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	BANKERS TRUST LOGO INSERTED HERE

 
ISDA CONFIRMATION LETTER
To:    Heartland Financial USA, Inc.
Attention:     Mr. David Horstmann, SVP Finance
Telephone:     (563) 589 - 1972 
Fax:         (563) 589 - 2011
From:     Bankers Trust Company
453 7th Street
Des Moines, IA 50309
Attention:     John Ruan IV
Telephone:     (515) 245-2444
Fax:         (515) 245-5216
Re:    USD Interest Rate Swap Transaction
 
Date:    April 5, 2011
 
Gentleman:
The purpose of this letter (this "Confirmation") is to confirm the terms and conditions of the transaction ("Transaction'') entered into between Bankers Trust Company ("Party A '') and Heartland Financial USA, Inc., ("Party B''). This Transaction is effective at, and as of 12:01 a.m., California time, on the Trade Date specified below.
 
The definitions and provisions contained in the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. ("ISDA)),, are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions and this Confirmation, this Confirmation will govern.
 
		
	1.
	This Confirmation evidences a complete and binding agreement between Party A and Party B as to the terms of the Transaction to which this Confirmation relates. Party A and Party B agree that the 1992 ISDA Master Agreement (“Multi-Currency-Cross Border") (the "Master Agreement"), a copy of which is attached hereto as Exhibit B, is hereby incorporated into this Confirmation by reference, and that this Confirmation will supplement, form a part of, and be subject to the Master Agreement with the modifications provided in this Confirmation. Notwithstanding that the parties have not signed the Master Agreement attached hereto as Exhibit B, all terms and conditions stated in the Master Agreement shall form a part of this Confirmation, and this Confirmation and the Master Agreement shall together be construed as a single agreement. This Confirmation shall constitute both the "Schedule" and a "Confirmation" as defined in the Master Agreement. In the event of any inconsistency between the provisions of the Master Agreement and this Confirmation, this Confirmation shall prevail for the purpose of this Transaction. For the purposes of this Transaction, the following elections shall apply:

 
		
	(i)
	The Master Agreement, this Confirmation, and this Transaction shall be governed by and

construed in accordance with the laws of the State of New York (without reference to the
choice of law provision),
 

 

 

		
	(ii)
	"Specified Entity" means "Affiliates" in relation to Party B, and "None" in relation to

Party A,
		
	(iii)
	"Specified Transaction" will have the meaning specified in Section 14 of the Master

Agreement and shall also include any obligations owed by Party B to Party A arising under any account agreement, loan, line of credit, credit agreement, reimbursement agreement, security agreement or other similar agreement including, but not limited to, the Swap Indebtedness,
 
		
	(iv)
	Cross-Default provision of Section 5(a)(vi) will apply to Party B only, and, for the purposes of Cross-Default "Threshold Amount" means, with respect to Party B, zero ($0), and "Specified Indebtedness" will not have the meaning specified in Section 14 of the Master Agreement, and shall be replaced with the following: "means any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of any money"; provided, however, with respect to Party A such term shall not include deposits and obligations in respect of deposits received in the ordinary course of Party A's banking business,

 
		
	(v)
	Credit Event Upon Merger of Section 5(b)(iv) will apply to Party B only, with effect as of the Trade Date of this Transaction, and

 
		
	(vi)
	"Termination Currency" means United States Dollars.

 
		
	2.
	The terms of the particular Transaction to which this Confirmation relates are as follows:

	
		
	Notional Amount:
	USD 15,000,000.00 (Initial Notional Amount)
For a Calculation Period, the amount set forth opposite that Calculation Period
on Exhibit A attached hereto.

	 
	 

	Trade Date:
	April 5, 2011

	 
	 

	Effective Date:
	April 20, 2011. The Effective Date is the first day of the first Calculation
Period. However, the rights and obligations of both parties under this
Transaction are in effect as of the Trade Date.

	 
	 

	Termination Date:
	April 20, 2016, subject to adjustment in accordance with the Modified
Following Business Day Convention.

 
Party B hereby acknowledges that the payments due by it under this Transaction shall be due on
their respective due dates whether or not (i) there exists at any time a commitment for any Financing or any such commitment expires or terminates, (ii) any closing of any Financing takes place or is postponed or delayed, (iii) any advance is made, outstanding or repaid in connection with any Financing before, on or after the Effective Date, (iv) circumstances change such that Party B ceases to have any need for, or is unable to obtain, any Financing; or (v) the principal amount of any Financing is less or more than the Notional Amount of this Transaction, or the term of any Financing is shorter or longer than the Term of this Transaction, or any other terms of any Financing differ from the terms of this Transaction. “Financing" means any loan or other extension of credit from Party A (or any other entity) to Party B (or any other entity) for this swap. In addition, Party B acknowledges that its obligations in respect of this Transaction upon the occurrence of any Event of Default, Termination Event or Additional Termination Event shall be due and payable by Party B if such event occurs before, on or after the Effective Date.

 

 

 
Fixed Amounts
 
	
		
	Fixed Rate Payer:
	Party B

	 
	 

	Period End Dates:
	Monthly on the 20th day of each month, commencing May 20,
2011, through and including the Termination Date; The
Calculation Periods are subject to No Adjustment.

	 
	 

	Fixed Rate Payer Payment Dates:
	Monthly on the 20th day of each month, commencing May 20,
201 I, through and including the Termination Date, subject to
adjustment in accordance with the designated Business Day
Convention.

	 
	 

	Business Day Convention:
	Modified Following

	 
	 

	Business Day:
	London and New York

	 
	 

	Fixed Rate:
	5.14%

	 
	 

	Fixed Rate Day Count Fraction:
	Actual/360

 
 
Floating Amounts
 
	
			
	Fixed Rate Payer:
	Party A

	 
	 

	Period End Dates:
	Monthly on the 20th day of each month, commencing May 20,
2011, through and including the Termination Date; The
Calculation Periods are subject to No Adjustment.

	 
	 

	Fixed Rate Payer Payment Dates:
	Monthly on the 20th day of each month, commencing May 20,
2011, through and including the Termination Date, subject to
adjustment in accordance with the designated Business Day
Convention.

	 
	 

	Business Day Convention:
	Modified Following

	 
	 

	Business Day:
	London and New York

	 
	 

	Floating Rate for Initial Calculation Period:
	Determined two London Banking Days prior to the Effective Date

	 
	 

	Floating Rate Option:
	USD-LIBOR-BBA

	 
	 

 

 

	
			
	Designated Maturity:
	1 Month

	 
	 

	Spread:
	Plus 2.75%

	 
	 

	Floating Rate Day Count Fraction:
	Actual/360

	 
	 

	Floating Rate Determined:
	Two London Banking Days prior to each Reset Date

	 
	 

	Reset Dates:
	The First day of each Calculation Period.

	 
	 

	Compounding:
	Not Applicable

	 
	 

	Rounding Convention
	5 decimal places per the ISDA Definitions

	 
	 

	Account Details:
	 

	 
	 

	Payments due to Party A:
	 

	Party B will wire payment(s) (or allow for direct ACH loan payments) to the following account:
Bank Name: Bankers Trust Company
ABA Number: 073000642
Account Name: Bankers Trust Wire Account
Account Number: 802551
Reference: Heartland Financial USA, Inc.

	 

	Payments due to Party B:
	 

	Party A will wire payment(s) to the following account:
Bank Name: Dubuque Bank & Trust
ABA Number: 073900535
Account Name: Heartland Financial USA, Inc.
Account Number: 72192
Reference: Bankers Trust Company

	 

	Calculation Agent:
	Party A

	 
	 

 

 

	
			
	Credit Support Document:
	Party B agrees and acknowledges that any and all Collateral,
guarantees, or security interests heretofore or hereafter pledged,
guaranteed, or granted to Party A pursuant to the Credit Agreement,
any security agreement, guarantee, deed of trust, mortgage or similar
document (collectively, the "Security Agreement”) shall also serve as collateral security for or a guarantee of the obligations of Party B
hereunder and Party B hereby grants to Party A a continuing security
interest in any and all Collateral heretofore or hereafter pledged to
Party A pursuant to a Security Agreement or related document as
security for any and all obligations of Party B hereunder. Party B
agrees to cause any security interest granted pursuant to any Security
Agreement or related document to specifically include the obligations
of Party B hereunder as secured obligations thereunder.
 
Party B also acknowledges and agrees that all Credit Support
Documents securing the obligation of Party B with respect to the Swap Indebtedness shall also secure the obligations of Party B with respect to this Transaction.
 
"Credit Agreement" means any note, instrument, agreement or other
document for borrowed money now or hereafter entered into between
Party A and Party B, as the same may be amended, extended,
supplemented or otherwise modified in writing from time to time with the consent of Party A.
 
"Collateral" means any or all real property, accounts, equipment,
general intangibles, instruments, inventory, intellectual property and all proceeds and products of such in which Party B has an ownership
interest or any other property which may be included or more
specifically defined in any Security Agreement.

	 
	 

	Credit Support Provider
for Party B:
	With respect to Party B, any grantor, guarantor or mortgagor under a
Credit Support Document.

	 
	 

	Agreement to Deliver
Documents:
	Upon execution of this Transaction Party B and its Credit Support
Provider (if applicable) agree to deliver to Party A:
(i) Credit Support Document(s); and
(ii) Satisfactory evidence of its capacity and ability to enter into this
Transaction;
(iii) Certified evidence of the authority, incumbency and specimen
signature of each person executing any document on its behalf in
connection with this Transaction; and
(iv) Such other documents as Party A may reasonably request from
time to time.
 
All of the above documents are subject to the representation in Section 3(d) of the Master Agreement.

	 
	 

 

 

	
			
	Acknowledgment:
	Party B acknowledges:
 
(a) Eligible Contract Participant. Party B is either an "eligible contract participant" as that term is defined in Section 1a (12) of the Commodity Exchange Act (7 U.S.C. 1a(12)) and was not formed solely for the purposes of constituting an "eligible contract participant", or if it is not an eligible contract participant, this Agreement (including each Transaction) is undertaken in conjunction with its line of business (including financial intermediation services) or the financing of its business. Party B further acknowledges it is entering into the Transaction with Party A for the purpose of hedging interest rate risk with respect to a specific loan transaction provided by Party A to Party B (the "Swap Indebtedness").
(b) Standardization and Creditworthiness. The economic terms of this Agreement, any Credit Support Document to which it is a party, and the Transaction with Party A have been individually tailored and negotiated by it; and the creditworthiness of the other party was a material consideration in its entering into or determining the terms of this Agreement, such Credit Support Documents, and such Transaction.

 
Additional Termination Event: Each of the following events shall constitute an Additional Termination Event hereunder, as to which Party B shall be the sole Affected Party and this Transaction shall be deemed to be an Affected Transaction:
 
		
	(i)
	If within sixty (60) calendar days of the Effective Date of the Transaction, Party A and Party B fail to enter into the Credit Agreement or Party A's obligation to lend under the Credit Agreement or any promissory note, loan agreement, credit agreement, reimbursement agreement or other document or instrument evidencing a credit extension from Party A to Party B is terminated, cancelled, voided, breached or amended in any manner which would affect Party B' s ability to perform its obligations under this Agreement, determined by Party A in its sole discretion; or 

 
		
	(ii)
	Any documents constituting a Security Agreement by Party B for the benefit of Party A are terminated or modified without the consent of Party A; or

 
		
	(iii)
	Party B fails to deliver Collateral in form and substance satisfactory to Party A within three Business Days of request by Party A; or 

 
		
	(iv)
	Any default, event of default or termination event by Party B, howsoever defined, under any

Credit Agreement; or
 
		
	(v)
	Party B has repaid all amounts owed to Party A under the Credit Agreement and Party A has no further obligation to provide any additional credit extension to Party B; or

 
		
	(vi)
	A material adverse change in the financial condition of Party B that is likely to affect its ability to perform its obligations under this Transaction, determined by Party A in its sole discretion; or 

 
		
	(vii)
	In the event Party B or Party B's Credit Support Provider is an individual and such individual: (A) dies, (B) is declared by a court of competent jurisdiction to be incompetent due to a physical, mental or emotional condition resulting from injury, sickness, disease or other cause, or (C) becomes unable to act in a prudent, timely and effective manner as a 

 

 

consequence of any accident, physical or mental condition (whether organic or psychological) or other similar cause, for an indefinite period of time (notwithstanding the appointment of a guardian, conservator or other legal representative for Party B or Party B's Credit Support Provider, as applicable) and a replacement individual or entity acceptable to Party A in Party A's sole discretion does not assume said obligations within 20 days of such event.
 
Events of Default: Section 5 of the Master Agreement is hereby amended as follows:
 
		
	(i)
	Credit Support Default. Section 5(a)(iii) of the Master Agreement is hereby amended by the addition of "or if there is no applicable grace period, one Local Business Day after notice of such failure is given to the party or Credit Support Provider (as the case may be)" after “elapsed" in the fourth line thereof.

 
		
	(ii)
	Default under Specified Transaction. Section 5(a)(v) of the Master Agreement is hereby amended by the substitution of "(or such default continues for at least one Local Business Day if there is no applicable notice requirement or grace period)” for the parenthetical clause in the seventh and eighth lines thereof.

 
		
	(iii)
	Failure to Pay or Deliver. Section 5(a)(i) of the Master Agreement shall be amended by replacing the word "third" with "first" Local Business Day in the third line thereof.

 
Joint & Several Obligations: Each entity which comprises Party B hereby acknowledges and confirms
that the obligations and liabilities of each such entity under this Transaction are joint and several. Accordingly, each such entity shall be jointly and severally liable for the obligations and liabilities expressed to be obligations of Party B hereunder. Additionally, each such entity further acknowledges
and confirms that notwithstanding the joint and several nature of their obligations hereunder, each
reference in the Master Agreement or this Transaction to Party B as "a party" shall be a reference to each
entity which comprises Party B. Notwithstanding anything to the contrary herein or in the underlying
loan documents, the obligations of Party B under this Confn'1l1ation shall guaranteed by the ownership
members of the Party B and such guarantees shall each be limited to the member's percentage ownership
of the total amount of the "loss" generally defined as the total amount of such obligations. Each entity
which comprises Party B hereby agrees to appoint the following to receive all notices, demands or
communications to be sent by Party A to Party B hereunder (the "Representative"):
 
The Representative will promptly transmit to the other entities which comprise Party B, as applicable, all payments and deliveries and notices so received. Upon delivery by Party A of any payment or delivery or notice, demand or communication hereunder to the Representative on behalf of Party B, Party A shall be relieved of all further responsibility with respect thereto.
 
Addresses for Notices: For the purpose of Section 12(a) of the Master Agreement, address for notices or communication to Party A and Party B shall be as follows:
 
Party A:
Bankers Trust Company
453 7th Street
Des Moines, IA 50309
Attention: Jennifer A. Cooper
 
 
 

 

 

Party B:
Heartland Financial USA, Inc.
Address:     c/o David Horstmann, SVP Finance
1398 Central Ave
Dubuque, IA 52001
Facsimile:     (563) 589 -1951
 
Payments on Early Termination: For the purpose of Section 6(e) of the Master Agreement: (i) Loss
will apply, and (ii) Second Method will apply.
 
Consent to Recording: Each party (i) consents to the recording of the telephone conversations of trading and marketing personnel of the parties in connection with this Transaction, and (ii) agrees to obtain any necessary consents of and give notice of such recording to its personnel, and (iii) consents to the submission of any such tape recording in evidence in any Proceedings.
 
Assignments Prohibited: This Confirmation shall not be assigned or transferred by Party B to any other
party without the prior written consent of Party A, which consent may be withheld or granted by Party A
in its sole discretion.
 
Right of Set-off: Section 6 of the Master Agreement is amended by adding the following new Section 6(f):
 
"(f)    Set-off. Any amount (the "Early Termination Amount") payable to one party (the Payee) by the other party (the Payer) under Section 6(e), in circumstances where there is a Defaulting Party or one Affected Party, will, at the option of the party ("X") other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any amount(s) (the "Other Agreement Amount") payable (whether at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) issued or executed by one party to or in favor of, the other party (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it is so set-off). X will give notice to the other party of any set-off effected under this Section 6(f).
 
For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency.
 
If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.
 
Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).
 
WAIVER OF JURY TRIAL: EACH PARTY HEREBY IRREVOCBLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY TRIAL OR LITIGATION ARISING OUT OF OR IN

 

 

CONNECTION WITH THIS TRANSACTION.
 
RISK DISCLOSURE ACKNOWLEDGMENT: PARTY B HEREBY ACKNOWLEDGES AND
AGREES THAT IT HAS: (X) READ THE RISK DISCLOSURE SET FORTH IMMEDIATELY
BELOW; (Y) UNDERSTANDS SUCH RISK DISCLOSURE; AND (Z) HAD AN ADEQUATE
OPPORTUNITY TO DISCUSS ANY QUESTIONS OR COMMENTS THAT IT MAY HAVE HAD
WITH RESPECT TO SUCH RISK DISCLOSURE PRIOR TO THE EXECUTION OF THIS
TRANSACTION.
RISK DISCLOSURE
 
AS IS COMMON WITH MANY OTHER FINANCIAL INSTRUMENTS AND TRANSACTIONS,
OVER-THE-COUNTER SWAPS, OPTIONS, FORWARDS, FOREIGN EXCHANGE TRANSACTIONS AND OTHER SIMILAR DERIVATIVES AND RELATED PRODUCTS (EACH, A "FINANCIAL PRODUCTS TRANSACTION") MAY INVOLVE A VARIETY OF SIGNIFICANT
RISKS. BEFORE ENTERING INTO ANY FINANCIAL PRODUCTS TRANSACTION, YOU SHOULD CAREFULLY CONSIDER WHETHER THE TRANSACTION IS APPROPRIATE FOR
YOU IN LIGHT OF YOUR OBJECTIVES, EXPERIENCE, FINANCIAL AND OPERATIONAL
RESOURCES, AND OTHER RELEVANT CIRCUMSTANCES. YOU SHOULD ALSO ENSURE
THAT YOU FULLY UNDERSTAND THE NATURE AND EXTENT OF YOUR EXPOSURE TO
RISK OF LOSS, IF ANY, WHICH IN SOME CIRCUMSTANCES MAY SIGNIFICANTLY EXCEED
THE AMOUNT OF ANY INITIAL PAYMENT MADE BY OR TO YOU.
 
THE SPECIFIC RISKS PRESENTED BY A PARTICULAR FINANCIAL PRODUCTS
TRANSACTION NECESSARILY DEPEND UPON THE TERMS OF THAT TRANSACTION AND
THE CIRCUMSTANCES. COMMON TO ALL, HOWEVER, IS THEIR NATURE AS LEGALLY
BINDING CONTRACTUAL COMMITMENTS, WHICH, ONCE AGREED TO, CANNOT BE
ALTERED OTHER THAN BY TERMINATION OR MODIFICATION UPON WRITTEN AGREEMENT BY THE PARTIES. YOU SHOULD UNDERSTAND THAT SUCH TERMINATION
AND/OR MODIFICATION MAY, IN CERTAIN CIRCUMSTANCES, RESULT IN SIGNIFICANT
LOSSES TO YOU AND MAY INCLUDE ADDITIONAL AMOUNTS REQUIRED TO COVER THE
RELEVANT COSTS.
 
IN ENTERING INTO ANY FINANCIAL PRODUCTS TRANSACTION WITH, OR ARRANGED BY, US, BANKERS TRUST COMPANY, N.A., OR, AS MAY BE APPLICABLE, OUR AUTHORIZED SUBSIDIARIES OR AFFILIATES (EACH SUCH ENTITY, "BANKERS TRUST"), YOU SHOULD ALSO UNDERSTAND THAT BANKERS TRUST IS ACTING SOLELY IN THE CAPACITY OF AN ARM'S LENGTH CONTRACTUAL PARTY B AND NOT IN THE CAPACITY OF YOUR FINANCIAL ADVISOR OR FIDUCIARY UNLESS OTHERWISE EXPLICITLY AGREED IN WRITING AND THEN ONLY TO THE EXTENT SO PROVIDED.
 
THIS BRIEF STATEMENT DOES NOT PURPORT TO DISCLOSE ALL OF THE RISKS OR OTHER RELEVANT CONSIDERATIONS OF ENTERING INTO FINANCIAL PRODUCTS
TRANSACTIONS.
 
		
	3.
	Please confirm that the foregoing correctly sets forth the terms of our agreement by having an authorized officer sign one copy of this telecopy Confirmation and returning it to us by telecopier to:

 
Bankers Trust Company
Attention: John Ruan IV
Fax: 515-245-5216

 

 

 
		
	4.
	Each party represents to the other party hereto that (i) it is not acting as a fiduciary or a financial or  investment advisor for the other party; (ii) it is not relying upon any advice, counsel or representations (whether written or oral) of the other party other than the representations expressly set forth in the Master Agreement, any Credit Support Document and herein; (iii) the other party hereto has not given to it any advice or counsel as to the expected or projected success, return, performance, result, consequence or benefit (either legal, regulatory, tax, financial, accounting, or otherwise) of this transaction; (iv) it has consulted with its own legal, regulatory, tax, business, investment financial and accounting advisors to the extent it has deemed necessary and has made its own investment, hedging, and trading decisions (including decisions regarding the suitability of this Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by the other party hereto; (v) it has determined that the rates, prices, or amounts and other terms of this Transaction in the indicative quotations (if any) provided by the other party hereto reflect those in the relevant market for similar transactions, and all trading decisions have been the result of arm's length negotiations between the parties; (vi) it is entering into this Transaction with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those risks; and (vii) it is a sophisticated investor.

 
6.     This Confirmation will be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine.
 
Yours sincerely,
 
BANKERS TRUST COMPANY (Party A)
 
By:       /s/ Gary Buelt        
Name:       Gary Buelt        
Its:    Authorized Signatory
 
Accepted, Agreed to and confirmed as of the Trade Date:
 
HEARTLAND FINANCIAL USA, INC. (Part B)
 
By:        David L. Horstmann            
        David L. Horstmann, its Senior Vice President - Finance
 
 
 
 
 
 
 
 
 
 

 

 

 
EXHIBIT "A"
Principal Reduction Schedule - page 1 of 2
 
	
					
	Reset 
Date
	Period End Date
	Payment 
Date
	Applicable Notional Amount
	Notional 
Change

04/18/2011     05/20/2011     05/20/2011     $15,000,000.00
05/18/2011     06/20/2011     06/20/2011     $14,904,123.28           $95,876.72
06/16/2011    07/20/2011     07/20/2011     $14,807,835.89           $96,287.39
07/18/2011     08/20/2011     08/22/2011    $14,711,136.08           $96,699.81
08/18/2011     09/20/2011     09/20/2011     $14,614,022.06           $97,114.02
09/16/2011     10/20/2011     10/20/2011    $14,516,492.07           $97,529.99
10/18/2011     11/20/2011     11/21/2011     $14,418,544.33           $97,947.74
11/17/2011     12/20/2011     12/20/2011     $14,320,177.04           $98,367.29
12/16/2011     01/20/2012    01/20/2012     $14,221,388.42           $98,788.62
01/18/2012     02/20/2012     02/21/2012     $14,122,176.65           $99,211.77
02/16/2012     03/20/2012     03/20/2012     $14,022,539.92           $99,636.73
03/16/2012     04/20/2012     04/20/2012     $13,922,476.42         $100,063.50
04/18/2012     05/20/2012     05/21/2012    $13,821,984.31         $100,492.11
05/17/2012     06/20/2012     06/20/2012     $13,721,061.76         $100,922.55
06/18/2012     07/20/2012     07/20/2012     $13,619,706.92         $101,354.84
07/18/2012     08/20/2012     08/20/2012     $13,517,917.95         $101,788.97
08/16/2012     09/20/2012     09/20/2012     $13,415,692.98        $102,224.97
09/18/2012     10/20/2012     10/22/2012     $13,313,030.15         $102,662.83
10/18/2012     11/20/2012     11/20/2012     $13,209,927.58         $103,102.57
11/16/2012     12/20/2012     12/20/2012     $13,106,383.39         $103,544.19
12/18/2012     01/20/2013     01/22/2013     $13,002,395.68         $103,987.71
01/17/2013     02/20/2013     02/20/2013     $12,897,962.56         $104,433.12
02/18/2013    03/20/2013    03/20/2013     $12,793,082.11         $104,880.45
03/18/2013     04/20/2013     04/22/2013     $12,687,752.43         $105,329.68
04/18/2013     05/20/2013    05/20/2013     $12,581,971.59         $105,780.84
05/16/2013     06/20/2013    06/20/2013     $12,475,737.65         $106,233.94
06/18/2013     07/20/2013     07/22/2013     $12,369,048.68        $106,688.97
07/18/2013     08/20/2013     08/20/2013     $12,261,902.72         $107,145.96
08/16/2013     09/20/2013     09/20/2013     $12,154,297.82         $107,604.90
09/18/2013     10/20/2013     10/21/2013     $12,046,232.01         $108,065.81
10/17/2013     11/20/2013     11/20/2013     $11,937,703.32         $108,528.69
11/18/2013     12/20/2013     12/20/2013     $11,828,709.77         $108,993.55
12/18/2013     01/20/2014     01/21/2014     $11,719,249.36         $109,460.41
01/16/2014     02/20/2014     02/20/2014     $11,609,320.09         $109,929.27
02/18/2014     03/20/2014     03/20/2014     $11,498,919.96         $110,400.13
03/18/2014     04/20/2014     04/22/2014     $11,388,046.96         $110,873.00
04/16/2014    05/20/2014     05/20/2014     $11,276,699.04         $111,347.92
05/16/2014     06/20/2014     06/20/2014     $11,164,874.18         $111,824.86
06/18/2014     07/20/2014     07/21/2014     $11,052,570.35         $112,303.83
07/17/2014     08/20/2014     08/20/2014     $10,939,785.47         $112,784.88
08/18/2014     09/20/2014     09/22/2014     $10,826,517.50         $113,267.97
09/18/2014     10/20/2014     10/20/2014     $10,712,764.37         $113,753.13
10/16/2014     11/20/2014     11/20/2014     $10,598,523.99         $114,240.38
11/18/2014     12/20/2014     12/22/2014     $10,483,794.29         $114,729.70
12/18/2014     01/20/2015     01/20/2015     $10,368,573.16         $115,221.13
01/16/2015     02/20/2015     02/20/2015     $10,252,858.50         $115,714.66
02/18/2015     03/20/2015     03/20/2015     $10,136,648.19         $116,210.31
03/18/2015     04/20/2015     04/20/2015     $10,019,940.12         $116,708.07
 
 
 

 

 

 
EXHIBIT "A"
Principal Reduction Schedule - page 2 of 2
 
	
					
	Reset 
Date
	Period End Date
	Payment 
Date
	Applicable Notional Amount
	Notional 
Change

04/16/2015     05/20/2015     05/20/2015       $9,902,732.14         $117,207.98
05/18/2015    06/20/2015     06/22/2015       $9,785,022.13         $117,710.01
06/18/2015     07/20/2015     07/20/2015       $9,666,807.93        $118,214.20
07/16/2015     08/20/2015     08/20/2015       $9,548,087.37         $118,720.56
08/18/2015     09/20/2015     09/21/2015       $9,428,858.29         $119,229.08
09/17/2015     10/20/2015     10/20/2015       $9,309,118.52         $119,739.77
10/16/2015     11/20/2015     11/20/2015       $9,188,865.86         $120,252.66
11/18/2015     12/20/2015     12/21/2015       $9,068,098.12         $120,767.74
12/17/2015     01/20/2016     01/20/2016       $8,946,813.09         $121,285.03
01/18/2016     02/20/2016     02/22/2016       $8,825,008.56         $121,804.53
02/18/2016     03/20/2016     03/21/2016       $8,702,682.29         $122,326.27
03/17/2016     04/20/2016     04/20/2016       $8,579,832.07         $122,850.22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

(Multicurrency - Cross Border)         EXHIBIT "B"
 
 
 
ISDA®
International Swap Dealers Association, Inc.
 
MASTER AGREEMENT
 
Dated as of April 5, 2011
 
 
Bankers Trust Company and Heartland Financial USA, Inc. have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a “Confirmation") exchanged between the parties confirming those Transactions.
 
Accordingly, the parties agree as follows:
 
		
	1.
	Interpretation

 
		
	(a)
	Definitions. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement.

 
		
	(b)
	Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.

 
		
	(c)
	Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

 
		
	2.
	Obligations

 
		
	(a)
	General Conditions.

 
		
	(i)
	Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.

 
		
	(ii)
	Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

 
		
	(iii)
	Each obligation of each party under Section 2(a)(i) is subject to (1) the condition 

 

 

precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement.
 
		
	(b)
	Change of Account. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.

 
		
	(c)
	Netting. If on any date amounts would otherwise be payable:

 
		
	(i)
	In the same currency; and

 
		
	(ii)
	In respect of the same Transaction,

 
by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. 
 
The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.
 
		
	(d)
	Deduction of Withholding for Tax.

 
		
	i.
	Gross-Up.  All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X") will:

 
		
	1.
	Promptly notify the other party (“Y”) of such requirement;

 
		
	2.
	Pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;

 
		
	3.
	Promptly forward to Y an official receipt (or a certified copy), or other documentation 

 

 

reasonably acceptable to Y, evidencing such payment to such authorities; and 
 
		
	4.
	If such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:

 
		
	A.
	The failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

 
		
	B.
	The failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.

 
		
	ii.
	Liability. If:

 
		
	(1)
	X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any dedication or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

 
		
	(2)
	X does not so deduct or withhold; and 

 
		
	(3)
	A liability resulting from such Tax is assessed directly against X,

 
Then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
 
		
	(e)
	Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.

 
 
 

 

 

		
	3.
	Representations

 
Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:
 
		
	(a)
	Basic Representations.

 
		
	i.
	Status. It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such law, in good standing;

 
		
	ii.
	Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorize such execution, delivery and performance;

 
		
	iii.
	No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;

 
		
	iv.
	Consents.  All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and

 
		
	v.
	Obligations Binding.  Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

 
(b)     Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.
 
(c)     Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.
 
(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3( d) in the Schedule is, as of the date of the information, true, accurate and complete in every material 

 

 

respect.
 
(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.
 
(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.
 
		
	4.
	Agreements 

 
Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:
    
		
	(a)
	Furnish Specified Information. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:

 
(i)    Any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;
 
(ii)    Any other documents specified in the Schedule or any Confirmation; and 
 
(iii)    Upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,
 
In each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. 
 
		
	(b)
	Maintain Authorizations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.

 
		
	(c)
	Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.

 
		
	(d)
	Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(1) to be accurate and true promptly upon learning of such failure.

 
		
	(e)
	Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organized, managed and controlled, or considered to have its seat, or 

 

 

in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.
 
		
	5.
	Events of Default and Termination Events

 
		
	(a)
	Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party:

 
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party;
 
(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party;
 
(iii) Credit Support Default. 
 
		
	1.
	Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;

 
		
	2.
	the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or

 
		
	3.
	the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document;

 
 (iv) Misrepresentation. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;
 

 

 

(v)   Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
 
(vi) Cross Default. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such agreements Of instruments (after giving effect to any applicable notice requirement Of grace period);
 
(vii) Bankruptcy.  The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:
 
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take 

 

 

possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or
 
(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:
 
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or
 
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.
 
		
	(b)
	Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:

 
		
	(i)
	Illegality. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party):

 
		
	(1)
	to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or

 
		
	(2)
	to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction;

 
		
	(ii)
	Tax Event.  Due to (x) any action taken by a taxing authority, or brought in a court of 

 

 

competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2( d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));
 
		
	(iii)
	Tax Event Upon Merger. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5 (a)(viii);

 
		
	(iv)
	Credit Event Upon Merger. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party “X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or ransferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or

 
		
	(v)
	Additional Termination Event.  If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation).

 
		
	(c)
	Event of Default and Illegality. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default.

 
		
	6.
	Early Termination

 
		
	(a)
	Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. 

 

 

If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
 
		
	(b)
	Right to Terminate Following Event of Default. 

 
(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require.
 
(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.
 
If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).
 
Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.
 
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event.
 
(iv) Right to Terminate. If: 
 
		
	1.
	a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or

 
		
	2.
	an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party, 

 

 

 

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.
 
		
	(c)
	Effect of Designation.

 
		
	(i)
	If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.

 
		
	(ii)
	Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e).

 
		
	(d)
	Calculations.

 
		
	(i)
	Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation.

 
		
	(ii)
	Payment Date. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed.

 
		
	(e)
	Payments on Early Termination.  If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss", and a payment method, either the "First Method" or the "Second Method". If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method", as the case may be, shall apply. The 

 

 

amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off.
 
		
	(i)
	Events of Default.  If the Early Termination Date results from an Event of Default:

 
		
	(1)
	First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party.

 
		
	(2)
	First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement.

 
		
	(3)
	Second Method and  Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.

 
(4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party.
 
		
	(ii)
	Termination Events. If the Early Termination Date results from a Termination Event:

 
		
	(1)
	One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)( 4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions.

 
		
	(2)
	Two Affected Parties. If there are two Affected Parties:

 
		
	(A)
	if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and

 

 

 
		
	(B)
	 if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y").

 
If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y.
 
		
	(iii)
	Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).

 
		
	(iv)
	Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable under this Section6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses.

 
		
	7.
	Transfer

 
Subject to Section 6(b )(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:
 
		
	(a)
	a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, Of transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and

 
		
	(b)
	a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6( e).

 
Any purported transfer that is not in compliance with this Section will be void.
 
		
	8.
	Contractual Currency

 
		
	(a)
	Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent 

 

 

permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.
 
		
	(b)
	Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually receivcd by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.

 
		
	(c)
	Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.

 
		
	(d)
	Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

 
		
	9.
	Miscellaneous

 
		
	(a)
	Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.

 
		
	(b)
	Amendments. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.

 
		
	(c)
	Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.

 
		
	(d)
	Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and 

 

 

privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.
 
		
	(e)
	Counterparts and Confirmations.

 
(i)   This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original.
 
(ii)  The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation.
 
		
	(f)
	No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.

 
		
	(g)
	Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.

 
		
	10.
	 Offices; Multibranch Parties

 
		
	(a)
	If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organization of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into.

 
		
	(b)
	Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party.

 
		
	(c)
	If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation.

 
		
	11.
	Expenses

 
A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.

 

 

 
		
	12.
	Notices

 
(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:
 
(i) if in writing and delivered in person or by courier, on the date it is delivered;
 
(ii) if sent by telex, on the date the recipient's answerback is received;
 
(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine);
 
(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or
 
(v) if sent by electronic messaging system, on the date that electronic message is   received, 
 
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day.
 
(b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it.
 
		
	13.
	Governing Law and Jurisdiction

 
		
	(a)
	Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.

 
		
	(b)
	Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:

 
(i)    submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and
 
(ii)    waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives 

 

 

the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party.
 
Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in anyone or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.
 
		
	(c)
	Service of Process. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law.

 
		
	(d)
	Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

 
		
	14.
	Definitions

 
As used in this Agreement:
 
"Additional Termination Event”  has the meaning specified in Section 5(b).
 
"Affected Party" has the meaning specified in Section 5(b).
 
“Affected Transaction” means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions.
 
"Affiliate" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person.
 
“Applicable Rate" means:
 
		
	(a)
	in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(ii)) by a Defaulting Party, the Default Rate;

 
		
	(b)
	in respect of an obligation to pay an amount under Section 6(e) of either party from and after  the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the 

 

 

Default Rate);
 
		
	(c)
	in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(ii)) by a Non-defaulting Party, the Non-default Rate; and

 
		
	(d)
	in all other cases, the Termination Rate.

 
"Burdened Party" has the meaning specified in Section 5(b).
 
“Change in Tax Law" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into.
 
“consent" includes a consent, approval, action, authorization, exemption, notice, filing, registration or exchange control consent.
 
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
 
“Credit  Support Document" means any agreement or instrument that is specified as such in this Agreement.
 
"Credit Support Provider " has the meaning specified in the Schedule.
 
"Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.
 
"Defaulting Party" has the meaning specified in Section 6(a).
 
"Early Termination Date" means the date determined in accordance with Section6(a) or 6(b)(iv).
 
"Event 0f Default" has the meaning specified in Section 5(a) and, if applicable, in the Schedule.
 
"Illegality" has the meaning specified in Section 5(b).
 
“Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organized, present or engaged in a trade or business in such jurisdiction, or
having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).
 
"law" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "lawful" and "unlawful" will be construed accordingly.
 
"Local Business Day" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation 

 

 

to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice
provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.
 
"Loss" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.
 
"Market Quotation" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such
party the economic equivalent of any payment or delivery (whether the underlying obligation was, absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming
satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after consultation with the other. 

 

 

If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. 
 
"Non-default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount.
 
"Non-defaulting Party" has the meaning specified in Section 6(a).
 
"Office" means a branch or office of a party, which may be such party's head or home office.
 
"Potential Event of Default" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
 
"Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city.
 
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organized, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.
 
"Scheduled Payment Date" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.
 
"Set-off” means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer.
 
"Settlement Amount" means, with respect to a party and any Early Termination Date, the sum of:
 
		
	(a)
	the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and

 
		
	(b)
	such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result.

 
"Specified Entity" has the meaning specified in the Schedule.
 

 

 

“Specified Indebtedness" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.
 
“Specified Transaction" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap currency transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.
 
"Stamp Tax" means any stamp, registration, documentation or similar tax.
 
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.
 
“Tax Event" has the meaning specified in Section 5(b).
 
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
 
"Terminated Transactions" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date).
 
“Termination Currency" has the meaning specified in the Schedule.
 
“Termination Currency Equivalent" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.
 
“Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified 

 

 

to be applicable, a Credit Event Upon Merger or an Additional Termination Event.
 
“Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.
 
 “Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market
of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair market values reasonably determined by both parties.
 
 
 
IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.
 
 
 
	
					
	 
	BANKERS TRUST COMPANY
	 
	 
	HEARTLAND FINANCIAL USA, INC.

	 
	 
	 
	 
	 

	By:
	/s/ Gary Buelt
	 
	By:
	/s/ David L. Horstmann

	Name:
	Gary Buelt
	 
	Name:
	David L. Horstmann

	Title:
	 
	 
	Title:
	SVP - FinanceWebFilings | EDGAR view

 

PROMISSORY NOTE
	
										
	Principal
$5,000,000.00
	Loan Date
04-20-2011
	Maturity
04-20-2013
	Loan No
55120-0101
	Call / Coll
9A00 / AA
	Account
00000160370
	Officer
00456
	Initials

	References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. 
Any item above containing “***” has been omitted due to text length limitations.

	 
	 

	Borrower:    Heartland Financial USA, Inc.
	Lender:     Bankers Trust Company

	1398 Central Avenue
	453 7th Street

	Dubuque, IA 52004
	P.O. Box 897

	 
	Des Moines, IA 50304-0897

	 
	(515)245-2863

	
		
	Principal Amount:  $5,000,000.00
	Date of Note: April 20, 2011

	 
	 

PROMISE TO PAY. Heartland Financial USA, Inc. (“Borrower”) promises to pay Bankers Trust Company (“Lender”), or order, in lawful money of the United States of America, the principal amount of Five Million & 00/100 ($5,000,000.00) or so much as may be outstanding together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on April 20, 2013. In addition, Borrower will pay regular quarterly payments of accrued unpaid interest due as of each payment date, beginning June 30, 2011, with all subsequent interest payments to be due on the same day of each quarter after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs; then to any late charges; then to any accrued unpaid interest; and then to principal. Borrower will pay Lender at Lender's address show above or at such other place as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the 30-Day London Interbank Offered Rate (LIBOR) as published in The Wall Street Journal which may or may not necessarily reflect the rate Lender charges to its other customers which may be lower (the “Index”).  The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current index rate upon Borrower's request. The interest rate change will not occur more often than each last day of the month. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 0.243% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 3.000 percentage points over the Index, adjusted if necessary to for any minimum and maximum rate limitations described below,  resulting in an initial rate of 4.500% per annum based on a year of 360 days. NOTICE: Under no circumstances will the interest rate on this Note be less than 4.500% per annum or more than the maximum rate allowed by applicable law. 
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest . Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Bankers Trust Company, 453 7th Street, P.O. Box 897, Des Moines, IA 50304-0897.
LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $50.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall 

 

 

be increased to 21.000% per annum based on a year of 360 days. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:
	
	
	Payment Default. Borrower fails to make any payment when due under this Note.

	 

	Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

	 

	False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

	 

	Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceedings under any bankruptcy or insolvency laws by or against Borrower.

	 

	Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

	 

	Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

	 

	Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

	 

	Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is Impaired.

	 

	Insecurity. Lender in good faith believe itself insecure.

	 

 LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note end all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEY'S FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Iowa without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Iowa.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Polk County, State of Iowa.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves the right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower hold jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this 

 

 

paragraph.
COLLATERAL. This loan is unsecured.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note, as well as direction for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for  all sums either:  (A) advance in accordance with the instructions of an authorized per son or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.
PURPOSE OF LOAN. The specific purpose of this loan is: line of Credit for General Corporate purposes, Capital injections to subsidiaries.
ADDITIONAL TERMS. This credit is subject to the terms and conditions of a Loan Commitment Letter dated April 5, 2011.
ADDITIONAL TERMS. Non-Use Fee. This Loan is subject to a annual Non-Use Fee Rate of .025%. The Borrower agrees to pay to Lender for the Revolving Commitment a non-use fee, for the period from the Loan Date to the Maturity Date, in an amount equal to (i) the Revolving Commitment less (ii) the average daily amount (for the period of measurement) of all Revolving Outstandings, multiplied by the Non-Use Fee Rate in effect from time to time. Such non-use fee shall be payable in arrears on the last day of each calendar quarter and on the Maturity Date for any period then ending for which such non-use fee shall not have previously been paid. The Non-Use Fee shall be computed per the Interest Calculation Method described in the Promissory Note.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate information about Borrower's account(s) to a consumer reporting agency. Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Bankers Trust Company 453 7th Street Des Moines, IA 50309.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE AND ALL OTHER DOCUMENTS RELATING TO THIS DEBT.
BORROWER:
HEARTLAND FINANCIAL USA, INC.
By:     /s/ John K, Schmidt                
       John K. Schmidt, EVP, CFO of Heartland Financial USA, Inc.

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