Exhibit 10.19
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 28, 2000
This Second Amended and Restated Credit Agreement (this
"AGREEMENT") dated as of September 28, 2000, is by and between
HEARTLAND FINANCIAL USA, INC., a corporation formed under the
laws of the State of Delaware ("BORROWER"), and THE NORTHERN
TRUST COMPANY, an Illinois banking corporation ("LENDER"), with a
banking office at 50 South LaSalle Street, Chicago, Illinois
60675, and shall amend and restate in its entirety that certain
Amended and Restated Credit Agreement dated as of July 23, 1999
executed by and between Borrower and Lender, as amended by that
certain Amendment dated as of November 1, 1999 to Amended and
Restated Credit Agreement by and between Borrower and Lender,
that certain Second Amendment dated as of July 23, 2000 to
Amended and Restated Credit Agreement ("SECOND AMENDMENT") by and
between Borrower and Lender, and all other prior amendments,
modifications, or waivers thereof or thereto (collectively, the
"AMENDED AND RESTATED CREDIT AGREEMENT").
WHEREAS, Borrower and Lender are parties to the Amended and
Restated Credit Agreement pursuant to which Lender has made
revolving loans ("PRIOR REVOLVING LOANS") and a term loan ("TERM
LOAN") to Borrower; and
WHEREAS, Borrower and Lender have agreed that the Amended
and Restated Credit Agreement shall be amended and restated into
this Agreement to, among other things, restructure the Prior
Revolving Loans and the Term Loan into the Loans under this
Agreement, and to make certain other amendments, all as provided
herein.
NOW, THEREFORE, in consideration of the promises and the
agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereby agree as follows:
SECTION 1. LOANS
1.1. RESTRUCTURING. On the date all the conditions precedent to
the effectiveness of this Agreement have been satisfied (herein,
the "RESTRUCTURING DATE"), and at the time on the Restructuring
Date that the restructuring contemplated by this Agreement occurs
(herein, the "RESTRUCTURING TIME"), the outstanding principal
balance of the Prior Revolving Loans and the Term Loan at the
Restructuring Time shall be restated and continued as Loans under
this Agreement.
1.2. REVOLVING CREDIT LOANS. Subject to the terms and conditions
of this Agreement, Lender agrees to make loans (the "Loan(s)") to
Borrower, from time to time from the date of this Agreement
through September 27, 2001 (the "MATURITY DATE"), at such times
and in such amounts, not to exceed THIRTY MILLION UNITED STATES
DOLLARS ($30,000,000) (the "COMMITMENT") at any one time
outstanding, as Borrower may request. During such period
Borrower may borrow, repay and reborrow hereunder. Each
borrowing shall be in the amount of at least $500,000.00 or the
remaining unused amount of the Commitment.
1.3. REVOLVING CREDIT NOTE. The Loans, including the Prior
Revolving Loans and the Term Loan, shall be evidenced by a
promissory note (the "NOTE"), substantially in the form of
EXHIBIT A, with appropriate insertions, dated the date hereof,
payable to the order of Lender and in the principal amount of the
Commitment. Lender may at any time and from time to time at
Lender's sole option attach a schedule (grid) to the Note and
endorse thereon notations with respect to each Loan specifying
the date and principal amount thereof, the Interest Period (as
defined below) (if applicable), the applicable interest rate and
rate option, and the date and amount of each payment of principal
and interest made by Borrower with respect to each such Loan.
Lender's endorsements as well as its records relating to the
Loans shall be rebuttably presumptive evidence of the outstanding
principal and interest on the Loans, and, in the event of
inconsistency, shall prevail over any records of Borrower and any
written confirmations of Loans given by Borrower. The unpaid
principal of the Note and all accrued and unpaid interest shall
be payable on or before the Maturity Date.
1.4. EXTENSION OF MATURITY DATE. Borrower may request an
extension of the Maturity Date by submitting a request for an
extension to Lender (an "EXTENSION REQUEST") no more than sixty
(60) days prior to the current Maturity Date. The Extension
Request must specify the new Maturity Date requested by Borrower
and the date (which must be at least thirty (30) days after the
Extension Request is delivered to Lender) as of which Lender must
respond to the Extension Request (the "EXTENSION DATE"). The new
Maturity Date shall be no more than 364 days after the Maturity
Date in effect at the time the Extension Request is received,
including such Maturity Date as one of the days in the
calculation of the days elapsed. Promptly upon receipt of an
Extension Request, Lender shall endeavor in good faith to notify
the Other Banks (as hereinafter defined) of the contents thereof
(provided it shall not be liable to Borrower, the Other Banks, or
any other Person for its failure to do so). If Lender fails to
respond to an Extension Request by the Extension Date, Lender
shall be deemed to have denied the Extension Request. If Lender,
in its sole discretion, decides to approve the Extension Request,
Lender shall deliver its written consent to Borrower, and
endeavor in good faith to notify the Other Banks of such
extension no later than the Extension Date (provided it shall not
be liable to Borrower, the Other Banks, or any other Person for
its failure to do so). If and only if the consent of each of the
Other Banks to the same new Maturity Date is received by Borrower
and Lender on or before the Extension Date, the Maturity Date
specified in the Extension Request shall become effective at the
expiration of the existing Maturity Date.
SECTION 2. INTEREST AND FEES
2.1. INTEREST RATE. Borrower agrees to pay interest on the
unpaid principal amount from time to time outstanding hereunder
at the following rates per annum:
(a) before maturity of any Loan, whether by acceleration or
otherwise, at the option of Borrower, subject to the terms hereof
at a rate equal to:
(i) The "PRIME-BASED RATE", which shall mean the Prime
Rate (as hereinafter defined) MINUS 1.0% per annum; or
(ii) "LIBOR", which shall mean that fixed rate of interest
per year for deposits with Interest Periods of 1, 2, or 3 months
(which Interest Period Borrower shall select subject to the terms
stated herein) in United States dollars offered to Lender in or
through the London interbank market at or about 11:00 A.M.,
London time, two Banking Days (as defined below) (during which
banks are generally open in both Chicago and London) before the
rate is to take effect in an amount corresponding to the amount
of the requested Loan or portion thereof and for the London
deposit Interest Period requested, DIVIDED BY one minus any
applicable reserve requirement (expressed as a decimal) on
Eurodollar deposits of the same amount and Interest Period as
determined by Lender in its sole discretion, PLUS 1.15% per
annum; or
(iii) "FEDERAL FUNDS RATE", which shall mean the weighted
average of the rates on overnight Federal funds transactions,
with members of the Federal Reserve System only, arranged by
Federal funds brokers, PLUS 1.15% per annum. The Federal Funds
Rate shall be determined by Lender on the basis of reports by
Federal funds brokers to, and published daily by, the Federal
Reserve Bank of New York in the Composite Closing Quotations for
U.S. Government Securities. If such publication is unavailable
or the Federal Funds Rate is not set forth therein, the Federal
Funds Rate shall be determined on the basis of any other source
reasonably selected by Lender. The Federal Funds Rate applicable
each day shall be the Federal Funds Rate reported as applicable
to Federal funds transactions on that date. In the case of
Saturday, Sunday or legal holiday, the Federal Funds Rate shall
be the rate applicable to Federal funds transactions on the
immediately preceding day for which the Federal Funds Rate is
reported.
(b) After the maturity of any Loan, whether by acceleration
or otherwise, such Loan shall bear interest until paid at a
rate equal to two percent (2%) in addition to the rate in
effect immediately prior to maturity (but not less than the
Prime-Based Rate in effect at maturity).
2.2. RATE SELECTION. Borrower shall select and change its
selection of the interest rate as among LIBOR, the Federal Funds
Rate and the Prime-Based Rate, as applicable, to apply to at
least $500,000 and in integral multiples of $100,000 thereafter
of any Loan or portion thereof, subject to the requirements
herein stated:
(a) At the time any Loan is made;
(b) At the expiration of a particular LIBOR Interest Period
selected for the outstanding principal balance of any Loan or
portion of any Loan currently bearing interest at LIBOR; and
(c) At any time for the outstanding principal balance of any
Loan or portion thereof currently bearing interest at the Prime-
Based Rate or the Federal Funds Rate.
2.3. RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR. If the Loans may bear interest at the LIBOR Rate
(pursuant to SECTION 2.1 hereinabove) and Borrower wishes to
borrow funds at LIBOR or Borrower wishes to change the rate of
interest on any Loan or portion thereof, within the limits
described above, from any other rate to LIBOR, it shall, at or
before 11:00 A.M., Chicago, Illinois time, not less than three
Banking Days prior to the Banking Day on which such rate is to
take effect, give Lender written or telephonic notice thereof,
which shall be irrevocable. Such notice shall specify the Loan
or portion thereof to which LIBOR is to apply, and, in addition,
the desired LIBOR Interest Period of one, two or three months
(but not to exceed the Maturity Date).
(b) FEDERAL FUNDS RATE OR PRIME-BASED RATE. If the Loans may
bear interest at the Federal Funds Rate or Prime-Based Rate
(pursuant to SECTION 2.1 hereinabove) and Borrower wishes to
borrow funds or to change the rate of interest on any Loan or any
portion thereof, to such rate, it shall, at or before l0:00 A.M.,
Chicago, Illinois time on the date such borrowing or change is to
take effect, which shall be a Banking Day, give written or
telephonic notice thereof, which shall be irrevocable. Such
notice shall specify the Loan or portion thereof to which the
Federal Funds Rate or Prime-Based Rate shall apply.
(c) FAILURE TO NOTIFY. If Borrower does not notify Lender at
the expiration of a selected Interest Period with respect to any
principal outstanding at LIBOR, then in the absence of such
notice Borrower shall be deemed to have elected to have such
principal accrue interest after the respective LIBOR Interest
Period at the Prime-Based Rate. If Borrower does not notify
Lender as to its selection of the interest rate option with
respect to any new Loan, then in the absence of such notice
Borrower shall be deemed to have elected to have such initial
advance accrue interest at the Prime-Based Rate.
2.4. INTEREST PAYMENT DATES. Accrued interest shall be paid in
respect of each portion of principal (a) to which the Prime-Based
Rate or the Federal Funds Rate applies, monthly on the last day
of each month of each year, beginning with the first of such
dates to occur after the date of the first Loan or portion
thereof, at maturity, and upon payment in full, and (b) to which
the LIBOR option applies, the end of each respective Interest
Period, every three months, at maturity, and upon payment in
full, whichever is earlier or more frequent. After maturity of
any installment, interest shall be payable upon demand.
2.5. ADDITIONAL PROVISIONS WITH RESPECT TO FEDERAL FUNDS RATE AND
LIBOR LOANS.
The selection by Borrower of the Federal Funds Rate or LIBOR
and the maintenance of Loans or portions thereof at such rate
shall be subject to the following additional terms and
conditions:
(a) AVAILABILITY OF DEPOSITS AT A DETERMINABLE RATE. If, after
Borrower has elected to borrow or maintain any Loan or portion
thereof at the Federal Funds Rate or LIBOR, Lender notifies
Borrower that:
(i) United States dollar deposits in the amount and for
the maturity requested are not available to Lender (in the case
of LIBOR, in the London interbank market); or
(ii) Reasonable means do not exist for Lender to determine
the Federal Funds Rate or LIBOR for the amount and maturity
requested, all as determined by Lender in its sole discretion,
then the principal subject to the Federal Funds Rate or LIBOR
shall accrue or shall continue to accrue interest at the Prime-
Based Rate.
(b) PROHIBITION OF MAKING, MAINTAINING, OR REPAYMENT OF
PRINCIPAL AT THE FEDERAL FUNDS RATE OR LIBOR. If any treaty,
statute, regulation, interpretation thereof, or any directive,
guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law) shall either prohibit or
extend the time at which any principal subject to the Federal
Funds Rate or LIBOR may be purchased, maintained, or repaid, then
on and as of the date the prohibition becomes effective, the
principal subject to that prohibition shall continue at the Prime-
Based Rate.
(c) PAYMENTS OF PRINCIPAL AND INTEREST TO BE INCLUSIVE OF ANY
TAXES OR COSTS. All payments of principal and interest shall
include any taxes and costs incurred by Lender resulting from
having principal outstanding hereunder at the Federal Funds Rate
or at LIBOR. Without limiting the generality of the preceding
obligation, illustrations of such taxes and costs are:
(i) With respect only to LIBOR, taxes (or the withholding
of amounts for taxes) of any nature whatsoever including income,
excise, and interest equalization taxes (other than income taxes
imposed by the United States or any state thereof on the income
of Lender), as well as all levies, imposts, duties, or fees
whether now in existence or resulting from a change in, or
promulgation of, any treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise, by a central
bank or fiscal authority (whether or not having the force of law)
or a change in the basis of, or time of payment of, such taxes
and other amounts resulting therefrom;
(ii) With respect only to LIBOR, any reserve or special
deposit requirements against assets or liabilities of, or
deposits with or for the account of, Lender with respect to
principal outstanding at LIBOR (including those imposed under
Regulation D of the Federal Reserve Board) or resulting from a
change in, or the promulgation of, such requirements by treaty,
statute, regulation, interpretation thereof, or any directive,
guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law), including capital
adequacy regulations;
(iii) With respect only to LIBOR, any other costs resulting
from compliance with treaties, statutes, regulations,
interpretations, or any directives or guidelines, or otherwise by
a central bank or fiscal authority (whether or not having the
force of law);
(iv) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment of
deposits acquired by Lender:
(A) To make any Loan or portion thereof or
maintain principal outstanding at LIBOR or the
Federal Funds Rate, or
(B) As the result of a voluntary prepayment at a
date other than the last day of an Interest Period
selected for principal outstanding at LIBOR; or
(C) As the result of a mandatory repayment at a
date other than the last day of an Interest Period
selected for principal outstanding at LIBOR or as
the result of the occurrence of an Event of
Default and the acceleration of any portion of the
indebtedness hereunder; or
(D) As the result of a prohibition on making,
maintaining, or repaying principal outstanding at
LIBOR or the Federal Funds Rate.
If Lender incurs any such taxes or costs, Borrower, upon
demand in writing specifying such taxes and costs, shall
promptly pay them; save for manifest error Lender's
specification shall be presumptively deemed correct.
2.6. BASIS OF COMPUTATION. Interest shall be computed for the
actual number of days elapsed on the basis of a year consisting
of 360 days, including the date a Loan is made and excluding the
date a Loan or any portion thereof is paid or prepaid.
2.7. FACILITY FEE, REDUCTION OF COMMITMENT. Borrower agrees to
pay Lender a facility fee (the "FACILITY FEE") equal to one-
eighth of one percent (0.125%) per annum on the Commitment
(whether or not in use). The Facility Fee shall commence to
accrue on the date of this Agreement and shall be paid on the
last day of each calendar quarter in each year, beginning with
the first of such dates to occur after the date of this
Agreement, at maturity and upon payment in full. At any time or
from time to time, upon at least ten days' prior written notice,
which shall be irrevocable, Borrower may reduce the Commitment in
the amount of at least $500,000 or in full. Upon any such
reduction of any part of the unused Commitment, the Facility Fee
on the part reduced shall be paid in full as of the date of such
reduction.
SECTION 3. PAYMENTS AND PREPAYMENTS
3.1. OPTIONAL PREPAYMENTS. Borrower may prepay without penalty
or premium any principal bearing interest at the Prime-Based Rate
or the Federal Funds Rate and may prepay any principal bearing
interest at LIBOR at the end of the Interest Period chosen or
agreed to by Borrower applicable to such Loan or portion of such
Loan. If Borrower prepays any principal bearing interest at LIBOR
in whole or in part prior to the expiration of the relevant
Interest Period, or if the maturity of any such LIBOR principal
is accelerated, then, to the fullest extent permitted by law
Borrower shall also pay Lender for all losses (including but not
limited to interest rate margin and any other losses of
anticipated profits) and expenses incurred by reason of the
liquidation or re-employment of deposits acquired by Lender to
make the Loan or maintain principal outstanding at LIBOR. Upon
Lender's demand in writing specifying such losses and expenses,
Borrower shall promptly pay them; Lender's specification shall be
deemed correct in the absence of manifest error. All Loans or
portions thereof made at LIBOR shall be conclusively deemed to
have been funded by or on behalf of Lender (in the London
interbank market) by the purchase of deposits corresponding in
amount and maturity to the amount and Interest Periods selected
(or deemed to have been selected) by Borrower under this
Agreement. Any partial repayment or prepayment shall be in an
amount of at least $500,000.
3.2. EQUAL ACTIONS. Borrower agrees that (a) each borrowing from
Lender under SECTION 1.2 of this Agreement and from the Other
Banks under the Other Bank Agreements, (b) each payment of the
Facility Fee under SECTION 2.7 of this Agreement to Lender and
under the Other Bank Agreements to the Other Banks and (c) each
reduction of the Commitment under SECTION 2.7 of this Agreement
and the commitments of the Other Banks under the Other Banks
Agreements shall be made equally among Lender and the Other Banks
and at substantially the same time. The making, conversion and
continuation of Loans hereunder and under the Other Bank
Agreements shall be made equally and at substantially the same
time and Interest Periods for LIBOR Loans hereunder and under the
Other Bank Agreement made on the same Banking Day shall be
coterminous. Each payment or prepayment of principal by Borrower
shall be made for the account of Lender and the Other Banks
equally and at substantially the same time. Each payment of
interest on the Loans to Lender and on loans to the Other Banks
shall be made for the account of Lender and the Other Banks
equally in accordance with the amounts of interest due and
payable to Lender and the Other Banks and at substantially the
same time.
3.3. FUNDS. All payments of principal, interest and the Facility
Fee shall be made in immediately available funds to Lender at its
banking office indicated above or as otherwise directed by
Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce Lender to make each of the Loans, Borrower
represents and warrants to Lender that:
4.1. ORGANIZATION. Borrower and each Subsidiary (as defined
below) are existing and in good standing under the laws of their
state of formation, and are duly qualified, in good standing and
authorized to do business in each jurisdiction where failure to
do so might have a material adverse impact on the consolidated
assets, condition or prospects of Borrower. Borrower and each
Subsidiary have the power and authority to own their properties
and to carry on their businesses as now being conducted.
4.2. AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance of this Agreement, the Note, the other Loan Documents
(as hereinafter defined) and all related documents and
instruments: (a) are within Borrower's powers; (b) have been
authorized by all necessary corporate action; (c) have received
any and all necessary governmental approval; and (d) do not and
will not contravene or conflict with any provision of law or
charter or by-laws of Borrower or any agreement affecting
Borrower or its property.
4.3. FINANCIAL STATEMENTS. Borrower has supplied copies of the
following financial or other statements to Lender:
(a) The Borrower's unaudited consolidated financial statements
as at June 30, 2000;
(b) The Borrower's audited consolidated financial statements as
at December 31, 1999; and
Such statements have been furnished to Lender, have been prepared
in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal
year, and fairly present the financial condition of Borrower and
each Subsidiary as at such dates and the results of their
operations for the respective periods then ended. Since the date
of those financial statements, no material, adverse change in the
business, condition, properties, assets, operations, or prospects
of Borrower or any Subsidiary has occurred of which Lender has
not been advised in writing before this Agreement was signed.
There is no known contingent liability of Borrower or any
Subsidiary which is known to be in an amount in excess of $10,000
(excluding loan commitments, letters of credit, and other
contingent liabilities incurred in the ordinary course of the
banking business) in excess of insurance for which the insurer
has confirmed coverage in writing which is not reflected in such
financial statements or of which Lender has not been advised in
writing before this Agreement was signed.
4.4. TAXES. Borrower and each Subsidiary have filed or caused to
be filed all federal, state and local tax returns which, to the
knowledge of Borrower or each Subsidiary, are required to be
filed, and have paid or have caused to be paid all taxes as shown
on such returns or on any assessment received by them, to the
extent that such taxes have become due (except for current taxes
not delinquent and taxes being contested in good faith and by
appropriate proceedings for which adequate reserves have been
provided on the books of Borrower or the appropriate Subsidiary,
and as to which no foreclosure, sale or similar proceedings have
been commenced). Borrower and each Subsidiary have set up
reserves which are adequate for the payment of additional taxes
for years which have not been audited by the respective tax
authorities.
4.5. LIENS. None of the assets of Borrower or any Subsidiary are
subject to any mortgage, pledge, title retention lien, or other
lien, encumbrance or security interest, except: (a) for current
taxes not delinquent or taxes being contested in good faith and
by appropriate proceedings; (b) for liens arising in the ordinary
course of business for sums not due or sums being contested in
good faith and by appropriate proceedings, but not involving any
deposits or Loan or portion thereof or borrowed money or the
deferred purchase price of property or services; (c) to the
extent specifically shown on Schedule 5.5(a); (d) for liens in
favor of Lender and the Other Banks granted after the date hereof
so long as such liens are granted on a pari passu basis; (e)
liens and security interests securing deposits of public funds,
repurchase agreements, Federal funds purchased, trust assets, and
other similar liens granted in the ordinary course of the banking
business; (f) liens granted by Citizens Finance Co. ("CFC") and
ULTEA, Inc. ("ULTEA") in favor of the Subsidiary Banks; and (g)
liens granted by any Subsidiary Bank to a Federal Home Loan Bank
in connection with a loan secured by assets of such Subsidiary
Bank made by such Home Loan Bank to any Subsidiary Bank.
4.6. ADVERSE CONTRACTS. Neither Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or
other corporate restriction, nor is it subject to any judgment,
decree or order of any court or governmental body, which may have
a material and adverse effect on the business, assets,
liabilities, financial condition, operations or business
prospects of Borrower and its Subsidiaries taken as a whole or on
the ability of Borrower to perform its obligations under this
Agreement, the Note, the other Loan Documents and the Other Bank
Agreements. Neither Borrower nor any Subsidiary has, nor with
reasonable diligence should have had, knowledge of or notice that
it is in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
such agreement, instrument, restriction, judgment, decree or
order.
4.7. REGULATION U. Borrower is not engaged principally in, nor
is one of Borrower's important activities, the business of
extending credit for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to
time hereinafter in effect.
4.8. LITIGATION AND CONTINGENT LIABILITIES. No litigation
(including derivative actions), arbitration proceedings or
governmental proceedings are pending or threatened against
Borrower which would (singly or in the aggregate), if adversely
determined, have a material and adverse effect on the financial
condition, continued operations or prospects of Borrower or any
Subsidiary, except as and if set forth (including estimates of
the dollar amounts involved) on Schedule 4.8 attached to this
Agreement.
4.9. FDIC INSURANCE. The deposits of each Subsidiary Bank of the
Borrower are insured by the FDIC to the extent permitted by
applicable law and no act has occurred which would adversely
affect the status of such Subsidiary Bank as an FDIC insured
bank.
4.10. INVESTIGATIONS. Neither Borrower nor any Subsidiary
Bank has received any notice that it is under investigation by,
or is operating under the restrictions imposed by or agreed to
in connection with, any regulatory authority.
4.11. BANK HOLDING COMPANY. Borrower has complied in all
material respects with all federal, state and local laws
pertaining to bank holding companies, including without
limitation the Bank Holding Company Act of 1956, as amended, and
there are no conditions precedent or subsequent to its engaging
in the business of being a registered bank holding company.
4.12. ERISA.
(a) Borrower and the ERISA Affiliates and the plan administrator
of each Plan have fulfilled in all material respects their
respective obligations under ERISA and the Code with respect to
such Plan and such Plan is currently in material compliance with
the applicable provisions of ERISA and the Code.
(b) With respect to each Plan, there has been no (i) "reportable
event" within the meaning of SECTION 4043 of ERISA and the
regulations thereunder which is not subject to the provision for
waiver of the 30-day notice requirement to the PBGC; (ii) failure
to make or properly accrue any contribution which is due to any
Plan; (iii) action under SECTIONS 4041 of ERISA to terminate any
Pension Plan; (iv) withdrawal from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to SECTIONS 4063 or 4064 of
ERISA; (v) institution by PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability pursuant to SECTIONS 4062(e),
4069 or 4212 of ERISA; (vii) complete or partial withdrawal
(within the meaning of SECTIONS 4203 and 4205 of ERISA) from any
Pension Plan which is a Multiemployer Plan that is in
reorganization or insolvency pursuant to SECTIONS 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under
SECTIONS 4041A or 4042 of ERISA; (viii) prohibited transaction
described in SECTION 406 of ERISA or 4975 of the Code which could
give rise to the imposition of any material fines, penalties,
taxes or related charges; (ix) assertion of a claim (other than
routine claims for benefits) against any Plan (other than a
Multiemployer Plan) which could reasonably be expected to be
successful; (x) receipt from the Internal Revenue Service of
notice of the failure of any Plan to qualify under SECTION 401(a)
of the Code, or the failure of any trust forming part of any Plan
to fail to qualify for exemption from taxation under SECTION
501(a) of the Code, if applicable; or (xi) imposition of a Lien
pursuant to SECTION 401(a)(29) or 412(n) of the Code or SECTION
302(f) of ERISA.
4.13. ENVIRONMENTAL LAWS.
(a) Borrower and each of its Subsidiaries have obtained all
material permits, licenses and other authorizations which are
required under the Environmental Laws and are in compliance in
all material respects with any applicable Environmental Laws.
(b) On or prior to the date hereof, no notice, demand, request
for information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no
investigation or review is pending or, to the best of Borrower's
knowledge, threatened by any governmental or other Person with
respect to any alleged or suspected failure by Borrower or any of
its Subsidiaries to comply in any material respect with any
Environmental Laws.
(c) There are no material liens arising under or pursuant to any
Environmental Laws on any of the property owned or leased by
Borrower or any of its Subsidiaries.
(d) There are no conditions existing currently or likely to
exist during the term of this Agreement which would subject
Borrower or any of its Subsidiaries or any of their property to
any material lien, damages, penalties, injunctive relief or
cleanup costs under any Environmental Laws or which require or
are likely to require cleanup, removal, remedial action or other
responses pursuant to Environmental Laws by Borrower and its
Subsidiaries.
4.14. SUBSIDIARIES. Attached hereto as EXHIBIT B is a
correct and complete list of all Subsidiaries of Borrower.
SECTION 5. COVENANTS
Until all obligations of Borrower hereunder and under the
other Loan Documents are paid and fulfilled in full and the
commitment of Lender to extend credit hereunder to Borrower has
expired or terminated, Borrower agrees that it shall, and shall
cause each Subsidiary to, comply with the following covenants,
unless Lender consents otherwise in writing:
5.1. EXISTENCE, MERGERS, ETC. Borrower and each Subsidiary shall
preserve and maintain their corporate, partnership or joint
venture (as applicable) existence, and will not liquidate,
dissolve, or merge, or consolidate with or into any other entity,
or sell, lease, transfer or otherwise dispose of all or a
substantial part of their assets other than in the ordinary
course of business as now conducted, except that:
(a) any Subsidiary may merge or consolidate with or into
Borrower or any one or more wholly-owned Subsidiaries;
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to Borrower or one or more wholly-
owned Subsidiaries;
(c) ULTEA may sell or lease assets to banks other than the
Subsidiary Banks in an amount not to exceed 50% of its total
lease assets;
(d) ULTEA may transfer an interest in accounts or notes
receivable on a non-recourse or a limited recourse basis to a
special purpose vehicle, PROVIDED, that the transfer qualifies as
a sale under generally accepted accounting principles and that
the total amount of the assets sold does not exceed $30,000,000
in the aggregate; and
(e) Borrower or any Subsidiary may merge with any other Person
so long as the Borrower or such Subsidiary shall be the surviving
Person and no Event of Default before or after giving effect to
such merger shall have occurred and be continuing.
Borrower and any Subsidiary shall take all steps to become
and remain duly qualified, in good standing and authorized to do
business in each jurisdiction where failure to do so might have a
material adverse impact on the consolidated assets, condition or
prospects of Borrower.
5.2. REPORTS, CERTIFICATES AND OTHER INFORMATION. Borrower shall
furnish (or cause to be furnished) to Lender:
(a) INTERIM REPORTS. Within forty-five (45) days after the end
of each quarter of each fiscal year of Borrower, a copy of an
unaudited financial statement of Borrower and its Subsidiaries
prepared on a consolidated basis consistent with the consolidated
financial statements of Borrower and its Subsidiaries referred to
in SECTION 4.3 above, signed by an authorized officer of Borrower
and consisting of at least: (i) a balance sheet as at the close
of such quarter; (ii) a statement of earnings and source and
application of funds for such quarter and for the period from the
beginning of such fiscal year to the close of such quarter; and
(iii) all call reports and other financial statements required to
be delivered by the Borrower and by each Subsidiary Bank to any
governmental authority or authorities having jurisdiction over
the Borrower or such Subsidiary Bank and all schedules thereto.
(b) AUDIT REPORT. Within 90 days after the end of each fiscal
year of Borrower, a copy of an annual report of Borrower and its
Subsidiaries prepared on a consolidated basis and in conformity
with generally accepted accounting principles applied on a basis
consistent with the consolidated financial statements of Borrower
and its Subsidiaries referred to in SECTION 4.3 above, duly
audited by independent certified public accountants of recognized
standing satisfactory to Lender, accompanied by an opinion
without significant qualification.
(c) CERTIFICATES. Contemporaneously with the furnishing of a
copy of each annual report and of each quarterly statement
provided for in this Section, a certificate dated the date of
such annual report or such quarterly statement and signed by
either the President, the Chief Financial Officer or the
Treasurer of Borrower, to the effect that no Event of Default or
Unmatured Event of Default has occurred and is continuing, or, if
there is any such event, describing it and the steps, if any,
being taken to cure it, and containing (except in the case of the
certificate dated the date of the annual report) a computation
of, and showing compliance with, any financial ratio or
restriction contained in this Agreement.
(d) REPORTS TO SEC AND TO SHAREHOLDERS. Copies of each filing
and report made by Borrower or any Subsidiary with or to any
securities exchange or the Securities and Exchange Commission,
except in respect of any single shareholder, and of each
communication from Borrower or any Subsidiary to shareholders
generally, promptly upon the filing or making thereof.
(e) NOTICE OF DEFAULT, LITIGATION AND ERISA NATTERS,
immediately upon learning of the occurrence of any of the
following, written notice describing the same and the steps being
taken by Borrower or such Subsidiary affected in respect thereof:
(i) the occurrence of an Event of Default or an Unmatured Event
of Default; (ii) the institution of, or any adverse determination
in, any litigation, arbitration or governmental proceeding which
is material to Borrower or any Subsidiary on a consolidated
basis; (iii) the occurrence of any event described in SECTION
4.12(b); (iv) the issuance of any cease and desist order,
memorandum of understanding, cancellation of insurance, or
proposed disciplinary action from the Federal Deposit Insurance
Corporation or other regulatory entity; or (v) the receipt by
Borrower or any Subsidiary Bank of any notice that it is under
investigation by, or is operating under the restrictions imposed
by or agreed to in connection with, any regulatory authority.
(f) OTHER BANK AGREEMENTS. Promptly, copies of any amendment,
supplement, waiver or other agreement affecting any Other Bank
Agreement, certified by the secretary or assistant secretary of
Borrower.
(g) OTHER INFORMATION. From time to time such other
information, financial or otherwise, concerning Borrower, any
Subsidiary or any Guarantor as Lender may reasonably request.
5.3. INSPECTION. Borrower and each Subsidiary shall permit
Lender and its agents at any time during normal business hours to
inspect their properties and to inspect and make copies of their
books and records. Any such inspection shall be at Borrower's
expense if an Event of Default or Unmatured Event of Default has
occurred and is continuing.
5.4. FINANCIAL REQUIREMENTS.
(a) TOTAL DEBT TO NET WORTH. Borrower's total indebtedness for
borrowed money (specifically excluding the indebtedness for
borrowed money of Borrower's Subsidiaries) shall not at any time
exceed forty-five percent (45%) of its Tangible Net Worth
(provided that nothing in this paragraph shall permit Borrower to
borrow except as specifically permitted elsewhere in this
Agreement).
(b) LEVERAGE RATIO. Borrower shall maintain at all times a
ratio of Tier 1 Capital to average quarterly assets less all non-
qualified intangible assets of at least five percent (5%),
calculated on a consolidated basis as at the last day of each
fiscal quarter of Borrower. Each Subsidiary Bank shall maintain
at all times a ratio of Tier 1 Capital to average quarterly
assets less all non-qualified intangible assets of at least five
percent (5%) as at the last day of each fiscal quarter of such
Subsidiary Bank.
(c) TIER 1 CAPITAL RATIO. Borrower shall maintain at all times
a ratio of Tier 1 Capital to risk-weighted assets of not less
than six percent (6%). Each Subsidiary Bank shall maintain at
all times a ratio of Tier 1 Capital to risk-weighted assets of
not less than six percent (6%).
(d) RISK-BASED CAPITAL RATIO Borrower shall maintain at all
times until December 31, 2000 a ratio of Total Capital to risk-
weighted assets of not less than nine percent (9%). On and after
December 31, 2000, Borrower shall maintain at all times a ratio
of Total Capital to risk-weighted assets of not less than ten
percent (10%). Each Subsidiary Bank shall maintain at all times
a ratio of Total Capital to risk-weighted assets of not less than
ten percent (10%).
(e) RETRUN ON AVERAGE ASSETS--BORROWER. Borrower's consolidated
net income shall be at least one half percent (0.50%) of its
average assets, calculated as at the last day of each fiscal
quarter of Borrower for the four fiscal quarter period ending on
such date.
(f) RETURN ON AVERAGE ASSETS-DUBUQUE BANK & TRUST ("DBT"). The
consolidated net income of DBT, an Iowa state bank, shall be at
least one percent (1.00%) of its average assets, calculated as at
the last day of each fiscal quarter of DBT for the four fiscal
quarter period ending on such date.
(g) NON-PERFORMING ASSETS. All assets of all Subsidiary Banks
and other Subsidiaries classified as "non-performing" (which
shall include all loans in non-accrual status, more than ninety
(90) days past due in principal or interest, restructured or
renegotiated, or listed as "other restructured" or "other real
estate owned") on the Federal Deposit Insurance Corporation or
other regulatory agency call report shall not exceed at any time
three percent (3%) of all loans of the Borrower and its
Subsidiaries on a consolidated basis.
(h) LOAN LOSS RESERVES RATIO. The Borrower and each Subsidiary
Bank shall maintain at all times on a consolidated basis a ratio
of loan loss reserves to non-performing loans (not including
"other real estate owned") of not less than one hundred percent
(100%).
5.5. INDEBTEDNESS, LIENS AND TAXES. Borrower and each Subsidiary
shall:
(a) INDEBTEDNESS. Not incur, permit to remain outstanding,
assume or in any way become committed for indebtedness in respect
of borrowed money (specifically including but not limited to
indebtedness in respect of money borrowed from financial
institutions but excluding deposits), except: (i) indebtedness
incurred hereunder or to Lender or to the Other Banks; (ii)
indebtedness described on SCHEDULE 5.5(a) hereof; (iii)
indebtedness of any Subsidiary arising in the ordinary course of
the business of such Subsidiary; (iv) indebtedness incurred in
connection with an offering of trust preferred or similar
securities of any Subsidiary, provided that the aggregate amount
of such indebtedness shall not exceed $25,780,000 at any one time
outstanding; and (v) in the event any transfer or contribution of
accounts receivable of ULTEA to a special purpose vehicle in
accordance with SECTION 5.1(d) is deemed to constitute a secured
financing, indebtedness of ULTEA to such special purpose vehicle,
secured by the account receivables and related rights transferred
to such special purpose vehicle only (the "FACTORED
RECEIVABLES"), PROVIDED, that such indebtedness shall not exceed
an amount equal to $30,000,000 in the aggregate.
(b) LIENS. Not create, suffer or permit to exist any lien or
encumbrance of any kind or nature upon any of their assets now or
hereafter owned or acquired (specifically including but not
limited to the capital stock of any of the Subsidiary Banks), or
acquire or agree to acquire any property or assets of any
character under any conditional sale agreement or other title
retention agreement, but this SECTION shall not be deemed to
apply to: (i) liens existing on the date of this Agreement and
described on SCHEDULE 5.5(a); (ii) liens of landlords,
contractors, laborers or suppliers, tax liens, or liens securing
performance or appeal bonds, or other similar liens or charges
arising out of Borrower's business, provided that tax liens are
removed before related taxes become delinquent and other liens
are promptly removed, in either case unless contested in good
faith and by appropriate proceedings, and as to which adequate
reserves shall have been established and no foreclosure, sale or
similar proceedings have commenced; (iii) liens in favor of
Lender and the Other Banks granted after the date hereof so long
as such liens are granted on a PARI PASSU basis; (iv) liens on
the assets of any Subsidiary (other than CFC and ULTEA) arising
in the ordinary course of the business of such Subsidiary; (v)
liens granted by any Subsidiary Bank to a Federal Home Loan Bank
in connection with a loan secured by assets of such Subsidiary
Bank made by such Federal Home Loan Bank to any Subsidiary Bank;
(vi) liens contemplated by SECTION 4.5; and (vii) in the event
any transfer or contribution of the Factored Receivables by ULTEA
to a special purpose vehicle is deemed to constitute a secured
financing, liens upon the Factored Receivables in favor of such
special purpose vehicle in an amount not to exceed $30,000,000 in
the aggregate.
(c) TAXES. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon them, upon their
income or profits or upon any properties belonging to them, prior
to the date on which penalties attach thereto, and all lawful
claims for labor, materials and supplies when due, except that no
such tax, assessment, charge, levy or claim need be paid which is
being contested in good faith by appropriate proceedings as to
which adequate reserves shall have been established, and no
foreclosure, sale or similar proceedings have commenced.
(d) GUARANTIES. Not assume, guarantee, endorse or otherwise
become or be responsible in any manner (whether by agreement to
purchase any obligations, stock, assets, goods or services, or to
supply or loan or any portion thereof any funds, assets, goods or
services, or otherwise) with respect to the obligation of any
other person or entity, except: (i) by the endorsement of
negotiable instruments for deposit or collection in the ordinary
course of business, issuance of letters of credit or similar
instruments or documents in the ordinary course of business; (ii)
as permitted by this Agreement; and (iii) in connection with an
offering of trust preferred or similar securities of any
Subsidiary as described in and subject to SECTION 5.5(a)(iv).
5.6. INVESTMENTS AND LOANS. Neither Borrower nor any Subsidiary
shall make any loan, advance, extension of credit or capital
contribution to, or purchase or otherwise acquire for a
consideration, evidences of indebtedness, capital stock or other
securities of any Person, except that Borrower and any Subsidiary
may:
(a) purchase or otherwise acquire and own short-term money
market items (specifically including but not limited to preferred
stock mutual funds);
(b) invest, by way of purchase of securities or capital
contributions, in the Subsidiary Banks or any other bank or
banks, and upon Borrower's purchase or other acquisition of fifty
percent (50%) or more of the stock of any bank, such bank shall
thereupon become a "Subsidiary Bank" for all purposes under this
Agreement;
(c) invest, by way of loan, advance, extension of credit
(whether in the form of lease, conditional sales agreement, or
otherwise), purchase of securities, capital contributions, or
otherwise, in Subsidiaries other than banks or Subsidiary Banks,
except that in no event shall Borrower's aggregate investment in
CFC and ULTEA exceed 15% of its Tangible Net Worth; and
(d) make any investment permitted by applicable governmental
laws and regulations.
Nothing in this SECTION 5.6 shall prohibit Borrower or any
Subsidiary Bank from making loans, advances, or other extensions
of credit in the ordinary course of banking upon substantially
the same terms as heretofore extended by them in such business or
upon such terms as may at the time be customary in the banking
business.
5.7. CAPITAL STRUCTURE AND DIVIDENDS. Neither Borrower nor any
Subsidiary shall declare or pay any dividend (other than
dividends payable in its own common stock or dividends paid to
Borrower) or make any other distribution in respect of such
shares or interest other than to Borrower, except that (i)
Borrower may declare or pay cash dividends to holders of the
stock of Borrower in any fiscal year in an amount not to exceed
50% of Borrower's consolidated net income for the immediately
preceding fiscal year and (ii) New Mexico Bank & Trust may pay
the same dividend per share that it pays Borrower to its minority
shareholders; provided that no Event of Default or Unmatured
Event of Default exists as of the date of such declaration or
payment or would result therefrom. Borrower shall continue to
own, directly or indirectly, the same (or greater) percentage of
the stock and partnership, joint venture, or other equity
interest in each Subsidiary that it held on the date of this
Agreement, and no Subsidiary shall issue any additional stock or
partnership, joint venture or other equity interests, options or
warrants in respect thereof, or securities convertible into such
securities or interests, other than to Borrower.
5.8. MAINTENANCE OF PROPERTIES. Borrower and each Subsidiary
shall maintain, or cause to be maintained, in good repair,
working order and condition, all their properties (whether owned
or held under lease), and from time to time make or cause to be
made all needed and appropriate repairs, renewals, replacements,
additions, and improvements thereto, so that the business carried
on in connection therewith may be properly and advantageously
conducted at all times.
5.9. INSURANCE. Borrower and each Subsidiary shall maintain
insurance in responsible companies in such amounts and against
such risks as is required by law and such other insurance, in
such amount and against such hazards and liabilities, as is
customarily maintained by bank holding companies and banks
similarly situated. Each Subsidiary Bank shall have deposits
insured by the Federal Deposit Insurance Corporation.
5.10. USE OF PROCEEDS.
(a) GENERAL. The proceeds of the Loans shall be used by
Borrower for general corporate purposes and to provide funding
for its Subsidiaries. Neither Borrower nor any Subsidiary shall
use or permit any proceeds of the Loans to be used, either
directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin
stock" within the meaning of Regulations U or X of the Board of
Governors of the Federal Reserve System, as amended from time to
time. If requested by Lender, Borrower and each Subsidiary will
furnish to Lender a statement in conformity with the requirements
of Federal Reserve Form U-1. No part of the proceeds of the
Loans will be used for any purpose which violates or is
inconsistent with the provisions of Regulation U or X of the
Board of Governors.
(b) TENDER OFFERS AND GOING PRIVATE. Neither Borrower nor any
Subsidiary shall use (or permit to be used) any proceeds of the
Loans to acquire any security in any transaction which is subject
to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended, or any regulations or rulings thereunder.
5.11. WELL CAPITALIZED. Each Subsidiary Bank shall at all
times be at least "well capitalized" as defined in the Federal
Deposit Insurance Corporation Improvement Act of 1991 and any
regulations issued thereunder, as such statute or regulation may
be amended or supplemented from time to time.
5.12. COMPLIANCE WITH LAW. Borrower and each Subsidiary
shall be in compliance with all laws and regulations (whether
federal, state or local and whether statutory, administrative,
judicial or otherwise) and with every lawful governmental order
or similar actions (whether administrative or judicial),
specifically including but not limited to all requirements of the
Bank Holding Company Act of 1956, as amended, and with the
existing regulations of the Board of Governors of the Federal
Reserve System relating to bank holding companies.
5.13. NOTICE OF DEPOSIT AND OTHER ACCOUNTS. Borrower shall,
and shall cause the Guarantors (as hereinafter defined) to
promptly notify Lender in writing (a) of any deposit or other
account currently maintained by Borrower or by the Guarantors
with any of the Other Banks and (b) upon the opening by Borrower
or by the Guarantors of any deposit or other account after the
date hereof with any of the Other Banks.
SECTION 6. GUARANTIES
6.1. GUARANTY. Payment of the Loans under this Agreement shall
be unconditionally guaranteed by ULTEA and by CFC (the
"GUARANTOR(s)") pursuant to a guaranty (individually a "GUARANTY"
and collectively the "GUARANTIES") executed by each Guarantor,
substantially in the form of EXHIBIT C hereto, with appropriate
insertions, as the same may be amended from time to time.
SECTION 7. CONDITIONS OF LENDING
7.1. DOCUMENTATION; NO DEFAULT. The obligation of Lender to make
any Loan is subject to the following conditions precedent:
(a) INITIAL DOCUMENTATION. Lender shall have received all of
the following promptly upon the execution and delivery hereof,
each duly executed and dated the date hereof (except for the
Second Amendment), in form and substance satisfactory to Lender
and its counsel, at the expense of Borrower, and in such number
of signed counterparts as Lender may request (except for the
Note, of which only the original shall be signed):
(i) NOTE. The Note, duly executed and delivered;
(ii) RESOLUTION; CERTIFICATE OF INCUMBENCY. A copy of a
resolution of the Board of Directors of Borrower authorizing or
ratifying the execution, delivery and performance, respectively,
of this Agreement, the Note, the other Loan Documents and any
other documents provided for in this Agreement, certified by an
appropriate officer of Borrower, together with a certificate of
an appropriate officer of Borrower, certifying the names of the
officer(s) of Borrower authorized to sign this Agreement, the
Note, the other Loan Documents and the other documents provided
for in this Agreement, together with a sample of the true
signature of each such person (Lender may conclusively rely on
such certificate until formally advised by a like certificate of
any changes therein);
(iii) GOVERNING DOCUMENTS. A certificate signed by an
appropriate officer of Borrower as to the articles of
incorporation and by-laws of Borrower, together with a good
standing certificate (dated no earlier than 30 days prior to this
Agreement) for the Borrower;
(iv) CERTIFICATE OF NO DEFAULT. A certificate signed by an
appropriate officer of Borrower to the effect that: (A) no Event
of Default or Unmatured Event of Default has occurred and is
continuing or will result from the making of the first Loan; and
(B) the representations and warranties of Borrower contained
herein and in the other Loan Documents are true and correct as at
the date of the first Loan as though made on that date;
(v) GUARANTIES. A separate Guaranty signed by each
Guarantor;
(vi) GUARANTOR RESOLUTIONS AND CERTIFICATE OF INCOMBENCY. A
copy of a resolution of the Board of Directors of each Guarantor
authorizing or ratifying the execution, delivery and performance,
respectively, of the Guaranty and any other documents provided
for in this Agreement, certified by an appropriate officer of
each Guarantor, together with a certificate of an appropriate
officer of the Guarantor certifying the names of the officer(s)
of each Guarantor authorized to sign the Guaranty and any other
documents provided for in this Agreement, together with a sample
of the true signature of each such person (Lender may
conclusively rely on such certificate until formally advised by a
like certificate of any changes therein);
(vii) OPINION OF COUNSEL TO GUARANTOR. An opinion of counsel
to each Guarantor in the form of EXHIBIT D attached hereto.
(viii) OPINION OF COUNSEL TO BORROWER. An opinion of counsel
to Borrower in the form of EXHIBIT E hereto;
(ix) OTHER BANK AGREEMENTS. A copy of the Other Bank
Agreements, duly executed by Borrower and the Other Banks,
certified by an appropriate officer of Borrower, which
certificate shall represent that, except for the names of the
Other Banks and related information therein, each Other Bank
Agreement is identical in all material respects to this
Agreement;
(x) SECOND AMENDMENT. The Second Amendment, duly executed
and delivered;
(xi) MISCELLANEOUS. Such other documents and certificates
as Lender may reasonably request.
(b) REPRESENTATIONS AND WARRANTIES TRUE. At the date of each
Loan, Borrower's representations and warranties set forth herein
and in the other Loan Documents shall be true and correct as of
such date as though made on such date.
(c) NO DEFAULT. At the time of each Loan, and immediately after
giving effect to such Loan, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing at the
time of such Loan, or would result from the making of such Loan.
(d) EQUALITY. At the time of each Loan and before and after
giving effect thereto, the principal amount of Loans outstanding
under this Agreement and loans outstanding under the Other Bank
Agreements shall be equally divided among the Lender and the
Other Banks.
7.2. AUTOMATIC UPDATE OF REPRESENTATIONS AND WARRANTIES AND NO-
DEFAULT CERTIFICATE; CERTIFICATE AT LENDER'S OPTION. The request
by Borrower for any Loan shall be deemed a representation and
warranty by Borrower that the statements in SUBSECTIONS (b), (c)
and (d)of SECTION 7.l are true and correct on and as at the date
of each succeeding Loan. Upon receipt of each Loan request
Lender in its sole discretion shall have the right to request
that Borrower provide to Lender, prior to Lender's funding of the
Loan, a certificate executed by Borrower's President, Treasurer,
or Chief Financial Officer to such effect.
SECTION 8. DEFAULT
8.1. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "EVENT OF DEFAULT":
(a) failure to pay, when and as due, any principal, interest or
other amounts payable hereunder or under the Note;
(b) any default, event of default, or similar event shall occur
or continue under any other instrument, document, note,
agreement, or guaranty delivered to Lender in connection with
this Agreement, or any such instrument, document, note,
agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or
(c) there shall occur any default or event of default, or any
event or condition that might become such with notice or the
passage of time or both, or any similar event, or any event that
requires the prepayment of borrowed money or the acceleration of
the maturity thereof, under the terms of any evidence of
indebtedness or other agreement issued or assumed or entered into
by Borrower, any Subsidiary or any Guarantor (including the Other
Bank Agreements), or under the terms of any indenture, agreement,
or instrument under which any such evidence of indebtedness or
other agreement is issued, assumed, secured, or guaranteed, and
such event shall continue beyond any applicable period of grace;
or
(d) any representation, warranty, schedule, certificate,
financial statement, report, notice, or other writing furnished
by or on behalf of Borrower, any Subsidiary or any Guarantor to
Lender is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified;
or
(e) any guaranty of or pledge of collateral security for the
Loans shall be repudiated or become unenforceable or incapable of
performance; or
(f) Borrower or any Subsidiary shall fail to comply with
SECTIONS 5.l or 5.4 hereof; or failure to comply with or perform
any agreement or covenant of Borrower or any Subsidiary contained
herein, which failure does not otherwise constitute an Event of
Default, and such failure shall continue unremedied for ten (l0)
days after notice thereof to Borrower by Lender; or
(g) any Guarantor shall dissolve, liquidate, merge, consolidate,
or cease to be in existence for any reason except as permitted
under SECTION 5.1 thereof; or
(h) any person or entity presently not in control of Borrower or
any Guarantor on the date hereof, shall obtain control directly
or indirectly of Borrower or any Guarantor, whether by purchase
or gift of stock or assets, by contract, or otherwise; or
(i) any proceeding (judicial or administrative) shall be
commenced against Borrower, any Subsidiary or any Guarantor, or
with respect to any assets of Borrower, any Subsidiary or any
Guarantor which shall threaten to have a material and adverse
effect on the assets, condition or prospects of Borrower, any
Subsidiary or any Guarantor; or final judgment(s) and/or
settlement(s) in an aggregate amount in excess of FIVE MILLION
UNITED STATES DOLLARS ($5,000,000) in excess of insurance for
which the insurer has confirmed coverage in writing, a copy of
which writing has been furnished to Lender, shall be entered or
agreed to in any suit or action commenced against Borrower, any
Subsidiary or any Guarantor; or
(j) Borrower or any Subsidiary or any Guarantor shall grant or
any person (other than Lender) shall obtain a security interest
in any assets of Borrower or any Subsidiary or any Guarantor
other than as permitted under SECTION 5.5(b) hereof; Borrower or
any Subsidiary or any Guarantor or any other person shall perfect
(or attempt to perfect) such a security interest; or any notice
of a federal tax lien against Borrower or any Subsidiary or any
Guarantor shall be filed with any public recorder; or
(k) the Federal Deposit Insurance Corporation or other
regulatory entity shall issue or agree to enter into a letter
agreement, memorandum of understanding, or a cease and desist
order with or against the Borrower or any Subsidiary; or the
Federal Deposit Insurance Corporation or other regulatory entity
shall issue or enter into an agreement, order, or take any
similar action with or against the Borrower or any Subsidiary
materially adverse to the business or operation of the Borrower
or any Subsidiary; or
(l) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation, dissolution, or similar proceeding,
domestic or foreign, is instituted by or against Borrower, any
Subsidiary or any Guarantor; or Borrower, any Subsidiary or any
Guarantor shall take any steps toward, or to authorize, such a
proceeding; or
(m) Borrower, any Subsidiary or any Guarantor shall become
insolvent, generally shall fail or be unable to pay its debts as
they mature, shall admit in writing its inability to pay its
debts as they mature, shall make a general assignment for the
benefit of its creditors, shall enter into any composition or
similar agreement, or shall suspend the transaction of all or a
substantial portion of its usual business; or
(n) an event or condition specified in SECTION 4.12(b) shall
occur or exist with respect to any Plan or Multiemployer Plan if
as a result of such event or condition, together with all other
such events or conditions, Borrower or any ERISA Affiliate shall
incur, or, in the opinion of Lender, shall be reasonably likely
to incur, a liability to a Plan, a Multiemployer Plan or the PBGC
(or any combination of the foregoing) which is, in the
determination of Lender, material in relation to the consolidated
financial condition, business, operations or prospects taken as a
whole of Borrower and its Subsidiaries.
8.2. DEFAULT REMEDIES.
(a) Upon the occurrence and during the continuance of any Event
of Default specified in SECTION 8.l (a)-(k) and (n), Lender at
its option may declare the Note (principal, interest and other
amounts) and any other amounts owed to Lender, including without
limitation any accrued but unpaid Facility Fee, immediately due
and payable without notice or demand of any kind. Upon the
occurrence of any Event of Default specified in SECTION 8.l (l)-
(m), the Note (principal, interest and other amounts) and any
other amounts owed to Lender, including without limitation any
accrued but unpaid Facility Fee, shall be immediately and
automatically due and payable without action of any kind on the
part of Lender. Upon the occurrence and during the continuance
of any Event of Default, any obligation of Lender to make any
Loan shall immediately and automatically terminate without action
of any kind on the part of Lender, and Lender may exercise any
rights and remedies under this Agreement, the Note, the other
Loan Documents any related document or instrument (including
without limitation any pertaining to collateral), and at law or
in equity.
(b) Lender may, by written notice to Borrower, at any time and
from time to time, waive any Event of Default or Unmatured Event
of Default, which shall be for such period and subject to such
conditions as shall be specified in any such notice. In the case
of any such waiver, Lender and Borrower shall be restored to
their former position and rights hereunder, and any Event of
Default or Unmatured Event of Default so waived shall be deemed
to be cured and not continuing; but no such waiver shall extend
to or impair any subsequent or other Event of Default or
Unmatured Event of Default. No failure to exercise, and no delay
in exercising, on the part of Lender of any right, power or
privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies of Lender herein provided are cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 9. DEFINITIONS
9.1. GENERAL. As used herein:
(a) The term "BANKING DAY" means a day on which Lender is open
at its main office for the purpose of conducting a commercial
banking business and is not authorized to close and, when used
with reference to LIBOR Rate Loans, a day on which Lender is
dealing with U.S. dollar deposits in the eurodollar interbank
market in London, England.
(b) The term "CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
(c) The term "ENVIRONMENTAL LAWS" means all federal, state and
local laws, including statutes, regulations, ordinances, codes,
rules and other governmental restrictions and requirements,
relating to the discharge of air pollutants, water pollutants or
process waste water or otherwise relating to the environment or
hazardous substances or the treatment, processing, storage,
disposal, release, transport or other handling thereof,
including, but not limited to, the federal Solid Waste Disposal
Act, the federal Clean Air Act, the federal Clean Water Act, the
federal Resource Conservation and Recovery Act, the federal
Hazardous Materials Transportation Act, the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
the federal Toxic Substances Control Act, regulations of the
Nuclear Regulatory Agency, and regulations of any state
department of natural resources or state environmental protection
agency, in each case as now or at any time hereafter in effect.
(d) The term "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(e) The term "ERISA AFFILIATE" means any corporation or trade or
business which is a member of the same controlled group of
corporations (within the meaning of SECTION 414(b) of the Code)
as Borrower or is under common control (within the meaning of
SECTION 414(c) of the Code) with Borrower.
(f) The term "FDIC" means the Federal Deposit Insurance
Corporation and any successor thereof.
(g) The term "INTEREST PERIOD" means, with regard to LIBOR
Loans, the amount of days from the date an interest rate is to be
in effect to the date such interest period matures according to
its terms.
(h) The term "LOAN DOCUMENTS" means collectively this Agreement,
the Note, Guaranties, and any and all other documents delivered
in connection herewith and therewith.
(i) The term "MULTIEMPLOYER PLAN" means a multiemployer plan
defined as such in SECTION 3(37) of ERISA to which contributions
have been made by Borrower or any ERISA Affiliate as a
"contributing sponsor" (within the meaning of SECTION 4001(a)(13)
of ERISA).
(j) The term "OTHER BANKS" means the banks party to the Other
Bank Agreements, together with their successors and assigns party
to such Other Bank Agreements.
(k) The term "OTHER BANK AGREEMENTS" means that certain
Revolving Credit Agreement dated even date herewith between
Borrower and Harris Trust and Savings Bank, and the notes,
guaranties, negative pledge agreements and the other documents
delivered in connection therewith, as each may be amended,
modified or supplemented from time to time.
(l) The term "PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
(m) The term "PENSION PLAN" means any Plan which is a "defined
benefit plan" within the meaning of SECTION 3(35) of ERISA.
(n) The term "PERSON" means any individual, corporation,
company, limited liability company, voluntary association,
partnership, trust, estate, unincorporated organization or
government (or any agency, instrumentality or political
subdivision thereof).
(o) The term "PLAN" means any plan, program or arrangement which
constitutes an "employee benefit plan" within the meaning of
SECTION 3(3) of ERISA.
(p) The term "PRIME RATE" means that rate of interest announced
from time to time by Lender called its prime rate, which rate may
not at any time be the lowest rate charged by Lender. Changes in
the rate of interest on the Loans resulting from a change in the
Prime Rate shall take effect on the date set forth in each
announcement of a change in the Prime Rate.
(q) The term "SUBSIDIARY" means any corporation, partnership,
joint venture, trust, or other legal entity of which Borrower
owns directly or indirectly fifty percent (50%) or more of the
outstanding voting stock or interest, or of which Borrower has
effective control, by contract or otherwise. The term Subsidiary
includes each Subsidiary Bank unless stated otherwise explicitly.
(r) The term "SUBSIDIARY BANK" means each Subsidiary which is a
bank or a thrift institution, including, without limitation, DBT,
Galena State Bank and Trust Company, First Community Bank, FSB,
Riverside Community Bank, Wisconsin Community Bank, and New
Mexico Bank & Trust.
(s) The term "TANGIBLE NET WORTH" shall mean at any date the
total shareholders' equity (including all classes of capital
stock, capital surplus, additional paid-in capital, retained
earnings, contingencies, and capital reserves), MINUS the cost of
common stock reacquired by the Borrower and other capital
accounts of the Borrower at such date, MINUS goodwill, patents,
trademarks, service marks, trade names, copyrights, and all
intangible assets (including without limitation "core-deposit
intangibles" and unidentifiable intangibles resulting from
acquisitions) and all items that are treated as intangible assets
under generally accepted accounting principles or that otherwise
fit within the definition of "intangible assets" in the
instructions for the call report of the Federal Deposit Insurance
Corporation.
(t) The term "TIER 1 CAPITAL" means the same as that determined
under the capital formula currently used by the Federal Reserve
Board.
(u) The term "TOTAL CAPITAL" means the same as that determined
under the capital formula currently used by the Federal Reserve
Board.
(v) The term "UNMATURED EVENT OF DEFAULT" means an event or
condition which would become an Event of Default with notice or
the passage of time or both.
Except as and unless otherwise specifically provided herein,
all accounting terms shall have the meanings given to them by
generally accepted accounting principles and shall be applied and
all reports required by this Agreement shall be prepared, in a
manner consistent with the financial statements referred to in
SECTION 4.3 above.
9.2. APPLICABILITY OF SUBSIDIARY REFERENCES. Terms hereof
pertaining to any Subsidiary shall apply only during such times
as Borrower has any Subsidiary.
SECTION 10. NO INTEREST OVER LEGAL RATE.
Borrower does not intend or expect to pay, nor does Lender
intend or expect to charge, accept or collect any interest which,
when added to any fee or other charge upon the principal which
may legally be treated as interest, shall be in excess of the
highest lawful rate. If acceleration, prepayment or any other
charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in
excess of the highest lawful rate, then any and all such excess
is hereby waived and shall be applied against the remaining
principal balance. Without limiting the generality of the
foregoing, and notwithstanding anything to the contrary contained
herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal
amount outstanding hereunder, cause the rate of interest
hereunder to exceed the highest lawful rate.
SECTION 11. PAYMENTS, ETC.
All payments hereunder shall be made in immediately
available funds, and shall be applied first to accrued interest
and then to principal; however, if an Event of Default occurs,
Lender may, in its sole discretion, and in such order as it may
choose, apply any payment to interest, principal and/or lawful
charges and expenses then accrued. Borrower shall receive
immediate credit on payments received during Lender's normal
banking hours if made in cash, immediately available funds, or by
debit to available balances in an account at Lender; otherwise
payments shall be credited after clearance through normal banking
channels. Borrower authorizes Lender to charge any account of
Borrower maintained with Lender for any amounts of principal,
interest, taxes, duties, or other charges or amounts due or
payable hereunder, with the amount of such payment subject to
availability of collected balances in Lender's discretion; unless
Borrower instructs otherwise, all Loans shall be made in
immediately available funds and shall be credited to an
account(s) of Borrower with Lender. LENDER AT ITS OPTION MAY
MAKE LOANS HEREUNDER UPON TELEPHONIC INSTRUCTIONS AND IN SO DOING
SHALL BE FULLY ENTITLED TO RELY SOLELY UPON INSTRUCTIONS,
INCLUDING INSTRUCTIONS TO MAKE TRANSFERS TO THIRD PARTIES,
REASONABLY BELIEVED BY LENDER TO HAVE BEEN GIVEN BY AN AUTHORIZED
PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. All payments
shall be made without deduction for or on account of any present
or future taxes, duties or other charges levied or imposed on
this Agreement, the Note, the other Loan Documents, the Loans or
the proceeds, Lender or Borrower by any government or political
subdivision thereof. Borrower shall upon request of Lender pay
all such taxes, duties or other charges in addition to principal
and interest, including without limitation all documentary stamp
and intangible taxes, but excluding income taxes based solely on
Lender's income.
SECTION 12. SETOFF
At any time after an Event of Default or Unmatured Event of
Default shall have occurred and be continuing, and without notice
of any kind, any account, deposit or other indebtedness owing by
Lender to Borrower, and any securities or other property of
Borrower delivered to or left in the possession of Lender or its
nominee or bailee, may be set off against and applied in payment
of any obligation hereunder, whether due or not.
SECTION 13. NOTICES
All notices, requests and demands to or upon the respective
parties hereto shall be deemed to have been given or made when
deposited in the mail, postage prepaid, addressed if to Lender to
its office indicated above (Attention: Division Head,
Correspondent Services Division), and if to Borrower to its
address set forth below, or to such other address as may be
hereafter designated in writing by the respective parties hereto
or, as to Borrower, may appear in Lender's records.
SECTION 14. AMENDMENT
This Agreement may be amended, supplemented or interpreted
at any time only by written instrument duly executed by Lender
and Borrower. Concurrently with the execution of any amendment
to this Agreement, Borrower shall deliver to Lender a
substantially similar amendment to the Other Bank Agreements
signed by each of the Other Banks, certified by an appropriate
officer of Borrower. Failure to deliver such amendment to the
Other Bank Agreements shall entitle Lender to declare an Event of
Default under SECTION 8.1(f) of this Agreement, without any
further notice.
SECTION 15. MISCELLANEOUS
This Agreement and any document or instrument executed in
connection herewith shall be governed by and construed in
accordance with the internal law of the State of Illinois, and
shall be deemed to have been executed in the State of Illinois.
Unless the context requires otherwise, wherever used herein the
singular shall include the plural and vice versa, and the use of
one gender shall also denote the other. Captions herein are for
convenience of reference only and shall not define or limit any
of the terms or provisions hereof; references herein to Sections
or provisions without reference to the document in which they are
contained are references to this Agreement. This Agreement shall
bind Borrower, its successors and assigns, and shall inure to the
benefit of Lender, its successors and assigns, except that
Borrower may not transfer or assign any of its rights or interest
hereunder without the prior written consent of Lender. Borrower
agrees to pay upon demand all expenses (including without
limitation attorneys' fees, legal costs and expenses, and time
charges of attorneys who may be employees of Lender, in each case
whether in or out of court, in original or appellate proceedings
or in bankruptcy) incurred or paid by Lender or any holder of the
Note in connection with (a) the negotiation, preparation,
execution and delivery of this Agreement, the Note and the other
Loan Documents, (b) any amendment, modification or waiver of any
of the terms of this Agreement, the Note or the other Loan
Documents, (c) any Event of Default or Unmatured Event of Default
and any enforcement or collection proceedings resulting
therefrom, and (d) any transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental
or revenue authority in respect of this Agreement, the Note or
the other Loan Documents or any other document referred to
herein. Except as otherwise specifically provided herein,
Borrower expressly and irrevocably waives presentment, protest,
demand and notice of any kind in connection herewith.
SECTION 16. WAIVER OF JURY TRIAL, ETC.
BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S
SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER
PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE, ANY LOAN DOCUMENT OR ANY DOCUMENT OR
INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITUS WITHIN OR JURISDICTION OVER
COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN
OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER
PROCEEDING BROUGHT BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH,
OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 17. EFFECT OF AMENDMENT AND RESTATEMENT
Borrower and Lender acknowledge and agree that (a) this
Agreement and the documents executed and delivered in connection
herewith do not constitute a novation, payment and reborrowing,
or termination of the obligations under the Amended and Restated
Credit Agreement (the "AMENDED AND RESTATED LOAN OBLIGATIONS") as
in effect prior to the date hereof, (b) the Amended and Restated
Loan Obligations are in all respects continuing with only the
terms thereof being modified as provided by this Agreement and
(c) all references in all related documents and all amendments,
restatements or other modifications thereof or thereto executed
and delivered in connection with the Amended and Restated Credit
Agreement shall be deemed to refer without further amendment to
this Agreement. All amendments, restatements or other
modifications thereof or thereto delivered in connection with the
Amended and Restated Credit Agreement are hereby ratified and
shall continue from and after the date hereof and such
agreements, as the same may have been or may contemporaneously
herewith be amended, shall remain in full force and effect from
and after the date hereof.
[The remainder of this is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
HEARTLAND FINANCIAL USA, INC.
By: ______________________________
Title: _____________________________
Address for notices:
1398 Central Avenue
Dubuque, Iowa 32004-0778
Attention: John K. Schmidt
THE NORTHERN TRUST COMPANY
By: ______________________________
Title: _____________________________
Address: 50 South LaSalle Street
Chicago, Illinois 60675
Attention:Division Head,
Correspondent Services
