DRAFT
EXHIBIT 1.1
1,000,000 CAPITAL SECURITIES
HEARTLAND FINANCIAL CAPITAL TRUST I
________ % CUMULATIVE CAPITAL SECURITIES
(LIQUIDATION PREFERENCE OF $25 PER CAPITAL SECURITY)
FORM OF UNDERWRITING AGREEMENT
------------------------------
_________ _____, 1999
Dain Rauscher Wessels, a division of
Dain Rauscher Incorporated
Howe Barnes Investments, Inc.
c/o Dain Rauscher Incorporated
Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
Heartland Financial USA, Inc., a Delaware corporation (the "Company"),
and its subsidiary, Heartland Financial Capital Trust I, a statutory business
trust organized under the Delaware Business Trust Act (the "Delaware Act") (the
"Trust" and, together with the Company, the "Offerors"), propose, subject to the
terms and conditions stated herein, to issue and sell to you (the
"Underwriters"), an aggregate of 1,000,000 of the Trust's ____% Cumulative
Capital Securities, with a liquidation preference of $25.00 per capital security
(the "Capital Securities"). The Offerors propose that the Trust issue the
Capital Securities pursuant to an amended and restated trust agreement, by First
Union Trust Company, National Association, a national banking association
("First Union"), as Property Trustee and Delaware Trustee, the administrative
trustees named therein (the "Administrative Trustees") and the Company and by
the holders from time to time of undivided beneficial interests in the Trust
(the "Trust Agreement"). The Capital Securities will be guaranteed by the
Company (the "Guarantee") as set forth in a Capital Securities Guarantee
Agreement (the "Guarantee Agreement"), to be dated ________ __, 1999, between
the Company and First Union, as trustee (the "Guarantee Trustee").
The proceeds of the sale of the Capital Securities will be used to
purchase junior subordinated deferrable interest debentures (the "Junior
Subordinated Debentures") issued by the Company pursuant to that certain
Indenture, to be dated _________ __, 1999, between the Company and First Union,
as trustee (the "Indenture").
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The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File Nos. 333-_______
and 333-______) for the registration of the Capital Securities, the Guarantee
and the Junior Subordinated Debentures under the Securities Act of 1933, as
amended (the "Act") and the rules and regulations thereunder and the
qualification of the Indenture, the Trust Agreement and the Guarantee under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the
rules and regulations thereunder. If the Offerors have elected to rely upon Rule
430A under the Act, they will prepare and file a prospectus (or a term sheet
meeting the requirements of Rule 434) pursuant to Rule 424(b) that discloses the
information previously omitted from the prospectus in reliance upon Rule 430A.
Such registration statement, as amended at the time it is or was declared
effective by the Commission, and, in the event of any amendment thereto after
the effective date and prior to the Closing Date (as hereinafter defined), such
registration statement as so amended (but only from and after the effectiveness
of such amendment), including a registration statement (if any) filed pursuant
to Rule 462(b) under the Act increasing the size of the offering registered
under the Act and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rules 430A(b) and 434(d)
under the Act, is hereinafter called the "Registration Statement". The
prospectus included in the Registration Statement at the time it is or was
declared effective by the Commission is hereinafter called the "Prospectus,"
except that if any prospectus (including any term sheet meeting the requirements
of Rule 434 under the Act provided by the Offerors for use with a prospectus
subject to completion within the meaning of Rule 434 under the Act in order to
meet the requirements of Section 10(a) of the Act) filed by the Offerors with
the Commission pursuant to Rule 424(b) under the Act (and Rule 434 under the
Act, if applicable) or any other such prospectus provided to the Underwriters by
the Offerors for use in connection with the offering of the Capital Securities
(whether or not required to be filed by the Offerors with the Commission
pursuant to Rule 424(b) under the Act) differs from the prospectus on file at
the time the Registration Statement is or was declared effective by the
Commission, the term "Prospectus" shall refer to such differing prospectus
(including any term sheet within the meaning of Rule 434 under the Act) from and
after the time such prospectus is filed with the Commission or transmitted to
the Commission for filing pursuant to such Rule 424(b) (and Rule 434, if
applicable) or from and after the time it is first provided to the Underwriters
by the Offerors for such use. The term "Preliminary Prospectus" as used herein
means the preliminary prospectus included in any Registration Statement prior to
the time it becomes or became effective under the Act and any prospectus subject
to completion as described in Rule 430A or 434 under the Act. References to the
Registration Statement, the Prospectus and the Preliminary Prospectus include
all information incorporated therein by reference. Copies of the Registration
Statement, including all exhibits and schedules thereto, any amendments thereto
and all Preliminary Prospectuses have been delivered to the Underwriters.
The Offerors hereby confirm their agreement with respect to the
purchase of the Capital Securities by the Underwriters as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS.
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(a) The Offerors jointly and severally represent and
warrant to, and agree with, each of the Underwriters that:
(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to the Registration
Statement has been filed with the Commission as of the date of this Agreement.
No stop order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or, to the
Company's knowledge, threatened by the Commission.
(ii) No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of the
Commission promulgated thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Offerors make
no representation or warranty as to information contained in or omitted in
reliance upon, and in conformity with, written information furnished to the
Offerors by or on behalf of any Underwriter, expressly for use in the
preparation thereof.
(iii) The Registration Statement and the
Prospectus conform in all material respects to the requirements of the Act and
the rules and regulations thereunder and the Trust Indenture Act and the rules
and regulations thereunder. Neither the Registration Statement, as of its
effective date and the date of any amendment thereto, nor the Prospectus
contains any untrue statement of a material fact or omits or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Offerors make no representation or
warranty as to (i) information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Offerors by
or on behalf of any Underwriter, expressly for use in the preparation thereof or
(ii) information in those parts of the Registration Statement which constitute
Statements of Eligibility and Qualification ("Form T-1") under the Trust
Indenture Act. Each Preliminary Prospectus and the Prospectus will be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"), except to the extent permitted by Regulation S-T.
(iv) The documents of the Company incorporated by
reference in the Registration Statement and the Prospectus, when they were filed
with the Commission, conformed in all material respects to the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not
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misleading; and any further documents so filed and incorporated by reference
in the Registration Statement and the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission will
conform in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(v) The Trust has been duly created and is
validly existing in good standing as a business trust under the Delaware Act
with full trust power and authority to own property and to conduct its business
as described in the Registration Statement and Prospectus and is authorized to
do business in each jurisdiction in which such qualification is required, except
where the failure to so qualify would not have a material adverse effect on the
Trust's condition (financial or otherwise), earnings, business, prospects,
assets, results of operations or properties taken as a whole; the Trust has
conducted and will conduct no business other than the transactions contemplated
by the Trust Agreement and described in the Prospectus; the Trust is not a party
to or otherwise bound by any agreement other than this Agreement and those
described in the Prospectus; the Trust is and will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation; and the Trust is and will be treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting principles.
(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware and is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"), supervised by the Board
of Governors of the Federal Reserve System (the "FRB"). The subsidiaries of the
Company are Dubuque Bank and Trust Company ("DB&T"), DB&T Insurance, Inc., DB&T
Community Development Corp., Galena State Bank and Trust Company ("GSB"),
Riverside Community Bank ("RCB"), First Community Bank, FSB ("FCB"), KFS
Services Inc., Wisconsin Community Bank ("WCB"), DBT Investment Corporation, New
Mexico Bank & Trust ("NMB"), Citizens Finance Co., ULTEA, Inc. and Keokuk
Bancshares, Inc. (each a ASubsidiary" and collectively the ASubsidiaries"). DB&T
is a commercial bank chartered under the laws of the State of Iowa. GSB and RCB
are commercial banks chartered under the laws of the State of Illinois. FCB is a
capital stock savings bank having a valid charter from the federal government of
the United States. FCB is a member in good standing of the Federal Home Loan
Bank of Des Moines. WCB is a commercial bank chartered under the laws of the
State of Wisconsin. NMB is a commercial bank chartered under the laws of the
State of New Mexico. None of DB&T, GSB, RCB, WCB and NMB are Federal Reserve
Bank members. Each Subsidiary has been duly incorporated or organized and is
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and the Subsidiaries has the corporate power
and authority to own or lease its properties and conduct its business as
described in the Prospectus; is, to the Company's knowledge, in compliance with
all federal and state regulatory rules and guidelines; and is duly qualified to
transact business in all jurisdictions in which the conduct of its business or
its ownership or leasing of property requires
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such qualification and the failure so to qualify would have a material
adverse effect on the business or condition, financial or otherwise, of the
Company and the Subsidiaries, taken as a whole. All outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company free and clear of all liens, encumbrances and
security interests, except as disclosed in the Registration Statement and
Prospectus and except that approximately 20% of the outstanding shares of
capital stock of NMB are not owned, directly or indirectly, by the Company.
No options, warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any obligations into, shares
of capital stock or ownership interests in any of the Subsidiaries are
outstanding.
(vii) All of the issued and outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, were offered and sold in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
Except as otherwise stated in the Registration Statement and Prospectus, there
are no preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, the Junior Subordinated Debentures,
the common securities of the Trust held by the Company (the "Common Securities")
or the Capital Securities. Neither the filing of the Registration Statement nor
the registration of the Capital Securities, the Guarantee or the Junior
Subordinated Debentures gives rise to any rights for or relating to the
registration of any capital stock or other securities of the Company or the
Trust. The Company has an authorized and outstanding capitalization as set forth
in the Registration Statement and the Prospectus.
(viii) Each of this Agreement, the Indenture, the
Trust Agreement and the Guarantee Agreement has been duly authorized, executed
and delivered by the Company and/or the Trust, as the case may be, and
constitutes a valid, legal and binding obligation of the Company and/or the
Trust, as the case may be, enforceable in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity and, with respect to Section 7 hereof,
by the public policy underlying the federal or state securities laws. The
execution, delivery and performance of this Agreement, the Indenture, the Trust
Agreement and the Guarantee Agreement and the consummation of the transactions
herein or therein contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, (x) any statute,
any indenture, mortgage, deed of trust, loan agreement, lease, franchise,
license or other agreement or instrument to which the Trust, the Company or any
of the Subsidiaries is a party or by which the Trust, the Company or any of the
Subsidiaries is bound or to which any property or assets of the Trust, the
Company or any of the Subsidiaries is subject or any order, rule, regulation,
order, agreement or decree of any court or governmental agency or body having
jurisdiction over the Company, any Subsidiary or the Trust or any of the
properties of the Company, any Subsidiary or the Trust or (y) the Company's or
any Subsidiary's charter or bylaws or the Trust Agreement or the Trust's
certificate of trust filed with the State of
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Delaware on ________ __, 1999 (the "Certificate of Trust"). No consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Indenture, the Trust Agreement and the
Guarantee Agreement or for the consummation of the transactions contemplated
hereby or thereby, including the issuance or sale of the Junior Subordinated
Debentures by the Company and the Common Securities and the Capital
Securities by the Trust, except such as may be required under the Act, all of
which have been obtained or made, and under state securities or blue sky
laws. Each of the Company and the Trust has full power and authority to enter
into this Agreement, the Indenture, the Trust Agreement and the Guarantee
Agreement, as the case may be, and to authorize, issue and sell the Junior
Subordinated Debentures or the Common Securities and the Capital Securities,
as the case may be, as contemplated by this Agreement; and each of the
Indenture, the Trust Agreement and the Guarantee Agreement has been duly
qualified under the Trust Indenture Act and will conform in all material
respects to the statements relating thereto in the Registration Statement and
the Prospectus.
(ix) The Junior Subordinated Debentures have been
duly authorized by the Company and at the Closing Date will have been duly
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered against payment therefor as described in the
Prospectus, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity, will be in the form contemplated by,
and entitled to the benefits of, the Indenture, will conform in all material
respects to the statements relating thereto in the Prospectus, and will be owned
by the Trust free and clear of any security interest, pledge, lien, encumbrance,
claim or equity.
(x) The Common Securities have been duly
authorized by the Trust Agreement and, when issued and delivered by the Trust to
the Company against payment therefor as described in the Prospectus, will be
validly issued and (subject to the terms of the Trust Agreement) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust and will
conform in all material respects to all statements relating thereto contained in
the Prospectus; and at the Closing Date all of the issued and outstanding Common
Securities of the Trust will be directly owned by the Company free and clear of
any security interest, pledge, lien, encumbrance, claim or equity.
(xi) The Capital Securities have been duly
authorized by the Trust Agreement and, when issued and delivered pursuant to
this Agreement against payment of the consideration set forth herein, will be
validly issued and fully paid and non-assessable undivided beneficial
interests in the Trust, will be entitled to the benefits of the Trust
Agreement and will conform in all material respects to the statements
relating thereto contained in the Prospectus; and holders of Capital
Securities will be entitled to the same limitation of personal liability
under Delaware law as extended to stockholders of private corporations for
profit.
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(xii) The Indenture, the Trust Agreement and the
Guarantee Agreement are in substantially the respective forms filed as exhibits
to the Registration Statement.
(xiii) The Company's obligations under the
Guarantee are subordinated and junior in right of payment to all Senior and
Subordinated Debt (as defined in the Indenture) of the Company.
(xiv) The Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior and Subordinated Debt
of the Company.
(xv) Each of the Administrative Trustees of the
Trust is an officer of the Company and has been duly authorized by the Company
to execute and deliver the Trust Agreement.
(xvi) The financial statements, together with the
related notes and schedules, contained or incorporated by reference in the
Registration Statement and Prospectus present fairly the consolidated financial
position, results of operations, shareholders' equity and cash flows of the
Company and its consolidated Subsidiaries on the basis stated therein at the
indicated dates and for the indicated periods. Such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as expressly stated
therein, and all adjustments necessary for a fair presentation of results for
such periods have been made, except as otherwise stated therein. The selected
financial and statistical data included in the Registration Statement and the
Prospectus present fairly the information shown therein on the basis stated in
the Registration Statement and the Prospectus and have been compiled on a basis
consistent with the financial statements presented therein.
(xvii) There is no action, suit or proceeding
pending or, to the knowledge of the Trust or the Company, threatened or
contemplated against any of the Trust, the Company or any Subsidiary before any
court or administrative or regulatory agency which, if determined adversely to
the Trust, the Company or such Subsidiary would, individually or in the
aggregate, result in a material adverse change in the business or condition
(financial or otherwise), results of operations, shareholders' equity or
prospects of the Trust, or of the Company and it Subsidiaries taken as a whole,
except as set forth in the Registration Statement or the Prospectus.
(xviii) There are no contracts or documents of the
Trust or the Company or any Subsidiary that are required by the Act or by the
rules and regulations thereunder to be filed as exhibits to the Registration
Statement or any document incorporated by reference therein which contracts or
documents have not been so filed.
(xix) The Company and the Subsidiaries have good
and marketable title to all properties and assets reflected as owned in the
financial statements hereinabove described (or as described as owned in the
Prospectus), in each case free and clear of all liens,
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encumbrances and defects, except such as are described in the Prospectus or
do not substantially affect the value of such properties and assets and do
not materially interfere with the use made and proposed to be made of such
properties and assets by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
(xx) Since the respective dates as of which
information is given in the Registration Statement, as it may be amended or
supplemented, (A) there has not been any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
condition, financial or otherwise, of the Trust, or of the Company and the
Subsidiaries taken as a whole, or the business affairs, management, financial
position, shareholders' equity or results of operations of the Trust, or of the
Company and the Subsidiaries taken as a whole, whether or not occurring in the
ordinary course of business, including, without limitation, any material
increase in delinquencies or the amount or number of classified assets of the
Company, any decrease in net interest margin for any month, or any material
decrease in the volume of loan originations, the amount of deposits or the
amount of loans, (B) there has not been any transaction not in the ordinary
course of business entered into by the Trust, the Company or any of the
Subsidiaries which is material to the Trust, or the Company and the Subsidiaries
taken as a whole, other than transactions described or contemplated in the
Registration Statement, (C) the Trust, the Company and the Subsidiaries have not
incurred any material liabilities or obligations, which are not in the ordinary
course of business or which could result in a material reduction in the future
earnings of the Trust, or the Company and the Subsidiaries taken as a whole,
(D) the Trust, the Company and the Subsidiaries have not sustained any material
loss or interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance, (E) there has not been any change in the capital stock of the
Company or the Subsidiaries (other than upon the exercise of options and
warrants described in the Registration Statement), or any material increase
in the short-term or long-term debt (other than the Junior Subordinated
Debentures) (including capitalized lease obligations) of the Company and the
Subsidiaries taken as a whole, and (F) there has not been any declaration or
payment of any dividends or any distributions of any kind with respect to the
capital stock of the Company or the Subsidiaries other than any dividends or
distributions described or contemplated in the Registration Statement and the
Company's regular quarterly common stock dividend.
(xxi) Neither the Company nor any of the
Subsidiaries is in violation of its respective charter or bylaws; the Trust is
not in violation of the Trust Agreement or its Certificate of Trust; and none of
the Trust, the Company, or the Subsidiaries is in violation of or otherwise in
default under any statute, or any rule, regulation, order, supervisory
agreement, judgment, decree or authorization of any court or governmental or
administrative agency or body having jurisdiction over the Trust, the Company or
any of the Subsidiaries or any of their properties, or any indenture, mortgage,
deed of trust, loan agreement, lease, franchise, license or
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other agreement or instrument to which the Trust, the Company or any of the
Subsidiaries is a party or by which any of them are bound or to which any
property or assets of the Trust, the Company or any of the Subsidiaries is
subject, which violation or default would have a material adverse effect on
the business, condition (financial or otherwise), results of operations,
shareholders' equity or prospects of the Trust, or of the Company and the
Subsidiaries taken as a whole.
(xxii) The Trust, the Company and each of the
Subsidiaries holds and is operating in compliance in all material respects with
all licenses, approvals, certificates and permits from governmental and
regulatory authorities which are necessary to the conduct of its business as
described in the Prospectus. Without limiting the generality of the foregoing,
the Company has all necessary federal or state approvals to own the stock of the
Subsidiaries. None of the Trust, the Company or any Subsidiary has received
notice of or has knowledge of any basis for any proceeding or action relating
specifically to the Trust, the Company or the Subsidiaries for the revocation or
suspension of any such consent, authorization, approval, order, license,
certificate or permit or any other action or proposed action by any regulatory
authority having jurisdiction over the Trust, the Company or the Subsidiaries
that would have a material adverse effect on the Trust, the Company or any
Subsidiary.
(xxiii) KPMG LLP, which have certified certain of
the financial statements filed with the Commission and incorporated by reference
into the Registration Statement, are independent public accountants with respect
to the Company as required by the Act and the rules and regulations thereunder.
(xxiv) The Offerors have not taken and will not
take, directly or indirectly, any action designed to, or which has constituted,
or which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Capital Securities.
(xxv) The Offerors' registration statement
pursuant to Section 12(b) of the Exchange Act with respect to the Capital
Securities has been declared effective by the Commission; and the Capital
Securities have been approved for designation upon notice of issuance on the
American Stock Exchange under the symbol "_____."
(xxvi) The Offerors have not distributed and will
not distribute any prospectus or other offering material in connection with the
offering and sale of the Capital Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to be
distributed by the Company.
(xxvii) The deposit accounts of each of DB&T, GSB,
RCB, FCB, WCB and NMB are insured by the Federal Deposit Insurance Corporation
(the "FDIC") to the fullest extent provided by law. No proceeding for the
termination of such insurance is pending or, to the knowledge of the Company, is
threatened. Neither the Company nor any Subsidiary has received or is subject to
any directive, order or supervisory agreement or arrangement from the
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FRB, the FDIC, the Office of Thrift Supervision (the AOTS"), or any other
state or federal regulatory authority to make any material change in the
method of conducting their respective businesses that has not been complied
with in all material respects.
(xxviii) The Offerors are in material compliance with
all provisions of Florida Statutes Section 517.075 (Chapter 92-198, laws of
Florida). Neither of the Offerors nor any of their affiliates does any business,
directly or indirectly, with the government of Cuba or with any person or entity
located in Cuba.
(xxix) The Trust, the Company and the Subsidiaries
have filed all federal, state, local and foreign tax returns or reports required
to be filed (including extensions), and have paid in full all taxes indicated by
said returns or reports and all assessments received by it or any of them to the
extent that such taxes have become due and payable (including extensions),
except where the Trust, the Company and the Subsidiaries are contesting in good
faith such taxes and assessments. The Company and the Subsidiaries have also
filed all required applications, reports, returns and other documents and
information with all state and federal savings bank authorities and agencies.
(xxx) The Trust, the Company and each of the
Subsidiaries owns or licenses all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and other similar rights
necessary for the conduct of their businesses as described in the Prospectus,
except where the failure to so own would not have a material adverse effect on
the Trust, the Company or any Subsidiary, taken as a whole. Neither the Trust
nor the Company has any knowledge of any infringement by them or the
Subsidiaries of any patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others, and none
of the Trust, the Company or any of the Subsidiaries has received any notice or
claim of conflict with the asserted rights of others with respect to any of the
foregoing.
(xxxi) None of the Trust, the Company or any of the
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or an "investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
(xxxii) The Company and its Subsidiaries maintain,
and the Trust will maintain, a system of internal accounting controls sufficient
to provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to records is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with
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respect to any differences.
(xxxiii) Other than as contemplated by this Agreement
and as disclosed in the Registration Statement, the Company has not incurred any
liability for any finder's or broker's fee or agent's commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xxxiv) No report or application filed by the
Company or any of its Subsidiaries with the FRB, the FDIC, the OTS or any
other state or federal regulatory authority, as of the date it was filed or
amended, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading when made or failed to comply in all
material respects with the applicable requirements of the FRB, the FDIC, the
OTS, or any other state or federal regulatory authority, as the case may be.
(xxxv) Based upon current guidelines of the FRB,
the Junior Subordinated Debentures will constitute "tier 1" capital (as
defined in 12 C.F.R. Part 225), subject to applicable regulatory restrictions
on the amount thereof that can be included in tier 1 capital.
(xxxvi) The Offerors meet all of the requirements
for the use of Form S-3 to register the Capital Securities, the Guarantee and
the Junior Subordinated Debentures under the Act.
(xxxvii) National Bancshares, Inc. ("National") has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of New Mexico and is duly registered as a bank
holding company under the BHC Act. The First National Bank of Clovis ("Clovis
Bank") has been duly organized and is validly existing as a national banking
association under the laws of the United States. The deposit accounts of Clovis
Bank are insured by the FDIC to the fullest extent provided by law. Each of
National and Clovis Bank has the corporate power and authority to own or lease
its properties and conduct its business as described in the Prospectus and is
duly qualified to transact business in all jurisdictions in which the conduct of
its business or its ownership or leasing of property requires such qualification
and the failure so to comply or qualify would have a material adverse effect on
its business or condition, financial or otherwise. All outstanding shares of
capital stock of Clovis Bank have been duly authorized and validly issued, are
fully paid and non-assessable, and are owned, directly or indirectly, by
National, free and clear of all liens, encumbrances and security interests,
except as disclosed in the Prospectus. No options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to convert
any obligations into, shares of capital stock or ownership interests in Clovis
Bank are outstanding.
(xxxviii) The Offerors have provided the
Underwriters with copies of the audited consolidated balance sheets of
National as of December 31, 1998 and 1997 and the related audited
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the years in the three-year period ended December 31,
1998, together with the related notes and schedules, and copies of the
unaudited consolidated balance sheets of National
11
as of June 30, 1999 and December 31, 1998 and the related unaudited
consolidated statements of income, cash flows and changes in shareholders'
equity for the three and six month periods ended June 30, 1999 and 1998,
together with the related notes and schedules (collectively the "National
Financial Statements"). The National Financial Statements present fairly the
consolidated financial position, results of operations, shareholders' equity and
cash flows of National and its consolidated subsidiaries on the basis stated
therein at the indicated dates and for the indicated periods. The National
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as expressly stated therein, and all adjustments necessary for a fair
presentation of results for such periods have been made, except as otherwise
stated therein.
(xxxix) Except as disclosed in the Prospectus, there
are no issues known to the Offerors that make consummation of the transactions
contemplated by the Agreement and Plan of Merger, dated August 17, 1999 (the
"Merger Agreement"), among the Company, NBI Acquisition Corporation and
National, improbable.
(b) Any certificate signed by or on behalf of the Trust
or the Company and delivered to the Underwriters or counsel to the Underwriters
shall be deemed to be a representation and warranty of the Trust or the Company
to each Underwriter as to the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF CAPITAL SECURITIES. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Trust agrees to issue
and sell to each Underwriter, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Trust, at a purchase price per Capital
Security of $25.00, the number of Capital Securities set forth opposite the name
of such Underwriter in Schedule A hereto.
As compensation to the Underwriters for their commitments hereunder and
in view of the fact that the proceeds of the sale of the Capital Securities
(together with the entire proceeds from the sale by the Trust to the Company of
the Common Securities) will be used to purchase the Junior Subordinated
Debentures, the Company hereby agrees to pay at the Closing Date to the
Underwriters a commission of $____ per Capital Security sold by the Trust
hereunder.
The Capital Securities will be delivered by the Company to the
Underwriters against payment of the purchase price therefor at the offices of
Silver, Freedman & Taff, L.L.P., 1100 New York Avenue, N.W., 7th Floor,
Washington, D.C. 20005, or such other location as may be mutually acceptable,
at 10:00 a.m. Eastern time on _________ __, 1999, or such other time and date
as the Underwriters and the Company may agree upon in writing, such time and
date of delivery being herein referred to as the "Closing Date." The purchase
price shall be payable by wire transfer of immediately available funds to an
account designated by the Trust at least two business days preceding the
Closing Date. The Underwriters' commission shall be payable by wire transfer
of immediately available funds to an account designated by the Underwriters
at least two business days preceding the Closing Date. Delivery of the
Capital Securities may be
12
made by credit through full fast transfer to the accounts at The Depository
Trust Company ("DTC") designated by the Underwriters. Certificates
representing the Capital Securities, in definitive form and in such
denominations and registered in such names as the Underwriters may request
upon at least two business days' prior notice to the Company shall be
prepared and will be made available for checking and packaging, not later
than 10:30 a.m., Central time, on the business day next preceding the Closing
Date at the offices of Dain Rauscher Incorporated, Dain Rauscher Plaza, 60
South Sixth Street, Minneapolis, Minnesota, or such other location as may be
mutually acceptable.
It is understood that any Underwriter may (but shall not be obligated
to) make payment to the Company on behalf of the other Underwriter for the
Securities to be purchased by such Underwriter. Any such payment shall not
relieve such other Underwriter of any of its obligations hereunder. Nothing
herein contained shall constitute the Underwriters as an unincorporated
association or partner with either or both Offerors.
3. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to make a public offering of the Capital Securities as soon
as the Underwriters deem it advisable to do so. The Capital Securities are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Underwriters may from time to time thereafter change the
public offering price and other selling terms.
4. COVENANTS OF THE OFFERORS. The Offerors jointly and severally
covenant and agree with the several Underwriters that:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts
to cause the Registration Statement and any post-effective amendments thereto
to become effective as promptly as possible; the Company will notify the
Underwriters promptly of the time when the Registration Statement or any
post-effective amendment to the Registration Statement has become effective
or any supplement to the Prospectus (including any term sheet within the
meaning of Rule 434 under the Act) has been filed and of any request by the
Commission for any amendment or supplement to the Registration Statement or
Prospectus or additional information; if the Company has elected to rely on
Rule 430A under the Act, the Company will prepare and file a Prospectus (or
term sheet within the meaning of Rule 434 under the Act) containing the
information omitted therefrom pursuant to Rule 430A under the Act with the
Commission within the time period required by, and otherwise in accordance
with the provisions of, Rules 424(b), 430A and 434, if applicable; the
Offerors will prepare and file with the Commission, promptly upon the
Underwriters' request, any amendments or supplements to the Registration
Statement or Prospectus (including any term sheet within the meaning of Rule
434 under the Act) that, in their opinion, may be necessary or advisable in
connection with their distribution of the Capital Securities; and the
Offerors will not file any amendment or supplement to the Registration
Statement or Prospectus (including any term sheet within the meaning of Rule
434 under the Act) to which the Underwriters shall reasonably object by
notice to the Company after having
13
been furnished a copy a reasonable time prior to the filing.
(b) The Offerors will advise the Underwriters promptly of
any request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Capital Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for that
purpose, and the Offerors will use their best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the Prospectus or
suspending such qualification and to obtain as soon as possible the lifting
thereof, if issued.
(c) The Offerors will cooperate with the Underwriters
and the Underwriters' counsel in order to qualify the Capital Securities for
sale under the securities laws of such jurisdictions as the Underwriters' may
reasonably have designated in writing and to continue such qualifications in
effect for so long as the Underwriters may reasonably request for
distribution of the Capital Securities (or obtain exemptions from the
application of such laws), provided that neither Offeror shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. The Offerors will, from time to time, prepare and file
such statements, reports and other documents as may be requested by the
Underwriters for that purpose.
(d) The Offerors will furnish the Underwriters with as
many copies of any Preliminary Prospectus as the Underwriters may reasonably
request and, during the period when delivery of a prospectus is required under
the Act, the Offerors will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Underwriters may, from time to time, reasonably request. The Offerors will
deliver to the Underwriters, at or before the Closing Date, two conformed copies
of the Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Underwriters such number of conformed
copies of the Registration Statement, without exhibits, and of all amendments
thereto, as the Underwriters may reasonably request.
(e) If, during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or if for any other reason it shall be necessary at any time to
amend or supplement the Prospectus to comply with any law, the Offerors promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein in light of the circumstances when it is so delivered, not
misleading, or so that the Prospectus will comply with law.
14
(f) The Offerors will make generally available to their
security holders, as soon as it is practicable to do so, but in any event not
later than 18 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 thereunder and will advise
the Underwriters in writing when such statement has been so made available.
(g) The Company will, for five years from the Closing
Date, deliver to each Underwriter, as soon as they are available, copies of its
annual report and copies of all other documents, reports and information
furnished by the Company to its security holders or filed with any securities
exchange pursuant to the requirements of such exchange or with the Commission
pursuant to the Act or the Exchange Act. The Company will deliver to each
Underwriter similar reports with respect to significant subsidiaries, as that
term is defined in the rules and regulations under the Act, which are not
consolidated in the Company's financial statements.
(h) The Offerors will apply the net proceeds from the
sale of the Junior Subordinated Debentures and the Capital Securities
substantially in accordance with the purposes set forth under "Use of Proceeds"
in the Prospectus.
(i) The Offerors will use their best efforts to maintain
the listing of the Capital Securities on the American Stock Exchange.
(j) The Offerors shall promptly notify the Underwriters
if any issues arise that make consummation of the transactions contemplated by
the Merger Agreement materially less probable.
5. COSTS AND EXPENSES.
(a) The Offerors will pay (directly or by
reimbursement) all costs, expenses and fees incident to the performance of
the obligations of the Offerors under this Agreement, including, without
limiting the generality of the foregoing, the following: accounting fees of
the Offerors; the fees and disbursements of counsel for the Offerors; the
cost of preparing, printing and filing of the Registration Statement, the
Preliminary Prospectus(es) and the Prospectus and any amendments and
supplements thereto and the printing, mailing and delivery to the
Underwriters and dealers of copies thereof and of this Agreement, any
selected dealers agreement, any blue sky memorandum and any supplements or
amendments thereto (excluding, except as provided below, fees and expenses of
counsel to the Underwriters); the filing fees of the Commission; the filing
fees and expenses (including legal fees and disbursements of counsel for the
Underwriters) incident to securing any required review by the NASD of the
terms of the sale of the Capital Securities; the fees and expenses of the
Indenture Trustee, including the fees
15
and disbursements of counsel for the Indenture Trustee in connection with the
Indenture and Junior Subordinated Debentures; the fees and expenses of the
Property Trustee and the Delaware Trustee, including the fees and
disbursements of counsel for the Property Trustee and the Delaware Trustee in
connection with the Trust Agreement and the Certificate of Trust; the fees
and expenses of the Guarantee Trustee, including the fees and disbursements
of counsel for the Guarantee Trustee in connection with the Guarantee and
Guarantee Agreement; listing fees, if any, transfer taxes and the expenses,
including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Capital Securities under
state securities or Blue Sky laws; the fees and expenses incurred in
connection with the listing of the Capital Securities on the American Stock
Exchange; the costs of preparing certificates representing Junior
Subordinated Debentures or Capital Securities; the costs and fees of any
registrar or transfer agent and all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 5. Notwithstanding anything to the contrary in
the foregoing sentence, the Offerors shall not be required to pay more than
an aggregate of (i) $______ of fees and expenses (x) related to qualification
of the Capital Securities under state securities or Blue Sky laws or (y)
incident to securing any required review by the NASD of the terms of the sale
of the Capital Securities and (ii) $______ of fees and expenses of the
Guarantee Trustee, including the fees and disbursements of counsel for the
Guarantee Trustee in connection with the Guarantee and Guarantee Agreement.
The Offerors shall not be required to pay for any of the Underwriters'
expenses (other than those related to qualification of the Capital Securities
under state securities or Blue Sky laws and those incident to securing any
required review by the NASD of the terms of the sale of the Capital
Securities which shall be paid by the Offerors as provided above) except
that, if this Agreement shall not be consummated because the conditions in
Section 6 hereof are not satisfied, or because this Agreement is terminated
by the Underwriters pursuant to Section 9(b) hereof, or by reason of any
failure, refusal or inability on the part of the Offerors to perform any
undertaking or satisfy any condition of this Agreement or to comply with any
of the terms hereof on either of their parts to be performed, unless such
failure to satisfy said condition or to comply with said terms shall be due
to the default or omission of any Underwriter, then the Offerors promptly
upon request by the Underwriters shall reimburse the several Underwriters for
all actual, accountable out-of-pocket expenses, including fees and
disbursements of counsel reasonably incurred in connection with
investigating, marketing and proposing to market the Capital Securities or in
contemplation of performing their obligations hereunder; but the Offerors
shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of
the Capital Securities.
(b) Upon successful completion of the offering
contemplated by this Agreement, the Offerors will pay all reasonable and
customary costs, expenses and fees incident to tombstone advertisements of the
offering and incurred with the approval of the Company.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Capital
Securities on the
16
Closing Date are subject to the condition that all representations and
warranties of the Offerors contained herein are true and correct, at and as
of the Closing Date, and the condition that each Offeror shall have performed
all of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in accordance
with Section 4(a) hereof (or any required post-effective amendment to the
Registration Statement shall have been filed and declared effective in
accordance with the requirements of Rule 430A); no stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, or
any part thereof shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the reasonable satisfaction of the Underwriters.
(b) The Underwriters shall have received on the Closing
Date the opinions of Barack Ferrazzano Kirschbaum Perlman & Nagelberg, counsel
for the Offerors, dated the Closing Date, addressed to the Underwriters, in the
form attached hereto as EXHIBIT 1.
Such counsel shall also state that on the basis of such counsel's
review and participation in conferences in connection with the preparation of
the Registration Statement and the Prospectus, such counsel has no reason to
believe that, as of its effective date, the Registration Statement or any
further amendment thereto made by the Offerors prior to the Closing Date,
including any document incorporated by reference in the Registration Statement,
as the case may be (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the Offerors
prior to the Closing Date, including any document incorporated by reference in
the Prospectus (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading or that, as
of the Closing Date, either the Registration Statement or the Prospectus or any
further amendment or supplement thereto made by the Offerors prior to the
Closing Date (other than the financial statements, other financial and
statistical data and related schedules therein, as to which such counsel need
express no statement) contains an untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and they do not know
of any amendment to the Registration Statement (or any document incorporated
therein by reference) required to be filed.
In rendering the above opinions, counsel may rely (i) as to matters
of law other than
17
federal law, upon the opinion or opinions of local counsel provided that the
extent of such reliance is specified in such opinion and that such counsel
shall state that such opinion or opinions of local counsel are satisfactory
to them and they believe they and the Underwriters are justified in relying
thereon and (ii) as to matters of fact, upon the representations of the Trust
and the Company contained in this Agreement and upon certificates of trustees
or officers of the Trust, the Company and of public officials.
(c) The Underwriters shall have received on the Closing
Date the opinions of _________________________, dated the Closing Date addressed
to the Underwriters, to the effect that:
(i) The statements set forth in the
Prospectus under the caption "Federal Income Tax Consequences" constitute a
fair and accurate summary of the matters addressed therein, based upon
current law and the assumptions stated or referred to therein.
(ii) Under current law, the Trust will be
classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation; accordingly, for United
States federal income tax purposes each beneficial owner of Capital
Securities will be treated as owning an undivided beneficial interest in the
Junior Subordinated Debentures, and stated interest on the Junior
Subordinated Debentures generally will be included in income by a holder of
Capital Securities at the time such interest income is paid or accrued in
accordance with such holder's regular method of tax accounting.
(iii) For federal income tax purposes, (a) the
Junior Subordinated Debentures will constitute indebtedness of the Company
and (b) the interest on the Junior Subordinated Debentures will be deductible
by the Company on an economic accrual basis in accordance with Section 163(e)
of the Internal Revenue Code of 1986, as amended, and Treasury Regulation
Section 1.163-7.
(d) The Underwriters shall have received on the Closing
Date the opinion of Richards, Layton & Finger, counsel to First Union, as
Property Trustee under the Trust Agreement, Indenture Trustee under the
Indenture, and Guarantee Trustee under the Guarantee Agreement, dated the
Closing Date, addressed to the Underwriters, to the effect that:
(i) First Union is a national banking
association, duly organized and validly existing under the laws of the United
States.
(ii) First Union has the power and authority to
execute, deliver and perform its obligations under the Trust Agreement, the
Indenture and the Guarantee Agreement.
(iii) Each of the Trust Agreement, the Indenture
and the Guarantee Agreement has been duly authorized, executed and delivered by
First Union and constitutes a legal, valid and binding obligation of First
Union, enforceable against First Union in accordance
18
with its terms.
(iv) The execution, delivery and performance by
First Union of the Trust Agreement, the Indenture and the Guarantee Agreement do
not conflict with or constitute a breach of the articles of association or
by-laws of First Union.
(v) No consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency governing
the banking or trust powers of First Union is required for the execution,
delivery or performance by First Union of the Trust Agreement, the Indenture and
the Guarantee Agreement.
(e) The Underwriters shall have received on the Closing
Date the opinion of Richards, Layton & Finger, as special Delaware counsel for
the Offerors, dated the Closing Date, addressed to the Underwriters, to the
effect that:
(i) The Trust has been duly created and is
validly existing in good standing as a business trust under the Delaware Act,
and all filings required as of the date hereof under the Delaware Act with
respect to the creation and valid existence of the Trust as a business trust
have been made.
(ii) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority to own property and to conduct
its business, all as described in the Prospectus.
(iii) The Trust Agreement constitutes a valid and
binding obligation of the Company, the Property Trustee and each of the
Administrative Trustees, and is enforceable against the Company, the Property
Trustee and each of the Administrative Trustees in accordance with its terms.
(iv) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority (i) to execute and deliver, and
to perform its obligations under, this Agreement, and (ii) to issue, and to
perform its obligations under, the Capital Securities and the Common Securities.
(v) Under the Trust Agreement and the Delaware
Act, the execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations under this Agreement, have been duly
authorized by all necessary trust action on the part of the Trust.
(vi) Under the Delaware Act, the certificate
attached to the Trust Agreement as Exhibit D is an appropriate form of
certificate to evidence ownership of the Capital Securities. The Capital
Securities have been duly authorized by the Trust Agreement and are duly and
validly issued and, subject to the qualifications hereinafter expressed in
this paragraph (vi), fully paid and non-assessable undivided beneficial
interests in the assets of the Trust and are entitled to the benefits of the
Trust Agreement. The Common Securities have been duly
19
authorized by the Trust Agreement and are duly and validly issued undivided
beneficial interests in the assets of the Trust and are entitled to the
benefits of the Trust Agreement. The holders of the Capital Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
Such counsel may note that the respective holders of the Capital Securities
may be obligated, pursuant to the Trust Agreement, to make certain payments
under the Trust Agreement.
(vii) Under the Trust Agreement and the Delaware
Act, the issuance of the Capital Securities and the Common Securities is not
subject to preemptive or similar rights.
(viii) The issuance and sale by the Trust of the
Capital Securities and the Common Securities, the purchase by the Trust of the
Junior Subordinated Debentures, the execution, delivery and performance by the
Trust of this Agreement and the Guarantee Agreement, the consummation by the
Trust of the transactions contemplated by this Agreement and compliance by the
Trust with its obligations under this Agreement do not violate (a) any of the
provisions of the Certificate of Trust or the Trust Agreement, or (b) any
applicable Delaware law or Delaware administrative regulation.
(ix) No authorization, approval, consent or order
of any Delaware court or any Delaware governmental authority or Delaware agency
is required to be obtained by the Trust solely in connection with the issuance
and sale by the Trust of the Common Securities or the Capital Securities or the
performance by the Trust of its obligations under the Trust Agreement or this
Agreement.
(x) The Capital Security holders (other than
those Capital Security holders who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Trust, and the Trust
will not be liable for any income tax imposed by the State of Delaware or any
political subdivisions or taxing authority thereof.
(f) The Underwriters shall have received from Silver,
Freedman & Taff, L.L.P., counsel for the Underwriters, an opinion dated the
Closing Date, with respect to the formation of the Trust, the validity of the
Capital Securities, the Indenture, the Trust Agreement, the Guarantee Agreement,
this Agreement, the Registration Statement, the Prospectus, and other related
matters as the Underwriters may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters. In rendering the above opinions, counsel may
rely (i) as to matters of law other than federal law, upon the opinion or
opinions of local counsel provided that the extent of such reliance is specified
in such opinion and (ii) as to matters of fact, upon the representations of the
Trust and the Company contained in this Agreement and upon certificates of
trustees or officers of the Trust, the Company and of public officials.
20
(g) The Underwriters shall have received on each of the
date hereof and the Closing Date signed letters, dated as of the date hereof and
the Closing Date in form and substance reasonably satisfactory to the
Underwriters, from KPMG LLP, (i) to the effect that they are independent public
accountants with respect to the Trust, the Company and the Subsidiaries within
the meaning of the Act and the related rules and regulations, (ii) containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus and (iii) confirming that the Trust is and will be treated as a
consolidated subsidiary of the Company pursuant to generally accepted accounting
principles.
(h) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been any change,
or any development involving a reasonably foreseeable change, in or affecting
the general affairs, management, financial position, shareholders' equity or
results of operations of the Offerors otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in the Underwriters'
reasonable judgment, is material and adverse to the Offerors and makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Capital Securities being delivered at the Closing Date on the terms and
in the manner contemplated in the Prospectus.
(i) The Underwriters shall have received on the Closing
Date a certificate or certificates of the chief executive officer and the chief
financial officer of the Company, to the effect that, as of the Closing Date,
each of them severally represents as follows:
(i) The Prospectus was filed with the Commission
pursuant to Rule 424(b) within the applicable period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section 4 of
this Agreement; no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been
initiated or are, to his knowledge, threatened by the Commission.
(ii) The representations and warranties of the
Company set forth in Section 1 of this Agreement are true and correct at and as
of the Closing Date, and the Company has performed all of its obligations under
this Agreement to be performed at or prior to the Closing Date.
(iii) The signers of said certificate have
carefully examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet within
the meaning of Rule 434 under the Act), and (a) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Prospectus, as amended or supplemented, does not include any untrue statement
of material fact or omit to state a material fact necessary to make
21
the statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended
or supplemented prospectus which has not been so set forth, (C) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its Subsidiaries
has incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock (other than any dividends or
distributions described or contemplated in the Registration Statement and the
Prospectus and the Company's regular quarterly common stock dividend), and
except as disclosed in the Prospectus, there has not been any change in the
capital stock, or any material change in the short-term or long-term debt, or
any issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any Subsidiary, or any material
adverse change or any development involving a prospective material adverse
change (whether or not arising in the ordinary course of business), in the
general affairs, condition (financial or otherwise), business, key personnel,
property, prospects, net worth or results of operations of the Company or any
Subsidiary, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the signer,
threatened or contemplated, any action, suit or proceeding to which the
Company or any Subsidiary is a party before or by any court or governmental
agency, authority or body, or any arbitrator, which might result in any
material adverse change in the condition (financial or otherwise), business,
prospects or results of operations of the Company or any Subsidiary.
(j) The Underwriters shall have received on the
Closing Date a certificate or certificates of the Administrative Trustees, to
the effect that, as of the Closing Date, each of them severally represents as
follows:
(i) The Prospectus was filed with the Commission
pursuant to Rule 424(b) within the applicable period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section 4 of
this Agreement; no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been
initiated or are, to his knowledge, threatened by the Commission.
(ii) The representations and warranties of the
Trust set forth in Section 1 of this Agreement are true and correct at and as of
the Closing Date, and the Trust has performed all of its obligations under this
Agreement to be performed at or prior to the Closing Date.
(iii) The signers of said certificate have
carefully examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet within the
meaning of Rule 434 under the Act), and (a) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of a
22
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Prospectus,
as amended or supplemented, does not include any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (B)
since the effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented prospectus which
has not been so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the Trust
has not incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of any kind
with respect to its capital securities, and except as disclosed in the
Prospectus, there has not been any change in the capital securities, or any
material change in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital
securities, of the Trust or any material adverse change or any development
involving a prospective material adverse change (whether or not arising in the
ordinary course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or results
of operations of the Trust, and (D) except as stated in the Registration
Statement and the Prospectus, there is not pending, or, to the knowledge of the
signer, threatened or contemplated, any action, suit or proceeding to which the
Trust is a party before or by any court or governmental agency, authority or
body, or any arbitrator, which might result in any material adverse change in
the condition (financial or otherwise), business, prospects or results of
operations of the Trust.
(k) The Offerors shall have furnished to the Underwriters
such further certificates and documents as the Underwriters may reasonably have
requested.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Underwriters and to Silver,
Freedman & Taff, L.L.P., counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Underwriters by notifying the Trust of such termination in writing or by
telegram at or prior to the Closing Date. In such event, the Trust and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 7 hereof).
7. INDEMNIFICATION.
(a) The Offerors jointly and severally agree to
indemnify and hold harmless each Underwriter, each officer and director
thereof, and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to
23
which such Underwriter or such persons may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus or the Prospectus,
including any amendments or supplements thereto (including any term sheet
within the meaning of Rule 434 under the Act), (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Capital Securities or the offering
contemplated hereby, and which is included as part of or referred to in any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person
for any legal or other expenses reasonably incurred by such Underwriter or
such controlling person in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that
the Offerors shall not be liable (1) in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission, made in the Registration Statement, any Preliminary Prospectus or
the Prospectus, including any amendments or supplements thereto, in reliance
upon and in conformity with written information furnished to the Offerors by
any Underwriter specifically for use therein or (2) in the case of any matter
covered by clause (iii) above to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such losses, claims,
damages or liabilities resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Offerors and the trustees and directors and officers who
have signed the Registration Statement, and each person, if any, who controls
the Offerors within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Offerors or any such person may become
subject under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, and will reimburse any legal or other expenses
reasonably incurred by the Offerors or any such person in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Trust or the Company by or through the
Underwriters specifically for use therein. The obligations of the
24
Underwriters under this Section 7(b) are several in proportion to their
respective underwriting obligations and not joint.
(c) The Company agrees to indemnify the Trust against all
loss, liability, claim damage and expense whatsoever, which may become due from
the Trust under subsection (a).
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) or contribution provided for
in Section 7(e) shall be available with respect to a proceeding to any party who
shall fail to give notice of such proceeding as provided in this Section 7(d) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice, but the failure to give such notice shall not relieve the indemnifying
party or parties from any liability which it or they may have to the indemnified
party otherwise than on account of the provisions of Section 7(a) or (b). In
case any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay promptly as
incurred the reasonable fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and the indemnified party
shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
or other indemnified parties which are different from or additional to those
available to the indemnifying party. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the fees and expenses of more than one separate
firm at any time for all such indemnified parties. Such firm shall be designated
in writing by the Underwriters and shall be reasonably satisfactory to the
Offerors in the case of parties indemnified pursuant to Section 7(a) and shall
be designated in writing by the Offerors and shall be reasonably satisfactory to
the Underwriters in the case of parties indemnified pursuant to Section 7(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
25
(e) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors on the
one hand and the Underwriters on the other from the offering of the Capital
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Offerors on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Offerors on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Offerors bears to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Offerors on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Offerors and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
7(e) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7(e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereto) referred to above in this Section 7(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Capital Securities purchased by such Underwriter;
and no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 7(e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Offerors under this Section 7
shall be in addition to any liability which the Offerors may otherwise have, and
the obligations of the Underwriters under this Section 7 shall be in addition to
any liability which the Underwriters may otherwise have.
26
8. NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered, telegraphed or
sent via facsimile transmission and confirmed as follows: if to the
Underwriters, to them c/o Dain Rauscher Incorporated, 60 South Sixth Street,
Minneapolis, Minnesota 55402, Attention: J. David Welch, Managing Director, with
a copy to Dave M. Muchnikoff, P.C., Silver, Freedman & Taff, L.L.P., 1100 New
York Avenue, N.W., 7th Floor, Washington, D.C. 20005; if to the Company, to
Heartland Financial USA, Inc., 1398 Central Avenue, Dubuqe, Iowa 52001,
Attention: John K. Schmidt, Executive Vice President and Chief Financial
Officer, with a copy to John Freechack, Barack Ferrazzano Kirschbaum Perlman &
Nagelberg, 333 West Wacker Drive, Suite 2700, Chicago, Illinois 60606, and if to
the Trust, to it c/o Heartland Financial USA, Inc., 1398 Central Avenue, Dubuqe,
Iowa 52001, Attention: John K. Schmidt, with a copy to First Union, One Rodney
Square, 920 King Street, First Floor, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration. All notices given by facsimile transmission
shall be electronically confirmed and a copy of such notice shall be sent
promptly via U.S. mail. All notices given by telegram shall be promptly
confirmed by letter sent by U.S. mail. Any notice to the Trust shall also be
copied to the Company at the address previously stated, Attention: John K.
Schmidt. Any party may change its address for notice purposes by written notice
to the other parties.
9. TERMINATION. This Agreement may be terminated by the
Underwriters by notice to the Offerors as follows:
(a) at any time prior to the earlier of (i) the time the
Capital Securities are released by the Underwriters for sale or (ii) 10:00 A.M.,
Eastern time, on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of
the following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change in or affecting the condition, financial or
otherwise, of the Trust, or of the Company and the Subsidiaries taken as a
whole or the business affairs, management, financial position, shareholders'
equity or results of operations of the Trust, or of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency after the date hereof or other national or
international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in the Underwriters' judgment, make the offering or delivery of
the Capital Securities impracticable or inadvisable, (iii) suspension of
trading in securities on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on either such Exchange, or a halt or
suspension of trading in securities generally which are quoted on Nasdaq or
(iv) declaration of a banking moratorium by either federal authorities or by
state authorities in Iowa, Illinois, Wisconsin, New Mexico or New
27
York; or
(c) as provided in Section 6 of this Agreement.
10. WRITTEN INFORMATION. For all purposes under this Agreement
(including, without limitation, Section 1, Section 3 and Section 7 hereof),
the Offerors understand and agree with each of the Underwriters that the
following constitutes the only written information furnished to the Offerors
by the Underwriters specifically for use in preparation of the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto: (i) the per share "Public Offering Price" and per share
"Underwriting Fees to be Paid by the Company" set forth on the cover page of
the Prospectus, and (ii) the information set forth under the caption
"Underwriting" in the Preliminary Prospectus and the Prospectus.
11. SUCCESSORS. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Trust and the Company
and their respective successors, executors, administrators, heirs and assigns,
and the trustees and controlling persons and the officers and directors of any
such controlling person referred to herein, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Capital Securities merely because of such purchase.
12. MISCELLANEOUS. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Offerors or controlling persons thereof and (c) delivery of and
payment for the Capital Securities under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware.
If the foregoing letter is in accordance with the Underwriters'
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Offerors and the Underwriters in accordance with its terms.
28
[The remainder of this page intentionally left blank.]
Very truly yours,
HEARTLAND FINANCIAL CAPITAL TRUST I,
a Delaware business trust
By:________________________________
_____________, Administrative Trustee
HEARTLAND FINANCIAL USA, INC.
By:________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
DAIN RAUSCHER WESSELS, A DIVISION OF
DAIN RAUSCHER INCORPORATED
HOWE BARNES INVESTMENTS, INC.
By: Dain Rauscher Incorporated
By:
----------------------------------
Matthew L. Johnson, Vice President
SCHEDULE A
SCHEDULE OF UNDERWRITERS
Number of
Capital Securities Capital Securities
Underwriter to be purchased
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated..........................................
Howe Barnes Investments, Inc.......................... ----------
1,000,000
Total................................................. ----------
----------
29
EXHIBIT I
(FORM OF OPINION OF COMPANY COUNSEL)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware and is
duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). Each Subsidiary of the Company has been duly
incorporated or organized, is validly existing and in good standing under the
laws of the jurisdiction of its formation. Each of the Company and its
Subsidiaries has the corporate power and authority to own or lease its
properties and conduct its business as described in the Registration Statement
and the Prospectus; is, to such counsel's knowledge, in compliance with all
federal and state regulatory rules and guidelines; and is duly qualified to
transact business in all jurisdictions in which the conduct of its business or
its ownership or leasing of property requires such qualification and the failure
so to qualify would have a material adverse effect on the business or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole.
(ii) DB&T, GSB, RCB, WCB and NMB have each been duly chartered
under the laws of their states of organization to conduct the business of a bank
and FCB has been duly chartered under federal law to conduct the business of a
savings association. The Company and its Subsidiaries have all necessary
consents and approvals under applicable federal and state laws and regulations
to own their respective assets and carry on their respective businesses as
currently conducted. The deposit accounts of each of DB&T, GSB, RCB, WCB, NMB
and FCB are insured by the Federal Deposit Insurance Corporation (the "FDIC") up
to the maximum applicable amount in accordance with the rules and regulations of
the FDIC, and, to the knowledge of such counsel, no proceedings for the
termination or revocation of such insurance are pending or threatened.
(iii) All of the issued and outstanding shares of the capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable, and the holders thereof are not subject to personal liability
by reason of being such holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company any shares of the capital stock of the Company or the Junior
Subordinated Debentures or the Capital Securities pursuant to the Company's
certificate of incorporation, bylaws or any agreement or other instrument or
arrangement known to such counsel to which the Company is a party or by which
the Company is bound. Neither the filing of the Registration Statement nor the
offering or sale of the Junior Subordinated Debentures or Capital Securities as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of capital stock or other securities of the Company.
The authorized capital stock of the Company is comprised of 12,000,000 shares of
common stock, par value $1.00 per share __________, of which were issued and
outstanding as of ________, 1999 and 200,000 shares of preferred stock par value
$1.00 per share, none of which were issued and outstanding as of _________,
1999.
(iv) All of the issued and outstanding shares of capital stock of
each of the Company's Subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable, and, to such counsel's knowledge,
except as otherwise described in the Registration Statement and Prospectus,
except for directors' qualifying shares, and except for NMB, the Company owns of
record and beneficially all of the issued and outstanding shares of the capital
stock of each of the Subsidiaries. All of the shares of the capital stock of the
Subsidiaries which are owned by the Company are so owned free and clear of any
security interests, claims, liens, proxies, equities or other encumbrances. To
such counsel's knowledge, except as described in the Registration Statement and
Prospectus, there are no preemptive rights or options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the Company
or any of its Subsidiaries any shares of the capital stock of any Subsidiary of
the Company.
(v) All of the issued and outstanding Common Securities of the
Trust are owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right.
(vi) National Bancshares, Inc. ("National") has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of New Mexico and is duly registered as a bank holding company
under the BHC Act. The First National Bank of Clovis ("Clovis Bank") has been
duly organized and is validly existing as a national banking association under
the laws of the United States. The deposit accounts of Clovis Bank are insured
by the FDIC up to the maximum applicable amount in accordance with the rules and
regulations of the FDIC. Each of National and Clovis Bank has the corporate
power and authority to own or lease its properties and conduct its business as
described in the Prospectus and is duly qualified to transact business in all
jurisdictions in which the conduct of its business or its ownership or leasing
of property requires such qualification and the failure so to comply or qualify
would have a material adverse effect on its business or condition, financial or
otherwise.
(vii) Based upon current guidelines of the Federal Reserve Board,
the liquidation amount of the Capital Securities will constitute "tier 1"
capital (as defined in 12 C.F.R. Part 225), subject to applicable regulatory
limitations on the amount thereof that can be included in tier 1 capital.
(viii) The Trust Agreement, the Indenture and the Guarantee Agreement
have each been duly qualified under the Trust Indenture Act.
(ix) The Junior Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Indenture Trustee in
the manner provided for in the Indenture and delivered against payment
therefor, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and subject to
general principles of equity.
(x) The Trust Agreement has been duly authorized, executed and
delivered by the Company and the Administrative Trustees, and is a valid and
binding obligation of the Company and each of the Administrative Trustees,
enforceable against the Company and each of the Administrative Trustees in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, and subject to general principles of equity.
(xi) The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, and
subject to general principles of equity.
(xii) The Indenture has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and subject to general
principles of equity.
(xiii) The Company has full corporate power and authority to enter
into this Agreement, the Indenture, the Trust Agreement and the Guarantee
Agreement, to issue the Junior Subordinated Debentures and to effect the
transactions contemplated by this Agreement, the Indenture, the Trust
Agreement and the Guarantee Agreement. The Trust has full trust power and
authority to enter into this Agreement and the Trust Agreement, to issue the
Capital Securities and to effect the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture and the Guarantee Agreement.
The execution, delivery and performance of this Agreement, the Indenture, the
Trust Agreement, the Guarantee Agreement, the Expense Agreement, the Capital
Securities, the Common Securities and the Junior Subordinated Debentures and
the consummation of the transactions herein or therein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, rule or regulation, any lease,
contract, indenture, mortgage, loan agreement or other agreement or
instrument known to such counsel to which the Company or the Trust is a party
or by which either is bound or to which any of their property is subject, the
Company's or any Subsidiary's charter or bylaws, or the Trust's Certificate
of Trust or the Trust Agreement or any permit, judgment, order or decree
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or the Trust or any of its respective
properties, except for any breach, violation or default which would not have
a material adverse effect on the Company and the Trust, taken as a whole; and
no consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Indenture, the Trust Agreement,
the Guarantee Agreement, the Capital Securities, the Junior Subordinated
Debentures, or the Guarantee or for the consummation of the transactions
contemplated hereby or thereby, including the issuance or sale of the Junior
Subordinated Debentures by the Company and the Common Securities and Capital
Securities by the Trust, except (a) such as may be required under the Act,
which has been obtained, or under state securities or blue sky laws, and (b)
the qualification of the Trust Agreement, the Guarantee Agreement and the
Indenture under the Trust Indenture Act and the regulations thereunder, all
of which have been effected.
(xiv) The Junior Subordinated Debentures are subordinate and junior
in right of payment to all ASenior and Subordinated Debt" (as defined in the
Indenture) of the Company.
(xv) Neither the Company nor the Trust is an Ainvestment company"
or a company Acontrolled" by an Ainvestment company" within the meaning of the
1940 Act.
(xvi) To such counsel's knowledge and information after due inquiry,
the Trust is not a party to or otherwise bound by any agreement other than those
described in the Prospectus.
(xvii) To such counsel's knowledge and information after due inquiry,
the Offerors are not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or any other instrument known
to such counsel to which either of the Offerors is a party or by which either of
them may be bound, or to which any of the property or assets of either the
Company or the Trust is subject.
(xviii) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that purpose
has been instituted or, to the knowledge of such counsel, threatened by the
Commission.
(xix) The statements (a) in the Prospectus under the caption
"Risk Related to an Investment in Heartland Financial -- We are subject to
significant government regulation," (b) in the Registration Statement in Item
15 and (c) in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 under the caption "Supervision and Regulation,"
insofar as such statements constitute a summary of matters of law, are
accurate summaries and fairly present the information called for with respect
to such matters. The statements in the Prospectus under the captions "Risks
Related to an Investment in the Capital Securities," "Description of the
Trust," "Description of the Capital Securities," Description of the
Debentures," "Description of the Guarantee" and "Relationship Among the
Capital Securities, the Debentures and the Guarantee," insofar as such
statements constitute a summary of matters of law or of the legal matters,
documents or proceedings referred to therein, are accurate summaries and
fairly present the information called for with respect to such matters.
(xx) The statements, other than those referred to in paragraph
(xviii) of counsel's opinion, in the Registration Statement and the Prospectus
describing (a) statutes, rules and regulations, (b) legal and governmental
proceedings or rulings, and (c) contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does not
know of any statutes, rules or regulations or legal or governmental proceedings,
pending or threatened, required to be described in the Registration Statement
and the Prospectus that are not described as required, or of any contracts or
documents of a character required to be described in the Registration Statement
or Prospectus or included as exhibits to the Registration Statement that are not
described or included as required.
(xxi) The reports of the Company incorporated by reference in the
Registration Statement and the Prospectus or any further amendment or supplement
thereto made by the Company (other than the financial statements, other
financial data and related schedules therein, as to which such counsel need
express no opinion), when they were filed with the Commission, complied as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder. Such counsel does not know
of any contracts, agreements, documents or instruments required to be filed as
exhibits to any such reports or described in any such reports which are not so
filed or described as required; and, insofar as any statements in any such
report constitute summaries of any contract, agreement, document or instrument
to which the Company or any Subsidiary is a party, such statements are accurate
summaries and fairly present the information called for with respect to such
matters.
(xxii) To such counsel's knowledge, neither the Company nor any of
its Subsidiaries is in violation of its respective charter or bylaws.
(xxiii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto (including any term sheet within the
meaning of Rule 434 under the Act), comply as to form in all material respects
with the requirements of the Act and the rules and regulations thereunder and
the Trust Indenture Act and the rules and regulations thereunder.