisions of Section 9.10, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. In case any
Debentures shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the
Debentures so authenticated with the same effect as if such successor Trustee
had itself authenticated such Debentures.
SECTION 9.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
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ARTICLE X
CONCERNING THE DEBENTUREHOLDERS
SECTION 10.1 EVIDENCE OF ACTION BY HOLDERS.
(a) Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of the
Debentures may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any
other action), the fact that at the time of taking any such action the
holders of such majority or specified percentage have joined therein may be
evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Debentures in Person or by agent or proxy
appointed in writing.
(b) If the Company shall solicit from the Debentureholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall
have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other action may
be given before or after the record date, but only the Debentureholders of
record at the close of business on the record date shall be deemed to be
Debentureholders for the purposes of determining whether Debentureholders of
the requisite proportion of Outstanding Debentures have authorized or agreed
or consented to such request, demand, authorization, direction, notice,
consent, waiver or other action, and for that purpose the Outstanding
Debentures shall be computed as of the record date; provided, however, that
no such authorization, agreement or consent by such Debentureholders on the
record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after
the record date.
SECTION 10.2 PROOF OF EXECUTION BY DEBENTUREHOLDERS.
Subject to the provisions of Section 9.1, proof of the execution of
any instrument by a Debentureholder (such proof shall not require
notarization) or his agent or proxy and proof of the holding by any Person of
any of the Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section 10.2 as it shall deem necessary.
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SECTION 10.3 WHO MAY BE DEEMED OWNERS.
Prior to the due presentment for registration of transfer of any
Debenture, the Company, the Trustee, any paying agent, any Authenticating
Agent and any Debenture Registrar may deem and treat the Person in whose name
such Debenture shall be registered upon the books of the Company as the
absolute owner of such Debenture (whether or not such Debenture shall be
overdue and notwithstanding any notice of ownership or writing thereon made
by anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal of and interest on such Debenture
(subject to Section 2.3) and for all other purposes; and neither the Company
nor the Trustee nor any paying agent nor any Authenticating Agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
SECTION 10.4 CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED.
In determining whether the holders of the requisite aggregate
principal amount of Debentures have concurred in any direction, consent or
waiver under this Indenture, the Debentures that are owned by the Company or
any other obligor on the Debentures or by any Person directly or indirectly
controlling or controlled by or under common control with the Company or any
other obligor on the Debentures shall be disregarded and deemed not to be
Outstanding for the purpose of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Debentures that the Trustee
actually knows are so owned shall be so disregarded. The Debentures so owned
that have been pledged in good faith may be regarded as Outstanding for the
purposes of this Section 10.4, if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right so to act with respect to
such Debentures and that the pledgee is not a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 10.5 ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS.
At any time prior to (but not after) the evidencing to the Trustee,
as provided in Section 10.1, of the taking of any action by the holders of
the majority or percentage in aggregate principal amount of the Debentures
specified in this Indenture in connection with such action, any holder of a
Debenture that is shown by the evidence to be included in the Debentures the
holders of which have consented to such action may, by filing written notice
with the Trustee, and upon proof of holding as provided in Section 10.2,
revoke such action so far as concerns such Debenture. Except as aforesaid any
such action taken by the holder of any Debenture shall be conclusive and
binding upon such holder and upon all future holders and owners of such
Debenture, and of any Debenture issued in exchange therefor, on registration
of transfer thereof or in place thereof, irrespective of whether or not any
notation in regard thereto is made upon such Debenture. Any action taken by
the holders of the majority or percentage in aggregate principal amount of
the Debentures specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the holders
of all the Debentures.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF DEBENTUREHOLDERS.
In addition to any supplemental indenture otherwise authorized by
this Indenture, the Company and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect),
without the consent of the Debentureholders, for one or more of the following
purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(d) to add to the covenants of the Company for the benefit of the
holders of all or any of the Debentures or to surrender any right or power
herein conferred upon the Company;
(e) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Debentures, only as herein set forth;
(f) to make any change that does not adversely affect the rights of
any Debentureholder in any material respect;
(g) to provide for the issuance of and establish the form and terms
and conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or of the
Debentures, or to add to the rights of the holders of the Debentures; or
(h) qualify or maintain the qualification of this Indenture under
the Trust Indenture Act. The Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, and to make any
further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into any such
supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise. Any supplemental indenture
authorized by the provisions of this Section 11.1 may be executed by the
Company and the Trustee without the consent of the holders of any of the
Debentures at the time Outstanding, notwithstanding any of the provisions of
Section 11.2.
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SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS.
With the consent (evidenced as provided in Section 10.1) of the
holders of not less than a majority in aggregate principal amount of the
Debentures at the time Outstanding, the Company, when authorized by Board
Resolutions, and the Trustee may from time to time and at any time enter into
an indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner not covered by Section 11.1 the rights of the holders of the
Debentures under this Indenture; provided, however, that no such supplemental
indenture shall without the consent of the holders of each Debenture then
Outstanding and affected thereby, (i) extend the fixed maturity of any
Debentures, reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, without the consent of the holder of
each Debenture so affected; or (ii) reduce the aforesaid percentage of
Debentures, the holders of which are required to consent to any such
supplemental indenture; provided further, that if the Debentures are held by
the Trust or a trustee of the Trust, such supplemental indenture shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities of the Trust shall have consented to such supplemental indenture;
provided further, that if the consent of the holder of each Outstanding
Debenture is required, such supplemental indenture shall not be effective
until each holder of the Trust Securities of the Trust shall have consented
to such supplemental indenture. It shall not be necessary for the consent of
the Debentureholders affected thereby under this Section 11.2 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article XI, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Debentures shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 11.4 DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.
Debentures affected by a supplemental indenture, authenticated and
delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article XI, may bear a notation in form approved by the
Company, provided such form meets the requirements of any exchange upon which
the Debentures may be listed, as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Debentures so
modified as to conform, in the opinion of the Board of Directors of the
Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Debentures then Outstanding.
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SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES.
(a) Upon the request of the Company, accompanied by their Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of
Debentureholders required to consent thereto as aforesaid, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into such supplemental
indenture. The Trustee, subject to the provisions of Section 9.1, may receive
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article XI is authorized or permitted by, and
conforms to, the terms of this Article XI and that it is proper for the
Trustee under the provisions of this Article XI to join in the execution
thereof.
(b) Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section 11.5,
the trustee shall transmit by mail, first class postage prepaid, a notice,
setting forth in general terms the substance of such supplemental indenture,
to the Debentureholders as their names and addresses appear upon the
Debenture Register. Any failure of the Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
ARTICLE XII
SUCCESSOR CORPORATION
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC.
Nothing contained in this Indenture or in any of the Debentures
shall prevent any consolidation or merger of the Company with or into any
other corporation or corporations (whether or not affiliated with the
Company, as the case may be), or successive consolidations or mergers in
which the Company, as the case may be, or its successor or successors shall
be a party or parties, or shall prevent any sale, conveyance, transfer or
other disposition of the property of the Company, as the case may be, or its
successor or successors as an entirety, or substantially as an entirety, to
any other corporation (whether or not affiliated with the Company, as the
case may be, or its successor or successors) authorized to acquire and
operate the same; provided, however, the Company hereby covenants and agrees
that, (i) upon any such consolidation, merger, sale, conveyance, transfer or
other disposition, the due and punctual payment, in the case of the Company,
of the principal of and interest on all of the Debentures, according to their
tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Company as the case may be, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act,
as then in effect) satisfactory in form to the Trustee executed and delivered
to the Trustee by the entity formed by such consolidation, or into which the
Company, as the case may be, shall have been merged, or by the entity which
shall have acquired such property; (ii) in case the Company consolidates with
or merges into another Person
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or conveys or transfers its properties and assets substantially then 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 (iii)
immediately after giving effect thereto, an Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing.
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of, in the case of the Company, the
due and punctual payment of the principal of and interest on all of the
Debentures Outstanding and the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Company, as
the case may be, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named as
the Company herein, and thereupon the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the
Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not
in substance) may be made in the Debentures thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures
shall prevent the Company from merging into itself or acquiring by purchase
or otherwise all or any part of the property of any other Person (whether or
not affiliated with the Company).
SECTION 12.3 EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.
The Trustee, subject to the provisions of Section 9.1, may receive
an Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale, conveyance, transfer or other disposition, and any such
assumption, comply with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE.
If at any time: (a) the Company shall have delivered to the Trustee
for cancellation all Debentures theretofore authenticated (other than any
Debentures that shall have been destroyed, lost or stolen and that shall have
been replaced or paid as provided in Section 2.9) and Debentures for whose
payment money or Governmental Obligations have theretofore been deposited in
trust or segregated and held in trust by the Company (and thereupon repaid to
the Company or discharged from such trust, as provided in Section 13.5); or
(b) all such Debentures not theretofore delivered
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to the Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit or cause to
be deposited with the Trustee as trust funds the entire amount in moneys or
Governmental Obligations sufficient or a combination thereof, sufficient in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
at maturity or upon redemption all Debentures not theretofore delivered to
the Trustee for cancellation, including principal and interest due or to
become due to such date of maturity or date fixed for redemption, as the case
may be, and if the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company; then this Indenture shall thereupon cease
to be of further effect except for the provisions of Sections 2.3, 2.7, 2.9,
5.1, 5.2, 5.3 and 9.7, that shall survive until the date of maturity or
redemption date, as the case may be, and Sections 9.7 and 13.5, that shall
survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
SECTION 13.2 DISCHARGE OF OBLIGATIONS.
If at any time all Debentures not heretofore delivered to the
Trustee for cancellation or that have not become due and payable as described
in Section 13.1 shall have been paid by the Company by depositing irrevocably
with the Trustee as trust funds moneys or an amount of Governmental
Obligations sufficient in the opinion of a nationally recognized certified
public accounting firm to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including
principal and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also pay
or cause to be paid all other sums payable hereunder by the Company, then
after the date such moneys or Governmental Obligations, as the case may be,
are deposited with the Trustee, the obligations of the Company under this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6, 9.7 and 13.5 hereof that shall
survive until such Debentures shall mature and be paid. Thereafter, Sections
9.7 and 13.5 shall survive.
SECTION 13.3 DEPOSITED MONIES TO BE HELD IN TRUST.
All monies or Governmental Obligations deposited with the Trustee
pursuant to Sections 13.1 or 13.2 shall be held in trust and shall be
available for payment as due, either directly or through any paying agent
(including the Company acting as its own paying agent), to the holders of the
Debentures for the payment or redemption of which such moneys or Governmental
Obligations have been deposited with the Trustee.
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SECTION 13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS.
In connection with the satisfaction and discharge of this Indenture,
all moneys or Governmental Obligations then held by any paying agent under
the provisions of this Indenture shall, upon demand of the Company, be paid
to the Trustee and thereupon such paying agent shall be released from all
further liability with respect to such moneys or Governmental Obligations.
SECTION 13.5 REPAYMENT TO COMPANY.
Any monies or Governmental Obligations deposited with any paying
agent or the Trustee, or then held by the Company in trust, for payment of
principal of or interest on the Debentures that are not applied but remain
unclaimed by the holders of such Debentures for at least two years after the
date upon which the principal of or interest on such Debentures shall have
respectively become due and payable, shall be repaid to the Company, as the
case may be, on May 31 of each year or (if then held by the Company) shall be
discharged from such trust; and thereupon the paying agent and the Trustee
shall be released from all further liability with respect to such monies or
Governmental Obligations, and the holder of any of the Debentures entitled to
receive such payment shall thereafter, as an unsecured general creditor, look
only to the Company for the payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 14.1 NO RECOURSE.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of the Debentures, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor corporation, either directly or through the
Company or any such predecessor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that this Indenture
and the obligations issued hereunder are solely corporate obligations, and
that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such,
of the Company or of any predecessor corporation, or any of them, because of
the creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or in
any of the Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer or director as
such, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
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Indenture or in any of the Debentures or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Indenture and the issuance of such Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1 EFFECT ON SUCCESSORS AND ASSIGNS.
All the covenants, stipulations, promises and agreements in this
Indenture contained by or on behalf of the Company shall bind their
respective successors and assigns, whether so expressed or not.
SECTION 15.2 ACTIONS BY SUCCESSOR.
Any act or proceeding by any provision of this Indenture authorized
or required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 15.3 SURRENDER OF COMPANY POWERS.
The Company by instrument in writing executed by appropriate
authority of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power
so surrendered shall terminate both as to the Company, as the case may be,
and as to any successor corporation.
SECTION 15.4 NOTICES.
Except as otherwise expressly provided herein any notice or demand
that by any provision of this Indenture is required or permitted to be given
or served by the Trustee or by the holders of Debentures to or on the Company
may be given or served by being deposited first class postage prepaid in a
post-office letterbox addressed (until another address is filed in writing by
the Company with the Trustee), as follows: Heartland Financial USA, Inc.,
1398 Central Avenue, Dubuque, Iowa 52001, Attention: John K. Schmidt,
Executive Vice President. Any notice, election, request or demand by the
Company or any Debentureholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made in
writing at the Corporate Trust Office of the Trustee.
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SECTION 15.5 GOVERNING LAW.
This Indenture and each Debenture shall be deemed to be a contract
made under the internal laws of the State of Delaware and for all purposes
shall be construed in accordance with the laws of said State.
SECTION 15.6 TREATMENT OF DEBENTURES AS DEBT.
It is intended that the Debentures shall be treated as indebtedness
and not as equity for federal income tax purposes. The provisions of this
Indenture shall be interpreted to further this intention.
SECTION 15.7 COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied
with, except that in the case of any such application or demand as to which
the furnishing of such documents is specifically required by any provision of
this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
(b) Each certificate or opinion of the Company provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant in this Indenture shall include (1) a statement that
the Person making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based; (3) a statement that, in the
opinion of such Person, he has made such examination or investigation as, in
the opinion of such Person, is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has been complied
with; and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided, however,
that each such certificate shall comply with the provisions of Section 314 of
the Trust Indenture Act.
SECTION 15.8 PAYMENTS ON BUSINESS DAYS.
In any case where the date of maturity of interest or principal of
any Debenture or the date of redemption of any Debenture shall not be a
Business Day, then payment of interest or principal may be made on the next
succeeding Business Day with the same force and effect as if made on the
nominal date of maturity or redemption, and no interest shall accrue for the
period after such nominal date.
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SECTION 15.9 CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 15.10 COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each
of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 15.11 SEPARABILITY.
In case any one or more of the provisions contained in this
Indenture or in the Debentures shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or
of the Debentures, but this Indenture and the Debentures shall be construed
as if such invalid or illegal or unenforceable provision had never been
contained herein or therein.
SECTION 15.12 ASSIGNMENT.
The Company shall have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any
such assignment, the Company shall remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns.
This Indenture may not otherwise be assigned by the parties thereto.
SECTION 15.13 ACKNOWLEDGMENT OF RIGHTS.
The Company acknowledges that, with respect to any Debentures held
by the Trust or a trustee of the Trust, if the Property Trustee fails to
enforce its rights under this Indenture as the holder of the Debentures held
as the assets of the Trust, any holder of Capital Securities may, to the
extent permitted under applicable law, institute legal proceedings directly
against the Company to enforce such Property Trustee's rights under this
Indenture without first instituting any legal proceedings against such
Property Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), the
Company acknowledges that a holder of Capital Securities may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Debentures.
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SECTION 15.14 ADDITIONAL PROVISIONS FOR THE PAYMENT OF EXPENSES.
In connection with the offering, sale and issuance of the Debentures
to the Trust and in connection with the sale of the Trust Securities by the
Trust, the Company, in its capacity as borrower with respect to the
Debentures, and not in limitation of the provisions contained in the "Expense
Agreement" (as such term is defined in the Trust Agreement) or the other
provisions contained herein, agrees to pay the following:
(a) All debts and other obligations (other than with respect
to the Capital Securities) of the Trust and all costs and expenses of
the Trust (including costs and expenses relating to the organization of
the Trust, the fees and expenses of the Property Trustee and the other
costs and expenses relating to the operation of the Trust); and
(b) Any and all taxes and all costs and expenses with respect
thereto (other than United States withholding taxes) to which the Trust
might become subject.
The foregoing obligations of the Company are for the benefit of, and shall be
enforceable by, any person to whom such debts, obligations, costs, expenses
and liabilities are owed (a "Creditor") whether or not such Creditor has
received notice thereof. Not in limitation of the provisions of the Expense
Agreement, any such Creditor may enforce such obligations of the Company
directly against the Company, and the Company irrevocably waives any right or
remedy to require that any such Creditor take any action against the Trust or
any other person before proceeding against the Company. The Company also
agrees to execute such additional agreements as may be necessary or desirable
to give full effect to the foregoing.
ARTICLE XVI
SUBORDINATION OF DEBENTURES
SECTION 16.1 AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each holder of Debentures
issued hereunder by such holder's acceptance thereof likewise covenants and
agrees, that all Debentures shall be issued subject to the provisions of this
Article XVI; and each holder of a Debenture, whether upon original issue or
upon transfer or assignment thereof, accepts and agrees to be bound by such
provisions. The payment by the Company of the principal of and interest on
all Debentures issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Debt, Subordinated Debt and Additional
Senior Obligations (collectively, "Senior Indebtedness") to the extent
provided herein, whether outstanding at the date of this Indenture or
thereafter incurred. No provision of this Article XVI shall prevent the
occurrence of any default or Event of Default hereunder.
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SECTION 16.2 DEFAULT ON SENIOR DEBT, SUBORDINATED DEBT OR ADDITIONAL SENIOR
OBLIGATIONS.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness of the Company, or in the event that the
maturity of any Senior Indebtedness of the Company has been accelerated
because of a default, then, in either case, no payment shall be made by the
Company with respect to the principal (including redemption payments) of or
interest on the Debentures. In the event that, notwithstanding the foregoing,
any payment shall be received by the Trustee when such payment is prohibited
by the preceding sentence of this Section 16.2, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the
Senior Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
(a) Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due upon all
Senior Indebtedness of the Company shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any
payment is made by the Company on account of the principal or interest on the
Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Debentures or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XVI,
shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Debentures or by the Trustee under
this Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated
by the Company) or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
such Senior Indebtedness may have been issued, as their respective interests
may appear, to the extent necessary to pay such Senior Indebtedness in full,
in money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the holders of Debentures or to the
Trustee.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received
by the Trustee before all Senior Indebtedness of the Company is paid
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in full, or provision is made for such payment in money in accordance with
its terms, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of such Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing
such Senior Indebtedness may have been issued, and their respective interests
may appear, as calculated by the Company, for application to the payment of
all Senior Indebtedness of the Company, as the case may be, remaining unpaid
to the extent necessary to pay such Senior Indebtedness in full in money in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.
(c) For purposes of this Article XVI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XVI with respect to the Debentures to the payment of all Senior
Indebtedness of the Company, as the case may be, that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment;
and (ii) the rights of the holders of such Senior Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section
16.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 9.7.
SECTION 16.4 SUBROGATION.
(a) Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the holders of the Debentures shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, as the case may
be, applicable to such Senior Indebtedness until the principal of and
interest on the Debentures shall be paid in full; and, for the purposes of
such subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article XVI, and no payment over pursuant to the provisions of this Article
XVI to or for the benefit of the holders of such Senior Indebtedness by
holders of the Debentures or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness of the Company, and the
holders of the Debentures, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article XVI are and are intended solely for the purposes of defining the
relative rights of the holders of the Debentures, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
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(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness of the
Company), and the holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the holders of the Debentures
the principal of and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holders of the Debentures and
creditors of the Company, as the case may be, other than the holders of
Senior Indebtedness of the Company, as the case may be, nor shall anything
herein or therein prevent the Trustee or the holder of any Debenture from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article XVI
of the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company, as the case may be, received upon the exercise of
any such remedy.
(c) Upon any payment or distribution of assets of the Company
referred to in this Article XVI, the Trustee, subject to the provisions of
Article IX, and the holders of the Debentures shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the holders of the
Debentures, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and
other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XVI.
SECTION 16.5 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of Debentures by such holder's acceptance thereof
authorizes and directs the Trustee on such holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XVI and appoints the Trustee such holder's
attorney-in-fact for any and all such purposes.
SECTION 16.6 NOTICE BY THE COMPANY.
(a) The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit
the making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XVI. Notwithstanding
the provisions of this Article XVI or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of monies to or by the Trustee
in respect of the Debentures pursuant to the provisions of this Article XVI,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 9.1, shall
be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for
in this Section 16.6 at least two Business Days prior to the date upon which
by the terms hereof any money may
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become payable for any purpose (including, without limitation, the payment of
the principal of or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purposes for
which they were received, and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to such
date.
(b) The Trustee, subject to the provisions of Section 9.1, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the
Company (or a trustee on behalf of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or a trustee on behalf
of any such holder or holders. In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment
or distribution pursuant to this Article XVI, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
XVI, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
(a) The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XVI in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder
of Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder. The Trustee's right to
compensation and reimbursement of expenses as set forth in Section 9.7 shall
not be subject to the subordination provisions of this Article XVI.
(b) With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XVI,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
such Senior Indebtedness and, subject to the provisions of Section 9.1, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to holders of Debentures, the Company or any other
Person money or assets to which any holder of such Senior Indebtedness shall
be entitled by virtue of this Article XVI or otherwise.
SECTION 16.8 SUBORDINATION MAY NOT BE IMPAIRED.
(a) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of the Company or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company with the terms,
provisions and
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covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
holders of the Debentures, without incurring responsibility to the holders of
the Debentures and without impairing or releasing the subordination provided
in this Article XVI or the obligations hereunder of the holders of the
Debentures to the holders of such Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, such Senior Indebtedness, or otherwise
amend or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
HEARTLAND FINANCIAL USA, INC.
By:________________________________
Name:______________________________
Title:_____________________________
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, AS TRUSTEE
By:________________________________
Name:______________________________
Title:_____________________________
55
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STATE OF __________ )
) ss:
COUNTY OF _________ )
On the __ day of ____, 1999, before me personally came
__________________to me known, who, being by me duly sworn, did depose and
say that he is the______________________ of Company, one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said
instrument is such corporation seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
___________________________________
Notary Public
(seal) My Commission expires:_____________
<PAGE>
EXHIBIT A
(FORM OF FACE OF DEBENTURE)
HEARTLAND FINANCIAL USA, INC.
____% SUBORDINATED DEBENTURE
DUE _______________, 2029
No. -1- $__________
CUSIP No. ______ ___ __
Heartland Financial USA, Inc., a Delaware corporation (the "Company,"
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to,
_________________________ or registered assigns, the principal sum of
_____________________________ ($) on September 30, 2029 (the "Stated Maturity"),
and to pay interest on said principal sum from ________ __, 1999, or from the
most recent interest payment date (each such date, an "Interest Payment Date")
to which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year commencing December 31, 1999, at the rate of ____% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded quarterly. The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months. The amount of interest 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. In the event that any date on which interest is payable
on this Debenture is not a business day, then payment of interest 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, payment of such
interest will be made on the immediately preceding business day, in each case,
with the same force and effect as if made on such date. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date shall, as provided in the Indenture, be paid to the person in whose name
this Debenture (or one or more Predecessor Debentures, as defined in said
Indenture) is registered at the close of business on the regular record date for
such interest installment, which shall be the close of business on the business
day next preceding such Interest Payment Date unless otherwise provided in the
Indenture. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered holders on such
regular record date and may be paid to the Person in whose
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name this Debenture (or one or more Predecessor Debentures) is registered at
the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered holders of the Debentures not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which
the Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of and
the interest on this Debenture shall be payable at the office or agency of
the Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holder at
such address as shall appear in the Debenture Register. Notwithstanding the
foregoing, so long as the holder of this Debenture is the Property Trustee,
the payment of the principal of and interest on this Debenture shall be made
at such place and to such account as may be designated by the Trustee. The
Stated Maturity may be shortened at any time by the Company to any date not
earlier than September 30, 2004, subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is
issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions; (b) authorizes and directs the Trustee on his or
her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided; and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each
holder hereof, by his or her acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated: ________ __, 1999.
HEARTLAND FINANCIAL USA, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Attest:
_________________________________
By:
_________________________________
Name:
_________________________________
Title:
_________________________________
3
<PAGE>
FORM OF CERTIFICATE OF AUTHENTICATION
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned
Indenture.
Dated: ________ __, 1999
First Union Trust Company,
National Association, as Trustee ___________________________________
or Authentication Agent
By: ______________________________ By: _______________________________
Authorized Signatory
4
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FORM OF REVERSE OF DEBENTURE
____% SUBORDINATED DEBENTURE
(CONTINUED)
This Debenture is one of the subordinated debentures of the Company
(herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued under and pursuant to an Indenture
dated as of _________, 1999 (the "Indenture") duly executed and delivered
between the Company and First Union Trust Company, National Association, as
Trustee (the "Trustee"), to which Indenture reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Debentures. The Debentures are limited in aggregate principal amount as
specified in the Indenture.
Because of the occurrence and continuation of a Special Event, in
certain circumstances, this Debenture may become due and payable at the
principal amount together with any interest accrued thereon (the "Redemption
Price"). The Redemption Price shall be paid prior to 12:00 noon, Eastern
Standard Time, time, on the date of such redemption or at such earlier time
as the Company determines. The Company shall have the right to redeem this
Debenture at the option of the Company, without premium or penalty, in whole
or in part at anytime on or after September 30, 2004 (an "Optional
Redemption"), or at any time in certain circumstances upon the occurrence of
a Special Event, at a Redemption Price equal to 100% of the principal amount
plus any accrued but unpaid interest, to the date of such redemption. Any
redemption pursuant to this paragraph shall be made upon not less than 30
days nor more than 60 days notice, at the Redemption Price. If the Debentures
are only partially redeemed by the Company pursuant to an Optional
Redemption, the Debentures shall be redeemed pro rata or by lot or by any
other method utilized by the Trustee. In the event of redemption of this
Debenture in part only, a new Debenture or Debentures for the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof. In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal of all of the
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions
provided in the Indenture. The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Debentures at the time
outstanding, as defined in the Indenture, to execute supplemental indentures
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the
Debentures; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of the Debentures except as provided in the
Indenture, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, without the consent of the
holder of each Debenture so affected; or (ii) reduce the aforesaid percentage
of Debentures, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of each Debenture
then outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding, on behalf of all of the holders of the
Debentures, to waive
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any past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or interest on any of the
Debentures. Any such consent or waiver by the registered holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this Debenture. No
reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
Provided certain conditions are met, the Company shall have the
right at any time during the term of the Debentures and from time to time to
extend the interest payment period of such Debentures for up to 20
consecutive quarters (each, an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the
Debentures to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, so long as no Event of Default shall have occurred and be continuing,
the Company may further extend such Extended Interest Payment Period,
provided that such Extended Interest Payment Period together with all such
further extensions thereof shall not exceed 20 consecutive quarters, extend
beyond the Stated Maturity or end on a date other than an Interest Payment
Date. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional
amounts then due and subject to the foregoing conditions, the Company may
commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Trustee
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Debentures of authorized denominations and for the same aggregate
principal amount shall be issued to the designated transferee or transferees.
No service charge shall be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and the Debenture
Registrar may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone
other than the Debenture Registrar) for the purpose of receiving payment of
or on account of the principal hereof and interest due hereon and for all
other purposes, and neither the Company nor the Trustee nor any paying agent
nor any Debenture Registrar shall be affected by any notice to the contrary.
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No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
The Debentures are issuable only in registered form without coupons
in denominations of $25 and any integral multiple thereof.
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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<PAGE>
Exhibit 4.3
CERTIFICATE OF TRUST
OF
HEARTLAND FINANCIAL CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF Heartland Financial Capital Trust I (the
"Trust") is being duly executed and filed by the undersigned 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 Heartland
Financial Capital Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is First Union Trust Company, National
Association, One Rodney Square, 920 King Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust will be effective upon
filing.
IN WITNESS WHEREOF, the undersigned being all of the trustees of the
Trust have duly executed this Certificate of Trust in accordance with
Section 3811(a)(1) of the Act.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Delaware trustee
By: /S/ Edward L. Truitt, Jr.
------------------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
/s/ Lynn B. Fuller
------------------------------------------------
Lynn B. Fuller, as Administrative Trustee
/s/ John K. Schmidt
------------------------------------------------
John K. Schmidt, as Administrative Trustee
/s/ Jacquie M. Manternach
------------------------------------------------
Jacquie M. Manternach, as Administrative Trustee
<PAGE>
Exhibit 4.4
TRUST AGREEMENT
OF
HEARTLAND FINANCIAL CAPITAL TRUST I
THIS TRUST AGREEMENT is made as of September 13, 1999 (this "Trust
Agreement"), by and among Heartland Financial USA, Inc., a Delaware
corporation, as depositor (the "Depositor"), First Union Trust Company,
National Association, a national banking association, as trustee (the
"Delaware Trustee"), and Lynn B. Fuller, John K. Schmidt and Jacquie M.
Manternach, as administrators (the "Administrative Trustees", and together
with the Delaware Trustee, the "Trustees"). The Depositor, the
Administrative Trustees and the Delaware Trustee hereby agree as follows:
1. The trust created hereby shall be known as "Heartland Financial
Capital Trust I" (the "Trust"), in which name the Administrative Trustees,
the Delaware Trustee or the Depositor, to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trust the sum of $10.00. The Delaware Trustee and the Administrative
Trustees hereby acknowledge receipt of such amount from the Depositor, which
amount shall constitute the initial trust estate. It is the intention of the
parties hereto that the Trust created hereby constitute a business trust
under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C, Section 3801,
ET SEQ. (the "Business Trust Act"), and that this document constitute the
governing instrument of the Trust. The Delaware Trustee is hereby authorized
and directed to execute and file a certificate of trust with the Delaware
Secretary of State in such form as the Delaware Trustee may approve.
3. The Depositor, the Administrative Trustees and the Delaware Trustee
will enter into an amended and restated Trust Agreement, satisfactory to each
such party, to provide for the contemplated operation of the Trust created
hereby and the issuance of the Capital Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Administrative Trustees and the Delaware
Trustee shall not have any duty or obligation hereunder or with respect to
the trust estate, except as otherwise required by applicable law or as may be
necessary to obtain prior to such execution and delivery of any licenses,
consents or approvals required by applicable law or otherwise.
4. The Depositor, as the depositor of the Trust, is hereby authorized,
in its discretion, (i) to prepare a Form S-3 Registration Statement in
accordance with the requirements of the Securities Act of 1933, as amended
(the "1933 Act"), and such other forms or filings as may be required by the
1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust
Indenture Act of 1939, as amended, in each case relating to the Capital
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<PAGE>
Securities of the Trust; (ii) to file and execute on behalf of the Trust,
such applications, reports, surety bonds, irrevocable consents, appointments
of attorney for service of process and other papers and documents that shall
be necessary or desirable to register or establish the exemption from
registration of the Capital Securities of the Trust under the securities or
"Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the
Trust, may deem necessary or desirable; (iii) to execute and deliver letters
or documents to, or instruments for filing with, a depository relating to the
Capital Securities of the Trust; and (iv) to execute, deliver and perform on
behalf of the Trust one or more purchase agreements, dealer manager
agreements, escrow agreements, registration rights agreements and other
related agreements providing for or relating to the sale of the Capital
Securities of the Trust.
In the event that any filing referred to in this Section 4 as required
by the rules and regulations of the Securities and Exchange Commission (the
"Commission") or state securities or "Blue Sky" laws to be executed on behalf
of the Trust by a party other than the Depositor, the Administrative Trustees
are hereby authorized to join in any such filing and to execute on behalf of
the Trust any and all of the foregoing, it being understood that the
Administrative Trustees, in their capacities as administrators of the Trust,
shall not be required to join in any such filing or execute on behalf of the
Trust any such document unless required by the rules and regulations of the
Commission or state securities or "Blue Sky" laws.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be four and
thereafter the number of trustees of the Trust shall be such number as shall
be fixed from time to time by a written instrument signed by the Depositor
which may increase or decrease the number of trustees of the Trust; provided,
however, that to the extent required by the Business Trust Act, one trustee
of the Trust shall either be a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any trustee of the
Trust at any time. Any trustee of the Trust may resign upon thirty days'
prior notice to the Depositor.
7. First Union Trust Company, National Association, in its capacity as
trustee of the Trust, shall not have any of the powers or duties of the
Administrative Trustees set forth herein and shall be a trustee of the Trust
for the sole purpose of satisfying the requirements of Section 3807 of the
Business Trust Act.
8. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to
conflict of laws principles).
[SIGNATURE PAGE FOLLOWS]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
HEARTLAND FINANCIAL USA, INC., as Depositor
By: /s/ John K. Schmidt
----------------------------------------
Name: John K. Schmidt
----------------------------------------
Title: Executive Vice President
----------------------------------------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
as not in its individual capacity but solely as
trustee of the Trust
By: /s/ Edward L. Truitt, Jr.
------------------------------------------
Name: Edward L. Truitt, Jr.
------------------------------------------
Title: Vice President
------------------------------------------
/s/ Lynn B. Fuller
------------------------------------------------
Lynn B. Fuller, not in his individual capacity,
but solely as trustee of the Trust
/s/ John K. Schmidt
-------------------------------------------------
John K. Schmidt, not in his individual capacity,
but solely as trustee of the Trust
/s/ Jacquie M. Manternach
--------------------------------------------------
Jacquie M. Manternach, not in his individual
capacity, but solely as trustee of the Trust
3
<PAGE>
EXHIBIT 4.5
FORM OF HEARTLAND FINANCIAL CAPITAL TRUST I
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
HEARTLAND FINANCIAL USA, INC., AS DEPOSITOR,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, AS PROPERTY TRUSTEE,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF _________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
CROSS-REFERENCE TABLE.............................................................................................v
AMENDED AND RESTATED TRUST AGREEMENT..............................................................................1
RECITALS..........................................................................................................1
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...............................................................10
SECTION 204. ISSUANCE OF THE CAPITAL SECURITIES....................................................10
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..........................................................................11
SECTION 208. ASSETS OF TRUST.......................................................................15
SECTION 209. TITLE TO TRUST PROPERTY...............................................................15
ARTICLE III PAYMENT ACCOUNT.....................................................................................15
SECTION 301. PAYMENT ACCOUNT.......................................................................15
ARTICLE IV DISTRIBUTIONS; REDEMPTION............................................................................15
SECTION 401. DISTRIBUTIONS.........................................................................15
SECTION 402. REDEMPTION............................................................................16
SECTION 403. SUBORDINATION OF COMMON SECURITIES....................................................18
SECTION 404. PAYMENT PROCEDURES....................................................................19
SECTION 405. TAX RETURNS AND REPORTS...............................................................19
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST...........................................19
SECTION 407. PAYMENTS UNDER INDENTURE..............................................................19
ARTICLE V TRUST SECURITIES CERTIFICATES.........................................................................20
SECTION 501. INITIAL OWNERSHIP.....................................................................20
SECTION 502. THE TRUST SECURITIES CERTIFICATES.....................................................20
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST
SECURITIES CERTIFICATES...............................................................20
i
<PAGE>
SECTION 503A. GLOBAL CAPITAL SECURITY...............................................................21
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF
CAPITAL SECURITIES CERTIFICATES.......................................................22
SECTION 506. PERSONS DEEMED SECURITYHOLDERS........................................................23
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES
AND ADDRESSES.........................................................................24
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.......................................................24
SECTION 509. APPOINTMENT OF PAYING AGENT...........................................................24
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR...........................................25
SECTION 511. TRUST SECURITIES CERTIFICATES.........................................................25
SECTION 512. NOTICES TO CLEARING AGENCY............................................................25
SECTION 513. RIGHTS OF SECURITYHOLDERS.............................................................26
ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING.............................................................26
SECTION 601. LIMITATIONS ON VOTING RIGHTS..........................................................26
SECTION 602. NOTICE OF MEETINGS....................................................................27
SECTION 603. MEETINGS OF CAPITAL SECURITYHOLDERS...................................................27
SECTION 604. VOTING RIGHTS.........................................................................28
SECTION 605. PROXIES, ETC..........................................................................28
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT..............................................28
SECTION 608. ACTS OF SECURITYHOLDERS...............................................................29
SECTION 609. INSPECTION OF RECORDS.................................................................30
ARTICLE VII REPRESENTATIONS AND WARRANTIES......................................................................30
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND
THE PROPERTY TRUSTEE..................................................................30
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE
BANK AND THE DELAWARE TRUSTEE.........................................................31
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR...........................................32
ARTICLE VIII TRUSTEES...........................................................................................33
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES...................................................33
SECTION 802. CERTAIN NOTICES.......................................................................34
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE....................................................34
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF SECURITIES.........................................................................36
SECTION 805. MAY HOLD SECURITIES...................................................................36
SECTION 806. COMPENSATION; INDEMNITY; FEES.........................................................37
SECTION 808. CONFLICTING INTERESTS.................................................................38
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE......................................................38
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT
OF SUCCESSOR..........................................................................39
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................................................41
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS...........................................................................41
ii
<PAGE>
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
DEPOSITOR OR TRUST....................................................................41
SECTION 814. REPORTS BY PROPERTY TRUSTEE...........................................................42
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.......................................................42
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT.............................................................................42
SECTION 817. NUMBER OF TRUSTEES....................................................................42
SECTION 818. DELEGATION OF POWER...................................................................43
SECTION 819. VOTING................................................................................43
ARTICLE IX TERMINATION, LIQUIDATION AND MERGER..................................................................43
SECTION 901. TERMINATION UPON EXPIRATION DATE......................................................43
SECTION 902. EARLY TERMINATION.....................................................................44
SECTION 903. TERMINATION...........................................................................44
SECTION 904. LIQUIDATION...........................................................................44
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR
REPLACEMENTS OF THE TRUST.............................................................46
ARTICLE X MISCELLANEOUS PROVISIONS..............................................................................47
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS...............................................47
SECTION 1002. AMENDMENT.............................................................................47
SECTION 1003. SEPARABILITY..........................................................................48
SECTION 1004. GOVERNING LAW.........................................................................48
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY......................................................48
SECTION 1006. SUCCESSORS............................................................................49
SECTION 1007. HEADINGS..............................................................................49
SECTION 1008. REPORTS, NOTICES AND DEMANDS..........................................................49
SECTION 1009. AGREEMENT NOT TO PETITION.............................................................49
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE
ACT...................................................................................50
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT,
GUARANTEE AND INDENTURE...............................................................50
</TABLE>
EXHIBITS
Exhibit A Certificate of Trust
Exhibit B Form of Common Securities Certificate
Exhibit C Form of Expense Agreement
Exhibit D Form of Capital Securities Certificate
Exhibit E Form of Capital Securities Certificate of Authentication
iii
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
SECTION OF TRUST INDENTURE ACT
OF 1939, AS AMENDED SECTION OF INDENTURE
---------------------------------- --------------------
<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.
iv
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________ __, 1999,
among (i) HEARTLAND FINANCIAL USA, INC., a Delaware corporation (including any
successors or assigns, the "Depositor"), (ii) FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, a national banking association with its principal place of
business in 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) FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association with its principal place of business in 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) ___________________, an individual, _____________________, an
individual, and ________________, 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 ______________,
____________ and _______________, 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 ___________________, 1999 (the "Original Trust
Agreement"), and by the execution and filing by the Delaware Trustee and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on _____________, 1999, 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
Capital 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:
<PAGE>
ARTICLE I
DEFINED TERMS
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 __________________,
__________________ and _______________, 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.
2
<PAGE>
"Authenticating Agent" means an authenticating agent with respect to
the Capital 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:
(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 60 consecutive 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 New York, New York or Wilmington, Delaware 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.
"Capital Security" means a preferred undivided beneficial interest in
the assets of the Trust, having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust
3
<PAGE>
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached as
Exhibit D.
"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.
"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 Heartland Financial USA, 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 One Rodney Square, 920 King
Street, 1st Floor, Wilmington, Delaware 19801, 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.
4
<PAGE>
"Debenture Trustee" means First Union Trust Company, National
Association, a national banking association with its principal place of business
in the State of Delaware and any successor thereto, as trustee under the
Indenture.
"Debentures" means the $__________ aggregate principal amount of the
Depositor's ____% Subordinated Debentures due 2029, issued pursuant to the
Indenture.
"Definitive Capital Securities Certificates" means Capital 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
5
<PAGE>
(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 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 Amount of the Outstanding
Capital 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 Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Global Capital Securities.
"Global Capital Security" means a Capital Security, the ownership and
transfer of which shall be made through book entries by a Clearing Agency as
described herein.
"Guarantee" means the Capital Securities Guarantee Agreement executed
and delivered by the Depositor and First Union Trust Company, National
Association, as trustee, contemporaneously with the execution and delivery of
this Trust Agreement, for the benefit of the holders of the Capital Securities,
as amended from time to time.
"Indenture" means the Indenture, dated as of _____________, 1999,
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.
"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.
6
<PAGE>
"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).
"Majority in liquidation amount of the Outstanding Capital Securities"
means, except as provided in the terms of the Capital Securities or, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Capital Securities,
voting separately as a class, of more than 50% of the Liquidation Amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to but excluding the date
upon which the voting percentages are determined) of all Outstanding Capital
Securities.
"Officers' Certificate" means a certificate signed by the President or
an Executive Vice President and by the Treasurer or the Vice President--Finance
or the Secretary, 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
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
7
<PAGE>
"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 Capital Securities, means, as
of the date of determination, all Capital Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Capital Securities theretofore canceled by the Property Trustee
or delivered to the Property Trustee for cancellation;
(b) Capital 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 Capital Securities; provided that, if such
Capital Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
(c) Capital Securities which have been paid or in exchange for or in
lieu of which other Capital 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
Capital Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Capital 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 Capital 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 Capital
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Capital 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 so to the
Depositor or any Affiliate of the Depositor.
"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.
"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.
8
<PAGE>
"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, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures, 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.
"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.
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"Trust Security" means any one of the Common Securities or the
Capital Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Capital Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as
of [ ], 1999, 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 "Heartland Financial
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
First Union Trust Company, National Association, One Rodney Square, 920 King
Street, 1st Floor, Wilmington, Delaware 19801, 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 Heartland
Financial USA, Inc., 1398 Central Avenue, Dubuque, Iowa 52001.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES.
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.
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SECTION 204. ISSUANCE OF THE CAPITAL SECURITIES.
On ___________, 1999, 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, Capital Securities Certificates, registered in
the name of Persons entitled thereto in an aggregate amount of 1,000,000 Capital
Securities having an aggregate Liquidation Amount of $25,000,000 against receipt
of the aggregate purchase price of such Capital 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 $_______ 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
$__________, 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 $________________.
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.
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
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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 Capital 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 Capital Securities upon
the American Stock Exchange or such securities exchange or
exchanges as shall be determined by the Depositor, the
registration of the Capital Securities under the Exchange Act,
the compliance with the listing requirements of the American
Stock Exchange or the applicable securities exchange 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;
(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
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Holders of the Capital 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;
(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
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(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 Capital 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 Capital 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 Capital 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 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 Capital 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
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registration of the Capital 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 Capital 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
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.
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.
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(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 the date of
issuance, 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 December
31, 1999. 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 Period with respect to the Debentures,
Distributions on the Capital Securities shall be deferred for a period equal to
the Extended Interest Payment Period. The amount of Distributions payable for
any period shall include the Additional Amounts and Additional Interest, if any.
(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 Business Day immediately prior to the relevant Distribution
Date.
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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 402(d); and
(vi) the place or places at which Trust Securities are to be
surrendered for the payment of the Redemption Price.
(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 Capital 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 Capital Securities held in global form,
deposit with the Clearing Agency for such Capital 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 Capital Securities to pay to the
appropriate beneficial holders. 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
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surrender of their Capital 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 Capital Securities
or its nominee, as the registered Holder of the Global Capital Securities
Certificate, shall receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution with
respect to Capital Securities held by the Clearing Agency or its nominee, and
(iv) any Trust Securities Certificates not held by the Clearing Agency for
the Capital 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.
(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 Capital Securities. The particular Capital Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Property
Trustee from the Outstanding Capital 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 Capital Securities of a
denomination larger than $25. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Capital Securities selected for
redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust
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Agreement, unless the context otherwise requires, all provisions relating to
the redemption of Capital Securities shall relate, in the case of any Capital
Securities redeemed or to be redeemed only in part, to the portion of the
Liquidation Amount of Capital 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 Capital 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 Capital 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
Capital 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, Capital
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 Capital Securities shall have been cured,
waived or otherwise eliminated. Until any such Event of Default under this Trust
Agreement with respect to the Capital Securities shall have been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely on behalf
of the record holders of the Capital Securities and not the record holder of the
Common Securities, and only the Holders of the Capital 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 Capital 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 Capital 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.
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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 Capital 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.
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 Capital 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 integral multiples thereof. 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
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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 and 511.
SECTION 503. EXECUTION, AUTHENTICATION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES.
(a) On the Closing Date and on any date on which the underwriters
exercise their over-allotment option, if any and as applicable (an "Option
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 Trust Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the Trust Securities
Certificate has been authenticated under this Trust Agreement. Each Trust
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 Trust Securities Certificates.
The Property Trustee may appoint an Authenticating Agent acceptable to
the Trust to authenticate the Trust Securities. An Authenticating Agent may
authenticate the Trust 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 CAPITAL SECURITY.
(a) Any Global Capital 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 Capital Security shall constitute a
single Capital Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, no
Global Capital Security may be exchanged for Capital 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 Capital Securities and the Depositor is
unable to locate a qualified successor depositary, (ii) the Depositor executes
and delivers to the Trustee a
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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 Capital Security is to be exchanged in whole or in part for
a beneficial interest in a Global Capital Security, then either (i) such
Global Capital 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 canceled, or equal to the Liquidation Amount of such other
Capital 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 Capital 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 Capital 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 Capital Securities issuable in exchange for such Global Capital 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 Capital Security executed, authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Capital
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 Capital Security, unless such Global Capital Security is
registered in the name of a Person other than the Clearing Agency for such
Global Capital Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a
Global Capital Security, shall be considered the Holder of the Capital
Securities represented by such Global Capital Security for all purposes under
this Trust Agreement and the Capital Securities, and owners of beneficial
interests in such Global Capital 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 Capital 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
Capital 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 Capital
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.
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SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF CAPITAL 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 Capital 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 Capital 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 referred 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 Capital 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 Capital 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 Capital Securities that have been
called for redemption. At the option of a record holder, Capital Securities
Certificates may be exchanged for other Capital Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Capital Securities Certificates to be exchanged at
the office or agency maintained pursuant to Section 508.
(c) Every Capital 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
executed by the Holder or his attorney duly authorized in writing. Each
Capital 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 Capital
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 Capital
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 Capital
Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Capital Securities being redeemed in part.
(d) No service charge shall be made for any registration of transfer
or exchange of Capital 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 Capital Securities Certificates.
(e) Capital 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
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Capital Security not made in accordance with this Trust Agreement shall be
null and void. A Capital Security that is not a Global Capital Security may
be transferred, in whole or in part, to a Person who takes delivery in the
form of another Capital Security that is not a Global Capital Security as
provided in Section 504(a). A beneficial interest in a Global Capital
Security may be exchanged for a Capital Security that is not a Global Capital
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 the Property Trustee in the
case of a Capital Securities Certificate shall authenticate 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.
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 each record date, 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
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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 of a beneficial interest in the Global Capital
Securities 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, New York or Wilmington, Delaware or other location
designated by the Administrative Trustees, an office or offices or agency or
agencies where Capital 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, First Union Trust Company, National Association, 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 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
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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
EXCEPT IN COMPLIANCE WITH SECTION 510 OF THE TRUST AGREEMENT."
SECTION 511. TRUST SECURITIES CERTIFICATES.
(a) Upon their original issuance, Capital Securities Certificates shall
be issued in the form of one or more fully registered Global Capital 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 Capital 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.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Global Capital 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 Capital 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 Capital
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Securities against payment of the purchase price therefor, the Capital
Securities shall be fully paid and nonassessable interests in the Trust. The
Holders of the Capital 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 Capital 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 Capital 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 Capital 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 Capital 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 Capital Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
(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 Holder of Capital
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 the Outstanding Capital Securities; PROVIDED, HOWEVER,
that where a consent under the Indenture would require the consent of each
Holder of Outstanding Debentures affected thereby,
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no such consent shall be given by the Property Trustee without the prior
written consent of each Holder of Capital Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of the Holders
of the Outstanding Capital Securities, except by a subsequent vote of the
Holders of the Outstanding Capital Securities. The Property Trustee shall
notify each Holder of the Outstanding Capital 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
Capital 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
Capital 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 Capital 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 Capital 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 Capital Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Capital 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 CAPITAL 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 Capital Securityholders are entitled
to vote upon the written request of the Capital Securityholders of 25% of the
Outstanding Capital 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 Capital Securityholders to vote
on any matters as to which the Capital Securityholders are entitled to vote.
(b) Capital Securityholders of record of 50% of the Outstanding Capital
Securities (based upon their aggregate Liquidation Amount), present in person or
by proxy, shall constitute a quorum at any meeting of Securityholders.
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(c) If a quorum is present at a meeting, an affirmative vote by the
Capital Securityholders of record present, in person or by proxy, holding more
than a majority of the Capital Securities (based upon their aggregate
Liquidation Amount) held by the Capital 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 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 and without prior notice if Securityholders holding 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.
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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 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.
(c) The ownership of Capital 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
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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 national banking association with its principal place
of business in the State of Delaware or, with respect to a Successor Property
Trustee, a state chartered bank and trust company; duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(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;
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(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, other than the filing of a Certificate of Trust with the
Secretary of State of 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 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 national banking association with its
principal place of business in the State of Delaware, or, if a Successor
Delaware Trustee, 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
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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, other than the filing of the Certificate of Trust with
the Secretary of State of 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.
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 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.
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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. Neither the Administrative Trustees nor the Delaware Trustee
shall be liable for its act or omissions hereunder except as a result of its
own gross negligence or bad faith 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, an Administrative Trustee has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to the Securityholders, 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 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 Administrative Trustees.
(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 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;
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(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.
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.
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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
Capital 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;
(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 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
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hereunder in good faith and in reliance thereon and, in accordance with such
advice, 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, 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 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
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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 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 (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).
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 and the Delaware Trustee
may be the same Person. 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
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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 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 an 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 to do so, 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
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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:s
(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
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.
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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 or 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
amount of the Outstanding Capital 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 Capital Securityholders, by Act of the
Securityholders of a Majority in liquidation amount of the Outstanding Capital
Securities 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 Capital Securityholders and
accepted appointment in the
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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.
(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.
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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 directly or indirectly a creditor of the Depositor or the Trust (or any
other obligor upon the Debentures or the Trust Securities), excluding any
creditor relationship described in Section 311(b) of the Trust Indenture Act,
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.
(a) Not later than July 15 of each year commencing with July 15, 2000,
the Property Trustee shall transmit to all Securityholders in accordance with
Section 1008, and to the Depositor, a brief report dated as of May 15 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.
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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 (i) 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 and (ii) such certificates required by Section 314(a)(4) 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.
(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
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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,
__________, 2034 (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:"
(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 Capital
Securities in accordance with Section 904;
(c) the redemption of all of the Capital Securities in connection with
the redemption of all of the Debentures (whether upon a Debenture Redemption
Date or the maturity of the Debentures); 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
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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 the 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 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 Capital 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 and for the
period provided for in the Debentures
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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 or termination pro rata (determined as
aforesaid) with Holders of Capital Securities, except that, if a Debenture
Event of Default has occurred and is continuing, the Capital 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 Capital 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 Capital Securities; or (b)
substitutes for the Capital Securities other securities having substantially
the same terms as the Capital Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Capital 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 Capital Securities are then listed, if
any; (iv) such merger,
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consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital 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 Capital
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 the Holders of 100% in Liquidation Amount of the Capital
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 replacement, conveyance, transfer or lease 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
MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
The death, incapacity, dissolution, bankruptcy or termination 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
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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.
(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 adversely
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.
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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.
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 Capital Securityholder, to such Capital
Securityholder as such Securityholder's name and address may appear on the
Securities Register; and (b) in the case of the Common Securityholder
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or the Depositor, to Heartland Financial USA, Inc., 1398 Central Avenue,
Dubuque, Iowa 52001, Attention: John K. Schmidt, facsimile no.: (319)
___-____. Any notice to Capital 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 First Union Trust
Company, National Association, One Rodney Square, 920 King Street, 1st Floor,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration; (b)
with respect to the Delaware Trustee, to First Union Trust Company, National
Association 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 Capital Trust." 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 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.
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(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. The
application of the Trust Indenture Act to this Trust Agreement shall not
affect the nature of the 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 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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HEARTLAND FINANCIAL USA, INC.
By:_______________________________
Name:____________________________
Title:_____________________________
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Property Trustee
By:______________________________
Name:____________________________
Title:_____________________________
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Delaware Trustee
By:______________________________
Name:____________________________
Title:_____________________________
_______________________________________________
____________________, As Administrative Trustee
_______________________________________________
________________, As Administrative Trustee
_______________________________________________
____________________, As Administrative Trustee
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EXHIBIT A
CERTIFICATE OF TRUST
OF
HEARTLAND FINANCIAL CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF Heartland Financial Capital Trust I (the
"Trust"), dated __________ __, 1999, is being duly executed and filed by First
Union Trust Company, National Association, a national banking association,
___________________, ________________ and __________________, 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 Heartland
Financial Capital Trust I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is First Union Trust Company, National
Association, One Rodney Square, 920 King Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust will be effective upon
filing.
IN WITNESS WHEREOF, the undersigned have executed this Certificate
of Trust in accordance with Section 3811(a)(1) of the Act.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Delaware trustee
By:________________________________
Name:
Title:
_______________________________________________
____________________, as Administrative Trustee
_______________________________________________
________________, as Administrative Trustee
_______________________________________________
____________________, as Administrative Trustee
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE
WITH SECTION 510 OF THE TRUST AGREEMENT
CERTIFICATE NUMBER 1 NUMBER OF COMMON SECURITIES _________
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
HEARTLAND FINANCIAL CAPITAL TRUST I
COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
HEARTLAND FINANCIAL CAPITAL TRUST I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
HEARTLAND FINANCIAL USA, 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, [ ]1999, 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.
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of _________, 1999.
HEARTLAND FINANCIAL CAPITAL TRUST I
By:_____________________________________
Name:___________________________________
Title:__________________________________
2
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EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as of
_________________ __, 1999, between HEARTLAND FINANCIAL USA, INC., a Delaware
corporation (the "Company"), and HEARTLAND FINANCIAL 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 ____% Subordinated Debentures (the
"Debentures") from, the Company and to issue and sell Heartland Financial
Capital Trust I ___% Cumulative Trust Capital Securities (the "Capital
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 ________ __, 1999, 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 Capital 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 Capital Securities or other similar interests in the
Trust the amounts due such holders pursuant to the terms of the Capital
Securities or such other similar interests, as the case may be. This
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 Capital
<PAGE>
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 Capital
Securities or any Beneficiary must restore payment of any sums paid under the
Capital Securities, under any obligation, under the Capital Securities
Guarantee Agreement dated the date hereof by the Company and First Union
Trust Company, National Association, 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.
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.
2
<PAGE>
SECTION 1.6. SUBROGATION.
The Company shall be subrogated to all (if any) rights of the Trust
in respect of any amounts paid to the Beneficiaries by the Company under this
Agreement; provided, however, that the Company shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation of any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Agreement.
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 Capital 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 Capital 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 telex):
Heartland Financial Capital Trust I
c/o Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
Facsimile No.: (319) ___-____
Attention: __________________, Administrative Trustee
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
Facsimile No.: (319) ___-____
Attention: __________________
3
<PAGE>
SECTION 2.4. CHOICE OF LAW
This agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware (without regard to conflict
of laws principles).
THIS AGREEMENT is executed as of the day and year first above
written.
HEARTLAND FINANCIAL USA, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
HEARTLAND FINANCIAL CAPITAL TRUST I
By:_____________________________________
Name:___________________________________
Title: Administrative Trustee
4
<PAGE>
EXHIBIT D
CERTIFICATE NUMBER ____________ NUMBER OF CAPITAL SECURITIES ________
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
HEARTLAND FINANCIAL CAPITAL TRUST I
____% CUMULATIVE TRUST CAPITAL SECURITIES
(LIQUIDATION AMOUNT $25 PER CAPITAL SECURITY)
CUSIP ____________
Heartland Financial 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 _________ Capital
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the _____% Cumulative Trust Capital
Securities (liquidation amount $25 per Capital Security) (the "Capital
Securities"). The Capital 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
Capital Securities are set forth in, and this certificate and the Capital
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 _______ __, 1999, as the same may be amended from time to time
(the "Trust Agreement"), including the designation of the terms of Capital
Securities as set forth therein. The Holder is entitled to the benefits of the
Capital Securities Guarantee Agreement entered into by Heartland Financial USA,
Inc., a Delaware corporation, and First Union Trust Company, National
Association, as guarantee trustee, dated as of [ ], 1999, 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.
<PAGE>
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.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this Certificate this ____ day of _________.
CERTIFICATE OF AUTHENTICATION: HEARTLAND FINANCIAL CAPITAL
TRUST I
This is one of the ____% Cumulative
Trust Capital Securities
Referred to in the within mentioned By: ________________________________
Amended and Restated Trust Agreement. ____________________, as
Administrative Trustee
By: ________________________________
________________, as
Administrative Trustee
By: ________________________________
________________, as
Administrative Trustee
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION,
as Authentication Agent and Registrar
By:__________________________________
AUTHORIZED SIGNATURE
2
<PAGE>
FORM OF REVERSE OF CERTIFICATE
The Trust will furnish without charge to any registered owner of
Capital Securities who so requests, a copy of the Trust Agreement and the
Guarantee. Any such request should be in writing and addressed to Heartland
Financial Capital Trust I, c/o Heartland Financial USA, Inc., 1398 Central
Avenue, Dubuque, Iowa 52001 or to the Registrar named on the face of this
Certificate.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN CON - as tenants in common
TEN ENT - as tenants in the entireties
JT TEN - as joint tenants with right of survival
UNIF GIFT MIN ACT - under Uniform Gift to Minors Act and not as tenants
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(insert address and zip code of assignee)
the within Certificate and all rights and interests represented by the
Capital Securities evidenced thereby, and hereby irrevocably constitutes and
appoints attorney to transfer the said Capital Securities on the books of the
within-named Trust with full power of substitution in the premises.
3
<PAGE>
Dated:_______________________________ Signature: _________________________
NOTE: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this Certificate in every particular, without
alteration or enlargement, or any change whatever.
Signature(s) Guaranteed:
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor
institution" that is a member or participant in a "signature
guarantee program" (i.e., the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York
Stock Exchange, Inc. Medallion Signature Program).
4
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE OF AUTHENTICATION
This is one of the ____% Cumulative Trust Capital Securities
referred to in the within-mentioned Amended and Restated Trust Agreement.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Authentication Agent and
Registrar
By: ______________________________________
AUTHORIZED SIGNATURE
<PAGE>
EXHIBIT 4.7
FORM OF
CAPITAL SECURITIES GUARANTEE AGREEMENT
BY AND BETWEEN
HEARTLAND FINANCIAL USA, INC.
AND
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
DATED AS OF ______ __, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS .........................................................................................................2
ARTICLE I DEFINITIONS AND INTERPRETATION.........................................................................2
SECTION 1.1. DEFINITIONS AND INTERPRETATION................................................2
ARTICLE II TRUST INDENTURE ACT...................................................................................6
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION..............................................6
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES................................................6
SECTION 2.3. REPORTS BY THE CAPITAL GUARANTEE TRUSTEE......................................6
SECTION 2.4. PERIODIC REPORTS TO CAPITAL GUARANTEE
TRUSTEE.......................................................................7
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT.....................................................................7
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.....................................................7
SECTION 2.7. EVENT OF DEFAULT; NOTICE......................................................7
SECTION 2.8. CONFLICTING INTERESTS.........................................................7
ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE
TRUSTEE..................................................................................................8
SECTION 3.1. POWERS AND DUTIES OF THE CAPITAL GUARANTEE
TRUSTEE.......................................................................8
SECTION 3.2. CERTAIN RIGHTS OF CAPITAL GUARANTEE TRUSTEE...................................9
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
GUARANTEE....................................................................11
ARTICLE IV CAPITAL GUARANTEE TRUSTEE............................................................................11
SECTION 4.1. CAPITAL GUARANTEE TRUSTEE; ELIGIBILITY.......................................11
ARTICLE V GUARANTEE.............................................................................................13
SECTION 5.1. GUARANTEE....................................................................13
SECTION 5.2. WAIVER OF NOTICE AND DEMAND..................................................13
SECTION 5.3. OBLIGATIONS NOT AFFECTED.....................................................13
SECTION 5.4. RIGHTS OF HOLDERS............................................................14
SECTION 5.5. GUARANTEE OF PAYMENT.........................................................14
SECTION 5.6. SUBROGATION..................................................................15
SECTION 5.7. INDEPENDENT OBLIGATIONS......................................................15
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION............................................................15
SECTION 6.1. LIMITATION OF TRANSACTIONS...................................................15
SECTION 6.2. RANKING......................................................................16
ARTICLE VII TERMINATION.........................................................................................16
i
<PAGE>
SECTION 7.1. TERMINATION..................................................................16
ARTICLE VIII INDEMNIFICATION....................................................................................16
SECTION 8.1. EXCULPATION..................................................................16
SECTION 8.2. INDEMNIFICATION..............................................................17
ARTICLE IX MISCELLANEOUS........................................................................................17
SECTION 9.1. SUCCESSORS AND ASSIGNS.......................................................17
SECTION 9.2. AMENDMENTS...................................................................17
SECTION 9.3. NOTICES......................................................................17
SECTION 9.4. BENEFIT......................................................................18
SECTION 9.5. GOVERNING LAW................................................................18
</TABLE>
ii
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
SECTION OF TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED GUARANTEE AGREEMENT
- ------------------------------- -------------------------------
<S> <C>
310(a) 1(a)
310(b) 1(c), 2.8
310(c) Not Applicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Not Applicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Not Applicable
314(c) 2.5
314(d) Not Applicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1
315(d) 3.1(d)
316(a) 1.1, 2.6, 5.4
316(b) 5.3
317(a) 3.1
317(b) Not Applicable
318(a) 1(a)
318(b) 1
318(c) 2.1(b)
</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.
iii
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
THIS CAPITAL SECURITIES GUARANTEE AGREEMENT (this "Capital
Securities Guarantee"), dated as of ________ __, 1999, is executed and
delivered by HEARTLAND FINANCIAL USA, INC., a Delaware corporation (the
"Guarantor"), and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, as trustee (the "Capital Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of Heartland Financial Capital Trust I, a
Delaware statutory business trust (the "Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of [ ], 1999, among the trustees of the Trust
named therein, the Guarantor, as depositor, and the holders from time to time
of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof up to 1,000,000 Capital securities, having an
aggregate liquidation amount of $25,000,000, designated the [ ]% Cumulative
Trust Capital Securities (the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Capital Securities Guarantee, to pay to the
Holders of the Capital Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Capital Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Capital Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS AND INTERPRETATION.
In this Capital Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Capital Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
2
<PAGE>
(b) terms defined in the Trust Agreement as at the date of execution
of this Capital Securities Guarantee have the same meaning when used in this
Capital Securities Guarantee, unless otherwise defined in this Capital
Securities Guarantee;
(c) a term defined anywhere in this Capital Securities Guarantee has
the same meaning throughout;
(d) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to Articles
and Sections are to Articles and Sections of this Capital Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Capital Securities Guarantee, unless otherwise defined in
this Capital Securities Guarantee or unless the context otherwise requires;
and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person; provided, however, that the Authorized Officer signing
an Officers' Certificate given pursuant to Section 314(a)(4) of the Trust
Indenture Act shall be the principal executive, financial or accounting
officer of such Person.
"Business Day" means any day other than a Saturday, Sunday, a day on
which federal or state banking institutions in New York, New York or
Wilmington, Delaware are authorized or required by law, executive order or
regulation to close or a day on which the Corporate Trust Office of the
Capital Guarantee Trustee is closed for business.
"Capital Guarantee Trustee" means First Union Trust Company,
National Association, until a Successor Capital Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Capital Securities Guarantee and thereafter means each such Successor Capital
Guarantee Trustee.
"Corporate Trust Office" means the office of the Capital Guarantee
Trustee at which the corporate trust business of the Capital Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at One Rodney
Square, 920 King Street, 1st Floor, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Capital
Securities.
3
<PAGE>
"Debentures" means the ____% Subordinated Debentures due
___________, 2029, of the Debenture Issuer held by the Property Trustee of
the Trust.
"Debenture Issuer" means Heartland Financial USA, Inc., issuer of
the Debentures under the Indenture.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Capital Securities Guarantee.
"Guarantor" means Heartland Financial USA, Inc., a Delaware
corporation.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent
not paid or made by the Trust: (i) any accumulated and unpaid Distributions
(as defined in the Trust Agreement) that are required to be paid on such
Capital Securities, to the extent the Trust shall have funds available
therefor, (ii) the redemption price, including all accumulated and unpaid
Distributions to but excluding the date of redemption (the "Redemption
Price"), to the extent the Trust has funds available therefor, with respect
to any Capital Securities called for redemption by the Trust, and (iii) 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 in exchange for Capital Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Capital Securities to the date of
payment, to the extent the Trust shall have funds available therefor, and (b)
the amount of assets of the Trust remaining available in either case for
distribution to Holders in liquidation of the Trust (the "Liquidation
Distribution"). If an event of default (as defined in the Indenture) with
respect to the Debentures has occurred and is continuing, the rights of
holders of the Common Securities to receive payments under the Trust
Agreement are subordinated to the rights of Holders of Capital Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, the Capital Guarantee Trustee or
any of their respective Affiliates.
"Indemnified Person" means the Capital Guarantee Trustee, any
Affiliate of the Capital Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Capital Guarantee Trustee.
"Indenture" means the Indenture dated as of [ ], 1999, among the
Debenture Issuer and First Union Trust Company, National Association, as
trustee, and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to the
Property Trustee of the Trust.
"List of Holders" shall have the meaning assigned thereto in
Section 2.2(a) hereof.
4
<PAGE>
"Liquidation Amount" means the stated value of $25 per Capital
Security.
"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.
"Majority in liquidation amount of the Capital Securities" means,
except as provided in the terms of the Capital Securities or, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting separately as a class, of more than 50% of the Liquidation
Amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to but
excluding the date upon which the voting percentages are determined) of all
Outstanding Capital Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person, at least one of
whom shall be the principal executive officer, principal financial officer,
principal accounting officer, treasurer or any vice president of such Person.
Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Capital Securities Guarantee shall
include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definition 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
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Redemption Price" has the meaning provided therefor in the
definition of Guarantee Payments.
"Responsible Officer" means, with respect to the Capital Guarantee
Trustee, any officer within the Corporate Trust Office of the Capital
Guarantee Trustee with direct responsibility for the administration of this
Capital Securities Guarantee, including any vice-president, any assistant
vice-president, any assistant secretary or other officer or assistant officer
of the Capital Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom
5
<PAGE>
such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Capital Guarantee Trustee" means a successor Capital
Guarantee Trustee possessing the qualifications to act as Capital Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Capital Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Capital
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed
by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.
(a) In the event the Capital Guarantee Trustee is not also acting in
the capacity of the Property Trustee under the Trust Agreement, the Guarantor
shall cause to be provided to the Capital Guarantee Trustee a list, in such
form as the Capital Guarantee Trustee may reasonably require, of the names
and addresses of the Holders of the Capital Securities ("List of Holders") as
of the date (i) within five (5) Business Days after the last day of March,
June, September and December, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 15 days before such List of Holders is given to the Capital
Guarantee Trustee; provided, that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders caused to have been given to the Capital
Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE CAPITAL GUARANTEE TRUSTEE.
On or before July 15 of each year, the Capital Guarantee Trustee
shall provide to the Holders of the Capital Securities such reports as are
required by Section 313 of the Trust Indenture Act, if
6
<PAGE>
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO CAPITAL GUARANTEE TRUSTEE.
The Guarantor shall provide to the Capital Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 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 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Capital Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Capital Securities Guarantee 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) may be given
in the form of an Officers' Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Capital Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7. EVENT OF DEFAULT; NOTICE.
(a) The Capital Guarantee Trustee shall, within five Business Days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of all
Events of Default actually known to a Responsible Officer of the Capital
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice; provided, that, except in the case of a default by Guarantor on
any of its payment obligations, the Capital Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer
of the Capital Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Capital
Securities.
(b) The Capital Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the
Capital Guarantee Trustee charged with the administration of the Trust
Agreement shall have obtained actual knowledge.
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SECTION 2.8. CONFLICTING INTERESTS.
The Trust Agreement shall be deemed to be specifically described in
this Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
SECTION 3.1. POWERS AND DUTIES OF THE CAPITAL GUARANTEE TRUSTEE.
(a) This Capital Securities Guarantee shall be held by the Capital
Guarantee Trustee for the benefit of the Holders of the Capital Securities,
and the Capital Guarantee Trustee shall not transfer this Capital Securities
Guarantee to any Person except a Holder of Capital Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee
Trustee on acceptance by such Successor Capital Guarantee Trustee of its
appointment to act as Successor Capital Guarantee Trustee. The right, title
and interest of the Capital Guarantee Trustee shall automatically vest in any
Successor Capital Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed
and delivered pursuant to the appointment of such Successor Capital Guarantee
Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Capital Guarantee Trustee has occurred and is continuing, the Capital
Guarantee Trustee shall enforce this Capital Securities Guarantee for the
benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Capital Securities Guarantee, and no implied covenants shall be
read into this Capital Securities Guarantee against the Capital Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible
Officer of the Capital Guarantee Trustee, the Capital Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Capital
Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Capital Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(i) the duties and obligations of the Capital Guarantee
Trustee shall be determined solely by the express provisions
of this Capital Securities Guarantee, and
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the Capital Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Capital Securities Guarantee,
and no implied covenants or obligations shall be read into
this Capital Securities Guarantee against the Capital
Guarantee Trustee; and
(ii) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Capital Guarantee
Trustee and conforming to the requirements of this Capital
Securities Guarantee; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Capital Guarantee Trustee, the
Capital Guarantee Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(e) the Capital Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Capital
Guarantee Trustee, unless it shall be proved that the Capital Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(f) the Capital Guarantee 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 Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Capital Guarantee
Trustee, or exercising any trust or power conferred upon the Capital
Guarantee Trustee under this Capital Securities Guarantee; and
(g) no provision of this Capital Securities Guarantee shall require
the Capital Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Capital Guarantee
Trustee shall have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it under the terms of
this Capital Securities Guarantee or indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2. CERTAIN RIGHTS OF CAPITAL GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) the Capital Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
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(ii) any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Capital
Securities Guarantee, the Capital Guarantee Trustee shall deem
it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Capital Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(iv) the Capital Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or
any rerecording, refiling or registration thereof);
(v) the Capital Guarantee Trustee may consult with counsel,
the written advice or opinion of such counsel with respect
legal matters 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 accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its
employees. The Capital Guarantee Trustee shall have the right
at any time to seek instructions concerning the administration
of this Capital Securities Guarantee from any court of
competent jurisdiction;
(vi) the Capital Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Capital Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have
provided to the Capital Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Capital Guarantee
Trustee, against the costs, expenses (including attorneys'
fees and expenses and the expenses of the Capital Guarantee
Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Capital Guarantee Trustee, upon the occurrence of
an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Capital Securities Guarantee;
(vii) the Capital Guarantee 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, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Capital Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
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(viii) the Capital Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians
or attorneys, and the Capital Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Capital Guarantee Trustee or its
agents hereunder shall bind the Holders of the Capital
Securities, and the signature of the Capital Guarantee Trustee
or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to
inquire as to the authority of the Capital Guarantee Trustee
to so act or as to its compliance with any of the terms and
provisions of this Capital Securities Guarantee, both of
which shall be conclusively evidenced by the Capital
Guarantee Trustee's or its agent's taking such action;
(x) whenever in the administration of this Capital Securities
Guarantee the Capital Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from
the Holders of a Majority in liquidation amount of the Capital
Securities, (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 conclusively relying
on or acting in accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Guarantee 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 Capital Guarantee 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 Capital Guarantee Trustee shall be construed to be
a duty.
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The Recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Capital Guarantee Trustee does not
assume any responsibility for their correctness. The Capital Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Capital Securities Guarantee.
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ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1. CAPITAL GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Capital Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or
Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or
examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Capital Guarantee Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2. APPOINTMENT, REMOVAL AND RESIGNATION OF CAPITAL GUARANTEE
TRUSTEES.
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Capital Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Capital Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Capital Guarantee Trustee and delivered to the Guarantor.
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(c) The Capital Guarantee Trustee appointed to office shall hold
office until a Successor Capital Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Capital Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Capital
Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Capital Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Capital Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal
or resignation of the Capital Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Capital Guarantee Trustee all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 5.2. WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
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SECTION 5.3. OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor
under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be
performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Capital Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;
(d) 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;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) any failure or omission to receive any regulatory approval or
consent required in connection with the Capital Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Capital Securities;
(g) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4. RIGHTS OF HOLDERS.
(a) Subject to Section 5.4(b), the Holders of a Majority in
liquidation amount of the Capital Securities have the right to direct the
time, method and place of conducting of any proceeding for any remedy
available to the Capital Guarantee Trustee in respect of this Capital
Securities Guarantee or exercising any trust or power conferred upon the
Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) Any Holder of Capital Securities may institute and prosecute a
legal proceeding directly against the Guarantor to enforce its rights under
this Capital Securities Guarantee without first instituting a legal
proceeding against the Trust, the Capital Guarantee Trustee or any other
Person. The Guarantor waives any right or remedy to require that any action
be brought first against the Trust or any other person or entity before
proceeding directly against the Guarantor.
SECTION 5.5. GUARANTEE OF PAYMENT.
This Capital Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6. SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Trust in respect of any amounts
paid to such Holders by the Guarantor under this Capital Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Capital Securities Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Capital Securities
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.7. INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (h), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. LIMITATION OF TRANSACTIONS.
So long as any Capital Securities remain outstanding, if there shall
have occurred an Event of Default under this Capital Securities Guarantee, an
event of default under the Indenture, an event of default under the Trust
Agreement or during an Extended Interest Payment Period (as defined in the
Indenture), then (a) the Guarantor shall not and will not permit any
Subsidiary to declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than (I) as a result of a
reclassification of its capital stock for another class of its capital stock
or (II) declarations or payments of dividends on capital stock by a
Subsidiary of the Company to the Company); (b) the Guarantor shall not and
will not permit any Subsidiary to make any payment of interest or principal
on or repay, repurchase or redeem any debt securities issued by the Guarantor
which rank pari passu with or junior to the Debentures; (c) the Guarantor
shall not make any Guarantee Payments with respect to debt securities of any
Subsidiary of the Guarantor that rank pari passu with or junior to the
Debentures (other than pursuant to this Capital Securities Guarantee
Agreement); and (d) the Guarantor shall not redeem, purchase or acquire less
than all of the outstanding Debentures or any of the Capital Securities.
SECTION 6.2. RANKING.
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all Senior Debt, Subordinated Debt and Additional Senior
Obligations, as defined in the Indenture, of the Guarantor, to the extent and
in the manner set forth in the Indenture, and the applicable provisions of
the Indenture will apply, in all relevant respects, to the obligations of the
Guarantor hereunder and (ii) senior to the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1. TERMINATION.
This Capital Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Capital Securities, (ii) upon full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust, or (iii) upon distribution of the Debentures to the
Holders of the Capital Securities. Notwithstanding the foregoing, this
Capital Securities Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities
or under this Capital Securities Guarantee.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance
with this Capital Securities Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred
on such Indemnified Person by this Capital Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Capital
Securities might properly be paid.
SECTION 8.2. INDEMNIFICATION.
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Capital Securities Guarantee.
When the Capital Guarantee Trustee incurs expenses or renders
services in connection with an Event of Default specified in Section
7.1(a)(iv) or (v) of the Indenture, the expenses including the reasonable
charges and expenses of its counsel) and the compensation for services are
intended to constitute expenses of administration under any applicable
federal or state bankruptcy, insolvency or other similar law.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Capital Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the
Holders of the Capital Securities then outstanding. Except in connection with
any merger or consolidation of the Guarantor with or into another entity
permitted by Section 12.1 of the Indenture or any sale, transfer, conveyance
or other disposition of the property of the Guarantor permitted by Section
12.1 of the Indenture, the Guarantor may not assign its rights or delegate
its obligations under this Capital Securities Guarantee.
SECTION 9.2. AMENDMENTS.
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Capital Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Capital Securities. The provisions of Article VI of the Trust Agreement
with respect to meetings of Holders of the Capital Securities apply to the
giving of such approval.
SECTION 9.3. NOTICES.
All notices provided for in this Capital Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital
Guarantee Trustee's mailing address set forth below (or such other address as
the Capital Guarantee Trustee may give notice of to the Holders of the
Capital Securities):
First Union Trust Company, National Association
One Rodney Square
920 King Street, 1st Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Capital Securities):
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
Attention: John K. Schmidt, Executive Vice President
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(c) If given to any Holder of Capital Securities, at the address set
forth on the books and records of the Trust. All such notices shall be deemed
to have been given when received in person, telecopied with receipt
confirmed, or mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of such refusal
or inability to deliver.
SECTION 9.4. BENEFIT.
This Capital Securities Guarantee is solely for the benefit of the
Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5. GOVERNING LAW.
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE.
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This Capital Securities Guarantee is executed as of the day and year
first above written.
HEARTLAND FINANCIAL USA, INC., as Guarantor
By:_________________________________________
Its:_________________________________________
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Capital Guarantee Trustee
By:_________________________________________
Its:_________________________________________
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EXHIBIT 5.1
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
333 WEST WACKER DRIVE, SUITE 2700
CHICAGO, ILLINOIS 60606
Telephone (312) 984-3100
Facsimile (312) 984-3150
September 15, 1999
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, IA 52001
Ladies and Gentlemen:
We have acted as special counsel for Heartland Financial USA, Inc.,
a Delaware corporation (the "Company") in connection with the, in connection
with the offering (the "Offering") by Heartland Financial Capital Trust I, a
Delaware business trust (the "Trust"), of the capital securities of the Trust
(the "Capital Securities") representing preferred undivided beneficial
ownership interests in the assets of the Trust, all as described in the
Company's and the Trust's Registration Statement on Form S-3 (the
"Registration Statement"). At your request, this opinion is being furnished
to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of (the "Certificate of Trust") of
the Trust, as filed with the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on September 13, 1999;
(b) The Trust Agreement of the Trust, dated as of September 13,
1999, among the Company, First Union Trust Company, National Association, a
national banking association with its principal place of business in the
State of Delaware ("First Union"), as trustee, and Lynn B. Fuller, John K.
Schmidt, and Jacquie M. Manternach, as administrative trustees (the
"Administrative Trustees");
(c) A form of Amended and Restated Trust Agreement for the Trust,
to be entered into between the Company, the Trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
ownership interests in the assets of such Trust, attached as an exhibit to
the Registration Statement described below (the "Trust Agreement");
(d) A form of certificate representing the Capital Securities;
(e) A form of Indenture to be entered into between the Company
and First Union, as Indenture Trustee (the "Indenture");
(f) A form of subordinated debenture to represent the subordinated
debentures of the Company (the "Debenture");
<PAGE>
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
Heartland Financial USA, Inc.
September 15, 1999
Page 2
(g) A form of Capital Securities Guarantee Agreement to be entered
into between the Company and First Union, as Guarantee Trustee (the
"Guarantee");
(h) A form of Agreement as to Expenses and Liabilities to be
entered into between the Company and the Trust (the "Expense Agreement");
(i) the Articles of Incorporation of the Company filed with the
Secretary of State of the State of Delaware on June 21, 1993, as amended, and
the Company's Bylaws, as amended;
(j) Resolutions of the Board of Directors of the Company relating
to the Offering and dated August 18, 1999; and
(k) The Registration Statement, including the prospectus
constituting a part thereof.
We have made such legal investigation as we deemed necessary for
purposes of this opinion. In that investigation, we have assumed the
genuineness of all signatures, the proper execution of all documents
submitted to us as originals, the conformity to the original documents of all
documents submitted to us as copies, and the authenticity and proper
execution of the originals of such copies. We have not made any independent
factual investigation, have relied without such investigation on all the
listed documents, and disclaim any duty to make such an independent factual
investigation.
Our opinions expressed below are subject to the qualifications that
we express no opinion as to the applicability of, compliance with, or effect
of (i) any bankruptcy, insolvency, reorganization, fraudulent transfer,
fraudulent conveyance, moratorium or other similar law affecting the
enforcement of creditors' rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law), (iii) public policy considerations which may limit the rights of
parties to obtain certain remedies and (iv) any laws except the laws of the
State of Illinois, the General Corporation Law of the State of Delaware and
the federal laws of the United States of America.
Based upon and subject to the foregoing qualifications, assumptions
and limitations and the further limitations set forth below, we are of the
opinion that:
(1) The execution and delivery by the Company of each of the Trust
Agreement, the Indenture, the Guarantee and the Expense Agreement has been
duly and validly authorized.
(2) The Debentures to be issued by the Company to the Trust will,
when issued in accordance with the terms of the Indenture as described in the
Registration Statement at the time it becomes effective, constitute valid and
binding obligations of the Company.
<PAGE>
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
Heartland Financial USA, Inc.
September 15, 1999
Page 3
(3) The Guarantee Agreement when provided by the Company in
accordance with the terms stated in the Registration Statement at the time it
becomes effective and upon issuance of the Capital Securities in accordance
with the terms described in the Registration Statement, will constitute a
valid and binding obligation of the Company.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Experts and Legal Matters"
in the Prospectus. In giving the foregoing consents, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. This
opinion is based upon our knowledge of the law and facts as of the date
hereof, and we assume no duty to communicate with you with respect to any
matter that comes to our attention hereafter.
Very truly yours,
/s/ Barack Ferrazzano Kirschbaum Perlman &
Nagelberg
BARACK FERRAZZANO KIRSCHBAUM
PERLMAN & NAGELBERG
<PAGE>
EXHIBIT 5.2
[Letterhead]
September 14, 1999
Heartland Financial Capital Trust I
c/o Heartland Financial USA, Inc.
1398 Central Avenue
P.O. Box 778
Dubuque, IA 52004-0778
Re: HEARTLAND FINANCIAL CAPITAL TRUST I
Ladies and Gentlemen:
We have acted as special Delaware counsel for Heartland
Financial USA, Inc., a Delaware corporation ("Heartland"), and Heartland
Financial Capital Trust I, a Delaware business trust (the "Trust"), in
connection with the matters set forth herein. At your request, this opinion
is being furnished to you.
For purposes of giving the opinions hereinafter set forth,
our examination of documents has been limited to the examination of originals
or copies of the following:
(a) The Trust Agreement of the Trust, dated as of
September 13, 1999 (the "Original Trust Agreement"),
among Heartland, First Union Trust Company, National
Association, a national banking association with its
principal place of business in the State of Delaware
("First Union"), as trustee (the "Delaware Trustee"),
and Lynn B. Fuller, John K. Schmidt and Jacquie M.
Manternach, as administrative trustees (the
"Administrative Trustees");
(b) A form of Amended and Restated Trust Agreement for
the Trust, among Heartland, the Delaware Trustee,
First Union, as property trustee (the "Property
Trustee"), the Administrative Trustees, and the
holders, from time to time, of the undivided
beneficial ownership interests in the assets of such
Trust (including Exhibits B and D thereto) (the
"Amended and Restated Trust Agreement;" and, together
with the Original Trust Agreement, the "Trust
Agreement");
(d) The Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary
prospectus with respect to the Trust (the
"Prospectus"), relating to the Capital Securities of
the Trusts representing preferred undivided
beneficial ownership interests in the assets of the
<PAGE>
Heartland Financial Capital Trust I
September 14, 1999
Page 2
Trusts (each, a "Capital Security" and collectively,
the "Capital Securities"), filed by Heartland and the
Trust with the Securities and Exchange Commission on
September 15, 1999; and
(e) A Certificate of Good Standing for the Trust, dated
September 14, 1999, obtained from the Secretary of
State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e)
above. In particular, we have not reviewed any document (other than the
documents listed in paragraphs (a) through (e) above) that is referred to in
or incorporated by reference into the documents reviewed by us. We have
assumed that there exists no provision in any document that we have not
reviewed that bears upon or is inconsistent with the opinions stated herein.
We have conducted no independent factual investigation of our own but rather
have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have
assumed (i) the authenticity of all documents submitted to us as authentic
originals, (ii) the conformity with the originals of all documents submitted
to us as copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement will constitute the entire agreement among the parties
thereto with respect to the subject matter thereof, including with respect to
the creation, operation and termination of the Trust, that the Certificate of
Trust is in full force and effect and has not been amended and that the Trust
Agreement will be in full force and effect and will not be amended, (ii)
except to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined
by us, (iv) that each of the parties to the documents examined by us has the
power and authority to execute and deliver, and to perform its obligations
under, such documents, (v) the due authorization, execution and delivery by
all parties thereto of all documents examined by us, (vi) the receipt by each
Person to whom a Preferred Security is to be issued by the Trusts
(collectively, the "Preferred Security Holders") of a Preferred Security
Certificate for such Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Trust Agreement and the
Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Trust
Agreement and the Registration Statement. We have not participated in the
preparation of the Registration Statement or Prospectus and assume no
<PAGE>
Heartland Financial Capital Trust I
September 14, 1999
Page 3
responsibility for their contents.
This opinion is limited to the laws of the State of
Delaware (excluding the securities laws of the State of Delaware), and we
have not considered and express no opinion on the laws of any other
jurisdiction, including federal laws and rules and regulations relating
thereto. Our opinions are rendered only with respect to Delaware laws and
rules, regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 DEL.
C. Section 3801, ET SEQ.
2. The Preferred Securities of the Trust have been duly
authorized by the Trust Agreement and will be duly and validly issued and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, 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. We note that the Preferred
Security Holders may be obligated to make payments as set forth in the Trust
Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the reference to us as local counsel under the headings
"Legal Matters" in the Prospectus Supplement and "Legal Opinions" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
<PAGE>
EXHIBIT 8.1
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
333 WEST WACKER DRIVE, SUITE 2700
CHICAGO, ILLINOIS 60606
MICHAEL J. LEGAMARO
(312) 629-5181 Telephone (312) 984-3100
Voice Mail Ext. 4581 Facsimile (312) 984-3193
[email protected]
September 15,1999
Heartland Financial Capital Trust I
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
RE: HEARTLAND FINANCIAL CAPITAL TRUST I
Ladies and Gentlemen:
We have acted as counsel to Heartland Financial USA, Inc., a Delaware
corporation (the "Company"), and to Heartland Financial Capital Trust I, a
Delaware business trust (the "Trust"), in connection with the registration
statement of the Company and the Trust on Form S-3 (as amended or supplemented,
the "Registration Statement"), of which a preliminary prospectus (the
"Prospectus") is a part, filed by the Company and the Trust with the United
States Securities and Exchange Commission under the Securities Act of 1933, as
amended. In that connection, we have participated in preparation of the section
set forth in the Prospectus entitled "Federal Income Tax Consequences."
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement; the form of Amended and Restated Trust
Agreement for the Trust to be entered into among the Company, First Union Trust
Company, National Association, a national banking association ("First Union")
and certain administrative Trustees named therein, the form of Indenture to be
entered into between the Company and First Union (the "Indenture"); the
Certificate of Trust of the Trust, as filed with the office of the Secretary of
State of the State of Delaware on September 13, 1999; the Trust Agreement as
filed with the office of the Secretary of State of the State of Delaware on
September 13, 1999; and such other documents and instruments as we have deemed
necessary for the rendering of this opinion. In our examination of the relevant
documents, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as copies, the authenticity of such
copies and the accuracy and completeness of all corporate records made available
to us by the Company and by the Trust.
<PAGE>
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
Quad City Holdings Capital Trust I
Quad City Holdings, Inc.
September 15, 1999
Page 2
Based solely upon our review of such documents, and upon such
information as the Company has provided to us (which we have not attempted to
verify in any respect), we are of the opinion that, under current federal income
tax law:
1. The Trust will be classified as a grantor trust and not as an
association taxable as a corporation.
2. The Debentures (as defined in the Indenture) will be
classified as indebtedness of the Company, and the interest on the
Debentures will be deductible by the Company.
3. The statements set forth in the Prospectus under the caption
"Federal Income Tax Consequences" constitute a fair and accurate
summary of the matters addressed therein, based upon current law and
the assumptions stated therein.
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
state, local, foreign, or other tax considerations. If any of the information
upon which we have relied is incorrect, or if changes in the relevant facts
occur after the date hereof, our opinion could be affected thereby.
Moreover, our opinion is based on the Internal Revenue Code of 1986,
as amended, applicable Treasury regulations promulgated thereunder, and
Internal Revenue Service rulings, procedures, and other pronouncements
published by the United States Internal Revenue Service. These authorities
are all subject to change, and such change may be made with retroactive
effect. We can give no assurance that, after such change, our opinion would
not be different. We undertake no responsibility to update or supplement our
opinion. This opinion is not binding upon the Internal Revenue Service, and
there can be no assurance, and none is hereby given, that the Internal
Revenue Service will not take a position contrary to one or more of the
positions reflected in the foregoing opinion, or that our opinion will be
upheld by the courts if challenged by the Internal Revenue Service.
<PAGE>
BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG
Quad City Holdings Capital Trust I
Quad City Holdings, Inc.
September 15, 1999
Page 3
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We also consent
to the use of our name in the Prospectus under the heading "Federal Income Tax
Consequences." In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. This opinion is being furnished
to you solely for your benefit in connection with the transactions set forth
above. It may not be relied upon by, nor a copy of it delivered to any other
party, without our prior written consent. This opinion is based upon our
knowledge of the law and facts as of the date hereof, and we assume no duty to
communicate with you with respect to any matter that comes to our attention
hereafter.
Very truly yours,
/s/ Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
BARACK FERRAZZANO KIRSCHBAUM
PERLMAN & NAGELBERG
<PAGE>
EXHIBIT 12.1
HEARTLAND FINANCIAL USA, INC.
CALCULATION OF EARNINGS TO FIXED CHARGES AS OF:
<TABLE>
<CAPTION>
June 30, Years ended December 31,
1999 1998 1998 1997 1996 1995 1994
-------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before income taxes 5,996 6,531 12,778 11,853 10,691 10,458 10,155
Add: preferred dividends on a pretax basis - - - - - - -
Add: fixed charges 18,630 17,285 36,393 31,793 27,687 25,549 20,167
Earnings including interest expense on deposits (1) 24,626 23,816 49,171 43,646 38,378 36,007 30,322
Less: interest expense on deposits 14,497 13,575 28,645 25,765 23,190 22,029 17,806
Earnings excluding interest expense on deposits (2) 10,129 10,241 20,526 17,881 15,188 13,978 12,516
Fixed charges:
Interest expense on deposits 14,497 13,575 28,645 25,765 23,190 22,029 17,806
Interest expense on borrowings 4,059 3,670 7,659 6,002 4,454 3,500 2,322
Interest expense on capital leases - - - - - - -
Portion of rents representative of interest factor 74 40 89 26 43 20 39
Fixed charges including interest expense on deposits (3) 18,630 17,285 36,393 31,793 27,687 25,549 20,167
Less: interest expense on deposits 14,497 13,575 28,645 25,765 23,190 22,029 17,806
Fixed charges excluding interest expense on deposits (4) 4,133 3,710 7,748 6,028 4,497 3,520 2,361
Rents 206 119 268 78 128 59 118
Portions of rents representative of interest factor 74 40 89 26 43 20 39
Ratio of earnings to fixed charges and preferred
stock dividends:
Excluding interest expense on deposits ((2)/(4)) 2.45 2.76 2.65 2.97 3.38 3.97 5.30
Including interest expense on deposits ((1)/(3)) 1.32 1.38 1.35 1.37 1.39 1.41 1.50
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Heartland Financial USA, Inc.
We consent to incorporation by reference in the registration statement on
Form S-3 of Heartland Financial USA, Inc. of our report dated January 22,
1999, relating to the consolidated balance sheets of Heartland Financial USA,
Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 1998, which report appears in the December 31,
1998, annual report on Form 10-K of Heartland Financial USA, Inc. and to the
reference to our firm under the heading "Experts" in the registration
statement.
/s/ KPMG LLP
Des Moines, Iowa
September 14, 1999
<PAGE>
EXHIBIT 25.1
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) X
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
SAME AS ABOVE
(Name, address and telephone number, including
area code, of trustee's agent for service)
Heartland Financial USA, Inc.
(Exact name of obligor as specified in its charter)
The State of Iowa
(State or other jurisdiction of incorporation or organization)
42-1405748
(I.R.S. employer identification no.)
c/o
John K. Schmidt
Executive Vice President
Heartland Financial USA, Inc.
1398 Central Avenue
Dubuque, Iowa 52001
(319) 589-2100
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
SUBORDINATED DEBENTURES
(Title of the Indenture securities)
------------------------------------------------
1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject
- -----------------------------------------------------------------
Name Address
- ------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under
indentures under which the applicant is trustee, Items 3 through 15 are not
required herein.
<PAGE>
16. LIST OF EXHIBITS.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust
Company, National Association, as now in effect, which contain
the authority to commence business and a grant of powers to
exercise corporate trust powers.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the Articles of
Association.
3. A copy of the authorization of the trustee to exercise
corporate trust powers, if such authorization is not contained
in the documents specified in exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union Trust Company,
National Association, or instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939 is included at Page 4 of this Form
T-1 Statement.
7. A copy of the latest report of condition of the trustee
published pursuant to law or to the requirements of its
supervising or examining authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information. Item 2 may, however,
be considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the
United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 14th
day of September, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by Heartland Financial USA, Inc.
of Subordinated Debentures, First Union Trust Company, National Association,
as the trustee herein named, hereby consents that reports of examinations of
said Trustee by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: \s\ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: September 14, 1999
4
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
-----
CONSOLIDATED REPORT OF CONDITION FOR JUNE 30, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNT IN THOUSANDS RCFD BIL MIL THOU
ASSETS
<S> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1)............................... 0081 41 1.a.
b. Interest-bearing balances (2)........................................................ 0071 0 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)........................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)......................... 1773 7 2.b.
3. Federal funds sold and securities purchased under agreements
to resell................................................................................ 1350 0 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)..... RCFD 2122 258,689 4.a.
b. LESS: Allowance for loan and lease losses......................... RCFD 3123 0 4.b.
c. LESS: Allocated transfer risk reserve............................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c).................................. 2125 258,689 4.d.
5. Trading assets (from Schedule RC-D)...................................................... 3545 0 5.
6. Premises and fixed assets (including capitalized leases)................................. 2145 0 6.
7. Other real estate owned (from Schedule RC-M)............................................. 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)..................................................................... 213 0 8.
9. Customers' liability to this bank on acceptances outstanding..............................2155 0 9.
10. Intangible assets (from Schedule RC-M)................................................... 2143 0 10.
11. Other assets (from Schedule RC-F)........................................................ 2160 3,648 11.
12. Total assets (sum of items 1 through 11)................................................. 2170 262,385 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
-----
Schedule RC--Continued
<TABLE>
<CAPTION>
DOLLAR AMOUNT IN THOUSANDS BIL MIL THOU
-------------------------- ------------
LIABILITIES
<S> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I)............................. RCON 2200 0 13.a.
(1) Noninterest-bearing (1)............ RCON 6631 0 13.a.(1)
(2) Interest-bearing....................RCON 6636 0 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II).................. RCFN 2200 0 13.b.
(1) Noninterest-bearing.................RCFN 6631 0 13.b.(1)
(2) Interest-bearing....................RCFN 6636 0 13.b.(2)
14. Federal funds purchased and securities sold
under agreements to repurchase.............................. RCFD 2800 0 14.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)................. RCFD 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):......................
a. With a remaining maturity of one year or less........... RCFD 2332 1,517 16.a.
b. With a remaining maturity of more than one year
through three years..................................... RCFD A547 0 16.b.
c. With a remaining maturity of more than three years...... RCFD A548 0 16.c.
17. Not applicable..............................................
18. Bank's liability on acceptances executed and outstanding.... RCFD 2920 0 18.
19. Subordinated notes and debentures (2)....................... RCFD 3200 0 19.
20. Other liabilities (from Schedule RC-G)...................... RCFD 2930 10,929 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 12,446 21.
22. Not applicable..............................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus............... RCFD 3838 0 23.
24. Common stock................................................ RCFD 3230 200 24.
25. Surplus (exclude all surplus related to preferred stock).... RCFD 3839 413,719 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 (163,980) 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 0 26.b.
27. Cumulative foreign currency translation adjustments......... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)........... RCFD 3210 249,939 28.
29. Total liabilities and equity capital
(sum of items 21 and 28).................................... RCFD 3300 262,385 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of auditing
work performed for the bank by independent external auditors as of Number
any date during 1996....................................... RCFD 6724 N/A M.1.
</TABLE>
1= Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2= Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3= Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4= Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5= Review of the bank's financial statements by external auditors 6 =
Compilation of the bank's financial statements by external auditors 7 =
Other audit procedures (excluding tax preparation work) 8 = No external
audit work
6= Compilation of the bank's financial statements by external auditors
7= Other audit procedures (excluding tax preparation work)
8= No external audit work
- ------------------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposit.
(2) Includes limited-life stock and related surplus.
6
<PAGE>
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
CHARTER CERTIFICATE
Whereas, satisfactory evidence has been presented to the Office of the
Comptroller of the Currency that FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, located in WILMINGTON, State of DELAWARE, has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
- --------------------------------------
Deputy Comptroller for Multinational Banking
Charter Number 23201
<PAGE>
Charter No. _________
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
For the purpose of organizing an association to carry on the business
of banking under the laws of the United States, the undersigned do enter into
the following Articles of Association:
FIRST. The title of this association shall be FIRST UNION TRUST
COMPANY, NATIONAL ASSOCIATION
SECOND. The main office of this association shall be in Wilmington,
Delaware. The business of this association will be limited to that of a national
trust bank. This association must obtain the prior written approval of the
Office of the Comptroller of the Currency (AOCC@) before amending its Articles
of Association to expand the scope of its activities and services. Transfers of
this association=s stock are subject to prior approval of a federal depository
institution regulatory agency. If no other agency approval is required, the
OCC=s approval must be obtained before the transfers. In such cases where OCC
approval is required, the OCC will apply the definitions and standards of the
Change in Bank Control Act and the OCC=s implementing regulation to ownership
changes in this association.
THIRD. The Board of Directors of this association shall consist of not
less than five nor more than twenty-five shareholders, the exact number to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each director, during the full term of his directorship, shall
own a minimum of $1,000 aggregate par value of stock of this association or a
minimum par market value or equity interest of $1,000 of stock in the bank
holding company controlling this association. Any vacancy in the Board of
Directors may be filled by action of the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
Board of Directors may designate, on the day of each year specified thereby in
the bylaws, but if no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be prescribed by the Board
of Directors.
Nominations for election to the Board of Directors may be made
by the Board of Directors or by any shareholder of any outstanding class of
capital stock of this association entitled to vote for election of directors.
Nominations other than those made by or on behalf of the existing bank
management shall be made in writing and be delivered or mailed to the president
of this association and to the OCC, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors, provided, however, that if less than 21 days notice of the meeting
is given to shareholders, such nomination shall be mailed or delivered to the
president of this association and to the Comptroller of the Currency not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed.
Such notification shall contain the following information to
the extent known to the notifying shareholder:
- The name and address of each proposed nominee.
- The principal occupation of each proposed nominee.
<PAGE>
- The total number of shares of capital stock
of this association that will be voted for
each proposed nominee.
- The name and residence address of the notifying
shareholder.
- The number of shares of capital stock of
this association owned by the notifying
shareholder. Nominations not made in
accordance herewith may, in his discretion,
be disregarded by the chairperson of the
meeting, and upon his instructions, the vote
tellers may disregard all votes cast for
each such nominee.
FIFTH. The authorized amount of capital stock of this association
shall be 2,000 shares of common stock of the par value of one hundred dollars
($100.00) each; but said capital stock may be increased or decreased from
time to time, according to the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional
shares thereof, each shareholder shall be entitled to subscribe for such
additional shares in proportion to the number of shares of said capital stock
owned by him at the time the increase is authorized by the shareholders,
unless another time subsequent to the date of the shareholders' meeting is
specified in a resolution by the shareholders at the time the increase is
authorized. The Board of Directors will have the power to prescribe a
reasonable period of time within which the preemptive rights to subscribe to
the new shares of capital stock must be exercised.
This association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated, without
the approval of the shareholders.
SIXTH. The Board of Directors shall appoint one of its members
president of this association, who shall be chairperson of the Board of
Directors, unless the Board of Directors appoints another director to be the
chairperson. The Board of Directors shall have the power to appoint one or
more vice presidents and to appoint a cashier and such other officers and
employees as may be required to transact the business of this association.
The Board of Directors shall have the power to:
- Define the duties of the officers and employees of
this association.
- Fix the salaries to be paid to the officers and
employees.
- Dismiss officers and employees.
- Require bonds from officers and employees and to fix
the penalty thereof.
- Regulate the manner in which any increase of
the capital of this association shall be
made.
- Manage and administer the business and affairs of
this association.
- Make all bylaws that it may be lawful for the Board
of Directors to make.
- Generally to perform all acts that are legal for a
Board of Directors to perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of
Wilmington, Delaware, without the approval of the shareholders, and shall
have the power to establish or change the location of any branch or branches
of the association to any other location, without the approval of the
shareholders.
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<PAGE>
EIGHTH. The corporate existence of this association shall continue
until terminated according to the laws of the United States.
NINTH. The Board of Directors of this association, or any three or
more shareholders owning, in the aggregate, not less than 10 percent of the
stock of this association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least 10 days prior to the date of the meeting to each shareholder of record
at his address as shown upon the books of this association.
TENTH. Each director and executive officer of this association shall
be indemnified by the association against liability in any proceeding
(including without limitation a proceeding brought by or on behalf of this
association itself) arising out of his status as such or his activities in
either of the foregoing capacities, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of this association.
Liabilities incurred by a director or executive officer of this association
in defending a proceeding shall be paid by this association in advance of the
final disposition of such proceeding upon receipt of an undertaking by the
director or executive officer to repay such amount if it shall be determined,
as provided in the last paragraph of this Article Tenth, that he is not
entitled to be indemnified by this association against such liabilities.
The indemnity against liability in the preceding paragraph of this
Article Tenth, including liabilities incurred in defending a proceeding,
shall be automatic and self-operative.
Any director, officer or employee of this association who serves at
the request of this association as a director, officer, employee or agent of
a charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade
association, or as a trustee or administrator under an employee benefit plan,
or who serves at the request of this association as a director, officer or
employee of a business corporation in connection with the administration of
an estate or trust by this association, shall have the right to be
indemnified by this association, subject to the provisions set forth in the
following paragraph of this Article Tenth, against liabilities in any manner
arising out of or attributable to such status or activities in any such
capacity, except for any liability incurred on account of activities which
were at the time taken known or believed by such person to be clearly in
conflict with the best interests of this association, or of the corporation,
partnership, joint venture, trust, enterprise, association or plan being
served by such person.
In the case of all persons except the directors and executive
officers of this association, the determination of whether a person is
entitled to indemnification under the preceding paragraph of this Article
Tenth shall be made by and in the sole discretion of the Chief Executive
Officer of this association. In the case of the directors and executive
officers of this association, the indemnity against liability in the
preceding paragraph of this Article Tenth shall be automatic and
self-operative.
For purposes of this Article Tenth of these Articles of Association
only, the following terms shall have the meanings indicated:
(a) "association" means First Union Trust Company, National Association
and its direct and indirect wholly-owned subsidiaries.
(b) "director" means an individual who is or was a director of this
association.
(c) "executive officer" means an officer of this association who by
resolution of the Board of Directors of this association has been
determined to be an executive officer of this association for
purposes of Regulation O of the Federal Reserve Board.
4
<PAGE>
(d) "liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses, including counsel
fees and expenses, incurred with respect to a proceeding.
(e) "party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
This association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless this association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons
who are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with this association only after the
effective date of such merger or other combination and only as to their
status and activities after such date.
The right to indemnification herein provided for shall inure to the
benefit of the heirs and legal representatives of any person entitled to such
right.
No revocation of, change in, or adoption of any resolution or provision
in the Articles of Association or By-laws of this association inconsistent
with, this Article Tenth shall adversely affect the rights of any director,
officer, or employee of this association with respect to (i) any proceeding
commenced or threatened prior to such revocation, change, or adoption, or
(ii) any proceeding arising out of any act or omission occurring prior to
such revocation, change, or adoption, in either case, without the written
consent of such director, officer, or employee.
5
<PAGE>
The rights hereunder shall be in addition to and not exclusive of any
other rights to which a director, officer, or employee of this association
may be entitled under any statute, agreement, insurance policy, or otherwise.
This association shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, or
employee of this association, or is or was serving at the request of this
association as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, trade association, employee
benefit plan, or other enterprise, against any liability asserted against
such director, officer, or employee in any such capacity, or arising out of
their status as such, whether or not this association would have the power to
indemnify such director, officer, or employee against such liability,
excluding insurance coverage for a formal order assessing civil money
penalties against a director, officer or employee of this association.
Notwithstanding anything to the contrary provided herein, no person
shall have a right to indemnification with respect to any liability (i)
incurred in an administrative proceeding or action instituted by an
appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action
by an individual or individuals in the form of payments to this association,
(ii) to the extent such person is entitled to receive payment therefor under
any insurance policy or from any corporation, partnership, joint venture,
trust, trade association, employee benefit plan, or other enterprise other
than this association, or (iii) to the extent that a court of competent
jurisdiction determines that such indemnification is void or prohibited under
state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of
a majority of the stock of this association, unless the vote of the holders
of a greater amount of stock is required by law, and in that case by the vote
of the holders of such greater amount.
IN WITNESS WHEREOF, we have hereunto set our hands this 25th day of
November, 1996.
ORGANIZERS:
- -------------------------------- --------------------------
Kent S. Hathaway Keith D. Lembo
- -------------------------------- --------------------------
Robert L. Andersen Stephen J. Antal
--------------------------
Daniel Glassberg
6
<PAGE>
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
BYLAWS
AS AMENDED AND RESTATED MAY 27, 1997
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and transaction of whatever other
business may properly come before the meeting, shall be held at the Main
Office of the Association, or such other place as the Board of Directors may
designate, at 10:00 A.M., on the third Tuesday of February in each year,
commencing with the year 1997 or such other time within 90 days as may be set
by the Board of Directors. If, from any cause, an election of directors is
not made on the said day, the Board of Directors shall order the election to
be held on some subsequent day, as soon thereafter as practicable, according
to the provisions of the law; and notice thereof shall be given in the manner
herein.
Section 1.2. SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for
any purpose at any time by the Board of Directors or by any one or more
shareholders owning, in the aggregate, not less than twenty-five percent of
the stock of the Association.
Section 1.3. NOTICE OF MEETINGS. Notice of Annual and Special
meetings shall mailed, postage prepaid, at least ten days prior to the date
thereof provided for the annual meeting, addressed to each shareholder at his
address appearing on the books of the Association; but any failure to mail
such notice, or any irregularity therein, shall not affect the validity of
such meeting,
<PAGE>
or of any of the proceedings thereat. A shareholder may waive any such notice.
Section 1.4. ORGANIZATION OF MEETINGS. The Chairman shall preside at
all meetings of shareholders. In his absence, the President, or a director
designated by the Chairman shall preside at such meeting.
Section 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid
only for one meeting to be specified therein, and any adjournments of such
meeting. Proxies shall be dated and shall be filed with the records of the
meeting.
Section 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting
of shareholders, unless otherwise provided by law. A majority of the votes
cast shall decide every question or matter submitted to the shareholders at
any meeting, unless otherwise provided by law or by the Articles of
Association.
ARTICLE II
DIRECTORS
Section 2.1. BOARD OF DIRECTORS. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law,
all corporate powers of the Association shall be vested in and may be
exercised by said Board.
Section 2.2. NUMBER. The Board shall consist of not less than five
nor more than twenty-five persons, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of
a majority of the full Board or by resolution of the shareholders at any
meeting thereof; provided, however, that a majority of the full Board may not
<PAGE>
increase the number of directors to a number which: (a) exceeds by more than
two the number of directors last elected by shareholders where such number
was fifteen or less; and (b) to a number which exceeds by more than four the
number of directors last elected by shareholders where such number was
sixteen or more, but in no event shall the number of directors exceed
twenty-five.
Section 2.3. ORGANIZATION MEETING. A meeting shall be held for the
purpose of organizing the new Board and electing and appointing officers of
the Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not
be a quorum present, the directors present may adjourn the meeting, from time
to time, until a quorum is obtained.
Section 2.4. REGULAR MEETINGS. The regular meetings of the Board
shall be held on such days and time as the directors may, by resolution,
designate; and written notice of any change thereof shall be sent to each
member. When any regular meeting of the Board falls upon a legal holiday, the
meeting shall be held on such other day as the Board may designate.
Section 2.5. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, or President, or at the request of three
or more directors. Each director shall be given notice of each special
meeting, except the organization meeting, at least one day before it is to be
held by facsimile, telephone, telegram, letter or in person. Any director may
waive any such notice.
Section 2.6. QUORUM. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less
number may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned without further notice.
3
<PAGE>
Section 2.7. TERM OF OFFICE AND VACANCY. Directors shall hold office
for one year and until their successors are elected and have qualified. No
person shall stand for election as a director of this Association if at the
date of his election he will have passed his seventieth birthday; provided,
however, this prohibition shall not apply to persons who are active officers
of this Association, an affiliate bank, or its parent corporation, or a
former chief executive officer of the Association. No person, who is not an
officer or former officer of this Association, an affiliate bank, or its
parent corporation and who has discontinued the principal position or
activity the person held when initially elected, shall be recommended to the
shareholders for reelection; provided, however, that exceptions may be made
because of a change in principal position or activity which would be
compatible with continued service to this Association. No person elected as a
director may exercise any of the powers of his office until he has taken the
oath of office as prescribed by law. When any vacancy occurs among the
directors, the remaining members of the Board, in accordance with the laws of
the United States, may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
Section 2.8. NOMINATIONS. Nominations for election to the Board
may be made by the Executive Committee or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote
for the election of directors.
Section 2.9. COMMUNICATIONS EQUIPMENT. Any or all directors may
participate in a meeting of the Board by means of conference telephone or any
means of communication by which all persons participating in the meeting are
able to hear each other.
Section 2.10. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the Board or committee thereof by law, the
Association's Articles of Association, or these Bylaws may be taken without a
meeting, if, prior or subsequent to the action, all members of the Board or
4
<PAGE>
committee shall individually or collectively consent in writing to the
action. Each written consent or consents shall be filed with the minutes of
the proceedings of the Board or committee. Action by written consent shall
have the same force and effect as a unanimous vote of the directors, for all
purposes. Any certificate or other documents which relates to action so taken
shall state that the action was taken by unanimous written consent of the
Board or committee without a meeting.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1. EXECUTIVE COMMITTEE. The Board may by resolution
adopted by a majority of the entire Board designate an Executive Committee
consisting of the Chairman of the Board, the President, and not less than two
other directors. Subject to the national banking laws and the Association's
Articles of Association, the Executive Committee may exercise all the powers
of the Board of Directors with respect to the affairs of the Association,
except that the Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of
Directors is actually convened for the conduct of
business,
(b) exercise any power specifically required to be
exercised by at least a majority of all the
directors,
(c) act on matters committed by the Bylaws or resolution
of the Board of Directors to another committee of the
board, or
(d) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is
amendable or repealable only by the Board;
2. amend the Articles of Association or make, alter or repeal any
Bylaw of the
5
<PAGE>
Association;
3. elect or appoint any director, create or fill any vacancies in
the Board of Directors or remove any director, or authorize or
approve any change in the compensation of any officer of the
Association who is also a director of the Association;
4. authorize or approve issuance or sale or contract for sale of
shares of stock of the Association, or determine the
designation and relative rights, preferences and limitations
of a class or series of shares;
5. adopt an agreement of merger or consolidation, or submit to
shareholders any action that requires shareholder approval,
including any recommendation to the shareholders concerning
the sale, lease or exchange of all or substantially all the
Association's property and assets, a dissolution of the
Association or a revocation of a previously approved
dissolution; or
6. authorize an expenditure by the Association in excess of $10
million for any one item or group of related items.
The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall report these
proceedings to the Board at the regular meetings thereof. The committee shall
serve as the nominating committee for nominations to the Board.
Section 3.2. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Board may
designate one of its members to be Chairman of the Executive Committee who
shall preside at the meetings thereof and shall perform such duties as the
Board shall assign to him from time to time.
6
<PAGE>
Section 3.3. AUDIT COMMITTEE. The Board shall appoint a committee of
three or more persons exclusive of the officers of this Association which
committee shall be known as the Audit Committee. It shall be the duty of this
committee at least once in every twelve months to examine the affairs of the
Association, and determine whether it is in a sound and solvent condition and
to recommend to the Board such changes in the manner of doing business, etc.,
as may seem to be desirable. The committee may cause such examination to be
made in its behalf and under its supervision by outside accountants and may
also use the services of any other persons either inside or outside the
Association to assist in its work. The results of each examination shall be
reported in writing to the Board.
Section 3.4. AUDIT OF TRUST DEPARTMENT. The Audit Committee shall,
at least once during each calendar year and within fifteen months of the last
such audit make suitable audits of the Trust Department or cause suitable
audits to be made by auditors responsible only to the Board, and at such time
shall ascertain whether the department has been administered in accordance
with law, Part 9 of the Regulations of the Comptroller of the Currency, and
sound fiduciary principles. In lieu of such periodic audit the Audit
Committee, at the election of the Board, may conduct or cause to be conducted
by auditors responsible only to the Board an adequate continuous audit system
adopted by the Board. A written report of such periodic or continuous audit
shall be made to the Board.
Section 3.5. OTHER COMMITTEES. The Board may appoint from time to
time other committees composed of one or more persons each, for such purposes
and with such powers as the Board may determine. The Chairman of the Board
shall have the power to designate another person to serve on any committee
during the absence or inability of any member thereof so to serve.
7
<PAGE>
Section 3.6. DIRECTORS' EMERITUS. The Board may designate one or
more persons to serve as Director Emeritus. Such Director Emeritus shall have
the right to attend any and all meetings of the Board, but shall have no vote
at such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. ALTERNATE COMMITTEE MEMBERS. The Board may, from time to
time, appoint one or more, but no more than three persons to serve as
alternate members of a committee, each of whom shall be empowered to serve on
that committee in place of a regular committee member in the event of the
absence or disability of that committee member. An alternate committee member
shall, when serving on a committee, have all of the powers of a regular
committee member. Alternate committee members shall be notified of, and
requested to serve at, a particular meeting or meetings, or for particular
periods of time, by or at the direction of the chairman of the committee or
the Chairman of the Board.
ARTICLE IV
OFFICERS
Section 4.1. OFFICERS. The officers of the Association may be a
Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or
Vice Chairmen (who shall not be required to be directors of the Association),
a President, one or more Vice Presidents, a Secretary, a Cashier or
Treasurer, and such other officers, including officers holding similar or
equivalent titles to the above in regions, divisions or functional units of
the Association, as may be appointed by the Board of Directors. The Chairman
of the Board and the President shall be members of the Board of Directors.
Any two or more offices may be held by one person, but no officer shall sign
or execute any document in more than one capacity.
8
<PAGE>
Section 4.2. TERM OF OFFICE. The officers who are required by the
articles of association or the bylaws to be members of the Board shall hold
their respective offices until the Organization meeting of the Board
following the annual meeting of shareholders or until their respective
successors shall have been elected, unless they shall resign, become
disqualified or be removed from office. Each other officer shall hold office
at the pleasure of the Board. Any officer may be removed at any time by the
Board.
Section 4.3. CHAIRMAN OF THE BOARD. The chairman of the board shall
be designated as Chairman of the Board. He shall preside at all meetings of
the stockholders and directors and he shall be a member of all committees of
the Board except the Audit Committee. He shall have such other powers and
perform such other duties as may be prescribed from time to time by the
Board. He shall be subject only to the direction and control of the Board.
Section 4.4. PRESIDENT. The president shall be the chief executive
officer of the Association and he shall be designated as President and Chief
Executive Officer. In the absence of the Chairman the President shall preside
at all meetings of the Board. The President shall be a member of each
committee of the Board except the Audit Committee. He shall have the powers
and perform the duties conferred or imposed upon the President by the
national banking laws, and he shall have such other powers and perform such
other duties as nay from time to time be imposed upon or assigned to him by
the Board.
Section 4.5. CHIEF FINANCIAL OFFICER. The Chief Financial officer
shall have such title as may be designated by the Board and he shall be
responsible for all monies, funds and valuables of this Association, provide
for the keeping of proper records of all transactions of the Association,
report to the Board at each regular meeting the condition of the Association,
submit to the Board,
9
<PAGE>
when requested, a detailed statement of the income and expenses, be
responsible for the conduct and efficiency of all persons employed under him,
and perform such other duties as may be from time to time assigned to him by
the Board.
Section 4.6. OTHER OFFICERS. All other officers shall respectively
exercise such powers and perform such duties as generally pertain to their
several offices, or as may be conferred upon or assigned to them by the
Board, the Chairman of the Board or the President.
Section 4.7. BOND. Each officer and employee, if so required by the
Board, shall give bond with surety to be approved by the Board, conditioning for
the honest discharge of his duties as such officer or employee. In the
discretion of the Board, such bonds may be individual, schedule or blanket form,
and the premiums may be paid by the Association.
Section 4.8. OFFICERS ACTING AS ASSISTANT SECRETARY. Notwithstanding
Section 4.la of this Article IV, any Senior Vice President, Vice President or
Assistant Vice President shall have, by virtue of his office, and by authority
of the Bylaws, the authority from time to time to act as an Assistant Secretary
of the Association, and to such extent, said officers are appointed to the
office of Assistant Secretary.
ARTICLE V
TRUST DEPARTMENT
Section 5.1. TRUST DEPARTMENT. There shall be a department of the
Association known as the Trust Department which shall perform the fiduciary
responsibilities of the Association. Opinions of counsel shall be retained on
file in the Trust Department in connection with all important matters pertaining
to fiduciary activities.
10
<PAGE>
Section 5.2. TRUST INVESTMENT. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the
fiduciary relationship and local law. Where such instrument does not specify
the character and class of the investments to be made and does not vest in
the Association a discretion in the matter, funds held pursuant to such
instrument shall be invested in investments in which corporate fiduciaries
may invest under local law.
ARTICLE VI
STOCK CERTIFICATES AND TRANSFERS
Section 6.1. STOCK CERTIFICATES. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the
Chairman or President, and the Secretary, or an Assistant Secretary. Each
certificate shall state upon its face that the stock is transferable only
upon the books of the Association by the holder thereof, or by duly
authorized attorney, upon the surrender of such certificate, and shall meet
the requirements of Section 5139, United States Revised Statutes, as amended.
Section 6.2. TRANSFERS. The stock of this Association shall be
assignable and transferable only on the books of this Association, subject to
the restrictions and provisions of the national banking laws; and a transfer
book shall be provided in which all assignments and transfers of stock shall
be made. When stock is transferred, the certificates thereof shall be
returned to the Association, canceled, preserved and new certificates issued.
Section 6.3. DIVIDENDS. Dividends shall be paid to the shareholders
in whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that
the directors may fix another date as a record date for the determination of
the shareholders entitled to receive payment thereof.
11
<PAGE>
ARTICLE VII
INCREASE OF STOCK
7.1. CAPITAL STOCK. Shares of the capital stock of the Association,
which have been authorized but not issued, may be issued from time to time
for such consideration, not less than the par value thereof, as may be
determined by the Board.
ARTICLE VIII
CORPORATE SEAL
Section 8.1. SEAL. The seal, an impression of which appears below,
is the seal of the Association adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President,
Vice President, each Assistant Vice President, the Chief Financial Officer,
the Secretary, each Assistant Secretary, each Trust Officer, each Assistant
Trust Officer or each Assistant Cashier, shall have the authority to affix
the corporate seal of this Association and to attest to the same.
12
<PAGE>
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. FISCAL YEAR. The fiscal year of the Association shall
be the calendar year.
Section 9. 2. EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations,
receipts, discharges, releases, satisfactions, settlements, petitions,
schedules, accounts, affidavits, bonds, undertakings, proxies, and other
instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the
Board, the Vice Chairman of the Board, any Chairman or Vice Chairman, the
President, any Vice President or Assistant Vice President, the Secretary or
any Assistant Secretary, the Cashier or Treasurer or any Assistant Cashier or
Assistant Treasurer, or any officer holding similar or equivalent titles to
the above in any regions, divisions or functional units of the Association,
or, if in connection with the exercise of fiduciary powers of the
Association, by any of said officers or by any Trust Officer or Assistant
Trust Officer (or equivalent titles); provided, however, that where required,
any such instrument shall be attested by one of said officers other than the
officer executing such instrument. Any such instruments may also be executed,
acknowledged, verified, delivered, or accepted in behalf of the Association
in such other manner and by such other officers as the Board of Directors may
from time to time direct. The provisions of this Section 9.2 are
supplementary to any other provision of these Bylaws.
Section 9.3. RECORDS. The organization papers of this Association, the
articles of association, the bylaws and any amendments thereto, the proceedings
of all regular and special meetings of the shareholders and of the directors,
the returns of the judges of elections, and the reports of the committees of
directors shall be recorded in an appropriate minute book, and the
13
<PAGE>
minutes of each meeting shall be signed by the Secretary or any other officer
appointed to act as secretary of the meeting.
Section 9.4. BANKING HOURS. This Association and its branch offices
shall be open on such days and during such hours as shall be fixed from time
to time by the Board.
Section 9.5. VOTING SHARES OF OTHER CORPORATIONS. The Chairman, any
Vice Chairman, the President, or any Vice President is authorized to vote,
represent and exercise on behalf of this Association all rights incident to
any and all shares of stock of any other corporation standing in the name of
the Association. The authority granted herein may be exercised by such
officers in person or by proxy or by power of attorney duly executed by said
officer.
ARTICLE X
BYLAWS
Section 10.1. INSPECTION. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office
of the Association, and shall be open for inspection to all shareholders,
during banking hours.
Section 10.2. AMENDMENTS. These Bylaws may be changed or amended at
any regular or special meeting of the Board by the vote of a majority of the
Directors.
14
<PAGE>
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
TRUST CERTIFICATE
Whereas, FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, Charter
Number 23201, located in WILMINGTON, State of DELAWARE, being a National
Banking Association, organized under the statutes of the United States, has
made application for authority to act as fiduciary;
And whereas, applicable provisions of the statutes of the United
States authorize the granting of such authority;
Now, therefore, I hereby certify that the said association is
authorized to act in all fiduciary capacities by such statutes.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
- --------------------------------------------
Deputy Comptroller for Multinational Banking
<PAGE>
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) X
---
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
SAME AS ABOVE
(Name, address and telephone number, including
area code, of trustee's agent for service)
Heartland Financial Capital Trust I
(Exact name of obligor as specified in its charter)
The State of Delaware
(State or other jurisdiction of incorporation or organization)
51-6512637
(I.R.S. employer identification no.)
c/o
Edward L. Truitt, Jr., Vice President
First Union Trust Company, National Association
One Rodney Square
920 King Street, Suite 102
Wilmington, DE 19801
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
CAPITAL SECURITIES
(Title of the Amended and Restated Declaration of Trust securities)
------------------------------------------------
1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject
- -----------------------------------------------------------------
Name Address
- ------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under
indentures under which the applicant is trustee, Items 3 through 15 are not
required herein.
<PAGE>
16. LIST OF EXHIBITS.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust Company,
National Association, as now in effect, which contain the authority
to commence business and a grant of powers to exercise corporate
trust powers.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union Trust Company,
National Association, or instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1
Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or
examining authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information. Item 2 may, however,
be considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the
United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 14th
day of September, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: /s/ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by Heartland Financial Capital
Trust I of Capital Securities, First Union Trust Company, National
Association, as the trustee herein named, hereby consents that reports of
examinations of said Trustee by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: September 14, 1999
4
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
CONSOLIDATED REPORT OF CONDITION FOR JUNE 30, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNT IN THOUSANDS RCFD BIL MIL THOU
-------------------------- -----------------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1).......................... 0081 41 1.a.
b. Interest-bearing balances (2)................................................... 0071 0 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)...................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).................... 1773 7 2.b.
3. Federal funds sold and securities purchased under agreements to resell............... 1350 0 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)...RCFD 2122 258,689 4.a.
b. LESS: Allowance for loan and lease losses.......................RCFD 3123 0 4.b.
c. LESS: Allocated transfer risk reserve...........................RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)............................. 2125 258,689 4.d.
5. Trading assets (from Schedule RC-D).................................................. 3545 0 5.
6. Premises and fixed assets (including capitalized leases)............................. 2145 0 6.
7. Other real estate owned (from Schedule RC-M)......................................... 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)................................................................. 213 0 8.
9. Customers' liability to this bank on acceptances outstanding......................... 2155 0 9.
10. Intangible assets (from Schedule RC-M)............................................... 2143 0 10.
11. Other assets (from Schedule RC-F).................................................... 2160 3,648 11.
12. Total assets (sum of items 1 through 11)............................................. 2170 262,385 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
Schedule RC--Continued
<TABLE>
<CAPTION>
DOLLAR AMOUNT IN THOUSANDS BIL MIL THOU
-------------------------- ------------
LIABILITIES
<S> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I)...................................................................... RCON 2200 0 13.a.
(1) Noninterest-bearing (1)............................. RCON 6631 0 13.a.(1)
(2) Interest-bearing.................................... RCON 6636 0 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II)....................................... RCFN 2200 0 13.b.
(1) Noninterest-bearing................................. RCFN 6631 0 13.b.(1)
(2) Interest-bearing.................................... RCFN 6636 0 13.b.(2)
14. Federal funds purchased and securities sold
under agreements to repurchase................................................... RCFD 2800 0 14.
15. a. Demand notes issued to the U.S. Treasury...................................... RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)...................................... RCFD 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):...........................................
a. With a remaining maturity of one year or less................................ RCFD 2332 1,517 16.a.
b. With a remaining maturity of more than one year
through three years.......................................................... RCFD A547 0 16.b.
c. With a remaining maturity of more than three years........................... RCFD A548 0 16.c.
17. Not applicable...................................................................
18. Bank's liability on acceptances executed and outstanding......................... RCFD 2920 0 18.
19. Subordinated notes and debentures (2)............................................ RCFD 3200 0 19.
20. Other liabilities (from Schedule RC-G)........................................... RCFD 2930 10,929 20.
21. Total liabilities (sum of items 13 through 20)................................... RCFD 2948 12,446 21.
22. Not applicable...................................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................... RCFD 3838 0 23.
24. Common stock..................................................................... RCFD 3230 200 24.
25. Surplus (exclude all surplus related to preferred stock)......................... RCFD 3839 413,719 25.
26. a. Undivided profits and capital reserves....................................... RCFD 3632 (163,980) 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities....... RCFD 8434 0 26.b.
27. Cumulative foreign currency translation adjustments.............................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)................................ RCFD 3210 249,939 28.
29. Total liabilities and equity capital (sum of items 21 and 28).................... RCFD 3300 262,385 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of auditing
work performed for the bank by independent external auditors as of Number
any date during 1996............................................................. RCFD 6724 N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
<PAGE>
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
CHARTER CERTIFICATE
Whereas, satisfactory evidence has been presented to the Office of the
Comptroller of the Currency that FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, located in WILMINGTON, State of DELAWARE, has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
- --------------------------------------
Deputy Comptroller for Multinational Banking
Charter Number 23201
<PAGE>
Charter No. _________
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
For the purpose of organizing an association to carry on the business
of banking under the laws of the United States, the undersigned do enter into
the following Articles of Association:
FIRST. The title of this association shall be FIRST UNION TRUST
COMPANY, NATIONAL ASSOCIATION
SECOND. The main office of this association shall be in Wilmington,
Delaware. The business of this association will be limited to that of a national
trust bank. This association must obtain the prior written approval of the
Office of the Comptroller of the Currency (AOCC@) before amending its Articles
of Association to expand the scope of its activities and services. Transfers of
this association=s stock are subject to prior approval of a federal depository
institution regulatory agency. If no other agency approval is required, the
OCC=s approval must be obtained before the transfers. In such cases where OCC
approval is required, the OCC will apply the definitions and standards of the
Change in Bank Control Act and the OCC=s implementing regulation to ownership
changes in this association.
THIRD. The Board of Directors of this association shall consist of not
less than five nor more than twenty-five shareholders, the exact number to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each director, during the full term of his directorship, shall
own a minimum of $1,000 aggregate par value of stock of this association or a
minimum par market value or equity interest of $1,000 of stock in the bank
holding company controlling this association. Any vacancy in the Board of
Directors may be filled by action of the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
Board of Directors may designate, on the day of each year specified thereby in
the bylaws, but if no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be prescribed by the Board
of Directors.
Nominations for election to the Board of Directors may be made
by the Board of Directors or by any shareholder of any outstanding class of
capital stock of this association entitled to vote for election of directors.
Nominations other than those made by or on behalf of the existing bank
management shall be made in writing and be delivered or mailed to the president
of this association and to the OCC, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors, provided, however, that if less than 21 days notice of the meeting
is given to shareholders, such nomination shall be mailed or delivered to the
president of this association and to the Comptroller of the Currency not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed.
Such notification shall contain the following information to
the extent known to the notifying shareholder:
- The name and address of each proposed nominee.
- The principal occupation of each proposed nominee.
<PAGE>
- The total number of shares of capital stock
of this association that will be voted for
each proposed nominee.
- The name and residence address of the notifying
shareholder.
- The number of shares of capital stock of
this association owned by the notifying
shareholder. Nominations not made in
accordance herewith may, in his discretion,
be disregarded by the chairperson of the
meeting, and upon his instructions, the vote
tellers may disregard all votes cast for
each such nominee.
FIFTH. The authorized amount of capital stock of this association
shall be 2,000 shares of common stock of the par value of one hundred dollars
($100.00) each; but said capital stock may be increased or decreased from
time to time, according to the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional
shares thereof, each shareholder shall be entitled to subscribe for such
additional shares in proportion to the number of shares of said capital stock
owned by him at the time the increase is authorized by the shareholders,
unless another time subsequent to the date of the shareholders' meeting is
specified in a resolution by the shareholders at the time the increase is
authorized. The Board of Directors will have the power to prescribe a
reasonable period of time within which the preemptive rights to subscribe to
the new shares of capital stock must be exercised.
This association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated, without
the approval of the shareholders.
SIXTH. The Board of Directors shall appoint one of its members
president of this association, who shall be chairperson of the Board of
Directors, unless the Board of Directors appoints another director to be the
chairperson. The Board of Directors shall have the power to appoint one or
more vice presidents and to appoint a cashier and such other officers and
employees as may be required to transact the business of this association.
The Board of Directors shall have the power to:
- Define the duties of the officers and employees of
this association.
- Fix the salaries to be paid to the officers and
employees.
- Dismiss officers and employees.
- Require bonds from officers and employees and to fix
the penalty thereof.
- Regulate the manner in which any increase of
the capital of this association shall be
made.
- Manage and administer the business and affairs of
this association.
- Make all bylaws that it may be lawful for the Board
of Directors to make.
- Generally to perform all acts that are legal for a
Board of Directors to perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of
Wilmington, Delaware, without the approval of the shareholders, and shall
have the power to establish or change the location of any branch or branches
of the association to any other location, without the approval of the
shareholders.
3
<PAGE>
EIGHTH. The corporate existence of this association shall continue
until terminated according to the laws of the United States.
NINTH. The Board of Directors of this association, or any three or
more shareholders owning, in the aggregate, not less than 10 percent of the
stock of this association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least 10 days prior to the date of the meeting to each shareholder of record
at his address as shown upon the books of this association.
TENTH. Each director and executive officer of this association shall
be indemnified by the association against liability in any proceeding
(including without limitation a proceeding brought by or on behalf of this
association itself) arising out of his status as such or his activities in
either of the foregoing capacities, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of this association.
Liabilities incurred by a director or executive officer of this association
in defending a proceeding shall be paid by this association in advance of the
final disposition of such proceeding upon receipt of an undertaking by the
director or executive officer to repay such amount if it shall be determined,
as provided in the last paragraph of this Article Tenth, that he is not
entitled to be indemnified by this association against such liabilities.
The indemnity against liability in the preceding paragraph of this
Article Tenth, including liabilities incurred in defending a proceeding,
shall be automatic and self-operative.
Any director, officer or employee of this association who serves at
the request of this association as a director, officer, employee or agent of
a charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade
association, or as a trustee or administrator under an employee benefit plan,
or who serves at the request of this association as a director, officer or
employee of a business corporation in connection with the administration of
an estate or trust by this association, shall have the right to be
indemnified by this association, subject to the provisions set forth in the
following paragraph of this Article Tenth, against liabilities in any manner
arising out of or attributable to such status or activities in any such
capacity, except for any liability incurred on account of activities which
were at the time taken known or believed by such person to be clearly in
conflict with the best interests of this association, or of the corporation,
partnership, joint venture, trust, enterprise, association or plan being
served by such person.
In the case of all persons except the directors and executive
officers of this association, the determination of whether a person is
entitled to indemnification under the preceding paragraph of this Article
Tenth shall be made by and in the sole discretion of the Chief Executive
Officer of this association. In the case of the directors and executive
officers of this association, the indemnity against liability in the
preceding paragraph of this Article Tenth shall be automatic and
self-operative.
For purposes of this Article Tenth of these Articles of Association
only, the following terms shall have the meanings indicated:
(a) "association" means First Union Trust Company, National Association
and its direct and indirect wholly-owned subsidiaries.
(b) "director" means an individual who is or was a director of this
association.
(c) "executive officer" means an officer of this association who by
resolution of the Board of Directors of this association has been
determined to be an executive officer of this association for
purposes of Regulation O of the Federal Reserve Board.
4
<PAGE>
(d) "liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses, including counsel
fees and expenses, incurred with respect to a proceeding.
(e) "party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
This association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless this association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons
who are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with this association only after the
effective date of such merger or other combination and only as to their
status and activities after such date.
The right to indemnification herein provided for shall inure to the
benefit of the heirs and legal representatives of any person entitled to such
right.
No revocation of, change in, or adoption of any resolution or provision
in the Articles of Association or By-laws of this association inconsistent
with, this Article Tenth shall adversely affect the rights of any director,
officer, or employee of this association with respect to (i) any proceeding
commenced or threatened prior to such revocation, change, or adoption, or
(ii) any proceeding arising out of any act or omission occurring prior to
such revocation, change, or adoption, in either case, without the written
consent of such director, officer, or employee.
5
<PAGE>
The rights hereunder shall be in addition to and not exclusive of any
other rights to which a director, officer, or employee of this association
may be entitled under any statute, agreement, insurance policy, or otherwise.
This association shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, or
employee of this association, or is or was serving at the request of this
association as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, trade association, employee
benefit plan, or other enterprise, against any liability asserted against
such director, officer, or employee in any such capacity, or arising out of
their status as such, whether or not this association would have the power to
indemnify such director, officer, or employee against such liability,
excluding insurance coverage for a formal order assessing civil money
penalties against a director, officer or employee of this association.
Notwithstanding anything to the contrary provided herein, no person
shall have a right to indemnification with respect to any liability (i)
incurred in an administrative proceeding or action instituted by an
appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action
by an individual or individuals in the form of payments to this association,
(ii) to the extent such person is entitled to receive payment therefor under
any insurance policy or from any corporation, partnership, joint venture,
trust, trade association, employee benefit plan, or other enterprise other
than this association, or (iii) to the extent that a court of competent
jurisdiction determines that such indemnification is void or prohibited under
state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of
a majority of the stock of this association, unless the vote of the holders
of a greater amount of stock is required by law, and in that case by the vote
of the holders of such greater amount.
IN WITNESS WHEREOF, we have hereunto set our hands this 25th day of
November, 1996.
ORGANIZERS:
- -------------------------------- --------------------------
Kent S. Hathaway Keith D. Lembo
- -------------------------------- --------------------------
Robert L. Andersen Stephen J. Antal
--------------------------
Daniel Glassberg
6
<PAGE>
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
BYLAWS
AS AMENDED AND RESTATED MAY 27, 1997
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and transaction of whatever other
business may properly come before the meeting, shall be held at the Main
Office of the Association, or such other place as the Board of Directors may
designate, at 10:00 A.M., on the third Tuesday of February in each year,
commencing with the year 1997 or such other time within 90 days as may be set
by the Board of Directors. If, from any cause, an election of directors is
not made on the said day, the Board of Directors shall order the election to
be held on some subsequent day, as soon thereafter as practicable, according
to the provisions of the law; and notice thereof shall be given in the manner
herein.
Section 1.2. SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for
any purpose at any time by the Board of Directors or by any one or more
shareholders owning, in the aggregate, not less than twenty-five percent of
the stock of the Association.
Section 1.3. NOTICE OF MEETINGS. Notice of Annual and Special
meetings shall mailed, postage prepaid, at least ten days prior to the date
thereof provided for the annual meeting, addressed to each shareholder at his
address appearing on the books of the Association; but any failure to mail
such notice, or any irregularity therein, shall not affect the validity of
such meeting,
<PAGE>
or of any of the proceedings thereat. A shareholder may waive any such notice.
Section 1.4. ORGANIZATION OF MEETINGS. The Chairman shall preside at
all meetings of shareholders. In his absence, the President, or a director
designated by the Chairman shall preside at such meeting.
Section 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid
only for one meeting to be specified therein, and any adjournments of such
meeting. Proxies shall be dated and shall be filed with the records of the
meeting.
Section 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting
of shareholders, unless otherwise provided by law. A majority of the votes
cast shall decide every question or matter submitted to the shareholders at
any meeting, unless otherwise provided by law or by the Articles of
Association.
ARTICLE II
DIRECTORS
Section 2.1. BOARD OF DIRECTORS. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law,
all corporate powers of the Association shall be vested in and may be
exercised by said Board.
Section 2.2. NUMBER. The Board shall consist of not less than five
nor more than twenty-five persons, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of
a majority of the full Board or by resolution of the shareholders at any
meeting thereof; provided, however, that a majority of the full Board may not
<PAGE>
increase the number of directors to a number which: (a) exceeds by more than
two the number of directors last elected by shareholders where such number
was fifteen or less; and (b) to a number which exceeds by more than four the
number of directors last elected by shareholders where such number was
sixteen or more, but in no event shall the number of directors exceed
twenty-five.
Section 2.3. ORGANIZATION MEETING. A meeting shall be held for the
purpose of organizing the new Board and electing and appointing officers of
the Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not
be a quorum present, the directors present may adjourn the meeting, from time
to time, until a quorum is obtained.
Section 2.4. REGULAR MEETINGS. The regular meetings of the Board
shall be held on such days and time as the directors may, by resolution,
designate; and written notice of any change thereof shall be sent to each
member. When any regular meeting of the Board falls upon a legal holiday, the
meeting shall be held on such other day as the Board may designate.
Section 2.5. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, or President, or at the request of three
or more directors. Each director shall be given notice of each special
meeting, except the organization meeting, at least one day before it is to be
held by facsimile, telephone, telegram, letter or in person. Any director may
waive any such notice.
Section 2.6. QUORUM. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less
number may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned without further notice.
3
<PAGE>
Section 2.7. TERM OF OFFICE AND VACANCY. Directors shall hold office
for one year and until their successors are elected and have qualified. No
person shall stand for election as a director of this Association if at the
date of his election he will have passed his seventieth birthday; provided,
however, this prohibition shall not apply to persons who are active officers
of this Association, an affiliate bank, or its parent corporation, or a
former chief executive officer of the Association. No person, who is not an
officer or former officer of this Association, an affiliate bank, or its
parent corporation and who has discontinued the principal position or
activity the person held when initially elected, shall be recommended to the
shareholders for reelection; provided, however, that exceptions may be made
because of a change in principal position or activity which would be
compatible with continued service to this Association. No person elected as a
director may exercise any of the powers of his office until he has taken the
oath of office as prescribed by law. When any vacancy occurs among the
directors, the remaining members of the Board, in accordance with the laws of
the United States, may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
Section 2.8. NOMINATIONS. Nominations for election to the Board
may be made by the Executive Committee or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote
for the election of directors.
Section 2.9. COMMUNICATIONS EQUIPMENT. Any or all directors may
participate in a meeting of the Board by means of conference telephone or any
means of communication by which all persons participating in the meeting are
able to hear each other.
Section 2.10. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the Board or committee thereof by law, the
Association's Articles of Association, or these Bylaws may be taken without a
meeting, if, prior or subsequent to the action, all members of the Board or
4
<PAGE>
committee shall individually or collectively consent in writing to the
action. Each written consent or consents shall be filed with the minutes of
the proceedings of the Board or committee. Action by written consent shall
have the same force and effect as a unanimous vote of the directors, for all
purposes. Any certificate or other documents which relates to action so taken
shall state that the action was taken by unanimous written consent of the
Board or committee without a meeting.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1. EXECUTIVE COMMITTEE. The Board may by resolution
adopted by a majority of the entire Board designate an Executive Committee
consisting of the Chairman of the Board, the President, and not less than two
other directors. Subject to the national banking laws and the Association's
Articles of Association, the Executive Committee may exercise all the powers
of the Board of Directors with respect to the affairs of the Association,
except that the Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of
Directors is actually convened for the conduct of
business,
(b) exercise any power specifically required to be
exercised by at least a majority of all the
directors,
(c) act on matters committed by the Bylaws or resolution
of the Board of Directors to another committee of the
board, or
(d) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is
amendable or repealable only by the Board;
2. amend the Articles of Association or make, alter or repeal any
Bylaw of the
5
<PAGE>
Association;
3. elect or appoint any director, create or fill any vacancies in
the Board of Directors or remove any director, or authorize or
approve any change in the compensation of any officer of the
Association who is also a director of the Association;
4. authorize or approve issuance or sale or contract for sale of
shares of stock of the Association, or determine the
designation and relative rights, preferences and limitations
of a class or series of shares;
5. adopt an agreement of merger or consolidation, or submit to
shareholders any action that requires shareholder approval,
including any recommendation to the shareholders concerning
the sale, lease or exchange of all or substantially all the
Association's property and assets, a dissolution of the
Association or a revocation of a previously approved
dissolution; or
6. authorize an expenditure by the Association in excess of $10
million for any one item or group of related items.
The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall report these
proceedings to the Board at the regular meetings thereof. The committee shall
serve as the nominating committee for nominations to the Board.
Section 3.2. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Board may
designate one of its members to be Chairman of the Executive Committee who
shall preside at the meetings thereof and shall perform such duties as the
Board shall assign to him from time to time.
6
<PAGE>
Section 3.3. AUDIT COMMITTEE. The Board shall appoint a committee of
three or more persons exclusive of the officers of this Association which
committee shall be known as the Audit Committee. It shall be the duty of this
committee at least once in every twelve months to examine the affairs of the
Association, and determine whether it is in a sound and solvent condition and
to recommend to the Board such changes in the manner of doing business, etc.,
as may seem to be desirable. The committee may cause such examination to be
made in its behalf and under its supervision by outside accountants and may
also use the services of any other persons either inside or outside the
Association to assist in its work. The results of each examination shall be
reported in writing to the Board.
Section 3.4. AUDIT OF TRUST DEPARTMENT. The Audit Committee shall,
at least once during each calendar year and within fifteen months of the last
such audit make suitable audits of the Trust Department or cause suitable
audits to be made by auditors responsible only to the Board, and at such time
shall ascertain whether the department has been administered in accordance
with law, Part 9 of the Regulations of the Comptroller of the Currency, and
sound fiduciary principles. In lieu of such periodic audit the Audit
Committee, at the election of the Board, may conduct or cause to be conducted
by auditors responsible only to the Board an adequate continuous audit system
adopted by the Board. A written report of such periodic or continuous audit
shall be made to the Board.
Section 3.5. OTHER COMMITTEES. The Board may appoint from time to
time other committees composed of one or more persons each, for such purposes
and with such powers as the Board may determine. The Chairman of the Board
shall have the power to designate another person to serve on any committee
during the absence or inability of any member thereof so to serve.
7
<PAGE>
Section 3.6. DIRECTORS' EMERITUS. The Board may designate one or
more persons to serve as Director Emeritus. Such Director Emeritus shall have
the right to attend any and all meetings of the Board, but shall have no vote
at such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. ALTERNATE COMMITTEE MEMBERS. The Board may, from time to
time, appoint one or more, but no more than three persons to serve as
alternate members of a committee, each of whom shall be empowered to serve on
that committee in place of a regular committee member in the event of the
absence or disability of that committee member. An alternate committee member
shall, when serving on a committee, have all of the powers of a regular
committee member. Alternate committee members shall be notified of, and
requested to serve at, a particular meeting or meetings, or for particular
periods of time, by or at the direction of the chairman of the committee or
the Chairman of the Board.
ARTICLE IV
OFFICERS
Section 4.1. OFFICERS. The officers of the Association may be a
Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or
Vice Chairmen (who shall not be required to be directors of the Association),
a President, one or more Vice Presidents, a Secretary, a Cashier or
Treasurer, and such other officers, including officers holding similar or
equivalent titles to the above in regions, divisions or functional units of
the Association, as may be appointed by the Board of Directors. The Chairman
of the Board and the President shall be members of the Board of Directors.
Any two or more offices may be held by one person, but no officer shall sign
or execute any document in more than one capacity.
8
<PAGE>
Section 4.2. TERM OF OFFICE. The officers who are required by the
articles of association or the bylaws to be members of the Board shall hold
their respective offices until the Organization meeting of the Board
following the annual meeting of shareholders or until their respective
successors shall have been elected, unless they shall resign, become
disqualified or be removed from office. Each other officer shall hold office
at the pleasure of the Board. Any officer may be removed at any time by the
Board.
Section 4.3. CHAIRMAN OF THE BOARD. The chairman of the board shall
be designated as Chairman of the Board. He shall preside at all meetings of
the stockholders and directors and he shall be a member of all committees of
the Board except the Audit Committee. He shall have such other powers and
perform such other duties as may be prescribed from time to time by the
Board. He shall be subject only to the direction and control of the Board.
Section 4.4. PRESIDENT. The president shall be the chief executive
officer of the Association and he shall be designated as President and Chief
Executive Officer. In the absence of the Chairman the President shall preside
at all meetings of the Board. The President shall be a member of each
committee of the Board except the Audit Committee. He shall have the powers
and perform the duties conferred or imposed upon the President by the
national banking laws, and he shall have such other powers and perform such
other duties as nay from time to time be imposed upon or assigned to him by
the Board.
Section 4.5. CHIEF FINANCIAL OFFICER. The Chief Financial officer
shall have such title as may be designated by the Board and he shall be
responsible for all monies, funds and valuables of this Association, provide
for the keeping of proper records of all transactions of the Association,
report to the Board at each regular meeting the condition of the Association,
submit to the Board,
9
<PAGE>
when requested, a detailed statement of the income and expenses, be
responsible for the conduct and efficiency of all persons employed under him,
and perform such other duties as may be from time to time assigned to him by
the Board.
Section 4.6. OTHER OFFICERS. All other officers shall respectively
exercise such powers and perform such duties as generally pertain to their
several offices, or as may be conferred upon or assigned to them by the
Board, the Chairman of the Board or the President.
Section 4.7. BOND. Each officer and employee, if so required by the
Board, shall give bond with surety to be approved by the Board, conditioning for
the honest discharge of his duties as such officer or employee. In the
discretion of the Board, such bonds may be individual, schedule or blanket form,
and the premiums may be paid by the Association.
Section 4.8. OFFICERS ACTING AS ASSISTANT SECRETARY. Notwithstanding
Section 4.la of this Article IV, any Senior Vice President, Vice President or
Assistant Vice President shall have, by virtue of his office, and by authority
of the Bylaws, the authority from time to time to act as an Assistant Secretary
of the Association, and to such extent, said officers are appointed to the
office of Assistant Secretary.
ARTICLE V
TRUST DEPARTMENT
Section 5.1. TRUST DEPARTMENT. There shall be a department of the
Association known as the Trust Department which shall perform the fiduciary
responsibilities of the Association. Opinions of counsel shall be retained on
file in the Trust Department in connection with all important matters pertaining
to fiduciary activities.
10
<PAGE>
Section 5.2. TRUST INVESTMENT. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the
fiduciary relationship and local law. Where such instrument does not specify
the character and class of the investments to be made and does not vest in
the Association a discretion in the matter, funds held pursuant to such
instrument shall be invested in investments in which corporate fiduciaries
may invest under local law.
ARTICLE VI
STOCK CERTIFICATES AND TRANSFERS
Section 6.1. STOCK CERTIFICATES. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the
Chairman or President, and the Secretary, or an Assistant Secretary. Each
certificate shall state upon its face that the stock is transferable only
upon the books of the Association by the holder thereof, or by duly
authorized attorney, upon the surrender of such certificate, and shall meet
the requirements of Section 5139, United States Revised Statutes, as amended.
Section 6.2. TRANSFERS. The stock of this Association shall be
assignable and transferable only on the books of this Association, subject to
the restrictions and provisions of the national banking laws; and a transfer
book shall be provided in which all assignments and transfers of stock shall
be made. When stock is transferred, the certificates thereof shall be
returned to the Association, canceled, preserved and new certificates issued.
Section 6.3. DIVIDENDS. Dividends shall be paid to the shareholders
in whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that
the directors may fix another date as a record date for the determination of
the shareholders entitled to receive payment thereof.
11
<PAGE>
ARTICLE VII
INCREASE OF STOCK
7.1. CAPITAL STOCK. Shares of the capital stock of the Association,
which have been authorized but not issued, may be issued from time to time
for such consideration, not less than the par value thereof, as may be
determined by the Board.
ARTICLE VIII
CORPORATE SEAL
Section 8.1. SEAL. The seal, an impression of which appears below,
is the seal of the Association adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President,
Vice President, each Assistant Vice President, the Chief Financial Officer,
the Secretary, each Assistant Secretary, each Trust Officer, each Assistant
Trust Officer or each Assistant Cashier, shall have the authority to affix
the corporate seal of this Association and to attest to the same.
12
<PAGE>
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. FISCAL YEAR. The fiscal year of the Association shall
be the calendar year.
Section 9. 2. EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations,
receipts, discharges, releases, satisfactions, settlements, petitions,
schedules, accounts, affidavits, bonds, undertakings, proxies, and other
instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the
Board, the Vice Chairman of the Board, any Chairman or Vice Chairman, the
President, any Vice President or Assistant Vice President, the Secretary or
any Assistant Secretary, the Cashier or Treasurer or any Assistant Cashier or
Assistant Treasurer, or any officer holding similar or equivalent titles to
the above in any regions, divisions or functional units of the Association,
or, if in connection with the exercise of fiduciary powers of the
Association, by any of said officers or by any Trust Officer or Assistant
Trust Officer (or equivalent titles); provided, however, that where required,
any such instrument shall be attested by one of said officers other than the
officer executing such instrument. Any such instruments may also be executed,
acknowledged, verified, delivered, or accepted in behalf of the Association
in such other manner and by such other officers as the Board of Directors may
from time to time direct. The provisions of this Section 9.2 are
supplementary to any other provision of these Bylaws.
Section 9.3. RECORDS. The organization papers of this Association, the
articles of association, the bylaws and any amendments thereto, the proceedings
of all regular and special meetings of the shareholders and of the directors,
the returns of the judges of elections, and the reports of the committees of
directors shall be recorded in an appropriate minute book, and the
13
<PAGE>
minutes of each meeting shall be signed by the Secretary or any other officer
appointed to act as secretary of the meeting.
Section 9.4. BANKING HOURS. This Association and its branch offices
shall be open on such days and during such hours as shall be fixed from time
to time by the Board.
Section 9.5. VOTING SHARES OF OTHER CORPORATIONS. The Chairman, any
Vice Chairman, the President, or any Vice President is authorized to vote,
represent and exercise on behalf of this Association all rights incident to
any and all shares of stock of any other corporation standing in the name of
the Association. The authority granted herein may be exercised by such
officers in person or by proxy or by power of attorney duly executed by said
officer.
ARTICLE X
BYLAWS
Section 10.1. INSPECTION. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office
of the Association, and shall be open for inspection to all shareholders,
during banking hours.
Section 10.2. AMENDMENTS. These Bylaws may be changed or amended at
any regular or special meeting of the Board by the vote of a majority of the
Directors.
14
<PAGE>
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
TRUST CERTIFICATE
Whereas, FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, Charter
Number 23201, located in WILMINGTON, State of DELAWARE, being a National
Banking Association, organized under the statutes of the United States, has
made application for authority to act as fiduciary;
And whereas, applicable provisions of the statutes of the United
States authorize the granting of such authority;
Now, therefore, I hereby certify that the said association is
authorized to act in all fiduciary capacities by such statutes.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
- --------------------------------------------
Deputy Comptroller for Multinational Banking
<PAGE>
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) X
---
----------
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States National Banking Association 56-1989961
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union Trust Company, National Association
One Rodney Square, Suite 102
920 King St.
Wilmington, DE 19801
(Address of principal (Zip Code)
executive offices)
SAME AS ABOVE
(Name, address and telephone number, including
area code, of trustee's agent for service)
Heartland Financial Capital Trust I
(Exact name of obligor as specified in its charter)
The State of Delaware
(State or other jurisdiction of incorporation or organization)
51-6512637
(I.R.S. employer identification no.)
c/o
Edward L. Truitt, Jr., Vice President
First Union Trust Company, National Association
One Rodney Square
920 King Street, Suite 102
Wilmington, DE 19801
(Address, including zip code, of principal executive offices)
--------------------
<PAGE>
GAURANTEE OF CAPITAL SECURITIES OF HEARTLAND CAPITAL TRUST I
(Title of the Amended and Restated Declaration of Trust securities)
------------------------------------------------
1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject
- -----------------------------------------------------------------
Name Address
- ------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under
indentures under which the applicant is trustee, Items 3 through 15 are not
required herein.
<PAGE>
16. LIST OF EXHIBITS.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union Trust Company,
National Association, as now in effect, which contain the authority
to commence business and a grant of powers to exercise corporate
trust powers.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union Trust Company,
National Association, or instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1
Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or
examining authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE>
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information. Item 2 may, however,
be considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union Trust Company, National Association, a
national banking association organized and existing under the laws of the
United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington, and State of Delaware, on the 14th
day of September, 1999.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
(trustee)
By: /s/ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by Heartland Financial Capital
Trust I of Capital Securities, First Union Trust Company, National
Association, as the trustee herein named, hereby consents that reports of
examinations of said Trustee by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon requests therefor.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ Edward L. Truitt, Jr.
Name: Edward L. Truitt, Jr.
Title: Vice President
Dated: September 14, 1999
4
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
CONSOLIDATED REPORT OF CONDITION FOR JUNE 30, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNT IN THOUSANDS RCFD BIL MIL THOU
ASSETS
<S> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions
(from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1)................................ 0081 41 1.a.
b. Interest-bearing balances (2)......................................................... 0071 0 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 7 2.b.
3. Federal funds sold and securities purchased under agreements
to resell................................................................................. 1350 0 3.
4. Loans and lease financing receivables
a. Loans and leases, net of unearned income (from Schedule RC-C)......RCFD 2122 258,689 4.a.
b. LESS: Allowance for loan and lease losses..........................RCFD 3123 0 4.b.
c. LESS: Allocated transfer risk reserve............................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)................................... 2125 258,689 4.d.
5. Trading assets (from Schedule RC-D)....................................................... 3545 0 5.
6. Premises and fixed assets (including capitalized leases).................................. 2145 0 6.
7. Other real estate owned (from Schedule RC-M).............................................. 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).. 213 0 8.
9. Customers' liability to this bank on acceptances outstanding.............................. 2155 0 9.
10. Intangible assets (from Schedule RC-M).................................................... 2143 0 10.
11. Other assets (from Schedule RC-F)......................................................... 2160 3,648 11.
12. Total assets (sum of items 1 through 11).................................................. 2170 262,385 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: First Union Trust Company, National Association
Call Date: 12/31/98 FFIEC 032
Address: One Rodney Square, 1st Floor Page RC-1
City, State, Zip: Wilmington, DE 19801
FDIC Certificate #: 34465
-----
Schedule RC--Continued
<TABLE>
<CAPTION>
DOLLAR AMOUNT IN THOUSANDS BIL MIL THOU
-------------------------- ------------
LIABILITIES
<S> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I)........................................... RCON 2200 0 13.a.
(1) Noninterest-bearing (1)........................ RCON 6631 0 13.a.(1)
(2) Interest-bearing............................... RCON 6636 0 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II)................................ RCFN 2200 0 13.b.
(1) Noninterest-bearing............................ RCFN 6631 0 13.b.(1)
(2) Interest-bearing................................RCFN 6636 0 13.b.(2)
14. Federal funds purchased and securities sold
under agreements to repurchase............................................. RCFD 2800 0 14.
15. a. Demand notes issued to the U.S. Treasury................................ RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)................................ RCFD 3548 0 15.b.
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):.......................
a. With a remaining maturity of one year or less........................... RCFD 2332 1,517 16.a.
b. With a remaining maturity of more than one year through three years..... RCFD A547 0 16.b.
c. With a remaining maturity of more than three years...................... RCFD A548 0 16.c.
17. Not applicable...............................................
18. Bank's liability on acceptances executed and outstanding.................... RCFD 2920 0 18.
19. Subordinated notes and debentures (2)....................................... RCFD 3200 0 19.
20. Other liabilities (from Schedule RC-G)...................................... RCFD 2930 10,929 20.
21. Total liabilities (sum of items 13 through 20).............................. RCFD 2948 12,446 21.
22. Not applicable...............................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus............................... RCFD 3838 0 23.
24. Common stock................................................................ RCFD 3230 200 24.
25. Surplus (exclude all surplus related to preferred stock).................... RCFD 3839 413,719 25.
26. a. Undivided profits and capital reserves.................................. RCFD 3632 (163,980) 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................................... RCFD 8434 0 26.b.
27. Cumulative foreign currency translation adjustments......................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)........................... RCFD 3210 249,939 28.
29. Total liabilities and equity capital
(sum of items 21 and 28).................................................... RCFD 3300 262,385 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of auditing
work performed for the bank by independent external auditors as of Number
any date during 1996......................................... RCFD 6724 N/A M.1.
</TABLE>
1= Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2= Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3= Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4= Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5= Review of the bank's financial statements by external auditors
6= Compilation of the bank's financial statements by external auditors
7= Other audit procedures (excluding tax preparation work)
8= No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
<PAGE>
Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
CHARTER CERTIFICATE
Whereas, satisfactory evidence has been presented to the Office of the
Comptroller of the Currency that FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, located in WILMINGTON, State of DELAWARE, has complied with all
provisions of the statutes of the United States required to be complied with
before being authorized to commence the business of banking as a National
Banking Association;
Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
- --------------------------------------
Deputy Comptroller for Multinational Banking
Charter Number 23201
<PAGE>
Charter No. _________
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
For the purpose of organizing an association to carry on the business
of banking under the laws of the United States, the undersigned do enter into
the following Articles of Association:
FIRST. The title of this association shall be FIRST UNION TRUST
COMPANY, NATIONAL ASSOCIATION
SECOND. The main office of this association shall be in Wilmington,
Delaware. The business of this association will be limited to that of a national
trust bank. This association must obtain the prior written approval of the
Office of the Comptroller of the Currency (AOCC@) before amending its Articles
of Association to expand the scope of its activities and services. Transfers of
this association=s stock are subject to prior approval of a federal depository
institution regulatory agency. If no other agency approval is required, the
OCC=s approval must be obtained before the transfers. In such cases where OCC
approval is required, the OCC will apply the definitions and standards of the
Change in Bank Control Act and the OCC=s implementing regulation to ownership
changes in this association.
THIRD. The Board of Directors of this association shall consist of not
less than five nor more than twenty-five shareholders, the exact number to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or special
meeting thereof. Each director, during the full term of his directorship, shall
own a minimum of $1,000 aggregate par value of stock of this association or a
minimum par market value or equity interest of $1,000 of stock in the bank
holding company controlling this association. Any vacancy in the Board of
Directors may be filled by action of the Board of Directors.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
Board of Directors may designate, on the day of each year specified thereby in
the bylaws, but if no election is held on that day, it may be held on any
subsequent day according to such lawful rules as may be prescribed by the Board
of Directors.
Nominations for election to the Board of Directors may be made
by the Board of Directors or by any shareholder of any outstanding class of
capital stock of this association entitled to vote for election of directors.
Nominations other than those made by or on behalf of the existing bank
management shall be made in writing and be delivered or mailed to the president
of this association and to the OCC, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors, provided, however, that if less than 21 days notice of the meeting
is given to shareholders, such nomination shall be mailed or delivered to the
president of this association and to the Comptroller of the Currency not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed.
Such notification shall contain the following information to
the extent known to the notifying shareholder:
- The name and address of each proposed nominee.
- The principal occupation of each proposed nominee.
<PAGE>
- The total number of shares of capital stock
of this association that will be voted for
each proposed nominee.
- The name and residence address of the notifying
shareholder.
- The number of shares of capital stock of
this association owned by the notifying
shareholder. Nominations not made in
accordance herewith may, in his discretion,
be disregarded by the chairperson of the
meeting, and upon his instructions, the vote
tellers may disregard all votes cast for
each such nominee.
FIFTH. The authorized amount of capital stock of this association
shall be 2,000 shares of common stock of the par value of one hundred dollars
($100.00) each; but said capital stock may be increased or decreased from
time to time, according to the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional
shares thereof, each shareholder shall be entitled to subscribe for such
additional shares in proportion to the number of shares of said capital stock
owned by him at the time the increase is authorized by the shareholders,
unless another time subsequent to the date of the shareholders' meeting is
specified in a resolution by the shareholders at the time the increase is
authorized. The Board of Directors will have the power to prescribe a
reasonable period of time within which the preemptive rights to subscribe to
the new shares of capital stock must be exercised.
This association, at any time and from time to time, may
authorize and issue debt obligations, whether or not subordinated, without
the approval of the shareholders.
SIXTH. The Board of Directors shall appoint one of its members
president of this association, who shall be chairperson of the Board of
Directors, unless the Board of Directors appoints another director to be the
chairperson. The Board of Directors shall have the power to appoint one or
more vice presidents and to appoint a cashier and such other officers and
employees as may be required to transact the business of this association.
The Board of Directors shall have the power to:
- Define the duties of the officers and employees of
this association.
- Fix the salaries to be paid to the officers and
employees.
- Dismiss officers and employees.
- Require bonds from officers and employees and to fix
the penalty thereof.
- Regulate the manner in which any increase of
the capital of this association shall be
made.
- Manage and administer the business and affairs of
this association.
- Make all bylaws that it may be lawful for the Board
of Directors to make.
- Generally to perform all acts that are legal for a
Board of Directors to perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of
Wilmington, Delaware, without the approval of the shareholders, and shall
have the power to establish or change the location of any branch or branches
of the association to any other location, without the approval of the
shareholders.
3
<PAGE>
EIGHTH. The corporate existence of this association shall continue
until terminated according to the laws of the United States.
NINTH. The Board of Directors of this association, or any three or
more shareholders owning, in the aggregate, not less than 10 percent of the
stock of this association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first-class mail, postage prepaid, mailed at
least 10 days prior to the date of the meeting to each shareholder of record
at his address as shown upon the books of this association.
TENTH. Each director and executive officer of this association shall
be indemnified by the association against liability in any proceeding
(including without limitation a proceeding brought by or on behalf of this
association itself) arising out of his status as such or his activities in
either of the foregoing capacities, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of this association.
Liabilities incurred by a director or executive officer of this association
in defending a proceeding shall be paid by this association in advance of the
final disposition of such proceeding upon receipt of an undertaking by the
director or executive officer to repay such amount if it shall be determined,
as provided in the last paragraph of this Article Tenth, that he is not
entitled to be indemnified by this association against such liabilities.
The indemnity against liability in the preceding paragraph of this
Article Tenth, including liabilities incurred in defending a proceeding,
shall be automatic and self-operative.
Any director, officer or employee of this association who serves at
the request of this association as a director, officer, employee or agent of
a charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade
association, or as a trustee or administrator under an employee benefit plan,
or who serves at the request of this association as a director, officer or
employee of a business corporation in connection with the administration of
an estate or trust by this association, shall have the right to be
indemnified by this association, subject to the provisions set forth in the
following paragraph of this Article Tenth, against liabilities in any manner
arising out of or attributable to such status or activities in any such
capacity, except for any liability incurred on account of activities which
were at the time taken known or believed by such person to be clearly in
conflict with the best interests of this association, or of the corporation,
partnership, joint venture, trust, enterprise, association or plan being
served by such person.
In the case of all persons except the directors and executive
officers of this association, the determination of whether a person is
entitled to indemnification under the preceding paragraph of this Article
Tenth shall be made by and in the sole discretion of the Chief Executive
Officer of this association. In the case of the directors and executive
officers of this association, the indemnity against liability in the
preceding paragraph of this Article Tenth shall be automatic and
self-operative.
For purposes of this Article Tenth of these Articles of Association
only, the following terms shall have the meanings indicated:
(a) "association" means First Union Trust Company, National Association
and its direct and indirect wholly-owned subsidiaries.
(b) "director" means an individual who is or was a director of this
association.
(c) "executive officer" means an officer of this association who by
resolution of the Board of Directors of this association has been
determined to be an executive officer of this association for
purposes of Regulation O of the Federal Reserve Board.
4
<PAGE>
(d) "liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses, including counsel
fees and expenses, incurred with respect to a proceeding.
(e) "party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
This association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless this association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons
who are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with this association only after the
effective date of such merger or other combination and only as to their
status and activities after such date.
The right to indemnification herein provided for shall inure to the
benefit of the heirs and legal representatives of any person entitled to such
right.
No revocation of, change in, or adoption of any resolution or provision
in the Articles of Association or By-laws of this association inconsistent
with, this Article Tenth shall adversely affect the rights of any director,
officer, or employee of this association with respect to (i) any proceeding
commenced or threatened prior to such revocation, change, or adoption, or
(ii) any proceeding arising out of any act or omission occurring prior to
such revocation, change, or adoption, in either case, without the written
consent of such director, officer, or employee.
5
<PAGE>
The rights hereunder shall be in addition to and not exclusive of any
other rights to which a director, officer, or employee of this association
may be entitled under any statute, agreement, insurance policy, or otherwise.
This association shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, or
employee of this association, or is or was serving at the request of this
association as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, trade association, employee
benefit plan, or other enterprise, against any liability asserted against
such director, officer, or employee in any such capacity, or arising out of
their status as such, whether or not this association would have the power to
indemnify such director, officer, or employee against such liability,
excluding insurance coverage for a formal order assessing civil money
penalties against a director, officer or employee of this association.
Notwithstanding anything to the contrary provided herein, no person
shall have a right to indemnification with respect to any liability (i)
incurred in an administrative proceeding or action instituted by an
appropriate bank regulatory agency which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action
by an individual or individuals in the form of payments to this association,
(ii) to the extent such person is entitled to receive payment therefor under
any insurance policy or from any corporation, partnership, joint venture,
trust, trade association, employee benefit plan, or other enterprise other
than this association, or (iii) to the extent that a court of competent
jurisdiction determines that such indemnification is void or prohibited under
state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of
a majority of the stock of this association, unless the vote of the holders
of a greater amount of stock is required by law, and in that case by the vote
of the holders of such greater amount.
IN WITNESS WHEREOF, we have hereunto set our hands this 25th day of
November, 1996.
ORGANIZERS:
- -------------------------------- --------------------------
Kent S. Hathaway Keith D. Lembo
- -------------------------------- --------------------------
Robert L. Andersen Stephen J. Antal
--------------------------
Daniel Glassberg
6
<PAGE>
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
BYLAWS
AS AMENDED AND RESTATED MAY 27, 1997
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and transaction of whatever other
business may properly come before the meeting, shall be held at the Main
Office of the Association, or such other place as the Board of Directors may
designate, at 10:00 A.M., on the third Tuesday of February in each year,
commencing with the year 1997 or such other time within 90 days as may be set
by the Board of Directors. If, from any cause, an election of directors is
not made on the said day, the Board of Directors shall order the election to
be held on some subsequent day, as soon thereafter as practicable, according
to the provisions of the law; and notice thereof shall be given in the manner
herein.
Section 1.2. SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for
any purpose at any time by the Board of Directors or by any one or more
shareholders owning, in the aggregate, not less than twenty-five percent of
the stock of the Association.
Section 1.3. NOTICE OF MEETINGS. Notice of Annual and Special
meetings shall mailed, postage prepaid, at least ten days prior to the date
thereof provided for the annual meeting, addressed to each shareholder at his
address appearing on the books of the Association; but any failure to mail
such notice, or any irregularity therein, shall not affect the validity of
such meeting,
<PAGE>
or of any of the proceedings thereat. A shareholder may waive any such notice.
Section 1.4. ORGANIZATION OF MEETINGS. The Chairman shall preside at
all meetings of shareholders. In his absence, the President, or a director
designated by the Chairman shall preside at such meeting.
Section 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid
only for one meeting to be specified therein, and any adjournments of such
meeting. Proxies shall be dated and shall be filed with the records of the
meeting.
Section 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting
of shareholders, unless otherwise provided by law. A majority of the votes
cast shall decide every question or matter submitted to the shareholders at
any meeting, unless otherwise provided by law or by the Articles of
Association.
ARTICLE II
DIRECTORS
Section 2.1. BOARD OF DIRECTORS. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law,
all corporate powers of the Association shall be vested in and may be
exercised by said Board.
Section 2.2. NUMBER. The Board shall consist of not less than five
nor more than twenty-five persons, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of
a majority of the full Board or by resolution of the shareholders at any
meeting thereof; provided, however, that a majority of the full Board may not
<PAGE>
increase the number of directors to a number which: (a) exceeds by more than
two the number of directors last elected by shareholders where such number
was fifteen or less; and (b) to a number which exceeds by more than four the
number of directors last elected by shareholders where such number was
sixteen or more, but in no event shall the number of directors exceed
twenty-five.
Section 2.3. ORGANIZATION MEETING. A meeting shall be held for the
purpose of organizing the new Board and electing and appointing officers of
the Association for the succeeding year on the day of the Annual Meeting of
Shareholders or as soon thereafter as practicable, and, in any event, within
thirty days thereof. If, at the time fixed for such meeting, there shall not
be a quorum present, the directors present may adjourn the meeting, from time
to time, until a quorum is obtained.
Section 2.4. REGULAR MEETINGS. The regular meetings of the Board
shall be held on such days and time as the directors may, by resolution,
designate; and written notice of any change thereof shall be sent to each
member. When any regular meeting of the Board falls upon a legal holiday, the
meeting shall be held on such other day as the Board may designate.
Section 2.5. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, or President, or at the request of three
or more directors. Each director shall be given notice of each special
meeting, except the organization meeting, at least one day before it is to be
held by facsimile, telephone, telegram, letter or in person. Any director may
waive any such notice.
Section 2.6. QUORUM. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less
number may adjourn any meeting, from time to time, and the meeting may be
held, as adjourned without further notice.
3
<PAGE>
Section 2.7. TERM OF OFFICE AND VACANCY. Directors shall hold office
for one year and until their successors are elected and have qualified. No
person shall stand for election as a director of this Association if at the
date of his election he will have passed his seventieth birthday; provided,
however, this prohibition shall not apply to persons who are active officers
of this Association, an affiliate bank, or its parent corporation, or a
former chief executive officer of the Association. No person, who is not an
officer or former officer of this Association, an affiliate bank, or its
parent corporation and who has discontinued the principal position or
activity the person held when initially elected, shall be recommended to the
shareholders for reelection; provided, however, that exceptions may be made
because of a change in principal position or activity which would be
compatible with continued service to this Association. No person elected as a
director may exercise any of the powers of his office until he has taken the
oath of office as prescribed by law. When any vacancy occurs among the
directors, the remaining members of the Board, in accordance with the laws of
the United States, may appoint a director to fill such vacancy at any regular
meeting of the Board, or at a special meeting called for that purpose.
Section 2.8. NOMINATIONS. Nominations for election to the Board
may be made by the Executive Committee or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote
for the election of directors.
Section 2.9. COMMUNICATIONS EQUIPMENT. Any or all directors may
participate in a meeting of the Board by means of conference telephone or any
means of communication by which all persons participating in the meeting are
able to hear each other.
Section 2.10. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the Board or committee thereof by law, the
Association's Articles of Association, or these Bylaws may be taken without a
meeting, if, prior or subsequent to the action, all members of the Board or
4
<PAGE>
committee shall individually or collectively consent in writing to the
action. Each written consent or consents shall be filed with the minutes of
the proceedings of the Board or committee. Action by written consent shall
have the same force and effect as a unanimous vote of the directors, for all
purposes. Any certificate or other documents which relates to action so taken
shall state that the action was taken by unanimous written consent of the
Board or committee without a meeting.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1. EXECUTIVE COMMITTEE. The Board may by resolution
adopted by a majority of the entire Board designate an Executive Committee
consisting of the Chairman of the Board, the President, and not less than two
other directors. Subject to the national banking laws and the Association's
Articles of Association, the Executive Committee may exercise all the powers
of the Board of Directors with respect to the affairs of the Association,
except that the Executive Committee may not:
1. (a) exercise such powers while a quorum of the Board of
Directors is actually convened for the conduct of
business,
(b) exercise any power specifically required to be
exercised by at least a majority of all the
directors,
(c) act on matters committed by the Bylaws or resolution
of the Board of Directors to another committee of the
board, or
(d) amend or repeal any resolution theretofore adopted by
the Board of Directors which by its terms is
amendable or repealable only by the Board;
2. amend the Articles of Association or make, alter or repeal any
Bylaw of the
5
<PAGE>
Association;
3. elect or appoint any director, create or fill any vacancies in
the Board of Directors or remove any director, or authorize or
approve any change in the compensation of any officer of the
Association who is also a director of the Association;
4. authorize or approve issuance or sale or contract for sale of
shares of stock of the Association, or determine the
designation and relative rights, preferences and limitations
of a class or series of shares;
5. adopt an agreement of merger or consolidation, or submit to
shareholders any action that requires shareholder approval,
including any recommendation to the shareholders concerning
the sale, lease or exchange of all or substantially all the
Association's property and assets, a dissolution of the
Association or a revocation of a previously approved
dissolution; or
6. authorize an expenditure by the Association in excess of $10
million for any one item or group of related items.
The committee shall hold regular meetings at such times as the members shall
agree and whenever called by the chairman of the committee. A majority of the
committee shall constitute a quorum for the transaction of business. The
committee shall keep a record of its proceedings and shall report these
proceedings to the Board at the regular meetings thereof. The committee shall
serve as the nominating committee for nominations to the Board.
Section 3.2. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Board may
designate one of its members to be Chairman of the Executive Committee who
shall preside at the meetings thereof and shall perform such duties as the
Board shall assign to him from time to time.
6
<PAGE>
Section 3.3. AUDIT COMMITTEE. The Board shall appoint a committee of
three or more persons exclusive of the officers of this Association which
committee shall be known as the Audit Committee. It shall be the duty of this
committee at least once in every twelve months to examine the affairs of the
Association, and determine whether it is in a sound and solvent condition and
to recommend to the Board such changes in the manner of doing business, etc.,
as may seem to be desirable. The committee may cause such examination to be
made in its behalf and under its supervision by outside accountants and may
also use the services of any other persons either inside or outside the
Association to assist in its work. The results of each examination shall be
reported in writing to the Board.
Section 3.4. AUDIT OF TRUST DEPARTMENT. The Audit Committee shall,
at least once during each calendar year and within fifteen months of the last
such audit make suitable audits of the Trust Department or cause suitable
audits to be made by auditors responsible only to the Board, and at such time
shall ascertain whether the department has been administered in accordance
with law, Part 9 of the Regulations of the Comptroller of the Currency, and
sound fiduciary principles. In lieu of such periodic audit the Audit
Committee, at the election of the Board, may conduct or cause to be conducted
by auditors responsible only to the Board an adequate continuous audit system
adopted by the Board. A written report of such periodic or continuous audit
shall be made to the Board.
Section 3.5. OTHER COMMITTEES. The Board may appoint from time to
time other committees composed of one or more persons each, for such purposes
and with such powers as the Board may determine. The Chairman of the Board
shall have the power to designate another person to serve on any committee
during the absence or inability of any member thereof so to serve.
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Section 3.6. DIRECTORS' EMERITUS. The Board may designate one or
more persons to serve as Director Emeritus. Such Director Emeritus shall have
the right to attend any and all meetings of the Board, but shall have no vote
at such meetings. A person designated as Director Emeritus may serve in that
capacity for a period of three years.
Section 3.7. ALTERNATE COMMITTEE MEMBERS. The Board may, from time to
time, appoint one or more, but no more than three persons to serve as
alternate members of a committee, each of whom shall be empowered to serve on
that committee in place of a regular committee member in the event of the
absence or disability of that committee member. An alternate committee member
shall, when serving on a committee, have all of the powers of a regular
committee member. Alternate committee members shall be notified of, and
requested to serve at, a particular meeting or meetings, or for particular
periods of time, by or at the direction of the chairman of the committee or
the Chairman of the Board.
ARTICLE IV
OFFICERS
Section 4.1. OFFICERS. The officers of the Association may be a
Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or
Vice Chairmen (who shall not be required to be directors of the Association),
a President, one or more Vice Presidents, a Secretary, a Cashier or
Treasurer, and such other officers, including officers holding similar or
equivalent titles to the above in regions, divisions or functional units of
the Association, as may be appointed by the Board of Directors. The Chairman
of the Board and the President shall be members of the Board of Directors.
Any two or more offices may be held by one person, but no officer shall sign
or execute any document in more than one capacity.
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Section 4.2. TERM OF OFFICE. The officers who are required by the
articles of association or the bylaws to be members of the Board shall hold
their respective offices until the Organization meeting of the Board
following the annual meeting of shareholders or until their respective
successors shall have been elected, unless they shall resign, become
disqualified or be removed from office. Each other officer shall hold office
at the pleasure of the Board. Any officer may be removed at any time by the
Board.
Section 4.3. CHAIRMAN OF THE BOARD. The chairman of the board shall
be designated as Chairman of the Board. He shall preside at all meetings of
the stockholders and directors and he shall be a member of all committees of
the Board except the Audit Committee. He shall have such other powers and
perform such other duties as may be prescribed from time to time by the
Board. He shall be subject only to the direction and control of the Board.
Section 4.4. PRESIDENT. The president shall be the chief executive
officer of the Association and he shall be designated as President and Chief
Executive Officer. In the absence of the Chairman the President shall preside
at all meetings of the Board. The President shall be a member of each
committee of the Board except the Audit Committee. He shall have the powers
and perform the duties conferred or imposed upon the President by the
national banking laws, and he shall have such other powers and perform such
other duties as nay from time to time be imposed upon or assigned to him by
the Board.
Section 4.5. CHIEF FINANCIAL OFFICER. The Chief Financial officer
shall have such title as may be designated by the Board and he shall be
responsible for all monies, funds and valuables of this Association, provide
for the keeping of proper records of all transactions of the Association,
report to the Board at each regular meeting the condition of the Association,
submit to the Board,
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when requested, a detailed statement of the income and expenses, be
responsible for the conduct and efficiency of all persons employed under him,
and perform such other duties as may be from time to time assigned to him by
the Board.
Section 4.6. OTHER OFFICERS. All other officers shall respectively
exercise such powers and perform such duties as generally pertain to their
several offices, or as may be conferred upon or assigned to them by the
Board, the Chairman of the Board or the President.
Section 4.7. BOND. Each officer and employee, if so required by the
Board, shall give bond with surety to be approved by the Board, conditioning for
the honest discharge of his duties as such officer or employee. In the
discretion of the Board, such bonds may be individual, schedule or blanket form,
and the premiums may be paid by the Association.
Section 4.8. OFFICERS ACTING AS ASSISTANT SECRETARY. Notwithstanding
Section 4.la of this Article IV, any Senior Vice President, Vice President or
Assistant Vice President shall have, by virtue of his office, and by authority
of the Bylaws, the authority from time to time to act as an Assistant Secretary
of the Association, and to such extent, said officers are appointed to the
office of Assistant Secretary.
ARTICLE V
TRUST DEPARTMENT
Section 5.1. TRUST DEPARTMENT. There shall be a department of the
Association known as the Trust Department which shall perform the fiduciary
responsibilities of the Association. Opinions of counsel shall be retained on
file in the Trust Department in connection with all important matters pertaining
to fiduciary activities.
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Section 5.2. TRUST INVESTMENT. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the
fiduciary relationship and local law. Where such instrument does not specify
the character and class of the investments to be made and does not vest in
the Association a discretion in the matter, funds held pursuant to such
instrument shall be invested in investments in which corporate fiduciaries
may invest under local law.
ARTICLE VI
STOCK CERTIFICATES AND TRANSFERS
Section 6.1. STOCK CERTIFICATES. Ownership of capital stock of the
Association shall be evidenced by certificates of stock signed by the
Chairman or President, and the Secretary, or an Assistant Secretary. Each
certificate shall state upon its face that the stock is transferable only
upon the books of the Association by the holder thereof, or by duly
authorized attorney, upon the surrender of such certificate, and shall meet
the requirements of Section 5139, United States Revised Statutes, as amended.
Section 6.2. TRANSFERS. The stock of this Association shall be
assignable and transferable only on the books of this Association, subject to
the restrictions and provisions of the national banking laws; and a transfer
book shall be provided in which all assignments and transfers of stock shall
be made. When stock is transferred, the certificates thereof shall be
returned to the Association, canceled, preserved and new certificates issued.
Section 6.3. DIVIDENDS. Dividends shall be paid to the shareholders
in whose names the stock shall stand at the close of business on the day next
preceding the date when the dividends are payable, provided, however, that
the directors may fix another date as a record date for the determination of
the shareholders entitled to receive payment thereof.
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ARTICLE VII
INCREASE OF STOCK
7.1. CAPITAL STOCK. Shares of the capital stock of the Association,
which have been authorized but not issued, may be issued from time to time
for such consideration, not less than the par value thereof, as may be
determined by the Board.
ARTICLE VIII
CORPORATE SEAL
Section 8.1. SEAL. The seal, an impression of which appears below,
is the seal of the Association adopted by the Board of Directors:
[Seal]
The Chairman of the Board, the Vice Chairman, the President, Senior
Executive Vice President, Executive Vice President, Senior Vice President,
Vice President, each Assistant Vice President, the Chief Financial Officer,
the Secretary, each Assistant Secretary, each Trust Officer, each Assistant
Trust Officer or each Assistant Cashier, shall have the authority to affix
the corporate seal of this Association and to attest to the same.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1. FISCAL YEAR. The fiscal year of the Association shall
be the calendar year.
Section 9. 2. EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations,
receipts, discharges, releases, satisfactions, settlements, petitions,
schedules, accounts, affidavits, bonds, undertakings, proxies, and other
instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the
Board, the Vice Chairman of the Board, any Chairman or Vice Chairman, the
President, any Vice President or Assistant Vice President, the Secretary or
any Assistant Secretary, the Cashier or Treasurer or any Assistant Cashier or
Assistant Treasurer, or any officer holding similar or equivalent titles to
the above in any regions, divisions or functional units of the Association,
or, if in connection with the exercise of fiduciary powers of the
Association, by any of said officers or by any Trust Officer or Assistant
Trust Officer (or equivalent titles); provided, however, that where required,
any such instrument shall be attested by one of said officers other than the
officer executing such instrument. Any such instruments may also be executed,
acknowledged, verified, delivered, or accepted in behalf of the Association
in such other manner and by such other officers as the Board of Directors may
from time to time direct. The provisions of this Section 9.2 are
supplementary to any other provision of these Bylaws.
Section 9.3. RECORDS. The organization papers of this Association, the
articles of association, the bylaws and any amendments thereto, the proceedings
of all regular and special meetings of the shareholders and of the directors,
the returns of the judges of elections, and the reports of the committees of
directors shall be recorded in an appropriate minute book, and the
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minutes of each meeting shall be signed by the Secretary or any other officer
appointed to act as secretary of the meeting.
Section 9.4. BANKING HOURS. This Association and its branch offices
shall be open on such days and during such hours as shall be fixed from time
to time by the Board.
Section 9.5. VOTING SHARES OF OTHER CORPORATIONS. The Chairman, any
Vice Chairman, the President, or any Vice President is authorized to vote,
represent and exercise on behalf of this Association all rights incident to
any and all shares of stock of any other corporation standing in the name of
the Association. The authority granted herein may be exercised by such
officers in person or by proxy or by power of attorney duly executed by said
officer.
ARTICLE X
BYLAWS
Section 10.1. INSPECTION. A copy of the Bylaws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office
of the Association, and shall be open for inspection to all shareholders,
during banking hours.
Section 10.2. AMENDMENTS. These Bylaws may be changed or amended at
any regular or special meeting of the Board by the vote of a majority of the
Directors.
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Comptroller of the Currency
Administrator of National Banks
Multinational Banking Division
250 E Street, SW
Washington, D.C. 20219-0001
TRUST CERTIFICATE
Whereas, FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, Charter
Number 23201, located in WILMINGTON, State of DELAWARE, being a National
Banking Association, organized under the statutes of the United States, has
made application for authority to act as fiduciary;
And whereas, applicable provisions of the statutes of the United
States authorize the granting of such authority;
Now, therefore, I hereby certify that the said association is
authorized to act in all fiduciary capacities by such statutes.
In testimony whereof, witness my signature and
Seal of office this fifteenth day of January 1997.
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Deputy Comptroller for Multinational Banking
