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
TABLE OF CONTENTS
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
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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
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CROSS REFERENCE TABLE
SECTION OF TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED GUARANTEE AGREEMENT
- ------------------------------- -------------------------------
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)
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.
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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;
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(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.
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"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.
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"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
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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
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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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