FIRST MIDWEST BANCORP INC (Form: 10-K, Received: 03/09/2004 16:31:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year-ended December 31, 2003

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 0-10967

FIRST MIDWEST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware

36-3161078

(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)

300 Park Blvd., Suite 400, P.O. Box 459

Itasca, Illinois 60143-9768

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (630) 875-7450

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class:

Common Stock, $.01 Par Value

Preferred Share Purchase Rights

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x .

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨ .

The aggregate market value of the registrant’s outstanding voting common stock held by non-affiliates on June 30, 2003, determined using a per share closing price on that date of $28.81, as quoted on The Nasdaq Stock Market, was $1,219,874,374.

At March 4, 2004 there were 46,520,598 shares of common stock, $.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s Proxy Statement for the 2004 Annual Stockholders’ Meeting - Part III

FORM 10-K

TABLE OF CONTENTS


		Page
Part I.

ITEM 1.	Business	3

ITEM 2.	Properties	8

ITEM 3.	Legal Proceedings	8

ITEM 4.	Submissions of Matters to a Vote of Security Holders	8

Part II

ITEM 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	9

ITEM 6.	Selected Financial Data	10

ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

ITEM 7a.	Qualitative and Quantitative Disclosures about Market Risk	40

ITEM 8.	Financial Statements and Supplementary Data	43

ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	79

ITEM 9a.	Controls and Procedures	79

Part III

ITEM 10.	Directors and Executive Officers of the Registrant	80

ITEM 11.	Executive Compensation	81

ITEM 12.	Security Ownership of Certain Beneficial Owners and Management	81

ITEM 13.	Certain Relationships and Related Transactions	81

ITEM 14.	Principal Accounting Fees and Services	81

Part IV

ITEM 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	81

PART I

ITEM 1. BUSINESS

First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc. (the “Company”) is a bank holding company incorporated in Delaware in 1982 for the purpose of becoming a multi-bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Act”). The Company is one of Illinois’ largest publicly traded banking companies with assets of $6.9 billion at year-end 2003 and is headquartered in the Chicago suburb of Itasca, Illinois.

The Company operates two wholly owned subsidiaries: First Midwest Bank (the “Bank”) and First Midwest Insurance Company, employing 1,646 full-time equivalent employees at December 31, 2003.

The Company has responsibility for the overall conduct, direction, and performance of its subsidiaries. The Company provides various services; establishes Company-wide policies and procedures; and provides other resources as needed, including capital.

Subsidiaries

At December 31, 2003, the Bank had $6.8 billion in total assets, $4.8 billion in total deposits, and operated 66 banking offices primarily in suburban metropolitan Chicago. These amounts include the assets, deposits, and banking offices acquired from CoVest Bancshares, Inc. (“CoVest”) on December 31, 2003. CoVest Banc, CoVest’s wholly owned bank subsidiary, was merged into the Bank effective February 13, 2004. In the discussion that follows, the “Bank” refers to the combined bank resulting from the merger of CoVest Banc, Inc. into First Midwest Bank. A discussion of the merger is included in Note 3 to “Notes to Consolidated Financial Statements” commencing on page 53 of this Form 10-K.

The Bank is engaged in commercial and retail banking and offers a broad range of lending, depository, and related financial services, including accepting deposits; commercial and industrial, consumer, and real estate lending; collections; trust and investment management services; safe deposit box operations; and other banking services tailored for personal, commercial and industrial, and governmental customers. The Bank also provides an electronic banking center on the internet at www.firstmidwest.com , which enables Bank customers to perform banking transactions and provides information about Bank products and services to the general public.

The Bank is comprised of two divisions, a sales division and a support division. The sales division is structured along commercial and retail product lines and operates in five geographical regions in Northern Illinois and in Scott County, Iowa. The support division provides corporate, administrative, and support services.

First Midwest Insurance Company operates as a reinsurer of credit life, accident, and health insurance sold through the Bank, primarily in conjunction with the consumer lending operations.

Competition

Illinois and the metropolitan Chicago area are highly competitive markets for banking and related financial services. Competition is generally expressed in terms of interest rates charged on loans and paid on deposits; the ability to garner new deposits; the scope and type of banking and financial services offered; the hours during which business can be conducted; the location of bank branches and ATMs; the availability and range of banking services on the internet; and the variety of additional services such as investment management, fiduciary, and brokerage services. Within the geographic area it serves, the Bank competes with other banking institutions and savings and loan associations, personal loan and finance companies, and credit unions. In addition, the Bank competes for deposits with money market mutual funds and investment brokers on the basis of interest rates offered and available products. Recently, the competition for banking customers intensified as both local and out-of-state banking institutions announced plans for large-scale branch office expansion in the suburban Chicago markets and certain local banks were acquired by larger local and national financial institutions.

In providing investment advisory services, the Bank also competes with retail and discount stockbrokers, investment advisors, mutual funds, insurance companies, and, to a lesser extent, financial institutions for investment management clients. Factors influencing this type of competition generally involve the variety of products and services that can be offered to clients and the performance of funds under management. With the proliferation of investment management service companies, such as mutual funds and discount brokerage services, competition for investment management services comes from financial service providers both within and outside of the geographic areas in which the Bank maintains offices.

Offering a broad array of products and services at competitive prices is an important element in competing for customers. The Company differentiates itself, however, by systematically assessing a customer’s specific financial needs, selling products and services identified in such assessment, and providing a high quality of these services and products. The Company believes this approach is the most important aspect in retaining and expanding its customer base as well as its knowledge and commitment to the communities in which the Bank is located.

Supervision and Regulation

On June 30, 2001, the Bank converted from a national banking association to an Illinois banking corporation.

The Company and its subsidiaries are subject to regulation and supervision by various governmental regulatory authorities including the Federal Reserve Board, the Federal Deposit Insurance Corporation (the “FDIC”), the Illinois Commissioner of Banks and Real Estate Companies (the “Commissioner of Illinois”), and the Arizona Department of Insurance. Financial institutions and their holding companies are extensively regulated under Federal and state law. The effect of such statutes, regulations, and policies can be significant and cannot be predicted with a high degree of certainty.

Federal and state laws and regulations generally applicable to financial institutions, such as the Company and its subsidiaries, regulate, among other things, the scope of business, investments, reserves against deposits, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, mergers, consolidations, and dividends. This supervision and regulation is intended primarily for the protection of the FDIC’s bank (the “BIF”) and savings association (the “SAIF”) insurance funds and the depositors, rather than the stockholders, of a financial institution.

The following references to material statutes and regulations affecting the Company and its subsidiaries are brief summaries thereof and are qualified in their entirety by reference to such statutes and regulations. Any change in applicable law or regulations may have a material effect on the business of the Company and its subsidiaries. The operations of the Company and the Bank may be affected by legislative and regulatory changes as well as by changes in the policies of various regulatory authorities. The Company cannot accurately predict the nature or the extent of the effects that such changes may have in the future on its business and earnings.

Bank Holding Company Act of 1956, as amended (the “Act”)

Generally, the Act governs the acquisition and control of banks and non-banking companies by bank holding companies. A bank holding company is subject to regulation under the Act and is required to register with the Federal Reserve under the Act. A bank holding company is required by the Act to file an annual report of its operations and such additional information as the Federal Reserve may require and is subject, along with its subsidiaries, to examination by the Federal Reserve. The Federal Reserve has jurisdiction to regulate the terms of certain debt issues of bank holding companies, including the authority to impose reserve requirements.

The acquisition of five percent (5%) or more of the voting shares of any bank or bank holding company requires the prior approval of the Federal Reserve and is subject to applicable federal law, including the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Riegle Neal”), for interstate transactions, and possible state law limitations as well. The Federal Reserve evaluates acquisition applications based upon, among other things, antitrust, safety and soundness, and community service considerations.

The Act also prohibits, with certain exceptions, a bank holding company from acquiring direct or indirect ownership or control of more than five percent (5%) of the voting shares of any “non banking” company unless the non-banking activities are found by the Federal Reserve to be “so closely related to banking . . . as to be a proper incident thereto.” Under current regulations of the Federal Reserve, a bank holding company and its nonbank subsidiaries are permitted, among other activities, to engage in such banking-related business ventures as consumer finance, equipment leasing, data processing, mortgage banking, financial and investment advice, and securities brokerage services. The Act does not place territorial restrictions on the activities of a bank holding company or its nonbank subsidiaries.

Federal law prohibits acquisition of “control” of a bank or bank holding company without prior notice to certain federal bank regulators. “Control” is defined in certain cases as the acquisition of as little as 10% of the outstanding shares. Furthermore, under certain circumstances, a bank holding company may not be able to purchase its own stock, where the gross consideration will equal 10% or more of the company’s net worth, without obtaining approval of the Federal Reserve. Under the Federal Reserve Act, banks and their subsidiaries (including bank holding companies) are subject to certain requirements and restrictions when dealing with each other (subsidiary transactions). The Company is also subject to the provisions of the Illinois Bank Holding Company Act.

Interstate Banking

Bank holding companies are permitted to acquire banks and bank holding companies, and be acquired, in any state, subject to the requirements of Riegle Neal, and in some cases, applicable state law.

Under Riegle Neal, adequately capitalized and managed bank holding companies may be permitted by the Federal Reserve to acquire control of a bank in any state. States, however, may prohibit acquisitions of banks that have not been in existence for at least five years. The Federal Reserve is prohibited from approving an application for acquisition if the applicant controls more than 10 percent of the total amount of deposits of insured depository institutions nationwide. In addition, interstate acquisitions may also be subject to statewide concentration limits.

The Federal Reserve would be prohibited from approving an application if, prior to consummation, the proposed acquirer controls any insured depository institution or branch in the home state of the target bank, and the applicant, following consummation of an acquisition, would control 30 percent or more of the total amount of deposits of insured depository institutions in that state. This legislation also provides that the provisions on concentration limits do not affect the authority of any state to limit or waive the percentage of the total amount of deposits in the state which would be held or controlled by any bank or bank holding company to the extent the application of this limitation does not discriminate against out-of-state institutions.

Interstate branching under Riegle Neal permits banks to merge across state lines, thereby creating a bank headquartered in one state with branches in other states. Approval of interstate bank mergers is subject to certain conditions including: adequate capitalization; adequate management; Community Reinvestment Act compliance; deposit concentration limits (as set forth above); compliance with federal and state antitrust laws; and compliance with applicable state consumer protection laws. An interstate merger transaction may involve the acquisition of a branch without the acquisition of the bank only if the law of the state in which the branch is located permits out-of-state banks to acquire a branch of a bank in that state without acquiring the bank. Following the consummation of an interstate transaction, the resulting bank may establish additional branches at any location where any bank involved in the transaction could have established a branch under applicable federal or state law, if such bank had not been a party to the merger transaction.

Riegle Neal became effective on June 1, 1997, and allowed each state, prior to the effective date, the opportunity to “opt out,” thereby prohibiting interstate branching within that state. Of the two states in which the Company’s banking subsidiaries are located (Illinois and Iowa), neither has adopted legislation to “opt out” of the interstate merger provisions. Furthermore, pursuant to Riegle Neal, a bank is able to add new branches in a state in which it does not already have banking operations if such state enacts a law permitting such de novo branching, or, if the state allows acquisition of branches, subject to applicable state requirements.

The effects on the Company of the changes in interstate banking and branching laws cannot be accurately predicted, but it is likely that there will be increased competition from national and regional banking firms headquartered outside of Illinois which establish banks in Illinois.

Illinois Banking Law

The Illinois Banking Act (“IBA”) governs the activities of the Company, an Illinois state banking corporation. The IBA defines the powers and permissible activities of an Illinois state chartered bank, prescribes corporate governance standards, imposes approval requirements on mergers of state banks, prescribes lending limits, and provides for the examination of state banks by the Commissioner of Illinois. The Banking on Illinois Act (“BIA”) became effective in mid-1999 and amended the IBA to provide a potential wide range of new activities for Illinois state chartered banks, including the Bank. The provisions of the BIA are to be construed liberally in order to create a favorable business climate for banks in Illinois. The main features of the BIA are to expand bank powers through a new “wild card” provision authorizing Illinois chartered banks to offer virtually any product or service that any bank or thrift may offer anywhere in the country, subject to certain safety and soundness considerations and prior notification to the Commissioner of Illinois and the FDIC. Previously, in addition to enumerated powers stated in the IBA, state banks could engage in any activity authorized or permitted to be conducted by a national bank. Management of the Bank remains aware of the favorable environment created by the BIA and will consider the opportunities that may become available to the Bank as a result of such legislation.

The Bank is subject to a variety of federal and state laws and regulations governing its operations. For example, deposit activities are subject, among other things, to the federal Truth in Savings Act and the Illinois Consumer Deposit Account Act. Federal and state laws also govern electronic banking transactions. Trust activities of the Bank are subject to the Illinois Corporate Fiduciaries Act. Loans made by the Bank are subject to applicable provisions of the Illinois Interest Act, the federal Truth in Lending Act, and the Illinois Financial Services Development Act.

The Bank is subject to a variety of other laws and regulations concerning equal credit opportunity, fair lending, customer privacy, fair credit reporting, and community reinvestment. The Bank currently holds an “outstanding” rating for community reinvestment activity, the highest available.

The Commissioner of Illinois has adopted predatory lending regulations. These regulations apply to “high cost” mortgages which are defined as mortgages which exceed a specified interest rate or are assessed points in excess of a specified minimum. Once any of these thresholds is reached, the regulations impose certain restrictions on the lender, including: obligating the lender to verify the borrower’s ability to repay the loan based on the borrower’s income and debt obligations; prohibiting deceptive refinancing known as loan flipping where a lender refinances existing loans, charging additional points and fees, without any financial benefit to the consumer; prohibiting the financing of a single premium credit insurance policy; prohibiting the financing of points and fees in excess of 6% of the total loan amount; limiting the size and interval of balloon payments; and limiting prepayment penalties that could be charged to consumers. These regulations also require the lender to make certain disclosures to borrowers who are seeking high cost mortgages. The regulations apply to all state licensed financial institutions making residential loans in Illinois. The regulations also require lenders to file with the Commissioner of Illinois semi-annual reports on mortgage loans, including information relating to defaults and foreclosures.

The Illinois legislature has also considered the adoption of legislation aimed at curbing what some legislators and consumer-oriented advocacy groups consider to be predatory lending practices by some mortgage brokers and other lenders active in the State of Illinois. “Predatory” lending consists of fraudulent and deceptive sales practices that occur when borrowers are pressured into taking out loans they do not need or cannot afford. Inasmuch as neither the Company nor the Bank engages in such practices, it is unlikely that any legislation adopted in Illinois to combat this perceived problem would have an impact on the Company or the Bank, other than the creation of additional reporting requirements.

As an Illinois banking corporation controlled by a bank holding company, the Bank is not only subject to the rules regarding change of control in the Act and the Federal Deposit Insurance Act and the regulations promulgated thereunder, it is also subject to the rules regarding change in control of Illinois banks contained in the IBA.

The Bank is subject to Sections 22(h), 23A and 23B of the Federal Reserve Act, which restrict or impose requirements on financial transactions between federally insured depository institutions and subsidiary companies. The statute limits credit transactions between a bank and its executive officers and its subsidiaries, prescribes terms and conditions for bank subsidiary transactions deemed to be consistent with safe and sound banking practices, requires arms-length transactions between subsidiaries, and restricts the types of collateral security permitted in connection with a bank’s extension of credit to a subsidiary.

Gramm-Leach-Bliley Act of 1999

The enactment of the Gramm-Leach-Bliley Act of 1999 (“GLB Act”) swept away large parts of a regulatory framework that had its origins in the Depression Era of the 1930’s. Effective March 11, 2000, new opportunities became available for banks, other depository institutions, insurance companies, and securities firms to enter into combinations that permit a single financial services organization to offer customers a more comprehensive array of financial products and services. To further this goal, the GLB Act amends section 4 of the Act providing a new regulatory framework applicable to a financial holding company (“FHC”), which has as its primary regulator the Federal Reserve. Functional regulation of the FHC’s subsidiaries will be conducted by their primary functional regulators. Pursuant to the GLB Act, bank holding companies, subsidiary depository institutions thereof, and foreign banks electing to qualify as a FHC must be “well managed,” “well capitalized,” and rated at least satisfactory under the Community Reinvestment Act in order to engage in new financial activities.

An FHC may engage in securities and insurance activities and other activities that are deemed financial in nature or incidental to a financial activity under the GLB Act. While aware of the flexibility of the FHC statute, the Company has, for the time being, decided not to become a FHC, but will continue to follow the reception given FHCs in the marketplace. The activities of bank holding companies that are not FHCs will continue to be regulated by and limited to activities permissible under the Act.

The GLB Act also prohibits a financial institution from disclosing non-public personal information about a consumer to nonaffiliated third parties, unless the institution satisfies various disclosure requirements and the consumer has not elected to opt out of the disclosure. Under the GLB Act, a financial institution must provide its customers with a notice of its privacy policies and practices, and the Federal Reserve, the FDIC, and other financial regulatory agencies have issued regulations implementing notice requirements and restrictions on a financial institution’s ability to disclose non-public personal information about consumers to nonaffiliated third parties.

The Company is also subject to certain state laws that limit the use and distribution of non-public personal information, both to subsidiaries and unaffiliated entities.

The GLB Act is expected, in time, to alter the competitive landscape of the product markets presently served by the Company. Companies that are presently engaged primarily in insurance activities or securities activities are now permitted to acquire banks and bank holding companies, such as the Company. The Company may, in the future, face increased competition from a broader range of larger, more diversified financial companies.

USA Patriot Act

On October 26, 2001, the President signed into law comprehensive anti-terrorism legislation known as the USA Patriot Act. Title III of the USA Patriot Act requires financial institutions, including the Company and the Bank, to help prevent, detect, and prosecute international money laundering and the financing of terrorism. The Department of the Treasury has adopted additional requirements to further implement Title III.

Under these regulations, a mechanism has been established for law enforcement officials to communicate names of suspected terrorists and money launderers to financial institutions to enable financial institutions to promptly locate accounts and transactions involving those suspects. Financial institutions receiving names of suspects must search their account and transaction records for potential matches and report positive results to the U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”). Each financial institution must designate a point of contact to receive information requests. These regulations outline how financial institutions can share information concerning suspected terrorist and money laundering activity with other financial institutions under the protection of a statutory safe harbor; provided each financial institution notifies FinCEN of its intent to share information.

The Department of the Treasury has also adopted regulations intended to prevent money laundering and terrorist financing through correspondent accounts maintained by U.S. financial institutions on behalf of foreign banks. Financial institutions are required to take reasonable steps to ensure that they are not providing banking services directly or indirectly to foreign shell banks.

In addition, banks must have procedures in place to identify and verify the identity of the persons with whom they deal. The Company and the Bank have augmented their systems and procedures to accomplish compliance with these requirements. The Company and the Bank believe that the cost of compliance with Title III of the USA Patriot Act is not likely to be material to them.

Capital Guidelines

The Federal Reserve and the other federal functional bank regulators have established risk-based capital guidelines to provide a framework for assessing the adequacy of the capital of national and state banks and their bank holding companies (collectively, “banking institutions”). These guidelines apply to all banking institutions, regardless of size, and are used in the examination and supervisory process as well as in the analysis of applications to be acted upon by the regulatory authorities. These guidelines require banking institutions to maintain capital based on the credit risk of their operations, both on and off-balance sheet.

The minimum capital ratios established by the guidelines are based on both Tier 1 and Total capital to total risk-based assets. In addition to the risk-based capital requirements, the Federal Reserve and the FDIC require banking institutions to maintain a minimum leveraged-capital ratio to supplement the risk-based capital guidelines.

Dividends

The Company’s primary source of liquidity is dividend payments from the Bank. In addition to capital guidelines, the Bank is limited in the amount of dividends it can pay to the Company under the IBA. Under this law, the Bank is permitted to declare and pay dividends in amounts up to the amount of its accumulated net profits, provided that it shall retain in its surplus at least one-tenth of its net profits since the date of the declaration of its most recent dividend until said additions to surplus, in the aggregate, equals at least the paid-in capital of the Bank. In no event may the Bank, while it continues its banking business, pay dividends in excess of its net profits then on hand (after deductions for losses and bad debts). As of December 31, 2003, the Bank could distribute dividends of approximately $218.9 million, without approval from the Commissioner of Illinois. In addition, the Bank is limited in the amount of dividends it can pay under the Federal Reserve Act and Regulation H. For example, dividends cannot be paid that would constitute a withdrawal of capital, dividends cannot be declared or paid if they exceed a bank’s undivided profits, and a bank may not declare or pay a dividend greater than current year net income plus retained net income of the prior two years without Federal Reserve approval.

Since the Company is a legal entity, separate and distinct from the Bank, its dividends to stockholders are not subject to the bank dividend guidelines discussed above. The Commissioner of Illinois is authorized to determine, under certain circumstances relating to the financial condition of a bank or bank holding company, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The Federal Reserve has taken the position that dividends that would create pressure or undermine the safety and soundness of the subsidiary bank are inappropriate.

FDIC Insurance Premiums

The Bank’s deposits are predominantly insured through the BIF, with certain deposits held by the Bank insured through the SAIF, both of which are administered by the FDIC. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious risk to the BIF or SAIF.

The FDIC’s deposit insurance premiums are assessed through a risk-based system under which all insured depository institutions are placed into one of nine categories and assessed insurance premiums on deposits based upon their level of capital and supervisory evaluation. For 2004, the Bank will pay premium assessments on both its BIF and SAIF insured deposits in order to service the interest on the Financing Corporation (“FICO”) bond obligations which were used to finance the cost of “thrift bailouts” in the 1980’s. The FICO assessment rates for the first semi-annual period of 2004 were set at $.0154 per $100 of insured deposits each for BIF and SAIF assessable deposits. These rates may be adjusted quarterly to reflect changes in assessment basis for the BIF and SAIF.

Where You Can Find More Information About First Midwest

The Company makes available, free of charge, on its website, http://www.firstmidwest.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

ITEM 2. PROPERTIES

The executive offices of the Company, the Bank and certain subsidiary operational facilities are located in a five-story office building in Itasca, Illinois. The Company and the Bank occupy approximately 36,179 square feet on the fourth floor, which is leased through an unaffiliated third party.

As of December 31, 2003, the Bank operates through 66 bank branches and operational facilities. Of these, 13 are leased and the remaining 53 are owned and not subject to any material liens. The banking offices are located in various communities throughout Northern Illinois, principally the Chicago metropolitan suburban area and in Scott County, Iowa. At certain Bank locations, excess space is leased to third parties. The Bank also owns 92 automated teller machines (ATMs), some of which are housed at a banking location and some of which are independently located. In addition, the Company owns other real property that, when considered in the aggregate, is not material to the Company’s financial position.

The Company believes its facilities in the aggregate are suitable and adequate to operate its banking business. Additional information with respect to premises and equipment is presented in Note 7 of “Notes to Consolidated Financial Statements” commencing on page 58 of this Form 10-K.

ITEM 3. LEGAL PROCEEDINGS

There are certain legal proceedings pending against the Company and its subsidiaries in the ordinary course of business at December 31, 2003. The Company believes that any liabilities arising from these proceedings would not have a material adverse effect on the consolidated financial condition of the Company.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no items submitted to a vote of security holders during the fourth quarter of 2003.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY

AND RELATED STOCKHOLDER MATTERS

The Company’s common stock is traded on The Nasdaq Stock Market under the symbol “FMBI.” Stock price quotations can be found in The Wall Street Journal and other major daily newspapers. As of December 31, 2003, there were 2,783 stockholders of record. The following table sets forth the closing common stock price, dividends per share, and book value per share during each quarter of 2003 and 2002.


	2003												2002
	Fourth			Third			Second			First			Fourth			Third			Second			First
Market price of common stock
High	$	32.80		$	31.45		$	29.87		$	28.12		$	28.79		$	30.13		$	32.16		$	29.81
Low	$	29.61		$	28.53		$	25.55		$	24.89		$	23.80		$	23.34		$	26.24		$	27.01
Quarter-end	$	32.43		$	29.71		$	28.81		$	25.81		$	26.71		$	26.86		$	27.78		$	29.04
Cash dividends per share	$	0.22		$	0.19		$	0.19		$	0.19		$	0.19		$	0.17		$	0.17		$	0.17
Dividend yield at quarter-end ⁽¹⁾		2.71	%		2.56	%		2.64	%		2.94	%		2.85	%		2.53	%		2.45	%		2.34	%
Book value per share at Quarter-end	$	11.22		$	10.94		$	10.92		$	10.58		$	10.42		$	10.44		$	9.91		$	9.21

⁽¹⁾	Ratios are presented on an annualized basis.

A discussion regarding the regulatory restrictions applicable to the Bank’s ability to pay dividends to the Company is included in the “Dividends” section under Item 1 located on page 7 of this Form 10-K. A discussion of the Company’s history and philosophy regarding the payment of dividends is included in the “Management of Capital” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” commencing on page 36 of this Form 10-K.

Equity Compensation Plans

The following table sets forth information, as of December 31, 2003, relating to equity compensation plans of the Company pursuant to which options, restricted stock, restricted stock units, or other rights to acquire shares may be granted from time to time.


	Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)	Weighted-average exercise prices of outstanding options, warrants, and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders ⁽¹⁾	2,129,591	$	23.17	2,467,504
Equity compensation plans not approved by security holders ⁽²⁾	5,529		15.30	—

Total	2,135,120	$	23.15	2,467,504

⁽¹⁾

Includes all outstanding options and awards under the Omnibus Stock and Incentive Plan and the Non-Employee Directors’ 1997 Stock Option Plan (the “Plans”). Additional information and details about the Plans are also disclosed in Notes 1 and 17 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 69, respectively, of this Form 10-K.

⁽²⁾	Represents shares underlying deferred stock units credited under the Company’s Nonqualified Retirement Plan, payable on a one-for-one basis in shares of the Company’s common stock.

The Nonqualified Retirement Plan is a defined contribution deferred compensation plan under which participants are credited with deferred compensation equal to contributions and benefits that would have accrued to the participant under the Company’s tax-qualified plans, but for limitations under the Internal Revenue Code, and to amounts of salary and annual bonus that the participant has elected to defer. Participant accounts are deemed to be invested in separate investment accounts under the plan, which mirror the investment accounts available under the Company’s tax-qualified savings and profit sharing plan, including an investment account deemed invested in shares of Company common stock. The accounts are adjusted to reflect the investment return related to such deemed investments. Except for the 5,529 shares set forth in the table above, all amounts credited under the Plan are paid in cash.

ITEM 6. SELECTED FINANCIAL DATA

Consolidated financial information reflecting a summary of the operating results and financial condition of the Company for each of the five years ended December 31, 2003, is presented in the table that follows. This summary should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this Form 10-K. A more detailed discussion and analysis of the factors affecting the Company’s financial condition and operating results is presented in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” commencing on page 11 of this Form 10-K.


	Years ended December 31,
	2003			2002			2001			2000			1999
Operating Results (Dollar amounts in thousands)
Interest income	$	291,067		$	329,664		$	385,218		$	421,517		$	361,279
Interest expense		81,313			110,910			180,838			231,906			168,615
Net interest income		209,754			218,754			204,380			189,611			192,664
Provision for loan losses		10,805			15,410			19,084			9,094			5,760
Noninterest income		77,207			66,531			68,076			61,960			58,237
Security gains, net		2,988			460			790			1,238			97
(Losses) on early extinguishment of debt		(6,025	)		—			—			—			—
Noninterest expense		149,452			148,052			145,356			144,416			149,809
Income tax expense		30,889			32,133			26,668			23,759			24,520
Net income	$	92,778		$	90,150		$	82,138		$	75,540		$	70,909
Weighted average shares outstanding		46,671			48,074			50,057			51,314			52,669
Weighted average diluted shares outstanding		46,982			48,415			50,401			51,604			53,071
Per Share Data
Basic earnings per share	$	1.99		$	1.88		$	1.64		$	1.47		$	1.35
Diluted earnings per share		1.97			1.86			1.63			1.46			1.34
Cash dividends declared		0.790			0.700			0.650			0.592			0.528
Book value at period end		11.22			10.42			9.18			8.75			7.19
Market value at period end		32.43			26.71			29.19			23.00			21.20
Performance Ratios
Return on average equity		18.28	%		18.82	%		17.89	%		19.17	%		17.39	%
Return on average assets		1.50	%		1.53	%		1.43	%		1.30	%		1.34	%
Net interest margin – tax equivalent		3.99	%		4.28	%		4.10	%		3.76	%		4.24	%
Dividend payout ratio		40.10	%		37.63	%		39.88	%		40.55	%		39.40	%
Average equity to average asset ratio		8.19	%		8.12	%		7.99	%		6.79	%		7.71	%


Consolidated Statements of Condition Highlights (Dollar amounts in thousands)	As of December 31,
	2003			2002			2001			2000			1999
Total assets	$	6,906,658		$	5,980,533		$	5,667,919		$	5,906,484		$	5,511,588
Loans		4,059,782			3,406,846			3,372,306			3,233,196			2,962,487
Deposits		4,818,108			4,172,954			4,193,921			4,252,205			4,001,183
Subordinated debt – trust preferred securities		128,716			—			—			—			—
Stockholders’ equity		522,540			491,953			447,267			446,723			369,261
Risk-Based Capital Ratios
Tier 1 capital to risk-weighted assets		10.29	%		9.93	%		9.96	%		10.51	%		10.21	%
Total capital to risk-weighted assets		11.41	%		11.03	%		11.08	%		11.61	%		11.32	%
Tier 1 leverage to average assets		8.49	%		7.32	%		7.43	%		7.36	%		7.19	%

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The following discussion and analysis is intended to address the significant factors affecting the Company’s Consolidated Statements of Income for the years 2001 through 2003 and Consolidated Statements of Condition as of December 31, 2002 and 2003. The discussion is designed to provide stockholders with a comprehensive review of the operating results and financial condition and should be read in conjunction with the consolidated financial statements, accompanying notes thereto, and other financial information presented in this Form 10-K.

A condensed review of operations for the fourth quarter of 2003 is included herein, commencing on page 38 of this Form 10-K. The review provides an analysis of the quarterly earnings performance for the fourth quarter of 2003 as compared to the same period in 2002.

Unless otherwise stated, all earnings per share data included in this section and through the remainder of this discussion are presented on a diluted basis.

FORWARD-LOOKING STATEMENTS

Statement under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: The Company and its representatives may, from time to time, make written or oral statements that are “forward-looking” and provide information other than historical information, including statements contained in the Form 10-K, the Company’s other filings with the Securities and Exchange Commission or in communications to its stockholders. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. These factors include, among other things, the factors listed below.

In some cases, the Company has identified forward-looking statements by such words or phrases as “will likely result,” “is confident that,” “expects,” “should,” “could,” “may,” “will continue to,” “believes,” “anticipates,” “predicts,” “forecasts,” “estimates,” “projects,” “potential,” “intends,” or similar expressions identifying “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the negative of those words and phrases. These forward-looking statements are based on management’s current views and assumptions regarding future events, future business conditions, and the outlook for the Company based on currently available information. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, these statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company is hereby identifying important factors that could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any forward-looking statements.

Among the factors that could have an impact on the Company’s ability to achieve operating results, growth plan goals, and the beliefs expressed or implied in forward-looking statements are:

•

Management’s ability to reduce and effectively manage interest rate risk and the impact of interest rates in general on the volatility of the Company’s net interest income;

•

Fluctuations in the value of the Company’s investment securities;

•

The ability to attract and retain senior management experienced in banking and financial services;

•

The sufficiency of allowances for loan losses to absorb the amount of actual losses inherent in the existing portfolio of loans;

•

The Company’s ability to adapt successfully to technological changes to compete effectively in the marketplace;

•

Credit risks and risks from concentrations (by geographic area and by industry) within the Bank’s loan portfolio;

•

The effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, and other financial institutions operating in the Company’s market or elsewhere or providing similar services;

•

The failure of assumptions underlying the establishment of allowances for loan losses and estimation of values of collateral and various financial assets and liabilities;

•

Volatility of rate sensitive deposits;

•

Operational risks, including data processing system failures or fraud;

•

Asset/liability matching risks and liquidity risks;

•

Changes in the economic environment, competition, or other factors that may influence the anticipated growth rate of loans and deposits, the quality of the loan portfolio and loan and deposit pricing, and the Company’s ability to successfully pursue acquisition and expansion strategies and integrate any acquired companies;

•

The impact from liabilities arising from legal or administrative proceedings on the financial condition of the Company;

•

Governmental monetary and fiscal policies, as well as legislative and regulatory changes, that may result in the imposition of costs and constraints on the Company through higher FDIC insurance premiums, significant fluctuations in market interest rates, increases in capital requirements, and operational limitations;

•

Changes in general economic or industry conditions, nationally or in the communities in which the Company conducts business;

•

Changes in accounting principles, policies, or guidelines affecting the businesses conducted by the Company;

•

The impact of mark-to-market adjustments required by purchase accounting in the Company’s acquisition of CoVest Bancshares and other issues that may arise in connection with the integration of CoVest Banc into the Bank;

•

Acts of war or terrorism; and

•

Other economic, competitive, governmental, regulatory, and technical factors affecting the Company’s operations, products, services, and prices.

The Company wishes to caution that the foregoing list of important factors may not be all-inclusive and specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

With respect to forward-looking statements set forth in the notes to consolidated financial statements, including those relating to contingent liabilities and legal proceedings, some of the factors that could affect the ultimate disposition of those contingencies are changes in applicable laws, the development of facts in individual cases, settlement opportunities, and the actions of plaintiffs, judges, and juries.

CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and are consistent with predominant practices in the financial services industry. Application of critical accounting policies, those policies that management believes are the most important to the Company’s financial position and results of operations, requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes and are based on information available as of the date of the financial statements. Future changes in information may affect these estimates, assumptions, and judgments, which, in turn, may affect amounts reported in the financial statements.

The Company has numerous accounting policies, of which the most significant are presented in Note 1 of “Notes to Consolidated Financial Statements” commencing on page 47 of this Form 10-K. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has determined that its accounting policies with respect to the reserve for loan losses and income taxes are the accounting areas requiring subjective or complex judgments that are most important to the Company’s financial position and results of operations, and, as such, are considered to be critical accounting policies as discussed below.

Reserve for Loan Losses

Arriving at an appropriate level of reserve for loan losses involves a high degree of judgment. The Company’s reserve for loan losses provides for probable losses based upon evaluations of known, and inherent risks in the loan portfolio. Management uses historical information to assess the adequacy of the reserve for loan losses as well as its assessment of the prevailing business environment, as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The reserve is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Company’s methodology of

assessing the adequacy of the reserve for loan losses, see Note 1 of “Notes to Consolidated Financial Statements” commencing on page 47 of this Form 10-K.

Income Taxes

The Company accounts for income tax expense by applying an estimated effective tax rate to its pre-tax income. The effective tax rate is based on management’s judgments and estimates regarding permanent differences in the treatment of specific items of income and expense for financial statement and income tax purposes. In addition, the Company recognizes deferred tax assets and liabilities, recorded in the Consolidated Statements of Condition, based on management’s judgments and estimates regarding temporary differences in the recognition of income and expenses for financial statement and income tax purposes.

The Company must also assess the likelihood that any deferred tax assets will be realized through the reduction or refund of taxes in future periods and establish a valuation allowance for those assets for which recovery is unlikely. In making this assessment, management must make judgments and estimates regarding the ability to realize the asset through carryback to taxable income in prior years, the future reversal of existing taxable temporary differences, future taxable income, and the possible application of future tax planning strategies. Although the Company has determined a valuation allowance is not required for any deferred tax assets, there is no guarantee that these assets are recognizable. For additional discussion of income taxes, see Notes 1 and 15 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 66, respectively, of this Form 10-K.

PERFORMANCE OVERVIEW

General Overview

The Company generated record earnings in 2003 while maintaining sound credit quality and repositioning its balance sheet in response to the historically low interest rate environment and in anticipation of increased interest rates in 2004. The Company repositioned its balance sheet to stabilize its net income in the event of anticipated interest rate increases. In 2003, these repositioning activities primarily involved the securities portfolio, borrowings from the Federal Home Loan Bank (“FHLB”), and deposit pricing strategies.

If interest rates increase during 2004, the Company’s financial performance would benefit in a number of ways, such as through increased net margins. If interest rates remain stable or decrease during 2004, the Company’s expected earnings could be negatively impacted. Under those circumstances, the Company anticipates its level of unrealized security gains to increase, providing the Company with the flexibility to substitute securities gains for potentially narrower net interest margins.

As a result of improved economic conditions, the Company expects continued expansion in the markets it serves, which is expected to generate a greater demand for the Company’s products and services. The competition for bank products and services continues to intensify in the Chicago metropolitan area, as banks both within and outside of Chicago have announced aggressive expansion plans. The Company continues to believe it can compete successfully because of its high-quality products and services, its unique relationship-based approach to banking, and its knowledge of and connections to its communities.

In 2003, the Company acquired CoVest Bancshares, Inc., a bank holding company, in northwestern suburban Cook County (the “CoVest Acquisition”) and the O’Hare Office of The Northern Trust Company. The CoVest Acquisition closed on December 31, 2003, and therefore had little impact on the Company’s 2003 performance. The Company expects the acquisitions will enable it to expand its market presence in the northwest Chicago suburbs. In particular, the Company expects that the acquisition of CoVest will be accretive to 2004 earnings by approximately $.06 per dilutive share, and the Company continues to seek, through cost-savings and other means, to increase the positive impact of the transaction in 2004.

In connection with the CoVest Acquisition, in November 2003, the Company, through a wholly owned trust subsidiary, issued $125,000,000 of trust preferred securities at 6.95% due on December 1, 2033. The year 2004 will be the first full year that the Company will record interest for that trust preferred issuance in its Consolidated Statements of Income. The interest recorded should amount to $9 million.

As a part of its growth strategy, the Company regularly evaluates potential acquisition candidates, searching for opportunities that both enhance earnings performance and leverage the effectiveness of its existing franchise.

Net Income and Performance Ratios

Net income totaled $92.8 million, or $1.97 per share in 2003, as compared to $90.2 million, or $1.86 per share in 2002. The return on average stockholders’ equity was 18.28% in 2003 as compared to 2002’s 18.82%, and the return on average assets for 2003 was 1.50% as compared to 1.53% for 2002. In 2003, the year over year decline in net interest income and higher operating expenses were more than offset by lower provisions for loan losses, higher levels of noninterest income and a decline in the effective tax rate.

Net Interest Income and Balance Sheet Restructuring

In 2003, the Company recorded $209.7 million in net interest income as compared to $218.8 million in 2002. Tax equivalent net interest margin in 2003 was 3.99%, down from 4.28% in 2002. Net interest income performance and strategies for 2003 largely reflected the challenging economic environment. For most of 2003, the continued, historically low level of interest rates created pressure on net interest margins as earning assets and cash flows repriced more quickly than interest-bearing liabilities.

During 2003, the Company’s decisions to reinvest cash flows and extend liabilities were directly influenced by its concerns as to the pace and timing of potential increases in interest rates. Over the last three quarters of 2003, the Company sold securities totaling $106.6 million for a net realized gain of $2.5 million; retired $310 million in borrowings with the Federal Home Loan Bank at a cost of $6.0 million; reinvested $372 million of security cash flows in shorter-term investments; and attracted $200 million in interest-bearing transactional deposits through promotional pricing. Although these activities served to decrease margin performance in 2003, the Company believes that these restructuring activities stabilized net interest margin and placed the Company in a relatively improved position for performing in a higher interest rate environment.

In fourth quarter of 2003, net interest margin was 4.01%, up from 3.90% in third quarter 2003, reversing the downward trend of the previous six quarters. Improved fourth quarter 2003 performance resulted from higher yields on mortgage-backed securities and the benefits realized from retiring and redeploying Federal Home Loan Bank borrowings at lower interest rates.

As of December 31, 2003, the Company’s after-tax unrealized security gains total $33.0 million as compared to $40.0 million at year-end 2002. Similar to its position at the start of 2003, management remains concerned about the impact of reinvesting cash flows into longer-term assets, which would improve short-term net interest income, but increasing its negative, longer-term exposure to rising interest rates. The current amount of unrealized gains existent in the Company’s securities portfolio enables the Company to mitigate this concern by realizing security gains to offset the negative short-term performance risk of investing cash flows in lower yielding, shorter-term assets in 2004.

Strategic Expansion

In 2003, the Company continued to expand its strategic footprint in the highly attractive suburban Chicago market. On December 31, 2003, the Company acquired approximately $530.8 million in loans and $465.7 million in deposits as a result of the CoVest Acquisition. In the second quarter of 2003, the Company opened its O’Hare Financial Center, a northwest Cook County branch, representing $102.9 million in deposits and $13.9 million of loans acquired for cash from The Northern Trust Company. Cash consideration was paid for both transactions, which under purchase accounting, created $82.9 million of intangible assets.

As a result of these transactions, the Company’s deposit presence in the highly valued, northwest Cook County market increased by $568.6 million, thus affording greater opportunities for revenue improvement through sales penetration.

Also during the fourth quarter of 2003, the Company sold two branches in Streator, Illinois, in rural LaSalle County, representing $69.1 million in deposits and $11.3 million in loans and resulting in a pre-tax gain on sale of $4.6 million.

Capital and Dividends

The Company continued to maintain a strong capital structure at December 31, 2003, with Tier 1 and Total risk-based asset ratios of 10.24% and 11.37%, respectively, exceeding the minimum “well-capitalized” levels for regulatory purposes of 10.0% and 6.0%, respectively. These ratios improved from 2002’s comparable ratios of 9.93% and 11.03%, respectively. In fourth quarter 2003, the Company’s wholly owned trust subsidiary, First Midwest Capital Trust I, issued $125 million in trust preferred securities. The issuance, which is treated as Tier 1 capital for regulatory purposes, matures in 2033 with semiannual interest payments due based upon a fixed coupon rate of 6.95%. The proceeds were primarily used to fund the CoVest Acquisition.

The ratio of tangible equity to tangible assets, which excludes both intangible assets and the trust preferred issuance in its calculation, fell to 6.22% at December 31, 2003 from 7.97% at December 31, 2002. This decline was caused by cash acquisitions of both CoVest Bancshares and the O’Hare Financial Center and the resulting $82.9 million in intangible assets.

In fourth quarter 2003, the Company increased its quarterly cash dividend to $.22 per share, bringing the total 2003 dividends paid to $.79 per share. Due, in part, to the CoVest Acquisition, the Company slowed the pace of its share repurchase program in 2003 to 842 thousand shares from 1.9 million shares in 2002. With 1.6 million shares remaining under its current repurchase authorization, the Company expects to continue to repurchase shares in 2004. The pace and timing of future share repurchases will be influenced by the expected rate of return on alternative capital investment opportunities.

Credit Quality

The Company’s loan loss provision for 2003 totaled $10.8 million, down $4.6 million from 2002. Net charge-offs totaled $9.6 million as compared to $15.2 million in 2002. All loan categories except 1-4 family real estate reflected improved levels. The ratio of the reserve for loan losses to total loans was 1.39% as of December 31, 2003, representing 245% of nonperforming assets and down as compared to a historical high of 383% as of December 31, 2002.

Loan Growth and Deposit Funding

Excluding the impact of the CoVest Acquisition, total loans increased in 2003 by 3.6% over 2002. Corporate lending continued to improve as commercial and industrial lending increased 11.6% in 2003 and real estate construction lending increased 18.9%. At the same time, 2003 real estate commercial loans increased only 1.6% over 2002, influenced by the soft office market and a higher level of prepayments. The prospects for new corporate lending are positive as the Company enters 2004.

Direct consumer lending increased 2.3%, due to continued strong growth in home equity line lending. Indirect consumer lending, primarily automobile financings acquired from dealerships in the Company’s primary markets, fell 14.2% in 2003 as compared to 2002, due to the Company’s emphasis on underwriting quality and pricing competition with auto manufacturers. With the expectation of higher rates and stable credit quality, consumer-lending trends should improve in 2004.

Noninterest Income and Expense

The Company’s efficiency ratio for 2003 was 48.3% as compared to 48.2% for 2002 and 49.7% for 2001. The “lower-is-better” efficiency ratio indicates the percentage of operating costs that is used to generate each dollar of net revenue. For example, during 2003, 48.3 cents were spent to generate each $1 of net revenue. Net revenue is defined as net interest income, on a tax equivalent basis, plus other income less securities gains and costs of extinguishing debt.

Noninterest income increased 9.1% over 2002, excluding security gains, costs of extinguishing debt and the gain from the sale of the Streator branches. Continued growth in service charge income, improving trust and investment product revenues and higher mortgage-related fee income helped offset declining, market sensitive earnings from corporate owned life insurance.

Noninterest expense increased $1.4 million or .9% over 2003. Higher compensation expense was offset by lower technology and related costs, intangible asset amortization, and remediation costs attributed to foreclosed real estate.

EARNINGS PERFORMANCE

Net Interest Income

The primary source of the Company’s traditional banking revenue is net interest income, which represents the difference between interest income and fees earned on loans, securities, and other earning assets and interest expense paid for the funding sources used to finance these assets. Changes in net interest income generally occur due to fluctuations in the volume of earning assets and paying liabilities and the rates earned and paid, respectively, on these assets and liabilities. Net interest margin represents net interest income as a percentage of total interest-earning assets. For purposes of this discussion, both net interest income and margin have been adjusted to a fully tax equivalent basis to more appropriately compare the returns on certain tax-exempt loans and securities to those on taxable earning assets. The accounting policies underlying the recognition of interest income on loans, securities, and other earning assets are presented in Notes 1, 6, and 12 of “Notes to Consolidated Financial Statements” commencing on pages 47, 57, and 62, respectively, of this Form 10-K.

The table below presents the effect of such adjustment.

Table 1

Effect of Tax Equivalent Adjustment

(Dollar amounts in thousands)


							% Change
	2003		2002		2001		2003-2002		2002-2001
Net interest income	$	209,754	$	218,754	$	204,380	(4.1	)	7.0
Tax equivalent adjustment		17,642		14,014		14,237	25.9		(1.6	)

Tax equivalent net interest income	$	227,396	$	232,768	$	218,617	(2.3	)	6.5

Net interest income on a tax equivalent basis decreased by 2.3% in 2003 following a 6.5% increase in 2002 over 2001. Tax equivalent net interest margin was 3.99% in 2003 as compared to 4.28% in 2002 and 4.10% in 2001. The 2003 decrease in net interest income is attributable to the reduction in tax equivalent interest earned on interest-earning assets of $35.0 million, exceeding the reduction in interest paid on interest-bearing liabilities of $29.6 million. Margin contraction resulted primarily from the repricing of earning assets in the low interest rate environment and the acceleration of cash flows due to refinance related repayments on mortgage-backed securities.

Table 2 summarizes the Company’s average interest-earning assets and funding sources over the last three years, as well as interest income and interest expense related to each category of assets and funding sources and the yield earned and rates paid on each. The table also shows the trend in net interest margin on a quarterly basis for 2003 and 2002, including the tax equivalent yields on earning assets and rates paid on interest-bearing liabilities. Table 3 analyzes the changes in interest income, interest expense, and net interest income that result from changes in the volumes of earning assets and funding sources, as well as fluctuations in interest rates.

Table 2

Net Interest Income and Margin Analysis

(Dollar amounts in thousands)


	2003						2002						2001
	Average Balance			Interest		Yield/ Rate (%)	Average Balance			Interest		Yield/ Rate (%)	Average Balance			Interest		Yield/ Rate (%)
Assets:
Interest-bearing deposits with banks	$	3,925		$	36	0.92	$	5,474		$	106	1.94	$	7,653		$	281	3.67
Securities:
Available for sale - taxable		1,466,925			56,077	3.82		1,493,194			78,301	5.24		1,413,181			92,015	6.51
Available for sale - nontaxable ⁽¹⁾		656,624			46,307	7.05		476,946			35,786	7.50		478,361			35,171	7.35
Held to maturity - taxable		13,378			831	6.21		13,759			952	6.92		1,926			106	5.50
Held to maturity - nontaxable ⁽¹⁾		61,157			4,010	6.56		54,900			4,003	7.29		66,459			5,466	8.22

Total securities		2,198,084			107,225	4.88		2,038,799			119,042	5.84		1,959,927			132,758	6.77
Federal funds sold and securities purchased under agreements to resell		9,515			114	1.20		3,587			69	1.92		2,361			97	4.11
Mortgages held for sale		16,932			932	5.50		10,404			642	6.17		9,607			640	6.66
Loans, net of unearned discount ⁽¹⁾⁽²⁾		3,465,877			200,402	5.78		3,382,508			223,819	6.62		3,349,890			265,679	7.93

Total interest-earning assets ⁽¹⁾⁽²⁾		5,694,333			308,709	5.42		5,440,772			343,678	6.32		5,329,438			399,455	7.50

Cash and due from banks		176,235						165,847						156,348
Reserve for loan losses		(49,182	)					(48,312	)					(46,498	)
Other assets		378,277						343,591						310,101

Total assets	$	6,199,663					$	5,901,898					$	5,749,389

Liabilities and Stockholders Equity:
Savings deposits	$	498,798			2,489	0.50	$	454,588			4,191	0.92	$	435,575			7,168	1.65
NOW accounts		813,993			7,089	0.87		723,634			10,291	1.42		501,800			8,574	1.71
Money market deposits		616,868			7,850	1.27		552,440			10,993	1.99		572,973			17,587	3.07
Time deposits		1,599,761			38,844	2.43		1,739,017			56,141	3.23		1,971,157			101,168	5.13
Borrowed funds		1,276,616			23,962	1.88		1,150,028			29,294	2.55		1,066,674			46,341	4.34
Subordinated debt - trust preferred securities		15,515			1,079	6.95		—			—	—		—			—	—

Total interest-bearing liabilities		4,821,551			81,313	1.69		4,619,707			110,910	2.40		4,548,179			180,838	3.98

Demand deposits		806,777						744,295						689,394
Other liabilities		63,755						58,788						52,584
Stockholders’ equity		507,580						479,108						459,232

Total liabilities and stockholders’ equity	$	6,199,663					$	5,901,898					$	5,749,389

Net interest income/margin ⁽¹⁾				$	227,396	3.99				$	232,768	4.28				$	218,617	4.10

Quarterly Net Interest Margin Trend


	2003								2002
	Fourth		Third		Second	First			Fourth		Third		Second		First
Yield on interest-earning assets	5.31	%	5.23	%	5.47%		5.69	%	5.95	%	6.28	%	6.50	%	6.55	%
Rates paid on interest-bearing liabilities	1.54	%	1.56	%	1.73%		1.92	%	2.19	%	2.37	%	2.43	%	2.62	%
Net interest margin ⁽¹⁾	4.01	%	3.90	%	4.01%		4.06	%	4.10	%	4.26	%	4.43	%	4.32	%

⁽¹⁾	Interest income and yields are presented on a tax equivalent basis, assuming a federal tax rate of 35%.

⁽²⁾	Loans on a nonaccrual basis for the recognition of interest income totaled $23.1 million, $12.5 million and $16.9 million, as of December 31, 2003, 2002, and 2001, respectively, and are included in loans, net of unearned discount, for purposes of this analysis.

Table 3

Changes in Net Interest Income Applicable to Volumes and Interest Rates

(Dollar amounts in thousands)


	Interest Income/Expense							Increase/(Decrease) due to: ⁽¹⁾
2003 as Compared to 2002	2003		2002		Increase (Decrease)			Volume			Rate			Total
Interest-bearing deposits with banks	$	36	$	106		(70	)	$	(24	)	$	(46	)	$	(70	)
Securities:
Available for sale - taxable		56,077		78,301		(22,224	)		(1,355	)		(20,869	)		(22,224	)
Available for sale - nontaxable ⁽²⁾		46,307		35,786		10,521			12,517			(1,996	)		10,521
Held to maturity - taxable		831		952		(121	)		(26	)		(95	)		(121	)
Held to maturity - nontaxable ⁽²⁾		4,010		4,003		7			60			(53	)		7

Total securities		107,225		119,042		(11,817	)		11,196			(23,013	)		(11,817	)
Federal funds sold and securities purchased under agreements to resell		114		69		45			58			(13	)		45
Mortgages held for sale		932		642		290			350			(60	)		290
Loans, net of unearned discount ⁽²⁾		200,402		223,819		(23,417	)		5,685			(29,102	)		(23,417	)

Total interest income ⁽²⁾		308,709		343,678		(34,969	)		17,265			(52,234	)		(34,969	)

Savings deposits		2,489		4,191		(1,702	)		458			(2,160	)		(1,702	)
NOW Accounts		7,089		10,291		(3,202	)		1,522			(4,724	)		(3,202	)
Money market deposits		7,850		10,993		(3,143	)		1,503			(4,646	)		(3,143	)
Time deposits		38,844		56,141		(17,297	)		(4,224	)		(13,073	)		(17,297	)
Borrowed funds		23,962		29,294		(5,332	)		3,836			(9,168	)		(5,332	)
Subordinated debt - trust preferred securities		1,079		—		1,079			1,079			—			1,079

Total interest expense		81,313		110,910		(29,597	)		4,174			(33,771	)		(29,597	)

Net interest income ⁽²⁾	$	227,396	$	232,768	$	(5,372	)	$	13,091		$	(18,463	)	$	(5,372	)


	Interest Income/Expense							Increase/(Decrease) due to: ⁽¹⁾
2002 as Compared to 2001	2002		2001		Increase (Decrease)			Volume			Rate			Total
Interest-bearing deposits with banks:	$	106	$	281	$	(175	)	$	(66	)	$	(109	)	$	(175	)
Securities:
Available for sale - taxable		78,301		92,015		(13,714	)		5,626			(19,340	)		(13,714	)
Available for sale - nontaxable ⁽²⁾		35,786		35,171		615			(104	)		719			615
Held to maturity - taxable		952		106		846			812			34			846
Held to maturity - nontaxable ⁽²⁾		4,003		5,466		(1,463	)		(886	)		(577	)		(1,463	)

Total securities		119,042		132,758		(13,716	)		5,448			(19,164	)		(13,716	)
Federal funds sold and securities purchased under agreements to resell		69		97		(28	)		700			(728	)		(28	)
Mortgages held for sale		642		640		2			18			(16	)		2
Loans, net of unearned discount ⁽²⁾		223,819		265,679		(41,860	)		2,614			(44,474	)		(41,860	)

Total interest income ⁽²⁾		343,678		399,455		(55,777	)		8,714			(64,491	)		(55,777	)

Savings deposits		4,191		7,168		(2,977	)		328			(3,305	)		(2,977	)
NOW accounts		10,291		8,574		1,717			2,767			(1,050	)		1,717
Money market deposits		10,993		17,587		(6,594	)		(610	)		(5,984	)		(6,594	)
Time deposits		56,141		101,168		(45,027	)		(10,849	)		(34,178	)		(45,027	)
Borrowed funds		29,294		46,341		(17,047	)		3,970			(21,017	)		(17,047	)

Total interest expense		110,910		180,838		(69,928	)		(4,394	)		(65,534	)		(69,928	)

Net interest income ⁽²⁾	$	232,768	$	218,617	$	14,151		$	13,108		$	1,043		$	14,151

⁽¹⁾	For purposes of this table, changes which are not due solely to volume changes or rate changes are allocated to such categories on the basis of the percentage relationship of each to the sum of the two.

⁽²⁾	Interest income is presented on a tax equivalent basis, assuming a federal tax rate of 35%.

Tax equivalent interest income was $308.7 million in 2003 as compared to $343.7 million and $399.5 million for 2002 and 2001, respectively. Interest-earning assets repricing in 2003 and 2002’s lower rate environment caused the yield on average earning assets to decline by 90 basis points to 5.42% in 2003 and 118 basis points to 6.32% in 2002 and accounted for $52.2 and $64.2 million, respectively, of the decrease in interest income compared to the preceding year.

Average interest-earning assets for 2003 increased by $253.6 million, or 4.7%, to $5,694.3 million as compared to $5,440.8 million in 2002. The growth in volume increased 2003’s interest income by $17.3 million. Average loans outstanding for 2003 increased by $83.4 million, or 2.5%, over 2002. Average securities increased by $159.3 million, or 7.8%, due to a greater level of investment in high-yielding, tax-exempt municipal securities. In 2002, average interest-earning assets increased by $111.3 million, or 2.1%, as compared to 2001.

Interest expense declined by $29.6 million to $81.3 million in 2003 as compared to $110.9 million in 2002 and $180.8 million in 2002. Interest-bearing liabilities repricing in the lower rate environment caused the rate paid on average interest-bearing deposits to fall by 71 basis points to 1.69% in 2003 and by 158 basis points to 2.40% in 2002. The lower interest rates paid on customer deposits and borrowed funds accounted for $33.8 million and $65.5 million, respectively, of the decrease in 2003 and 2002 interest expense as compared to the preceding year.

Average interest-bearing liabilities for 2003 increased by $201.8 million, or 4.4%, to $4,821.6 million. In 2002, average interest-bearing liabilities increased by $71.5 million, or 1.6%. The mix of average deposits in 2003 and 2002 saw a shift from high-cost time deposits to less expensive transactional deposits. This shift resulted in lower interest expense for 2003 and 2002 of $25.3 million and $52.9 million, respectively. As discussed in the subsequent section entitled “Funding and Liquidity Management” commencing on page 34 of this Form 10-K, the repositioning of deposit balances was influenced by pricing and promotional strategies as well as customer liquidity preferences given the prevailing interest rate and economic climate.

Tax equivalent net interest margin was 3.99% in 2003 as compared to 4.28% in 2002. Net interest margin declined during the second half of 2002 as a greater volume of earning assets began to reprice in the stable, low interest rate environment that existed for most of 2002 and throughout 2003. In part, the speed of decline was also accelerated by the impact of refinance related prepayments on mortgage-backed securities and certain measures taken by management to better insulate net interest income and margin from the potential of future rising interest rates. The section entitled “Qualitative and Quantitative Disclosures About Market Risk,” commencing on page 40, describes the measures taken during the year and discusses the techniques used to manage the volatility and other factors that affect net interest margin and net interest income.

Noninterest Income

Noninterest income, exclusive of security gains, (losses) on the early extinguishment of debt, and gains realized from branch divestitures, increased by 9.1% in 2003 from 2002, following a decrease of 2.3% in 2002. All major categories increased in 2003, except for corporate owned life insurance income. In 2002, the lower interest rate environment, as well as weakened debt and equity markets, negatively impacted market-sensitive revenue streams, such as trust revenue, corporate owned life insurance, and investment product fees derived from third party mutual funds and annuities. These declines were partly offset by greater revenues derived from increased service charges on deposit accounts.

The following table analyzes the components of noninterest income for the years 2001 through 2003.

Table 4

Noninterest Income Analysis

(Dollar amounts in thousands)


								% Change
	2003			2002		2001		2003-2002		2002-2001
Service charges on deposit accounts	$	27,924		$	25,362	$	24,148	10.1		5.0
Trust and investment management fees		10,810			10,309		10,445	4.9		(1.3	)
Other service charges, commissions, and fees		15,772			14,023		15,126	12.5		(7.3	)
Card-based fees		8,336			7,895		7,452	5.6		5.9
Corporate owned life insurance		5,059			6,728		8,190	(24.8	)	(17.9	)
Other income		4,671			2,214		2,715	111.0		(18.5	)

Subtotal		72,572			66,531		68,076	9.1		(2.3	)
Security gains, net		2,988			460		790	N/M		N/M
Net (losses) on early extinguishment of debt		(6,025	)		—		—	N/M		N/M
Net gain from branch divestitures		4,635			—		—	N/M		N/M

Total noninterest income	$	74,170		$	66,991	$	68,866	10.7		(2.7	)

N/M – Not meaningful.

Service charges on deposit accounts represent the largest component of noninterest income and consists of fees on both interest-bearing and noninterest-bearing deposit accounts and fees related to checks drawn upon retail customer accounts with insufficient funds (“NSF fees”). Service charges on deposit accounts include both hard dollar charges and charges assessed through account analysis, which are reduced by earnings credits indexed to a short-term U.S. Treasury yield and applicable to business deposit accounts only. Service charges on deposit accounts increased $2.6 million, or 10.1%, as compared to 2002. The $2.6 million increase in 2003 is primarily attributable to $2.1 million in higher revenue resulting from an increase in items drawn on customer accounts with insufficient funds. Further contributing to the increase are higher service charges on business checking accounts due to greater transaction volumes combined with lower earnings credit paid thereon. The increase of $1.2 million in 2002 over 2001 was attributable to an increase in NSF fees as well as increases in service charges on business checking accounts.

The Company provides trust and investment management services to its customers, acting as executor, administrator, trustee, agent, and in various other fiduciary capacities for client accounts. By merging its stand-alone trust company into the Bank in 2001, the Bank is able to generate a more seamless integrated delivery of trust, investment management, and fiduciary services to its more extensive commercial and personal client base. The amount of trust and investment management fees generally correlates to the amount of total assets under management, as well as conditions in the equity and debt markets, as fees on certain accounts are based on market value. Improved equity markets and strong sales efforts in 2003 helped increase the amount of assets under management. Assets under management and in nondiscretionary custody accounts totaled $2.2 billion at December 31, 2003, up 13.9% as compared to $1.9 billion at December 31, 2002. In 2002, the decline in fees was principally a result of a decline in the equity markets.

Increases in other service charges, commissions, and fees in 2003 were driven primarily by increases in commissions on mortgage loan sales and sales of annuity, insurance, and investment products. In 2002, declines resulted from decreases in market-sensitive official check commissions, insurance premiums earned, and alternative investment revenues, partly offset by an increase in commissions on mortgage loan originations. The design of the insurance product offering in 2002 resulted in fewer insurance premiums earned as compared to that in 2001.

Card-based fees consist of debit and credit card interchange fees charged for processing signature-based transactions as well as various fees charged on both customer and non-customer automated teller machine (“ATM”) and point-of-sale transactions processed through the ATM networks. Card-based fees increased $441 thousand in 2003 following a similar increase of $443 thousand in 2002 from 2001. The increase in both 2003 and 2002 is attributable to higher volumes in debit card and point-of-sale transactions and reflects accelerated growth in debit card acceptance as the payment of choice over checks and cash. As a result of the settlement in 2003 of the antitrust litigation brought against VISA USA, Inc, by various retail merchants, effective January 2004, merchants may refuse to accept signature-based debit card transactions, which may result in a reduction in interchange income for 2004. At this time, it is not possible to accurately predict the magnitude of this reduction since it will be driven by the individual practices and policies of the point-of-sale merchant. Management does not expect the impact of this reduction to be material.

The Company owns life insurance policies that insure the lives of certain Company officers. The Company is the beneficiary under these corporate owned life insurance (“COLI”) policies and uses the proceeds from the policies to offset the costs of certain employee benefits. At December 31, 2003 and 2002 the Company held COLI policies with a total value of $146.4 million and $141.4 million, respectively, with six national insurance carriers, all of whom were rated in the top ranking levels by insurance carrier rating agencies.

COLI income represents the increase in cash surrender value (“CSV”) of the policies, net of any premiums paid. The increase in CSV is primarily attributable to earnings credited to the policies, based on investments made by the insurers. Under applicable tax law, this increase in CSV is not subject to federal taxation. The tax equivalent yield on the COLI was 6.1%, 6.8%, and 9.4% at December 31, 2003, 2002, and 2001 respectively. The decline in yield since 2001 reflects a reduction in the earnings on investments made by the insurer and credited to the policies, which resulted primarily from shortening the maturity of those investments. As market rates increase, the flexibility exists to lengthen the maturity of the investments and improve performance.

Other income increased by 111.0% in 2003 following an 18.5% decrease in 2002 from 2001. The increase in 2003 was due to the receipt of $1.2 million from the settlement of litigation initiated by the Company in 1998 and $1.1 million in proceeds related to the liquidation of a former demutualized carrier of corporate owned life insurance. The reduction in other income in 2002 was due to certain nonrecurring activities in 2001.

Net security gains realized in 2003 totaled $3.0 million as compared to $.5 million in 2002, while 2003 also reflects $6.0 million in losses attributed to the early extinguishment of debt. These activities were part of the previously discussed balance sheet restructuring initiatives. Additionally, in 2003 the Company recognized a $4.6 million gain on the divesture of two branches in rural Streator, Illinois. Combined, these gains and losses increased noninterest income by $1.1 million.

Noninterest Expense

Noninterest expense totaled $149.5 million in 2003 as compared to $148.1 million in 2002 and $145.4 million in 2001. Table 5 analyzes the components of noninterest expense for the years 2001 through 2003.

Table 5

Noninterest Expense Analysis

(Dollar amounts in thousands)


										% Change
	2003			2002			2001			2003-2002		2002-2001
Compensation expense:
Salaries and wages	$	64,736		$	61,834		$	60,089		4.7		2.9
Retirement and other employee benefits		18,650			17,716			15,308		5.3		15.7
Temporary personnel expense		898			1,076			1,383		(16.5	)	(22.2	)

Total compensation expense		84,284			80,626			76,780		4.5		5.0
Net occupancy expense		14,508			14,298			14,353		1.5		(0.4	)
Equipment expense		7,979			7,769			7,644		2.7		1.6
Technology and related costs		8,913			9,796			10,186		(9.0	)	(3.8	)
Professional services		6,623			6,627			6,270		(0.1	)	5.7
Advertising and promotions		4,563			4,195			3,314		8.8		26.6
Other expenses		22,582			24,741			26,809		(8.7	)	(7.7	)

Total noninterest expense	$	149,452		$	148,052		$	145,356		0.9		1.9

Average full-time equivalent (FTE) employees.		1,540			1,525			1,531

Efficiency ratio		48.3	%		48.2	%		49.7	%

Salaries and wages increased by 4.7% in 2003 following an increase of 2.9% in 2001. The Company’s staffing levels on a full-time equivalent basis were fairly constant for the years 2001 through 2003, but are expected to increase in 2004 as a result of the CoVest Acquisition. The year over year increases in salaries and wages resulted from a combination of annual merit increases and a higher level of commissions associated with mortgage origination and sales activity. The 2003 increase in retirement and employee benefits was primarily due to increased pension costs resulting from changes made in actuarial

assumptions, while the 2002 increase resulted from higher health care and retirement plan contributions. Further discussion of the Company’s retirement plans can be found in Note 16 of “Notes to Consolidated Financial Statements” commencing on page 67 of this Form 10-K.

Net occupancy expense increased by 1.5% in 2003 from 2002 following a decrease of 0.4% in 2002 from 2001. The 2003 increase is associated with higher utilities, property taxes and rental expense. The 2002 decrease is primarily due to lower utilities expense and other seasonal costs resulting from favorable weather conditions in addition to the elimination of operating costs associated with three smaller branch office closings in the prior year. Equipment expense increased by 2.7% in 2003 following an increase of 1.6% in 2002. The 2003 increase in equipment expense is primarily related to higher software maintenance costs and technology related purchases, offset in part by a reduction in depreciation expense. The 2002 increase is attributable to higher depreciation costs on new assets placed in service and greater non-capitalized equipment expenditures.

Technology and related costs include expenses related to core bank data processing, trust, network communications, and other external processing systems. This category decreased by 9.0% in 2003 from 2002 and by 3.8% in 2002 from 2001. The 2003 decrease resulted from costs savings achieved from bringing “in-house” the backroom operation of the items processing function, effective August 2003. The 2002 decrease is principally due to cost savings achieved from a change in voice and data circuits provider.

Professional services remained flat in 2003 following an increase of 5.7% in 2002. Professional fees in 2003 included higher audit fees from expanded services and personnel recruitment costs as well as fees associated with obtaining credit ratings pursuant to the issuance of trust-preferred subordinated debt. The increase in 2002 was predominately due to consulting services related to enhancing retail target marketing strategies, as well as greater loan related costs associated with increased home equity loan volume, and was partially offset by lower personnel recruitment costs and cost savings in regulatory exam fees in connection with the Bank’s 2001 conversion from a national bank to an Illinois state chartered bank.

Advertising and promotions expense increased by 8.8% in 2003 following an increase of 26.6% in 2002. After recouping the expenses associated with the litigation referred to in the discussion of other noninterest income, the net proceeds of $750 thousand were contributed to First Midwest Charitable Foundation, a not-for-profit foundation concentrating on serving charitable organizations within the communities served by the Company. A decrease in promotions in 2003 from 2002 partially offset this contribution to result in a $368 thousand net increase for 2003. The 2002 increase resulted from a return to more normalized expense levels as compared to 2001, as well as costs associated with participation in community development projects.

Other expenses decreased 8.7% in 2003 as compared to 2002 after decreasing 7.7% in 2002 as compared to 2001. Other expenses include various categories such as freight and courier costs, merchant credit card expense, supplies and printing, and telephone expense incurred in the day-to-day operations of the Company. The decrease in 2003 resulted from reductions in other real estate owned expense, other intangibles amortization, and postage expense. The 2002 decrease is primarily reflective of the cost containment measures embraced throughout the Company and the elimination of $2.2 million in goodwill amortization due to the adoption of the Financial Accounting Standards Board Statement (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” which ceased the amortization of goodwill. Further discussion of the adoption of SFAS No. 142 and the impact on the Company is included in Notes 1 and 8 of “Notes to the Consolidated Financial Statements” commencing on pages 47 and 58, respectively, of this Form 10-K.

Income Taxes

The Company’s provision for income taxes includes both federal and state income tax expense. An analysis of the provision for income taxes and the effective income tax rates for the periods 2001 through 2003 are detailed in Table 6.

Table 6

Income Tax Expense Analysis

(Dollar amounts in thousands)


	2003			2002			2001
Income before income tax expense	$	123,667		$	122,283			$	108,806
Income tax expense	$	30,889		$	32,133			$	26,668
Effective income tax rate		25.0	%		26.3	%			24.5	%

The Company’s accounting policies underlying the recognition of income taxes in the Consolidated Statements of Condition and Income are included in Notes 1 and 15 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 66, respectively, of this Form 10-K. In accordance with such policies, the Company records income tax expense (benefits) in accordance with SFAS No. 109, “Accounting for Income Taxes”. Pursuant to SFAS No. 109, the Company recognizes deferred tax assets and liabilities based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Net deferred tax liabilities totaling $9.3 million at December 31, 2003 are recorded in other liabilities in the accompanying Consolidated Statements of Condition.

Under SFAS No. 109, a valuation allowance must be established for any deferred tax asset for which recovery or settlement is unlikely. In assessing whether a valuation allowance is required, the Company considers the ability to realize the asset through carryback to taxable income in prior years, the future reversal of existing taxable temporary differences, future taxable income, and the possible application of future tax planning strategies. Based on this assessment, the Company has determined that a valuation allowance is not required for any of the deferred tax assets it has recorded.

The changes in effective income tax rate reflected in the table above are primarily attributable to changes in tax-exempt income. The reduction in the 2003 effective tax rate was principally driven by greater tax-exempt income in 2003 as compared to 2002 and is a result of state and municipal securities purchases made during the year. The increase in the effective tax rate in 2002 as compared to 2001 was due to a reduction in income from state and municipal securities and from bank owned life insurance, which decreased as a result of maturities and declining interest rates.

FINANCIAL CONDITION

INVESTMENT PORTFOLIO MANAGEMENT

The investment portfolio is managed to maximize the return on invested funds within acceptable risk guidelines, to meet pledging and liquidity requirements, and to adjust balance sheet interest rate sensitivity to insulate net interest income against the impact of changes in interest rates. The following table sets forth the year-end carrying value of securities for the last three years.

Table 7

Composition of Investment Portfolio

(Dollar amounts in thousands)


	As of December 31,
	2003			2002			2001
	Amount		% of Total	Amount		% of Total	Amount		% of Total
By Type:
U.S. Treasury	$	1,376	0.1	$	1,705	0.1	$	2,211	0.1
U.S. Agency		219,580	9.5		201,883	9.6		70,521	3.8
Collateralized Mortgage Obligations		902,221	39.3		867,080	41.5		806,414	43.3
Other Mortgage-Backed Securities		261,462	11.4		282,660	13.5		355,325	19.1
State and Municipal		825,674	35.9		641,529	30.7		542,626	29.2
Other		86,783	3.8		96,742	4.6		83,737	4.5

Total	$	2,297,096	100.0	$	2,091,599	100.0	$	1,860,834	100.0

By Classification:
Available for sale	$	2,229,650	97.1	$	2,021,767	96.7	$	1,795,250	96.5
Held to maturity		67,446	2.9		69,832	3.3		65,584	3.5

Total	$	2,297,096	100.0	$	2,091,599	100.0	$	1,860,834	100.0

The maturity distribution and average yields, on a tax equivalent basis, of the securities available for sale portfolio at December 31, 2003 are presented in Table 8.

Table 8

Securities Available for Sale

Maturity Distribution and Portfolio Yields

(Dollar amounts in thousands)


	As of December 31, 2003
	U.S. Agency			Collateralized Mortgage Obligations ⁽¹⁾			Other Mortgage- Backed Securities ⁽¹⁾			State and Municipal ⁽²⁾			Other			Total
One year or less:
Market Value	$	201,438		$	236,235		$	54,547		$	8,015		$	74,235		$	574,470
Amortized Cost		201,440			236,177			53,321			7,592			78,814			577,344
Yield (%)		1.64	%		3.86	%		6.23	%		6.67	%		4.02	%		3.36	%
One year to five years:
Market Value		17,966			506,721			122,889			294,749			469			942,794
Amortized Cost		17,966			506,596			120,127			274,148			469			919,306
Yield (%)		3.17	%		4.01	%		6.01	%		7.33	%		6.00	%		5.25	%
Five years to ten years:
Market Value		—			134,788			49,204			277,169			6,032			467,193
Amortized Cost		—			134,755			48,098			257,753			6,518			447,124
Yield (%)		—			4.05	%		5.68	%		6.79	%		6.00	%		5.83	%
After ten years:
Market Value		—			24,477			34,822			179,847			6,047			245,193
Amortized Cost		—			24,470			34,040			167,248			6,047			231,805
Yield (%)		—			3.76	%		5.58	%		6.51	%		7.25	%		6.10	%

Total:
Market Value	$	219,404		$	902,221		$	261,462		$	759,780		$	86,783		$	2,229,650
Amortized Cost	$	219,406		$	901,998		$	255,586		$	706,741		$	91,848		$	2,175,579
Yield (%)		1.77	%		3.97	%		5.94	%		6.93	%		4.38	%		4.96	%

⁽¹⁾	The maturity distributions of mortgaged-backed securities are based upon estimated future cash flows and prepayments. Actual maturities of the securities may differ from that reflected in the table.

⁽²⁾	Yields on state and municipal securities are reflected on a tax equivalent basis, assuming a federal tax rate of 35%.

Securities that the Company believes could be sold prior to maturity in order to manage interest rate, prepayment, or liquidity risk are classified as securities available for sale and are carried at fair market value. Unrealized gains and losses on this portfolio segment are reported on an after-tax basis as a separate component of stockholders’ equity in Accumulated Other Comprehensive Income.

At December 31, 2003 and 2002, the after-tax unrealized net gain on the securities available for sale portfolio totaled $33.0 million and $40.0 million, respectively. The unrealized net appreciation or depreciation on this portfolio represents the difference, net of taxes, between the aggregate cost and market value of the portfolio. This balance sheet component will fluctuate as current market interest rates and conditions change, thereby affecting the aggregate market value of the portfolio.

At December 31, 2003, the available for sale securities portfolio totaled $2,229.7 million compared with $2,021.8 million at December 31, 2002. Approximately 52% of the portfolio is comprised of mortgage-backed securities as compared to 58% and 66%, respectively, at year-end 2002 and 2001. The effective duration on the entire portfolio, used in this context to represent the estimated percentage change in the market value of the securities portfolio given a 100 basis point change up or down in the level of interest rates, increased from 1.28% as of year-end 2002 to 2.75% in 2003 as refinance-related cash flows stemming from mortgage rates at 40-year lows were reinvested. In 2002, the effective duration of 1.28% reflected the anticipation of accelerated prepayments speeds in 2003 given the historically low level of mortgage rates. As a result, 2003’s reinvestment of actual cash flows was made, in comparison to 2002, into longer-term investments and had the effect of increasing the effective duration in 2003. In addition, the increase in mortgage rates in fourth quarter 2003 had the effect of creating the expectation for slower prepayment speeds in 2004 and further increasing portfolio duration.

The slightly higher level of interest rates at the end of 2003 as compared with 2002 decreased the pre-tax unrealized gain (representing the difference between the total portfolio amortized cost and market value) in the securities available for sale portfolio at December 31 from $65.6 million at year-end 2002 to $54.1 million at year-end 2003. The level of unrealized gains gives the Company the flexibility to either extend portfolio duration and receive higher yields or shorten duration and realize security gains as market opportunities present themselves in 2004.

The maturity distribution and average yields, on a tax equivalent basis, of the securities held to maturity portfolio as of December 31, 2003 are presented in Table 9.

Table 9

Securities Held to Maturity

Maturity Distribution and Portfolio Yields

(Dollar amounts in thousands)


	As of December 31, 2003
	U.S. Treasury			U.S. Agency			State and Municipal ⁽¹⁾			Other		Total
One year or less:
Market Value	$	1,027		$	—		$	21,227		$	—	$	22,254
Amortized Cost		1,026			—			21,205			—		22,231
Yield (%)		1.10	%		—			4.80	%		—		4.63	%
One year to five years:
Market Value		350			176			23,483			—		24,009
Amortized Cost		350			176			23,459			—		23,985
Yield (%)		1.84	%		1.36	%		6.93	%		—		6.81	%
Five years to ten years:
Market Value		—			—			5,763			—		5,763
Amortized Cost		—			—			5,757			—		5,757
Yield (%)		—			—			9.79	%		—		9.79	%
After ten years:
Market Value		—			—			15,488			—		15,488
Amortized Cost		—			—			15,473			—		15,473
Yield (%)		—			—			3.92	%		—		3.92	%

Total:
Market Value	$	1,377		$	176		$	65,961		$	—	$	67,514
Amortized Cost	$	1,376		$	176		$	65,894		$	—	$	67,446
Yield (%)		1.29	%		1.36	%		5.79	%		—		5.68	%

⁽¹⁾	Yields on state and municipal securities are reflected on a tax equivalent basis, assuming a federal tax rate of 35%.

Securities that the Company has the ability and intent to hold until maturity are classified as securities held to maturity and are accounted for using historical cost, adjusted for amortization of premium and accretion of discount. The Company has no trading account securities.

Securities Gains, Net - Net gains on sales of securities increased in 2003 to $3.0 million as compared to $0.5 million in 2002 and $0.8 million in 2001. The gains in 2003 occurred primarily as part of management’s previously discussed balance sheet restructuring initiatives. The gains in 2002 resulted primarily from the sale of short-maturity securities in which the Company felt the gains fully discounted any future interest rate movements.

LOAN PORTFOLIO AND CREDIT QUALITY

Loans are the Company’s principal source of revenue. The Company’s revenue from lending activities is primarily represented by interest income, but it also includes loan origination and commitment fees (net of related costs) and earned discounts on consumer loans. The accounting policies underlying recording of loans in the Consolidated Statements of Condition and the recognition and/or deferral of interest income and fees (net of costs) arising from lending activities are included in Notes 1 and 5 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 56, respectively, of this Form 10-K.

Portfolio Composition

The Company’s historical strategy has been to distribute its loan portfolio approximately evenly among the categories of commercial and industrial (including agricultural), consumer (including real estate 1-4 family) and real estate (both commercial and construction). The Company also looks to maintain a diversified portfolio of corporate loans (commercial and industrial, agricultural, commercial real estate and real estate construction) that minimizes exposure to any particular industry segment. This type of diversification spreads the risk and reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.

It is the Company’s policy to concentrate its lending activities in the geographic areas it serves, generally lending to consumers and small to mid-sized businesses from whom deposits are gathered in the same market areas, with the primary concentration being the Chicago suburban banking market. Although the Company’s legal lending limit approximates $104.1 million, the largest loan outstanding to one borrower at year-end 2003 was approximately $19.7 million, with only 15 borrowers having aggregate loans in excess of $10 million. In terms of both loans made and commitments to extend credit, the Company’s largest exposure to a single borrower is $30.0 million and to a group of related companies comprising a single relationship is $38.7 million. The Company had 18 credits in the portfolio where total commitments to extend credit to a single borrower relationship exceed $20 million.

The following table summarizes the total loans outstanding, and their percent of the loan portfolio, as of the end of the last five years.

Table 10

Loan Portfolio

(Dollar amounts in thousands)


	As of December 31,
	2003			% of Total	2002			% of Total	2001			% of Total	2000			% of Total	1999			% of Total
Commercial and industrial	$	1,052,117		25.9	$	897,845		26.4	$	827,281		24.5	$	817,208		25.3	$	780,500		26.3
Agricultural		94,983		2.3		91,381		2.7		87,188		2.6		67,736		2.1		56,852		1.9
Real estate - commercial		1,393,420		34.3		1,019,989		29.9		998,857		29.6		900,781		27.9		834,852		28.2
Real estate - construction		453,429		11.2		344,509		10.1		314,993		9.4		272,647		8.4		189,018		6.4

Subtotal –corporate loans		2,993,949		73.7		2,353,724		69.1		2,228,319		66.1		2,058,372		63.7		1,861,222		62.8
Consumer		895,588		22.1		914,820		26.8		947,246		28.1		924,189		28.6		847,997		28.6
Real estate – 1-4 family		170,245		4.2		138,302		4.1		196,741		5.8		250,635		7.7		253,268		8.6

Total	$	4,059,782		100.0	$	3,406,846		100.0	$	3,372,306		100.0	$	3,233,196		100.0	$	2,962,487		100.0

Growth vs. prior year–end		19.2	%			1.0	%			4.3	%			9.1	%			11.2	%

Total loans for the year ended December 31, 2003 were 19.2% higher than for 2002 primarily due to loans acquired as part of the CoVest Acquisition. Excluding the $530.8 million in loans the Company acquired from CoVest, total loans increased approximately 3.6% over 2002, with all loan categories experiencing growth except for 1-4 family real estate and indirect consumer lending. Total loans in 2002 grew 1.0% over 2001, with all loan categories experiencing growth except 1-4 family real estate and consumer lending. Excluding 1-4 family real estate loans, total loans at year-end 2001 grew by 6.5%.

Commercial and industrial loans are diversified among industries and include loans to manufacturers, wholesalers, retailers, and service businesses. Consistent with the Company’s emphasis on relationship banking, most of these credits represent core, multi-relationship customers of the Company who usually also maintain deposit relationships and use other Company banking services, such as cash management. Table 11 on page 28 of this Form 10-K provides a breakout of the Company’s corporate loan portfolio, including commercial and industrial loans, by industry segment and illustrates the diversity and granularity of the portfolio. Table 12 on page 28 of this Form 10-K summarizes the portfolio’s maturities and interest rate sensitivity.

Commercial and industrial loans totaled $1,052.1 million at December 31, 2003, as compared to $897.8 million at December 31, 2002 for an increase of $154.3 million, or 17.2%. Although the CoVest Acquisition contributed $50.3 million, or 5.6%, of the current year increase in commercial loans, the 2003 increase is principally due to a combination of loans made to new customers as well as increased outstandings to existing customers drawing on established lines of credit. As illustrated in Table 10, above, commercial and industrial loans have increased every year since 1999. This favorable trend reflects the Company’s interdisciplinary approach to commercial lending, as well as the Company’s tenure in its markets and in-depth client knowledge. As a result of improving economic conditions, the Company has experienced, and anticipates continuing, expansion in the markets it serves, particularly in the north and southeast Chicago suburban markets. Current commercial

pipelines are positive, and the Company expects that a continued expansion would generate a demand for additional loan growth.

Real estate commercial loans, which increased by 36.6%, or $373.4 million, in 2003, represent income-producing commercial property loans, multi-unit residential mortgages, and commercial real estate mortgages. Of the $373.4 million increase, $356.7 million represents loans acquired from CoVest. Of the commercial real estate loans acquired from CoVest, 77.2% represent multi-family loans made to real estate companies and individual investors to finance or refinance apartment buildings. CoVest had developed a strong niche in this type of lending emphasizing adjustable rate yields and strong credit characteristics. These loans are concentrated in the metropolitan and north suburban Chicago area and typically represent apartment buildings ranging in size from five units up to twenty-four units, although larger projects may range up to 100 units or more. The Company feels that this type of lending helps diversify its existent, strong commercial and multifamily development real estate platform and affords a continuing opportunity for growth. Further analysis of the consumer nature of this portfolio may see it reclassified to the retail category for policy purposes.

Excluding the amount of CoVest loans, real estate commercial loans increased by 1.6% in 2003, as compared to 2003, reflecting the impact of higher prepayments and the 2003’s softer commercial real estate market. Growth in this category slowed following larger increases in this category during 2001 and 2000, which, at that time, were reflective of the continuing significant demand for commercial properties in the suburban Chicago market.

Real estate construction loans grew by $108.9 million, or 31.6%, in 2003. These are primarily single-family and multi-family residential and non-residential projects located in the Company’s primary markets. Real estate construction loans are a profitable line of lending for the Company due to the higher level of interest rates and fees earned on such loans as compared to other loan categories and the favorable loss experience on these loans. Approximately 50% of the 2003 increase was due to the acquisition of CoVest. In addition, the loan growth experienced in 2002 and 2003 primarily resulted from continued strong demand for single-family and 1-4 family residential construction in the Chicago banking market.

The strength of the suburban Chicago real estate market over the past several years enabled real estate commercial and construction lending to grow to over one-third of the Company’s total loans. Real estate commercial and construction lending has been an area of specialty for the Company since its formation in 1983. The combination of seasoned, long-time borrowers, experienced senior lending officers, management’s focus on market fundamentals, and a stringent underwriting process has given the Company a competitive market advantage. These factors and a balanced exposure to any particular industry segment have reduced the Company’s exposure to loss through periods of economic downturn. The Company’s loan loss experience for these two categories of lending is detailed in Table 13 on page 31 of this Form 10-K.

Consumer loans decreased $19.2 million, or 2.1%, in 2003. These loans consist of loans made directly to individuals for various personal purposes, as well as indirect installment loans represented mainly by automobile financings acquired from dealerships in the Company’s primary markets. The decline in indirect lending has been significantly influenced by lower lending volumes, accelerated prepayments, and pricing competition resulting from zero percent financing promotions offered by automobile manufacturers. This category also includes direct home equity loans and other direct installment loans. The mix of credits within this lending category has shifted. Since the start of 2002, promotional sales have increased home equity line balances by approximately $66.9 million, or 24.2%, in 2003 and $66.2 million, or 31.6%, in 2002 and effectively offset declines in indirect consumer loans.

Real estate 1-4 family loans are comprised predominately of owner occupied residential properties. The Company offers mortgage products through its branch network, but all administrative activities, including servicing, are outsourced to a third party vendor. The Company earns commissions from the origination of mortgage loans, which are then either retained for portfolio or sold in the secondary market by the outsourcing vendor. Real estate 1-4 family loans totaled $170.2 million as of December 31, 2003 and increased by 23.1% over 2002 following a decrease of 29.7% in 2002 from 2001, due primarily to the acquisition of $52.3 million in loans from CoVest. Excluding these loans, real estate 1-4 family decreased by 14.7% compared to 2002 due to the accelerated level of refinancing. Since 2001, the Company has elected not to retain a majority of its mortgage loan origination production in its portfolio, thereby accounting for the approximate 29.7% decrease in 2002 and the 21.5% decrease in 2001.

Distribution of Corporate Loans By Industry

Table 11 summarizes the Company’s ten largest industry segments for the corporate loan portfolio as of December 31, 2003 and 2002. Portfolio analysis by industry segment provides useful insight as to credit exposure to any particular industry or market segment. The effectiveness of such analysis, however, is limited to the extent that classification by segment requires that allocation of a customer’s aggregate loans outstanding be based upon the nature of the borrower’s ongoing business activity as opposed to the purpose of the collateral underlying an individual loan. To the extent that a borrower’s underlying

business activity changes, classification differences will arise. As a result, the Company periodically reassesses and adjusts industry classifications.

Table 11

Corporate Loan Portfolio by Industry Segment ⁽¹⁾

(Dollar amounts in thousands)


	As of December 31,
	2003			2002
	Amount		% of Total	Amount		% of Total
Lessors of commercial real estate	$	458,668	15.3	$	431,844	18.4
Lessors of multifamily residential		325,798	10.9		61,664	2.6
Manufacturing trade		213,627	7.1		179,634	7.6
Residential building construction		190,915	6.4		115,995	4.9
Retailer trade		163,950	5.5		145,157	6.2
Wholesaler trade		163,499	5.4		149,046	6.3
Land subdivision and land development		140,407	4.7		147,824	6.3
Heavy construction and trade contractors		138,410	4.6		131,517	5.6
Agriculture, forestry, fishing, and hunting		137,239	4.6		143,517	6.1
Nonresidential building construction		115,622	3.9		118,750	5.0

Subtotal		2,048,135	68.4		1,624,948	69.0
All other segments		945,814	31.6		728,776	31.0

Total	$	2,993,949	100.0	$	2,353,724	100.0

⁽¹⁾	Classified pursuant to the North American Industrial Classification System standard industry descriptions.

The Company believes its loan portfolio is diversified across industries and market segments. As of December 31, 2003, “Lessors of Commercial Real Estate” totaled $458.7 million, or 15.3%, of total corporate loans and was the largest industry segment. This segment increased by $26.8 million, or 6.2%, from 2002. These segments are diversified among industries and by the tenants who are both owner-occupiers of the real estate or third party lessees. Consequently, industry risk is further diversified within this segment. In addition, 2003 reflects the increase of loans made to “Lessors of Multi-family Residential Real Estate” primarily due to the acquisition of CoVest

Maturity and Interest Rate Sensitivity of Corporate Loans

Table 12 summarizes the maturity distribution of the Company’s corporate loan portfolio as of December 31, 2003 as well as the interest rate sensitivity of loans in these categories that have maturities in excess of one year.

Table 12

Maturities and Sensitivities of Corporate Loans to Changes in Interest Rates

(Dollar amounts in thousands)


	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years		Total
Commercial, industrial, and agricultural	$	706,559	$	409,593	$	30,948	$	1,147,100
Real estate - commercial		289,071		893,820		210,529		1,393,420
Real estate - construction		310,981		137,187		5,261		453,429

Total	$	1,306,611	$	1,440,600	$	246,738	$	2,993,949

Loans maturing after one year:
Predetermined (fixed) interest rates			$	843,852	$	64,128
Floating interest rates				596,748		182,610

Total			$	1,440,600	$	246,738

Credit Quality Management and Reserve for Loan Losses

The Company’s loan portfolios are subject to varying degrees of credit risk. Credit risk is mitigated through portfolio diversification, which limits exposure to any single industry or customer. Similarly, credit risk is also addressed through the establishment of a thorough system of internal controls, including standard lending and credit policies, underwriting criteria and collateral safeguards. The Company monitors and implements its formal credit policies and procedures and continues to evaluate the quality, trends, collectibility, and collateral protection within the loan portfolio. The Company’s policy and procedures are reviewed and modified on an ongoing basis in order manage risk as conditions change and new credit products are offered.

The Company’s credit administration policies include a comprehensive loan rating system. The internal loan review staff annually reviews at least 70% of all corporate loans and commitments and all new loans and commitments in excess of $1 million. Account officers are vested with the responsibility of monitoring their customer relationships and act as the first line of defense in determining changes in the loan ratings on credits for which they are responsible. The Company believes that any significant change in the overall quality of the loan portfolio will be reflected by these loan ratings within this monitoring system.

The Company’s senior managers actively review those loans that require some form of remediation. Those loans are reviewed at regular quarterly meetings between the credit administration staff and the account officers, and action plans are developed to either remedy any emerging problem loans or develop a specific plan for removing such loans from the portfolio. Such periodic reviews are then escalated for review by senior executive officers, including the Chief Executive Officer. During times of economic duress, the Company has increased the frequency of these meetings.

The Company maintains a reserve for loan losses to absorb probable losses inherent in the loan portfolio. The reserve for loan losses consists of three components: (i) specific reserves established for any impaired commercial, real estate commercial, and real estate construction loan for which the recorded investment in the loan exceeds the measured value of the loan; (ii) reserves based on historical loan loss experience; and (iii) general reserves maintained to cover uncertainties that affect management’s estimate of probable losses. Management evaluates the sufficiency of the reserve for loan losses based upon the combined total of the specific, historical loss and general components.

The accounting policies underlying the establishment and maintenance of the reserve for loan losses through provisions charged to operating expense are discussed in Notes 1 and 6 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 57, respectively, of this Form 10-K.

Table 13 shows the allocation of the reserve for loan losses by loan category, as well as charge-off and recovery information for the last 5 years. Table 14 offers expanded detail reflecting the allocation of the reserve for loan losses and as a percentage of total loans by category. During 2003, the Company expanded its reserve assessment to fully allocate its general reserve component to specific pools or groups of loans, thereby better linking its assessment of the underlying risks attributed to each loan category. To facilitate comparison, 2002’s allocation by category has been restated to reflect this change in methodology. Data presented for periods prior to 2001 was not restated due to the absence of sufficient, comparable data.

As of December 31, 2003, the reserve for loan losses totaled $56.4 million as compared to $47.9 million and $47.8 million at the end of 2002 and 2001, respectively. The ratio of reserve for loan losses to total loans at year-end 2003 was 1.39%, down from 1.41% at year-end 2002 and 1.42% at the end of 2001.

The 2003 increase in overall reserve is due to the purchase of $7.2 million of loan loss reserves and $531 million in loans from CoVest on December 31, 2003. As detailed in Table 14, the acquired loan loss reserves represented 1.36% of the loans purchased. As a part of its due diligence process, the Company undertook a thorough review and assessment of CoVest’s written underwriting practices, loan origination procedures, delinquent and problem loan classification, and remediation process. In addition, CoVest’s methodology, risk assessment practices, and the underlying components used in establishing the sufficiency of its reserve for loan losses were reviewed; and CoVest’s outsourced loan review function and the most recent regulatory examination findings were assessed. Based upon the results of this review, the Company believes the level of the acquired reserves to be adequately valued.

The provision for loan losses decreased in 2003 to $10.8 million compared to $15.4 million in 2002 and $19.1 million in 2001. The 2003 provision for loan losses exceeded the year’s net charge-offs by $1.3 million. Total loans charged off, net of recoveries, were $9.6 million, or 0.28% of average loans, in 2003 and $15.2 million, or 0.45% of average loans, in 2002.

Gross charge-offs declined in 2003 to $12.1 million from $18.2 million in 2002 and $19.3 million in 2001. The lower level of charge-offs in 2003 primarily benefited from a tightening of the underwriting standards for the indirect lending portfolio in

2001 as the economy weakened. In addition, the level of corporate charge-offs in 2002 and 2001 were elevated as the Company recognized the weakening economy and adopted an aggressive problem loan identification and charge-off strategy.

In 2003, allocation of the Company’s reserve to the commercial and industrial, real estate commercial, and real estate construction categories increased as compared to 2002, due in large part to comparatively higher exposures to single borrowers and portfolio growth amid concerns relative to the continuing level of economic weakness. The growth in the commercial reserve allocation was also caused by an increase in specific reserves relating to the higher level of impaired loans. Further, the increased reserve allocation to the real estate commercial and construction categories reflected the higher incremental reserve allocation for the loan portfolio acquired from CoVest. These category increases were partly offset by improved delinquency and charge-off trends in all corporate lending areas. Reserve allocations to the consumer loan portfolio decreased in relation to 2002 due to improved delinquency and charge-off trends.

Table 13

Reserve for Loan Losses and

Summary of Loan Loss Experience

(Dollar amounts in thousands)


	Years ended December 31,
	2003			2002			2001			2000			1999
Change in reserve for loan losses:
Balance at beginning of year	$	47,929		$	47,745		$	45,093		$	42,645		$	43,290
Loans charged-off		(12,105	)		(18,177	)		(19,330	)		(9,149	)		(9,141	)
Recoveries on loans previously charged-off		2,555			2,951			2,898			2,503			2,736

Net loans charged-off		(9,550	)		(15,226	)		(16,432	)		(6,646	)		(6,405	)
Provisions charged to operating expense		10,805			15,410			19,084			9,094			5,760
Reserve of acquired bank		7,220			—			—			—			—

Balance at end of year	$	56,404		$	47,929		$	47,745		$	45,093		$	42,645

Allocation of reserve for loan losses by loan category at December 31 ⁽¹⁾ :
Commercial and industrial	$	18,526		$	14,012		$	10,886		$	10,193		$	8,633
Agricultural		1,297			1,503			1,674			2,338			2,351
Real estate – commercial		15,704			12,390			2,600			4,957			5,332
Real estate – construction		6,286			4,722			1,459			1,472			841
Consumer		13,959			14,896			13,399			10,238			8,542
Real estate - 1-4 family		632			406			155			1,204			1,151
Other unallocated		—			—			17,572			14,691			15,795

Total	$	56,404		$	47,929		$	47,745		$	45,093		$	42,645

Reserve as a percent of loans at year-end		1.39	%		1.41	%		1.42	%		1.39	%		1.44	%

Loans charged-off:
Commercial and industrial	$	(3,941	)	$	(4,967	)	$	(4,620	)	$	(2,560	)	$	(2,147	)
Agricultural		(5	)		(1,283	)		(104	)		—			(54	)
Real estate – commercial		(317	)		(591	)		(3,119	)		(159	)		(513	)
Real estate – construction		(750	)		(1,123	)		—			—			—
Consumer		(6,954	)		(10,126	)		(11,363	)		(6,253	)		(6,358	)
Real estate - 1-4 family		(138	)		(87	)		(124	)		(177	)		(69	)

Total	$	(12,105	)	$	(18,177	)	$	(19,330	)	$	(9,149	)	$	(9,141	)

Recoveries on loans previously charged-off:
Commercial and industrial	$	547		$	339		$	363		$	531		$	568
Agricultural		1			22			1			—			14
Real estate – commercial		93			21			—			15			16
Real estate – construction		506			—			—			—			—
Consumer		1,408			2,569			2,534			1,957			2,137
Real estate - 1-4 family		—			—			—			—			1

Total	$	2,555		$	2,951		$	2,898		$	2,503		$	2,736

Net loans charged-off:
Commercial and industrial	$	(3,394	)	$	(4,628	)	$	(4,257	)	$	(2,029	)	$	(1,579	)
Agricultural		(4	)		(1,261	)		(103	)		—			(40	)
Real estate – commercial		(224	)		(570	)		(3,119	)		(144	)		(497	)
Real estate – construction		(244	)		(1,123	)		—			—			—
Consumer		(5,546	)		(7,557	)		(8,829	)		(4,296	)		(4,221	)
Real estate - 1-4 family		(138	)		(87	)		(124	)		(177	)		(68	)

Total	$	(9,550	)	$	(15,226	)	$	(16,432	)	$	(6,646	)	$	(6,405	)

Ratio of net loans charged-off to average loans outstanding for the period		0.28	%		0.45	%		0.49	%		0.21	%		0.23	%

⁽¹⁾

In 2003, the reserve assessment methodology was altered to fully allocate all components of the loan loss reserve by category with 2002 data being restated to reflect this change. For the years 1999 to 2001, the “other” component of the reserve represented that portion of the reserve based upon general factors, including recent net charge-off experience as well as economic and business conditions, but not allocated by category.

Table 14

Reserve for Loan Loss Allocation by Category

(Dollar amounts in thousands)


	Years ended December 31 ⁽¹⁾
	2003
	First Midwest Bank			Acquired			Total			2002
Commercial and industrial	$	17,383		$	1,143		$	18,526		$	14,012
Agricultural		1,297			—			1,297			1,503
Real estate – commercial		11,382			4,322			15,704			12,390
Real estate – construction		5,048			1,238			6,286			4,722
Consumer		13,606			353			13,959			14,896
Real estate - 1-4 family		468			164			632			406

Total	$	49,184		$	7,220		$	56,404		$	47,929

Total loans at year-end	$	3,528,973		$	530,809		$	4,059,782		$	3,406,846

*Reserve as a percent of total loans*
Commercial and industrial		0.49	%		0.22	%		0.46	%		0.41	%
Agricultural		0.04	%		0.00	%		0.03	%		0.04	%
Real estate - commercial		0.32	%		0.81	%		0.39	%		0.36	%
Real estate - construction		0.14	%		0.23	%		0.15	%		0.14	%
Consumer		0.39	%		0.07	%		0.34	%		0.44	%
Real estate - 1-4 family		0.01	%		0.03	%		0.02	%		0.01	%

Total		1.39	%		1.36	%		1.39	%		1.41	%

⁽¹⁾	In 2003, the reserve assessment methodology was altered to fully allocate all components of the loan loss reserve by category with 2002 data being restated to reflect this change.

Nonperforming Assets

Nonperforming assets includes: (1) loans for which the accrual of interest has been discontinued; (2) loans for which the terms have been renegotiated to provide for a reduction or deferral of interest and principal due to a weakening of the borrower’s financial condition; and (3) real estate that has been acquired primarily through foreclosure and is awaiting disposition. For a detailed discussion on the Company’s policy on accrual of interest on loans see Note 1 of “Notes to Consolidated Financial Statements” commencing on page 47 of this Form 10-K.

Loans past due 90 days and still accruing interest are not included in nonperforming assets and continue to accrue interest because they are adequately secured by collateral and/or are in the process of collection and are reasonably expected to result in repayment or restoration to current status.

The following table summarizes nonperforming assets and past due loans for the past five years as well as certain information relating to interest income on nonaccrual loans outstanding during 2003.

Table 15

Nonperforming Assets and Past Due Loans

(Dollar amounts in thousands)


	Years ended December 31,
	2003			2002			2001			2000			1999
Nonaccrual loans:
Commercial and industrial	$	5,817		$	3,986		$	8,181		$	6,407		$	6,456
Agricultural		169			241			1,420			33			940
Real estate commercial		1,823			4,096			1,737			7,694			8,934
Real estate construction		4,331			1,000			1,903			397			187
Consumer		1,516			1,803			1,796			2,043			748
Real estate 1-4 family		2,274			1,399			1,810			3,275			3,013

Total nonaccrual loans		15,930			12,525			16,847			19,849			20,278
Restructured loans		7,137			—			—			—			—

Total nonperforming loans		23,067			12,525			16,847			19,849			20,278
Foreclosed real estate		5,812			5,496			3,630			1,337			1,157

Total nonperforming assets	$	28,879		$	18,021		$	20,477		$	21,186		$	21,435

90 days past due loans (still accruing interest)	$	3,384		$	3,307		$	5,783		$	7,045		$	5,286

Nonperforming loans to total loans		0.57	%		0.37	%		0.50	%		0.61	%		0.68	%
Nonperforming assets to total loans plus foreclosed real estate		0.71	%		0.53	%		0.61	%		0.65	%		0.72	%
Nonperforming assets to total assets		0.42	%		0.30	%		0.36	%		0.36	%		0.39	%
Reserve for loan losses as a percent of:
Total loans at year-end		1.39	%		1.41	%		1.42	%		1.39	%		1.44	%
Nonperforming loans		245	%		383	%		283	%		227	%		210	%

The effect of nonaccrual loans on interest income for 2003 is presented below:


	2003
Interest which would have been included at the normal contract rates	$	951
Interest included in income during the year		(192	)

Interest income not recognized in the financial statements	$	759

Nonperforming assets at December 31, 2003 totaled $28.9 million, compared with $18.0 million at year-end 2002 and $20.5 million in 2001, representing .71% of total loans and foreclosed real estate as of December 31, 2003, up from .53% for the year ended December 31, 2002 and .61% for 2001. Included in nonperforming assets at December 31, 2003 are $7.1 of restructured loans, representing two credits that were renegotiated to current market terms during second quarter 2003. Of this total, $4.1 million continues to accrue interest at December 31, 2003 and the remaining $3.0 million continues to record cash payments received as reductions to principal only. These loans are expected to return to performing status by the end of the first quarter of 2004 as a result of sustained borrower performance under the restructured terms. At December 31, 2003, the Company did not have any commitments to lend additional funds to borrowers with restructured loans.

Nonaccrual loans at December 31, 2003 totaled $15.9 million, compared with $12.5 million and $16.8 million at year-end 2002 and 2001, respectively. The $3.4 million increase in total nonperforming loans in 2003 reflected an increase of $5.2 million in nonperforming commercial and industrial and real estate construction loans partially offset by a decrease of $2.3 million in real estate commercial. The increase in nonperforming commercial and industrial and real estate construction loans was principally due to $4.9 million of nonaccruing loans acquired from CoVest. The loans acquired were comprehensively reviewed by the Company and deemed to be appropriately valued. The ratio of the reserve for loan losses to nonperforming loans at year-end 2003 was 245%, down from 2002’s historical high of 383%.

In addition to the loans summarized in Table 15, on December 31, 2003, the Company had $72.3 millions of loans that are now performing, but where the Company had some concern with the ability of the borrower to comply with present loan repayment terms. This increased from $27.1 million at year-end 2002. These loans continue to perform under existing

terms, accrue interest and reflect reasonably anticipated plans that will result in the type of restructure, guarantee, additional collateral, or such action that will reflect the full liquidation of debt. The classification of these loans, however, does not imply that management expects losses on these loans but rather that a higher level of scrutiny is prudent under the circumstances. Such classifications relate to concerns specific to a given borrower and do not relate to any concentrated risk elements common to all loans in this category. The increase in 2003’s classification stems in large part from the acquisition of the CoVest portfolio on December 31, 2003, as well as management’s concerns about the stability of the economy.

FUNDING AND LIQUIDITY MANAGEMENT

Liquidity management is the ability to provide funding sources at a minimum cost to meet fluctuating deposit, withdrawal, and loan demand needs. The Company’s liquidity policy establishes parameters as to how liquidity should be managed to maintain flexibility in responding to changes in liquidity needs over a 12-month forward period, including the requirement to formulate a quarterly liquidity compliance plan for review by the Bank’s Board of Directors. The compliance plan includes a recorded analysis that measures projected needs to purchase and sell funds. Inherent in the analysis is a set of projected balance sheet assumptions that are updated quarterly throughout the year. Based on such assumptions, the Company determines its total cash liquidity on hand and adds to that position excess collateral capacity from pledging, unused federal funds purchased lines, and other unused borrowing capacity such as Federal Home Loan Bank advances, resulting in a calculation of the Company’s total liquidity capacity. The Company’s total policy-directed liquidity requirement is 7.5% of total sources (demand deposits, interest-bearing transactions deposits, retail time deposits, other borrowings, and other liabilities and equity) less pledged deposits. Based upon the Company’s projections as of December 31, 2003, the Company expects to have net excess liquidity capacity, based upon policy guidelines, for the forward twelve-month period.

Total deposits and borrowed funds as of December 31, 2003 are summarized in Notes 9 and 10 of the “Notes of Consolidated Financial Statements” commencing on pages 60 and 60 of this Form 10-K, respectively. Table 16 provides a year-to-year comparison of the sources of the Company’s liability funding based upon average balances over the last three years. Average, rather than period-end, balances are more meaningful in analyzing the Company’s funding sources because of the inherent fluctuations that occur on a monthly basis within most deposit categories.

Table 16

Funding Sources – Average Balances

(Dollar amounts in thousands)


	2003		% of Total	2002		% of Total	2001		% of Total
Demand deposits	$	806,777	14.3	$	744,295	13.9	$	689,394	13.2
Savings deposits		498,798	8.9		454,588	8.5		435,575	8.3
NOW accounts		813,993	14.5		723,634	13.5		501,800	9.6
Money market accounts		616,868	11.0		552,440	10.3		572,973	10.9

Transactional deposits		2,736,436	48.7		2,474,957	46.2		2,199,742	42.0
Time deposits		1,599,761	28.4		1,739,017	32.4		1,971,157	37.6

Total deposits		4,336,197	77.1		4,213,974	78.6		4,170,899	79.6

Repurchase agreements		554,281	9.8		519,113	9.6		618,518	11.8
Funds purchased and other borrowed funds		737,850	13.1		630,915	11.8		448,156	8.6

Borrowed funds		1,292,131	22.9		1,150,028	21.4		1,066,674	20.4

Total funding sources	$	5,628,328	100.0	$	5,364,002	100.0	$	5,237,573	100.0

In 2002 and 2003, the Company focused its sales efforts on increasing core funding sources from transactional deposits as funding costs are generally less expensive than wholesale borrowed funds and do not typically require the pledging of securities as collateral. As discussed in the section entitled “Qualitative and Quantitative Disclosures About Market Risk,” commencing on page 40 of this Form 10-K, these efforts were consistent with the Company’s strategy to reduce its exposure to increases in market interest rates. As shown in Table 16, average deposits for 2003 totaled $4.3 billion, representing an increase of $122.2 million, or 2.9%, in 2003 and followed an increase of 1.0% in 2002 over 2001.

Average transactional deposits increased by $261.5 million, or 10.6%, over 2002 while average time deposits declined by $139.3 million, or 8.0%. The shift in deposit mix was driven by a combination of pricing and promotional strategies employed throughout 2002 and 2003.

On December 31, 2003, the Company acquired $465.7 million in deposits from CoVest, 60% of which are transactional deposits. Given the year-end acquisition date of the transaction, these balances did not influence 2003 average balances.

The pricing strategies in 2003, the overall low level of interest rates in 2002 and 2003, and instability in the equity markets have combined to create an incentive for customers seeking liquidity to shift balances to transactional accounts as opposed to shorter and longer-term time deposits. As equity markets stabilize or interest rates increase, management expects that customer liquidity preferences will change and some portion of transactional balances will revert to time deposits as influenced by then existent pricing and competition.

Tables 17 and 18 that follow provide additional information regarding the Company’s time deposit and wholesale funding activities over the last 3 years.

Table 17

Maturities of Time Deposits of $100,000 or More

(Dollar amounts in thousands)


	As of December 31,
	2003		2002		2001
Maturing within 3 months	$	229,195	$	256,755	$	250,793
After 3 but within 6 months		103,480		100,090		170,793
After 6 but within 12 months		102,076		122,926		125,570
After 12 months		141,807		72,585		65,804

Total	$	576,558	$	552,356	$	612,960

Table 18

Borrowed Funds

(Dollar amounts in thousands)


	2003			2002			2001
	Amount		Rate (%)	Amount		Rate (%)	Amount		Rate (%)
At year-end:
Securities sold under agreements to repurchase	$	564,709	0.76	$	384,408	1.21	$	494,851	2.04
Federal funds purchased		315,000	1.01		278,000	1.24		207,000	1.53
Federal Home Loan Bank advances		491,373	2.35		575,000	3.72		270,000	4.79
Other borrowed funds		590	0.94		—	—		—	—

Total borrowed funds	$	1,371,672	1.39	$	1,237,408	2.38	$	971,851	2.70

Average for the year:
Securities sold under agreements to repurchase	$	554,281	0.87	$	519,113	1.65	$	618,518	4.14
Federal funds purchased		233,119	1.19		193,929	1.72		214,814	3.85
Federal Home Loan Bank advances		489,014	3.34		436,986	3.98		233,342	5.35
Other borrowed funds		202	1.49		—	—			—

Total borrowed funds	$	1,276,616	1.88	$	1,150,028	2.55	$	1,066,674	4.34

Maximum month-end balance:
Securities sold under agreements to repurchase	$	742,164		$	621,630		$	691,940
Federal funds purchased		360,000			278,000			297,000
Federal Home Loan Bank advances		575,000			575,000			270,000
Other borrowed funds		2,500			—			—

Average borrowed funds totaled $1,276.6 million representing an increase of $126.6 million, or 11.0%, over 2002 after increasing $83.4 million, or 7.8%, in 2002 over 2001. The Company makes extensive, interchangeable use of both repurchase agreements and FHLB advances to supplement deposits and leverage the interest yields produced through its securities portfolio. As of December 31, 2003, FHLB borrowings totaled $491.4 million as compared to $575.0 million as of December 31, 2002. As of December 31, 2003, the weighted average maturity and yield for FHLB borrowings was 20.2 and 2.35%, respectively, as compared to 19.9 months and 3.72% as of December 31, 2002 and 11.0 months and 4.79% as of December 31, 2001. This repositioning was consistent with management’s strategies to opportunistically lengthen interest-

bearing liability terms in the current low interest rate environment and resulted from the early retirement and redeployment of $310.0 million in FHLB borrowings during 2003.

The liquidity needs of First Midwest Bancorp, Inc. on an unconsolidated basis (“parent company”) consist primarily of operating expenses and dividend payments to its stockholders. The primary source of liquidity for the parent company is dividends from subsidiaries. At December 31, 2003, the parent company had short-term credit facilities, which require no compensating balances, available to fund cash flow needs totaling $50.0 million. The parent company also has the ability to enhance its liquidity position by raising capital or incurring debt. The parent company had $128.7 million in subordinated debt from trust preferred securities but had no debt outstanding under its short-term credit facilities as of year-end 2003. The parent company had cash and equivalent short-term investments of $31.9 million as of such date.

CONTRACTUAL OBLIGATIONS, COMMITMENTS, OFF-BALANCE SHEET RISK, AND CONTINGENT LIABILITIES

Through the normal course of operation, the Company has entered into certain contractual obligations and other commitments. Such obligations generally relate to the funding of operations through deposits or debt issuances, as well as leases for premises and equipment. As a financial services provider, the Company routinely enters into commitments to extend credit. While contractual obligations represent future cash requirements of the Company, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process as all comparable loans made by the Company.

The following table presents the Company’s significant fixed and determinable contractual obligations and significant commitments as of December 31, 2003. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

Table 19

Contractual Obligations, Commitments, Contingencies, and Off-Balance Sheet Items

(Dollar amounts in thousands)


		Payments Due In
	Note Reference ⁽¹⁾	One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
Deposits without a stated maturity	9	$	3,119,055	$	—	$	—	$	—	$	3,119,055
Consumer and brokered certificates of deposit	9		1,163,234		466,826		65,856		137		1,696,053
Borrowed Funds	10		786,799		482,740		102,133		—		1,371,672
Long-term debt – trust preferred securities	11		—		—		—		128,716		128,716
Operating leases	7		1,721		1,424		720		274		4,139
Commitments to extend credit:
Fixed rate	20										100,120
Floating rate	20										1,066,289
Letters of credit:
Standby	20										105,709
Commercial	20										755

⁽¹⁾	Denotes the corresponding note in “Notes to Consolidated Financial Statements” commencing on page 47 of this Form 10-K.

MANAGEMENT OF CAPITAL

Stockholders’ Equity

Stockholders’ equity at December 31, 2003 was $522.4 million, an increase of $30.6 million, or 6.2%, from December 31, 2002. The stockholders’ equity increased largely as the result of earnings in excess of dividends paid to stockholders. Equity as a percentage of assets was 7.6% at December 31, 2003, compared to 8.2% a year ago. Book value per common share increased to $11.22 at December 31, 2003, up from $10.42 at December 31, 2002.

Capital Measurements

A strong capital structure is crucial in maintaining investor confidence, accessing capital markets, and enabling the Company to take advantage of future profitable growth opportunities. The Company’s Capital Policy requires that the Company and its subsidiary banks maintain a capital ratio in excess of the minimum regulatory guidelines and also serves as an internal discipline in analyzing business risks and internal growth opportunities, in addition to setting targeted levels of return on equity. Under regulatory capital adequacy guidelines, the Company and its subsidiary banks are subject to various capital requirements set and administered by the federal banking agencies. These requirements specify ratios that represent capital, defined as Tier 1 and Total, as a percentage of assets and off-balance-sheet items that have been weighted according to broad risk categories and a leverage ratio that compares Tier 1 capital to adjusted average assets. At December 31, 2003, the Company and each of its banking subsidiaries exceeded the minimum risk based capital requirements established by banking regulatory agencies. The consolidated Tier 1 and Total risk based capital ratios were 10.29% and 11.41%, respectively, and the leverage ratio was 8.49% at December 31, 2003. The minimum ratios for well-capitalized banks are 6.00% for Tier 1 capital, 10.00% for Total capital and 5.00% for the leverage ratio. For further details of the regulatory capital requirements and ratios as of December 31, 2003 and 2002, for the Company and its subsidiary banks, see Note 19 of “Notes to Consolidated Financial Statements” commencing on page 71 of this Form 10-K.

Stock Repurchase Programs

The Company has continued to follow a policy of retaining sufficient capital to support growth in total assets and returning excess capital to stockholders in the form of dividends and through common stock repurchases, with the latter resulting in an increase in the percentage ownership of the Company by existing stockholders.

In August 2002, the Company’s Board of Directors authorized the repurchase of up to 3 million of its common shares, or 6.28% of shares then outstanding. The plan authorizes repurchases in both open market and privately negotiated transactions and has no execution time limit. Subject to ongoing capital, investment, and acquisition considerations, management intends to continue share repurchases in 2004. The Company repurchased 842 thousand and 1.9 million shares of its common stock during 2003 and 2002, respectively, at a weighted average cost per share of $26.60 and $27.93, respectively, under repurchase programs in effect at that time. At December 31, 2003, the Company’s authority to repurchase 1.6 million shares remained under the current share repurchase authorization. The following table shows the current and all previous authorizations.

Table 20

Repurchase Authorizations

(Share and dollar amounts in thousands, except per share data)


Date	Shares Authorized	Authorized as a % of Outstanding		Shares Repurchased		Repurchased as a % of Authorization		Average Cost Per Repurchased Share
November 1991	1,125	4.80	%	799		71	%	$	9.87
November 1993	1,125	4.90	%	409	⁽¹⁾	36	%		11.20
November 1995	1,500	6.60	%	173	⁽¹⁾	12	%		12.21
November 1996	1,690	5.30	%	1,038		62	%		16.27
September 1998	1,600	2.90	%	1,600		100	%		21.55
February 1999	3,750	6.90	%	3,750		100	%		20.92
November 1999	1,875	3.75	%	1,188	⁽²⁾	63	%		23.90
August 2001	3,125	6.25	%	2,436	⁽³⁾	78	%		27.26
August 2002	3,000	6.28	%	1,442	⁽⁴⁾	48	% ⁽⁴⁾		26.99	⁽⁴⁾

⁽¹⁾	Authorizations suspended as a result of pooling-of-interests restrictions in connection with acquisitions.

⁽²⁾	Balance rescinded and replaced by August 2001 authorization.

⁽³⁾	Balance rescinded and replaced by August 2002 authorization.

⁽⁴⁾	Represents repurchases through December 31, 2003.

The repurchased shares are held as treasury stock and available for issuances in conjunction with the Company’s Dividend Reinvestment Plan, qualified and nonqualified retirement plans, and stock option plans as well as for other general corporate

purposes. The Company has reissued shares held in the treasury to fund such plans totaling 222,583 shares and 352,287 shares in 2003 and 2002, respectively.

Dividends

The Company paid dividends per common share of $0.79 in 2003 and $0.70 in 2002 and has paid dividends every year since its formation in 1983. The Company believes that it has a responsibility not only to judiciously manage its capital structure but also to reward its stockholders with a meaningful current return on their investment. As part of the Company’s dividend policy, the Board of Directors periodically reviews its dividend payout ratio to ensure that it is consistent with internal capital guidelines, industry standards, and peer group practices. As a result of improved performance from operations and the Company’s perceived future prospects, the Board of Directors has increased the quarterly dividend every year since 1993 with increases averaging 12.3%.

On November 19, 2003, the Company increased its quarterly dividend by 15.8% from $.19 to $.22 per share. The Company has increased its annual dividend at a compound annual growth rate of 10% and 12% over the past five and ten years, respectively. Based on the Company’s December 31, 2003 closing price of $32.43 per share, the current dividend payment represents an annualized yield of 2.71%.

The dividend payout ratio, which represents the percentage of dividends declared to stockholders to earnings per share, was 40.1% for 2003 and 37.6% 2002. The dividend payout ratio has averaged approximately 39.5% for the past five years.

QUARTERLY REVIEW

The following table summarizes the Company’s quarterly earnings performance for 2003 and 2002.

Table 21

Quarterly Earnings Performance ⁽¹⁾

(Dollar amounts in thousands, except per share data)


	2003												2002
	Fourth			Third			Second			First			Fourth			Third			Second			First
Interest income	$	71,668		$	71,309		$	73,525		$	74,565		$	78,221		$	83,259		$	84,241		$	83,943
Interest expense		18,706			19,302			20,881			22,424			25,468			27,801			27,945			29,696
Net interest income		52,962			52,007			52,644			52,141			52,753			55,458			56,296			54,247
Provision for loan losses		3,075			2,660			2,540			2,530			4,235			3,020			3,100			5,055
Noninterest income		19,217			16,387			17,880			17,698			17,151			16,880			16,358			16,142
Security gains (losses), net		202			(615	)		3,335			66			427			9			24			—
Noninterest expense		37,109			37,551			37,954			36,838			35,696			38,106			38,614			35,636
Income tax expense		7,998			6,366			8,718			7,807			7,934			8,542			8,030			7,627
Net income		24,199			21,202			24,647			22,730			22,466			22,679			22,934			22,071

Basic earnings per share	$	0.52		$	0.46		$	0.53		$	0.48		$	0.47		$	0.47		$	0.47		$	0.45
Diluted earnings per share	$	0.52		$	0.45		$	0.53		$	0.48		$	0.47		$	0.47		$	0.47		$	0.45

Return on average equity		18.59	%		16.73	%		19.40	%		18.39	%		17.92	%		18.46	%		19.60	%		19.39	%
Return on average assets		1.54	%		1.33	%		1.59	%		1.53	%		1.49	%		1.50	%		1.57	%		1.55	%
Net interest margin – tax equivalent		4.01	%		3.90	%		4.01	%		4.06	%		4.10	%		4.26	%		4.43	%		4.32	%

⁽¹⁾	All ratios are presented on an annualized basis.

FOURTH QUARTER 2003 vs. 2002

Net income for the fourth quarter ended December 31, 2003, increased to $24.2 million, or $.52 per diluted share, as compared to the fourth quarter of 2002 of $22.5 million, or $.47 per diluted share, representing an increase of 10.6% on a per diluted share basis. Performance for the fourth quarter of 2003 resulted in an annualized return on average assets of 1.54% as compared to 1.49% for the fourth quarter of 2002 and an annualized return on average equity of 18.6% as compared to 17.9% for the fourth quarter of 2002.

During the fourth quarter of 2003, the Company continued to pursue previously announced balance sheet restructuring strategies as a result of the continued low interest rate environment and its expectation for higher interest rates. During the quarter, the Company extinguished $100 million of Federal Home Loan Bank advances with a weighted maturity of 18 months and a weighted cost of 3.78% at a pre-tax cost of approximately $3 million. In a separate transaction, this funding was replaced with Federal Home Loan Bank advances having a weighted maturity of 24 months and a weighted cost of 1.96%.

The Company’s net interest income totaled $53.0 million for the fourth quarter of 2003, in line with the prior year’s fourth quarter of $52.8 million. Net interest margin for the fourth quarter of 2003 was 4.01%, down from 4.10% a year ago, but up from 3.90% in the third quarter of 2003. As expected, the Company’s margin improved from the prior quarter primarily due to improved yields on mortgage-backed securities and benefits realized from retiring and redeploying Federal Home Loan Bank advances at lower interest rates. The Company also incurred $1.1 million in interest expense stemming from the $125 million trust preferred issuance.

Total loans at December 31, 2003 were 19.2% higher than at December 31, 2002, primarily due to loans acquired as part of the CoVest Acquisition. Excluding the $531 million in loans the Company acquired from CoVest, total loans increased approximately 3.6% over 2002 as loans in all categories experienced growth, except 1-4 family real estate and indirect consumer lending. Total loans, excluding CoVest, increased 1.2% on a linked-quarter basis and represented 4.8% on an annualized basis. Excluding CoVest, commercial loan growth on a linked-quarter basis was 1.65% and 11.6% year-over-year for 2003.

Average deposits for the fourth quarter 2003 increased from the prior year’s fourth quarter by 4.6%, primarily due to growth in transactional accounts (demand, savings, NOW, and money market accounts). Compared to the fourth quarter of 2002, transactional deposits increased 14.1%, largely due to targeted pricing and promotional efforts.

Noninterest income for the fourth quarter of 2003 totaled $19.4 million, including the $4.6 million gain realized from the sale of the Streator branches and $3.0 million in losses created by the early retirement of Federal Home Loan Bank advances. Excluding these transactions, noninterest income for fourth quarter 2003 was $17.8 million, a slight increase from the $17.6 million earned in the prior year’s fourth quarter. Service charges on deposit accounts, commissions earned from the sale of third-party investment products and trust income all increased in fourth quarter 2003 when compared to the prior year’s fourth quarter. This increase was partly offset by lower income from corporate owned life insurance, mortgage-related sales commissions and debit card revenues. Noninterest income was relatively stable on a linked-quarter basis after excluding debt retirement and securities gains and losses from both periods.

Total noninterest expense for the fourth quarter of 2003 increased 4.0% from the prior year’s fourth quarter and increased 1.0% for full year 2003 from 2002. On a linked-quarter basis, noninterest expense was essentially unchanged.

Nonperforming loans at December 31, 2003 totaled $23.1 million, representing 0.57% of total outstanding loans. This ratio is up from the September 30, 2003 level of 0.53% and a historically low level of 0.37% as of December 31, 2002. As anticipated in pre-acquisition due diligence, nonperforming loans include $4.9 million of nonaccruing loans acquired from CoVest. Nonperforming loans also include $7.1 million of loans restructured by the Company that are expected to return to performing status by the end of the first quarter of 2004 as the result of sustained borrower performance under the restructured terms.

Nonperforming assets totaled $28.9 million at December 31, 2003. Loans past due 90 days decreased by 29.6% to $3.4 million on a linked-quarter basis.

Net charge-offs for the fourth quarter and full year of 2003 were 0.35% and 0.28% of average loans, respectively, down from 0.49% and 0.45% for the fourth quarter and full year of 2002, respectively. Provisions for loan losses for the fourth quarter of 2003 fully covered net charge-offs, resulting in the Company maintaining its ratio of the reserve for loan losses to total loans at the close of the fourth quarter of 2003 at 1.39%. Loan loss reserves acquired as a part of the CoVest Acquisition totaled $7.2 million and represented 1.36% of the loans acquired. The reserve for loan losses at December 31, 2003 represented 245% of nonperforming loans as compared to the historically high level of 383% at year-end 2002.

ITEM 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. Interest rate risk is the Company’s primary market risk and is the result of repricing, basis, and option risk. Repricing risk represents timing mismatches in the Company’s ability to alter contractual rates earned on financial assets or paid on liabilities in response to market interest rates. Basis risk refers to the potential for changes in the underlying relationship between market rates or indices, which subsequently result in a narrowing of the spread earned on a loan or investment relative to its cost of funds. Option risk arises from the “embedded options” present in many financial instruments such as loan prepayment options or deposit early withdrawal options. These provide customers opportunities to take advantage of directional changes in rates and could have an adverse impact on the Company’s margin performance.

The Company seeks to achieve consistent growth in net interest income and net income while managing volatility that arises from shifts in interest rates. The Company’s Asset and Liability Management Committee (“ALCO”) oversees financial risk management by developing programs to measure and manage interest rate risks within authorized limits set by the Company’s Board of Directors. ALCO also approves the Company’s asset/liability management policies, oversees the formulation and implementation of strategies to improve balance sheet positioning and earnings, and reviews the Company’s interest rate sensitivity position. Management uses net interest income and economic value of equity simulation modeling tools to analyze and capture near-term and longer-term interest rate exposures.

Net interest income represents the Company’s primary tool for measuring interest rate sensitivity. Net interest income simulation analysis measures the sensitivity of net interest income to various interest rate movements and balance sheet structures. The simulation is based on actual cash flows and repricing characteristics for on and off-balance sheet instruments and incorporates market-based assumptions regarding the effect of changing interest rates on the prepayment rates of certain assets and liabilities. The simulation includes management projections for activity levels in each of the product lines offered by the Company. Assumptions based upon the historical behavior of deposit rates and balances in relation to interest rates are also incorporated into the simulation. These assumptions are inherently uncertain. As a result, the simulation cannot precisely measure net interest income or precisely predict the impact of the fluctuation in interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and management strategies.

The Company monitors and manages interest rate risk within approved policy limits. The simulation model assesses the magnitude of changes in net interest income resulting from changes in interest rates over both a 12-month horizon and uses multiple rate scenarios. These scenarios include, but are not limited to, a flat or unchanged rate environment, a “most likely” forecast (which the Company believes to be the most probable outlook), a graduated increase and decrease of 200 basis points that occurs in equal steps over a six month time horizon, and immediate increases and decreases of 200 and 300 basis points.

The Company’s current interest rate risk policy limits are determined by measuring the change in net interest income over a 12-month horizon assuming a significant 200 basis point graduated increase in all interest rate limits. Current policy limits this exposure to plus or minus 8% of the anticipated level of net interest income over the corresponding 12-month horizon assuming no change in current interest rates.

The Company’s 12-month net interest income sensitivity profile as of year-end 2003 and 2002 is as follows.

Analysis of Net Interest Income Sensitivity

(Dollar amounts in thousands)


	Gradual Change in Rates ⁽¹⁾						Immediate Change in Rates
	-200 ⁽²⁾			+200			-200 ⁽²⁾			+200			-300 ⁽²⁾			+300
December 31, 2003:
Dollar change	$	(26,053	)	$	5,377		$	(35,487	)	$	7,016		$	(35,487	)	$	12,619
Percent change		-11.2	%		+2.3	%		-15.3	%		+3.0	%		-15.3	%		+5.4	%
December 31, 2002:
Dollar change	$	(10,401	)	$	(3,825	)	$	(13,177	)	$	2,256		$	(13,177	)	$	3,813
Percent change		-4.8	%		-1.8	%		-6.1	%		+1.0	%		-6.1	%		+1.8	%

⁽¹⁾	Reflects an assumed uniform change in interest rates that occurs in equal steps over a six-month horizon.

⁽²⁾	Due to the low level of interest rates as of year-end 2003 and 2002, management’s judgment was used to set reasonable levels of change in the yield curve and establish, where appropriate, interest rate floors for select interest-earning assets and interest-bearing liabilities.

As of December 31, 2003, the Company’s interest rate sensitivity profile, assuming a gradual change in rates, was more positive in rising interest rate scenarios and more negative in falling rate scenarios than the profile that existed as of December 31, 2002. The change in profile results from a combination of the Federal Reserve’s 25 basis point reduction in the Federal Fund target rate in June 2003, continuing low interest rates, faster prepayments than in prior years, and changing management strategies as to cash flow reinvestment. The lower level of interest rates further limits the Company’s ability to reprice its interest-bearing deposit accounts in falling interest rate scenarios and increases sensitivity to falling rates on a comparative basis. Since ALCO has deemed the risk to a 200 basis point decline in rates to be unlikely, the Bank’s Board has authorized operation beyond policy in this area. In addition, balance sheet strategies as of December 31, 2003 have been modified from December 31, 2002 to reflect both actual and planned efforts to reduce exposure to rising rates through liability extensions and security reinvestment into shorter-duration instruments.

In addition to the simulation analysis, management uses an economic value of equity sensitivity technique to capture the risk in both short and long-term positions and to study the impact of long-term cash flows on earnings and capital. Economic value of equity involves discounting present values of expected cash flows on all assets, liabilities, and off-balance sheet contracts under different interest rate scenarios. The discounted present value of all cash flows represents the Company’s economic value of equity. Economic value of equity does not represent the true fair value of asset, liability, or derivative positions because factors such as credit risk, liquidity risk, and the impact of future changes to the balance sheet are not considered. The Company’s policy guidelines call for preventative measures to be taken in the event that an immediate increase or decrease in interest rates of 200 basis points is estimated to reduce the economic value of equity by more than 20%.

Analysis of Economic Value of Equity

(Dollar amounts in thousands)


	Immediate Change in Rates
	-200			+200
December 31, 2003:
Dollar change	$	(36,271	)	$	(53,088	)
Percent change		-3.8	%		-5.5	%
December 31, 2002:
Dollar change	$	28,605		$	(50,889	)
Percent change		+3.8	%		-6.8	%

The sensitivity of the Company’s economic value of equity to changing interest rates has changed significantly in comparison to 2002 as a result of accelerated mortgage-backed security cash flows and the balance sheet restructuring and positioning strategies executed during 2003 to mitigate the Company’s exposure to higher interest rates. While the reinvestment of mortgage-backed security cash flows increased the Company’s sensitivity to rising rates, this impact was offset by the execution of certain liability lengthening strategies as well as changes made to the assumed maturity characteristics of demand and NOW accounts to better reflect historical trends. Strategies designed to lengthen liabilities executed during 2003 included longer-term time deposit pricing and promotion, the purchase of longer-dated brokered certificates of deposit, the retirement and re-extension of FHLB borrowings, and the issuance of long-term debt from trust preferred securities. In the combination, these activities reduced the sensitivity of the economic value of equity to rising rates from 2002 but reversed its sensitivity to falling rates from a positive impact in 2002 to a negative impact in 2003.

The Company’s current net interest income sensitivity, as measured over a 12-month horizon, is more positively impacted in a rising rate environment as compared to December 31, 2002 and its longer-term risk position, as measured by the economic value of equity, is less negatively impacted by rising rates. While the Company’s balance sheet and net interest income remains vulnerable to an immediate decrease in interest rates, ALCO has deemed the risk of an immediate and extended decline in interest rates to be low given the current rate environment. Rather, given the negative impact of rising interest rates on the economic value of equity and anticipating the longer-term trend in rates to be upward, ALCO continues to believe it prudent to evaluate and consider balance sheet strategies designed to reduce longer-term exposure to rising rates.

Overall, the Company believes that its current balance sheet structure and net interest income performance is less vulnerable to increasing interest rates as compared to the condition that existed at year-end 2002. Conversely, the Company’s balance sheet and net interest income is more vulnerable to an immediate decrease in interest rates than it was at the year-end 2002 due to the low level of interest rates.

As part of its approach to controlling the interest rate risk within its balance sheet, the Company has utilized derivative instruments (specifically interest rate swaps with third parties) in order to limit volatility in net interest income. The advantages of using such interest rate derivatives include minimization of balance sheet leverage resulting in lower capital requirements as compared to cash instruments, the ability to maintain or increase liquidity, and the opportunity to customize

the interest rate swap to meet desired risk parameters. The accounting policies underlying the treatment of derivative financial instruments in the Consolidated Statements of Condition and Income of the Company are described in Notes 1 and 12 of “Notes to Consolidated Financial Statements” commencing on pages 47 and 62, respectively, of this Form 10-K.

Interest rate swap transactions involve exchanges of fixed and floating rate interest payments without the exchange of the underlying notional (i.e., principal) amount on which the interest payments are calculated. When the interest rate swap has been appropriately designated as a hedge, the net cash flow paid or received by the Company on these transactions is treated as an adjustment to interest income and expense on the underlying earning asset or funding source to which the swap relates. A risk associated with interest rate swap transactions is credit risk, defined as the ability of the swap counterparty to perform its interest payment obligation under the terms of the agreement. Credit risk on interest rate swap transactions consists of the aggregate net interest payable to the Company by the counterparty in addition to the aggregate unrealized gain on the swap position. The Company controls this credit risk by reviewing each counterparty for creditworthiness prior to entering into transactions and maintaining a policy limiting credit exposure to any one counterparty to not more than 2.5% of consolidated stockholders’ equity. In addition, the Company’s interest rate swap transactions require the establishment of a mutual mark-to-market arrangement whereby cash collateral is required to be on deposit with the Company and/or the counterparty, depending upon the existing net settlement position. The Company does not act as an intermediary in arranging interest rate swaps for customers.

As of December 31, 2003 and 2002, the Company had total interest rate swaps with an aggregate notional amount of $76.9 million and $125.0 million in place, respectively, hedging various balance sheet categories. The specific terms of the interest rate swaps outstanding as of December 31, 2003 and 2002 are discussed in Note 12 of “Notes to Consolidated Financial Statements” commencing on page 62 of this Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FIRST MIDWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION

(Dollar amounts in thousands)


	December 31,
	2003			2002
Assets
Cash and due from banks	$	186,900		$	195,153
Federal funds sold and other short-term investments		5,789			11,745
Mortgages held for sale		9,620			18,521
Securities available for sale, at market value		2,229,650			2,021,767
Securities held to maturity, at amortized cost (market value 2003 – $67,514; 2002 – $69,987)		67,446			69,832
Loans, net of unearned discount		4,059,782			3,406,846
Reserve for loan losses		(56,404	)		(47,929	)

Net loans		4,003,378			3,358,917

Premises, furniture, and equipment		91,535			81,627
Accrued interest receivable		30,506			31,005
Investment in corporate owned life insurance		146,421			141,362
Goodwill		83,735			16,397
Other intangible assets		15,533			—
Other assets		36,145			34,207

Total assets	$	6,906,658		$	5,980,533

Liabilities
Demand deposits	$	859,080		$	789,392
Savings deposits		629,505			475,366
NOW accounts		890,461			717,542
Money market deposits		740,009			525,621
Time deposits		1,696,053			1,665,033

Total deposits		4,815,108			4,172,954
Borrowed funds		1,371,672			1,237,408
Subordinated debt - trust preferred securities		128,716			—
Accrued interest payable		6,828			8,503
Other liabilities		61,794			69,715

Total liabilities		6,384,118			5,488,580

Stockholders’ Equity
Preferred stock, no par value; 1,000 shares authorized, none issued		—			—
Common stock, $.01 par value; authorized 100,000 shares; issued 56,927 shares outstanding: 2003 – 46,581 shares; 2002 – 47,206 shares		569			569
Additional paid-in capital		68,755			71,020
Retained earnings		650,128			594,192
Accumulated other comprehensive income, net of tax		32,656			39,365
Treasury stock, at cost: 2003 – 10,346 shares; 2002 – 9,721 shares		(229,568	)		(213,193	)

Total stockholders’ equity		522,540			491,953

Total liabilities and stockholders’ equity	$	6,906,658		$	5,980,533

See notes to consolidated financial statements.

FIRST MIDWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollar amounts in thousands, except per share data)


	Years ended December 31,
	2003			2002		2001
Interest Income
Loans	$	200,013		$	223,393	$	265,191
Securities:
Available for sale - taxable		56,077			78,301		92,015
Available for sale - nontaxable		30,632			23,702		23,038
Held to maturity - taxable		831			952		106
Held to maturity - nontaxable		2,432			2,499		3,850

Total interest on securities		89,972			105,454		119,009
Federal funds sold and other short-term investments		1,082			817		1,018

Total interest income		291,067			329,664		385,218

Interest Expense
Savings deposits		2,489			4,191		7,168
NOW accounts		7,089			10,291		8,574
Money market deposits		7,850			10,993		17,587
Time deposits		38,844			56,141		101,168
Borrowed funds		23,962			29,294		46,341
Subordinated debt - trust preferred securities		1,079			—		—

Total interest expense		81,313			110,910		180,838

Net interest income		209,754			218,754		204,380
Provision for loan losses		10,805			15,410		19,084

Net interest income after provision for loan losses		198,949			203,344		185,296

Noninterest Income
Service charges on deposit accounts		27,924			25,362		24,148
Trust and investment management fees		10,810			10,309		10,445
Other service charges, commissions, and fees		15,772			14,023		15,126
Card-based fees		8,336			7,895		7,452
Corporate owned life insurance income		5,059			6,728		8,190
Security gains, net		2,988			460		790
(Losses) on early extinguishment of debt		(6,025	)		—		—
Other income		9,306			2,214		2,715

Total noninterest income		74,170			66,991		68,866

Noninterest Expense
Salaries and wages		64,736			61,834		60,089
Retirement and other employee benefits		19,548			18,792		16,691
Net occupancy expense		14,508			14,298		14,353
Equipment expense		7,979			7,769		7,644
Technology and related costs		8,913			9,796		10,186
Professional services		6,623			6,627		6,270
Advertising and promotions		4,563			4,195		3,314
Other expenses		22,582			24,741		26,809

Total noninterest expense		149,452			148,052		145,356

Income before income tax expense		123,667			122,283		108,806
Income tax expense		30,889			32,133		26,668

Net income	$	92,778		$	90,150	$	82,138

Per Share Data
Basic earnings per share	$	1.99		$	1.88	$	1.64
Diluted earnings per share	$	1.97		$	1.86	$	1.63
Weighted average shares outstanding		46,671			48,074		50,057
Weighted average diluted shares outstanding		46,982			48,415		50,401

See notes to consolidated financial statements.

FIRST MIDWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollar amounts in thousands, except per share data)


	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance at December 31, 2000	$	569	$	78,155		$	487,878		$	(7,039	)	$	(112,840	)	$	446,723
Comprehensive Income:
Net income		—		—			82,138			—			—			82,138
Other comprehensive income, net of tax:
Unrealized gains on securities		—		—			—			14,124			—			14,124
Unrealized (losses) on hedging activities		—		—			—			(1,820	)		—			(1,820	)

Total comprehensive income																94,442
Dividends declared ($.65 per share)		—		—			(32,416	)		—						(32,416	)
Purchase of treasury stock		—		—			—			—			(64,582	)		(64,582	)
Treasury stock issued to (purchased for) benefit plans		—		(1	)		—			—			(121	)		(122	)
Exercise of stock options		—		(3,192	)		—			—			6,414			3,222
Fair value adjustment to treasury stock held in grantor trust		—		(1	)		—			—			1			—

Balance at December 31, 2001		569		74,961			537,600			5,265			(171,128	)		447,267
Comprehensive Income:
Net income		—		—			90,150			—			—			90,150
Other comprehensive income, net of tax:
Unrealized gains on securities		—		—			—			32,928			—			32,928
Unrealized gains on hedging activities		—		—			—			1,172			—			1,172

Total comprehensive income																124,250
Dividends declared ($.70 per share)		—		—			(33,558	)		—						(33,558	)
Purchase of treasury stock		—		—			—			—			(52,117	)		(52,117	)
Treasury stock issued to (purchased for) benefit plans		—		9			—			—			(155	)		(146	)
Exercise of stock options		—		(3,954	)		—			—			10,217			6,263
Fair value adjustment to treasury stock held in grantor trust		—		4			—			—			(10	)		(6	)

Balance at December 31, 2002		569		71,020			594,192			39,365			(213,193	)		491,953
Comprehensive Income:
Net income		—		—			92,778			—			—			92,778
Other comprehensive income, net of tax:
Unrealized (losses) on securities		—		—			—			(7,029	)		—			(7,029	)
Unrealized gains on hedging activities		—		—			—			320			—			320

Total comprehensive income																86,069
Dividends declared ($.79 per share)		—		—			(36,842	)		—			—			(36,842	)
Purchase of treasury stock		—		—			—			—			(22,404	)		(22,404	)
Treasury stock issued to (purchased for) benefit plans		—		4			—			—			(165	)		(161	)
Exercise of stock options		—		(2,269	)		—			—			6,210			3,941
Fair value adjustment to treasury stock held in grantor trust		—		—			—			—			(16	)		(16	)

Balance at December 31, 2003	$	569	$	68,755		$	650,128		$	32,656		$	(229,568	)	$	522,540

See notes to consolidated financial statements.

FIRST MIDWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)


	Years ended December 31,
	2003			2002			2001
Operating Activities
Net income	$	92,778		$	90,150		$	82,138
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		10,805			15,410			19,084
Depreciation of premises, furniture, and equipment		8,423			8,690			8,739
Net amortization of premium on securities		17,482			9,812			2,210
Net (gains) on sales of securities		(2,988	)		(460	)		(790	)
Net losses on early extinguishment of debt		6,025			—			—
Net (gains) on sales of other real estate owned		(312	)		(176	)		(172	)
Net (gains) losses on sales of premises, furniture, and equipment		(498	)		92			(306	)
(Gain) on branch divestiture		(4,635	)		—			—
Net pension cost		3,230			2,461			1,950
Tax benefit from exercise of nonqualified stock options		920			985			979
Net decrease in deferred income taxes		3,606			554			1,239
Net amortization of goodwill and other intangibles		38			1,313			2,962
Originations and purchases of mortgage loans held for sale		(472,076	)		(286,450	)		(277,987	)
Proceeds from sales of mortgage loans held for sale		480,977			283,169			268,185
Net (increase) in corporate owned life insurance		(5,059	)		(6,082	)		(8,420	)
Net decrease in accrued interest receivable		499			1,022			9,562
Net (decrease) in accrued interest payable		(1,675	)		(1,728	)		(10,337	)
Net (increase) in other assets		(16,355	)		(7,841	)		(12,232	)
Net (decrease) increase in other liabilities		3,325			21,771			1,326

Net cash provided by operating activities		124,510			132,692			88,130

Investing Activities
Securities available for sale:
Proceeds from maturities, repayments, and calls		1,036,514			575,629			607,405
Proceeds from sales		608,485			300,212			525,498
Purchases		(1,878,797	)		(1,057,730	)		(753,832	)
Securities held to maturity:
Proceeds from maturities, repayments, and calls		73,940			35,547			33,973
Purchases		(71,655	)		(39,796	)		(37,198	)
Net (increase) in loans		(657,943	)		(57,982	)		(160,572	)
Proceeds from sales of other real estate owned, net of purchases		2,673			6,526			2,909
Proceeds from sales of premises, furniture, and equipment		1,484			1,446			3,146
Proceeds from branch divestiture		5,142			—			—
Purchases of premises, furniture, and equipment		(19,824	)		(14,683	)		(6,871	)
Acquisitions, net of cash acquired		(82,909	)		—			—

Net cash (used) provided by investing activities		(982,890	)		(250,831	)		214,458

Financing Activities
Net increase (decrease) in deposit accounts		642,154			(20,967	)		(58,284	)
Net increase (decrease) in borrowed funds		128,239			265,557			(174,021	)
Proceeds from issuance of subordinated debt - trust preferred securities		128,715			—			—
Purchase of treasury stock		(22,404	)		(52,117	)		(64,582	)
Proceeds from issuance of treasury stock		6			9			16
Cash dividends paid		(35,560	)		(32,879	)		(32,297	)
Exercise of stock options		3,021			5,278			2,243

Net cash provided (used) by financing activities		844,171			164,881			(326,925	)

Net (decrease) increase in cash and cash equivalents		(14,209	)		46,742			(24,337	)
Cash and cash equivalents at beginning of year		206,898			160,156			184,493

Cash and cash equivalents at end of year	$	192,689		$	206,898		$	160,156

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations - First Midwest Bancorp, Inc. (“the Company”) is a Delaware corporation and bank holding company that was incorporated in 1982, began operations on March 31, 1983, and was formed through an exchange of common stock. The Company is headquartered in Itasca, Illinois, and has operations primarily located in Northern Illinois, principally in the suburban metropolitan Chicago area. The Company is engaged in commercial and retail banking and offers a comprehensive selection of financial products and services including lending, depository, trust, investment management, insurance, and other related financial services tailored to the needs of its individual, business, institutional, and governmental customers.

Principles of Consolidation - The consolidated financial statements include the accounts and results of operations of the Company after elimination of all significant intercompany accounts and transactions. Assets held by its subsidiaries (the “Subsidiaries”) in a fiduciary or agency capacity are not assets of the subsidiaries and, accordingly, are not included in the consolidated financial statements.

Basis of Presentation - Certain reclassifications have been made to prior year amounts to conform to the current year presentation. For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents has been defined by management to include cash and due from banks, funds sold, and other short-term investments. The Company uses the accrual basis of accounting for financial reporting purposes, except for immaterial sources of income and expense, which are recorded when received or paid.

Use of Estimates - The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States and general practice within the banking industry. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed in the preparation of the consolidated financial statements.

Business Combinations - In accordance with SFAS No. 141, “Business Combinations,” business combinations initiated after June 30, 2001, are accounted for by the purchase method of accounting. Under the purchase method, net assets of the business acquired are recorded at their estimated fair value at of the date of acquisition, with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill. Results of operations of the acquired business are included in the income statement from the effective date of acquisition.

Securities - Securities are classified as held to maturity or available for sale at the time of purchase. Securities classified as held to maturity, which management has the positive intent and ability to hold to maturity, are reported at amortized cost, adjusted for amortization of premiums and accretion of discounts, using the level-yield method. The historical cost of debt securities classified as held to maturity or available for sale is adjusted for amortization of premiums and accretion of discounts over the estimated life of the security. In determining the estimated life of a mortgage-related security, certain judgments are required as to the timing and amount of future principal prepayments. These judgments are made based upon the actual performance of the underlying security and the general market consensus regarding changes in mortgage interest rates. Amortization of premium and accretion of discount is included in interest income from the related security.

Available for sale securities are reported at fair value with unrealized gains and losses, net of related deferred income taxes, included in stockholders’ equity as a separate component of other comprehensive income. Realized securities gains or losses and declines in value judged to be other than temporary are included in investment securities gains (losses), net in the Consolidated Statements of Income. The cost of securities sold is based on the specific identification method. Any security for which there has been other than temporary impairment of value is written down to its estimated fair value through a charge to earnings. The Company does not carry any securities for trading purposes.

Loans - Loans are carried at the principal amount outstanding, net of unearned discount, including certain net deferred loan origination fees. Residential real estate mortgage loans held for sale are carried at the lower of aggregate cost or market value. Unearned discount on certain consumer installment loans is credited to income over the term of the loan using the level-yield method. Interest income on loans is accrued based on principal amounts outstanding. Loan and lease origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the estimated life of the related loans or commitments as a yield adjustment. Other credit-related fees, including line of credit fees are recognized as fee income when earned.

Nonaccrual loans - Generally, commercial loans and loans secured by real estate (including impaired loans) are designated as nonaccrual: (a) when either principal or interest payments are 90 days or more past due based on contractual terms unless the loan is sufficiently collateralized such that full repayment of both principal and interest is expected and is in the process of collection; or (b) when an individual analysis of a borrower’s creditworthiness indicates a credit should be placed on nonaccrual status. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the reserve for loan losses. Future interest income may only be recorded on a cash basis after recovery of principal is reasonably assured. Nonaccrual loans are returned to accrual status when the financial position of the borrower and other relevant factors indicate there is no longer doubt as to such collectibility.

Commercial loans and those secured by real estate are generally charged-off when deemed uncollectible and to the extent principal and interest due exceed the net realizable value of the collateral, with the charge-off occurring when the loss is reasonably quantifiable. Consumer loans are subject to mandatory charge-off at a specified delinquency date and are usually not classified as nonaccrual prior to being charged-off. Closed-end consumer loans, which include installment, automobile, and single payment loans are generally charged-off in full no later than the end of the month in which the loan becomes 120 days past due. Open-end unsecured consumer loans, such as credit card loans, are generally charged-off in full no later than the end of the month in which the loan becomes 180 days past due.

Impaired Loans - A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all contractual principal and interest due according to the terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the value of the underlying collateral. The Company evaluates the collectibility of both principal and interest when assessing the need for loss accrual. All loans subject to evaluation and considered impaired are included in nonperforming assets.

Restructured Loans - In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a restructured loan. Loans restructured at a rate equal to or greater than that of a new loan with comparable risk at the time the contract is modified may be excluded from restructured loans in the calendar years subsequent to the restructuring if they are in compliance with modified terms. Generally, a nonaccrual loan that is restructured remains in nonaccrual for a period of six months to demonstrate that the borrower can meet the restructured terms. However, sustained payment performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the restructured terms. These factors may result in the loan being returned to accrual status at the time of restructuring or upon satisfaction of a shorter performance period.

Reserve for Loan Losses - The reserve for loan losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio. The allowance takes into consideration such factors as changes in the nature, volume, size and current risk characteristics of the loan portfolio, an assessment of individual problem loans, actual and anticipated loss experience; current economic conditions that affect the borrowers ability to pay and other pertinent factors. Determination of the reserve is inherently subjective, as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged-off against the reserve, while recoveries of amounts previously charged-off are credited to the reserve. A provision for loan losses is charged to operating expense based on management’s periodic evaluation of the factors previously mentioned, as well as other pertinent factors.

Based on an estimation done pursuant to the requirements of Financial Accounting Standards Board (“SFAS”) Statement No. 5, “Accounting for Contingencies,” and SFAS Statement Nos. 114 and 118, “Accounting by Creditors for Impairment of a Loan,” the reserve for loan losses consists of three components: (i) specific reserves established for expected losses resulting from analysis developed through specific credit allocations on individual loans for which the recorded investment in the loan exceeds the measured value of the loan; (ii) reserves based on historical loan loss experience for each loan category; and (iii) reserves based on general, current economic conditions as well as specific economic factors believed to be relevant to the markets in which the Company operates.

The specific reserves component of the reserve for loan losses is based on a regular analysis of impaired loans over a fixed-dollar amount where the internal credit rating is at or below a predetermined classification. A loan is considered impaired when it is probable that the Company will be unable to collect all contractual principal and interest due according to the terms of the loan agreement. Loans subject to impairment valuation are defined as nonaccrual and restructured loans exclusive of smaller homogeneous loans such as home equity, installment, and 1-4 family residential loans. Impairment is measured by estimating the fair value of the loan based on the present value of expected future cash flows, discounted at the loan’s initial

effective interest rate, the market price of the loan, or the fair value of the underlying collateral less costs to sell, if repayment of the loan is collateral dependent. If the estimated fair value of the loan is less than the recorded book value, a valuation reserve is established as a component of the reserve for loan losses.

The component of the reserve for loan losses based on historical loan loss experience is determined statistically using a loss migration analysis that examines loss experience and the related internal grading of loans charged-off. The loss migration analysis is performed quarterly and loss factors are updated regularly based on actual experience.

The final component of the reserve for loan losses reflects management’s general estimate of probable inherent, but undetected, losses within the portfolio. The general component of the reserve for loan losses is determined based upon the Company’s assessment of economic conditions such as levels of unemployment and bankruptcy trends. The Company also assesses other risk factors such as changes in the characteristics of the loan portfolio, underwriting policies as well as delinquency and charge-off trends. The general allowance is determined by applying estimated loss factors to the credit exposures from outstanding loans due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower’s financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors. In addition, this component includes a portion that explicitly accounts for the inherent imprecision in loan loss migration models. Because the general component of the reserve considers risk factors that may not have manifested themselves in the Company’s historical loss experience, it involves a high degree of subjectivity in its determination.

Additions to the reserve for loan loss are expensed through the provision for loan losses. Credit exposures deemed to be uncollectible are charged against the allowance for loan losses while recoveries of previously charged off amounts are credited to the reserve. The provision for loan losses charged to operating expense in any given year is dependent on a number factors including historic loan growth and changes in the composition of the loan portfolio, net charge-off levels, and the Company’s assessment of the reserve for loan losses based upon the previously discussed methodology.

Foreclosed Real Estate - Foreclosed real estate includes properties acquired in partial or total satisfaction of certain loans and is included in other assets in the accompanying Consolidated Statements of Condition. Properties are recorded at the lower of the recorded investment in the loans for which the properties previously served as collateral or the fair value, which represents the estimated sales price of the properties on the date acquired less estimated selling costs. Any write-downs in the carrying value of a property at the time of acquisition are charged against the reserve for loan losses. Management periodically reviews the carrying value of foreclosed real estate properties. Any write-downs of the properties subsequent to acquisition, as well as gains or losses on disposition and income or expense from the operations of foreclosed real estate, are recognized in operating results in the period they are realized. At December 31, 2003 and 2002, foreclosed real estate totaled $5.8 million and $5.5 million, respectively.

Depreciable Assets - Premises, furniture and equipment, and leasehold improvements are stated at cost less accumulated depreciation. Depreciation expense is determined by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the life of the asset or the lease term. Rates of depreciation are generally based on the following useful lives: buildings - 25 to 40 years; building improvements - 3 to 15 years; and furniture and equipment - 3 to 10 years. Gains and losses on dispositions are reflected in other income and other expense, respectively. Maintenance and repairs are charged to operating expenses as incurred, while improvements that extend the useful life are capitalized and depreciated over the estimated remaining life.

Long-lived depreciable assets are evaluated periodically for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. Impairment exists when the expected undiscounted future cash flows of a long-lived asset are less than its carrying value. In that event, the Company recognizes a loss for the difference between the carrying amount and the estimated fair value of the asset based on a quoted market price, if applicable, or a discounted cash flow analysis. Impairment losses are recorded in other noninterest expense on the income statement.

Corporate Owned Life Insurance - Corporate Owned Life Insurance (“COLI”) represents life insurance policies on the lives of certain Company officers for which the Company is the beneficiary. These policies are recorded as an asset on the Consolidated Statements of Condition at their cash surrender value, or the amount that could be realized currently. The change in cash surrender value and insurance proceeds received are recorded as COLI income on the Consolidated Statements of Income in noninterest income and is not subject to income taxes.

Goodwill and Other Intangibles - Goodwill represents the excess of purchase price over the fair value of net assets acquired using the purchase method of accounting. Other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. On January 1, 2002, the

Company adopted SFAS 142, “Goodwill and Other Intangible Assets.” Under the provisions of SFAS 142, goodwill is no longer ratably amortized over an estimated life, but rather is tested at least annually for impairment, or more often if events or circumstances indicate that there maybe impairment. Identified intangible assets that have a finite useful life are amortized over that life in a manner that reflects the estimated decline in the economic value of the identified intangible asset. Identified intangible assets that have a finite useful life are periodically reviewed to determine whether there have been any events or circumstances to indicate that the recorded amount is not recoverable from projected undiscounted net operating cash flows. If the projected undiscounted net operating cash flows are less than the carrying amount, a loss is recognized to reduce the carrying amount to fair value, and, when appropriate, the amortization period is also reduced. Unamortized intangible assets associated with disposed assets are included in the determination of gain or loss on sale of the disposed assets. Prior to the adoption of SFAS No. 142, goodwill had been amortized using the straight-line method over periods not exceeding 20 years. All of the Company’s other intangible assets have finite lives and are amortized over varying periods not exceeding 11 years. Note 8, “Goodwill and Other Intangible Assets,” commencing on page 58 of this Form 10-K, includes a summary of the Company’s goodwill and other intangible assets as well as further details about the impact of the adoption of SFAS No. 142.

Trust Assets and Assets Under Management - Assets held in fiduciary or agency capacity for customers are not included in the consolidated financial statements as they are not assets of the Company or its subsidiaries. Fee income is recognized on an accrual basis for financial reporting purposes and is included as a component of noninterest income.

Advertising Costs - All advertising costs incurred by the Company are expensed in the period in which they are incurred.

Derivative Financial Instruments - In the ordinary course of business, the Company enters into derivative transactions as part of its overall interest rate risk management strategy to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), as amended, all derivative instruments are recorded on the balance sheet at fair value. Subsequent changes in a derivative’s fair value are recognized in earnings unless specific hedge accounting criteria are met.

On the date the Company enters into a derivative contract, it designates the derivative instrument as either a fair value hedge, cash flow hedge or as a freestanding derivative instrument. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered to be fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows to be received or paid related to an asset or liability or other types of forecasted transactions are considered to be cash flow hedges. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking each hedge transaction.

For derivative instruments designated and qualifying as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings during the period of the change in fair values. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For all hedge relationships, derivative gains and losses not effective in hedging the change in fair value or expected cash flows of the hedged item are recognized immediately in current earnings during the period of change.

At the hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes in the fair values or cash flows of the derivative instruments have been highly effective in offsetting changes in the fair values or cash flows of the hedged item and whether they are expected to be highly effective in the future. If it is determined that the derivative instrument is not highly effective as a hedge, hedge accounting is discontinued prospectively. SFAS No. 133 basis adjustments recorded on interest-bearing hedged assets and liabilities are amortized over the remaining life of the hedged item beginning no later than when the hedge terminates. The Company does not hold or issue derivative financial instruments for trading purposes.

Income Taxes - The Company and its banking subsidiaries file a consolidated federal income tax return. First Midwest Insurance Company files a separate federal life insurance company tax return. The provision for income taxes is based upon income in the financial statements, rather than amounts reported on the Company’s income tax return.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established for any deferred tax asset for which

recovery or settlement is unlikely. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Earnings Per Share - Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the period. The basic EPS computation excludes the dilutive effect of all common stock equivalents. Diluted EPS is computed by dividing net income by the weighted average number of common shares outstanding plus all potential common shares. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company’s potential common shares represent shares issuable under its long-term incentive compensation plans. Such common stock equivalents are computed based on the treasury stock method using the average market price for the period.

Treasury Stock - Treasury stock acquired is recorded at cost and is carried as a reduction of stockholders’ equity in the Consolidated Statements of Condition. Treasury stock issued is valued based on the “last in, first out” inventory method. The difference between the consideration received upon issuance and the carrying value is charged or credited to additional paid-in capital.

Stock-Based Compensation - The Company’s stock-based compensation plans are accounted for based on the intrinsic value method set forth in Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related Interpretations. Under APB 25, no compensation expense is recognized, as the exercise price of the Company’s stock options is equal to the fair market value of its common stock on the date of the grant.

Pursuant to SFAS Statement No. 123, “Accounting for Stock Based Compensation” (“SFAS No. 123”), as amended by SFAS Statement No. 148 (“SFAS No. 148”), disclosure requirements, pro forma net income and earnings per share are presented in the following table as if compensation cost for stock options was determined under the fair value method and amortized to expense over the options’ vesting periods.


	Years ended December 31,
	2003			2002			2001
	(Dollar amounts in thousands, except per share data)
Net income, as reported	$	92,778		$	90,150		$	82,138
Less: pro forma expense related to options granted		(1,564	)		(2,499	)		(2,526	)

Pro forma net income	$	91,214		$	87,651		$	79,612

Basic Earnings Per Share:
As reported	$	1.99		$	1.88		$	1.64
Pro forma	$	1.95		$	1.82		$	1.59
Diluted Earnings Per Share:
As reported	$	1.97		$	1.86		$	1.63
Pro forma	$	1.94		$	1.81		$	1.58

The fair values of stock options granted were estimated at the date of grant using a Black-Scholes option-pricing model. The following weighted-average assumptions were used in the model to determine the fair value of options granted: a risk-free interest rate of 2.27%, 4.69%, and 4.93% for 2003, 2002, and 2001, respectively; an expected life of the option of 3.5 years, 7.8 years, and 7.2 years for 2003, 2002, and 2001, respectively; an expected dividend yield of 2.72%, 2.72%, and 2.75% for 2003, 2002, and 2001, respectively; and expected stock volatility of 22% for 2003, 22% for 2002, and 23% for 2001. The weighted average fair values of options at their date of grant during 2003, 2002, and 2001 were $3.58, $6.99, and $5.51, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models such as the Black-Scholes require the input of highly subjective assumptions including the expected stock price volatility. Periodically, management will review and adjust the assumptions used to calculate the fair value of an option in order to realign them with current experience. In 2003, management adjusted the expected life of an option and the correlating risk-free interest rate to better reflect historical and expected trends. The Company’s stock options have characteristics significantly different from traded options and inasmuch as changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For additional details on the Company’s stock-based compensation plans see Note 17, “Stock Option Plans,” commencing on page 69 of this Form 10-K.

Comprehensive Income - Comprehensive income is the total of reported net income and all other revenues, expenses, gains and losses that under accounting principles generally accepted in the United States bypass reported net income. The Company includes changes in unrealized gains or losses, net of tax, on securities available for sale and changes in the fair value of derivatives designated under cash flow hedges in other comprehensive income and is presented in the Consolidated Statements of Changes in Stockholders’ Equity.

Segment Disclosures - Operating segments are components of a business about which separate financial information is available and that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. Public companies are required to report certain financial information about operating segments in interim and annual financial statements. The Company’s chief operating decision maker evaluates the operations of the Company as one operating segment, commercial banking, due to the materiality of the commercial banking operation to the Company’s financial condition and results of operations, taken as a whole, and as a result, separate segment disclosures are not required. The Company offers the following products and services to external customers: deposits, loans, and trust services. Revenues for each of these products and services are disclosed separately in the Consolidated Statements of Income.

2.	RECENT ACCOUNTING PRONOUNCEMENTS

On December 24, 2003, the FASB revised and reissued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46R”), which provides guidance on how to identify a variable interest entity (“VIE”), certain of which are also referred to as special purpose entities (“SPEs”), and determine when the assets, liabilities, noncontrolling interest, and results of operations of a VIE need to be included in a company’s consolidated financial statements. VIEs are entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46R requires VIEs to be consolidated by the primary beneficiary which represents the company that will absorb a majority of the VIE’s expected losses if they occur, receive a majority of the VIE’s expected residual returns if they occur or both. FIN 46R also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The revised interpretation resulted in multiple effective dates based on the nature as well as the creation date of the VIE. The provisions of FIN 46R are effective December 31, 2003, for public entities that have interests in SPEs and effective March 31, 2004, for interests in all other types of VIEs. As permitted, the Company early adopted all provisions of FIN 46R on December 31, 2003. There was no material impact to the Company’s results of operations, financial position, or liquidity as a result of applying the provisions of FIN 46R. For details regarding the Company’s interest in VIEs and the adoption of FIN 46R, see Note 21, “Variable Interest Entities,” commencing on page 73 of this Form 10-K.

On December 23, 2003, the FASB revised and reissued Statement No. 132, “Employers’ Disclosures about Pension and Other Postretirement Benefits” (“SFAS No. 132R”), which retains the disclosure requirements contained in the original statement and expands on them to require additional disclosure about plan assets, obligations, cash flows and net periodic benefit cost of defined pension plans and other defined postretirement plans in annual financial statements. Additionally, SFAS No. 132R requires interim period disclosure of the components of net periodic pension cost and contributions if significantly different from previously reported amounts. SFAS No. 132R does not change the measurement or recognition provisions of pension and postretirement plans required by FASB Statements No. 87, “Employers’ Accounting for Pensions,” No. 88, “Employers’ Accounting for Settlement and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” and No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions.” The revised statement is effective for financial statements with fiscal years ending after December 15, 2003 and interim period disclosure requirements are effective for interim periods beginning after December 15, 2003. On December 31, 2003, the Company adopted SFAS No. 132R. Adoption of the revised statement had no effect on the Company’s results of operations, financial position, or liquidity. The required disclosures for December 31, 2003, are located in Note 16, “Employee Benefit Plans,” commencing on page 67 of this Form 10-K.

In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“SFAS No. 150”). SFAS No. 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity that, under previous guidance, could be accounted for as equity, but now must be classified as liabilities in statements of financial position. These financial instruments include mandatorily redeemable financial instruments, obligations to repurchase the issuer’s equity shares by transferring assets, and obligations to issue a variable number of shares. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and for all other existing instruments at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS No. 150 on July 1, 2003. Adoption of the new guidance had no effect on the Company’s results of operations, financial position, or liquidity.

In April 2003, the FASB issued Statement No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS No. 149”), which amends and clarifies financial accounting and reporting for derivative instruments and hedging activities under SFAS 133, as well as amends certain other existing FASB pronouncements. In general, SFAS 149 is effective for derivative transactions entered into or modified and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 had no effect on the Company’s results of operations, financial position, or liquidity.

In December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS No. 148”). SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require more prominent disclosures about the method of accounting for stock-based employee compensation and the effect of the method used on reported results in both annual and interim financial statements. The disclosure provisions were adopted on December 31, 2002. As permitted by SFAS No. 148, the Company applies the provisions of Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees,” (“APB 25”) for all employee stock option grants and has elected to disclose pro forma net income and earnings per share amounts as if the fair value based method had been applied in measuring compensation costs. The required disclosure for December 31, 2003, is located in Note 1, “Summary of Significant Accounting Policies,” commencing on page 47 of this Form 10-K.

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”), which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements of FIN 45 were effective for the Company as of December 31, 2002, and required disclosure of the nature of the guarantee, the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, and the current amount of the liability, if any, for the guarantor’s obligations under the guarantee. The initial recognition and measurement provisions of FIN 45 were applied prospectively to guarantees issued or modified after December 31, 2002. The impact of adoption was not material to the Company’s results of operations, financial position, or liquidity. The most significant instruments impacted for the Company are standby letters of credit. The required disclosures have been incorporated into Note 20, “Commitments, Guaranties and Contingent Liabilities,” commencing on page 72 of this Form 10-K.

3.	ACQUISITION AND DIVESTITURE ACTIVITY

On June 13, 2003, the Company acquired from The Northern Trust Company a single retail branch office located in Chicago, Illinois, with $102.9 million of deposits and $13.9 million of loans. This acquisition was accounted for under the purchase method of accounting and resulted in the recognition of $18.4 million and $0.9 million in goodwill and core deposit intangible, respectively. Both the goodwill and core deposit intangible resulting from the transaction are deductible for income tax purposes.

On November 17, 2003, the Company completed the sale of two retail branch offices in Streator, Illinois, to First National Bank of Ottawa, Ottawa, Illinois. Included in the sale were $69.1 million of deposits and other liabilities, $11.3 million of loans, and $0.5 million of premises and equipment. The Company received a deposit premium of 7%, or $4.9 million. The pre-tax gain from the sale was $4.6 million, net of associated costs, and was reflected in other non-interest income.

On December 31, 2003, the Company completed the acquisition of CoVest Bancshares, Inc. (the “CoVest Acquisition”), a single bank holding company in a cash transaction valued at $27.45 per CoVest share, or approximately $102.2 million in the aggregate. CoVest provided retail and commercial banking services to customers through three full service locations in the northwest suburbs of Chicago, Illinois. The Company believes this acquisition presents a unique opportunity to expand its current operations and establish an increased presence in the northwest suburbs of Chicago. The transaction, which is accounted for under the purchase method of accounting, included the recognition of $14.7 million of identifiable intangible assets to be amortized over a weighted average life of 6.9 years and the excess of purchase price over the fair value of identifiable net assets (“goodwill”) of $48.9 million. Goodwill initially recorded is subject to the completion of appraisals and valuation of assets acquired and liabilities assumed. The goodwill and intangibles resulting from this transaction are not deductible for income tax purposes.

The following table presents the allocation of the purchase price of CoVest, including acquisition costs, to assets acquired and liabilities assumed, based on their fair values as of the date of acquisition, December 31, 2003 (Dollar amounts in thousands).


Cash	$	8,161
Federal funds sold and other short-term investments		238
Securities available for sale		32,777
Loans, net of reserve for loan loss		523,589
Premises and equipment		8,502
Goodwill		48,928
Core deposit premium		14,179
Noncompete agreement		500
Other assets		8,768

Total assets acquired		645,642

Deposits		465,706
Borrowed funds		65,842
Other liabilities		11,845

Total liabilities acquired		543,393

Net assets acquired	$	102,249

In accordance with disclosures required by SFAS No. 141, “Business Combinations,” the following (unaudited) pro forma consolidated results of operations for the years ended December 31, 2003 and 2002 have been prepared as if the acquisition of CoVest occurred as of January 1, 2002.


	2003		2002
	(Dollar amounts in thousands, except per share data)
Net interest income	$	230,691	$	240,025
Net income	$	95,113	$	96,746
Basic earnings per share	$	2.04	$	2.01
Diluted earnings per share	$	2.02	$	2.00

In connection with the acquisition, the Company accrued $6.0 million for direct merger-related costs, which was included in the purchase price of the transaction and in the determination of goodwill. The merger-related charges consist of $4.6 million in employee severance and benefit related costs, $.6 million in contract termination costs, and $.8 million in professional fees. Employee severance and benefit related charges include severance, other benefits, and outplacement costs associated with the termination of employees primarily in centralized corporate support and data processing functions and change-in-control payments made pursuant to pre-exiting employment agreements. The severance amounts are determined based on the Company’s existing severance pay programs and are paid out over a benefit period of up to 10 months. Change-in-control payments are paid out over a benefit period of up to three years. Contract termination costs represent cancellation payments or present values of the remaining contract obligation for termination of certain data processing agreements and similar services. Professional fees include legal, investment banking, and accounting services associated with consummating the acquisition. As of December 31, 2003, the remaining balance in the accrual was $4.3 million.

4.	SECURITIES

The aggregate amortized cost, gross unrealized gains and losses, and market value of securities as of December 31 were as follows.


	2003									2002
	Amortized		Gross Unrealized					Market		Amortized		Gross Unrealized					Market
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
	(Dollar amounts in thousands)
Securities Available for Sale
U.S. Agency	$	219,406	$	—	$	(2	)	$	219,404	$	200,527	$	1,231	$	(1	)	$	201,757
Collateralized Mortgage Obligations		901,998		6,175		(5,952	)		902,221		854,251		14,793		(1,964	)		867,080
Other Mortgage-Backed Securities		255,586		6,142		(266	)		261,462		272,546		10,208		(94	)		282,660
State and Municipal		706,741		53,832		(793	)		759,780		529,608		43,976		(56	)		573,528
Other		91,848		35		(5,100	)		86,783		99,241		351		(2,850	)		96,742

Total	$	2,175,579	$	66,184	$	(12,113	)	$	2,229,650	$	1,956,173	$	70,559	$	(4,965	)	$	2,021,767

Securities Held to Maturity
U.S. Treasury	$	1,376	$	1	$	—		$	1,377	$	1,705	$	9	$	—		$	1,714
U.S. Agency		176		—		—			176		126		1		—			127
State and Municipal		65,894		67		—			65,961		68,001		145		—			68,146

Total	$	67,446	$	68	$	—		$	67,514	$	69,832	$	155	$	—		$	69,987

During second quarter 2003, $36.0 million of certain non-marketable equity securities were reclassified from the held to maturity portfolio to the available for sale portfolio to more accurately account for the securities in accordance with their terms and conditions. No gains or losses were realized on the reclassification. All prior periods presented have been restated to reflect the reclassification.

The following table presents the aggregate amount of unrealized losses and the aggregate related fair values of investments with unrealized losses as of December 31, 2003. The securities presented are grouped according to the time periods during which the investments have been in an unrealized loss position.


	Unrealized Losses		Related Fair Value
	(Dollar amounts in thousands)
One year or less	$	6,946	$	767,933
Greater than one year		5,167		32,240

Total	$	12,113	$	800,173

Of the $12.1 million in total unrealized losses reported at December 31, 2003, $5.1 million reported in the greater than one year category is associated with a single $24.9 million investment in Federal National Mortgage Association preferred stock. Management does not consider the unrealized loss to be other-than-temporary, as the security maintains an investment grade credit rating and anticipates a more favorable market value upon the 2004 scheduled repricing. Of the $6.9 million in unrealized losses reported in the one year or less category, 89%, or $6.2 million is associated with the investment in numerous collateralized mortgage-backed obligations. Management does not consider the unrealized losses associated with these securities to be other-than-temporary, as the investments are backed by agency guaranteed securities and, accordingly, anticipates the timely receipt of all principal payments.

The following table shows securities available for sale and held to maturity as of December 31, 2003, by remaining contractual maturity. Included in securities available for sale are collateralized mortgage obligations and other mortgage-backed securities. All of these securities are presented based on their expected average lives using historical and predicted prepayment trends.


	Available for Sale				Held to Maturity
	Amortized Cost		Market Value		Amortized Cost		Market Value
	(Dollar amounts in thousands)
One year or less	$	577,344	$	574,470	$	22,231	$	22,254
One year to five years		919,306		942,794		23,985		24,009
Five years to ten years		447,124		467,193		5,757		5,763
After ten years		231,805		245,193		15,473		15,488

Total	$	2,175,579	$	2,229,650	$	67,446	$	67,514

The following table presents proceeds from sales of securities and the components of net security gains for the years ended December 31.


	2003			2002			2001
	(Dollar amounts in thousands)
Proceeds from sales	$	608,485		$	300,212		$	525,498
Gross realized gains	$	4,134		$	1,921		$	3,297
Gross realized losses		(1,146	)		(1,461	)		(2,507	)

Net realized gains	$	2,988		$	460		$	790

Income taxes on net realized gains	$	1,165		$	179		$	308

The carrying value of securities available for sale, securities held to maturity, and securities purchased under agreements to resell, which were pledged to secure deposits and for other purposes as permitted or required by law at December 31, 2003 and 2002 totaled $2,078.3 million and $1,691.7 million, respectively.

Excluding securities issued by the U.S. Government and its agencies and corporations, there were no investments in securities from one issuer that exceeded 10% of consolidated stockholders’ equity on December 31, 2003 or 2002.

For additional details of the securities available for sale portfolio and the related impact of unrealized gains/(losses) thereon, see Note 14, “Comprehensive Income,” commencing on page 64 of this Form 10-K.

LOANS

Total loans, net of deferred loan fees and other discounts of $3.2 million and $2.0 million at December 31, 2003 and 2002, respectively, were as follows.


	2003		2002
	(Dollar amounts in thousands)
Commercial and industrial	$	1,052,117	$	897,845
Agricultural		94,983		91,381
Consumer		895,588		914,820
Real estate - 1-4 family		170,245		138,302
Real estate - commercial		1,393,420		1,019,989
Real estate - construction		453,429		344,509

Total loans	$	4,059,782	$	3,406,846

The Company primarily lends to consumers and small to mid-sized businesses in the market areas in which the Company generates deposits. Within these parameters, the Company strives to diversify its loan portfolio by loan type, industry, borrower, and geographic concentrations. Management believes that such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries. As of December 31, 2003 and 2002, there were no significant loan concentrations with any single borrower, industry, or geographic segment.

It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral to obtain prior to making a loan. The type of collateral, when required, will vary in ranges from liquid assets to real estate. The Company’s access to collateral, in the event of borrower default, is assured through adherence to state lending laws and the Company’s lending standards and credit monitoring procedures.

The following table summarizes the book value of loans that were pledged to secure deposits and for other purposes as required or permitted by law at December 31, 2003 and 2002.


	2003		2002
	(Dollar amounts in thousands)
Loans pledged to secure:
Deposits	$	54,455	$	51,375
Federal Home Loan Bank Advances		326,620		268,530

Total	$	381,075	$	319,905

6.	RESERVE FOR LOAN LOSSES AND IMPAIRED LOANS

Reserve For Loan Losses

A summary of the transactions in the reserve for loan losses follows for the years ended December 31.


	2003			2002			2001
	(Dollar amounts in thousands)
Balance at beginning of year	$	47,929		$	47,745		$	45,093
Loans charged-off		(12,105	)		(18,177	)		(19,330	)
Recoveries of loans previously charged-off		2,555			2,951			2,898

Net loans charged-off		(9,550	)		(15,226	)		(16,432	)
Provision for loan losses		10,805			15,410			19,084
Reserve of acquired bank		7,220			—			—

Balance at end of year	$	56,404		$	47,929		$	47,745

Impaired Loans

A portion of the Company’s reserve for loan losses is allocated to loans deemed impaired. All impaired loans are included in non-performing assets. A summary of these loans and their related reserve for loan losses is as follows.


	2003		2002		2001
	(Dollar amounts in thousands)
Impaired loans:
With valuation reserve required ⁽¹⁾	$	12,230	$	1,587	$	4,828
With no valuation reserve required		7,508		7,736		8,414

Total impaired loans	$	19,738	$	9,323	$	13,242

Valuation reserve related to impaired loans	$	4,167	$	1,336	$	3,954
Average impaired loans	$	13,924	$	10,855	$	15,979
Interest income recognized on impaired loans	$	218	$	345	$	237

⁽¹ ⁾	These impaired loans require a valuation reserve because the value of the loans is less than the recorded investment in the loans.

7.	PREMISES, FURNITURE, AND EQUIPMENT

Premises, furniture, and equipment at December 31 are summarized as follows.


	2003			2002
	(Dollar amounts in thousands)
Land	$	29,983		$	27,510
Premises		98,644			87,714
Furniture and equipment		71,518			63,572

Total cost		200,145			178,796
Accumulated depreciation		(108,610	)		(97,169	)

Net book value	$	91,535		$	81,627

Depreciation expense on premises, furniture, and equipment for the years 2003, 2002, and 2001 totaled, $8.4 million, $8.7 million, and $8.7 million, respectively.

Operating Leases

At December 31, 2003, the Company and the Bank were each obligated under certain noncancellable operating leases for premises and equipment, which expire at various dates through the year 2013. Many of these leases contain renewal options, and certain leases provide options to purchase the leased property during or at the expiration of the lease period at specific prices. Some leases contain escalation clauses calling for rentals to be adjusted for increased real estate taxes and other operating expenses, or proportionately adjusted for increases in the consumer or other price indices. The following summary reflects the future minimum rental payments, by year, required under operating leases that, as of December 31, 2003, have initial or remaining noncancellable lease terms in excess of one year.


	Total
	(Dollar amounts in thousands)
Year-ending December 31,
2004	$	1,721
2005		986
2006		438
2007		395
2008		325
2009 and thereafter		274

Total minimum lease payments	$	4,139

Rental expense charged to operations in 2003, 2002, and 2001, amounted to approximately $2.0 million, $1.9 million, and $1.9 million, respectively, including amounts paid under short-term cancelable leases. Occupancy expense has been reduced by rental income from premises leased to others in the amount of $217 thousand for 2003, $222 thousand for 2002, and $213 thousand for 2001.

8.	GOODWILL AND OTHER INTANGIBLE ASSETS

The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142 which provides that intangible assets with finite lives be amortized and that goodwill and other intangible assets with indefinite lives not be amortized, but rather tested at least annually for impairment. The Company performed its annual impairment test, resulting in no impairment for 2003.

The change in the carrying amount of goodwill for the year ended December 31, 2003 is as follows.


	2003
	(Dollar amounts in thousands)
Balance at December 31, 2002	$	16,397
Goodwill from business combinations		67,338

Balance at December 31, 2003	$	83,735

The Company has other intangible assets capitalized on its Consolidated Statements of Condition in the form of core deposit premiums and a noncompete agreement. In accordance with SFAS No. 142, these intangible assets are being amortized over their estimated useful lives, which range from 3 to 11.3 years. The Company reviews intangible assets for possible impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. A summary of the Company’s other intangible assets follows.


	2003							2002
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life	Net Carrying Amount
	(Dollar amounts in thousands)						(In years)
Other intangible assets:
Core deposit premium	$	15,071	$	38	$	15,033	7.3	$	—
Noncompete agreement		500		—		500	3.0		—

Total other intangible assets	$	15,571	$	38	$	15,533	7.1	$	—

Amortization expense of other intangible assets totaled $38 thousand, $1.3 million, and $803 thousand for the years ended December 31, 2003, 2002, and 2001, respectively. Amortization expense on other intangible assets is expected to total $2.3 million, $2.2 million, and $2.1 million in 2004 through 2006, 2007, and 2008, respectively.

Upon the adoption of SFAS No. 142 on January 1, 2002, the Company discontinued the amortization of goodwill, which decreased noninterest expense and increased net income in 2003 and 2002 as compared to 2001. A reconciliation of previously reported net income and earnings per share as adjusted for the exclusion of goodwill amortization is presented below had the Company accounted for goodwill under SFAS No. 142 for all periods presented.


	2003		2002		2001
	(Dollar amounts in thousands, except share data)
Reported net income	$	92,778	$	90,150	$	82,138
Add back of goodwill amortization		—		—		2,160

Adjusted net income	$	92,778	$	90,150	$	84,298

Basic earnings per share:
Reported net income	$	1.99	$	1.88	$	1.64
Add back of goodwill amortization		—		—		0.04

Adjusted net income	$	1.99	$	1.88	$	1.68

Diluted earnings per share:
Reported net income	$	1.97	$	1.86	$	1.63
Add back of goodwill amortization		—		—		0.04

Adjusted net income	$	1.97	$	1.86	$	1.67

9.	DEPOSITS

The following is a summary of deposits at December 31.


	2003		2002
	(Dollar amounts in thousands)
Demand deposits	$	859,080	$	789,392
Savings deposits		629,505		475,366
NOW accounts		890,461		717,542
Money market deposits		740,009		525,621
Time deposits less than $100		1,119,495		1,112,677
Time deposits of $100 or more		576,558		552,356

Total deposits	$	4,815,108	$	4,172,954

The scheduled maturities of time deposits as of December 31, 2003, for the years 2004 through 2009 and thereafter, were as follows.


	Total
	(Dollar amounts in thousands)
Year ending December 31,
2004	$	1,163,234
2005		351,087
2006		115,739
2007		38,532
2008		27,324
2009 and thereafter		137

Total	$	1,696,053

10.

BORROWED FUNDS

The following is a summary of borrowed funds for the years ended December 31.


	2003		2002
	(Dollar amounts in thousands)
Securities sold under agreements to repurchase	$	564,709	$	384,408
Federal funds purchased		315,000		278,000
Federal Home Loan Bank advances		491,373		575,000
Other borrowed funds		590		—

Total borrowed funds	$	1,371,672	$	1,237,408

Securities sold under agreements to repurchase and federal funds purchased generally mature within 1 to 90 days from the transaction date. Securities sold under agreements to repurchase are treated as financings, and the obligations to repurchase securities sold are reflected as a liability in the Consolidated Statements of Condition. Repurchase agreements are secured by U.S. Treasury and U.S. Agency securities and, if required, are held in third party pledge accounts. The securities underlying the agreements remain in the respective asset accounts. As of December 31, 2003, the Company did not have amounts at risk under repurchase agreements with any individual counterparty or group of counterparties that exceed 10% of stockholders’ equity.

The Company’s subsidiary banks are members of the Federal Home Loan Bank (“FHLB”) and have access to term financing from the FHLB. These advances are secured by qualifying residential and multi-family mortgages and mortgage-related securities. At December 31, 2003, all advances from the FHLB are fixed rate with interest payable monthly.

As of December 31, 2003, the maturity and rate schedule for FHLB advances is as follows.


Maturity	Advance Amount		Rate (%)
	(Dollar amounts in thousands)
October 4, 2004	$	5,107	3.83
November 1, 2004		7,143	3.55
November 1, 2004		5,012	1.52
April 29, 2005		25,000	1.78
May 2, 2005		50,000	1.76
May 13, 2005		50,000	1.58
August 1, 2005		15,000	3.22
August 1, 2005		100,000	3.35
October 3, 2005		50,000	1.85
October 3, 2005		50,000	1.82
October 31, 2005		75,000	2.10
December 19, 2005		25,000	2.17
December 19, 2005		12,000	2.03
May 30, 2006		3,000	2.06
July 24, 2006		5,246	4.10
January 15, 2008 ⁽¹⁾		10,865	4.55
May 28, 2008		3,000	2.77

	$	491,373	2.35

⁽¹⁾	Callable quarterly, in whole or in part, at the discretion of the Federal Home Loan Bank of Chicago.

Other borrowed funds consist of term federal funds purchased, treasury tax and loan deposits, and short-term credit arrangements with unaffiliated banks and are generally repaid weekly. None of the Company’s borrowings have any related compensating balance requirements that restrict the usage of Company assets.

Exclusive of Federal Reserve Bank discount borrowing facilities, the Company had $1,244.6 million of unused short-term credit lines available for use at December 31, 2003.

11.

SUBORDINATED DEBT – TRUST PREFERRED SECURITIES

In November 2003 the Company formed First Midwest Capital Trust I (“FMCT I”), a statutory business trust, organized for the sole purpose of issuing trust securities and investing the proceeds thereof in junior subordinated debentures of the Company, the sole assets of the trust. The preferred trust securities of the trust represent preferred beneficial interests in the assets of the trust and are subject to mandatory redemption, in whole or in part, upon payment of the junior subordinated debentures held by the trust. The common securities of the trust are wholly owned by the Company. The trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated debentures. The Company’s obligations under the junior subordinated debentures and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the trust securities issued by the trust. The guarantee covers the distributions and payments on liquidation or redemption of the trust preferred securities, but only to the extent of funds held by the trust.

In accordance with FIN 46R, FMCT I qualifies as a variable purpose entity for which the Company is not the primary beneficiary and therefore ineligible for consolidation. Accordingly, the trust is not consolidated in the Company’s financial statements and is accounted for using the equity method. The subordinated debentures issued by the Company to the trust are reflected in the Company’s Consolidated Statement of Condition as “Subordinated Debentures - Trust Preferred Securities” with the corresponding interest distributions recorded as interest expense.

The trust preferred securities are tax-advantaged issues and currently qualify for Tier 1 capital treatment under the Federal Reserve Board (“FRB”) guidelines. As a result of the issuance of FIN 46R, the FRB is currently evaluating whether de-consolidation of the trust will affect the qualification of the trust preferred securities as Tier 1 capital. Refer to Note 2,

“Recent Accounting Pronouncements,” and Note 19, “Regulatory and Capital Matters,” commencing on pages 52 and 71 of this Form 10-K for additional details regarding the issuance of FIN 46R and risk-based capital ratios.

The following summarizes the securities issued and debentures acquired by FMCT I at December 31, 2003 (Dollar amounts in thousands).

Issuance Trust

Issuance

Date

Common

Shares

Issued

Trust

Preferred

Securities

Issued ⁽¹⁾

Coupon

Rate ⁽²⁾

Principal

Amount of

Debentures ⁽³⁾

Maturity

First Midwest Capital Trust I

Nov. 2003

3,866

125,000

6.95

128,866

Dec. 1, 2033

⁽¹⁾	The trust preferred securities accrue distributions at a rate equal to the interest rate and maturity identical to that of the related debentures. The trust preferred securities will be redeemed upon maturity of the related debentures.

⁽²⁾

The coupon rate is fixed with distributions payable semi-annually. The Company has the right to defer payment of interest on the debentures at any time or from time to time for a period not exceeding five years provided no extension period may extend beyond the stated maturity of the debentures. During such extension period, distributions on the trust preferred securities will also be deferred, and the Company’s ability to pay dividends on its common stock will be restricted.

⁽³⁾

The Company has the right to redeem its debentures: (i) in whole or in part at any time and (ii) in whole at any time within 90 days after the occurrence of a “Tax Event,” an “Investment Company Act Event,” or a “Regulatory Capital Event,” (as defined in the indenture pursuant to which the debentures were issued), subject to regulatory approval. If the debentures are redeemed before they mature, the redemption price will be the greater of: (a) the principal amount, plus any accrued but unpaid interest or (b) the sum of the present values of principal and interest payments from the redemption date to the maturity date discounted at the Adjusted Treasury Rate (as defined in the indenture), plus any accrued but unpaid interest.

12.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. Derivative instruments represent contracts between parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a notional amount and underlying as specified in the contract. A notional amount represents the number of units of a specific item, such as currency units or shares. An underlying represents a variable, such as an interest rate, security price, or price index. The amount of cash or other asset delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying. Derivatives are also implicit in certain contracts and commitments.

SFAS No. 133 requires all derivative instruments to be carried at fair value on the balance sheet and provides special hedge accounting provisions that permit the change in fair value of the hedged item related to the risk being hedged to be recognized in earnings in the same period and in the same income statement line as the change in fair value of the derivative. Note 1, “Summary of Significant Accounting Policies, commencing on page 47 of this Form 10-K, provides further detail on how derivative instruments are accounted for in the financial statements. The Company usually designates derivative instruments used to manage interest rate risk into SFAS No. 133 hedge relationships with the specific assets, liabilities, or cash flows being hedged. Some derivative instruments used for interest rate risk management may not be designated in a SFAS No. 133 hedge relationship. Such will be the case if the derivative instrument is being used to offset risk related to an asset or liability that is accounted for at fair value in the financial statements, if the derivative instrument has been moved out of a SFAS No. 133 relationship because the hedge was deemed not effective, or if operational or cost constraints make it prohibitive to apply hedge accounting.

Management uses derivative instruments to protect against the risk of interest rate movements on the value of certain assets and liabilities and on future cash flows. The derivative instruments the Company primarily uses are interest rate swaps with indices that relate to the pricing of specific assets and liabilities. The nature and volume of the derivative instruments used to manage interest rate risk depend on the level and type of assets and liabilities on the balance sheet and the risk management strategies for the current and anticipated rate environment.

As with any financial instrument, derivative instruments have inherent risks, primarily market and credit risk. Market risk is the adverse effect a change in interest rates, currency, equity prices, or implied volatility has on the value of a financial instrument. Market risk associated with changes in interest rates is managed by establishing and monitoring limits as to the degree of risk that may be undertaken as part of the Company’s overall market risk monitoring process, which includes the use of net interest income and economic value of equity simulation methodologies. This process is carried out by the

Company’s Asset Liability Management Committee. See further discussion of this process in Item 7a, “Qualitative and Quantitative Disclosures About Market Risk,” commencing on page 40 of this Form 10-K.

Credit risk occurs when the counterparty to a derivative contract with an unrealized gain fails to perform according to the terms of the agreement. Credit risk is managed by limiting the aggregate amount of net unrealized gains in agreements outstanding, monitoring the size and the maturity structure of the derivatives, applying uniform credit standards maintained for all activities with credit risk, and collateralizing gains. The Company maintains a policy limiting credit exposure to any one counterparty to not more than 2.5% of stockholders’ equity. Additionally, the Company has established bilateral collateral agreements with its major derivative dealer counterparties that provide for exchanges of marketable securities or cash to collateralize either party’s net gains. On December 31, 2003, these collateral agreements covered 100% of the notional amount of the Company’s interest rate swaps outstanding, and the Company had pledged or delivered to counterparties cash or U.S. government and U.S. government sponsored agency securities with a fair value of $.9 million to collateralize net losses with counterparties.

Derivative contracts are valued using observable market prices, if available, or cash flow projection models acquired from third parties. Pricing models used for valuing derivative instruments are regularly validated by testing through comparison with other third parties. The valuations and expected lives presented in the following table are based on yield curves, forward yield curves, and implied volatilities that were observable in the cash and derivatives markets on December 31, 2003 and 2002.

Fair Value Hedge - During 2003, the Company hedged the fair value of fixed rate commercial loans through the use of pay fixed, receive variable interest rate swap. The Company did not enter into any fair value hedges in 2002. The Company recognized no ineffective fair value hedge gains or losses, and no gains or losses were recognized related to components of derivative instruments that were excluded from the assessment of hedge ineffectiveness during 2003 and 2002.

Cash Flow Hedges - During 2003 and 2002, the Company hedged cash flow variability related to variable-rate funding products, specifically certain indexed deposit accounts, through the use of pay fixed, receive variable interest rate swaps. The Company recognized no ineffective cash flow hedge gains or losses, and no gains or losses were recognized related to components of derivative instruments that were excluded from the assessment of hedge ineffectiveness during 2003 and 2002.

Gains and losses on derivative instruments reclassified from accumulated other comprehensive income to current period earnings are included in the line item in which the hedged cash flows are recorded. At December 31, 2003 and 2002, accumulated other comprehensive income included a deferred after-tax net loss of $328 thousand and $648 thousand, respectively, for the derivatives used to hedge funding cash flows. See Note 14, “Comprehensive Income,” commencing on page 64 of this Form 10-K, for further detail of the amounts included in accumulated other comprehensive income. The net after-tax derivative loss included in other comprehensive income at December 31, 2003 related to the derivatives used to hedge funding cash flows is projected to be reclassified into interest expense in conjunction with the recognition of interest payments on funding products through September 2005, with $.7 million of net loss expected to be reclassified within the next year. During 2003 and 2002, pretax losses of $1.0 million and $3.0 million, respectively, were reclassified into interest expense as adjustments to interest payments on variable-rate funding products.

Other Derivative Activities - The Company’s derivative portfolio also includes derivative instruments not designated in a SFAS No. 133 hedge relationship. Those instruments include real estate 1-4 family mortgage loan commitments and an interest rate cap. The Company does not enter into derivative transactions for purely speculative purposes. The effect of the mortgage loan commitments was not material for any period presented. As a result of the CoVest acquisition, the Company has an interest rate cap at December 31, 2003. The interest rate cap notional amount outstanding at December 31, 2003 was $10.0 million, with a 4.50% capped rate based on the 3 month U.S. Treasury Bill. The interest rate cap will mature on October 12, 2004, and has a fair value of less than $1 thousand. During 2002, the Company had no derivative instruments in its derivative portfolio not included in SFAS No. 133 hedge relationships.

Summary information regarding the interest rate derivatives portfolio used for interest-rate risk management purposes and designated as accounting hedges under SFAS No. 133 at December 31, 2003, 2002, and 2001 are as follows.


	2003			2002			2001
	(Dollar amounts in thousands)
*Fair Value Hedges*
Notional amount outstanding	$	1,923		$	—		$	—
Weighted average interest rate paid		2.75	%		—			—
Weighted average interest rate received		1.32	%		—			—
Weighted average maturity (in years)		4.38			—			—
Derivative asset (liability) fair value	$	38		$	—		$	—

*Cash Flow Hedges*
Notional amount outstanding	$	75,000		$	125,000		$	100,000
Weighted average interest rate paid		2.30	%		4.76	%		5.25	%
Weighted average interest rate received		1.14	%		1.39	%		1.89	%
Weighted average maturity (in years)		1.66			0.64			1.13
Derivative asset (liability) fair value	$	(538	)	$	(1,063	)	$	(2,984	)

13.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31.


	2003		2002		2001
	(Dollar amounts in thousands, except per share data)
Basic earnings per share:
Net income	$	92,778	$	90,150	$	82,138
Average common shares outstanding		46,671		48,074		50,057
Basic earnings per share	$	1.99	$	1.88	$	1.64
Diluted earnings per share:
Net income	$	92,778	$	90,150	$	82,138
Average common shares outstanding		46,671		48,074		50,057
Dilutive effect of stock options		311		341		344

Diluted average common shares outstanding		46,982		48,415		50,401

Diluted earnings per share	$	1.97	$	1.86	$	1.63

During 2003, 2002, and 2001, options to purchase 370 shares, 354 shares, and 150 shares, respectively, were not included in the computation of diluted earnings per share because the exercise price of these options was greater than the average market price of the Company’s common stock, and, therefore, the effect would be antidilutive.

14.

COMPREHENSIVE INCOME

Comprehensive income includes net income as well as certain items that are reported directly within a separate component of stockholders’ equity that are not considered part of net income. Currently, the Company’s components of other comprehensive income are the unrealized gains (losses) on securities available for sale and the unrealized (losses) on certain derivatives. The following table summarizes reclassification adjustments and the related income tax effect to the components of other comprehensive income for the years ended December 31.


	2003			2002			2001
	(Dollar amounts in thousands)
Unrealized holding gains on available for sale securities arising during the period:
Unrealized net (losses) gains	$	(8,534	)	$	54,185		$	23,947
Related tax benefit (expense)		3,327			(21,132	)		(9,340	)

Net		(5,207	)		33,053			14,607

Less: Reclassification adjustment for net gains realized during the period:
Realized net gains on sales of available for sale securities		2,988			206			792
Related tax (expense)		(1,166	)		(81	)		(309	)

Net		1,822			125			483

Net unrealized holding (losses) gains on available for sale securities		(7,029	)		32,928			14,124

Unrealized holding (losses) on derivatives used in cash flow hedging relationships arising during the year:
Unrealized net (losses)		(502	)		(1,107	)		(3,060	)
Related tax benefit		195			432			1,194

Net		(307	)		(675	)		(1,866	)

Less: Amounts reclassified to interest expense:
Realized net (losses) on cash flow hedges		(1,027	)		(3,028	)		(76	)
Realized tax benefit		400			1,181			30

Net		(627	)		(1,847	)		(46	)

Net unrealized holding gains (losses) on derivatives used in cash flow hedging relationships		320			1,172			(1,820	)

Total other comprehensive (loss) income	$	(6,709	)	$	34,100		$	12,304

Activity in accumulated other comprehensive income (loss), net of tax, for the years ended December 31, 2001 through 2003 was as follows.


	Accumulated Unrealized (Losses) Gains on Securities Available for Sale			Accumulated Unrealized (Losses) on Hedging Activities			Accumulated Other Comprehensive (Loss) Income
	(Dollar amounts in thousands)
Balance, December 31, 2000	$	(7,039	)	$	—		$	(7,039	)
2001 change		14,124			(1,820	)		12,304

Balance, December 31, 2001		7,085			(1,820	)		5,265
2002 change		32,928			1,172			34,100

Balance, December 31, 2002		40,013			(648	)		39,365
2003 change		(7,029	)		320			(6,709	)

Balance, December 31, 2003	$	32,984		$	(328	)	$	32,656

15.

INCOME TAXES

Total income taxes (benefits) reported in the Consolidated Statements of Income for the years ended December 31, 2003, 2002, and 2001 include the following components.


	2003			2002		2001
	(Dollar amounts in thousands)
Current tax expense (benefit):
Federal	$	28,850		$	30,874	$	25,550
State		(26	)		705		(121	)

Total		28,824			31,579		25,429

Deferred tax expense (benefit):
Federal		907			512		1,574
State		1,158			42		(335	)

Total		2,065			554		1,239

Total income tax expense	$	30,889		$	32,133	$	26,668

Differences between the amounts reported in the consolidated financial statements and the tax bases of assets and liabilities result in temporary differences for which deferred tax assets and liabilities have been recorded. Deferred tax assets and liabilities as of December 31, 2003 and 2002 were as follows.


	2003			2002
	(Dollar amounts in thousands)
Deferred tax assets:
Reserve for loan losses	$	19,742		$	16,775
Depreciable assets		461			1,157
Accrued retirement benefits		1,306			1,751
State tax benefits		1,327			2,218
Other		2,380			1,826

Total deferred tax assets	$	25,216		$	23,727

Deferred tax liabilities:
Purchase accounting adjustments		(3,881	)		(1,435	)
Dividends receivable		(4,966	)		(3,469	)
Deferred loan fees		(3,230	)		(1,912	)
Other		(1,503	)		(1,669	)

Total deferred tax liabilities	$	(13,580	)	$	(8,485	)

Net deferred tax assets		11,636			15,242
Tax effect of adjustments related to other comprehensive income		(20,952	)		(25,136	)

Net deferred tax (liabilities) assets including adjustments	$	(9,316	)	$	(9,894	)

Net deferred tax liabilities are included in other liabilities in the accompanying Consolidated Statements of Condition. Management believes that it is more likely than not that the deferred tax assets will be fully realized, therefore no valuation allowance has been recorded as of December 31, 2003 or 2002. The net deferred tax assets of $11.6 million include $1.5 million of net deferred tax liabilities acquired in the CoVest Acquisition.

The differences between the statutory federal income tax rate and the effective tax rate on income for the years ended December 31, 2003, 2002, and 2001 are as follows.


	2003		2002		2001
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Tax exempt income, net of interest expense disallowance	(8.9	%)	(7.1	%)	(7.7	%)
State income tax, net of federal tax effect	0.1	%	0.4	%	(0.3	%)
Other, net	(1.2	%)	(2.0	%)	(2.5	%)

Effective tax rate	25.0	%	26.3	%	24.5	%

As of December 31, 2003, 2002, and 2001, the Company’s retained earnings includes an appropriation for an acquired thrift’s tax bad debt reserves of approximately $2.5 million for which no provision for federal or state income taxes has been made. If, in the future, this portion of retained earnings were distributed as a result of the liquidation of the Company or its subsidiaries, federal and state income taxes would be imposed at the then applicable rates.

16.

EMPLOYEE BENEFIT PLANS

Savings and Profit Sharing Plan - The Company has a defined contribution retirement savings plan (the “Plan”) which allows qualified employees, at their option, to make contributions up to 15% of pre-tax base salary through salary deductions under Section 401(k) of the Internal Revenue Code. At the employees’ direction, employee contributions are invested among a variety of investment alternatives. For employees who make voluntary contributions to the Plan, the Company contributes an amount equal to 2% of the employee’s compensation. At the Company’s discretion, an additional profit sharing amount may also be contributed up to a maximum of 6%. The Company’s matching contribution vests immediately, while the discretionary component gradually vests over 7 years based on the employee’s years of service. The cost of providing this plan was $4.1 million, $4.0 million, and $3.7 million in 2003, 2002, and 2001, respectively. The number of shares of the Company common stock held by the Plan was 1,964,540 at December 31, 2003, and 1,937,826 at December 31, 2002. The fair value of Company shares held by the Plan at December 31, 2003 and 2002 was $63.7 million and $51.8 million, respectively. The Plan received $1.5 million in dividends during 2003 and $1.4 million during 2002.

Pension Plan - The Company maintains a noncontributory defined benefit retirement plan (the “Pension Plan”) covering substantially all full-time employees that provides for retirement benefits based upon years of service and compensation levels of the participants. Actuarially determined pension costs are charged to current operations. The Company’s funding policy is to contribute amounts to its plan sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974, plus such additional amounts as the Company determines to be appropriate.

The following table summarizes the Pension Plan’s costs and obligations to participants for the years ended December 31. Amounts are based on December 31, 2003 and 2002 measurement dates, respectively.


	2003			2002
	(Dollar amounts in thousands)
Accumulated benefit obligation	$	22,454		$	17,808

Change in benefit obligation:
Projected benefit obligation at beginning of year	$	26,316		$	20,887
Service cost		3,218			2,797
Interest cost		1,770			1,539
Actuarial losses		4,145			2,992
Benefits paid		(1,888	)		(1,937	)
Plan amendments		—			38

Projected benefit obligation at end of year	$	33,561		$	26,316

Change in plan assets:
Fair value of plan assets of beginning of year	$	17,949		$	17,336
Actual return on plan assets		2,906			(1,109	)
Benefits paid		(1,888	)		(1,937	)
Employer contributions		5,400			3,659

Fair value of plan assets at end of year	$	24,367		$	17,949

Reconciliation of funded status:
Funded status	$	(9,194	)	$	(8,367	)
Unamortized prior service cost		41			49
Unrecognized net actuarial losses		13,587			10,582

Net amount recognized	$	4,434		$	2,264

Amounts recognized in the consolidated statements of condition consist of:
Prepaid benefit cost	$	4,434		$	2,264

The following actuarial assumptions were used to determine the actuarial present value of the projected benefit obligation at December 31, 2003 and 2002.


	2003		2002
Weighted-average assumptions at the end of the year:
Discount rate	6.25	%	6.75	%
Rate of compensation increase	4.50	%	4.50	%

Net periodic benefit pension expense for the year ended December 31 included the following components.


	2003			2002			2001
	(Dollar amounts in thousands)
Components of net periodic benefit cost:
Service cost	$	3,218		$	2,797		$	2,230
Interest cost		1,770			1,539			1,257
Expected return on plan assets		(2,168	)		(1,945	)		(1,456	)
Recognized net actuarial loss		402			96			—
Amortization of prior service cost		8			(26	)		(81	)

Net periodic cost	$	3,230		$	2,461		$	1,950

The following actuarial assumptions were used to determine the net periodic benefit expense for the year ended December 31, 2003, 2002 and 2001.


	2003		2002		2001
Weighted-average assumptions:
Discount rate	6.75	%	7.25	%	7.75	%
Expected return on plan assets	8.75	%	9.00	%	9.00	%
Rate of compensation increase	4.50	%	4.50	%	4.50	%

The asset allocation for the Pension Plan assets as of the measurement date, by asset category, is as follows.


	Target Allocation 2004	Percentage of Plan Assets
	Target Allocation 2004	2003	2002
Asset Category:
Equity securities	45-55%	50%	48%
Fixed income	40-50%	44%	48%
Other	2-5%	6%	4%

Total		100%	100%

Determination of expected long-term rate of return - The expected long-term rate of return for the Pension Plan’s total assets is based on the expected return of each of the above categories, weighted based on the median of the target allocation for each class. Equity securities are expected to return 10% - 11% over the long-term, while cash and fixed income is expected to return between 4% and 6%. Based on historical experience, the Retirement Plans Committee expects that the Plan’s asset managers will provide a modest (.5% - 1% per annum) premium to their respective market benchmark indices.

Investment policy and strategy - The policy, as established by the Retirement Plans Committee, is to provide for growth of capital with a moderate level of volatility by investing assets per the target allocations state above. The assets are reallocated as needed by the fund manager to meet the above target allocations, and the investment policy is reviewed on a quarterly basis, under the advisement of a certified investment advisor, to determine if the policy should be changed.

Based on the actuarial assumptions, the Company expects to make $3.7 million in employer contributions to the Pension Plan in 2004. Estimated pension benefit payments, which reflect expected future service, for fiscal years 2004 through 2013, are as follows (dollar amounts in thousands).


2004	$	306
2005		387
2006		497
2007		662
2008		905
2009 - 2013		8,405

Other Plans of Merged Subsidiaries - As a result of the CoVest acquisition, the Company maintained a post-retirement benefit plan that provides certain post-retirement health care benefits to retired employees and directors of CoVest. In 2002, CoVest froze the plan with future benefits available only to current participants. The plan is accounted for in accordance with SFAS No. 106, “Employee Accounting for Post-retirement Benefits Other Than Pensions.” It is anticipated that the majority of the accumulated post-retirement benefit obligation will be paid out to participants, if elected, in the form of a lump-sum distribution in the first quarter 2004. The liability under this plan is not material to the Company’s consolidated financial statements.

17.

STOCK OPTION PLANS

Omnibus Stock and Incentive Plan (the “Omnibus Plan”) - In February 1989, the Board of Directors of the Company adopted the Omnibus Plan, which allows for the granting of both incentive and non-statutory (“nonqualified”) stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares to certain key

employees. The total number of shares of the Company’s common stock authorized for awards under the Omnibus Plan, as amended, is 6,431,641 of which 325,000 shares may be granted in restricted stock.

Since the inception of the Omnibus Plan, in February of each year certain key employees have been granted nonqualified stock options. The option exercise price is set at the fair market value of the Company common stock on the date the options are granted. All options have a term of ten years from the date of grant and vest over three years (subject to accelerated vesting in connection with death, disability or a change-in-control, as defined in the Omnibus Plan) with 50% exercisable after two years from the date of grant and the remaining 50% exercisable three years after the grant date.

Nonemployee Directors Stock Option Plan (the “Directors Plan”) - In 1997, the Board of Directors of the Company adopted the Directors Plan, which provides for the granting of nonqualified options for shares of common stock to nonmanagement Board members of the Company. A maximum of 281,250 nonqualified options for shares of common stock are authorized for grant under the Directors Plan. The timing, amounts, recipients, and other terms of the option grants are determined by the provisions of, or formulas in, the Directors Plan. The exercise price of the options is equal to the fair market value of the common stock on the grant date. All options have a term of ten years from the date of grant and become exercisable one year from the grant date subject to accelerated vesting in the event of retirement, death, disability, or a change-in-control, as defined in the Directors Plan. Directors elected during the service year are granted options on a pro-rata basis to those granted to the directors at the start of the service year.

Both the Omnibus Plan and the Directors Plan have been submitted to and approved by the stockholders of the Company.

A summary of the nonqualified stock option transactions under the Omnibus Plan and Directors Plan for the periods noted are as follows.


	Years ended December 31,
	2003				2002				2001
	Options		Average Exercise Price		Options		Average Exercise Price		Options		Average Exercise Price
	(Dollar amounts in thousands)
Outstanding at beginning of year	2,063		$	21.88	2,069		$	19.34	1,906		$	17.18
Granted	575			26.55	596			28.86	727			23.55
Exercised	(469	)		21.33	(580	)		19.84	(516	)		17.04
Forfeited	(31	)		26.26	(16	)		25.01	(48	)		21.83
Expired	(8	)		27.95	(6	)		28.72	—			—

Outstanding at end of year	2,130		$	23.17	2,063		$	21.88	2,069		$	19.34

Exercisable at end of year	1,074		$	19.87	989		$	19.55	809		$	16.52

The following is a summary of options outstanding and exercisable at December 31, 2003.


	Options Outstanding				Exercisable Options
Range of Exercise Prices	Number Outstanding	Average Life ⁽¹⁾	Average Exercise Price		Number Exercisable	Average Exercise Price
$10.77 - $18.55	583	4.42	$	16.76	583	$	16.76
$18.88 - $22.50	563	6.29		22.07	366		21.84
$22.73 - $26.70	484	8.93		26.18	17		24.09
$27.41 - $32.05	500	7.26		28.99	108		29.36

Total	2,130	6.61	$	23.17	1,074	$	19.87

⁽¹⁾	Represents the average contractual life remaining in years.

18.

STOCKHOLDER RIGHTS PLAN

On February 15, 1989, the Board of Directors of the Company adopted a Stockholder Rights Plan. Pursuant to that Plan, the Company declared a dividend, paid March 1, 1989, of one right (“Right”) for each outstanding share of the Company common stock held on record on March 1, 1989 pursuant to a Rights Agreement dated February 15, 1989. Each right entitles the registered holder to purchase from the Company 1/100 of a share of Series A Preferred Stock for a price of $100, subject to adjustment. The Rights will be exercisable only if a person or group has acquired, or announces the intention to acquire, 10% or more of the Company’s outstanding shares of common stock. The Company is entitled to redeem each for $0.01, subject to adjustment, at any time prior to the earlier of the tenth business day following the acquisition by any person or group of 10% or more of the outstanding shares of the Company common stock, or the expiration of the Rights in November, 2005.

As a result of the Rights distribution, 600,000 of the 1,000,000 shares of authorized preferred stock were reserved for issuance as Series A Preferred Stock.

19.

REGULATORY AND CAPITAL MATTERS

The Company and its subsidiaries are subject to various regulatory requirements that impose restrictions on cash, loans or advances, and dividends. The Company’s subsidiary banks are required to maintain reserves against deposits. Reserves are held either in the form of vault cash or non-interest bearing balances maintained with the Federal Reserve Bank and are based on the average daily balances and statutory reserve ratios prescribed by the type of deposit account. At December 31, 2003 and 2002, reserve balances of $69.2 million and $57.0 million, respectively, were maintained in fulfillment of these requirements.

Under current Federal Reserve regulations, the Company’s subsidiary banks are limited in the amount they may loan or advance to the parent company and its nonbank subsidiaries. Loans or advances to a single Subsidiary may not exceed 10% and loans to all subsidiaries may not exceed 20% of the bank’s capital stock and surplus, as defined. Loans from subsidiary banks to nonbank subsidiaries, including the parent company, are also required to be collateralized.

The principal source of cash flow for the Company is dividends from its banking and other subsidiaries. Various Federal and state banking regulations and capital guidelines limit the amount of dividends that may be paid to the Company by its subsidiary banks. Future payment of dividends by the subsidiaries is dependent on individual regulatory capital requirements and levels of profitability. Without prior regulatory approval, the subsidiary banks can initiate aggregate dividend payments in 2004 of $218.9 million plus an additional amount equal to their net profits for 2004, as defined by statute, up to the date of any such dividend declaration. Since the Company is a legal entity, separate and distinct from its subsidiaries, the dividends of the Company are not subject to such bank regulatory guidelines.

The Company and its subsidiary banks are also subject to various capital requirements set up and administered by the Federal banking agencies. Under capital adequacy guidelines, the Company and its subsidiary banks must meet specific guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components of capital and assets, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and its subsidiary banks to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital to average assets (as defined). Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary, actions by regulators that, if undertaken, could have a material effect on the Company’s financial statements. As of December 31, 2003, the Company and its subsidiary banks meet all capital adequacy requirements to which they are subject.

As of December 31, 2003, the most recent regulatory notification classified the Company’s subsidiary banks as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized”, the subsidiary banks must maintain minimum Total and Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the subsidiary banks’ classification.

The following table summarizes the actual capital ratios for the Company and its subsidiary banks, as well as those required to be categorized as adequately capitalized and “well capitalized.”


	First Midwest Actual				For Capital Adequacy Purposes				Well Capitalized for FDICIA
	Capital		Ratio		Capital		Ratio		Capital		Ratio
	(Dollar amounts in thousands)
As of December 31, 2003:
Total capital (to risk-weighted assets):
First Midwest Bancorp, Inc	$	572,815	11.41	%	$	401,620	8.00	%	$	502,025	10.00	%
First Midwest Bank		494,221	10.82			365,526	8.00			456,907	10.00
CoVest Banc		50,317	12.01			33,524	8.00			41,904	10.00
Tier 1 capital (to risk-weighted assets):
First Midwest Bancorp, Inc		516,411	10.29			200,810	4.00			301,215	6.00
First Midwest Bank		445,037	9.74			182,763	4.00			274,144	6.00
CoVest Banc		45,006	10.74			16,762	4.00			25,143	6.00
Tier 1 leverage (to average assets):
First Midwest Bancorp, Inc		516,411	8.49			182,481	3.00			304,135	5.00
First Midwest Bank		445,037	7.26			183,774	3.00			306,290	5.00
CoVest Banc		45,006	7.55			17,887	3.00			29,812	5.00

As of December 31, 2002:
Total capital (to risk-weighted assets):
First Midwest Bancorp, Inc	$	482,512	11.03	%	$	349,960	8.00	%	$	437,450	10.00	%
First Midwest Bank		460,426	10.56			348,826	8.00			436,033	10.00
Tier 1 capital (to risk-weighted assets):
First Midwest Bancorp, Inc		434,583	9.93			174,980	4.00			262,470	6.00
First Midwest Bank		412,497	9.46			174,413	4.00			261,620	6.00
Tier 1 leverage (to average assets):
First Midwest Bancorp, Inc		434,583	7.32			178,126	3.00			296,877	5.00
First Midwest Bank		412,497	7.01			176,683	3.00			294,471	5.00

As discussed in Note 11, “Subordinated Debt – Trust Preferred Securities,” commencing on page 61 of this Form 10-K, the capital securities held by FMCT I qualify as Tier 1 capital for the Company under FRB guidelines. In calculating the amount of Tier 1 qualifying capital, the FRB currently allows the inclusion in Tier 1 capital securities such as the capital securities issued by FMCT I up to an amount not to exceed 25% of total Tier 1 capital. As of December 31, 2003, the Company’s Tier 1 capital totaled $ 516.4 million, of which $125.0 million, or 24% would have been attributable to the capital securities.

As a result of the issuance of FIN 46R, the FRB is currently evaluating whether deconsolidation of the trust will affect the qualification of the preferred securities as Tier 1 capital. It is possible that a change in the FRB guidelines may result in these securities qualifying for Tier 2 capital rather than Tier 1 capital. If Tier 2 capital treatment had been required at December 31, 2003, the Company would remain “well capitalized” under the Federal Reserve requirements.

20.

COMMITMENTS, GUARANTEES, AND CONTINGENT LIABILITIES

Credit Extension Commitments and Guarantees

In the normal course of business, the Company enters into a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers, to reduce its exposure to fluctuations in interest rates and to conduct lending activities. These instruments principally include commitments to extend credit, standby letters of credit and commercial letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Condition. The contractual or notional amounts of these financial instruments at December 31 were as follows.


	2003		2002
	(Dollar amounts in thousands)
Commitments to extend credit:
Fixed rate	$	100,120	$	229,309
Floating rate		1,066,289		848,132
Letters of credit:
Standby		105,709		85,375
Commercial		755		774

The amount of unused home equity lines of credit included in commitments to extend credit totaled $252.9 million and $195.1 million at December 31, 2003 and 2002, respectively.

Credit Commitments - Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses, have variable interest rates tied to prime rate, and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash-flow requirements.

Standby and commercial letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party and are most often issued in favor of a municipality where construction is taking place to ensure that the borrower adequately completes the construction. Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party. This type of letter of credit is typically issued on behalf of a customer who is generally involved in an international business activity such as the importing of goods.

In the event of a customer’s nonperformance, the Company’s credit loss exposure is represented by the contractual amount of those commitments. The credit risk is essentially the same as that involved in extending loans to customers and is subject to normal credit policies. The Company uses the same credit policies in making credit commitments as it does for on-balance sheet instruments, with such exposure to credit loss minimized due to various collateral requirements in place.

The maximum potential future payments guaranteed by the Company under standby letters of credit arrangements is represented by the contractual amount of the commitment. At December 31, 2003, the carrying value of the Company’s standby letters of credit, which is included in other liabilities in the Consolidated Statements of Condition, totaled $449 thousand. The current liability reflects the fair value of the guarantee associated with standby letters of credit originated since January 1, 2003, the implementation date of the recognition provisions of FIN 45. At December 31, 2003, standby letters of credit had a remaining weighted-average term of approximately 9.7 months, with remaining actual lives ranging from less than 1 year to 11.9 years. If a commitment is funded, the Company may seek recourse through the underlying collateral provided including real estate, physical plant and property, marketable securities, or cash.

Legal Proceedings

As of December 31, 2003, there were certain legal proceedings pending against the Company and its subsidiaries in the ordinary course of business. The Company does not believe that liabilities, individually or in the aggregate, arising from these proceedings, if any, would have a material adverse effect on the consolidated financial condition of the Company as of December 31, 2003.

21.

VARIABLE INTEREST ENTITIES

A variable interest entity (“VIE”) is a partnership, limited liability company, trust or other legal entity that does not have sufficient equity to permit it to finance its activities without additional subordinated financial support from other parties, or whose investors lack one of three characteristics associated with owning a controlling financial interest. Those characteristics are: (i) the direct or indirect ability to make decisions about an entity’s activities through voting rights or similar rights; (ii) the obligation to absorb the expected losses of an entity if they occur; and (iii) the right to receive the expected residual returns of the entity, if they occur.

FIN 46R addresses the consolidation of VIEs. This interpretation is summarized in Note 2, “Recent Accounting Pronouncements,” commencing on page 52 of this Form 10-K. Under FIN 46R, VIEs are consolidated by the party who is

exposed to a majority of the VIE’s expected losses and/or residual returns (i.e., the primary beneficiary). Effective December 31, 2003, the Company adopted the provisions of FIN 46R for all interests held in a VIE. The Company evaluated various entities in which it held an interest to determine if these entities met the definition of a “VIE”, and whether the Company was the primary beneficiary and should consolidate the entity based on the variable interests it held. The following provides a summary of the VIEs in which the Company has a significant interest and discusses the accounting changes that resulted from the adoption of FIN 46R.

The Company owns 100% of the common stock of a business trust that was formed in November 2003 to issue trust preferred securities to third party investors. The trust’s only assets, which totaled $128.7 million at December 31, 2003, are debentures issued by the Company that were acquired by the trust using proceeds from the issuance of preferred securities and common stock. The trust meets the FIN 46R definition of a VIE, but the Company is not the primary beneficiary of the trust. Accordingly, the trust is not consolidated in the Company’s financial statements and is accounted for using the equity method. The subordinated debentures issued by the Company to the trust are reflected in the Company’s Consolidated Statement of Condition as “Subordinated debt—trust preferred securities.”

As a consequence of the December 31, 2003, CoVest Acquisition, the Company holds interest in 21 trust preferred capital security issuances within its investment portfolio. While these investments may meet the FIN 46R definition of a VIE, the Company is not the primary beneficiary. The Company accounts for its interest in these investments as available for sale securities. The Company’s maximum exposure to loss is limited to its investment in these VIE, which at December 31, 2003, had a total book and market value of $1.9 million.

The Company has a significant limited partner interest in 10 low-income housing tax credit partnerships, acquired at various times from 1997 to 2003. These entities meet the FIN 46R definition of a VIE. However, the Company is not the primary beneficiary of the entities, and, as such, will continue to account for its interest in these partnerships on the cost method. Exposure to loss as a result of its involvement with these entities is limited to the approximately $4.2 million book basis of the Company’s investment, which included unfunded commitments to make future investments.

The Company also holds an insignificant equity interest in 10 community development corporations, most of which are not-for-profit entities and, therefore, outside the scope of FIN 46R. While certain of these entities may meet the FIN 46R definition of a VIE, the Company is not the primary beneficiary of any of these entities as a result of its insignificant interest. As such, the Company will continue to account for its interest in these partnerships on the cost or equity method. Exposure to loss as a result of its involvement with these entities is limited to the approximately $173 thousand book basis of the Company’s investment.

The Company also holds an insignificant limited partnership interest in a partnership that was formed in 2000 for purposes of offering title services. The partnership has no material asset balance and distributes all income to the partners. While this entity may meet the FIN 46R definition of a VIE, the Company is not the primary beneficiary as a result of its insignificant interest. The Company’s maximum exposure to loss is limited to its investment in the partnership, which is less than $8 thousand.

22.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounting principles generally accepted in the United States require disclosure of the estimated fair values of certain financial instruments, both assets and liabilities, on and off-balance sheet, for which it is practical to estimate the fair value. Because the estimated fair values provided herein exclude disclosure of the fair value of certain other financial instruments and all non-financial instruments, any aggregation of the estimated fair value amounts presented would not represent the underlying value of the Company. Examples of non-financial instruments having significant value include the future earnings potential of significant customer relationships and the value of the Company’s trust division operations and other fee-generating businesses. In addition, other significant assets including property, plant and equipment, and goodwill are not considered financial instruments and, therefore, have not been valued.

Various methodologies and assumptions have been utilized in management’s determination of the estimated fair value of the Company’s financial instruments, which are detailed below. The fair value estimates are made at a discrete point in time based upon relevant market information. Because no market exists for a significant portion of these financial instruments, fair value estimates are based on judgments regarding future expected economic conditions and loss experience and risk characteristics of the financial instruments. These estimates are subjective, involve uncertainties, and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The following methods and assumptions were used in estimating the fair value of financial instruments.

Short-Term Financial Assets and Liabilities - Financial instruments with a short or no stated maturity, prevailing market rates, and limited credit risk, carrying amounts approximate fair value. Those financial instruments include cash and due from banks, funds sold and other short-term investments, mortgages held for sale, corporate owned life insurance, accrued interest receivable, and accrued interest payable.

Securities Available for Sale and Held to Maturity - The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans - The fair value of loans was estimated using present value techniques by discounting the future cash flows of the remaining maturities of the loans, and, if applicable, prepayment assumptions were considered based on historical experience and current economic and lending conditions. The discount rate was based on the London Interbank Offering Rate (“Libor”) yield curve, with rate adjustments for liquidity and credit risk. The primary impact of credit risk on the present value of the loan portfolio, however, was accommodated through the use of the reserve for loan losses, which is believed to represent the current fair value of probable future losses for purposes of the fair value calculation.

Deposit Liabilities - The fair value of demand, savings, money market deposits, and fixed-maturity certificates of deposits was estimated using a discounted cash flow analysis based on the LIBOR yield curve. The cash flows used for demand, savings, and money market deposits were developed using a weighted average life based on current and historical experiences regarding portfolio retention and interest rate repricing behavior.

Borrowed Funds - The fair value of repurchase agreements and FHLB advances is estimated by discounting the agreements based on maturities using the rates currently offered for repurchase agreements of similar remaining maturities. The carrying amounts of funds purchased and other borrowed funds approximate their fair value due to their short-term nature.

Subordinated Debt-Trust Preferred Securities - The fair value of subordinated debt was determined using available market quotes.

Derivative Assets and Liabilities - The fair value of derivative instruments are based either on cash flow projection models acquired from third parties or observable market price.

Commitments - Given the limited interest rate exposure posed by the commitments outstanding at year-end due to their general variable nature, coupled with the general short-term nature of the commitment periods entered into, termination clauses provided in the agreements, and the market rate of fees charged, the Company has estimated the fair value of commitments outstanding to be immaterial.

The carrying amount and estimated fair value of the Company’s financial instruments at December 31, 2003 and 2002 are as follows.


	2003				2002
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(Dollar amounts in thousands)
Financial Assets:
Cash and due from banks	$	186,900	$	186,900	$	195,153	$	195,153
Funds sold and other short-term investments		5,789		5,789		11,745		11,747
Mortgages held for sale		9,620		9,620		18,521		18,521
Securities available for sale		2,229,650		2,229,650		2,021,767		2,021,767
Securities held to maturity		67,446		67,514		69,832		69,987
Loans, net of reserve for loan losses		4,059,782		4,075,381		3,406,846		3,530,226
Accrued interest receivable		30,506		30,506		31,005		31,005
Investment in corporate owned life insurance		146,421		146,421		141,362		141,362
Derivative assets		38		38		—		—
Financial Liabilities:
Deposits	$	4,815,108	$	4,479,605	$	4,172,954	$	4,000,720
Borrowed funds		1,371,672		1,373,032		1,237,408		1,248,956
Subordinated debt-trust preferred securities		128,716		130,721		—		—
Derivative liabilities		538		538		1,063		1,063
Accrued interest payable		6,828		6,828		8,503		8,503

23.

SUPPLEMENTARY CASH FLOW INFORMATION

Supplemental disclosures to the Consolidated Statements of Cash Flows for the three years ended December 31 are as follows.


	2003		2002		2001
	(Dollar amounts in thousands)
Income taxes paid	$	30,573	$	27,495	$	25,056
Interest paid to depositors and creditors		82,988		112,638		191,175
Non-cash transfers of loans to foreclosed real estate		2,677		8,216		5,030
Dividends declared but unpaid		10,264		8,982		8,303

24.

RELATED PARTY TRANSACTIONS

The Company, through its subsidiary banks, has made loans and had transactions with certain of its directors and executive officers. However, all such loans and transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. The Securities and Exchange Commission has determined that, with respect to the Company and significant subsidiaries, disclosure of borrowings by directors and executive officers and certain of their related interests should be made if the loans are greater than 5% of stockholders’ equity, in the aggregate. These loans totaling $1.1 million and $.7 million in aggregate were not greater than 5% of stockholders’ equity at December 31, 2003 or 2002, respectively.

25.

CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

The following represents the condensed financial statements of First Midwest Bancorp, Inc., the parent company.

Statements of Condition

(parent company only)


	December 31,
	2003		2002
	(Dollar amounts in thousands)
Assets
Cash and interest-bearing deposits	$	31,936	$	27,063
Investment in and advances to subsidiaries		569,197		461,973
Goodwill		56,955		8,943
Other intangible assets		14,612		—
Other assets		15,067		13,385

Total assets	$	687,767	$	511,364

Liabilities and Stockholders’ Equity
Subordinated debt - trust preferred securities	$	128,716	$	—
Accrued expenses and other liabilities		36,511		19,411
Stockholders’ equity		522,540		491,953

Total liabilities and stockholders’ equity	$	687,767	$	511,364

Statements of Income

(parent company only)


	Years ended December 31,
	2003		2002		2001
	(Dollar amounts in thousands)
Income
Dividends from subsidiaries	$	54,160	$	92,310	$	69,547
Interest income		477		376		1,221
Security transactions and other income		15		319		519

Total income		54,652		93,005		71,287

Expenses
Interest expense		1,082		—		—
Salaries and employee benefits		4,215		3,155		2,802
Amortization of intangible assets		—		149		880
Other expenses		2,812		2,659		2,092

Total expenses		8,109		5,963		5,774

Income before income tax expense and equity in undistributed income of subsidiaries		46,543		87,042		65,513
Income tax benefit		2,948		1,831		1,652

Income before undistributed income of subsidiaries		49,491		88,873		67,165
Equity in undistributed income of subsidiaries		43,287		1,277		14,973

Net income	$	92,778	$	90,150	$	82,138

Statements of Cash Flows

(parent company only)


	Years ended December 31,
	2003			2002			2001
	(Dollar amounts in thousands)
Operating Activities
Net income	$	92,778		$	90,150		$	82,138
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed income from subsidiaries		(43,287	)		(1,277	)		(14,973	)
Depreciation of premises, furniture, and equipment		49			57			87
Net (gains) losses on sales of securities		—			(254	)		2
Tax benefit from employee exercises of nonqualified stock options		920			985			979
Net amortization of goodwill and other intangibles		—			149			880
Net (increase) decrease in other assets		(17,462	)		397			6,032
Net increase (decrease) in other liabilities		15,818			(380	)		(1,497	)

Net cash provided by operating activities		48,816			89,827			73,648

Investing Activities
Purchases of securities available for sale		(9,035	)		(1,346	)		(1,218	)
Proceeds from sales of securities available for sale		—			954			824
Purchase of other assets, net of sales		(28	)		833			2,096
Acquisition, net of cash acquired		(108,658	)		—			—

Net cash (used) provided by investing activities		(117,721	)		441			1,702

Financing Activities
Proceeds from the issuance of subordinated debt		128,715			—			—
Net purchases of treasury stock		(22,404	)		(52,117	)		(64,582	)
Proceeds from issuance of treasury stock		6			9			16
Cash dividends paid		(35,560	)		(32,879	)		(32,297	)
Exercise of stock options		3,021			5,278			2,243

Net cash provided (used) by financing activities		73,778			(79,709	)		(94,620	)

Net increase (decrease) in cash and cash equivalents		4,873			10,559			(19,270	)
Cash and cash equivalents at beginning of year		27,063			16,504			35,774

Cash and cash equivalents at end of year	$	31,936		$	27,063		$	16,504

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9a. CONTROLS AND PROCEDURES

(a)	Evaluation of disclosure controls and procedures.

Within 90 days prior to the filing date of this report (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and its Executive Vice President, Chief Financial Officer and Principal Accounting Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-14 and 15d-14 of the Securities and Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the President and Chief Executive Officer and Executive Vice President, Chief Financial Officer and Principal Accounting Officer concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b)	Changes in internal controls.

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date nor were there any significant deficiencies or material weaknesses in the Company’s internal controls.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company’s executive officers are elected annually by the Company’s Board of Directors. Certain information regarding the Company’s executive officers is set forth below.


Name (Age)	Position or Employment for Past Five Years	Executive Officer Since
John M. O’Meara (58)	President and, since 2003, Chief Executive Officer of the Company; Chairman and Chief Executive Officer of the Bank; prior to 2003, Chief Operating Officer of the Company	1987
Michael Kozak (52)	Executive Vice President and Chief Credit Officer of the Bank since 2004; prior thereto, Senior Vice President, Regional Credit Office since 1997	2004
Mark M. Dietrich (56)	Group Executive Vice President and Chief Operations Officer of the Bank	2002
Thomas J. Schwartz (54)	Group President, Commercial Banking of the Bank since 2000; prior thereto, Regional President of the Bank’s North Metro Region	2002
Michael L. Scudder (43)	Executive Vice President, Chief Financial Officer and Principal Accounting Officer of the Company since 2002; Group Executive Vice President, and Chief Financial Officer of the Bank	2002
Steven H. Shapiro (45)	Executive Vice President and Corporate Secretary since 2003; prior thereto, Deputy General Counsel and Assistant Secretary of FMC Technologies, Inc., since 2001, and Associate General Counsel and Assistant Secretary of FMC Corporation since 1998	2003
Janet M. Viano (48)	Group President, Retail Banking of the Bank since 2000; prior thereto, Director of Customer Service of the Bank	2002
Terry G. Beaudry (55)	Group President Trust Division, Chief Operating Officer since 2001; prior thereto, President and Chief Executive Officer of First Midwest Trust Company	2004
Kent S. Belasco (52)	Executive Vice President and Chief Information Officer since 1991	2004
Stephanie R. Wise (36)	Executive Vice President, Business and Institutional Services since 2003; prior thereto, Executive Vice President E-Commerce Division Manager since 2000, and Senior Vice President, Cash Management Division Manager since 1997	2004

The information required by this item concerning Directors is incorporated herein by reference to the caption “ELECTION OF DIRECTORS” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

The information required by this item concerning Section 16 (a) Beneficial Ownership Reporting Compliance is incorporated herein by reference to the caption “SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to the caption “EXECUTIVE COMPENSATION” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

The Compensation Committee’s Report on Executive Compensation and Stock Performance graph contained in the “Executive Compensation” section of the Registrant’s Proxy Statement shall not be deemed incorporated by reference by any general statement incorporating by reference the Registrant’s Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Registrant specifically incorporates this information by reference, and shall not otherwise be deemed “filed” under such Acts.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

Security ownership information of certain beneficial owners and management is incorporated herein by reference to the caption “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANGEMENT” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to the caption “CERTAIN RELATIONS AND RELATED TRANSACTIONS” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated herein by reference to the caption “PRINCIPAL ACCOUNTING FEES AND SERVICES” of the Registrant’s Proxy Statement for the 2004 Annual Meeting of Stockholders.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND

REPORTS ON FORM 8-K

(a) (1)

Financial Statements

The following consolidated financial statements of the Registrant and its subsidiaries are filed as a part of this document under “Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.”

Consolidated Statements of Condition as of December 31, 2003 and 2002.

Consolidated Statements of Income for the years ended December 31, 2003, 2002, and 2001.

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2003, 2002, and 2001.

Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002, and 2001.

Notes to Consolidated Financial Statements.

Report of Independent Auditors.

(a) (2)

Financial Statement Schedules

The schedules for the Registrant and its subsidiaries are omitted because of the absence of conditions under which they are required, or because the information is set forth in the consolidated financial statements or the notes thereto.

(a) (3)

Exhibits

See Exhibit Index commencing on page 85.

(b)	Reports on Form 8-K

The following Current Reports on Form 8-K were filed or furnished during the fourth quarter of 2003:

On October 10, 2003, the Company announced investment grade ratings issued by S & P Credit Rating Service.

On October 22, 2003, the Company announced its earning results for the quarter and nine months ended September 30, 2003.

On November 11, 2003, the Company announced the placement of $125,000,000 in trust preferred securities.

On December 31, 2003, the Company announced the completion of the CoVest Bancshares, Inc acquisition.

Management’s Report

To Our Stockholders:

The accompanying consolidated financial statements were prepared by management, which is responsible for the integrity and objectivity of the data presented. In the opinion of management, the financial statements, which necessarily include amounts based on management’s estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States.

Management depends upon the Company’s system of internal controls in meeting its responsibilities for reliable financial statements. This system is designed to provide reasonable assurance that assets are safeguarded and that transactions are properly recorded and executed in accordance with management’s authorization. Judgments are required to assess and balance the relative cost and the expected benefits of these controls. As an integral part of the system of internal controls, the Company relies upon a professional Internal Audit function that conducts operational, financial, and special audits, and coordinates audit coverage with the Independent Auditors.

The consolidated financial statements have been audited by the Independent Auditors, Ernst and Young LLP, who render an independent professional opinion on management’s financial statements.

The Audit Committee of the Company’s Board of Directors, composed solely of outside directors, meets regularly with the Internal Auditors, the Independent Auditors and management to assess the scope of the annual examination plan and to discuss audit, internal control and financial reporting issues, including major changes in accounting policies and reporting practices. The Internal Auditors and the Independent Auditors have free access to the Audit Committee, without management present, to discuss the results of their audit work and their evaluations of the adequacy of internal controls and the quality of financial reporting.



/s/ J OHN M. O’M EARA				/s/ M ICHAEL L. S CUDDER

John M. O’Meara President and Chief Executive Officer				Michael L. Scudder Executive Vice President, Chief Financial Officer, and Principal Accounting Officer

January 20, 2004

Report of Independent Auditors

The Board of Directors and Stockholders

First Midwest Bancorp, Inc:

We have audited the accompanying consolidated statements of condition of First Midwest Bancorp, Inc. as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of First Midwest Bancorp, Inc. as of December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

/S/ ERNST & YOUNG LLP

Ernst & Young LLP

Chicago, Illinois

January 20, 2004

EXHIBIT INDEX


Exhibit Number		Description of Documents

3.1		Restated Certificate of Incorporation is incorporated herein by reference to Exhibit 3 to the Quarterly Report on Form 10-Q dated March 31, 2002.

3.2		Restated Bylaws of the Company is incorporated herein by reference to Exhibit 3 to the Quarterly Report on Form 10-Q dated June 30, 2003.

4.1		Amended and Restated Rights Agreement, Form of Rights Certificate and Designation of Series A Preferred Stock of the Company, dated November 15, 1995, is incorporated herein by reference to Exhibits (1) through (3) of the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on November 21, 1995.

4.2		First Amendment to Rights Agreements, dated June 18, 1997, is incorporated herein by reference to Exhibit 4 of the Company’s Amendment No. 2 to the Registration Statement on Form 8-A filed with the Securities and Exchange Commission on June 30, 1997.

4.3		Registration Rights Agreement dated as of November 18, 2003 by and among First Midwest Bancorp, Inc. and First Midwest Capital Trust I.

4.4		Amended and Restated Declaration of Trust of First Midwest Capital Trust I dated November 18, 2003.

4.5		Indenture dated as of November 18, 2003.

4.6		Series A Capital Securities Agreement dated November 18, 2003.

10.1		Loan Agreement between First Midwest Bancorp, Inc. and M&I Marshall & Ilsley Bank dated October 16, 1998, as amended is incorporated herein by reference to Exhibit 10 to the Quarterly Report on Form 10-Q dated September 30, 2003.

10.6		Restated Savings and Profit Sharing Plan is incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2002.

10.3		Restated Omnibus Stock and Incentive Plan is incorporated herein by reference to Exhibit 10 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.4		Amended and Restated Non-Employee Directors’ 1997 Stock Option Plan is incorporated herein by reference to Exhibit 10 to the Quarterly Report on Form 10-Q dated September 30, 2000.

10.5		Amendment to the Amended and Restated Non-Employee Directors’ 1997 Stock Option Plan is herein incorporated by reference to Exhibit 10 to the Quarterly Report on Form 10-Q dated June 30, 2003.

10.6		Restated Nonqualified Stock Option-Gain Deferral Plan is incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.7		Restated Deferred Compensation Plan for Nonemployee Directors is incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.8		Restated Nonqualified Retirement Plan is incorporated herein by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.9		Form of Letter Agreement for Nonqualified Stock Options Grant executed between the Company and the executive officers of the Company pursuant to the Company’s Omnibus Stock and Incentive Plan is incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.10		Form of Letter Agreement for Nonqualified Stock Options Grant executed between the Company and the directors of the Company pursuant to the Company’s Non-Employee Directors’ 1997 Stock Option Plan is incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated June 30, 2003.

10.11		Form of Letter Agreement for Nonqualified Stock Option Grant executed between the Company and former executive of the Company is incorporated herein by reference to Exhibit 10 to the Quarterly Report on Form 10-Q dated March 31, 2003.



10.12		Form of Indemnification Agreements executed between the Company and executive officers and directors of the Company is incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K dated December 31, 1991.

10.13		Form of Employment Agreements executed between the Company and certain executive officers of the Company is incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K dated December 31, 1997.

10.14		Retirement and Consulting Agreement and Continuing Participant Agreement to the Omnibus Stock and Incentive Plan executed between the Company and former executive of the Company is incorporated herein by reference to Exhibit 10.1 and 10.2 to the Quarterly Report on Form 10-Q dated June 30, 2002.

10.15		Retirement and Consulting Agreement and Continuing Participant Agreement to the Omnibus Stock and Incentive Plan executed between the Company and former executive of the Company is incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K dated December 31, 2002.

10.16		Form of Split-Dollar Life Insurance Agreements executed between the Company and certain executive officers of the Company is incorporated herein by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K dated December 31, 1991.

10.17		Form of Amendment to Split-Dollar Life Insurance Agreements executed between the Company and certain executive officers of the Company is incorporated herein by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K dated December 31, 1992.

11		Statement re: Computation of Per Share Earnings - The computation of basic and diluted earnings per share is included in Note 13 of the Company’s Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATE” of this document.

12		Statement re: Computation of Ratio of Earnings to Fixed Charges.

14.1		Code of Ethics and Standards of Conduct.

14.2		Code of Ethics for Senior Financial Officers.

21		Subsidiaries of the Registrant.

23		Consents of Accountants.

31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Exhibits 10.3 through 10.17 are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to item 14(a)3.

All other Exhibits that are required to be filed with this form are not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


FIRST MIDWEST BANCORP, INC. Registrant

By		/s/ J OHN M. O’M EARA

		John M. O’Meara *President and Chief Executive Officer*

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in their capacities on March 8, 2004.


Signatures

/s/ R OBERT P. O’M EARA Robert P. O’Meara		Chairman of the Board

/s/ J OHN M. O’M EARA John M. O’Meara		President and Chief Executive Officer, and Director

/s/ M ICHAEL L. S CUDDER Michael L. Scudder		Executive Vice President, Chief Financial Officer, and Principal Accounting Officer

/s/ V ERNON A. B RUNNER Vernon A. Brunner		Director

/s/ B RUCE S. C HELBERG Bruce S. Chelberg		Director

/s/ O. R ALPH E DWARDS O. Ralph Edwards		Director

/s/ J OSEPH W. E NGLAND Joseph W. England		Director

/s/ B ROTHER J AMES G AFFNEY , FSC Brother James Gaffney, FSC		Director

/s/ T HOMAS M. G ARVIN Thomas M. Garvin		Director

/s/ P ATRICK J. M C D ONNELL Patrick J. McDonnell		Director

/s/ J OHN L. S TERLING John L. Sterling		Director

/s/ J. S TEPHEN V ANDERWOUDE J. Stephen Vanderwoude		Director

Exhibit 4.3

REGISTRATION RIGHTS AGREEMENT

Dated as of November 18, 2003

by and among

FIRST MIDWEST BANCORP, INC.

FIRST MIDWEST CAPITAL TRUST I

and

the Initial Purchasers referred to herein

1

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the " Agreement ") is made and entered into as of November 18, 2003 by and among FIRST MIDWEST BANCORP, INC., a Delaware corporation (the " Company "), FIRST MIDWEST CAPITAL TRUST I, a statutory trust created under the laws of the state of Delaware (the " Trust "), and the initial purchasers listed in Annex A hereto (each, an " Initial Purchaser, " and together, the " Initial Purchasers ").

This Agreement is made pursuant to the Purchase Agreement dated November 10, 2003 (the " Purchase Agreement "), among the Company, as issuer of 6.95% Junior Subordinated Deferrable Interest Debentures due December 1, 2033, Series A (the " Debentures "), the Trust and the Initial Purchasers, which provides for, among other things, the sale by the Trust to the Initial Purchasers on the date hereof of 125,000 of the Trust's 6.95% Capital Securities, Series A, liquidation amount $1,000 per Capital Security (the " Capital Securities "), the proceeds of which will be used by the Trust, together with the proceeds from the sale of the Trust's Common Securities to the Company, to purchase the Debentures. The Capital Securities, together with the Debentures and the Company's guarantee agreement in respect of the Capital Securities (the " Capital Securities Guarantee ") are collectively referred to as the "Securities." In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company and the Trust have agreed to provide the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows:

Definitions . As used in this Agreement, the following capitalized defined terms shall have the following meanings:

" Advice " shall have the meaning set forth in the last paragraph of Section 3 hereof.

" Applicable Period " shall have the meaning set forth in Section 3(r) hereof.

" Business Day " shall mean any day other than a Saturday or Sunday, or a day on which banking institutions in New York, New York are authorized or required by law or executive order to close.

" Closing Time " shall mean the Closing Time as defined in the Purchase Agreement.

" Company " shall have the meaning set forth in the preamble to this Agreement and also includes the Company's successors and permitted assigns.

" Declaration " or " Declaration of Trust " shall mean the Amended and Restated Declaration of Trust, to be dated as of November 18, 2003, by the trustees named therein and the Company as sponsor.

" Depositary " shall mean The Depository Trust Company, or any other depositary appointed by the Trust; provided , however , that such depositary must have an address in the Borough of Manhattan, in The City of New York.

" Effectiveness Period " shall have the meaning set forth in Section 2(b) hereof.

" Exchange Act " shall mean the Securities Exchange Act of 1934, as amended from time to time.

" Exchange Offer " shall mean the offer by the Company and the Trust to the Holders to exchange all of the Registrable Securities (other than Private Exchange Securities) for a like principal amount of Exchange Securities pursuant to Section 2(a) hereof.

" Exchange Offer Registration " shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof.

" Exchange Offer Registration Statement " shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

" Exchange Period " shall have the meaning set forth in Section 2(a) hereof.

" Exchange Securities " shall mean (i) with respect to the Debentures, the 6.95% Debentures due December 1, 2033, Series B (the " Exchange Debentures "), containing terms substantially identical to the Debentures (except that they will not contain terms with respect to the transfer restrictions under the Securities Act and will not provide for any increase in the interest rate thereon), (ii) with respect to the Capital Securities, the Trust's 6.95% Capital Securities, Series B, liquidation amount $1,000 per Capital Security (the " Exchange Capital Securities "), which will have terms substantially identical to the Capital Securities (except they will not contain terms with respect to transfer restrictions under the Securities Act and will not provide for any increase in the distribution rate thereon) and (iii) with respect to the Capital Securities Guarantee, the Company's guarantee agreement (the " Exchange Capital Securities Guarantee ") in respect of the Exchange Capital Securities which will have terms substantially identical to the Capital Securities Guarantee.

" Holder " shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their respective successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture or Declaration of Trust.

" Indenture " shall mean the Indenture relating to the Debentures and the Exchange Debentures to be dated as of the Closing Time among the Company, as issuer, and Wilmington Trust Company, as trustee, as the same may be amended from time to time in accordance with the terms thereof.

" Initial Purchasers " shall have the meaning set forth in the preamble to this Agreement.

" Inspectors " shall have the meaning set forth in Section 3(l) hereof.

" Issue Date " shall mean November 18, 2003, the date of original issuance of the Securities.

" Liquidated Damages " shall have the meaning set forth in Section 2(e) hereof.

" Majority Holders " shall mean the Holders of a majority of the aggregate liquidation amount of outstanding Capital Securities.

" Participating Broker-Dealer " shall have the meaning set forth in Section 3(r) hereof.

" Person " shall mean an individual, partnership, corporation, trust or unincorporated organization, limited liability company or a government or agency or political subdivision thereof.

" Private Exchange " shall have the meaning set forth in Section 2(a) hereof.

" Private Exchange Securities " shall have the meaning set forth in Section 2(a) hereof.

" Prospectus " shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein.

" Purchase Agreement " shall have the meaning set forth in the preamble to this Agreement.

" Records " shall have the meaning set forth in Section 3(l) hereof.

" Registrable Securities " shall mean the Securities and, if issued, the Private Exchange Securities; provided , however , that the Securities or Private Exchange Securities, as the case may be, shall cease to be Registrable Securities when (i) a Registration Statement with respect to such Securities or Private Exchange Securities for the exchange or resale thereof, as the case may be, shall have been declared effective under the Securities Act and such Securities or Private Exchange Securities, as the case may be, shall have been disposed of pursuant to such Registration Statement, (ii) such Securities or Private Exchange Securities, as the case may be, shall have been sold to the public or be eligible for sale to the public pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act or are eligible to be sold without restriction as contemplated by Rule 144(k), (iii) such Securities or Private Exchange Securities, as the case may be, shall have ceased to be outstanding or (iv) with respect to the Securities, such Securities shall have been exchanged for Exchange Securities upon consummation of the Exchange Offer and are thereafter freely tradable by the holder thereof (other than an affiliate of the Company or Participating Broker-Dealers).

" Registration Expenses " shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC or National Association of Securities Dealers, Inc. (the " NASD ") registration and filing fees, including, if applicable, the fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained by any Holder of Registrable Securities in accordance with the rules and regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities) and compliance with the rules of the NASD, (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus and any amendments or supplements thereto, and in preparing or assisting in preparing, printing and distributing any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) rating agency fees, (v) the fees and disbursements of counsel for the Company and of the independent certified public accountants of the Company, including the expenses of any "comfort" letters required by or incident to such performance and compliance, (vi) the fees and expenses of the Trustee and their counsel, and any exchange agent or custodian, (vii) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges, and (viii) the reasonable fees and expenses of any special experts retained by the Company in connection with any Registration Statement.

" Registration Statement " shall mean any registration statement of the Company and the Trust which covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

" Rule 144(k) Period " shall mean the period of two years (or such shorter period as may hereafter be referred to in Rule 144(k) under the Securities Act (or similar successor rule)) commencing on the Issue Date.

" SEC " shall mean the Securities and Exchange Commission.

" Securities " shall have the meaning set forth in the preamble to this Agreement.

" Securities Act " shall mean the Securities Act of 1933, as amended from time to time.

" Shelf Registration " shall mean a registration effected pursuant to Section 2(b) hereof.

" Shelf Registration Event " shall have the meaning set forth in Section 2(b) hereof.

" Shelf Registration Event Date " shall have the meaning set forth in Section 2(b) hereof.

" Shelf Registration Statement " shall mean a "shelf" registration statement of the Company and the Trust pursuant to the provisions of Section 2(b) hereof which covers all of the Registrable Securities or all of the Private Exchange Securities, as the case may be, on an appropriate form (which shall be Form S-3 if the Company is eligible to use such Form and such Form is otherwise available for use) under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

" TIA " shall have the meaning set forth in Section 3(j) hereof.

" Trustees " shall mean any and all trustees with respect to (i) the Capital Securities under the Declaration, (ii) the Debentures under the Indenture and (iii) the Capital Securities Guarantee.

Registration Under the Securities Act .

Exchange Offer . Except as set forth in Section 2(b) hereof, the Company and the Trust shall, for the benefit of the Holders, at the Company's cost, (i) cause to be filed with the SEC within 150 days after the Issue Date an Exchange Offer Registration Statement on an appropriate form under the Securities Act covering the Exchange Offer, (ii) use their reasonable good faith efforts to cause such Exchange Offer Registration Statement to be declared effective under the Securities Act by the SEC not later than the date which is 210 days after the Issue Date, and (iii) use their reasonable good faith efforts to keep such Exchange Offer Registration Statement effective for not less than 30 calendar days (except as set forth in Section 3(r) below or longer if required by applicable law) after the date notice of the Exchange offer is post marked to the Holders. In addition, in the event that the Company has filed a Shelf Registration Statement in accordance with the provisions of Section 2(b) in lieu of conducting an Exchange Offer in accordance with the foregoing sentence, the Company may, if permitted in accordance with then applicable laws or regulations and the then current interpretations of the staff of the SEC, elect to conduct an Exchange Offer in accordance with the terms set forth herein, other than with respect to the specific timing requirements set forth in the foregoing sentence. In the event the Company conducts such an Exchange Offer subsequent to the filing and effectiveness of a Shelf Registration Statement, the Company's obligations to maintain such a Shelf Registration shall terminate upon the consummation of the Exchange Offer with respect of any Holder which could have received securities that would be freely tradable without restriction under the Securities Act and applicable blue sky or state securities laws through its participation in the Exchange Offer. Upon the effectiveness of the Exchange Offer Registration Statement, the Company and the Trust shall promptly commence the Exchange Offer, it

being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for a like principal amount of Exchange Debentures or a like liquidation amount of Exchange Capital Securities, together with the Exchange Guarantee, as applicable (assuming that such Holder is not an affiliate of the Company within the meaning of Rule 405 under the Securities Act and is not a broker-dealer tendering Registrable Securities acquired directly from the Company for its own account, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements or understandings with any Person to participate in the Exchange Offer or in a public distribution (within the meaning of the Securities Act) for the purpose of distributing the Exchange Securities), to transfer such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and under state securities or blue sky laws.

In connection with the Exchange Offer, the Company and the Trust shall:

mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents (together, the "Notice");

keep the Exchange Offer open for acceptance for a period of not less than 30 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law) (such period referred to herein as the " Exchange Period "). The Exchange Offer shall be deemed to have been completed upon the earlier to occur of (i) the Company and the Trust having exchanged the Exchange Securities for all outstanding Capital Securities pursuant to the Exchange Offer, and (ii) the Company and the Trust having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Period, which shall be a date that is at least 30 days following the commencement of the Exchange Offer;

utilize the services of the Depositary for the Exchange Offer with respect to Capital Securities represented by a global certificate;

permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last Business Day of the Exchange Period in accordance with the instructions specified in the Notice;

notify each Holder by means of the Notice that any Security not tendered by such Holder in the Exchange Offer will remain outstanding and continue to accrue interest or accumulate distributions, as the case may be, but will not retain any rights under this Agreement (except in the case of the Participating Broker-Dealers as provided herein); and

otherwise comply in all material respects with all applicable laws relating to the Exchange Offer.

If any of the Initial Purchasers determine upon advice of outside counsel that it is not eligible to participate in the Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment in the initial placement, as soon as practicable upon receipt by the Company and the Trust of a written request from such Initial Purchaser, the Company and the Trust, as applicable, shall issue and deliver to such Initial Purchaser in exchange (the " Private Exchange ") for the Securities held by such Initial Purchaser a like liquidation amount of Exchange Capital Securities of the Trust or, in the event the Trust is liquidated and Debentures are distributed, a like principal amount of the Exchange Debentures of the Company, entitled to the benefits of the Exchange Capital Securities Guarantee (if applicable), in each case that are identical (except that such securities may bear a customary legend with respect to restrictions on transfer pursuant to the Securities Act) to the Exchange Securities

(the " Private Exchange Securities ") and which are issued pursuant to the Indenture or the Declaration (which provides that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture or the Declaration, as applicable, and that the Exchange Securities, the Private Exchange Securities and the Securities will vote and consent together on all matters as one class and that none of the Exchange Securities, the Private Exchange Securities or the Securities will have the right to vote or consent as a separate class on any matter). The Private Exchange Securities shall be of the same series as the Exchange Securities, and the Company and the Trust will seek to cause the CUSIP Service Bureau to issue the same CUSIP numbers for the Private Exchange Securities as for the Exchange Securities issued pursuant to the Exchange Offer.

As soon as practicable after the close of the Exchange Offer, and, if applicable, the Private Exchange, the Company and the Trust, as the case requires, shall:

accept for exchange all Securities tendered and not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;

deliver, or cause to be delivered, to the applicable Trustee for cancellation all Securities so accepted for exchange by the Company; and

issue, and cause the applicable Trustee under the Indenture, the Declaration or the Guarantee, as applicable, to promptly authenticate and deliver to each Holder, new Exchange Securities and Private Exchange Securities, as applicable, equal in principal amount to the principal amount of the Debentures or equal in liquidation amount to the liquidation amount to the Capital Securities (entitled to the benefits of the guarantee thereof) as are tendered by such Holder and will execute, and cause the applicable Trustee to execute, the Exchange Capital Securities Guarantee.

Distributions on each Exchange Capital Security and distributions or interest on each Exchange Debenture and Private Exchange Security issued pursuant to the Exchange Offer and in the Private Exchange will accumulate or accrue from the last date on which a distribution or interest was paid on the Capital Security or the Debenture surrendered in exchange therefor or, if no distribution or interest has been paid on such Capital Security or Debenture, from the Issue Date. Subject to the provisions of this Agreement, to the extent not prohibited by any law or applicable interpretation of the staff of the SEC, the Company and the Trust shall use their reasonable good faith efforts to complete the Exchange Offer as provided above, and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than as specified in this agreement and those conditions that are customary in similar exchange offers. Each Holder of Registrable Securities (other than Participating Broker-Dealers) who wishes to exchange such Registrable Securities for Exchange Securities in the Exchange Offer will be required to make certain customary representations in connection therewith, including representations that (i) it is not an affiliate of the Trust or the Company, (ii) the Exchange Securities to be received by it were acquired in the ordinary course of its business and (iii) at the time of the Exchange Offer, it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Capital Securities. Participating Broker-Dealers and others who cannot make such representations will not acquire freely-tradable Exchange Capital Securities and must comply with the registration and prospectus delivery requirements of the Securities Act.

Upon consummation of the Exchange Offer in accordance with this Section 2(a), the provisions of this Agreement shall continue to apply, mutatis mutandis , solely with respect to Registrable Securities that are Private Exchange Securities and Exchange Securities held by Participating Broker-Dealers, and the Company and the Trust shall have no further obligation to register the Registrable Securities (other than Private Exchange Securities) held by any Holder pursuant to Section 2(b) of this Agreement.

Shelf Registration

the Company or the Trust reasonably determine, after conferring with counsel (which may be in-house counsel), that the Exchange Offer Registration contemplated by Section 2(a) above is not available under applicable laws and regulations and prevailing interpretations of the staff of the SEC,

as a result of regulatory developments announced at any time prior to the consummation of the Exchange Offer (whether or not the Exchange Registration Statement has been filed with and declared effective by the SEC or the Exchange Period has commenced), the Exchange Capital Securities will not upon issuance constitute, or will not constitute after the issuance, Tier 1 Capital (or its then equivalent) of the Company (a "Capital Event"),

the Exchange Offer Registration Statement is not declared effective within 210 days of the Issue Date or the Exchange Offer is not consummated prior to the termination of the Exchange Period,

upon the request of any Participating Broker-Dealer (other than an Initial Purchaser holding Registrable Securities acquired directly from the Company) within 30 days following commencement of the Exchange Offer who is not eligible to participate in the Exchange Offer or who elects to participate in the Exchange Offer but does not receive Exchange Securities that are freely transferable without any limitations or restrictions under the Securities Act, or

upon the request of any of the Initial Purchasers within 5 days following commencement of the Exchange Offer (provided that, in the case of this clause (v), such Initial Purchaser holds Registrable Securities from an initial allotment that it acquired directly from the Company),

(any of the events specified in (i), (ii), (iii), (iv) or (v) being a " Shelf Registration Event " and the date of occurrence thereof, the " Shelf Registration Event Date "), then the Company and the Trust shall promptly deliver to the applicable Holders and the Property Trustee written notice thereof and shall, at their cost:

cause to be filed as promptly as practicable after such Shelf Registration Event Date, as the case may be, and within 45 days after such Shelf Registration Event Date (or such later date as is 150 days after the Issue Date), a Shelf Registration Statement providing for the sale by the applicable Holders of all of the Registrable Securities,

use their reasonable good faith efforts to have such Shelf Registration Statement declared effective by the SEC no later than 60 days following the filing of the Shelf Registration Statement. In the event the Company is required to file a Shelf Registration Statement pursuant to clause (iv) or (v) above, the Company shall file and use its reasonable good faith efforts to have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be combined with the Exchange Registration Statement) with respect to offers and sales of Registrable Securities held by such Holder or Initial Purchaser, as applicable,

No Holder of Registrable Securities shall be entitled to include any of its Registrable Securities in any Shelf Registration pursuant to this Agreement unless and until such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder and furnishes to the Company and the Trust in writing, within 15 days after receipt of a request therefor, such information as the Company and the Trust may, after conferring with counsel with regard to information relating to Holders that would be required by the SEC to be included in such Shelf Registration Statement or Prospectus included therein, reasonably request for inclusion in any Shelf Registration Statement or Prospectus included therein. By including any Registrable Securities in a Shelf Registration Statement, each Holder as to which any Shelf Registration is being effected will be deemed to agree to furnish in writing to the Company and the Trust all information with respect to such Holder necessary to make the information previously furnished to the Company by such Holder not materially misleading.

The Company and the Trust agree to use their reasonable good faith efforts to keep the Shelf Registration Statement continuously effective and usable for resales for (a) the Rule 144(k) Period in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(i), (ii), (iii) or (b) 180 days in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv) and (v) (subject, in each case, to extension pursuant to the last paragraph of Section 3 hereof), or for such shorter period which will terminate when all of the Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or cease to be Registrable Securities (the " Effectiveness Period "). The Company and the Trust shall not permit any securities other than Registrable Securities to be included in the Shelf Registration. The Company and the Trust will, in the event a Shelf Registration Statement is declared effective, provide to each Holder a reasonable number of copies of the Prospectus which is a part of the Shelf Registration Statement and notify each such Holder when the Shelf Registration has become effective. The Company and the Trust further agree, if necessary, to supplement or amend the Shelf Registration Statement, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for shelf registrations, and the Company and the Trust agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC.

Expenses . The Company shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) or 2(b) hereof and will reimburse the Initial Purchasers for the reasonable fees and disbursements of counsel for the Initial Purchasers incurred in connection with the Exchange Offer and, if applicable, the Private Exchange, and either counsel for the Initial Purchasers or any other single counsel designated in writing by the Majority Holders to act as counsel for the Holders of the Registrable Securities in connection with a Shelf Registration Statement. Except as provided herein, each Holder shall pay all expenses of its counsel, underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement.

Effective Registration Statement .

An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided , however , that if, after it has been declared effective, the offering of Registrable Securities pursuant to an Exchange Offer Registration Statement or a Shelf Registration Statement is suspended by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have been effective during the period of such interference until the offering of Registrable Securities pursuant to such Registration Statement may legally resume.

The Company may, by notice as described in Section 3(e), suspend the availability of a Shelf Registration Statement (and, if the Exchange Offer Registration Statement is being used in connection with the resale of Exchange Securities by Participating Broker-Dealers, the Exchange Offer Registration Statement) and the use of the related Prospectus for up to 45 consecutive days each, but no more than the aggregate of 90 days, upon the happening of any fact or the taking of any action referred to in Section 3(e)(vi), but subject to compliance by the Company with its obligations under the last paragraph of Section 3.

Additional Interest or Distributions . In the event that:

neither the Exchange Offer Registration Statement is filed with the SEC on or prior to the 150 ^th day after the Issue Date nor a Shelf Registration Statement is filed with the SEC on or prior to the 45 ^th day after the Shelf Registration Event Date in respect of a Shelf Registration Event attributable to any of the events set forth in 2(b) (provided that in no event shall such filing date be required to be earlier than 150 days after the Issue Date), then, commencing on the day after the applicable required filing date, additional interest shall accrue on the principal amount of the Debentures, and additional distributions shall accumulate on the liquidation amount of the Capital Securities, each at a rate of 0.25% per annum; or

neither the Exchange Offer Registration Statement nor a Shelf Registration Statement is declared effective by the SEC on or prior to the 60th day after the applicable required filing date, then, commencing on the day after the applicable required effective date, additional interest shall accrue on the principal amount of the Debentures, and additional distributions shall accumulate on the liquidation amount of the Capital Securities, each at a rate of 0.25% per annum; or

(A) the Trust has not exchanged Exchange Capital Securities for all Capital Securities validly tendered or the Company has not exchanged Exchange Guarantees or Exchange Debentures for all Guarantees or Debentures validly tendered, in accordance with the terms of the Exchange Offer on or prior to the 40 ^th day after the date on which the Exchange Offer Registration Statement was declared effective, or such longer period as may be required by law or (B) if applicable, the Shelf Registration Statement in respect of a Shelf Registration Event set forth in Section 2(b) has been declared effective and such Shelf Registration Statement ceases to be effective or usable for resales at any time prior to the expiration of the Rule 144(k) Period (other than after such time as all Capital Securities have been disposed of thereunder or otherwise cease to be Registrable Securities or if the Company effects an Exchange Offer and is no longer obligated to maintain the effectiveness of the Shelf Registration Statement), then additional interest shall accrue on the principal amount of Debentures, and additional distributions shall accumulate on the liquidation amount of the Capital Securities, each at a rate of 0.25% per annum commencing on (x) the 41 ^st day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective or usable for resales in the case of (B) above;

the Exchange Offer Registration Statement is declared effective by the SEC but, if the Exchange Offer Registration Statement is being used in connection with the resale of Exchange Securities as contemplated by Section 3(r) of this Agreement, the Exchange Offer Registration Statement ceases to be effective or the Exchange Offer Registration Statement or the Prospectus included therein ceases to be usable in connection with resales of Exchange Securities for any reason during the Applicable Period referred to in Section 3(r) (as such period may be extended pursuant to the last paragraph of Section 3 of this Agreement), additional distributions shall accumulate on the liquidation amount of the Capital Securities, each at a rate of 0.25% per annum commencing on the day such Exchange Offer Registration Statement ceases to be effective or usable for resales;

each, a "Registration Default." If a Registration Default occurs and is continuing for a period of 90 days or more, then the additional interest rate or additional distribution rate, as the case may be, will increase, from and after the 90 ^th day of such Registration Default, by an additional 0.25% per year until such Registration Default has been cured; provided , however , that neither the additional interest rate on the Debentures, nor the additional distribution rate on the liquidation amount of the Capital Securities, may exceed in the aggregate 0.50% per annum; provided , further , however, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of Exchange Capital Securities, Exchange Guarantees and Exchange Debentures for all Capital Securities, Guarantees and Debentures tendered (in the case of clause (iii)(A) above), or upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective or usable for resales (in the case of clause (iii)(B) above) or the reinstatement of the use thereof, additional interest on the Debentures, and additional distributions on the liquidation amount of the Capital Securities as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue or accumulate, as the case may be, and the Debentures shall thereafter resume accruing interest at the rate of 6.95% per annum and the Capital Securities shall thereafter resume accumulating distributions at the rate of 6.95% per annum.

Any amounts of additional interest and additional distributions due pursuant to Section 2(e)(i), (ii), (iii) or (iv) above will be payable in cash on the next succeeding June 1 or December 1 as the case may be, to holders on the relevant record dates for the payment of interest and distributions pursuant to the Indenture and the Declaration, respectively.

Specific Enforcement . Without limiting the remedies available to the Holders, the Company and the Trust acknowledge that any failure by the Company or the Trust to comply with its obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Holder may obtain such relief as may be required to specifically enforce the Company's and the Trust's obligations under Section 2(a) and Section 2(b) hereof.

Distribution of Subordinated Debentures . Notwithstanding any other provisions of this Agreement, in the event that Subordinated Debentures are distributed to holders of Capital Securities in liquidation of the Trust pursuant to the Declaration, (i) all references in this Section 2 and in Section 3 to Securities, Registrable Securities and Exchange Securities shall not include the Capital Securities and Capital Securities Guarantee or the Exchange Capital Securities and Exchange Capital Securities Guarantee issued or to be issued in exchange therefor in the Exchange Offer and (ii) all requirements for any action to be taken by the Trust in this Section 2 and in Section 3 shall cease to apply and all requirements for any action to be taken by the Company in this Section 2 and in Section 3 shall apply to the Debentures and Exchange Debentures issued or to be issued in exchange therefor in the Exchange Offer.

Registration Procedures . In connection with the obligations of the Company and the Trust with respect to the Registration Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the Trust shall:

prepare and file with the SEC a Registration Statement or, if required, Registration Statements as prescribed by Sections 2(a) and 2(b) hereof within the relevant time period specified in Section 2 hereof on the appropriate form under the Securities Act, which form (i) shall be selected by the Company and the Trust, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and, in the case of an Exchange Offer, be 11

available for the exchange of Registrable Securities, and (iii) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use its reasonable good faith efforts to cause such Registration Statement to become effective and remain effective (and, in the case of a Shelf Registration Statement, usable for resales) in accordance with Section 2 hereof; provided , however , that if (1) such filing is pursuant to Section 2(b), or (2) a Prospectus contained in an Exchange Offer Registration Statement filed pursuant to Section 2(a) is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Securities, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company and the Trust shall furnish to and afford the Holders of the Registrable Securities (in the case of a filing pursuant to Section 2(b)) and each such Participating Broker-Dealer covered by an Exchange Offer Registration Statement who has provided the Company the notification referred to in Section 3(e) hereof, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of the Registration Statement and Prospectus or any amendments or supplements thereto proposed to be filed. The Company and the Trust shall not file any Registration Statement or Prospectus or any amendments or supplements thereto in respect of which the Holders must be afforded an opportunity to review prior to the filing of such document if the Majority Holders or such Participating Broker-Dealer, as the case may be, their counsel or the managing underwriters, if any, shall reasonably object;

prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the Effectiveness Period or the Applicable Period, as the case may be; and cause each Prospectus to be supplemented, if so determined by the Company or the Trust or requested by the SEC, by any required prospectus supplement and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the Securities Act, and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder applicable to it with respect to the disposition of all securities covered by each Registration Statement during the Effectiveness Period or the Applicable Period, as the case may be, in accordance with the intended method or methods of distribution by the selling Holders thereof described in this Agreement (including sales by any Participating Broker-Dealer);

in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities included in the Shelf Registration Statement, at least ten Business Days prior to filing, that a Shelf Registration Statement with respect to the Registrable Securities is being filed and advising such Holder that the distribution of Registrable Securities will be made in accordance with the method selected by the Majority Holders; and (ii) furnish to each Holder of Registrable Securities included in the Shelf Registration Statement and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested) and as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities included in the Shelf Registration Statement in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto;

use their reasonable good faith efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions by the time the applicable Registration Statement is declared effective by the SEC as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable

Securities shall reasonably request in writing in advance of such date of effectiveness, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided , however , that the Company and the Trust shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process in any jurisdiction where it would not otherwise be subject to such service of process or (iii) subject itself to taxation in any such jurisdiction if it is not then so subject;

in the case of (1) a Shelf Registration or (2) Participating Broker-Dealers from whom the Company or the Trust has received prior written notice that they will be utilizing the Prospectus contained in the Exchange Offer Registration Statement as provided in Section 3(r) hereof, are seeking to sell Exchange Securities and are required to deliver Prospectuses, promptly notify each Holder of Registrable Securities, or such Participating Broker-Dealers, as the case may be, and the managing underwriters, if any, and promptly confirm such notice in writing (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement or Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the qualification of the Registrable Securities or the Exchange Securities to be offered or sold by any Participating Broker-Dealer in any jurisdiction described in paragraph 3(d) hereof or the initiation of any proceedings for that purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company and the Trust contained in any purchase agreement, securities sales agreement or other similar agreement, cease to be true and correct in all material respects, (v) of the happening of any event or the failure of any event to occur or the discovery of any facts or otherwise, during the Effectiveness Period, which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which causes such Registration Statement or Prospectus to omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (vi) the Company and the Trust's reasonable determination that a post-effective amendment to the Registration Statement would be appropriate;

use their reasonable good faith efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible time;

cooperate with the Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends (except as may be required by law or currently prevailing interpretations of the staff of the SEC) and in such denominations (consistent with the provisions of the Indenture and the Declaration) and registered in such names as the selling Holders or the underwriters may reasonably request at least two Business Days prior to the closing of any sale of Registrable Securities;

in the case of a Shelf Registration or an Exchange Offer Registration, promptly after the occurrence of any circumstance contemplated by Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the Purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and to notify each Holder to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, 13

and each Holder hereby agrees to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission;

obtain a CUSIP number for all Exchange Capital Securities and the Capital Securities (and, if the Trust has made a distribution of the Debentures to the Holders of the Capital Securities, the Debentures or the Exchange Debentures) as the case may be, not later than the effective date of a Registration Statement, and provide the Trustee with certificates for the Exchange Securities or the Registrable Securities, as the case may be, in a form eligible for deposit with the Depositary;

at or before the effective time of the Exchange Offer or Shelf Registration Statement, cause the Indenture, the Declaration, the Guarantee and the Exchange Capital Securities Guarantee to be qualified under the Trust Indenture Act of 1939 (the " TIA ") in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, and effect such changes to such documents as may be required for them to be so qualified in accordance with the terms of the TIA and execute, and use its reasonable good faith efforts to cause the relevant trustee to execute all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable such documents to be so qualified in a timely manner;

in the case of a Shelf Registration, enter into such agreements (including underwriting agreements) as are customary in underwritten offerings and take all such other appropriate actions in connection therewith as are reasonably requested by the Holders of at least 25% in aggregate principal or liquidation amount, as the case may be, of the Registrable Securities in order to expedite or facilitate the registration or the disposition of such Registrable Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, if requested by either (x) an Initial Purchaser in the case where such Initial Purchaser holds Securities acquired by it as part of its initial placement, or (y) Holders of at least 25% in aggregate principal or liquidation amount, as the case may be, of the Registrable Securities covered thereby: (i) make such representations and warranties to Holders of such Registrable Securities and the underwriters (if any), with respect to the business of the Trust, the Company and its subsidiaries as then conducted and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (ii) obtain opinions of counsel to the Company and the Trust and updates thereof (which may be in the form of a reliance letter) in form and substance reasonably satisfactory to the managing underwriters (if any) and the Holders of a majority in aggregate principal or liquidation amount, as the case may be, of the Registrable Securities being sold, addressed to each selling Holder and the underwriters (if any) covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such underwriters (it being agreed that the matters to be covered by such opinion may be subject to customary qualifications and exceptions); (iii) obtain "comfort" letters and updates thereof in form and substance reasonably satisfactory to the managing underwriters from the independent certified public accountants of the Company and the Trust (and, if necessary, any other independent certified public accountants of any subsidiary of the Company and the Trust or of any business acquired by the Company and the Trust for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with underwritten offerings and such other matters as reasonably requested by such underwriters in accordance with Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered into, the same shall contain expense reimbursement, indemnification provisions and procedures which are substantially comparable to those set forth in Section 4 hereof (or such other provisions and procedures acceptable to the Company and the Trust and the Holders of a majority in aggregate principal or liquidation amount, as the case may be of Registrable Securities covered by such Registration Statement and the managing

underwriters or agents) with respect to all parties to be indemnified pursuant to said Section (including, without limitation, such underwriters and selling Holders); and in the case of an underwritten registration, the above requirements shall be satisfied at each closing under the related underwriting agreement or as and to the extent required thereunder;

if (1) a Shelf Registration is filed pursuant to Section 2(b) or (2) a Prospectus contained in an Exchange Offer Registration Statement filed pursuant to Section 2(a) is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Securities during the Applicable Period, make reasonably available for inspection by any selling Holder of such Registrable Securities being sold, or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be, or underwriter (collectively, the " Inspectors "), at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Trust, the Company and its subsidiaries (collectively, the " Records ") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Trust, the Company and its subsidiaries to supply all relevant information in each case reasonably requested by any such Inspector in connection with such Registration Statement provided , however , that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders by the Company and the Trust. Records which the Company and the Trust determine, in good faith, to be confidential and any records which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a material misstatement or omission in such Registration Statement, (ii) the information in such Records is required to be disclosed by applicable law or regulation or by legal process or is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or government or regulatory body or is necessary in connection with any action, suit or proceeding or (iii) the information in such Records has been made generally available to the public. Each selling Holder of such Registrable Securities and each such Participating Broker-Dealer will be required to agree in writing that information obtained by it as a result of such inspections shall be deemed confidential and shall not engage in any market transactions in the securities of the Trust or the Company on the basis of such information unless and until such information is made generally available to the public through no fault of the Inspectors or a selling Holder. Each selling Holder of such Registrable Securities and each such Participating Broker-Dealer will be required to further agree in writing that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction or in connection with any action, suit or proceeding, give notice to the Company and allow the Company at its expense to undertake appropriate action to prevent disclosure of the Records deemed confidential;

comply with all applicable rules and regulations of the SEC so long as any provision of this Agreement shall be applicable and make generally available to its securityholders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 75 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods, provided that the obligations under this paragraph shall be satisfied by the timely filing of quarterly and annual reports on Forms 10-Q and 10-K under the Exchange Act;

upon consummation of an Exchange Offer or Private Exchange Offer, if requested by a Trustee, obtain an opinion of counsel to the Company addressed to the Trustee to the effect 15

that (i) each of the Company and the Trust, as the case requires, has duly authorized, executed and delivered the Exchange Securities and (ii) each of the Exchange Securities or Private Exchange Securities, as the case may be, constitutes the legal, valid and binding obligation of the Company or the Trust, as the case requires, enforceable against the Company or the Trust, as the case requires, in accordance with its respective terms (in each case, with customary exceptions);

if an Exchange Offer or Private Exchange Offer is to be consummated, upon delivery of the Registrable Securities by Holders to the Company or the Trust, as applicable (or to such other Person as directed by the Company or the Trust, respectively), in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company or the Trust, as applicable, shall mark, or cause to be marked, on such Registrable Securities delivered by such Holders that such Registrable Securities are being cancelled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, it being understood that in no event shall such Registrable Securities be marked as paid or otherwise satisfied;

cooperate with each seller of Registrable Securities covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD;

take all other steps necessary to effect the registration of the Registrable Securities covered by a Registration Statement contemplated hereby;

in the case of the Exchange Offer Registration Statement (i) include in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," which section shall be reasonably acceptable to the Initial Purchasers and which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer (a " Participating Broker-Dealer ") that holds Registrable Securities acquired for its own account as a result of market-making activities or other trading activities and that will be the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be received by such broker-dealer in the Exchange Offer, including a statement that any such broker-dealer who receives Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Company the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request (each of the Company and the Trust hereby consents to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto by any Person subject to the prospectus delivery requirements of the Securities Act, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment or supplement thereto), (iii) use their reasonable good faith efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such Persons must comply with such requirements under the Securities Act and applicable rules and regulations in order to resell the Exchange Securities; provided , however , that such period shall not be required to exceed 180 days following the expiration of the Exchange Offer (or such longer period if extended pursuant to the last sentence of Section 3 hereof) (the " Applicable Period "), and (iv) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision or the substance thereof:

"If the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer";

and (y) a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act; and

in the case of any Exchange Offer Registration Statement, the Company and the Trust agree to deliver to an appropriate representative of the Participating Broker-Dealers if requested by such representative of such Participating Broker-Dealers, on behalf of such Participating Broker-Dealers upon consummation of the Exchange Offer (i) an opinion of counsel in form and substance reasonably satisfactory to such representative of the Participating Broker-Dealers, covering the matters customarily covered in opinions requested in connection with Exchange Offer Registration Statements and such other matters as may be reasonably requested (it being agreed that the matters to be covered by such opinion may be subject to customary qualifications and exceptions), (ii) an officers' certificate containing certifications substantially similar to those set forth in Section 5 of the Purchase Agreement and such additional certifications as are customarily delivered in a public offering of debt securities and (iii) as well as upon the effectiveness of the Exchange Offer Registration Statement, a comfort letter, in each case, in customary form if permitted by Statement on Auditing Standards No. 72.

In the case of (1) a Shelf Registration Statement or (2) Participating Broker-Dealers who have notified the Company and the Trust that they will be utilizing the Prospectus contained in the Exchange Offer Registration Statement as provided in Section 3(r) hereof, are seeking to sell Exchange Securities and are required to deliver Prospectuses each Holder agrees that, upon receipt of any notice from the Company or the Trust of the happening of any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(h) hereof or until it is advised in writing (the " Advice ") by the Company and the Trust that the use of the applicable Prospectus may be resumed, and, if so directed by the Company and the Trust, such Holder will deliver to the Company or the Trust (at the Company's or the Trust's expense, as the case requires) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities or Exchange Securities, as the case may be, current at the time of receipt of such notice. If the Company or the Trust shall give any such notice to suspend the disposition of Registrable Securities or Exchange Securities, as the case may be, pursuant to a Registration Statement, the Company and the Trust shall use their reasonable good faith efforts to file and have declared effective (if an amendment) as soon as practicable after the resolution of the related matters an amendment or supplement to the Registration Statement and shall extend the period during which such Registration Statement shall be maintained effective and usable for resales pursuant to this Agreement by the number of days in the period from and including the date of the giving of such notice to and including the date when the Company and the Trust shall have made available to the Holders (x) copies of the supplemented or amended Prospectus necessary to resume such dispositions or (y) the Advice.

Indemnification and Contribution . In connection with any Registration Statement, the Company and the Trust shall, jointly and severally, indemnify and hold harmless the Initial Purchasers, each Holder, each underwriter who participates in an offering of the Registrable Securities, each Participating Broker-Dealer, each Person, if any, who controls any of such parties within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of their respective directors, officers, partners, employees and agents, as follows:

from and against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto), covering Registrable Securities or Exchange Securities, as applicable, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

from and against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any court or governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission in the Registration Statement, if such settlement is effected with the prior written consent of the Company; and

from and against any and all expenses whatsoever as incurred (including the fees and disbursements of counsel) reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any court or governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) of this Section 4(a);

provided , however , that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing to the Company or the Trust by such Holder, such Participating Broker-Dealer or any underwriter with respect to such Holder, Participating Broker-Dealer or any underwriter, as the case may be, expressly for use in the Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto).

Each Holder, underwriter or Participating Broker-Dealer agrees, severally and not jointly, to indemnify and hold harmless the Company, the Trust, and each of their respective directors, officers (including each officer of the Company and the Trust who signed the Registration Statement), employees and agents and each Person, if any, who controls the Company or the Trust, any other Holder, underwriter or Participating Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company or the Trust by such Holder, underwriter or Participating Broker-Dealer expressly for use in the Registration Statement 18

(or any amendment thereto), or any such Prospectus (or any amendment or supplement thereto); provided , however , that, in the case of Shelf Registration Statement, no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement.

Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, enclosing a copy of all papers properly served on such indemnified party, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have under this Section 4, except to the extent that it is materially prejudiced by such failure. An indemnifying party may participate at its own expense in the defense of any such action, or, if it so elects within a reasonable time after receipt of such notice, assume the defense of any suit brought to enforce any such claim; but if it so elects to assume the defense, such defense shall be conducted by counsel chosen by it and approved by the indemnified party or parties, which approval shall not be unreasonably withheld. In the event that an indemnifying party elects to assume the defense of any such suit and retain such counsel, the indemnified party or parties shall bear the fees and expenses of any additional counsel thereafter retained by such indemnified party or parties; provided, however, that the indemnified party or parties shall have the right to employ counsel (in addition to local counsel) to represent the indemnified party or parties who may be subject to liability arising out of any action in respect of which indemnity may be sought against the indemnifying party if, in the reasonable judgment of counsel for the indemnified party or parties, there may be a conflict of interest such that multiple representation would violate the Code of Professional Responsibility or like governing rules, in which event the fees and expenses of appropriate separate counsel shall be borne by the indemnifying party. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to local counsel), separate from its own counsel, for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional written release in form and substance satisfactory to the indemnified parties of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

If at any time an indemnified party shall have validly requested an indemnifying party to reimburse the indemnified party for reasonable fees and expenses of counsel pursuant to Section 4(a), such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

In order to provide for just and equitable contribution in circumstances under which any of the indemnity provisions set forth in this Section 4 is for any reason held to be unavailable to the indemnified parties although applicable in accordance with its terms, the Company, the Trust, and the Holders shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by the Company, the Trust, and the Holders, as incurred; provided that no Person guilty of fraudulent misrepresentation (within the meaning of

Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person that was not guilty of such fraudulent misrepresentation. As between the Company, the Trust, and the Holders, such parties shall contribute to such aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect the relative fault of the Company and Trust, on the one hand, and the Holders, on the other hand, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault of the Company and the Trust, on the one hand, and of the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Trust, on the one hand, or by or on behalf of the Holders, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Trust and the Holders of the Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 4 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 4, each affiliate of a Holder, and each director, officer, partner, employee, agent and Person, if any, who controls a Holder or such affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Holder, and each director of each of the Company or the Trust, each officer of each of the Company or the Trust who signed the Registration Statement, and each Person, if any, who controls each of the Company and the Trust within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as each of the Company or the Trust.

Participation in Underwritten Registrations . No Holder may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents reasonably required under the terms of such underwriting arrangements.

Selection of Underwriters . The Holders of Registrable Securities covered by the Shelf Registration Statement who desire to do so may sell the securities covered by such Shelf Registration in an underwritten offering, subject to the provisions of this agreement. In any such underwritten offering, the underwriter or underwriters and manager or managers that will administer the offering will be selected by the Holders of at least 25% in aggregate principal or liquidation amount of the Registrable Securities, as applicable, included in such offering; provided , however , that such underwriters and managers must be of national reputation and satisfactory to the Company and the Trust.

Miscellaneous .

Rule 144 and Rule 144A . For so long as the Company or the Trust is subject to the reporting requirements of Section 13 or 15 of the Exchange Act and any Registrable Securities remain outstanding, each of the Company and the Trust, as the case may be, will file the reports required to be filed by it under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC thereunder. Each of the Company and the Trust also agree that if it ceases to be so required to file such reports, it will, upon the request of any Holder of Registrable Securities during any time period prior to the expiration of the Rule 144(k) Period (a) make publicly available such information as is necessary to permit sales of its securities pursuant to Rule 144 under the Securities Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales of its securities pursuant to Rule 144A under the Securities Act, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such

Holder to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, (ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company and the Trusts will deliver to such Holder a written statement as to whether it has complied with such requirements.

No Inconsistent Agreements . The Company or the Trust has not entered into nor will the Company or the Trust on or after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or the Trust's other issued and outstanding securities under any such agreements.

Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Trust has obtained the written consent of Holders of at least a majority in aggregate principal or liquidation amount, as applicable, of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure; provided , that no amendment, modification or supplement or waiver or consent to the departure with respect to the provisions of Section 4 hereof which materially adversely affects the rights of any Holder of Registrable Securities shall be effective as against such Holder of Registrable Securities unless consented to in writing by such Holder of Registrable Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be amended, without the consent of any Holder of Registrable Securities, by written agreement signed by the Company, the Trust and Initial Purchasers, to cure any ambiguity, correct or supplement any provision of this Agreement that may be inconsistent with any other provision of this Agreement or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with other provisions of this Agreement, (ii) this Agreement may be amended, modified or supplemented, and waivers and consents to departures from the provisions hereof may be given, by written agreement signed by the Company, the Trust and Initial Purchasers to the extent that any such amendment, modification, supplement, waiver or consent is, in their reasonable judgment, necessary or appropriate to comply with applicable law (including any interpretation of the Staff of the SEC) or any change therein and (iii) to the extent any provision of this Agreement relates to the Initial Purchasers, such provision may be amended, modified or supplemented, and waivers or consents to departures from such provisions may be given, by written agreement signed by Initial Purchasers, the Company and the Trust.

Notices . All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, facsimile, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company or the Trust by means of a notice given in accordance with the provisions of this Section 7(d), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the Company or the Trust, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 7(d).

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of the Initial Purchasers, including, without limitation and without the need for an express assignment, subsequent Holders; provided , however , that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement, the Declaration or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof.

Third Party Beneficiary . Each Holder and any underwriter or Participating Broker-Dealer shall be a third party beneficiary of the agreements made hereunder between the Company and the Trust, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder.

Counterparts . This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

GOVERNING LAW . THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Severability . In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

Securities Held by the Company, the Trust or its Affiliates . Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company, the Trust or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

	FIRST MIDWEST BANCORP, INC. By: /s/ John M. O'Meara Name: John M. O'Meara Title: President and Chief Executive Officer
	FIRST MIDWEST CAPITAL TRUST I By: /s/ Michael L. Scudder Name: Michael L. Scudder Title: Executive Vice President and Chief Financial Officer

Confirmed and accepted as of the date first above written by the undersigned: KEEFE, BRUYETTE & WOODS, INC. By: /s/ Daniel D. Floyd Daniel D. Floyd Vice President
LEHMAN BROTHERS INC. By: /s/ Martin Goldberg Name: Martin Goldberg Title: Senior Vice President
HOWE BARNES INVESTMENTS, INC. By: /s/ Glenn C. Harris Name: Glenn C. Harris Title: Senior Vice President
MCDONALD INVESTMENTS INC. By: /s/ Scott Brown Name: Scott Brown Title: Managing Director
OPPENHEIMER & CO. INC. By: /s/ Jason D. Janosz Name: Jason D. Janosz Title: Senior Vice President
RAYMOND JAMES & ASSOCIATES, INC. By: /s/ William E. Waldeck Name: William E. Waldeck Title: Managing Director
SANDLER O'NEILL & PARTNERS, L.P. By: __/s/ Catherine A. Lawton Name: Catherine A. Lawton Title: Vice President
STIFEL, NICOLAUS & COMPANY, INCORPORATED By: __/s/ Mark J. Ross Name: Mark J. Ross Title: Managing Director

annex a

Keefe, Bruyette & Woods, Inc.

Lehman Brothers Inc.

Howe Barnes Investments, Inc.

McDonald Investments Inc.

Oppenheimer & Co. Inc.

Raymond James & Associates, Inc.

Sandler O'Neill & Partners, L.P.

Stifel Nicolaus & Company, Incorporated

Exhibit 4.4

Amended and Restated Declaration of Trust

First Midwest Capital Trust I

November 18, 2003

Table of Contents

Section Heading Page

Article I Interpretation and Definitions 1 *

Section 1.1. Definitions 1 *

Article II Trust Indenture Act 8 *

Section 2.1. Trust Indenture Act Application 8 *

Section 2.2. Lists of Holders of Securities 9 *

Section 2.3. Reports by the Property Trustee 9 *

Section 2.4. Periodic Reports to Property Trustee 9 *

Section 2.5. Evidence of Compliance with Conditions Precedent 9 *

Section 2.6. Events of Default; Waiver 10 *

Section 2.7. Event of Default; Notice 11 *

Article III Organization 12 *

Section 3.1. Name 12 *

Section 3.2. Office 12 *

Section 3.3. Purpose 12 *

Section 3.4. Authority 13 *

Section 3.5. Title to Property of the Trust 13 *

Section 3.6. Powers and Duties of the Administrative Trustees 13 *

Section 3.7. Prohibition of Actions by the Trust and the Trustees 16 *

Section 3.8. Powers and Duties of the Property Trustee 17 *

Section 3.9. Certain Duties and Responsibilities of the Property Trustee 19 *

Section 3.10. Certain Rights of Property Trustee 21 *

Section 3.11. Delaware Trustee 23 *

Section 3.12. Execution of Documents 23 *

Section 3.13. Not Responsible for Recitals or Issuance of Securities 23 *

Section 3.14. Duration of Trust 23 *

Section 3.15. Mergers 24 *

Article IV Sponsor 25 *

Section 4.1. Sponsor's Purchase of Common Securities 25 *

Section 4.2. Responsibilities of the Sponsor 25 *

Section 4.3. Right to Proceed 26 *

Article V Trustees 26 *

Section 5.1. Number of Trustees; Appointment of Co-Trustee 26 *

Section 5.2. Delaware Trustee 27 *

Section 5.3. Property Trustee; Eligibility 27 *

Section 5.4. Certain Qualifications of Administrative Trustees and Delaware Trustee Generally 28 *

Section 5.5. Administrative Trustees 28 *

Section 5.6. Delaware Trustee 29 *

Section 5.7. Appointment, Removal and Resignation of Trustees 29 *

Section 5.8. Vacancies Among Trustees 30 *

Section 5.9. Effect of Vacancies 30 *

Section 5.10. Meetings 30 *

Section 5.11. Delegation of Power 31 *

Section 5.12. Merger, Conversion, Consolidation or Succession to Business 31 *

Article VI Distributions 32 *

Section 6.1. Distributions 32 *

Article VII Issuance of Securities 32 *

Section 7.1. General Provisions Regarding Securities 32 *

Section 7.2. Execution and Authentication 33 *

Section 7.3. Form and Dating 33 *

Section 7.4. Registrar, Paying Agent and Exchange Agent 35 *

Section 7.5. Paying Agent to Hold Money in Trust 35 *

Section 7.6. Replacement Securities 36 *

Section 7.7. Outstanding Capital Securities 36 *

Section 7.8. Capital Securities in Treasury 36 *

Section 7.9. Temporary Securities 36 *

Section 7.10. Cancellation 37 *

Section 7.11. CUSIP Numbers 37 *

Article VIII Termination of Trust 38 *

Section 8.1. Termination of Trust 38 *

Article IX Transfer of Interests 39 *

Section 9.1. Transfer of Securities 39 *

Section 9.2. Transfer Procedures and Restrictions 39 *

Section 9.3. Book Entry Interests 48 *

Section 9.4. Notices to Clearing Agency 48 *

Section 9.5. Appointment of Successor Clearing Agency 49 *

Article X Limitation of Liability of Holders of Securities, Trustees or Others 49 *

Section 10.1. Liability 49 *

Section 10.2. Exculpation 49 *

Section 10.3. Fiduciary Duty 50 *

Section 10.4. Indemnification 50 *

Section 10.5. Outside Businesses 53 *

Section 10.6. Compensation; Fees 53 *

Article XI Accounting 54 *

Section 11.1. Fiscal Year 54 *

Section 11.2. Certain Accounting Matters 54 *

Section 11.3. Banking 54 *

Section 11.4. Withholding 55 *

Article XII Amendments and Meetings 55 *

Section 12.1. Amendments 55 *

Section 12.2. Meetings of the Holders; Action by Written Consent 57 *

Article XIII Representations of Property Trustee and Delaware Trustee 58 *

Section 13.1. Representations and Warranties of Property Trustee 58 *

Section 13.2. Representations and Warranties of Delaware Trustee 59 *

Article XIV Registration Rights 60 *

Section 14.1. Registration Rights Agreement 60 *

Article XV Miscellaneous 60 *

Section 15.1. Notices 60 *

Section 15.2. Governing Law 61 *

Section 15.3. Intention of the Parties 61 *

Section 15.4. Headings 61 *

Section 15.5. Successors and Assigns 61 *

Section 15.6. Partial Enforceability 62 *

Section 15.7. Counterparts 62 *

Signature Page 63 *

Amended and Restated Declaration of Trust of
First Midwest Capital Trust I

November 18, 2003

Amended and Restated Declaration of Trust ( "Declaration" ), dated and effective as of November 18, 2003, by the Trustees (as defined herein), the Sponsor (as defined herein) and by the holders, from time to time, of undivided beneficial interests in the Trust to be issued pursuant to this Declaration.

Witnesseth:

Whereas, certain of the Trustees and the Sponsor established First Midwest Capital Trust I (the "Trust" ), a trust created under the Delaware Statutory Trust Act pursuant to a Declaration of Trust dated as of November 6, 2003 (the "Original Declaration" ), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on November 6, 2003, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain Debentures of the Debenture Issuer (each as hereinafter defined);

Whereas, as of the date hereof, no interests in the Trust have been issued;

Whereas, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration; and

Now, Therefore, it being the intention of the parties hereto to set up the Trust as a statutory trust under the Statutory Trust Act and that this Declaration constitute the governing instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration.

Article I

Interpretation and Definitions

Section 1.1. Definitions . Unless the context otherwise requires:

1. capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

2. a term defined anywhere in this Declaration has the same meaning throughout;

3. all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time;

4. all references in this Declaration to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified;

5. a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and

6. a reference to the singular includes the plural and vice versa.

"Administrative Trustee" has the meaning set forth in Section 5.1.

"Affiliate" has the same meaning as given to that term in Rule 405 under the Securities Act or any successor rule thereunder.

"Agent" means any Paying Agent, Registrar or Exchange Agent.

"Authorized Officer" of a Person means any other Person that is authorized to legally bind such Person.

"Book Entry Interest" means a beneficial interest in a Global Capital Security registered in the name of a Clearing Agency or its nominee, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 9.3.

"Business Day" means any day other than a Saturday or a Sunday or a day on which banking institutions in the City of New York are authorized or required by law, executive order or regulation to close or a day on which the Corporate Trust Office of the Property Trustee or the Corporate Trust Office of the Debenture Trustee is closed for business.

"Capital Security Beneficial Owner" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency).

"Capital Securities" means, collectively, the Series A Capital Securities and the Series B Capital Securities.

"Capital Securities Guarantee" means, collectively, the Series A Capital Securities Guarantee and the Series B Capital Securities Guarantee, as amended from time to time.

"Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in

whose name or in the name of a nominee of that organization shall be registered a Global Capital Security and which shall undertake to effect book entry transfers and pledges of the Capital Securities.

"Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency.

"Closing Time" means the "Closing Time" under the Purchase Agreement.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation.

"Commission" means the United States Securities and Exchange Commission as from time to time constituted, or if any time after the execution of this Declaration such Commission is not existing and performing the duties now assigned to it under applicable Federal securities laws, then the body performing such duties at such time.

"Common Securities" has the meaning set forth in Section 7.1(a).

"Corporate Trust Office" means the office of the Property Trustee at which the corporate trust business of the Property Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Declaration is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.

"Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.

"Debenture Issuer" means First Midwest Bancorp, Inc., a Delaware corporation, or any successor entity resulting from any consolidation, amalgamation, merger or other business combination, in its capacity as issuer of the Debentures under the Indenture.

"Debenture Trustee" means Wilmington Trust Company, a banking corporation organized under the laws of the State of Delaware and any successor thereto, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee.

"Debentures" means, collectively, the Series A Debentures and the Series B Debentures.

"Default" means an event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

"Definitive Capital Securities" has the meaning set forth in Section 7.3(c).

"Delaware Trustee" has the meaning set forth in Section 5.2.

"Direct Action" has the meaning set forth in Section 3.8(e).

"Distribution" means a distribution payable to Holders in accordance with Section 6.1.

"DTC" means The Depository Trust Company, the initial Clearing Agency.

"Event of Default" in respect of the Securities means an Event of Default (as defined in the Indenture) that has occurred and is continuing in respect of the Debentures.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation.

"Exchange Agent" has the meaning set forth in Section 7.4.

"Exchange Offer" means the offer that may be made pursuant to the Registration Rights Agreement (i) by the Trust to exchange Series B Capital Securities for Series A Capital Securities and (ii) by the Debenture Issuer to exchange Series B Debentures for Series A Debentures and the Series B Capital Securities Guarantee for the Series A Capital Securities Guarantee.

"Expense Agreement" means the Agreement as to Expenses and Liabilities dated as of November 18, 2003, by and between the Debenture Issuer and the Trust, as amended from time to time.

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"Fiduciary Indemnified Person" has the meaning set forth in Section 10.4(b).

"Global Capital Securities" has the meaning set forth in Section 7.3(a).

"Holder" means a Person in whose name a Security is registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.

"Indemnified Person" means a Trust Indemnified Person or a Fiduciary Indemnified Person.

"Indenture" means the Indenture dated as of November 18, 2003, between the Debenture Issuer and Wilmington Trust Company, as Trustee, as amended from time to time.

"Investment Company" means an investment company as defined in the Investment Company Act.

"Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation.

"Legal Action" has the meaning set forth in Section 3.6(g).

"Like Amount" has the meaning set forth in Section 3 of Annex I hereto.

"List of Holders" has the meaning set forth in Section 2.2.

"Majority in liquidation amount" means, with respect to the Trust Securities, except as provided in the terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class.

"Offering Memorandum" has the meaning set forth in Section 3.6(b)(i).

"Officers' Certificate" means, with respect to any Person, a certificate signed by any of the Chairman, the Chief Executive Officer, the President, a Vice President, the Chief Financial Officer, the Secretary or an Assistant Secretary of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include:

(a) a statement that the officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by the officer in rendering the Officers' Certificate;

(c) a statement that such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with.

"Opinion of Counsel" shall mean a written opinion of counsel, who may be an employee of the Sponsor, and who shall be reasonably acceptable to the Property Trustee.

"Paying Agent" has the meaning specified in Section 7.4.

"Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

"PORTAL Market" means the Private Offerings, Resales and Trading through Automated Linkages Market.

"Property Trustee" has the meaning set forth in Section 5.3(a).

"Property Trustee Account" has the meaning set forth in Section 3.8(c).

"Purchase Agreement" means the Purchase Agreement for the initial offering and sale of Capital Securities in the form of Exhibit B.

"QIBs" means qualified institutional buyers as defined in Rule 144A.

"Quorum" means a majority of the Administrative Trustees or, if there are only two Administrative Trustees, both of them.

"Registrar" has the meaning set forth in Section 7.4.

"Registration Rights Agreement" means the Registration Rights Agreement dated as of November 18, 2003, by and among the Trust, the Debenture Issuer and the Initial Purchasers named therein, as amended from time to time.

"Registration Statement" has the meaning set forth in the Registration Rights Agreement.

"Regulation S" means Regulation S under the Securities Act, as such regulation may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

"Regulation S Global Capital Security" has the meaning set forth in Section 7.3(a).

"Related Party" means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor.

"Responsible Officer" means, when used with respect to the Property Trustee, any officer of the Property Trustee with direct responsibility for the administration of this Declaration and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Restricted Capital Security" means a Capital Security required by Section 9.2 to contain a Restricted Securities Legend.

"Restricted Definitive Capital Securities" has the meaning set forth in Section 7.3(c).

"Restricted Securities Legend" has the meaning set forth in Section 9.2(h).

"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any successor rule or regulation.

"Rule 144" means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

"Rule 144A" means Rule 144A under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

"Rule 144A Global Capital Security" has the meaning set forth in Section 7.3(a).

"Securities" or "Trust Securities" means the Common Securities and the Capital Securities.

"Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation.

"Series A Capital Securities" has the meaning specified in Section 7.1(a).

"Series B Capital Securities" has the meaning specified in Section 7.1(a).

"Series A Capital Securities Guarantee" means the guarantee agreement dated as of November 18, 2003 of Sponsor in respect of the Series A Capital Securities, as amended from time to time.

"Series B Capital Securities Guarantee" means the guarantee agreement to be entered in connection with the Exchange Offer by the Sponsor in respect of the Series B Capital Securities, as amended from time to time.

"Series A Debentures" means the Series A 6.95% Junior Subordinated Deferrable Interest Debentures due December 1, 2033 of the Debenture Issuer issued pursuant to the Indenture.

"Series B Debentures" means the Series B 6.95% Junior Subordinated Deferrable Interest Debentures due December 1, 2033 of the Debenture Issuer issued pursuant to the Indenture.

"Special Event" has the meaning set forth in Section 4(c) of Annex I hereto.

"Sponsor" means First Midwest Bancorp, Inc., a Delaware corporation, or any successor entity resulting from any merger, consolidation, amalgamation or other business combination, in its capacity as sponsor of the Trust.

"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq. , as it may be amended from time to time, or any successor legislation.

"Super Majority" has the meaning set forth in Section 2.6(a)(ii).

"10% in liquidation amount" means, with respect to the Trust Securities, except as provided in the terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class.

"Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

"Trust Indemnified Person" means (a) any Administrative Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Administrative Trustee; or (d) any officer, employee or agent of the Trust or its Affiliates.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation.

"Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder.

"Unrestricted Global Capital Security" has the meaning set forth in Section 9.2(b).

Article II

Trust Indenture Act

Section 2.1. Trust Indenture Act Application . (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.

(b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act.

(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts with the duties imposed by Section Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities representing undivided beneficial interests in the assets of the Trust.

Section 2.2. Lists of Holders of Securities . (a) If the Capital Securities are not in the form of a Global Capital Security in the name of ----Cede & Co. or other nominee of the Clearing Agency pursuant to Section 7.3(b) of this Declaration, each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide the Property Trustee (i) within 14 days after each record date for payment of Distributions, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders ( "List of Holders" ) as of such record date, provided that neither the Sponsor nor the Administrative Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Sponsor and the Administrative Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Registrar (if acting in such capacity), provided that the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.

(b) The Property Trustee shall comply with its obligations under Section Section 311(a), 311(b) and 312(b) of the Trust Indenture Act.

Section 2.3. Reports by the Property Trustee . Within 60 days after May 15 of each year, commencing May 15, 2004, the Property Trustee shall provide to the Holders of the Capital Securities such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act.

Section 2.4. Periodic Reports to Property Trustee . Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as are required by Section 314 of the Trust Indenture Act, if any, and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314(a)(4) of the Trust Indenture Act, such compliance certificate to be delivered annually on or before 120 days after the end of each fiscal year of the Sponsor. Delivery of such documents, reports and information to the Property Trustee is for informational purposes only and the Property Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Sponsor's compliance with any of its covenants hereunder (as to which the Property Trustee is entitled to rely exclusively on Officers' Certificates).

Section 2.5. Evidence of Compliance with Conditions Precedent . Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or

opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate.

Section 2.6. Events of Default; Waiver . (a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf of the Holders of all of the Capital Securities, waive any past Event of Default in respect of the Capital Securities and its consequences; provided that, if the underlying Event of Default under the Indenture:

(i) is not waivable under the Indenture, the Event of Default under the Declaration shall also not be waivable; or

(ii) requires the consent or vote of greater than a majority in aggregate principal amount of the holders of the Debentures (a "Super Majority" ) to be waived under the Indenture, the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in aggregate liquidation amount of the Capital Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.

The foregoing provisions of this Section 2.6(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Capital Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or an Event of Default with respect to the Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the Capital Securities of an Event of Default with respect to the Capital Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities.

The Holders of a Majority in liquidation amount of the Capital Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee, including the right to direct the Property Trustee to exercise the remedies available to it as holder of the Debentures, provided, however, that (subject to the provisions of Section 3.9) the Property Trustee shall have the right to decline to follow any such direction if the Property Trustee shall determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Property Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Property Trustee, in good faith, by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or Responsible Officers, shall determine that the action or proceedings so directed would involve the Property Trustee in personal liability.

(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default 14

with respect to the Common Securities and its consequences, provided that, if the underlying Event of Default under the Indenture:

(i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration shall also not be waivable; or

(ii) requires the consent or vote of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in aggregate liquidation amount of the Common Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and its consequences if all Events of Default with respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such Events of Default have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Capital Securities and only the Holders of the Capital Securities will have the right to direct the Property Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon such waiver, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon.

(c) A waiver of an Event of Default under the Indenture by the Property Trustee, at the direction of the Holders of the Capital Securities, constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.

Section 2.7. Event of Default; Notice . (a) The Property Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Securities, notice of all Defaults with respect to the Securities actually known to a Responsible Officer of the Property Trustee, unless such Defaults have been cured before the giving of such notice; provided that, except for a default in the payment of principal of or premium, if any, or interest on any of the Debentures, the Property Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a

trust committee of directors and/or a Responsible Officer of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities.

(b) The Property Trustee shall not be deemed to have knowledge of any Default except:

(i) a Default under Sections 5.01(a), (b), (d) and (e) of the Indenture relating to the Debentures; or

(ii) any Default as to which the Property Trustee shall have received written notice from any of the Administrative Trustees or Sponsors or a Responsible Officer of the Property Trustee charged with the administration of the Declaration shall have obtained actual knowledge of such Default.

(c) Within 10 Business Days after the occurrence of any Event of Default actually known to the Property Trustee, the Property Trustee shall transmit notice of such Event of Default to the Holders of the Capital Securities, the Administrative Trustees and the Sponsor, unless such Event of Default shall have been cured or waived. The Sponsor and the Administrative Trustees shall file annually with the Property Trustee, in accordance with Section 2.4, a certification as to whether or not they are in compliance with all the conditions and covenants applicable to them under this Declaration.

Article III

Organization

Section 3.1. Name . The Trust is named "First Midwest Capital Trust I" as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrative Trustees.

Section 3.2. Office . The address of the principal executive office of the Trust is c/o First Midwest Bancorp, Inc., 300 Park Boulevard, Suite 400, Itasca, Illinois 60143, Attention: Chief Financial Officer. On 10 Business Days written notice to the Property Trustee, the Delaware Trustee and the Holders of Securities, the Administrative Trustees may designate another principal office.

Section 3.3. Purpose . The exclusive purposes and functions of the Trust are (a) to issue and sell Securities, (b) use the proceeds from the sale of the Securities to acquire the Debentures, and (c) except as otherwise limited herein, to engage in only those other activities necessary, advisable or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, mortgage or pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust.

Section 3.4. Authority . Subject to the limitations provided in this Declaration and to the specific duties of the Property Trustee, the Administrative Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Administrative Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee on behalf of the Trust in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration.

Section 3.5. Title to Property of the Trust . Except as provided in Section 3.8 with respect to the Debentures and the Property Trustee Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust.

Section 3.6. Powers and Duties of the Administrative Trustees . The Administrative Trustees shall have the exclusive power, duty and authority to cause the Trust to engage in the following activities:

(a) to issue and sell the Securities in accordance with this Declaration; provided, however, that except, in the case of (i) and (iii), as contemplated in Section 7.1(a), (i) the Trust may issue no more than one series of Capital Securities and no more than one series of Common Securities, (ii) there shall be no interests in the Trust other than the Securities, and (iii) the issuance of Securities shall be limited to a simultaneous issuance of both Capital Securities and Common Securities at any Closing Time,

(b) in connection with the issue and sale of the Capital Securities and the consummation of the Exchange Offer to:

(i) prepare and execute, if necessary, an offering memorandum (the "Offering Memorandum" ) in preliminary and final form prepared by the Sponsor, in relation to the offering and sale of Series A Capital Securities to QIBs and to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and outside the United States to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act, and to execute and file with the Commission, at such time as determined by the Sponsor, any Registration Statement, including any amendments thereto, as contemplated by the Registration Rights Agreement;

(ii) execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary in order to qualify or register all or part of the Capital Securities in any state in which the Sponsor has determined to qualify or register such Capital Securities for sale;

(iii) if directed by the Sponsor, execute and file an application, prepared by the Sponsor, to designate the Capital Securities for trading in the PORTAL Market;

(iv) to execute and deliver letters, documents, or instruments with DTC and other Clearing Agencies relating to the Capital Securities;

(v) if required, execute and file with the Commission a registration statement on Form 8-A, including any amendments thereto, prepared by the Sponsor, relating to the registration of the Capital Securities under Section 12(b) of the Exchange Act; and

(vi) execute and enter into the Expense Agreement, the Registration Rights Agreement, the Debenture Subscription Agreement and the Common Securities Subscription Agreement and to take such actions as are required by the terms of such agreements;

(c) to acquire the Series A Debentures with the proceeds of the sale of the Series A Capital Securities and the Common Securities and to exchange the Series A Debentures for a like principal amount of Series B Debentures, pursuant to the Exchange Offer; provided, however, that the Administrative Trustees shall cause legal title to the Debentures to be held of record in the name of the Property Trustee for the benefit of the Holders;

(d) to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event;

(e) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of Section 316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Capital Securities and Holders of Common Securities as to such actions and applicable record dates;

(f) to take all actions and perform such duties as may be required of the Administrative Trustees pursuant to the terms of the Securities;

(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ( "Legal Action" ), unless pursuant to Section 3.8(e), the Property Trustee has the exclusive power to bring such Legal Action;

(h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services;

(i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act;

(j) to give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Administrative Trustee;

(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust;

(l) to act as, or appoint another Person to act as, Registrar and Exchange Agent for the Securities or to appoint a Paying Agent for the Securities as provided in Section 7.4 except for such time as such power to appoint a Paying Agent is vested in the Property Trustee;

(m) to give prompt written notice to the Property Trustee and to Holders of any notice received from the Debenture Issuer of its election to defer payments of interest on the Debentures by extending the interest payment period under the Indenture;

(n) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Capital Securities or to enable the Trust to effect the purposes for which the Trust was created;

(o) to take any action, not inconsistent with this Declaration or with applicable law, that the Administrative Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.6, including, but not limited to:

(i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act;

(ii) causing the Trust to be classified for United States federal income tax purposes as a grantor trust; and

(iii) cooperating with the Debenture Issuer to ensure that the Debentures will be treated as indebtedness of the Debenture Issuer for United States federal income tax purposes.

(p) to take all action necessary to consummate the Exchange Offer or otherwise cause the Capital Securities to be registered pursuant to an effective registration statement in accordance with the provisions of the Registration Rights Agreement;

(q) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Administrative Trustees, on behalf of the Trust; and

(r) to execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing.

The Administrative Trustees must exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Administrative Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.3.

Subject to this Section 3.6, the Administrative Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.8.

Any expenses incurred by the Administrative Trustees pursuant to this Section 3.6 shall be reimbursed by the Sponsor. The Administrative Trustees shall take all actions on behalf of the Trust that are not specifically required by this Declaration to be taken by any other Trustee.

Section 3.7. Prohibition of Actions by the Trust and the Trustees . (a) The Trust shall not, and none of the Trustees (including the Property Trustee) shall cause the Trust to, engage in any activity other than as required or authorized by this Declaration. The Trust shall not, and none of the Trustees (including the Property Trustee) shall cause the Trust to:

(i) invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders pursuant to the terms of this Declaration and of the Securities;

(ii) acquire any assets other than as expressly provided herein;

(iii) possess Trust property for other than a Trust purpose;

(iv) make any loans or incur any indebtedness other than loans represented by the Debentures;

(v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever except as otherwise expressly provided herein;

(vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or

(vii) other than as provided in this Declaration or Section 5(b) of Annex I, (A) direct the time, method and place of conducting any proceeding with respect to any remedy available to the Debenture Trustee, or exercising any trust or power conferred

upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless the Trust shall have received an opinion of an independent tax counsel experienced in such matters to the effect that such modification will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust; provided, however, that where a consent under the Indenture would require the consent of each holder of Debentures affected thereby, no consent shall be given by the Property Trustee without the prior approval of each Holder of the Capital Securities.

Section 3.8. Powers and Duties of the Property Trustee . (a) The legal title to the Debentures shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Holders. The right, title and interest of the Property Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 5.7. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered.

(b) The Property Trustee shall not transfer its right, title and interest in the Debentures to the Administrative Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee).

(i) establish and maintain a segregated non-interest bearing trust account (the "Property Trustee Account" ) in the name of and under the exclusive control of the Property Trustee on behalf of the Holders and, upon the receipt of payments of funds made in respect of the Debentures held by the Property Trustee, deposit such funds into the Property Trustee Account and make payments to the Holders of the Capital Securities and Holders of the Common Securities from the Property Trustee Account in accordance with Section 6.1. Funds in the Property Trustee Account shall be held uninvested until disbursed in accordance with this Declaration. The Property Trustee Account shall be an account that is maintained with a banking institution the rating on whose long-term unsecured indebtedness is at least equal to the rating assigned to the Capital Securities by a "nationally recognized statistical rating organization," as that term is defined for purposes of Rule 436(g)(2) under the Securities Act;

(ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Securities to the extent the Debentures are redeemed or mature; and

(iii) upon written notice of distribution issued by the Administrative Trustees in accordance with the terms of the Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of certain events.

(d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of the Securities.

(e) Subject to Section 3.9(a), the Property Trustee shall take any Legal Action which arises out of or in connection with (A) an Event of Default of which a Responsible Officer of the Property Trustee has actual knowledge or (B) the Property Trustee's duties and obligations under this Declaration or the Trust Indenture Act, and if such Property Trustee shall have failed to take such Legal Action, the Holders of Capital Securities, to the fullest extent permitted by applicable law, may take such Legal Action, to the same extent as if such Holders of Capital Securities held an aggregate principal amount of Debentures equal to the aggregate liquidation amount of such Capital Securities, without first proceeding against the Property Trustee or the Trust; provided however, that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay the principal of or premium, if any, or interest on the Debentures on the date such principal, premium, if any, or interest is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Capital Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or premium, if any, or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder (a "Direct Action" ) on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of Capital Securities in such Direct Action. Except as provided in the preceding sentences, the Holders of Capital Securities will not be able to exercise directly any other remedy available to the holders of the Debentures.

(f) The Property Trustee shall not resign as a Trustee unless either:

(i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders pursuant to the terms of the Securities; or

(ii) a successor Property Trustee has been appointed and has accepted that appointment in accordance with Section 5.7 (a "Successor Property Trustee" ).

(g) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Debentures under the Indenture and, if an Event of Default actually known to a Responsible Officer of the Property Trustee occurs and is continuing, the Property Trustee shall, for the benefit of Holders, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to the terms of such Securities.

(h) The Property Trustee shall be authorized to undertake any actions set forth in Section 317(a) of the Trust Indenture Act.

(i) For such time as the Property Trustee is the Paying Agent, the Property Trustee may authorize one or more Persons to act as additional Paying Agents and to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to all Securities

and any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any such additional Paying Agent may be removed by the Property Trustee at any time the Property Trustee remains as Paying Agent and a successor Paying Agent or additional Paying Agents may be (but are not required to be) appointed at any time by the Property Trustee while it is so acting as Paying Agent.

(j) Subject to this Section 3.8, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 3.6.

(k) The Property Trustee shall give prompt written notice to the Holders of the Securities of any notice received by it from the Debenture Issuer of the Debenture Issuer's election to defer payments of interest on the Debentures by extending the interest payment period with respect thereto.

The Property Trustee must exercise the powers set forth in this Section 3.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Property Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3.

Section 3.9. Certain Duties and Responsibilities of the Property Trustee . (a) The Property Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and in the Securities and no implied covenants shall be read into this Declaration or the Securities against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b) No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Declaration and in the Securities, and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration and in the Securities, and no implied covenants or obligations shall be read into this Declaration or the Securities against the Property Trustee; and

(B) in the absence of bad faith on the part of the Property Trustee, the Property Trustee may conclusively rely, as to the truth of the statements and the

correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Property Trustee and conforming to the requirements of this Declaration; provided, however, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration;

(ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration;

(iv) no provision of this Declaration shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Property Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or indemnity reasonably satisfactory to the Property Trustee against such risk or liability is not reasonably assured to it;

(v) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Property Trustee Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration and the Trust Indenture Act;

(vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Debentures or the payment of any taxes or assessments levied thereon or in connection therewith;

(vii) the Property Trustee shall not be liable for any interest on any money received by it. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Trustee Account maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law;

(viii) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Sponsor with their respective duties

under this Declaration, nor shall the Property Trustee be liable for any default or misconduct of the Administrative Trustees or the Sponsor; and

(ix) under no circumstances shall the Property Trustee be personally liable for any indebtedness or obligation of the Trust.

Section 3.10. Certain Rights of Property Trustee . (a) Subject to the provisions of Section 3.9:

(i) the Property Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties;

(ii) any direction or act of the Sponsor or the Administrative Trustees contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate;

(iii) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Administrative Trustees;

(iv) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or registration thereof;

(v) the Property Trustee may consult with counsel or other experts of its selection and the written advice or opinion of such counsel and experts with respect to legal matters or written advice within the scope of such experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of its employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction;

(vi) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the costs, expenses (including reasonable attorneys' fees and expenses and the expenses of the Property Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying

with such request or direction, including such reasonable advances as may be requested by the Property Trustee; provided, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence of an Event of Default which has not been cured or waived, of its obligation to exercise the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs;

(vii) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit;

(viii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action;

(x) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders which instructions may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in or accordance with such instructions;

(xi) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and

(xii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration.

(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty.

(c) Notwithstanding anything to the contrary herein or in any other document, neither the Delaware Trustee nor the Property Trustee shall be required to execute, deliver or certify on behalf of the Property Trustee, the Delaware Trustee, the Trust or any other Person any filings, certificates, affidavits or other instruments required by the Commission or required under the Sarbanes-Oxley Act of 2002. Notwithstanding any Person's right to instruct the Delaware Trustee or the Property Trustee, neither the Delaware Trustee, the Property Trustee nor any agent, employee, director or officer of the Delaware Trustee or the Property Trustee shall have any obligation to execute any certificates or other documents required by the Commission or required pursuant to the Sarbanes-Oxley Act of 2002 or the rules and regulations promulgated thereunder, and the refusal to comply with any such instructions shall not constitute a default or breach under any document.

Section 3.11. Delaware Trustee . Notwithstanding any other provision of this Declaration other than Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Administrative Trustees or the Property Trustee described in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Statutory Trust Act. In the event the Delaware Trustee shall at any time be required to take action or perform any duty hereunder with respect to the Trust, the Delaware Trustee shall be entitled to the benefits of Section 3.9(b) and Section 3.10.

Section 3.12. Execution of Documents . Except as otherwise required by the Statutory Trust Act or this Declaration, any Administrative Trustee is authorized to execute on behalf of the Trust any documents that the Administrative Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.6; provided that the Registration Statement referred to in Section 3.6(b)(i), including any amendments thereto, shall be signed by all of the Administrative Trustees.

Section 3.13. Not Responsible for Recitals or Issuance of Securities . The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration, the Debentures or the Securities.

Section 3.14. Duration of Trust . The Trust, unless terminated pursuant to the provisions of Article VIII hereof, shall have existence up to December 1, 2034.

Section 3.15. Mergers . (a) The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any Person, except as described in Section 3.15(b) and (c).

(b) The Trust may, at the request of the Sponsor, with the consent of the Administrative Trustees or, if there are more than two, a majority of the Administrative Trustees and without the consent of the Holders, the Delaware Trustee or the Property Trustee, merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to, a trust organized as such under the laws of any state; provided that:

(i) such successor entity (the "Successor Entity" ) either:

(A) expressly assumes all of the obligations of the Trust under the Securities; or

(B) substitutes for the Securities other securities having substantially the same terms as the Securities (the "Successor Securities" ) so long as the Successor Securities rank the same as the Securities rank with respect to Distributions and payments upon liquidation, redemption and otherwise;

(ii) the Sponsor expressly appoints a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the Holder of the Debentures;

(iii) the Capital Securities or any Successor Securities are listed or quoted, or any Successor Securities will be listed or quoted upon notification of issuance, on any national securities exchange or with another organization on which the Capital Securities are then listed or quoted, if any;

(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Capital Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization;

(v) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders (including any Successor Securities) in any material respect (other than with respect to any dilution of such Holders' interests in the new entity);

(vi) such Successor Entity has a purpose substantially identical to that of the Trust;

(vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Sponsor has received an opinion of an independent counsel to the Trust experienced in such matters to the effect that:

(A) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the new entity); and

(B) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and

(viii) the Sponsor or any permitted successor or assignee owns all of the common securities of such Successor Entity and guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Capital Securities Guarantee.

(c) Notwithstanding Section 3.15(b), the Trust shall not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to, any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or the Successor Entity not to be classified as a grantor trust for United States federal income tax purposes.

Article IV

Sponsor

Section 4.1. Sponsor's Purchase of Common Securities . At the Closing Time, the Sponsor will purchase all of the Common Securities then issued by the Trust, in an amount at least equal to 3% of the capital of the Trust at such time as provided in the Common Securities Subscription Agreement dated as of November 18, 2003 between the Sponsor and the Trust (the "Common Securities Subscription Agreement" ), at the same time as the Series A Capital Securities are to be issued.

Section 4.2. Responsibilities of the Sponsor . In connection with the issue and sale of the Capital Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities:

(a) to prepare the Offering Memorandum and to prepare for filing by the Trust with the Commission any Registration Statement, including any amendments thereto as contemplated by the Registration Rights Agreement;

(b) to determine the states in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the

Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such states;

(c) if deemed necessary or advisable by the Sponsor, to prepare or cause to be prepared for filing by the Trust an application to designate the Capital Securities for trading in the PORTAL Market;

(d) if applicable, to prepare for filing by the Trust with the Commission a registration statement on Form 8-A relating to the registration of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments thereto;

(e) to negotiate the terms of and execute the Purchase Agreement providing for the sale of the Capital Securities and the Registration Rights Agreement; and

(f) to perform any and all acts necessary or desirable as determined by the Sponsor to effectuate the Exchange Offer or otherwise comply with the provisions of the Registration Rights Agreement.

Section 4.3. Right to Proceed . The Sponsor acknowledges the rights of the Holders of Capital Securities, in the event that a failure of the Trust to pay Distributions on the Capital Securities is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures, to institute a Direct Action for enforcement of its payment obligations on the Debentures.

Article V

Trustees

Section 5.1. Number of Trustees; Appointment of Co-Trustee . The number of Trustees initially shall be five (5), and:

(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and

(b) after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities;

provided, however, that the number of Trustees shall in no event be less than two (2); and provided further, that (1) one Trustee shall satisfy the requirements of the Delaware Trustee pursuant to Section 5.2; (2) there shall be at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (an "Administrative Trustee" ); and (3) one Trustee shall be the Property Trustee for so long as this Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Property Trustee may also serve as Delaware Trustee if it meets

the applicable requirements. Notwithstanding the above, unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust's property may at the time be located, the Holders of a Majority in liquidation amount of the Common Securities acting as a class at a meeting of the Holders of the Common Securities, and the Administrative Trustees shall have power to appoint one or more Persons either to act as a co-trustee, jointly with the Property Trustee, of all or any part of the Trust's property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in such capacity any property, title, right or power deemed necessary or desirable, subject to the provisions of this Declaration. In case an Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make any such appointment of a co-trustee.

Section 5.2. Delaware Trustee . If required by the Statutory Trust Act, one Trustee (the "Delaware Trustee" ) shall be:

(a) a natural Person who is a resident of the State of Delaware; or

(b) if not a natural Person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law,

provided that, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee may also be the Delaware Trustee and Section 3.11 shall have no application.

Section 5.3. Property Trustee; Eligibility . (a) There shall at all times be one Trustee (the "Property Trustee" ) which shall act as Property Trustee which shall:

(i) not be an Affiliate of the Sponsor; and

(ii) be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Property Trustee shall cease to be eligible to so act under Section 5.3(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 5.7(c).

(c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

(d) The Capital Securities Guarantee and the Indenture shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.

(e) The initial Property Trustee shall be:

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration

Section 5.4. Certain Qualifications of Administrative Trustees and Delaware Trustee Generally . Each Administrative Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers.

Section 5.5. Administrative Trustees . The initial Administrative Trustees shall be:

Michael L. Scudder
James P. Hotchkiss
Steven H. Shapiro

(a) Except as expressly set forth in this Declaration and except if a meeting of the Administrative Trustees is called with respect to any matter over which the Administrative Trustees have power to act, any power of the Administrative Trustees may be exercised by, or with the consent of, any one such Administrative Trustee.

(b) An Administrative Trustee shall have the authority set forth in Section 3.12 to execute on behalf of the Trust any documents which the Administrative Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.6; and

(c) An Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purposes of signing any documents which the Administrative Trustees have power and authority to cause the Trust to execute pursuant to Section 3.6.

Section 5.6. Delaware Trustee . The initial Delaware Trustee shall be:

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration

Section 5.7. Appointment, Removal and Resignation of Trustees . (a) Subject to Section 5.7(b) of this Declaration and to Section 6(b) of Annex I hereto, Trustees may be appointed or removed without cause at any time:

(i) until the issuance of any Securities, by written instrument executed by the Sponsor;

(ii) unless an Event of Default shall have occurred and be continuing after the issuance of any Securities, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a single class at a meeting of the Holders of the Common Securities; and

(iii) if an Event of Default shall have occurred and be continuing after the issuance of the Securities, with respect to the Property Trustee or the Delaware Trustee, by vote of Holders of a Majority in liquidation amount of the Capital Securities voting as a single class at a meeting of Holders of the Capital Securities.

(b) (i) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.7(a) until a successor Property Trustee has been appointed and has accepted such appointment by written instrument executed by such successor Property Trustee and delivered to the Administrative Trustees and the Sponsor; and

(ii) The Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.7(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee" ) has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Administrative Trustees and the Sponsor.

(c) A Trustee appointed to office shall hold office until a successor shall have been appointed or until its death, removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that:

(i) No such resignation of the Trustee that acts as the Property Trustee shall be effective:

(A) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or

(B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; and

(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee.

(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Delaware Trustee or Successor Property Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.7.

(e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.7 within 60 days after delivery of an instrument of resignation or removal, the Property Trustee or Delaware Trustee resigning or being removed, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be.

(f) No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be.

Section 5.8. Vacancies Among Trustees . If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Administrative Trustees or, if there are more than two, a majority of the Administrative Trustees, shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.7.

Section 5.9. Effect of Vacancies . The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 5.7, the Administrative Trustees in office, regardless of their number, shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Declaration.

Section 5.10. Meetings . If there is more than one Administrative Trustee, meetings of the Administrative Trustees shall be held from time to time upon the call of any Administrative

Trustee. Regular meetings of the Administrative Trustees may be held at a time and place fixed by resolution of the Administrative Trustees. Notice of any in-person meetings of the Administrative Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before such meeting. Notice of any telephonic meetings of the Administrative Trustees or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of an Administrative Trustee at a meeting shall constitute a waiver of notice of such meeting except where an Administrative Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Administrative Trustees may be taken at a meeting by vote of a majority of the Administrative Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the Administrative Trustees. In the event there is only one Administrative Trustee, any and all action of such Administrative Trustee shall be evidenced by a written consent of such Administrative Trustee.

Section 5.11. Delegation of Power . (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 3.6, including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and

(b) the Administrative Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein.

Section 5.12. Merger, Conversion, Consolidation or Succession to Business . Any Person into which the Property Trustee, the Delaware Trustee or any Administrative Trustee that is not a natural person, as the case may be, may be merged or converted or with which either may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Property Trustee or the Delaware Trustee, as the case may be, shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

Article VI

Distributions

Section 6.1. Distributions . Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)), premium and/or principal on the Debentures held by the Property Trustee or Liquidated Damages (as defined in the Registration Rights Agreement) or any other payments pursuant to the Registration Rights Agreement with respect to the Debentures held by the Property Trustee (the amount of any such payment being a "Payment Amount" ), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution" ) of the Payment Amount to Holders.

Article VII

Issuance of Securities

Section 7.1. General Provisions Regarding Securities . (a) The Administrative Trustees shall on behalf of the Trust issue one class of capital securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Series A Capital Securities" ) and one class of common securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Common Securities" ). The Administrative Trustees shall on behalf of the Trust issue one class of capital securities representing undivided beneficial interests in the Trust having such terms as set forth in Annex I (the "Series B Capital Securities" ) in exchange for Series A Capital Securities accepted for exchange in the Exchange Offer, if any, which Series B Capital Securities shall not bear the legends required by Section 9.2(h) unless the Holder of such Series A Capital Securities is either (A) a broker-dealer who purchased such Series A Capital Securities directly from the Trust for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (B) a Person participating in the distribution of the Series A Capital Securities or (C) a Person who is an affiliate (as defined in Rule 144A) of the Trust. The Trust shall issue no securities or other interests in the assets of the Trust other than the Securities.

(b) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.

(c) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable undivided beneficial interests in the assets of the Trust.

(d) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration.

Section 7.2. Execution and Authentication . (a) The Securities shall be signed on behalf of the Trust by an Administrative Trustee. In case any Administrative Trustee of the Trust who shall have signed any of the Securities shall cease to be such Administrative Trustee before the Securities so signed shall be delivered by the Trust, such Securities nevertheless may be delivered as though the person who signed such Securities had not ceased to be such Administrative Trustee; and any Securities may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be the Administrative Trustees of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such an Administrative Trustee.

(b) One Administrative Trustee shall sign the Capital Securities for the Trust by manual or facsimile signature. Unless otherwise determined by the Trust, such signature shall, in the case of Common Securities, be a manual signature.

A Capital Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Property Trustee. Each such signature shall be conclusive evidence that the Capital Security has been authenticated under this Declaration.

Upon a written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate the Capital Securities for original issue. The aggregate number of Capital Securities outstanding at any time shall not exceed the number set forth in the Terms in Annex I hereto except as provided in Section 7.7.

The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Capital Securities. An authenticating agent may authenticate Capital Securities whenever the Property Trustee may do so. Each reference in this Declaration to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.

Section 7.3. Form and Dating . The Capital Securities and the Property Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates representing the Securities may be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by their execution thereof. The Securities may have letters, CUSIP or other numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject, if any, or usage ( provided, that any such notation, legend or endorsement is in a form acceptable to the Trust). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the Property Trustee in writing. Each Capital Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent applicable, the Property Trustee and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby.

(a) Global Securities . Securities offered and sold to QIBs in reliance on Rule 144A or offered and sold outside of the United States to non-U.S. persons in offshore transactions in reliance on Regulation S, as provided in the Purchase Agreement, shall be issued in the form of one or more, permanent global securities in definitive, fully registered form without distribution coupons with the global legend and the applicable Restricted Securities Legend set forth in Exhibit A-1 hereto (respectively, a "Rule 144A Global Capital Security" or "Regulation S Global Capital Security," and each a "Global Capital Security" and together the "Global Capital Securities" ), which shall be deposited on behalf of the purchasers of the Capital Securities represented thereby with the Clearing Agency or with the Property Trustee, at its New York office, as custodian for the Clearing Agency, and registered in the name of the Clearing Agency or a nominee of the Clearing Agency, duly executed by the Trust and authenticated by the Property Trustee as hereinafter provided. The number of Capital Securities represented by the Rule 144A Global Capital Security and the Regulation S Global Capital Security may from time to time be increased or decreased by adjustments made on the records of the Property Trustee and the Clearing Agency or its nominee as hereinafter provided.

(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to the Rule 144A Global Capital Securities, Regulation S Global Capital Securities and such other Capital Securities in global form as may be authorized by the Trust to be deposited with or on behalf of the Clearing Agency.

The Trust shall execute and the Property Trustee shall, in accordance with this Section 7.3, authenticate and make available for delivery initially one or more Rule 144A Global Capital Securities and one or more Regulation S Global Capital Securities that (i) shall be registered in the name of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be delivered by the Property Trustee to such Clearing Agency or pursuant to such Clearing Agency's written instructions or held by the Property Trustee as custodian for the Clearing Agency.

Clearing Agency Participants shall have no rights under this Declaration with respect to any Rule 144A Global Capital Security or any Regulation S Global Capital Security held on their behalf by the Clearing Agency or by the Property Trustee as the custodian of the Clearing Agency or under such Rule 144A Global Capital Security or such Regulation S Global Capital Security, and the Clearing Agency may be treated by the Trust, the Property Trustee and any agent of the Trust or the Property Trustee as the absolute owner of such Rule 144A Global Capital Security or such Regulation S Global Capital Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trust, the Property Trustee or any agent of the Trust or the Property Trustee from giving effect to any written certification, proxy or other authorization furnished by the Clearing Agency or impair, as between the Clearing Agency and its Clearing Agency Participants, the operation of customary practices of such Clearing Agency governing the exercise of the rights of a holder of a beneficial interest in any Global Capital Security.

(c) Definitive Capital Securities . Except as provided in Section 7.9, Capital Security Beneficial Owners will not be entitled to receive physical delivery of certificated Capital Securities ( "Definitive Capital Securities" ). Purchasers of Securities who are "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and did not

purchase Capital Securities in reliance on Regulation S will receive Capital Securities in the form of individual certificates in definitive, fully registered form without distribution coupons and with the applicable Restricted Securities Legend set forth in Exhibit A-1 hereto ( "Restricted Definitive Capital Securities" ); provided, however, that upon registration of transfer of such Restricted Definitive Capital Securities to a QIB, such Restricted Definitive Capital Securities will, unless the Rule 144A Global Capital Security has previously been exchanged, be exchanged for an interest in a Rule 144A Global Capital Security pursuant to the provisions of Section 9.2. Restricted Definitive Capital Securities will bear the applicable Restricted Securities Legend set forth on Exhibit A-1 unless removed in accordance with this Section 7.3 or Section 9.2.

Section 7.4. Registrar, Paying Agent and Exchange Agent . The Trust shall maintain in the State of Delaware, (i) an office or agency where Capital Securities may be presented for registration of transfer ( "Registrar" ), (ii) an office or agency where Capital Securities may be presented for payment ( "Paying Agent" ) and (iii) an office or agency where Securities may be presented for exchange ( "Exchange Agent" ). The Registrar shall keep a register of the Capital Securities and of their transfer. The Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and may appoint one or more co-registrars, one or more additional paying agents and one or more additional exchange agents in such other locations as it shall determine. The term "Registrar" includes any additional registrar, "Paying Agent" includes any additional paying agent and the term "Exchange Agent" includes any additional exchange agent. The Trust may change any Paying Agent, Registrar, co-registrar or Exchange Agent without prior notice to any Holder. The Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees. The Trust shall notify the Property Trustee of the name and address of any Agent not a party to this Declaration. If the Trust fails to appoint or maintain another entity as Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and Exchange Agent for the Common Securities.

The Trust initially appoints the Property Trustee as Registrar, Paying Agent, and Exchange Agent for the Capital Securities.

Section 7.5. Paying Agent to Hold Money in Trust . The Trust shall require each Paying Agent other than the Property Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of the Holders or the Property Trustee all money held by the Paying Agent for the payment of liquidation amounts or Distributions on the Securities, and will notify the Property Trustee if there are insufficient funds for such purpose. While any such insufficiency continues, the Property Trustee may require a Paying Agent to pay all money held by it to the Property Trustee. The Trust at any time may require a Paying Agent to pay all money held by it to the Property Trustee and to account for any money disbursed by it. Upon payment over to the Property Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust) shall have no further liability for the money. If the Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.

Section 7.6. Replacement Securities . If a Holder claims that a Security owned by it has been lost, destroyed or wrongfully taken or if such Security is mutilated and is surrendered to the Trust or in the case of the Capital Securities to the Property Trustee, the Trust shall issue and, in the case of Capital Securities, the Property Trustee shall authenticate a replacement Security if the Property Trustee's and the Trust's requirements, as the case may be, are met. An indemnity bond must be provided by the Holder which, in the judgment of the Property Trustee, is sufficient to protect the Trustees, the Sponsor or any authenticating agent from any loss that any of them may suffer if a Security is replaced. The Trust may charge such Holder for its expenses in replacing a Security.

Every replacement Security is an additional beneficial interest in the Trust.

Section 7.7. Outstanding Capital Securities . The Capital Securities outstanding at any time are all the Capital Securities authenticated by the Property Trustee except for those cancelled by it, those delivered to it for cancellation, and those described in this Section as not outstanding.

If a Capital Security is replaced, paid or purchased pursuant to Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee receives proof satisfactory to it that the replaced, paid or purchased Capital Security is held by a bona fide purchaser.

If Capital Securities are considered paid in accordance with the terms of this Declaration, they cease to be outstanding and Distributions on them shall cease to accumulate.

A Capital Security does not cease to be outstanding because one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.

Section 7.8. Capital Securities in Treasury . In determining whether the Holders of the required amount of Securities have concurred in any direction, waiver or consent, Capital Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall be disregarded and deemed not to be outstanding, except that for the purposes of determining whether the Property Trustee shall be fully protected in relying on any such direction, waiver or consent, only Securities that a Responsible Officer of the Property Trustee actually knows to be so owned shall be so disregarded.

Section 7.9. Temporary Securities . (a) Until definitive Securities are ready for delivery, the Trust may prepare and, in the case of the Capital Securities, the Property Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities in lieu of which they are issued and with such insertions, omissions, substitutions and other variations that the Trust deems appropriate for temporary Securities. Without unreasonable delay, the Trust shall prepare and, in the case of the Capital Securities, the Property Trustee shall authenticate definitive Securities in exchange for temporary Securities.

(b) A Global Capital Security deposited with the Clearing Agency or with the Property Trustee as custodian for the Clearing Agency pursuant to Section 7.3 shall be transferred to the beneficial owners thereof in the form of definitive certificated Capital Securities only if such

transfer complies with Section 9.2 and (i) the Clearing Agency notifies the Trust that it is unwilling or unable to continue as Clearing Agency for such Global Capital Security or if at any time such Clearing Agency ceases to be a "clearing agency" registered under the Exchange Act and a clearing agency is not appointed by the Sponsor within 90 days of such notice, (ii) a Default or an Event of Default has occurred and is continuing or (iii) the Trust at its sole discretion elects to cause the issuance of definitive certificated Capital Securities.

(c) Any Global Capital Security that is transferable to the beneficial owners thereof in the form of definitive certificated Capital Securities pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee located in the State of Delaware, to be so transferred, in whole or from time to time in part, without charge, and the Property Trustee shall authenticate and make available for delivery, upon such transfer of each portion of such Global Capital Security, an equal aggregate liquidation amount of Securities of authorized denominations in the form of certificated Capital Securities. Any portion of a Global Capital Security transferred pursuant to this Section shall be registered in such names as the Clearing Agency shall direct. Any Capital Security in the form of definitive certificated Capital Securities delivered in exchange for an interest in the Restricted Capital Security in global form shall, except as otherwise provided by Sections 7.3 and 9.2, bear the applicable Restricted Securities Legend set forth in Exhibit A-1 hereto.

(d) Subject to the provisions of Section 7.9(c), the Holder of a Global Capital Security may grant proxies and otherwise authorize any Person, including Clearing Agency Participants and Persons that may hold interests through Clearing Agency Participants, to take any action which such Holder is entitled to take under this Declaration or the Securities.

(e) In the event of the occurrence of any of the events specified in Section 7.9(b), the Trust will promptly make available to the Property Trustee a reasonable supply of certificated Capital Securities in fully registered form without distribution coupons.

Section 7.10. Cancellation . The Trust at any time may deliver Capital Securities to the Property Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall forward to the Property Trustee any Capital Securities surrendered to them for registration of transfer, redemption, exchange or payment. The Property Trustee shall promptly cancel all Capital Securities surrendered for registration of transfer, redemption, exchange, payment, replacement or cancellation and shall retain or dispose of cancelled Capital Securities in its customary manner unless the Sponsor directs them to be returned to it, provided that the Property Trustee shall not be obligated to destroy Capital Securities. The Trust may not issue new Capital Securities to replace Capital Securities that have been redeemed or paid or that have been delivered to the Property Trustee for cancellation or that any Holder has exchanged.

Section 7.11. CUSIP Numbers . The Trust in issuing the Capital Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Property Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders of Capital Securities; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Capital Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Capital 41

Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Sponsor will promptly notify the Property Trustee after it becomes aware of any change in the CUSIP numbers.

Article VIII

Termination of Trust

Section 8.1. Termination of Trust . (a) The Trust shall automatically terminate:

(i) upon the bankruptcy of the Sponsor;

(ii) upon the filing of a certificate of dissolution or liquidation or its equivalent with respect to the Sponsor, or the revocation of the Sponsor's charter and the expiration of 90 days after the date of revocation without a reinstatement thereof;

(iii) following the distribution of a Like Amount of the Debentures to the Holders upon the liquidation of the Trust, Debentures having a principal amount equal to the liquidation amount of the Trust Securities of the Holder to whom such Debentures are distributed, provided that, the Property Trustee has received written notice from the Sponsor directing the Property Trustee to terminate the Trust (which direction is optional, and except as otherwise expressly provided below, within the discretion of the Sponsor) and; provided, further, that such direction and such distribution is conditioned on the receipt by the Sponsor or the Trust, as the case requires, of any required regulatory approval (including without limitation any required approval of the Federal Reserve Board);

(iv) upon the entry of a decree of judicial dissolution of the Trust by a court of competent jurisdiction;

(v) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities;

(vi) upon the repayment of the Debentures or at such time as no Debentures are outstanding; or

(vii) the expiration of the term of the Trust provided in Section 3.14.

(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a) and in accordance with Section 3810 of the Statutory Trust Act the Administrative Trustees shall file a certificate of cancellation with the Secretary of State of the State of Delaware.

Article IX

Transfer of Interests

Section 9.1. Transfer of Securities . (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Securities. Any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void.

(b) The Sponsor may not transfer the Common Securities other than a transfer in connection with a consolidation or merger of the Sponsor into another Person, or any conveyance, transfer or lease by the Sponsor of its properties and assets substantially as an entirety to any Person, pursuant to the Indenture.

(c) The Administrative Trustees shall provide for the registration and transfer of Securities, which will be effected without charge but only upon payment (with such indemnity as the Administrative Trustees may require) in respect of any tax or other governmental charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Securities, the Administrative Trustees shall cause one or more new Securities to be issued in the name of the designated transferee or transferees. Every Security surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Administrative Trustees duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Capital Security surrendered for registration of transfer shall be canceled by the Property Trustee. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Declaration.

Section 9.2. Transfer Procedures and Restrictions .

(a) General . Except as otherwise provided in Section 9.2(b), if Capital Securities are issued upon the registration of transfer, exchange or replacement of Capital Securities bearing the Restricted Securities Legend set forth in Exhibit A-1 hereto, or if a request is made to remove such Restricted Securities Legend on Capital Securities, the Capital Securities so issued shall bear the Restricted Securities Legend, or the Restricted Securities Legend shall not be removed, as the case may be, unless there is delivered to the Trust and the Property Trustee such evidence satisfactory to the Sponsor, which shall include an Opinion of Counsel as may be reasonably required by the Sponsor, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof are made pursuant to an exception from the registration requirements of the Securities Act or, with respect to Restricted Definitive Capital Securities, that such Securities are not "restricted" within the meaning of Rule 144. Upon provision of such satisfactory evidence, the Property Trustee, at the written direction of the Trust, shall authenticate and deliver Capital Securities that do not bear the legend.

(b) Transfers After Effectiveness of a Registration Statement . After the effectiveness of a Registration Statement with respect to any Capital Securities, and except as otherwise required by applicable laws and regulations or currently prevailing interpretations of the staff of the Commission, all requirements pertaining to legends on such Capital Securities will cease to apply, and beneficial interests in a Capital Security in global form without legends will be available to transferees of such Capital Securities, upon exchange of the transferring Holder's Restricted Definitive Capital Security or directions to transfer such Holder's beneficial interest in the Rule 144A Global Capital Security or the Regulation S Global Capital Security, as the case may be. No such transfer or exchange of a Restricted Definitive Capital Security or of an interest in the Rule 144A Global Capital Security or the Regulation S Global Capital Security shall be effective unless the transferor delivers to the Trust a certificate in a form substantially similar to that attached hereto as the "Form of Assignment" in Exhibit A-1. Except in connection with the Exchange Offer as provided in Section 9.2(l), after the effectiveness of a Registration Statement, the Trust shall issue and the Property Trustee, upon a written order of the Trust signed by one Administrative Trustee, shall authenticate a Capital Security in global form without the Restricted Securities Legend (the "Unrestricted Global Capital Security" ) for deposit with the Clearing Agency or its custodian to evidence transfers of beneficial interests from the (i) Rule 144A Global Capital Security or the Regulation S Global Capital Security and (ii) Restricted Definitive Capital Securities.

(c) Transfer and Exchange of Definitive Capital Securities . When Definitive Capital Securities are presented to the Registrar or co-Registrar

(x) to register the transfer of such Definitive Capital Securities; or

(y) to exchange such Definitive Capital Securities for an equal number of Definitive Capital Securities,

the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Capital Securities surrendered for transfer or exchange:

(i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Administrative Trustees and the Registrar or co-registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and

(ii) in the case of Definitive Capital Securities that are Restricted Definitive Capital Securities:

(A) if such Restricted Capital Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or

(B) if such Restricted Capital Securities are being transferred: (i) a certification from the transferor in a form substantially similar to that attached

hereto as the "Form of Assignment" in Exhibit A-1, and (ii) if the Trust so requests, evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the Restricted Securities Legend.

(d) Restrictions on Transfer of a Definitive Capital Security for a Beneficial Interest in a Global Capital Security . A Definitive Capital Security may not be exchanged for a beneficial interest in a Global Capital Security except upon satisfaction of the requirements set forth below. Upon receipt by the Property Trustee of a Definitive Capital Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Property Trustee and the Administrative Trustees, together with:

(i) if such Definitive Capital Security is a Restricted Capital Security, certification (in a form substantially similar to that attached hereto as the "Form of Assignment" in Exhibit A-1), provided, however, that such Definitive Capital Security may only be exchanged for an interest in a Regulation S Global Security where such Definitive Capital Security is being transferred pursuant to Regulation S or Rule 144 (if available); and

(ii) whether or not such Definitive Capital Security is a Restricted Capital Security, written instructions directing the Property Trustee to make, or to direct the Clearing Agency to make, an adjustment on its books and records with respect to the appropriate Global Capital Security to reflect an increase in the number of the Capital Securities represented by such Global Capital Security,

then the Property Trustee shall cancel such Definitive Capital Security and cause, or direct the Clearing Agency to cause, the aggregate number of Capital Securities represented by the appropriate Global Capital Security to be increased accordingly. If no Global Capital Securities are then outstanding, the Trust shall issue and the Property Trustee shall authenticate, upon written order of any Administrative Trustee, an appropriate number of Capital Securities in global form.

(e) Transfer and Exchange of Global Capital Securities . Subject to Section 9.2(f), the transfer and exchange of Global Capital Securities or beneficial interests therein shall be effected through the Clearing Agency, in accordance with this Declaration (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Clearing Agency therefor.

(f) Transfer of a Beneficial Interest in a Global Capital Security for a Definitive Capital Security .

(i) Any Person having a beneficial interest in a Global Capital Security may upon request, but only upon 20 days prior notice to the Property Trustee, and if accompanied by the information specified below, exchange such beneficial interest for a Definitive Capital Security representing the same number of Capital Securities. Upon receipt by the Property Trustee from the Clearing Agency or its nominee on behalf of any Person having a beneficial interest in a

Global Capital Security of written instructions or such other form of instructions as is customary for the Clearing Agency or the Person designated by the Clearing Agency as having such a beneficial interest in a Restricted Capital Security and a certification from the transferor (in a form substantially similar to that attached hereto as the "Form of Assignment" in Exhibit A-1), which may be submitted by facsimile, then the Property Trustee will cause the aggregate number of Capital Securities represented by Global Capital Securities to be reduced on its books and records and, following such reduction, the Trust will execute and the Property Trustee will authenticate and make available for delivery to the transferee a Definitive Capital Security.

(ii) Definitive Capital Securities issued in exchange for a beneficial interest in a Global Capital Security pursuant to this Section 9.2(f) shall be registered in such names and in such authorized denominations as the Clearing Agency, pursuant to instructions from its Clearing Agency Participants or indirect participants or otherwise, shall instruct the Property Trustee in writing. The Property Trustee shall deliver such Capital Securities to the Persons in whose names such Capital Securities are so registered in accordance with such instructions of the Clearing Agency.

(g) Restrictions on Transfer and Exchange of Global Capital Securities . Notwithstanding any other provisions of this Declaration (other than the provisions set forth in subsection (b) of Section 7.9), a Global Capital Security may not be transferred as a whole except by the Clearing Agency to a nominee of the Clearing Agency or another nominee of the Clearing Agency or by the Clearing Agency or any such nominee to a successor Clearing Agency or a nominee of such successor Clearing Agency.

Prior to the expiration of the restricted period, as contemplated by Regulation S, beneficial interests in the Regulation S Global Capital Security may be exchanged for beneficial interests in the Rule 144A Global Capital Security only if such exchange occurs in connection with a transfer of the Capital Securities pursuant to Rule 144A and the transferor first delivers to the Property Trustee a written certificate (in a form substantially similar to that attached hereto as the "Form of Assignment" in Exhibit A-1) to the effect that the Capital Securities are being transferred to a Person who the transferor reasonably believes is a QIB, purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A and in accordance with all applicable securities laws of the states of the United States and other jurisdictions.

Beneficial interests in the Rule 144A Global Capital Security may be transferred to a Person who takes delivery in the form of an interest in the Regulation S Global Capital Security, whether before or after the expiration of such restricted period, as contemplated by Regulation S, only if the transferor first delivers to the Property Trustee a written certificate (in a form substantially similar to that attached hereto as the "Form of Assignment" in Exhibit A-1) to the effect that such transfer is being made in accordance with Rule 903 or Rule 904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs prior to the expiration of such restricted

period, the interest transferred will be held immediately thereafter through the Euroclear System or Clearstream, societe anonyme.

(h) Legend . (i) Except as permitted by the following paragraph (ii), each Capital Security certificate evidencing the Global Capital Securities and the Definitive Capital Securities (and all Capital Securities issued in exchange therefor or substitution thereof) shall bear a legend (the "Restricted Securities Legend" ) in substantially the following form, as applicable:

The Holder of this Capital Security by its acceptance hereof is deemed to have agreed to be bound by the provisions of a registration rights agreement among First Midwest Bancorp, Inc. (the "Corporation" ), First Midwest Capital Trust I (the "Trust" ), and the Initial Purchasers named therein dated November 18, 2003 (the "Registration Rights Agreement" ). The Corporation will provide a copy of the registration rights agreement to a Holder without charge upon written request to the trust at its principal place of business.

This Capital Security has not been registered under the Securities Act of 1933, as amended (the "Securities Act" ) or any state securities laws or any other applicable securities law. Neither this Capital Security nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, registration.

The Holder of this Capital Security by its acceptance hereof agrees to offer, sell or otherwise transfer this Capital Security, prior to the date (the "Resale Restriction Termination Date" ) which is two years after the later of the original issuance date hereof and the last date on which the Corporation or any "Affiliate" of the Corporation was the owner of this Capital Security (or any predecessor of this Capital Security) only (A) to the corporation, (B) pursuant to a registration statement which has been declared effective under the Securities Act, (C) so long as this Capital Security is eligible for resale pursuant to Rule 144A under the Securities Act ( "Rule 144A" ), to a person it reasonably believes is a "Qualified Institutional Buyer" (as defined in Rule 144A) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the transfer is being made in reliance on Rule 144A,

(D) pursuant to offers and sales to non-U.S. Persons that occur outside the United States within the meaning of Regulation S under the Securities Act, (E) to an institutional "Accredited Investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring this Capital Security for its own account, or for the account of such an Institutional Accredited Investor, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act or (F) pursuant to any other available exemption from the registration requirements under the Securities Act, subject to the right of the trust and the Corporation prior to any such offer, sale or transfer (i) pursuant to clause (D), (E) or (F) to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to each of them and (ii) pursuant to Clause (E), to require that the transferor deliver to the trust a letter from the transferee substantially in the form of Annex A to the offering memorandum dated November 10, 2003. Such Holder further agrees that it will deliver to each person to whom this Capital Security is transferred a notice substantially to the effect of this legend.

The Holder of this Capital Security by its acceptance hereof also agrees, represents and warrants that either (i) it is not an employee benefit plan subject to the Employment Retirement Income Security Act of 1974, as amended ( "Erisa" ) or (ii) the acquisition and holding of this Capital Security by it is not prohibited by either Section 406 of Erisa or Section 4975 of the U.S. Internal Revenue Code of 1986, as amended, or is exempt from any such prohibition.

The Capital Securities will be issued and, until registered under the Securities Act, may be transferred only in blocks having a liquidation amount of not less than $100,000 (100 capital securities). Any attempted transfer of Capital Securities in a block having a liquidation amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be the Holder of such Capital Securities for any purpose, including, but not limited to, the receipt of distributions on such Capital

Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Capital Securities.

and in the case of the Regulation S Global Capital Security:

This Capital Security has not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons unless registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available.

(ii) Upon any sale or transfer of a Restricted Capital Security (including any Restricted Capital Security represented by a Global Capital Security) pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 under the Securities Act after such registration statement ceases to be effective:

(A) in the case of any Restricted Capital Security that is a Definitive Capital Security, the Registrar shall permit the Holder thereof to exchange such Restricted Capital Security for a Definitive Capital Security that does not bear the Restricted Securities Legend and rescind any restriction on the transfer of such Restricted Capital Security; and

(B) in the case of any Restricted Capital Security that is represented by a Global Capital Security, the Registrar shall permit the Holder of such Global Capital Security to exchange such Global Capital Security for another Global Capital Security that does not bear the Restricted Securities Legend.

(i) Cancellation or Adjustment of Global Capital Security . At such time as all beneficial interests in a Global Capital Security have either been exchanged for Definitive Capital Securities to the extent permitted by this Declaration or redeemed, repurchased or canceled in accordance with the terms of this Declaration, such Global Capital Security shall be returned to the Property Trustee for cancellation by the Property Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Capital Security is exchanged for Definitive Capital Securities, Capital Securities represented by such Global Capital Security shall be reduced and an adjustment shall be made on the books and records of the Property Trustee (if it is then the custodian for such Global Capital Security) with respect to such Global Capital Security, by the Property Trustee or any Securities custodian, to reflect such reduction.

(j) Obligations with Respect to Transfers and Exchanges of Capital Securities .

(i) To permit registrations of transfers and exchanges, the Trust shall execute and the Property Trustee shall authenticate Definitive Capital Securities and Global Capital Securities at the Registrar's or co- Registrar's request in accordance with the terms of this Declaration.

(ii) Registrations of transfers or exchanges will be effected without charge, but only upon payment (with such indemnity as the Trust or the Sponsor may require) in respect of any tax or other governmental charge that may be imposed in relation to it.

(iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of (a) Capital Securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption or any notice of selection of Capital Securities for redemption and ending at the close of business on the day of such mailing; or (b) any Capital Security so selected for redemption in whole or in part, except the unredeemed portion of any Capital Security being redeemed in part.

(iv) Prior to the due presentation for registrations of transfer of any Capital Security, the Trust, the Property Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the Person in whose name a Capital Security is registered as the absolute owner of such Capital Security for the purpose of receiving Distributions on such Capital Security (subject to Section 2(c) of Annex I) and for all other purposes whatsoever, and none of the Trust, the Property Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary.

(v) All Capital Securities issued upon any registration of transfer or exchange pursuant to the terms of this Declaration shall evidence the same security and shall be entitled to the same benefits under this Declaration as the Capital Securities surrendered upon such registration of transfer or exchange.

(k) No Obligation of the Property Trustee .

(i) The Property Trustee shall have no responsibility or obligation to any beneficial owner of a Global Capital Security, a Clearing Agency Participant in the Clearing Agency or other Person with respect to the accuracy of the records of the Clearing Agency or its nominee or of any Clearing Agency Participant thereof, with respect to any ownership interest in the Capital Securities or with respect to the delivery to any Clearing Agency Participant, beneficial owner or other Person (other than the Clearing Agency) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Capital Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Capital Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Clearing Agency or its nominee in the case of a Global Capital Security). The rights of Capital Security Beneficial Owners shall be exercised only through the Clearing Agency subject to the applicable rules and procedures of the Clearing Agency. The Property Trustee may conclusively rely and shall be fully protected in relying upon information furnished by the Clearing Agency or any agent thereof with respect to its Participants and any Capital Security Beneficial Owners.

(ii) The Property Trustee and Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Declaration or under applicable law with respect to any transfer of any interest

in any Capital Security (including any transfers between or among Clearing Agency Participants or Capital Security Beneficial Owners) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Declaration, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(l) Exchange of Series A Capital Securities for Series B Capital Securities . (i) The Series A Capital Securities may be exchanged for Series B Securities pursuant to the terms of the Exchange Offer in the manner contemplated by the Registration Rights Agreement. The Trustee shall make the exchange as follows:

The Sponsor shall present the Property Trustee with an Officers' Certificate certifying the following:

(A) upon issuance of the Series B Capital Securities, the transactions contemplated by the Exchange Offer have been consummated; and

(B) the number of Series A Capital Securities properly tendered in the Exchange Offer that are represented by a Global Capital Security and the number of Series A Capital Securities properly tendered in the Exchange Offer that are represented by Definitive Capital Securities, the name of each Holder of such Definitive Capital Securities, the liquidation amount of Capital Securities properly tendered in the Exchange Offer by each such Holder and the name and address to which Definitive Capital Securities for Series B Capital Securities shall be registered and sent for each such Holder.

(ii) The Property Trustee, upon receipt of (i) such Officers' Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B Capital Securities have been registered under Section 5 of the Securities Act and the Indenture has been qualified under the Trust Indenture Act and (y) with respect to the matters set forth in Section 3(o) of the Registration Rights Agreement and (iii) a Company Order (as defined in the Indenture), shall authenticate (A) a Global Capital Security for Series B Capital Securities in aggregate liquidation amount equal to the aggregate liquidation amount of Series A Capital Securities represented by a Global Capital Security indicated in such Officers' Certificate as having been properly tendered and (B) Definitive Capital Securities representing Series B Capital Securities registered in the names of, and in the liquidation amounts indicated in such Officers' Certificate.

(iii) If, upon consummation of the Exchange Offer, less than all the outstanding Series A Capital Securities shall have been properly tendered and not withdrawn, the Property Trustee shall make an endorsement on such Global Capital Security for Series A Capital Securities indicating the reduction in the number and aggregate liquidation amount represented thereby as a result of the Exchange Offer.

(iv) The Property Trustee shall deliver such Definitive Capital Securities for Series B Capital Securities to the Holders thereof as indicated in such Officers' Certificate.

(m) Minimum Transfers . Capital Securities may only be transferred in minimum blocks of $100,000 aggregate liquidation amount (and integrals of $1,000 above $100,000) until such Capital Securities are registered pursuant to an effective registration statement filed under the Securities Act. Any transfer of Capital Securities in violation of this Section having an aggregate liquidation amount of less than $100,000 will be void. After the Capital Securities are registered pursuant to an effective registration statement filed under the Securities Act, the Capital Securities may be transferred in blocks of $1,000 aggregate liquidation amount (one Capital Security) or integral multiples thereof.

Section 9.3. Book Entry Interests . Global Capital Securities shall initially be registered on the books and records of the Trust in the name of Cede & Co., the nominee of the Clearing Agency, and no Capital Security Beneficial Owner will receive a Definitive Capital Security certificate representing such Capital Security Beneficial Owner's interests in such Global Capital Securities, except as provided in Section 9.2 and 7.9. Unless and until definitive, fully registered Capital Securities certificates have been issued to the Capital Security Beneficial Owners pursuant to Section 9.2 and 7.9:

(a) the provisions of this Section 9.3 shall be in full force and effect;

(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Declaration (including the payment of Distributions on the Global Capital Securities and receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the sole holder of the Global Certificates and shall have no obligation to the Capital Security Beneficial Owners;

(c) to the extent that the provisions of this Section 9.3 conflict with any other provisions of this Declaration, the provisions of this Section 9.3 shall control; and

(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants and the Clearing Agency shall receive and transmit payments of Distributions on the Global Certificates to such Clearing Agency Participants. The Clearing Agency will make book entry transfers among the Clearing Agency Participants.

Section 9.4. Notices to Clearing Agency . Whenever a notice or other communication to the Capital Security Holders is required under this Declaration, the Trustees shall give all such notices and communications specified herein to be given to the Holders of Global Capital Securities to the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial Owners.

Section 9.5. Appointment of Successor Clearing Agency . If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Capital Securities, the Administrative Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to such Capital Securities.

Article X

Limitation of Liability of Holders of Securities,
Trustees or Others

Section 10.1. Liability . (a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and the terms of the Securities, the Sponsor shall not be:

(i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or

(ii) required to pay to the Trust or to any Holder of Securities any deficit upon dissolution or termination of the Trust or otherwise.

(b) The Sponsor shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets.

(c) Pursuant to Section 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware.

Section 10.2. Exculpation . (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and, if selected by such Indemnified Person, has been selected by such Indemnified Person with reasonable care on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid.

Section 10.3. Fiduciary Duty . (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person.

(b) Unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises between any Covered Persons and any Indemnified Persons; or

(ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities,

the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise.

(i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or

(ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law.

Section 10.4. Indemnification . (a) (i) The Sponsor shall indemnify, to the full extent permitted by law, any Trust Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was a Trust Indemnified Person against expenses (including reasonable attorneys' fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he 54

acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Trust Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(ii) The Sponsor shall indemnify, to the full extent permitted by law, any Trust Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Trust Indemnified Person against expenses (including reasonable attorneys' fees and expenses) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Trust Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper.

(iii) To the extent that a Trust Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or matter therein, he shall be indemnified, to the full extent permitted by law, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.

(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Trust Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Administrative Trustees by a majority vote of a quorum consisting of such Administrative Trustees who were not parties to such action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrative Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Common Security Holder of the Trust.

(v) Expenses (including reasonable attorneys' fees and expenses) incurred by a Trust Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Trust Indemnified Person to repay such amount if it shall

ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 10.4(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Administrative Trustees by a majority vote of a Quorum of disinterested Administrative Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrative Trustees so directs, by independent legal counsel in a written opinion or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the Administrative Trustees, counsel or the Common Security Holder at the time such determination is made, such Trust Indemnified Person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Trust Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Administrative Trustees, independent legal counsel or Common Security Holder reasonably determine that such person deliberately breached his duty to the Trust or its Common or Capital Security Holders.

(vi) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors of the Sponsor or Capital Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 10.4(a) shall be deemed to be provided by a contract between the Sponsor and each Trust Indemnified Person who serves in such capacity at any time while this Section 10.4(a) is in effect. Any repeal or modification of this Section 10.4(a) shall not affect any rights or obligations then existing.

(vii) The Sponsor or the Trust may purchase and maintain insurance on behalf of any Person who is or was a Trust Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 10.4(a).

(viii) For purposes of this Section 10.4(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any Person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 10.4(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued.

(ix) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be a Trust Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a Person.

(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Property Trustee or the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person" ) for, and to hold each Fiduciary Indemnified Person harmless against, any and all loss, liability, damage, claim or expense including taxes (other than taxes based on the income of such Fiduciary Indemnified Person) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or removal of the Property Trustee or the Delaware Trustee, as the case may be, and the termination of this Declaration.

Section 10.5. Outside Businesses . The Sponsor, the Delaware Trustee and the Property Trustee (subject to Section 5.3(c)) may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. None of the Sponsor, the Delaware Trustee or the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and the Sponsor, the Delaware Trustee and the Property Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. The Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates.

Section 10.6. Compensation; Fees . The Sponsor agrees:

(a) to pay to the Trustees from time to time mutually agreed upon reasonable compensation for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Declaration (including the reasonable compensation and the expenses and disbursements of their respective agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith.

The provisions of this Section 10.6 shall survive the dissolution of the Trust and the termination of this Declaration and the removal or resignation of any Trustee. No Trustee may claim any lien or charge on any property of the Trust as a result of any amount due pursuant to this Section 10.6.

Article XI

Accounting

Section 11.1. Fiscal Year . The fiscal year ( "Fiscal Year" ) of the Trust shall be the calendar year, or such other year as is required by the Code or Treasury Regulations.

Section 11.2. Certain Accounting Matters . (a) At all times during the existence of the Trust, the Administrative Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with United States generally accepted accounting principles, consistently applied. The Trust shall use the accrual method of accounting for United States federal income tax purposes. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Administrative Trustees.

(b) The Administrative Trustees shall cause to be prepared and delivered to the Property Trustee such documents, reports and information necessary for the Property Trustee to comply with Section 2.3 of this Declaration.

(c) The Administrative Trustees shall cause to be duly prepared and delivered to each of the Holders, any annual United States federal income tax information statement, required by the Code and the Treasury Regulations, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Administrative Trustees shall endeavor to deliver all such information statements within 30 days after the end of each Fiscal Year of the Trust.

(d) The Administrative Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States federal income tax return, on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Administrative Trustees on behalf of the Trust with any state or local taxing authority.

Section 11.3. Banking . The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Property Trustee shall be made directly to the Property Trustee Account and no other funds of the Trust shall be deposited in the Property Trustee Account. The sole signatories for such accounts shall be designated by the Administrative Trustees; provided,

however, that the Property Trustee shall designate the signatories for the Property Trustee Account.

Section 11.4. Withholding . The Trust and the Administrative Trustees shall comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Administrative Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to Distributions or allocations to any Holder, the amount withheld shall be deemed to be a Distribution in the amount of the withholding to the Holder. In the event of any claimed over withholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding.

Article XII

Amendments and Meetings

Section 12.1. Amendments . (a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by:

(i) the Administrative Trustees (or if there are more than two Administrative Trustees a majority of the Administrative Trustees);

(ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee; and

(iii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee.

(b) No amendment shall be made, and any such purported amendment shall be void and ineffective:

(i) unless the Property Trustee shall have first received:

(A) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and

(B) an Opinion of Counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities),

provided, however, that neither the Property Trustee nor the Delaware Trustee shall be required to sign any such amendment which adversely affects the rights, powers, duties, obligations or immunities of the Property Trustee or the Delaware Trustee, as the case may be, and

(ii) to the extent the result of such amendment would be to:

(A) cause the Trust to fail to continue to be classified for purposes of United States federal income taxation as a grantor trust;

(B) reduce or otherwise adversely affect the powers of the Property Trustee in contravention of the Trust Indenture Act; or

(c) At such time after the Trust has issued any Securities that remain outstanding, any amendment that would adversely affect the rights, privileges or preferences of any Holder of Securities may be effected only with such additional requirements as may be set forth in the terms of such Securities;

(d) Section 9.1(d) and this Section 12.1 shall not be amended without the consent of all of the Holders of the Securities;

(e) Article Four shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities;

(f) The rights of the Holders of the Common Securities under Article Five to increase or decrease the number of, and appoint and remove Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities; and

(g) Notwithstanding Section 12.1(c), this Declaration may be amended without the consent of the Holders of the Securities to:

(i) cure any ambiguity, correct or supplement any provision in this Declaration that may be inconsistent with any other provision of this Declaration or to make any other provisions with respect to matters or questions arising under this Declaration which shall not be inconsistent with the other provisions of the Declaration;

(ii) to modify, eliminate or add to any provisions of the Declaration to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Securities are

outstanding or to ensure that the Trust will not be required to register as an Investment Company under the Investment Company Act;

(iii) to modify, eliminate or add any provisions of the Declaration to such extent as shall be necessary to enable the Trust and the Sponsor to conduct an Exchange Offer in the manner contemplated by the Registration Rights Agreement; or

(iv) to make any changes that would provide any additional rights and benefits to Holders or that does not adversely affect the legal rights herein of any such Holders;

provided, however, that in the case of clauses (i) and (iii), such action shall not adversely affect in any material respect the interests of the Holders, and any amendments of this Declaration shall become effective when notice thereof is given to the Holders.

Section 12.2. Meetings of the Holders; Action by Written Consent . (a) Meetings of the Holders of any class of Securities may be called at any time by the Administrative Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading. The Administrative Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Administrative Trustees one or more notices in writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders calling a meeting shall specify in writing the Security Certificates held by the Holders exercising the right to call a meeting and only those Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met.

(b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities:

(i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least seven days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders is permitted or required under this Declaration or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the Holders. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders entitled to vote who have not consented in writing. The Administrative Trustees may specify that any written ballot submitted to the Security Holders for the purpose of

taking any action without a meeting shall be returned to the Trust within the time specified by the Administrative Trustees;

(ii) each Holder may authorize any Person to act for it by proxy on all matters in which a Holder is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders were stockholders of a Delaware corporation;

(iii) each meeting of the Holders shall be conducted by the Administrative Trustees or by such other Person that the Administrative Trustees may designate; and

(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Capital Securities are then listed or trading, otherwise provides, the Administrative Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote.

Article XIII

Representations of Property Trustee and Delaware Trustee

Section 13.1. Representations and Warranties of Property Trustee . The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Property Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that:

(a) The Property Trustee is a Delaware banking corporation with trust powers and authority under the laws of the State of Delaware to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration;

(b) The execution, delivery and performance by the Property Trustee of the Declaration has been duly authorized by all necessary corporate action on the part of the Property Trustee. The Declaration has been duly executed and delivered by the Property Trustee and constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy,

reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law);

(c) The execution, delivery and performance of this Declaration by the Property Trustee does not conflict with or constitute a breach of the charter or by-laws of the Property Trustee;

(d) No consent, approval or authorization of, or registration with or notice to, any Delaware State or federal banking authority is required for the execution, delivery or performance by the Property Trustee of this Declaration; and

(e) The Property Trustee satisfies the qualifications set forth in Section 5.3(a).

Section 13.2. Representations and Warranties of Delaware Trustee . The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that:

(a) The Delaware Trustee is a duly organized Delaware banking corporation, validly existing and in good standing under the laws of the State of Delaware, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration;

(b) The execution, delivery and performance by the Delaware Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. This Declaration has been duly executed and delivered by the Delaware Trustee and constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law);

(c) No consent, approval or authorization of, or registration with or notice to, any federal banking authority is required for the execution, delivery or performance by the Delaware Trustee of this Declaration; and

(d) The Delaware Trustee is a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware.

Article XIV

Registration Rights

Section 14.1. Registration Rights Agreement . The Holders of the Capital Securities, the Debentures and the Capital Securities Guarantee are entitled to the benefits of the Registration Rights Agreement.

Article XV

Miscellaneous

Section 15.1. Notices . All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

(a) if given to the Trust or any Administrative Trustee, in care of the Administrative Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders and the Property Trustee):

First Midwest Capital Trust I
c/o First Midwest Bancorp, Inc.
300 Park Boulevard, Suite 400
Itasca, Illinois 60143
Attention: Corporate Secretary
Telecopy: 630-875-7360

(b) if given to the Delaware Trustee, at the Delaware Trustee's mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the Holders and the other Trustees):

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-636-4140

(c) if given to the Property Trustee, at the Property Trustee's mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders and the other Trustees):

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-636-4140

(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice to the Trust and the Property Trustee):

First Midwest Bancorp, Inc.
300 Park Boulevard, Suite 400
Itasca, Illinois 60143
Attention: Chief Financial Officer
Telecopy: (630) 875-7360

(e) if given to any other Holder, at the address set forth on the books and records of the Trust.

All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

Section 15.2. Governing Law . This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws.

Section 15.3. Intention of the Parties . It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties.

Section 15.4. Headings . Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof.

Section 15.5. Successors and Assigns . Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed.

Section 15.6. Partial Enforceability . If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

Section 15.7. Counterparts . This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

In Witness Whereof, the undersigned has caused these presents to be executed as of the day and year first above written.

_____/s/ Michael L. Scudder

Michael L. Scudder, as Administrative Trustee

_____/s/ James P. Hotchkiss

James P. Hotchkiss, as Administrative Trustee

_____/s/ Steven Shapiro

Steven H. Shapiro, as Administrative Trustee

Wilmington Trust Company, as Delaware Trustee

By__ _/s/ K. Long

Name: Kristin Long

Title: Financial Services Officer

Wilmington Trust Company, as Property Trustee

By __ _/s/ K. Long

Name: Kristin Long

Title: Financial Services Officer

First Midwest Bancorp, Inc., as Sponsor

By __ _/s/ John M. O'Meara

Name: John M. O'Meara

Title: President and Chief Executive Officer

Annex I

Terms of
6.95% Series A/Series B Capital Securities
6.95% Common Securities

Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of November 18, 2003 (as amended from time to time, the "Declaration" ), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration or, if not defined in such Declaration, as defined in the Offering Memorandum referred to below in Section 2(c) of this Annex I):

1. Designation and Number.

(a) Capital Securities . 125,000 Series A Capital Securities of the Trust and 125,000 Series B Capital Securities of the Trust, each series with an aggregate liquidation amount with respect to the assets of the Trust of One Hundred Twenty-Five Million dollars ($125,000,000) and each with a liquidation amount with respect to the assets of the Trust of $1,000 per Security, are hereby designated for the purposes of identification only as "6.95% Series A Capital Securities" and "6.95% Series B Capital Securities," respectively (collectively, the "Capital Securities" ). 125,000 of the Series A Capital Securities are issuable at the Closing Time. The Series B Capital Securities are issuable pursuant to the Exchange Offer in the manner contemplated by the Registration Rights Agreement. The certificates evidencing the Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Capital Securities are listed.

(b) Common Securities. 3,866 Common Securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of Three Million Eight Hundred Sixty Six Thousand dollars ($3,866,000) and a liquidation amount with respect to the assets of the Trust of $1,000 per security, are hereby designated for the purposes of identification only as "6.95% Common Securities" (the "Common Securities" ). 3,866,000 of the Common Securities are issuable at the Closing Time. The certificates evidencing the Common Securities shall be substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice.

2. Distributions.

(a) Distributions payable on each Security will be fixed at a rate per annum of 6.95% (the "Coupon Rate" ) of the liquidation amount of $1,000 per Security (the "Liquidation Amount" ), such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. Distributions in arrears for more than one semi-annual period will bear

additional distributions thereon compounded semi-annually at the Coupon Rate (to the extent permitted by applicable law). Pursuant to the Registration Rights Agreement, in certain limited circumstances the Debenture Issuer will be required to pay Liquidated Damages (as defined in the Registration Rights Agreement) with respect to the Debentures. The term "Distributions," as used herein, includes distributions of any such distributions and Liquidated Damages payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds on hand legally available therefor.

(b) Distributions on the Securities will be cumulative, will accumulate from the most recent date to which Distributions have been paid or duly provided for or, if no Distributions have been paid or duly provided for, from the Issue Date (as defined in the Indenture), and will be payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2004 (each, a "Distribution Date" ), except as otherwise described below. Distributions will be computed on the basis of a 360-day year consisting of twelve 30-day months and for any period less than a full calendar month on the basis of the actual number of days elapsed in such month. As long as no Event of Default has occurred and is continuing under the Indenture, the Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period at any time and from time to time on the Debentures for a period not exceeding 10 consecutive semi-annual periods, including the first such semi-annual period during such extension period (each an "Extension Period" ), during which Extension Period no interest shall be due and payable on the Debentures, provided that no Extension Period shall end on a day other than an Interest Payment Date on the Debentures or extend beyond the Maturity Date of the Debentures. As a consequence of such deferral, Distributions will also be deferred. Despite such deferral, Distributions will continue to accumulate with additional Distributions thereon (to the extent permitted by applicable law but not at a rate greater than the rate at which interest is then accruing on the Debentures) at the Coupon Rate compounded semi-annually during any such Extension Period. Prior to the termination of any such Extension Period, the Debenture Issuer may further defer payments of interest by further extending such Extension Period; provided that such Extension Period, together with all such previous and further extensions within such Extension Period, may not exceed 10 consecutive semi-annual periods, including the first semi-annual period during such Extension Period, or extend beyond the Maturity Date of the Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the above requirements.

(c) Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the fifteenth day of the month which precedes the month in which the relevant Distribution Date occurs, which Distribution Dates correspond to the interest payment dates on the Debentures. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment in respect of the Global Capital Securities will be made as described under the heading "Description of Capital Securities--Payment on the Capital Securities" in the Offering Memorandum dated November 10, 2003, of the Debenture Issuer and the Trust relating to the Securities and the Debentures. Payments in respect of Capital Securities held in certificated form will be made by check mailed to the Holder entitled thereto. The relevant record dates for the Common Securities shall be the same as the record dates for the

Capital Securities. Distributions payable on any Securities that are not punctually paid on any Distribution Date, as a result of the Debenture Issuer having failed to make a payment under the Debentures, will cease to be payable to the Holder on the relevant record date, and such defaulted Distributions will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such date.

(d) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined in Section 8 hereof) among the Holders of the Securities.

3. Liquidation Distribution Upon Dissolution.

In the event of any termination of the Trust or the Sponsor otherwise gives notice of its election to liquidate the Trust pursuant to Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the Administrative Trustees as expeditiously as the Administrative Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to the Holders a Like Amount (as defined below) of the Debentures, in which event such Holders will be entitled to receive out of the assets of the Trust legally available for distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the aggregate of the liquidation amount of $1,000 per Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution" ).

"Like Amount" means (i) with respect to a redemption of the Securities, Securities having a Liquidation Amount equal to the principal amount of Debentures to be paid in accordance with their terms and (ii) with respect to a distribution of Debentures upon liquidation of the Trust, Debentures having a principal amount equal to the Liquidation Amount of the Securities of the Holder to whom such Debentures are distributed.

If, upon any such liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets on hand legally available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis.

4. Redemption and Distribution.

(a) Upon the prepayment of the Debentures in whole or in part, at maturity or upon early redemption (either at the option of the Debenture Issuer or pursuant to a Special Event, as described below) (other than following the distribution of the Debentures to the Holders), the proceeds from such redemption or prepayment shall be simultaneously applied by the Property Trustee (subject to the Property Trustee having received notice no later than 45 days prior to such

redemption or prepayment) to redeem a Like Amount of the Securities at a redemption price equal to (i) in the case of the repayment of the Debentures at maturity, the Maturity Redemption Price (as defined below), (ii) in the case of the optional redemption of the Debentures upon the occurrence and continuation of a Special Event, the Special Event Redemption Price (as defined below) and (iii) in the case of the optional redemption of the Debentures other than as a result of the occurrence and continuance of a Special Event, the Optional Redemption Price (as defined below). The Maturity Redemption Price, the Special Event Redemption Price and the Optional Redemption Price are referred to collectively as the "Redemption Price." Holders will be given not less than 30 nor more than 60 days notice of such redemption.

(b) The "Maturity Redemption Price," with respect to a redemption of Securities, shall mean an amount equal to the principal of and accrued and unpaid interest on the Debentures as of the Maturity Date (as defined in the Indenture) thereof.

(c) In the case of an optional redemption, if fewer than all the outstanding Securities are to be so redeemed, the Securities will be redeemed Pro Rata and the Securities to be redeemed will be determined as described in Section 4(f)(ii) below.

The Debenture Issuer shall have the right (subject to the conditions in the Indenture) to elect to redeem the Debentures in whole or in part at any time and from time to time, prior to the Maturity Date, subject to any required regulatory approval, upon not less than 30 days and not more than 60 days notice, at the Optional Redemption Price and, simultaneous with such redemption, to cause a Like Amount of the Securities to be redeemed by the Trust at the Optional Redemption Price on a Pro Rata basis. "Optional Redemption Price" shall mean, with respect to any redemption of the Securities, an amount in cash equal to the greater of (i) 100% of the principal of a Like Amount to be redeemed or (ii) the sum, as determined by a Quotation Agent (as defined in the Indenture), of the present values of the principal amount payable with respect to such optional redemption of a Like Amount of Debentures on the Maturity Date, together with scheduled payments of interest on the Debentures from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Indenture), plus, in each case, any accrued and unpaid interest thereon, including Compounded Interest and Additional Interest (as defined in the Indenture), if any, to the date of such redemption.

(d) If at any time a Tax Event, a Regulatory Capital Event or an Investment Company Event (each as defined below, and each a "Special Event" ) occurs, the Debenture Issuer shall have the right (subject to the conditions set forth in the Indenture) at any time prior to the Maturity Date, upon not less than 30 nor more than 60 days notice, to redeem the Debentures in whole, but not in part, within the 90 days following the occurrence of such Special Event (the "90 Day Period" ), and, simultaneous with such redemption, to cause a Like Amount of the Securities to be redeemed by the Trust at the Special Event Redemption Price on a Pro Rata basis.

"Tax Event" means the receipt by the Sponsor and the Administrative Trustees of an opinion of independent tax counsel experienced in such matters to the effect that, as a result of

any amendment to, or change (including any announced prospective change) in, the laws or any regulations promulgated thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the Issue Date, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest payable by the Debenture Issuer on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Debenture Issuer, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"Investment Company Event" means the receipt by the Sponsor and the Administrative Trustee of an opinion of independent counsel having a recognized tax and securities law practice to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law" ), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Capital Securities.

"Regulatory Capital Event" means the receipt by the Debenture Issuer of an opinion of independent bank regulatory counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any rules, guidelines or policies of the Federal Reserve Board or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after the Issue Date, there is more than an insubstantial risk that the Debenture Issuer will not be entitled to treat the Capital Securities (or any substantial portion thereof) as Tier 1 regulatory capital (or the then equivalent thereof) for purposes of capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Debenture Issuer or any of its subsidiaries; provided, however, that the distribution of the Debentures in connection with a termination of the Trust by the Debenture Issuer shall not in and of itself constitute a Regulatory Capital Event.

"Special Event Redemption Price" shall mean, with respect to a redemption of Securities, a price equal to the greater of (i) 100% of the principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as determined by a Quotation Agent, of the present values of the principal amount payable with respect to such Special Event redemption of a Like Amount of the Debentures on the Maturity Date, together with scheduled payments of interest on the Debentures from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in either case, accumulated and unpaid interest thereon, if any, to the date of such redemption.

(d) On and from the date fixed by the Administrative Trustees for any distribution of Debentures and liquidation of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) the Clearing Agency or its nominee (or any successor Clearing Agency or its nominee), as the Holder of the Capital Securities, will receive a registered global certificate or certificates representing the Debentures to be delivered upon such distribution and any certificates representing Securities not held by the Clearing Agency or its nominee (or any successor Clearing Agency or its nominee) will be deemed to represent Debentures having a principal amount equal to the liquidation amount of such Securities and bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid distributions on such Securities as of that date until such certificates are presented to the Administrative Trustees or their agent for cancellation, whereupon the Debenture Issuer will issue to such Holder, and the Debenture Trustee will authenticate, a certificate representing such Debentures.

(e) The Trust may not redeem fewer than all the outstanding Securities unless all accumulated and unpaid Distributions have been paid on all Securities for all semi-annual Distribution periods terminating on or before the date of redemption.

(f) The procedure with respect to redemptions or distributions of Debentures shall be as follows:

(i) Notice of any redemption of, or notice of distribution of Debentures in exchange for, the Securities (a "Redemption/Distribution Notice" ) will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders. Each Redemption/Distribution Notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder.

(ii) In the event that fewer than all the outstanding Securities are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Securities, provided that, in respect of Capital Securities registered in the name of and held of record by the Clearing Agency or its nominee (or any successor Clearing Agency or its nominee) or any nominee, the distribution of the proceeds of such redemption will be made to the Clearing Agency and disbursed by such Clearing Agency in accordance with the procedures applied by such agency or nominee.

(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, then (A) with respect to Capital Securities issued in book-entry form, by 12:00 noon, New York City time, on the redemption date, provided that the Debenture Issuer has paid the Property Trustee a sufficient amount of cash in

connection with the related redemption or maturity of the Debentures by 10:00 a.m., New York City time, on the Maturity Date or the date of redemption, as the case requires, the Property Trustee will deposit irrevocably with the Clearing Agency or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the applicable Redemption Price with respect to such Capital Securities and will give the Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the relevant Clearing Agency Participants, and (B) with respect to Capital Securities issued in certificated form and Common Securities, provided that the Debenture Issuer has paid the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Property Trustee will pay the relevant Redemption Price to the Holders by check mailed to the address of the relevant Holder appearing on the books and records of the Trust on the redemption date. If a Redemption/Distribution Notice shall have been given and funds deposited as required, if applicable, then immediately prior to the close of business on the date of such deposit, or on the redemption date, as applicable, Distributions will cease to accumulate on the Securities so called for redemption and all rights of Holders of Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Securities shall cease to be outstanding.

(iv) Payment of accumulated and unpaid Distributions on the Redemption Date of the Securities will be subject to the rights of Holders of Securities on the close of business on a regular record date in respect of a Distribution Date occurring on or prior to such Redemption Date.

Neither the Administrative Trustees nor the Trust shall be required to register or cause to be registered the transfer of (i) any Securities beginning on the opening of business 15 days before the day of mailing of a notice of redemption and ending at the close of business on the day of such mailing or (ii) any Securities selected for redemption except the unredeemed portion of any Security being redeemed. If any date fixed for redemption of Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Property Trustee or, with respect to the Capital Securities, by the Sponsor as guarantor pursuant to the relevant Capital Securities Guarantee, Distributions on such Securities will continue to accumulate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the redemption price.

(v) Redemption/Distribution Notices shall be sent by the Property Trustee on behalf of the Trust to (A) in respect of the Capital Securities, the Clearing Agency or its nominee (or any successor Clearing Agency or its nominee) if the Global Certificates have been issued or, if Definitive Capital Security Certificates have been issued, to the Holder thereof, and (B) in respect of the Common Securities to the Holder thereof.

(vi) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws and banking laws), provided, the acquiror is not the Holder of the Common Securities or the obligor under the Indenture, the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Capital Securities by tender, in the open market or by private agreement.

5. Voting Rights--Capital Securities.

(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the Declaration, the Holders of the Capital Securities will have no voting rights.

(b) So long as any Debentures are held by the Property Trustee, the Trustees shall not, without, in each case, obtaining the prior approval of the Holders of a Majority in liquidation amount of all outstanding Capital Securities, (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on such Debenture Trustee with respect to the Debentures, (ii) waive any past default that is waivable under Section 5.07 of the Indenture, (iii) exercise any right to rescind or annul a declaration of acceleration of the maturity of the principal of the Debentures or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required unless the Trust shall have received an opinion of an independent tax counsel experienced in such matters to the effect that such modification will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust; provided, however, that where a consent under the Indenture would require the consent of each holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior approval of each Holder of the Capital Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of the Capital Securities except by subsequent vote of such Holders. Subject to Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of Capital Securities of any notice of default with respect to the Debentures. In addition to obtaining the foregoing approvals of such Holders of the Capital Securities, prior to taking any of the foregoing actions, the Trustees shall obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of such action.

If an Event of Default under the Declaration has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay principal of or premium, if any, or interest on the Debentures on the due date (or in the case of redemption, on the redemption date), then a Holder of Capital Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or premium, if any, or interest on a Like Amount of Debentures (a "Direct Action" ) on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Common Securities Holder will be subrogated to the rights of such Holder of Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of Capital Securities in such Direct Action. Except as provided in the preceding sentences and in Section 3.8(e) of the Declaration, the Holders of Capital Securities will not be able to exercise directly any other remedy available to the holders of the Debentures.

Any approval or direction of Holders of Capital Securities may be given at a separate meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Administrative Trustees will cause a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Capital Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents.

No vote or consent of the Holders of the Capital Securities will be required for the Trust to redeem and cancel Capital Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any of the circumstances described above, any of the Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding.

6. Voting Rights--Common Securities.

(a) Except as provided under Sections 6(b), 6(c) and 7 or as otherwise required by law and the Declaration, the Holders of the Common Securities will have no voting rights.

(b) Unless an Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by the Holder of the Common Securities. If an Event of Default has occurred and is continuing, the Property Trustee and the Delaware Trustee may be removed by the Holders of a Majority in liquidation amount of the outstanding Capital Securities. In no event will the Holders of the Capital Securities have the right to vote to appoint, remove or replace the Administrative Trustees, which voting rights are vested exclusively in the Sponsor as the Holder of the Common Securities. No resignation or removal of a Trustee and no appointment of a successor trustee shall be effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the Declaration.

(c) So long as any Debentures are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on such Debenture Trustee with respect to the Debentures, (ii) waive any past default that is waivable under Section 5.07 of the Indenture, (iii) exercise any right to rescind or annul a declaration of acceleration of the maturity of the principal of the Debentures or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of a Majority in liquidation amount of all outstanding Common Securities; provided, however, that where a consent under the Indenture would require the consent of each holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior approval of each Holder of the Common Securities. The

Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of the Common Securities except by subsequent vote of such Holders. Subject to Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of Common Securities of any notice of default with respect to the Debentures. In addition to obtaining the foregoing approvals of such Holders of the Common Securities, prior to taking any of the foregoing actions, the Trustees shall obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of such action.

If an Event of Default under the Declaration has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay principal of or premium, if any, or interest on the Debentures on the due date (or in the case of redemption, on the redemption date), then a Holder of Common Securities may institute a Direct Action for enforcement of payment to such Holder of the principal of or premium, if any, or interest on a Like Amount of Debentures on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Common Securities Holder will be subordinated to the rights of such Holder of Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of Common Securities in such Direct Action. Except as provided in the preceding sentences, the Holders of Common Securities will not be able to exercise directly any other remedy available to the holders of the Debentures.

Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Administrative Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents.

No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

7. Amendments to Declaration and Indenture.

In addition to the requirements set out in Section 12.1 of the Declaration, the Declaration may be amended from time to time by the Sponsor, the Property Trustee and the Administrative Trustees, without the consent of the Holders of the Securities (i) to cure any ambiguity, correct or supplement any provisions in the Declaration that may be inconsistent with any other provisions, or to make any other provisions with respect to matters or questions arising under the Declaration which shall not be inconsistent with the other provisions of the Declaration, (ii) to modify, eliminate or add to any provisions of the Declaration to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor

trust at all times that any Securities are outstanding or to ensure that the Trust will not be required to register as an "Investment Company" under the Investment Company Act, (iii) to modify, eliminate or add any provisions of the Declaration to such extent as shall be necessary to enable the Trust and the Sponsor to conduct an Exchange Offer in the manner contemplated by the Registration Rights Agreement, or (iv) to make any changes that would provide any additional rights and benefits to Holders or that does not adversely affect the legal rights herein of any such Holder; provided, however, that in the case of clauses (i) and (iii), such action shall not adversely affect in any material respect the interests of any Holder of Securities, and any amendments of the Declaration shall become effective when notice thereof is given to the Holders of the Securities. Under the circumstances referred to in Section 12.1(c) of the Declaration, the Declaration may be amended by the Trustees and the Sponsor with (i) the consent of Holders representing a Majority in liquidation amount of all outstanding Securities, and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status as an Investment Company under the Investment Company Act, provided that, without the consent of each Holder of Trust Securities, the Declaration may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Holder of Trust Securities to institute suit for the enforcement of any such payment on or after such date.

8. Pro Rata.

A reference in these terms of the Securities to any payment, distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default under the Declaration has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Capital Securities pro rata according to the aggregate liquidation amount of Capital Securities held by the relevant Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding. In any such proration, the Trust may make such adjustments as may be appropriate in order that only Securities in authorized denominations shall be redeemed (subject to the minimum block requirements of Section 9.2(m) of the Declaration).

9. Ranking.

The Capital Securities rank pari passu with the Common Securities and payment thereon shall be made Pro Rata with the Common Securities, except that, if an Event of Default under the Declaration occurs and is continuing, no payments in respect of Distributions on, or payments upon liquidation, redemption or otherwise with respect to, the Common Securities shall be made

until the Holders of the Capital Securities shall be paid in full the Distributions, Redemption Price, Liquidation Distribution and other payments to which they are entitled at such time.

10. Acceptance of Capital Securities Guarantee and Indenture.

Each Holder of Capital Securities, by the acceptance thereof, agrees to the provisions of the Capital Securities Guarantee, including the subordination provisions therein and to the provisions of the Indenture.

11. No Preemptive Rights.

The Holders of the Securities shall have no preemptive rights to subscribe for any additional securities.

12. Miscellaneous.

These terms constitute a part of the Declaration.

The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee (as may be appropriate) and the Indenture (including any supplemental indenture) to a Holder without charge on written request to the Sponsor at its principal place of business.

Exhibit A-1

Form of Capital Security Certificate

[Form of Face of Security]

[if this Capital Security is a Global Capital Security, insert: this Capital Security is a Global Capital Security within the meaning of the declaration hereinafter referred to and is registered in the name of the depository trust company (the "Clearing Agency" ) or a nominee of the Clearing Agency. This Capital Security is exchangeable for Capital Securities registered in the name of a person other than the Clearing Agency or its nominee only in the limited circumstances described in the declaration and no transfer of this Capital Security (other than a transfer of this Capital Security as a whole by the Clearing Agency to a nominee of the Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or another nominee of the Clearing Agency) may be registered except in limited circumstances.]

[Unless this Capital Security is presented by an authorized representative of the Depository Trust Company (55 Water Street, New York, New York) to the Trust or its Agent for registration of transfer, exchange or payment, and any Capital Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depository Trust Company and any payment hereon is made to Cede & Co., any transfer, pledge or other use hereof for value or otherwise by a person is wrongful since the Registered Owner hereof, Cede & Co., has an interest herein.]

[If this Capital Security is a Restricted Capital Security, insert: The Holder of this Capital Security by its acceptance hereof is deemed to have agreed to be bound by the provisions of a registration rights agreement among First Midwest Bancorp, Inc. ( "First Midwest" ), First Midwest Capital Trust I (the "Trust" ), and the Initial Purchasers named therein dated November 18, 2003 (The "Registration Rights Agreement" ). First Midwest will provide a copy of the Registration Rights Agreement to a holder without charge upon written request to the Trust at its principal place of business.

The Holder of this Capital Security by its acceptance hereof agrees to offer, sell or otherwise transfer this Capital Security, prior to the date (the "Resale

Restriction Termination Date" ) which is two years after the later of the original issuance date hereof and the last date on which First Midwest or any "Affiliate" of First Midwest was the owner of this Capital Security (or any predecessor of this Capital Security) only (a) to First Midwest, (b) pursuant to a Registration Statement which has been declared effective under the Securities Act, (c) so long as this Capital Security is eligible for resale pursuant to Rule 144A under the Securities Act ( "Rule 144A" ), to a person it reasonably believes is a "Qualified Institutional Buyer" (as defined in Rule 144A) that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that occur outside the United States within the meaning, of and in compliance with, Regulation S under the Securities Act, (e) to an institutional "Accredited Investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring this Capital Security for its own account, or for the account of such an institutional Accredited Investor, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act or (f) pursuant to any other available exemption from the registration requirements under the Securities Act, subject to the right of First Midwest and the Trust prior to any such offer, sale or transfer (i) pursuant to clause (d), (e) or (f) to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to each of them and (ii) pursuant to clause (e), to require that the transferor deliver to the Trust a letter from the transferee substantially in the form of Annex A to the Offering Memorandum dated November 10, 2003. Such holder further agrees that it will deliver to each person to whom this Capital Security is transferred a notice substantially to the effect of this legend.

The holder of this Capital Security by its acceptance hereof also agrees, represents and warrants that either (i) it is not an employee benefit plan subject to the Employment Retirement Income Security Act of 1974, as amended ( "ERISA" ) or (ii) the acquisition and holding of this Capital Security by it is not prohibited by either Section 406 of ERISA or Section 4975 of the U.S. Internal Revenue Code of 1986, as amended, or is exempt from any such prohibition.]

The Capital Securities will be issued and, until registered under the Securities Act, may be transferred only in blocks having a liquidation amount of not less than $100,000 (100 Capital Securities). Any attempted transfer of Capital Securities in a block having a liquidation amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be the holder of such Capital Securities for any purpose, including, but not limited to, the receipt of distributions on such Capital Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Capital Securities.

[If this Capital Security is a Regulation S Global Security, insert: This Capital Security has not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons

unless registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available.]

Certificate Number Number of Capital Securities

CUSIP No. __________

Certificate Evidencing Capital Securities
of
First Midwest Capital Trust I

6.95% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)

First Midwest Capital Trust I, a statutory trust created under the laws of the State of Delaware (the "Trust" ), hereby certifies that _____ (the "Holder" ) is the registered owner of [__________ securities of the Trust]* [the number of securities of the Trust specified in Schedule A hereto]** representing undivided beneficial interests in the assets of the Trust designated the 6.95% Series ____ Capital Securities (liquidation amount $1,000 per Capital Security) (the "Capital Securities" ). Subject to the Declaration (as defined below), the Capital Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of November 18, 2003, as the same may be amended from time to time (the "Declaration" ), including the designation of the terms of the Capital Securities as set forth in Annex I to the Declaration. Capitalized terms used but not defined herein shall have the meaning given them in the Declaration. The Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture (including any supplemental indenture) to a Holder without charge upon written request to the Trust at its principal place of business.

Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder and to the benefits of the Capital Securities Guarantee to the extent provided therein.

By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership in the Debentures.

In Witness Whereof, the Trust has executed this certificate this ____ day of __________.

First Midwest Capital Trust I

By:

Name:

Title: Administrative Trustee

Property Trustee's Certificate of Authentication

This is one of the Capital Securities referred to in the within- mentioned Declaration.

Dated:

Wilmington Trust Company, as Property Trustee

By:

Authorized Officer

[Form of Reverse of Security]

Distributions payable on each Capital Security will be fixed at a rate per annum of 6.95% (the "Coupon Rate" ) of the liquidation amount of $1,000 per Capital Security, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. Distributions in arrears for more than one semi-annual period will bear interest thereon compounded semi-annually at the Coupon Rate (to the extent permitted by applicable law). Pursuant to the Registration Rights Agreement, in certain limited circumstances the Debenture Issuer will be required to pay additional interest (in accordance with the Registration Rights Agreement) with respect to the Debentures. The term "Distributions," as used herein, includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds on hand legally available therefor.

Distributions on the Capital Securities will be cumulative, will accumulate from the most recent date to which Distributions have been paid or duly provided for or, if no Distributions have been paid or duly provided for, from November 18, 2003 and will be payable semi-annually in arrears, on June 1 and December 1 of each year, commencing on June 1, 2004, except as otherwise described below. Distributions will be computed on the basis of a 360-day year consisting of twelve 30-day months and, for any period less than a full calendar month, the number of days elapsed in such month. As long as no Event of Default has occurred and is continuing under the Indenture, the Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period at any time and from time to time on the Debentures for a period not exceeding 10 consecutive semi-annual periods, including the first such semi-annual period during such extension period (each an "Extension Period" ), provided that no Extension Period shall end on a day other than an Interest Payment Date for the Debentures or shall extend beyond the Maturity Date of the Debentures. As a consequence of such deferral, Distributions also will be deferred. Despite such deferral, semi-annual Distributions will continue to accumulate with interest thereon (to the extent permitted by applicable law, but not at a rate exceeding the rate of interest then accruing on the Debentures) at the Coupon Rate compounded semi-annually during any such Extension Period. Prior to the termination of any such Extension Period, the Debenture Issuer may further defer payments of interest by further extending such Extension Period; provided that such Extension Period, together with all such previous and further extensions within such Extension Period, may not exceed 10 consecutive semi-annual periods, including the first semi-annual period during such Extension Period, or extend beyond the Maturity Date of the Debentures. Payments of accumulated Distributions will be payable to Holders as they appear on the books and records of the Trust on the first record date preceding the end of the Extension Period. Upon the termination of any Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the above requirements.

Subject to the Sponsor obtaining any prior regulatory approval then required and to certain other conditions set forth in the Declaration and the Indenture, the Property Trustee may, at the direction of the Sponsor, at any time terminate the Trust and, after satisfaction of any

liabilities to creditors of the Trust in accordance with applicable law, cause the Debentures to be distributed to the Holders of the Securities in liquidation of the Trust or, simultaneous with any redemption of the Debentures, cause a Like Amount of the Securities to be redeemed by the Trust.

The Capital Securities shall be redeemable as provided in the Declaration.

Assignment

For Value Received, the undersigned assigns and transfers this Capital Security certificate to:

(insert assignee's social security or tax identification number)

(insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Capital Security certificate on the books of the Trust. The agent may substitute another to act for him or her.

Dated: ____________________________

Signature: ____________________________

(Sign exactly as your name appears on the other side of this Capital Security certificate)

Signature Guarantee*: ____________________________

___________

*Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ( "STAMP" ) or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended.

[Include the following if the Capital Security bears a Restricted Capital Securities Legend--

In connection with any transfer of any of the Capital Securities evidenced by this certificate, the undersigned confirms that such Capital Securities are being:

Check One Box Below

(1)		exchanged for the undersigned's own account without transfer; or
(2)		transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or
(3)		transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; or
(4)		transferred to an institutional "accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act of 1933 that is acquiring the Capital Securities for its own account, or for the account of such an institutional "accredited investor," for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act of 1933; or
(5)		transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; or
(6)		transferred pursuant to an effective registration statement.

Unless one of the boxes is checked, the Registrar will refuse to register any of the Capital Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (3), (4) or (5) is checked, the Registrar may require, prior to registering any such transfer of the Capital Securities, such legal opinions, certifications and other information as the Trust has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act; provided, further, that (i) if box 2 is checked, the transferee must also certify in the form attached hereto that it is a qualified institutional buyer as defined in Rule 144A or (ii) if box (4) is checked, the transferee must also provide to the Registrar a Transferee Letter of Representation in the form attached as Annex I to the Offering Memorandum of the Trust dated November 10, 2003; provided, further, that after the date that a Registration Statement has been filed and so long as such Registration Statement continues to be effective, the Registrar may only permit transfers for which box (6) has been checked.

Signature

Schedule A ***

The initial number of Capital Securities evidenced by the Certificate to which this Schedule is attached 125,000 (having an aggregate liquidation amount of $125,000,000). The notations in the following table evidence decreases and increases in the number of Capital Securities evidenced by such Certificate.

Decrease in Number of Capital Securities	Increase in Number of Capital Securities	Number of Capital Securities Remaining after such Decrease or Increase	Notation by Registrar

Certificate of Qualified Institutional Buyer

The undersigned transferee of Capital Securities hereby certifies that (i) the undersigned is a "qualified institutional buyer" (a "QIB" ) as defined in Rule 144A ( "Rule 144A" ) promulgated under the Securities Act of 1933, (ii) the undersigned is aware that the transfer of the Capital Securities to the undersigned is being made in reliance on Rule 144A and (iii) the undersigned is acquiring the Capital Securities for its own account or for the account of another QIB over which the undersigned exercises its sole investment discretion.

The undersigned also understands and acknowledges that the Capital Securities have not been registered under the Securities Act or any other applicable securities law, are being offered for resale in transactions not requiring registration under the Securities Act and may not be offered, sold, pledged or otherwise transferred except in compliance with the registration requirements of the Securities Act or any other applicable securities laws, pursuant to an exemption therefrom or in a transaction not subject thereto and, in each case, in compliance with the terms of the Capital Securities and the terms of the Amended and Restated Declaration of Trust of First Midwest Capital Trust I, dated as of November 18, 2003, as the same may be amended from time to time.

Signature

Exhibit A-2

Form of Common Security Certificate

This Common Security has not been registered under the Securities Act of 1933, as amended (the "Securities Act" ), or any state securities laws or any other applicable securities law.

Certificate Number Number of Common Securities

Certificate Evidencing Common Securities
of
First Midwest Capital Trust I

6.95% Common Securities
(liquidation amount $1,000 per Capital Security)

First Midwest Capital Trust I, a statutory trust created under the laws of the State of Delaware (the "Trust" ), hereby certifies that First Midwest Bancorp, Inc. (the "Holder" ) is the registered owner of _____ common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the 6.95% Common Securities (liquidation amount $1,000 per Common Security) (the "Common Securities" ). Subject to the limitations in Section 9.1(c) of the Declaration (as defined below), the Common Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of November 18, 2003, as the same may be amended from time to time (the "Declaration" ), including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration. Capitalized terms used but not defined herein shall have the meaning given them in the Declaration. The Sponsor will provide a copy of the Declaration and the Indenture (including any supplemental indenture) to a Holder without charge upon written request to the Sponsor at its principal place of business.

Upon receipt of this certificate, the Sponsor is bound by the Declaration and is entitled to the benefits thereunder.

By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Debentures.

In Witness Whereof, the Trust has executed this certificate this ____ day of November, 2003.

First Midwest Capital Trust I

By:

Name:

Title: Administrative Trustee

[Form of Reverse of Security]

Distributions payable on each Common Security will be fixed at a rate per annum of 6.95% (the "Coupon Rate" ) of the liquidation amount of $1,000 per Common Security, such rate being the rate of interest payable on the Debentures to be held by the Property Trustee. Distributions in arrears for more than one semi-annual period will bear interest thereon compounded semi-annually at the Coupon Rate (to the extent permitted by applicable law). Pursuant to the Registration Rights Agreement, in certain limited circumstances the Debenture Issuer will be required to pay additional interest (in accordance with the Registration Rights Agreement) with respect to the Debentures. The term "Distributions," as used herein, includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Property Trustee and to the extent the Property Trustee has funds available therefor.

Distributions on the Common Securities will be cumulative, will accrue from the most recent date to which Distributions have been paid or duly provided for or, if no Distributions have been paid or duly provided for, from November 18, 2003 and will be payable semi-annually in arrears, on June 1 and December 1 of each year, commencing on June 1, 2003, except as otherwise described below. Distributions will be computed on the basis of a 360-day year consisting of twelve 30-day months and, for any period less than a full calendar month, the number of days elapsed in such month. As long as no Event of Default has occurred and is continuing under the Indenture, the Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period at any time and from time to time on the Debentures for a period not exceeding 10 consecutive semi-annual periods, including the first such semi-annual period during such extension period (each an "Extension Period" ), provided that no Extension Period shall end on a day other than an Interest Payment Date for the Debentures or shall extend beyond the Maturity Date of the Debentures. As a consequence of such deferral, Distributions also will be deferred. Despite such deferral, Distributions will continue to accumulate with interest thereon (to the extent permitted by applicable law, but not at a rate exceeding the rate of interest then accruing on the Debentures) at the Coupon Rate compounded semi-annually during any such Extension Period. Prior to the termination of any such Extension Period, the Debenture Issuer may further defer payments of interest by further extending such Extension Period; provided that such Extension Period, together with all such previous and further extensions within such Extension Period, may not exceed 10 consecutive semi-annual periods, including the first semi-annual period during such Extension Period, or extend beyond the Maturity Date of the Debentures. Payments of accrued Distributions will be payable to Holders as they appear on the books and records of the Trust on the first record date preceding the end of the Extension Period. Upon the termination of any Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the above requirements.

distributed to the Holders to the Securities in liquidation of the Trust or, simultaneous with any redemption of the Debentures, cause a Like Amount of the Securities to be redeemed by the Trust.

The Common Securities shall be redeemable as provided in the Declaration.

Assignment

For Value Received, the undersigned assigns and transfers this Common Security certificate to:

(insert assignee's social security or tax identification number)

(insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Common Security certificate on the books of the Trust. The agent may substitute another to act for him or her.

Dated: ____________________________

Signature: ____________________________

(Sign exactly as your name appears on the other side of this Capital Security certificate)

Signature Guarantee*: ____________________________

___________

Exhibit 4.5

First Midwest Bancorp, Inc.

Indenture

Dated as of November 18, 2003

Wilmington Trust Company
as Trustee

Junior Subordinated Deferrable Interest Debentures

Table of Contents

Section Heading Page

Article I Definitions 6 *

Section 1.01. Definitions 6 *

Article II Securities 17 *

Section 2.01. Forms Generally 17 *

Section 2.02. Execution and Authentication 17 *

Section 2.03. Form and Payment 17 *

Section 2.04. Legends 18 *

Section 2.05. Global Security 18 *

Section 2.06. Interest 20 *

Section 2.07. Transfer and Exchange 20 *

Section 2.08. Replacement Securities 22 *

Section 2.09. Treasury Securities 23 *

Section 2.10. Temporary Securities 23 *

Section 2.11. Cancellation 23 *

Section 2.12. Defaulted Interest 23 *

Section 2.13. CUSIP Numbers 24 *

Article III Particular Covenants of the Corporation 24 *

Section 3.01. Payment of Principal, Premium and Interest 24 *

Section 3.02. Offices for Notices and Payments, etc 25 *

Section 3.03. Appointments to Fill Vacancies in Trustee’s Office 25 *

Section 3.04. Provision as to Paying Agent 25 *

Section 3.05. Certificate to Trustee 26 *

Section 3.06. Compliance with Consolidation Provisions 27 *

Section 3.07. Limitation on Dividends 27 *

Section 3.08. Covenants as to First Midwest Capital Trust 27 *

Section 3.09. Payment of Expenses 28 *

Section 3.10. Payment upon Resignation or Removal 29 *

Article IV Securityholders’ Lists and Reports by the Corporation and the Trustee 29 *

Section 4.01. Securityholders’ Lists 29 *

Section 4.02. Preservation and Disclosure of Lists 29 *

Section 4.03. Reports by Corporation 30 *

Section 4.04. Reports by the Trustee 31 *

Article V Remedies of the Trustee and Securityholders on Event of Default 32 *

Section 5.01. Events of Default 32 *

Section 5.02. Payment of Securities on Default; Suit Therefor 34 *

Section 5.03. Application of Moneys Collected by Trustee 35 *

Section 5.04. Proceedings by Securityholders 36 *

Section 5.05. Proceedings by Trustee 37 *

Section 5.06. Remedies Cumulative and Continuing 37 *

Section 5.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders 37 *

Section 5.08. Notice of Defaults 38 *

Section 5.09. Undertaking to Pay Costs 38 *

Article VI Concerning the Trustee 39 *

Section 6.01. Duties and Responsibilities of Trustee 39 *

Section 6.02. Reliance on Documents, Opinions, etc 40 *

Section 6.03. No Responsibility for Recitals, etc 41 *

Section 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Securities 42 *

Section 6.05. Moneys to Be Held in Trust 42 *

Section 6.06. Compensation and Expenses of Trustee 42 *

Section 6.07. Officers’ Certificate as Evidence 43 *

Section 6.08. Conflicting Interest of Trustee 43 *

Section 6.09. Eligibility of Trustee 43 *

Section 6.10. Resignation or Removal of Trustee 44 *

Section 6.11. Acceptance by Successor Trustee 45 *

Section 6.12. Succession by Merger, etc 45 *

Section 6.13. Limitation on Rights of Trustee as a Creditor 46 *

Section 6.14. Authenticating Agents 46 *

Article VII Concerning the Securityholders 47 *

Section 7.01. Action by Securityholders 47 *

Section 7.02. Proof of Execution by Securityholders 48 *

Section 7.03. Who Are Deemed Absolute Owners 48 *

Section 7.04. Securities Owned by Corporation Deemed Not Outstanding 48 *

Section 7.05. Revocation of Consents; Future Holders Bound 49 *

Article VIII Securityholders’ Meetings 49 *

Section 8.01. Purposes of Meetings 49 *

Section 8.02. Call of Meetings by Trustee 50 *

Section 8.03. Call of Meetings by Corporation or Securityholders 50 *

Section 8.04. Qualifications for Voting 50 *

Section 8.05. Regulations 50 *

Section 8.06. Voting 52 *

Article IX Amendments 52 *

Section 9.01. Without Consent of Securityholders 52 *

Section 9.02. With Consent of Securityholders 54 *

Section 9.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures 55 *

Section 9.04. Notation on Securities 55 *

Section 9.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee 55 *

Article X Consolidation, Merger, Sale, Conveyance and Lease 55 *

Section 10.01. Corporation May Consolidate, etc., on Certain Terms 55 *

Section 10.02. Successor Corporation to Be Substituted for Corporation 56 *

Section 10.03. Opinion of Counsel to Be Given Trustee 57 *

Article XI Satisfaction and Discharge of Indenture 57 *

Section 11.01. Discharge of Indenture 57 *

Section 11.02. Deposited Moneys and U.S. Government Obligations to Be Held in Trust by Trustee 58 *

Section 11.03. Paying Agent to Repay Moneys Held 58 *

Section 11.04. Return of Unclaimed Moneys 58 *

Section 11.05. Defeasance upon Deposit of Moneys or U.S. Government Obligations 58 *

Article XII Immunity of Incorporators, Stockholders, Officers and Directors 60 *

Section 12.01. Indenture and Securities Solely Corporate Obligations 60 *

Article XIII Miscellaneous Provisions 60 *

Section 13.01. Successors 60 *

Section 13.02. Official Acts by Successor Corporation 60 *

Section 13.03. Surrender of Corporation Powers 60 *

Section 13.04. Addresses for Notices, etc 61 *

Section 13.05. Governing Law 61 *

Section 13.06. Evidence of Compliance with Conditions Precedent 61 *

Section 13.07. Business Days 61 *

Section 13.08. Trust Indenture Act to Control 62 *

Section 13.09. Table of Contents, Headings, etc 62 *

Section 13.10. Execution in Counterparts 62 *

Section 13.11. Separability 62 *

Section 13.12. Assignment 62 *

Section 13.13. Acknowledgement of Rights 62 *

Article XIV Redemption of Securities 63 *

Section 14.01. Special Event Redemption 63 *

Section 14.02. Optional Redemption by Corporation 63 *

Section 14.03. No Sinking Fund 64 *

Section 14.04. Notice of Redemption; Selection of Securities 64 *

Section 14.05. Payment of Securities Called for Redemption 65 *

Article XV Subordination of Securities 65 *

Section 15.01. Agreement to Subordinate 65 *

Section 15.02. Default on Senior Indebtedness 65 *

Section 15.03. Termination; Dissolution; Bankruptcy 66 *

Section 15.04. Subrogation 67 *

Section 15.05. Trustee to Effectuate Subordination 68 *

Section 15.06. Notice by the Corporation 68 *

Section 15.07. Rights of the Trustee; Holders of Senior Indebtedness 69 *

Section 15.08. Subordination May Not Be Impaired 69 *

Article XVI Extension of Interest Payment Period 70 *

Section 16.01. Extension of Interest Payment Period 70 *

Section 16.02. Notice of Extension 71 *

Exhibit A Form of Security

This Indenture, dated as of November 18, 2003, between First Midwest Bancorp, Inc., a Delaware corporation (hereinafter sometimes called the “Corporation” ), and Wilmington Trust Company, a Delaware banking corporation, as trustee (hereinafter sometimes called the “Trustee” ),

Witnesseth:

In consideration of the premises, and the purchase of the Securities by the holders thereof, the Corporation covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Securities, as follows:

Article I

Definitions

Section 1.01. Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture shall have the respective meanings specified in this Section 1.01. All other terms used in this Indenture which are defined in the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act” ), or which are by reference therein defined in the Securities Act, shall (except as herein otherwise expressly provided or unless the context otherwise requires) have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act as in force at the date of this Indenture as originally executed. The following terms have the meanings given to them in the Declaration: (i) Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv) Administrative Trustees; (v) Direct Action; (vi) Purchase Agreement; (vii) Distributions; (viii) Series A Capital Securities; and (ix) Series B Capital Securities. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with United States generally accepted accounting principles and the term “generally accepted accounting principles” means such accounting principles as are generally accepted at the time of any computation. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Headings are used for convenience of reference only and do not affect interpretation. The singular includes the plural and vice versa.

“Additional Interest” shall have the meaning set forth in Section 2.06(c).

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to (i) the yield, under the heading which represents the average for the immediately prior week, appearing in the most recently published Federal Reserve statistical release designated “H.15 (519)” on the Federal Reserve’s website at www.federalreserve.gov, or any successor publication which is published weekly by the Federal Reserve, and which establishes yields on actively-traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Maturity Date (if no maturity is within three months before or after the Maturity Date, yields for the two published

maturities most closely corresponding to the Maturity Date shall be interpolated, and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date plus, in each case, (a) 0.25% with respect to the Optional Redemption Price, (b) 1.70% with respect to the Special Event Redemption Price relating to a Tax Event or an Investment Company Event and (c) 1.45% with respect to the Special Event Prepayment Price relating to a Regulatory Capital Event.

“Affiliate” means, with respect to a specified Person, (a) any Person directly or indirectly owning, controlling or holding the power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person, (b) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person, (c) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person, (d) a partnership in which the specified Person is a general partner, (e) any officer or director of the specified Person, and (f) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner.

“Agreement as to Expenses and Liabilities” means the Agreement as to Expenses and Liabilities, dated as of the Issue Date, by and between the Corporation and First Midwest Capital Trust as such agreement may be amended, modified or supplemented from time to time.

“Authenticating Agent” shall mean any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.14.

“Bankruptcy Law” shall mean Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

“Board of Directors” shall mean either the Board of Directors of the Corporation or any duly authorized committee of that board.

“Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Corporation to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” shall mean, with respect to any series of Securities, any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close or a day on which the Corporate Trust Office of the Trustee or the Property Trustee is closed for business.

“Capital Securities” shall mean undivided beneficial interests in the assets of First Midwest Capital Trust which rank pari passu with the Common Securities issued by First

Midwest Capital Trust; provided, however, that if an Event of Default has occurred and is continuing, no payments in respect of Distributions on, or payments upon liquidation, redemption or otherwise with respect to, the Common Securities shall be made until the holders of the Capital Securities shall be paid in full the Distributions and the liquidation, redemption and other payments to which they are entitled. References to “Capital Securities” shall include collectively any Series A Capital Securities and Series B Capital Securities.

“Capital Securities Guarantee” shall mean any guarantee that the Corporation may enter into with Wilmington Trust Company or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of First Midwest Capital Trust and shall include a Series A Capital Securities Guarantee and a Series B Capital Securities Guarantee with respect to the Series A Capital Securities and the Series B Capital Securities, respectively.

“Change in 1940 Act Law” shall have the meaning set forth in the definition of “Investment Company Event.”

“Closing Time” shall have the meaning set forth in the Purchase Agreement.

“Commission” shall mean the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Common Securities” shall mean undivided beneficial interests in the assets of First Midwest Capital Trust which rank pari passu with Capital Securities issued by First Midwest Capital Trust; provided, however, that if an Event of Default has occurred and is continuing, no payments in respect of Distributions on, or payments upon liquidation, redemption or otherwise with respect to, the Common Securities shall be made until the holders of the Capital Securities shall be paid in full the Distributions and the liquidation, redemption and other payments to which they are entitled.

“Common Stock” shall mean the Common Stock, par value $0.01 per share, of the Corporation or any other class of stock resulting from changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.

“Company Request” or “Company Order” shall mean a written request or order signed in the name of the Corporation by the Chairman, the Chief Executive Officer, the President, a Vice President, the Comptroller, the Secretary or an Assistant Secretary of the Corporation, and delivered to the Trustee.

“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity date corresponding to the Maturity Date that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities with a maturity date corresponding to the Maturity Date. If no United States Treasury security has a maturity date which is within three months before or

after the Maturity Date, the two most closely corresponding United States Treasury securities shall be used as the Comparable Treasury Issue, and the Adjusted Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month.

“Comparable Treasury Price” means, with respect to any redemption date pursuant to Sections 14.01 and 14.02, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Quotations.

“Compounded Interest” shall have the meaning set forth in Section 16.01.

“Corporation” shall mean First Midwest Bancorp, Inc., a Delaware corporation, and, subject to the provisions of Article X, shall include its successors and assigns.

“Corporate Trust Office” means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Department.

“Coupon Rate” shall have the meaning set forth in Section 2.06(a).

“Custodian” shall mean any receiver, trustee, assignee, liquidator, or similar official appointed under any Bankruptcy Law.

“Declaration” means the Amended and Restated Declaration of Trust of First Midwest Capital Trust, dated as of the Issue Date.

“Default” means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

“Defaulted Interest” shall have the meaning set forth in Section 2.12.

“Deferred Interest” shall have the meaning set forth in Section 16.01.

“Definitive Securities” shall mean those Securities issued in fully registered certificated form not otherwise in global form.

“Depositary” shall mean, with respect to Securities of any series for which the Corporation shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor

registered as a clearing agency under the Exchange Act or other applicable statute or regulation, which, in each case, shall be designated by the Corporation pursuant to Section 2.05(d).

“Dissolution Event” means the liquidation of First Midwest Capital Trust pursuant to the Declaration, and the distribution of the Securities held by the Property Trustee to the holders of the Trust Securities issued by First Midwest Capital Trust pro rata in accordance with the Declaration.

“Event of Default” shall mean any event specified in Section 5.01, continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exchange Offer” means the offer that may be made pursuant to the Registration Rights Agreement (i) by the Corporation to exchange Series B Securities for Series A Securities and to exchange a Capital Securities Guarantee with respect to the Series B Capital Securities for a Capital Securities Guarantee with respect to the Series A Capital Securities and (ii) by First Midwest Capital Trust to exchange Series B Capital Securities for Series A Capital Securities.

“Extended Interest Payment Period” shall have the meaning set forth in Section 16.01.

“Federal Reserve” shall mean the Board of Governors of the Federal Reserve System.

“First Midwest Capital Trust” shall mean First Midwest Capital Trust I, a Delaware statutory trust created for the purpose of issuing its undivided beneficial interests in connection with the issuance of Securities under this Indenture.

“Global Security” means, with respect to the Securities, a Security executed by the Corporation and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture, which shall be registered in the name of the Depositary or its nominee.

“Indebtedness” shall mean (i) every obligation of the Corporation for money borrowed; (ii) every obligation of the Corporation evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of the Corporation with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of the Corporation; (iv) every obligation of the Corporation issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of the Corporation; (vi) all indebtedness of the Corporation whether incurred on or prior to the date of the Indenture or thereafter incurred, for claims in respect of derivative products including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, the Corporation has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise.

“Indebtedness Ranking on a Parity with the Securities” shall mean Indebtedness, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred, which specifically by its terms ranks equally with and not senior to the Securities in the right of payment upon the happening of the dissolution or winding up or liquidation or reorganization of the Corporation. The securing of any Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the Securities, shall not be deemed to prevent such Indebtedness from constituting Indebtedness Ranking on a Parity with the Securities.

“Indebtedness Ranking Junior to the Securities” shall mean any Indebtedness, whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, which specifically by its terms ranks junior to and not equally with or senior to the Securities (and any other Indebtedness Ranking on a Parity with the Securities) in right of payment upon the happening of the dissolution or winding up or liquidation or reorganization of the Corporation. The securing of any Indebtedness, otherwise constituting Indebtedness Ranking Junior to the Securities, shall not be deemed to prevent such Indebtedness from constituting Indebtedness Ranking Junior to the Securities.

“Indenture” shall mean this instrument as originally executed or, if amended as herein provided, as so amended.

“Interest Payment Date” shall have the meaning set forth in Section 2.06.

“Investment Company Act,” means the Investment Company Act of 1940, as amended, as in effect at the date of execution of this Indenture.

“Investment Company Event” means the receipt by the Corporation of an opinion of independent counsel having a recognized tax and securities law practice, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a “Change in 1940 Act Law” ), there is more than an insubstantial risk that the Trust is or will be considered an “investment company” that is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Capital Securities.

“Issue Date” means November 18, 2003.

“Liquidated Damages” shall have the meaning set forth in the Registration Rights Agreement.

“Maturity Date” shall mean December 1, 2033.

“Mortgage” shall mean and include any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance.

“Non Book-Entry Capital Securities” shall have the meaning set forth in Section 2.05(a)(ii).

“Officers” shall mean any of the Chairman, the Chief Executive Officer, the Chief Operating Officer, the President, a Vice President, the Chief Financial Officer, the Treasurer, the Secretary or an Assistant Secretary of the Corporation.

“Officers’ Certificate” shall mean a certificate signed by two Officers and delivered to the Trustee.

“Opinion of Counsel” shall mean a written opinion of counsel, who may be an employee of the Corporation, and who shall be reasonably acceptable to the Trustee.

“Optional Redemption Price” shall mean, with respect to any redemption of the Securities pursuant to Section 14.02 hereof, an amount in cash equal to the greater of (i) 100% of the principal amount to be redeemed or (ii) the sum, as determined by a Quotation Agent, of the present values of the principal amount on the Maturity Date, together with scheduled payments of interest on the Securities from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any accrued and unpaid interest thereon, including Compounded Interest and Additional Interest, if any, to the date of such redemption.

“Other Debentures” means all junior subordinated debentures issued by the Corporation from time to time and sold to trusts, in each case similar to the First Midwest Capital Trust to be established by the Corporation (if any).

“Other Guarantees” means all guarantees issued by the Corporation with respect to capital securities (if any) and issued to other trusts, in each case similar to the First Midwest Capital Trust established by the Corporation (if any).

The term “Outstanding” when used with reference to Securities, shall, subject to the provisions of Section 7.04, mean, as of any particular time, all Securities authenticated and delivered by the Trustee or the Authenticating Agent under this Indenture, except:

(a) Securities theretofore cancelled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation;

(b) Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Corporation) or shall have been set aside and segregated in trust by the Corporation (if the Corporation shall act as its own paying agent); provided that, if such Securities, or portions thereof, are to be redeemed prior to maturity thereof, notice of such redemption shall have been given as provided in Article XIV or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.08 unless proof

satisfactory to the Corporation and the Trustee is presented that any such Securities are held by bona fide holders in due course.

“Person” shall mean any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security.

“Purchase Agreement” shall mean the Purchase Agreement dated as of November 10, 2003 among the Corporation, First Midwest Capital Trust and the initial purchasers named therein.

“Quotation Agent” means the Reference Treasury Dealer appointed by the Corporation.

“Redemption Price” means the Special Event Redemption Price or the Optional Redemption Price, as the context requires.

“Reference Treasury Dealer” means (i) Lehman Brothers Inc. and its successors; provided, however, that if the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer” ), the Corporation shall substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the Corporation.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date pursuant to Section 14.01 or Section 14.02, as applicable, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. New York City time on the third Business Day preceding such redemption date.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Issue Date, by and among the Corporation, the First Midwest Capital Trust and the Initial Purchasers named therein as such agreement may be amended, modified or supplemented from time to time.

“Regulatory Capital Event” means the receipt by the Corporation of an opinion of independent bank regulatory counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any rules, guidelines or policies of the Federal Reserve or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such

pronouncement or decision is announced on or after the Issue Date, there is more than an insubstantial risk that the Company will not be entitled to treat the Capital Securities (or any substantial portion thereof) as Tier 1 regulatory capital (or the then equivalent thereof) for purposes of capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Corporation or any of its subsidiaries; provided, however, that the distribution of the Securities in connection with a termination of the First Midwest Capital Trust by the Corporation shall not in and of itself constitute a Regulatory Capital Event.

“Responsible Officer,” when used with respect to the Trustee, shall mean, any officer of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.

“Restricted Security” shall mean Securities that bear or are required to bear the Securities Act legends set forth in Exhibit A hereto.

“Rule 144A” means Rule 144A under the Securities Act, as such Rule may be amended from time to time, or under any similar rule or regulation hereafter adopted by the Commission.

“Securities” means, collectively, the Series A Securities and the Series B Securities.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Securityholder,” “holder of Securities,” or other similar terms, shall mean any Person in whose name at the time a particular Security is registered on the register kept by the Corporation or the Trustee for that purpose in accordance with the terms hereof.

“Security Register” shall mean (i) prior to a Dissolution Event, the list of holders provided to the Trustee pursuant to Section 4.01, and (ii) following a Dissolution Event, any security register maintained by a security registrar for the Securities appointed by the Corporation following the execution of a supplemental indenture providing for transfer procedures as provided for in Section 2.07(a).

“Senior Indebtedness” shall mean all Indebtedness whether outstanding on the date of execution of the Indenture or thereafter created, assumed or incurred, except Indebtedness Ranking on a Parity with the Securities or Indebtedness Ranking Junior to the Securities, and any deferrals, renewals or extensions of such Senior Indebtedness.

“Series A Securities” means the Corporation’s 6.95% Series A Junior Subordinated Deferrable Interest Debentures due December 1, 2033, as authenticated and issued under this Indenture.

“Series B Securities” means the Corporation’s 6.95% Series B Junior Subordinated Deferrable Interest Debentures due December 1, 2033, as authenticated and issued under this Indenture.

“Special Event” means a Tax Event, Regulatory Capital Event or an Investment Company Event, as the case may be.

“Special Event Redemption Price” shall mean, with respect to any redemption of the Securities pursuant to Section 14.01 hereof, an amount in cash equal to the greater of (i) 100% of the principal amount to be redeemed or (ii) the sum, as determined by a Quotation Agent, of the present values of the principal amount on the Maturity Date, together with scheduled payments of interest on the Securities from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any accrued and unpaid interest thereon, including Compounded Interest and Additional Interest, if any, to the date of such redemption.

“Subsidiary” shall mean with respect to any Person, (i) any corporation at least a majority of whose outstanding voting stock is owned, directly or indirectly, by such Person or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. For the purposes of this definition, “voting stock” means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

“Tax Event” shall mean the receipt by First Midwest Capital Trust and the Corporation of an opinion of independent tax counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws or any regulations promulgated thereunder of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the Issue Date, there is more than an insubstantial risk that (i) First Midwest Capital Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Securities, (ii) interest payable by the Corporation on the Securities is not, or within 90 days of the date of such opinion, will not be, deductible by the Corporation, in whole or in part, for United States federal income tax purposes, or (iii) First Midwest Capital Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

“Trustee” shall mean the Person identified as “Trustee” in the first paragraph hereof, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder. The term “Trustee” as used with respect to a particular series of the Securities shall mean the trustee with respect to that series.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939 as in force at the date of execution of this Indenture, except as provided in Section 9.03.

“Trust Securities” shall mean the Capital Securities and the Common Securities, collectively.

“U.S. Government Obligations” shall mean securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.

Article II

Securities

Section 2.01. Forms Generally. The Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A, the terms of which are incorporated in and made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Corporation is subject or customary usage. Each Security shall be dated the date of its authentication. The Securities shall be issued in minimum denominations of $100,000 in principal amount (and integrals of $1,000 above $100,000) until the Series B Securities are registered pursuant to an effective registration statement filed under the Securities Act and as contemplated by the Registration Rights Agreement. Any transfer of Securities in violation of this Section having an aggregate principal amount of less than $100,000 will be void. After the Securities are registered pursuant to an effective registration statement filed under the Securities Act, the Securities may be transferred in blocks of $1,000 aggregate principal amount (one Security) or integral multiples thereof.

Section 2.02. Execution and Authentication. Two Officers shall sign the Securities for the Corporation by manual or facsimile signature in the manner set forth in Exhibit A. If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.

A Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Trustee. The signature of the Trustee shall be conclusive evidence that the Security has been authenticated under this Indenture. The form of Trustee’s certificate of authentication to be borne by the Securities shall be substantially as set forth in Exhibit A hereto.

The Trustee shall, upon a Company Order, authenticate for original issue up to, and the aggregate principal amount of Securities Outstanding at any time may not exceed, $128,866,000 aggregate principal amount of the Securities to be issued on the Closing Time, except as provided in Sections 2.07, 2.08, 2.10 and 14.05. The series of Securities to be initially issued hereunder shall be the Series A Securities.

Section 2.03. Form and Payment. Except as provided in Section 2.05, the Securities shall be issued in fully registered certificated form without interest coupons. Principal of, premium, if any, and interest on the Securities issued in certificated form will be payable, the transfer of such Securities will be registrable and such Securities will be exchangeable for Securities bearing identical terms and provisions at the office or agency of the Corporation maintained for such purpose under Section 3.02; provided, however, that payment of interest with respect to the Securities may be made at the option of the Corporation (i) by check mailed to the holder at such address as shall appear in the Security Register, or (ii) by wire transfer to an account maintained by the Person entitled thereto; provided, that proper wire transfer instructions have been received in writing by the relevant record date. Notwithstanding the foregoing, so long as the holder of any Securities is the Property Trustee, the payment of the principal of, premium, if any, and interest (including Compounded Interest and Additional Interest, if any) on such Securities held by the Property Trustee will be made at such place and to such account as may be designated by the Property Trustee.

Section 2.04. Legends. (a) Except as permitted by subsection (b) of this Section 2.04 or as otherwise determined by the Corporation in accordance with applicable law, each Security shall bear the applicable legends relating to restrictions on transfer pursuant to the securities laws in substantially the form set forth on Exhibit A hereto.

(b) The Corporation shall issue and the Trustee shall authenticate Series B Securities in exchange for Series A Securities accepted for exchange in the Exchange Offer, which Series B Securities shall not bear the legends required by subsection (a) above, in each case unless the holder of such Series A Securities is either (A) a broker-dealer who purchased such Series A Securities directly from the Corporation for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (B) a Person participating in the distribution of the Series A Securities, or (C) a Person who is an Affiliate (as defined in Rule 144 under the Securities Act) of the Corporation.

Section 2.05. Global Security. (a) In connection with a Dissolution Event, (i) if any Capital Securities are held in book-entry form, the related Definitive Securities shall be presented to the Trustee (if an arrangement with the Depositary has been maintained) by the Property Trustee in exchange for one or more Global Securities (as may be required pursuant to Section 2.07) in an aggregate principal amount equal to the aggregate principal amount of all Outstanding Securities, to be registered in the name of the Depositary, or its nominee, and

delivered by the Trustee to the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Administrative Trustees; the Corporation upon any such presentation shall execute one or more Global Securities in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with this Indenture; and payments on the Securities issued as a Global Security will be made to the Depositary; and

(ii) if any Capital Securities are held in certificated form, the related Definitive Securities may be presented to the Trustee by the Property Trustee and any Capital Security certificate which represents Capital Securities other than Capital Securities in book-entry form ( “Non Book-Entry Capital Securities” ) will be deemed to represent beneficial interests in Securities presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Capital Securities until such Capital Security certificates are presented to the Security registrar for transfer or reissuance, at which time such Capital Security certificates will be cancelled and a Security, registered in the name of the holder of the Capital Security certificate or the transferee of the holder of such Capital Security certificate, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Capital Security certificate cancelled, will be executed by the Corporation and delivered to the Trustee for authentication and delivery in accordance with this Indenture. Upon the issuance of such Securities, Securities with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been cancelled.

(b) The Global Securities shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon; provided, that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the amount of Outstanding Securities represented thereby shall be made by the Trustee, in accordance with instructions given by the Corporation as required by this Section 2.05.

(c) The Global Securities may be transferred, in whole but not in part, only to the Depositary, another nominee of the Depositary, or to a successor Depositary selected or approved by the Corporation or to a nominee of such successor Depositary.

(d) If at any time the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary or the Depositary has ceased to be a clearing agency registered under the Exchange Act, and a successor Depositary is not appointed by the Corporation within 90 days after the Corporation receives such notice or becomes aware of such condition, as the case may be, the Corporation will execute, and the Trustee, upon written notice from the Corporation, will authenticate and make available for delivery the Definitive Securities, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security in exchange for such Global Security. If there is an Event of Default, the Depositary shall have the right to exchange the Global Securities for Definitive Securities. In addition, the Corporation may at any time determine that the Securities shall no longer be represented by a Global Security. In the event of such an Event of Default or such a determination, the Corporation shall execute, and subject to Section 2.07, the Trustee, upon receipt of an Officers’

Certificate evidencing such determination by the Corporation, will authenticate and make available for delivery the Definitive Securities, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security in exchange for such Global Security. Upon the exchange of the Global Security for such Definitive Securities, in authorized denominations, the Global Security shall be cancelled by the Trustee. Such Definitive Securities issued in exchange for the Global Security shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Securities to the Depositary for delivery to the Persons in whose names such Definitive Securities are so registered.

Section 2.06. Interest. (a) Each Security will bear interest at the rate of 6.95% per annum (the “Coupon Rate” ) from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from the Issue Date, until the principal thereof becomes due and payable, and at the Coupon Rate on any overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest, compounded semi-annually, payable (subject to the provisions of Article XVI) semi-annually in arrears on June 1 and December 1 of each year (each, an “Interest Payment Date” ) commencing on June 1, 2004, to the Person in whose name such Security or any predecessor Security is registered, at the close of business on the regular record date for such interest installment, which shall be the fifteenth day of the month which precedes the month in which the relevant Interest Payment Date falls.

(b) Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months and, for any period of less than a full calendar month, the actual number of days elapsed in such month. In the event that any Interest Payment Date falls on a day that is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such date.

(c) During such time as the Property Trustee is the holder of any Securities, the Corporation shall pay any additional amounts on the Securities as may be necessary in order that the amount of Distributions then due and payable by First Midwest Capital Trust on the Outstanding Capital Securities shall not be reduced as a result of any additional taxes, duties and other governmental charges to which First Midwest Capital Trust has become subject as a result of a Tax Event ( “Additional Interest” ).

Section 2.07. Transfer and Exchange .

(a) Transfer Restrictions. The Series A Securities, and those Series B Securities with respect to which any Person described in Section 2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred except in compliance with the legend contained in Exhibit A unless otherwise determined by the Corporation in accordance with applicable law. Upon any distribution of the Securities following a Dissolution Event, the Corporation and the Trustee shall enter into a supplemental indenture pursuant to Section 9.01 to provide for the transfer

restrictions and procedures with respect to the Securities substantially similar to those contained in the Declaration to the extent applicable in the circumstances existing at such time.

(b) General Provisions Relating to Transfers and Exchanges. Upon surrender for registration of transfer of any Security at the office or agency of the Corporation maintained for the purpose pursuant to Section 3.02, the Corporation shall execute, and the Trustee shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount.

At the option of the holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Corporation shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the holder making the exchange is entitled to receive.

Every Security presented or surrendered for registration of transfer or exchange shall (if so required by the Corporation or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security registrar duly executed, by the holder thereof or his attorney duly authorized in writing.

All Definitive Securities and Global Securities issued upon any registration of transfer or exchange of Definitive Securities or Global Securities shall be the valid obligations of the Corporation, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Definitive Securities or Global Securities surrendered upon such registration of transfer or exchange.

No service charge shall be made to a holder for any registration of transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

The Corporation shall not be required to (i) issue, register the transfer of or exchange Securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption or any notice of selection of Securities for redemption under Article XIV hereof and ending at the close of business on the day of such mailing; or (ii) register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

(c) Exchange of Series A Securities for Series B Securities. The Series A Securities may be exchanged for Series B Securities pursuant to the terms of the Exchange Offer in the manner contemplated by the Registration Rights Agreement. The Trustee shall make the exchange as follows:

The Corporation shall present the Trustee with an Officers’ Certificate certifying the following:

(A) upon issuance of the Series B Securities, the transactions contemplated by the Exchange Offer have been consummated; and

(B) the principal amount of Series A Securities properly tendered in the Exchange Offer that are represented by a Global Security and the principal amount of Series A Securities properly tendered in the Exchange Offer that are represented by Definitive Securities, the name of each holder of such Definitive Securities, the principal amount properly tendered in the Exchange Offer by each such holder and the name and address to which Definitive Securities for Series B Securities shall be registered and sent for each such holder.

The Trustee, upon receipt of (i) such Officers’ Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B Securities have been registered under Section 5 of the Securities Act and the Indenture has been qualified under the Trust Indenture Act and (y) with respect to the matters set forth in Section 3(o) of the Registration Rights Agreement, and (iii) a Company Order, shall authenticate (A) a Global Security for Series B Securities in aggregate principal amount equal to the aggregate principal amount of Series A Securities represented by a Global Security indicated in such Officers’ Certificate as having been properly tendered, and (B) Definitive Securities representing Series B Securities registered in the names of, and in the principal amounts indicated in such Officers’ Certificate.

If, upon consummation of the Exchange Offer, the principal amount of the Global Security for the Series B Securities is less than the principal amount of the Global Security for the Series A Securities, the Trustee shall make an endorsement on such Global Security for Series A Securities indicating a reduction in the principal amount represented thereby.

The Trustee shall make such Definitive Securities for Series B Securities available for delivery to the holders thereof as indicated in such Officers’ Certificate.

Section 2.08. Replacement Securities. If any mutilated Security is surrendered to the Trustee, or the Corporation and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, the Corporation shall issue and the Trustee shall authenticate a replacement Security if the Trustee’s requirements for replacements of Securities are met. An indemnity bond must be supplied by the holder that is sufficient in the judgment of the Trustee and the Corporation to protect the Corporation, the Trustee, any agent thereof or any authenticating agent from any loss that any of them may suffer if a Security is replaced. The Corporation or the Trustee may charge for its expenses in replacing a Security.

Every replacement Security is an obligation of the Corporation and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Securities duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost or stolen Securities.

Section 2.09. Treasury Securities. In determining whether the holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Corporation or any Affiliate of the Corporation, as the case may be, shall be disregarded and deemed not to be Outstanding, except that for purposes of determining whether the Trustee shall be fully protected in relying on any such direction, waiver or consent, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.

Section 2.10. Temporary Securities. Pending the preparation of Definitive Securities, the Corporation may prepare and, upon Company Order, the Trustee shall authenticate and make available for delivery, temporary Securities. Temporary Securities shall be substantially in the form of the Definitive Securities in lieu of which they are issued and with such insertions, omissions, substitutions and other variations as the Corporation deems appropriate for temporary securities.

If temporary Securities are issued, the Corporation shall prepare and, upon Company Order, the Trustee shall authenticate and make available for delivery, Definitive Securities in exchange for temporary Securities without unreasonable delay. The Definitive Securities shall be printed, lithographed or engraved, or produced by any combination thereof, or in any other lawful manner, all as determined by the officers executing such Definitive Securities. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at the office or agency maintained by the Corporation for such purpose pursuant to Section 3.02 hereof, without charge to the holder. Upon surrender for cancellation of any one or more temporary Securities, the Corporation shall execute, and the Trustee shall authenticate and make available for delivery, in exchange therefor the same aggregate principal amount of Definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities.

Section 2.11. Cancellation. The Corporation at any time may deliver Securities to the Trustee for cancellation. The Trustee shall promptly cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall retain or dispose of cancelled Securities in its customary manner unless the Corporation directs them to be returned to it; provided, that the Trustee shall not be obligated to destroy the Securities. The Corporation may not issue new Securities to replace Securities that have been redeemed or paid or that have been delivered to the Trustee for cancellation or that any holder has exchanged.

Section 2.12. Defaulted Interest. Any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest” ) shall forthwith cease to be payable to the holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Corporation, at its election, as provided in clause (a) or clause (b) below:

(a) The Corporation may make payment of any Defaulted Interest on Securities to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment

of such Defaulted Interest, which shall be fixed in the following manner: the Corporation shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment, and at the same time the Corporation shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Corporation of such special record date and, in the name and at the expense of the Corporation, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in the Security Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered on such special record date and shall be no longer payable pursuant to the following clause (b).

(b) The Corporation may make payment of any Defaulted Interest on any Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Corporation to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Section 2.13. CUSIP Numbers. The Corporation in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP“ numbers in notices of redemption as a convenience to Securityholders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Corporation will promptly notify the Trustee of any change in the CUSIP numbers.

Article III

Particular Covenants of the Corporation

Section 3.01. Payment of Principal, Premium and Interest. The Corporation covenants and agrees for the benefit of the holders of the Securities that it will duly and punctually pay or cause to be paid the principal of and premium, if any, and interest on the Securities at the place, at the respective times and in the manner provided herein. Except as provided in Section 2.03, 23

each installment of interest on the Securities may be paid by mailing checks for such interest payable to the order of the holder of Security entitled thereto as they appear in the Security Register. The Corporation further covenants to pay any and all amounts including, without limitation, Liquidated Damages, if any, on the dates and in the manner required under the Registration Rights Agreement.

Section 3.02. Offices for Notices and Payments, etc. So long as any of the Securities remain Outstanding, the Corporation will maintain in the State of Delaware, an office or agency where the Securities may be presented for payment, an office or agency where the Securities may be presented for registration of transfer and for exchange as in this Indenture provided and an office or agency where notices and demands to or upon the Corporation in respect of the Securities or of this Indenture may be served. The Corporation will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Until otherwise designated from time to time by the Corporation in a notice to the Trustee, any such office or agency for all of the above purposes shall be the Corporate Trust Office. In case the Corporation shall fail to maintain any such office or agency in the State of Delaware, or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office.

In addition to any such office or agency, the Corporation may from time to time designate one or more offices or agencies outside the State of Delaware, where the Securities may be presented for payment, registration of transfer and for exchange in the manner provided in this Indenture, and the Corporation may from time to time rescind such designation, as the Corporation may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Corporation of its obligation to maintain any such office or agency in the State of Delaware, for the purposes above mentioned. The Corporation will give to the Trustee prompt written notice of any such designation or rescission thereof.

Section 3.03. Appointments to Fill Vacancies in Trustee’s Office. The Corporation, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee hereunder.

Section 3.04. Provision as to Paying Agent. (a) If the Corporation shall appoint a paying agent other than the Trustee with respect to the Securities, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provision of this Section 3.04,

(1) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest on the Securities (whether such sums have been paid to it by the Corporation or by any other obligor on the Securities of such series) in trust for the benefit of the holders of the Securities;

(2) that it will give the Trustee notice of any failure by the Corporation (or by any other obligor on the Securities) to make any payment of the principal of and premium or interest on the Securities when the same shall be due and payable; and

(3) that it will at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by it as such paying agent.

(b) If the Corporation shall act as its own paying agent, it will, on or before each due date for the payment of the principal of and premium, if any, or interest on the Securities, set aside, segregate and hold in trust for the benefit of the holders of the Securities a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee of any failure to take such action and of any failure by the Corporation (or by any other obligor under the Securities) to make any payment of the principal of and premium, if any, or interest on the Securities when the same shall become due and payable.

(c) Anything in this Section 3.04 to the contrary notwithstanding, the Corporation may, at any time, for the purpose of obtaining a satisfaction and discharge with respect to the Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Trustee or any paying agent hereunder, as required by this Section 3.04, such sums to be held by the Trustee upon the trusts herein contained.

(d) Anything in this Section 3.04 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.04 is subject to Sections 11.03 and 11.04.

Section 3.05. Certificate to Trustee. The Corporation will deliver to the Trustee on or before 120 days after the end of each fiscal year (which currently ends on December 31), commencing with the first fiscal year ending after the date hereof, so long as Securities are Outstanding hereunder, an Officers’ Certificate, one of the signers of which shall be the principal executive, principal financial or principal accounting officer of the Corporation stating that in the course of the performance by the signers of their duties as officers of the Corporation they would normally have knowledge of any default by the Corporation in the performance and observance of any covenants, provisions and conditions, material terms (without regard to any period of grace or requirement of notice provided hereunder) contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature thereof. The Corporation shall promptly notify the Trustee in writing of any change in its fiscal year end.

Section 3.06. Compliance with Consolidation Provisions. The Corporation will not, while any of the Securities remain Outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other Person unless the provisions of Article X hereof are complied with.

Section 3.07. Limitation on Dividends. The Corporation will not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Corporation’s capital stock (which includes common and preferred stock), (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities issued by the Corporation (including any Other Debentures) that rank pari passu with or junior in right of payment to the Securities, or (iii) make any guarantee payments with respect to any guarantee by the Corporation of any securities of any Subsidiary of

the Corporation (including Other Guarantees) if such guarantee ranks pari passu or junior in right of payment to the Securities (other than (a) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, Common Stock of the Corporation; (b) any declaration of a dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (c) payments under the Capital Securities Guarantee; (d) as a direct result of, and only to the extent required in order to avoid the issuance of fractional shares of capital stock following a reclassification of the Corporation’s capital stock or the exchange or the conversion of one class or series of the Corporation’s capital stock for another class or series of the Corporation’s capital stock; (e) the purchase of fractional interests in shares of the Corporation’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; and (f) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Corporation’s benefit plans for its directors, officers or employees or the Corporation’s dividend reinvestment plan) if at such time (i) an Event of Default shall have occurred and be continuing, (ii) there shall have occurred any event of which the Corporation has actual knowledge that (a) is, or with the giving of notice or the lapse of time, or both, would constitute an Event of Default, and (b) in respect of which the Corporation shall not have taken reasonable steps to cure, (iii) if the Securities are held by the Property Trustee, the Corporation shall be in default with respect to its payment obligations under the Capital Securities Guarantee, or (iv) the Corporation shall have given notice of its election of the exercise of its right to extend the interest payment period pursuant to Section 16.01 and any such extension shall be continuing.

Section 3.08. Covenants as to First Midwest Capital Trust. In the event Securities are issued to First Midwest Capital Trust or a trustee of such trust in connection with the issuance of Trust Securities by First Midwest Capital Trust, for so long as such Trust Securities remain Outstanding, the Corporation will (i) maintain 100% direct ownership of the Common Securities of First Midwest Capital Trust; provided, however, that any successor of the Corporation, permitted pursuant to Article X, may succeed to the Corporation’s ownership of such Common Securities, (ii) use its reasonable efforts to cause First Midwest Capital Trust (a) to remain a statutory trust, except in connection with a distribution of Securities, the redemption of all of the Trust Securities of First Midwest Capital Trust or certain mergers, consolidations or amalgamations, each as permitted by the Declaration of First Midwest Capital Trust, and (b) to otherwise continue to be treated as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes, and (iii) to use its reasonable efforts to cause each holder of Trust Securities to be treated as owning an individual undivided beneficial interest in the Securities.

Section 3.09. Payment of Expenses. In connection with the offering, sale and issuance of the Securities to First Midwest Capital Trust and in connection with the sale of the Trust Securities by First Midwest Capital Trust, the Corporation, in its capacity as borrower with respect to the Securities, shall:

(a) pay all costs and expenses relating to the offering, sale and issuance of the Securities, including commissions to the initial purchasers payable pursuant to the Purchase Agreement, fees and expenses in connection with any Exchange Offer or other

action to be taken pursuant to the Registration Rights Agreement and compensation of the Trustee in accordance with the provisions of Section 6.06;

(b) pay all costs and expenses of the First Midwest Capital Trust pursuant to the Agreement as to Expenses and Liabilities (including, but not limited to, costs and expenses relating to the organization of the First Midwest Capital Trust, the offering, sale and issuance of the Trust Securities (including commissions to the initial purchasers in connection therewith), the fees and expenses of the Property Trustee and the Delaware Trustee, the costs and expenses relating to the operation of the First Midwest Capital Trust, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of assets of the First Midwest Capital Trust;

(c) be primarily and fully liable for any indemnification obligations arising with respect to the Declaration;

(d) pay any and all taxes (other than United States withholding taxes attributable to the First Midwest Capital Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the First Midwest Capital Trust; and

(e) pay all other fees, expenses, debts and obligations (other than payments of principal of, premium, if any, or interest on the Trust Securities) related to First Midwest Capital Trust.

Section 3.10. Payment upon Resignation or Removal. Upon termination of this Indenture or the removal or resignation of the Trustee, unless otherwise stated, the Corporation shall pay to the Trustee all amounts accrued and owing to the date of such termination, removal or resignation. Upon termination of the Declaration or the removal or resignation of the Delaware Trustee or the Property Trustee, as the case may be, pursuant to Section 5.7 of the Declaration, the Corporation shall pay to the Delaware Trustee or the Property Trustee, as the case may be, all amounts accrued and owing to the date of such termination, removal or resignation.

Article IV

Securityholders’ Lists and Reports by the
Corporation and the Trustee

Section 4.01. Securityholders’ Lists. The Corporation covenants and agrees that it will furnish or cause to be furnished to the Trustee:

(a) on a semi-annual basis on each regular record date for the Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Securityholders as of such record date; and

(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Corporation, of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished,

except that, no such lists need be furnished so long as the Trustee is in possession thereof by reason of its acting as Security registrar.

Section 4.02. Preservation and Disclosure of Lists. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of the Securities (1) contained in the most recent list furnished to it as provided in Section 4.01, or (2) received by it in the capacity of Securities registrar (if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.01 upon receipt of a new list so furnished.

(b) In case three or more holders of Securities (hereinafter referred to as “applicants” ) apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Securities or with holders of all Securities with respect to their rights under this Indenture and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within five Business Days after the receipt of such application, at its election, either:

(1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02, or

(2) inform such applicants as to the approximate number of holders of all Securities, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02 a copy of the form of proxy or other communication which is specified in such request with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of Securities of such series or all Securities, as the

case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

(c) Each and every holder of Securities, by receiving and holding the same, agrees with the Corporation and the Trustee that neither the Corporation nor the Trustee nor any paying agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Securities in accordance with the provisions of subsection (b) of this Section 4.02, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b).

Section 4.03. Reports by Corporation. (a) The Corporation covenants and agrees to file with the Trustee, within 15 days after the date on which the Corporation is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as said Commission may from time to time by rules and regulations prescribe) which the Corporation may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Corporation is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations.

(b) The Corporation covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by said Commission, such additional information, documents and reports with respect to compliance by the Corporation with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations.

(c) The Corporation covenants and agrees to transmit by mail to all holders of Securities, as the names and addresses of such holders appear upon the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Corporation pursuant to subsections (a) and (b) of this Section 4.03 as may be required by rules and regulations prescribed from time to time by the Commission.

(d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive

notice of any information contained therein or determinable from information contained therein, including the Corporation’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(e) So long as is required for an offer or sale of the Securities to qualify for an exemption under Rule 144A under the Securities Act, the Corporation shall, upon request, provide the information required by clause (d)(4) thereunder to each holder of Securities and to each beneficial owner and prospective purchaser of Securities identified by any holder of Restricted Securities, unless such information is furnished to the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

Section 4.04. Reports by the Trustee. (a) The Trustee shall transmit to Securityholders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture, commencing May 15, 2004, deliver to Securityholders a brief report, dated as of the applicable May 15, which complies with the provisions of such Section 313(a).

(b) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, with the Commission and with the Corporation. The Corporation will promptly notify the Trustee when the Securities are listed on any stock exchange.

Article V

Remedies of the Trustee and Securityholders on
Event of Default

Section 5.01. Events of Default. One or more of the following events of default shall constitute an Event of Default hereunder (whatever the reason for such Event of Default and whether it shall be voluntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, Rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest upon any Security when it becomes due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Corporation in accordance with the terms hereof shall not constitute a default in the payment of interest for this purpose; or

(b) default in the payment of all or any part of the principal of or premium, if any, on any Security as and when the same shall become due and payable either at maturity, upon redemption, by declaration or otherwise; or

(c) default in the performance, or breach, of any covenant or warranty of the Corporation in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Corporation by the Trustee or to the Corporation and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(d) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Corporation in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Corporation or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(e) the Corporation shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Corporation or of any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due.

If an Event of Default with respect to Securities at the time Outstanding occurs and is continuing, then in every such case the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities then Outstanding may declare the principal amount of all Securities to be due and payable immediately, by a notice in writing to the Corporation (and to the Trustee if given by the holders of the Outstanding Securities), and upon any such declaration the same shall become immediately due and payable.

The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the Securities shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, (i) the Corporation shall pay or shall deposit with the Trustee a sum sufficient to pay (A) all matured installments of interest upon all the Securities and the principal of and premium, if any, on any and all Securities which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest specified in the Securities to the date of such payment or deposit) and (B) such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith, and (ii) any and all Events of Default under the Indenture, other than the non-payment of the principal of the Securities which shall have

become due solely by such declaration of acceleration, shall have been cured, waived or otherwise remedied as provided herein, then, in every such case, the holders of a majority in aggregate principal amount of the Securities then Outstanding, by written notice to the Corporation and to the Trustee, may rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or shall impair any right consequent thereon.

In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Corporation, the Trustee and the holders of the Securities shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Corporation, the Trustee and the holders of the Securities shall continue as though no such proceeding had been taken.

Section 5.02. Payment of Securities on Default; Suit Therefor. The Corporation covenants that (a) in case Default shall be made in the payment of any installment of interest upon any of the Securities as and when the same shall become due and payable, and such Default shall have continued for a period of 30 days, or (b) in case Default shall be made in the payment of the principal of or premium, if any, on any of the Securities as and when the same shall have become due and payable, whether at maturity of the Securities or upon redemption or by declaration or otherwise, then, upon demand of the Trustee, the Corporation will pay to the Trustee, for the benefit of the holders of the Securities, the whole amount that then shall have become due and payable on all such Securities for principal and premium, if any, or interest, or both, as the case may be, with interest upon the overdue principal and premium, if any, and (to the extent that payment of such interest is enforceable under applicable law and, if the Securities are held by First Midwest Capital Trust or a trustee of such trust, without duplication of any other amounts paid by First Midwest Capital Trust or a trustee in respect thereof) upon the overdue installments of interest at the rate borne by the Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith.

In case the Corporation shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Corporation or any other obligor on the Securities and collect in the manner provided by law out of the property of the Corporation or any other obligor on the Securities wherever situated the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Corporation or any other obligor on the Securities under Bankruptcy Law, or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Corporation or such other obligor, or in the case of any other similar judicial proceedings relative

to the Corporation or other obligor upon the Securities, or to the creditors or property of the Corporation or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Securities and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securityholders allowed in such judicial proceedings relative to the Corporation or any other obligor on the Securities, or to the creditors or property of the Corporation or such other obligor, unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith.

Nothing herein contained shall be construed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.

All rights of action and of asserting claims under this Indenture, or under any of the Securities, may be enforced by the Trustee without the possession of any of the Securities, or the production thereof on any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the holders of the Securities.

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the holders of the Securities, and it shall not be necessary to make any holders of the Securities parties to any such proceedings.

Section 5.03. Application of Moneys Collected by Trustee. Any moneys collected by the Trustee pursuant to Section 5.02 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the Securities in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

First: To the payment of all amounts due to the Trustee under Section 6.06, including the costs and expenses of collection applicable to the Securities and reasonable compensation to the Trustee, its agents, attorneys and counsel, and of all other expenses and liabilities incurred, and all advances made, by the Trustee except as a result of its negligence or bad faith;

Second: To the payment of all Senior Indebtedness of the Corporation if and to the extent required by Article XV;

Third: To the payment of the amounts then due and unpaid upon Securities for principal of (and premium, if any) and interest on the Securities, in respect of which or for the benefit of which money has been collected, ratably, without preference of priority of any kind, according to the amounts due on such Securities for principal (and premium, if any) and interest, respectively; and

Fourth: To the Corporation.

Section 5.04. Proceedings by Securityholders. No holder of any Security shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to the Securities specifying such Event of Default, as hereinbefore provided, and unless also the holders of not less than 25% in aggregate principal amount of the Securities then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding, it being understood and intended, and being expressly covenanted by the taker and holder of every Security with every other taker and holder and the Trustee, that no one or more holders of Securities shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities.

Notwithstanding any other provisions in this Indenture, however, the right of any holder of any Security to receive payment of the principal of, premium, if any, and interest on such Security, on or after the same shall have become due and payable, or to institute suit for the

enforcement of any such payment, shall not be impaired or affected without the consent of such holder and by accepting a Security hereunder it is expressly understood, intended and covenanted by the taker and holder of every Security with every other such taker and holder and the Trustee, that no one or more holders of Securities shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

The Corporation and the Trustee acknowledge that pursuant to the Declaration, the holders of Capital Securities are entitled, in the circumstances and subject to the limitations set forth therein, to commence a Direct Action with respect to any Event of Default under this Indenture and the Securities.

Section 5.05. Proceedings by Trustee. In case an Event of Default occurs with respect to Securities and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Section 5.06. Remedies Cumulative and Continuing. Except as provided in the last paragraph of Section 2.08, all powers and remedies given by this Article V to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to the Securities, and no delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.04, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

Section 5.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders . The holders of a majority in aggregate principal amount of the Securities at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or to direct the exercise of any trust or power conferred on the Trustee; provided, however, that (subject to the provisions of Section 6.01) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action so directed would be unjustly prejudicial to the holders not taking part in such

direction or if the Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Trustee, by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or Responsible Officers, shall determine in good faith that the action or proceedings so directed would involve the Trustee in personal liability. Prior to any declaration accelerating the maturity of the Securities, the holders of a majority in aggregate principal amount of the Securities at the time Outstanding may, by vote, on behalf of the holders of all of the Securities waive any past Default or Event of Default and its consequences except a Default (a) in the payment of principal of or premium, if any, or interest on any of the Securities or (b) in respect of covenants or provisions hereof which cannot be modified or amended without the consent of the holder of each Security affected; provided, however, that if the Securities are held by the Property Trustee, such waiver or modification to such waiver shall not be effective until the holders of a majority in aggregate liquidation amount of Trust Securities shall have consented to such waiver or modification to such waiver; provided, further, that if the consent of the holder of each Outstanding Security is required, such waiver shall not be effective until each holder of the Trust Securities shall have consented to such waiver. Upon any such waiver, the Default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Corporation, the Trustee and the holders of the Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 5.07, said Default or Event of Default shall for all purposes of the Securities and this Indenture be deemed to have been cured and to be not continuing.

Section 5.08. Notice of Defaults. The Trustee shall, within 90 days after the occurrence of a Default with respect to the Securities mail to all Securityholders, as the names and addresses of such holders appear upon the Security Register, notice of all Defaults known to the Trustee, unless such Defaults shall have been cured before the giving of such notice (the term “Defaults” for the purpose of this Section 5.08 being hereby defined to be the events specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not including periods of grace, if any, provided for therein, and irrespective of the giving of written notice specified in clause (c) of Section 5.01); and provided, that, except in the case of Default in the payment of the principal of or premium, if any, or interest on any of the Securities, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders; provided, further, that in the case of any Default of the character specified in Section 5.01(c) no such notice to Securityholders shall be given until at least 60 days after the occurrence thereof but shall be given within 90 days after such occurrence.

Section 5.09. Undertaking to Pay Costs. All parties to this Indenture agree, and each holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of

the claims or defenses made by such party litigant; but the provisions of this Section 5.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in aggregate principal amount of the Securities Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or premium, if any, or interest on any Security against the Corporation on or after the same shall have become due and payable.

Article VI

Concerning the Trustee

Section 6.01. Duties and Responsibilities of Trustee . With respect to the holders of the Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default which may have occurred:

(1) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any written certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith, in accordance with the direction of the Securityholders pursuant to Section 5.07, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.

Section 6.02. Reliance on Documents, Opinions, etc. Except as otherwise provided in Section 6.01:

(a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Corporation mentioned herein may be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Corporation;

(c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby;

(e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default (that has not been cured or waived), to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his or her own affairs;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of a majority in aggregate principal amount of the Outstanding Securities; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents (including any Authenticating Agent) or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care; and

(h) the Trustee shall be under no obligation to institute any suit, or to take any remedial proceeding under this Indenture, or to enter any appearance or in any way defend in any suit in which it may be made defendant, or in the enforcement of any rights or powers hereunder, if the Trustee reasonably believes that it will not be adequately indemnified against any and all costs and expenses, outlays, and counsel fees and other reasonable disbursements and against all liability, except liability that is adjudicated to have resulted from its negligence or willful misconduct, in connection with any actions so taken.

Section 6.03. No Responsibility for Recitals, etc. The recitals contained herein and in the Securities (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be taken as the statements of the Corporation and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Corporation of any Securities or the proceeds of any Securities authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture. The Trustee shall not be charged with knowledge of any Default or Event of Default under Section 5.01(a) or (b) relating to Other Debentures unless (i) a Responsible Officer of the Trustee assigned to its Principal Office shall have actual knowledge thereof, or (ii) the Corporation, any Securityholder or the holder of any Other Debenture shall have given the Trustee written notice thereof in accordance with Section 13.04.

Section 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Securities. The Trustee or any Authenticating Agent or any paying agent or any transfer agent or any Security registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent, transfer agent or Security registrar.

Section 6.05. Moneys to Be Held in Trust. Subject to the provisions of Section 11.04, all moneys received by the Trustee or any paying agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any paying agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Corporation. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Corporation, signed by the Chairman of the Board of Directors, the President or a Vice President or the Treasurer or an Assistant Treasurer of the Corporation.

Section 6.06. Compensation and Expenses of Trustee. The Corporation, as borrower, covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Corporation and the Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Corporation will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from or be incurred in connection with its negligence or bad faith. The Corporation also covenants to indemnify each of the Trustee or any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim of liability in the premises. The obligations of the Corporation under this Section 6.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(d) or Section 5.01(e), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

The provisions of this Section shall survive the resignation or removal of the Trustee and the termination of this Indenture.

Section 6.07. Officers’ Certificate as Evidence. Except as otherwise provided in Sections 6.01 and 6.02, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof is herein specifically

prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

Section 6.08. Conflicting Interest of Trustee. If the Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Corporation shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, subject to the penultimate paragraph thereof.

Section 6.09. Eligibility of Trustee. The Trustee hereunder shall at all times be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia or a corporation or other Person permitted to act as trustee by the Commission authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section 6.09, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Corporation may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Corporation, serve as Trustee.

If at any time the Trustee shall cease to be eligible to so act under the provisions of this Section 6.09, the Trustee shall immediately resign in the manner and with the effect set forth in Section 6.10.

Section 6.10. Resignation or Removal of Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice of such resignation to the Corporation and by mailing notice thereof to the holders of the Securities at their addresses as they shall appear on the Security Register. Upon receiving such notice of resignation, the Corporation shall promptly appoint a successor trustee or trustees by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 60 days after the mailing of such notice of resignation to the Securityholders, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide holder of a Security for at least six months may, subject to the provisions of Section 5.04, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(1) the Trustee shall fail to comply with the provisions of Section 6.08 after written request therefor by the Corporation or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, or

(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.09 and shall fail to resign after written request therefor by the Corporation or by any such Securityholder, or

(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Corporation may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 5.04, any Securityholder who has been a bona fide holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c) The holders of a majority in aggregate principal amount of the Securities at the time Outstanding may at any time remove the Trustee and nominate a successor trustee, which shall be deemed appointed as successor trustee unless within 10 days after such nomination the Corporation objects thereto or if no successor trustee shall have been so appointed and shall have accepted appointment within 30 days after such removal, in which case the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.10; provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.

(d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 6.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.11.

Section 6.11. Acceptance by Successor Trustee. Any successor trustee appointed as provided in Section 6.10 shall execute, acknowledge and deliver to the Corporation and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the retiring trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Corporation or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 6.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring trustee thereunder. Upon request of any such successor trustee, the Corporation shall execute any and all instruments

in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 6.06.

No successor trustee shall accept appointment as provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 6.08 and eligible under the provisions of Section 6.09.

Upon acceptance of appointment by a successor trustee as provided in this Section 6.11, the Corporation shall mail notice of the succession of such trustee hereunder to the holders of Securities at their addresses as they shall appear on the Security Register. If the Corporation fails to mail such notice within 10 days after the acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Corporation.

Section 6.12. Succession by Merger, etc. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, if such successor is otherwise eligible under Section 6.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto or successor of the Trustee.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which the Securities or this Indenture elsewhere provides that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

Section 6.13. Limitation on Rights of Trustee as a Creditor. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein.

Section 6.14. Authenticating Agents. There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Corporation with power to act on its behalf and subject to its direction in the authentication and delivery of Securities issued upon exchange or transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Securities; provided, that the Trustee shall have no liability to the Corporation for any acts or omissions of the Authenticating Agent with

respect to the authentication and delivery of Securities. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $50,000,000 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 6.14 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect herein specified in this Section.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 6.14 without the execution or filing of any paper or any further act on the part of the parties hereto or such Authenticating Agent.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Corporation. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Corporation. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 6.14, the Trustee may, and upon the request of the Corporation shall, promptly appoint a successor Authenticating Agent eligible under this Section 6.14, shall give written notice of such appointment to the Corporation and shall mail notice of such appointment to all Securityholders as the names and addresses of such holders appear on the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.

The Corporation, as borrower, agrees to pay to any Authenticating Agent from time to time reasonable compensation for its services. Any Authenticating Agent shall have no responsibility or liability for any action taken by it as such in accordance with the written directions of the Trustee.

Article VII

Concerning the Securityholders

Section 7.01. Action by Securityholders. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Securities may take any action (including the making of any demand or request, the giving of any notice, consent or

waiver or the taking of any other action) the fact that at the time of taking any such action the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders in person or by agent or proxy appointed in writing, (b) by the record of such holders of Securities voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article VIII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders.

If the Corporation shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action, the Corporation may, at its option, as evidenced by an Officers’ Certificate, fix in advance a record date for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action or to revoke any such action, but the Corporation shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action or revocation may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Securities shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

Section 7.02. Proof of Execution by Securityholders. Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Securities shall be proved by the Security Register or by a certificate of the Security registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

The record of any Securityholders’ meeting shall be proved in the manner provided in Section 8.06.

Section 7.03. Who Are Deemed Absolute Owners. Prior to due presentment for registration of transfer of any Security, the Corporation, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Security registrar may deem the Person in whose name such Security shall be registered upon the Security Register to be, and may treat him as, the absolute owner of such Security (whether or not such Security shall be overdue) for the purpose of receiving payment of or on account of the principal of and premium, if any, and (subject to Section 2.06) interest on such Security and for all other purposes; and neither the Corporation nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or

sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security.

Section 7.04. Securities Owned by Corporation Deemed Not Outstanding. In determining whether the holders of the requisite aggregate principal amount of Securities have concurred in any direction, consent or waiver under this Indenture, Securities which are owned by the Corporation or any other obligor on the Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Corporation or any other obligor on the Securities shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities which the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section 7.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Securities and that the pledgee is not the Corporation or any such other obligor or Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Corporation or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the written advice of counsel shall be full protection to the Trustee.

Section 7.05. Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.01, of the taking of any action by the holders of the percentage in aggregate principal amount of the Securities specified in this Indenture in connection with such action, any holder of a Security (or any Security issued in whole or in part in exchange or substitution therefor), subject to Section 7.01, the serial number of which is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee at the Corporate Trust Office and upon proof of holding as provided in Section 7.02, revoke such action so far as concerns such Security (or so far as concerns the principal amount represented by any exchanged or substituted Security). Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon such Security or any Security issued in exchange or substitution therefor.

Article VIII

Securityholders’ Meetings

Section 8.01. Purposes of Meetings. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes:

(a) to give any notice to the Corporation or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any Default hereunder and its

consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article V;

(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI;

(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.02; or

(d) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of such Securities under any other provision of this Indenture or under applicable law.

Section 8.02. Call of Meetings by Trustee. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.01, to be held at such time and at such place in the State of Delaware, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Securities at their addresses as they shall appear on the Securities Register. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting.

Section 8.03. Call of Meetings by Corporation or Securityholders. In case at any time the Corporation pursuant to a resolution of the Board of Directors, or the holders of at least 10% in aggregate principal amount of the Securities then Outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Corporation or such Securityholders may determine the time and the place in said Borough of Manhattan for such meeting and may call such meeting to take any action authorized in Section 8.01, by mailing notice thereof as provided in Section 8.02.

Section 8.04. Qualifications for Voting. To be entitled to vote at any meeting of Securityholders a Person shall (a) be a holder of one or more Securities or (b) a Person appointed by an instrument in writing as proxy by a holder of one or more Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Corporation and its counsel.

Section 8.05. Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by an instrument in writing, appoint a temporary Chairman of the meeting, unless the meeting shall have been called by the Corporation or by Securityholders as provided in Section 8.03, in which case the Corporation or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary Chairman. A permanent Chairman and a permanent Secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the Outstanding Securities present at the meeting.

Subject to the provisions of Section 8.04, at any meeting each holder of Securities or proxy therefor shall be entitled to one vote for each $1,000 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the Chairman of the meeting to be not Outstanding. The Chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

The Persons entitled to vote a majority in principal amount of the Outstanding Securities shall constitute a quorum for a meeting of Holders of Securities; provided, however, that if any action is to be taken at such meeting with respect to a consent, waiver, request, demand, notice, authorization, direction or other action which may be given by the holders of not less than a specified percentage in principal amount of the Outstanding Securities, the Persons holding or representing such specified percentage in principal amount of the Outstanding Securities will constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of holders of Securities, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.02, except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities which shall constitute a quorum.

Except as limited by the first proviso to the first paragraph of Section 9.02, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the holders of a majority in principal amount of the Outstanding Securities; provided, however, that, except as limited by the first proviso to the first paragraph of Section 9.02, any resolution with respect to any consent, waiver, request, demand, notice, authorization, direction or other action which this Indenture expressly provides may be given by the holders of not less than a specified percentage in principal amount of the Outstanding Securities may be adopted at a meeting or an adjourned meeting duly reconvened

and at which a quorum is present as aforesaid only by the affirmative vote of the holders of not less than such specified percentage in principal amount of the Outstanding Securities.

Any resolution passed or decision taken at any meeting of holders of Securities duly held in accordance with this Section shall be binding on all the holders of Securities whether or not present or represented at the meeting.

Section 8.06. Voting. The vote upon any resolution submitted to any meeting of holders of Securities shall be by written ballots on which shall be subscribed the signatures of such holders or of their representatives by proxy and the serial number or numbers of the Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the Secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the Secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 8.02. The record shall show the serial numbers of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent Chairman and Secretary of the meeting and one of the duplicates shall be delivered to the Corporation and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. The holders of the Series A Capital Securities and the Series B Capital Securities shall vote for all purposes as a single class.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

Article IX

Amendments

Section 9.01. Without Consent of Securityholders. The Corporation and the Trustee may from time to time and at any time amend the Indenture, without the consent of the Securityholders, for one or more of the following purposes:

(a) to evidence the succession of another Person to the Corporation, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Corporation pursuant to Article X hereof;

(b) to add to the covenants of the Corporation such further covenants, restrictions or conditions for the protection of the Securityholders as the Board of Directors and the Trustee shall consider to be for the protection of the Securityholders, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a Default or an Event of Default

permitting the enforcement of all or any of the remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction or condition such amendment may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;

(c) to provide for the issuance under this Indenture of Securities in coupon form (including Securities registrable as to principal only) and to provide for exchangeability of such Securities with the Securities issued hereunder in fully registered form and to make all appropriate changes for such purpose; provided, that any such amendment shall not adversely affect the ability of the Corporation to deduct from its income taxes interest payments made on the Securities;

(d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture; provided, that any such action shall not materially adversely affect the interests of the holders of the Securities;

(e) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities;

(f) to make provision for transfer procedures, certification, book-entry provisions, the form of restricted securities legends, if any, to be placed on Securities, minimum denominations and all other matters required pursuant to Section 2.07 or otherwise necessary, desirable or appropriate in connection with the issuance of Securities to holders of Capital Securities in the event of a distribution of Securities by First Midwest Capital Trust following a Dissolution Event;

(g) to qualify or maintain qualification of this Indenture under the Trust Indenture Act;

(h) to enable the Corporation and First Midwest Capital Trust to conduct an Exchange Offer as contemplated by the Registration Rights Agreement; provided, that any such amendment shall not materially adversely affect the interests of the holders of the Securities; or

(i) to make any change that does not adversely affect the rights of any Securityholder in any material respect.

The Trustee is hereby authorized to join with the Corporation in the execution of any supplemental indenture to effect such amendment, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its

discretion, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Any amendment to the Indenture authorized by the provisions of this Section 9.01 may be executed by the Corporation and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

Section 9.02. With Consent of Securityholders. With the consent (evidenced as provided in Section 7.01) of the holders of a majority in aggregate principal amount of the Securities at the time Outstanding, the Corporation, when authorized by a Board Resolution, and the Trustee may from time to time and at any time amend the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the holders of the Securities; provided, however, that no such amendment shall without the consent of the holders of each Security then Outstanding and affected thereby (i) extend the Maturity Date of any Security, or reduce the rate or extend the time of payment of interest thereon (except as contemplated by Article XVI), (ii) reduce the principal amount thereof, or reduce any amount payable on redemption thereof, or make the principal of, or any interest or premium on the Securities payable in any coin or currency other than that provided in the Securities, or impair or affect the right of any Securityholder to institute suit for payment thereof, or (iii) reduce the aforesaid percentage of Securities the holders of which are required to consent to any such amendment to the Indenture; provided, however, that if the Securities are held by First Midwest Capital Trust, such amendment shall not be effective until the holders of a majority in liquidation amount of Trust Securities shall have consented to such amendment; provided, further, that if the consent of the holder of each Outstanding Security is required, such amendment shall not be effective until each holder of the Trust Securities shall have consented to such amendment.

Upon the request of the Corporation accompanied by a copy of a resolution of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any supplemental indenture affecting such amendment, and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee shall join with the Corporation in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

Promptly after the execution by the Corporation and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, prepared by the Corporation, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Security Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

It shall not be necessary for the consent of the Securityholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Section 9.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures. Any supplemental indenture executed pursuant to the provisions of this Article IX shall comply with the Trust Indenture Act. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Corporation and the holders of Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.04. Notation on Securities. Securities authenticated and delivered after the execution of any supplemental indenture affecting such series pursuant to the provisions of this Article IX may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Corporation or the Trustee shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Corporation, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Securities then Outstanding.

Section 9.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall, upon its request, receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article IX.

An Opinion of Counsel received by the Trustee pursuant to this Section shall be conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof.

Article X

Consolidation, Merger, Sale, Conveyance and Lease

Section 10.01. Corporation May Consolidate, etc., on Certain Terms. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Corporation with or into any other Person (whether or not affiliated with the Corporation, as the case may be), or successive consolidations or mergers in which the Corporation, or its successor or successors, as the case may be, shall be a party or parties, or shall prevent any sale, conveyance, transfer or lease of the property of the Corporation, or its successor or successors, as

the case may be, as an entirety, or substantially as an entirety, to any other Person (whether or not affiliated with the Corporation, or its successor or successors, as the case may be) authorized to acquire and operate the same; provided, that (a) the Corporation is the surviving Person, or the Person formed by or surviving any such consolidation or merger (if other than the Corporation) or to which such sale, conveyance, transfer or lease of property is made is a Person organized and existing under the laws of the United States or any state thereof or the District of Columbia, and (b) upon any such consolidation, merger, sale, conveyance, transfer or lease, the due and punctual payment of the principal of and premium, if any, and interest on the Securities according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Corporation shall be expressly assumed, by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act, as then in effect) satisfactory in form to the Trustee executed and delivered to the Trustee by the Person formed by such consolidation, or into which the Corporation, shall have been merged, or by the Person which shall have acquired such property, as the case may be, and (c) after giving effect to such consolidation, merger, sale, conveyance, transfer or lease, no Default or Event of Default shall have occurred and be continuing.

Section 10.02. Successor Corporation to Be Substituted for Corporation. In case of any such consolidation, merger, conveyance or transfer and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Securities and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Corporation, such successor Person shall succeed to and be substituted for the Corporation, with the same effect as if it had been named herein as the party of the first part, and the Corporation thereupon shall be relieved of any further liability or obligation hereunder or upon the Securities. Such successor Person thereupon may cause to be signed, and may issue either in its own name or in the name of First Midwest Bancorp, Inc., any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Corporation and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor Person instead of the Corporation and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Securities which previously shall have been signed and delivered by the officers of the Corporation to the Trustee or the Authenticating Agent for authentication, and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Indentures had been issued at the date of the execution hereof.

Section 10.03. Opinion of Counsel to Be Given Trustee. The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall be furnished an Opinion of Counsel as conclusive evidence that any consolidation, merger, sale, conveyance, transfer or lease, and any assumption, permitted or required by the terms of this Article X complies with the provisions of this Article X.

Article XI

Satisfaction and Discharge of Indenture

Section 11.01. Discharge of Indenture. When (a) the Corporation shall deliver to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.08) and not theretofore cancelled, or (b) all the Securities not theretofore cancelled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Corporation shall deposit with the Trustee, in trust, funds sufficient to pay on the Maturity Date or upon redemption all of the Securities (other than any Securities which shall have been destroyed, lost or stolen and which shall have been replaced as provided in Section 2.08) not theretofore cancelled or delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due to the Maturity Date or redemption date, as the case may be, but excluding, however, the amount of any moneys for the payment of principal of or premium, if any, or interest on the Securities (1) theretofore repaid to the Corporation in accordance with the provisions of Section 11.04, or (2) paid to any state or to the District of Columbia pursuant to its unclaimed property or similar laws, and if in either case the Corporation shall also pay or cause to be paid all other sums payable hereunder by the Corporation, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive until such Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04 shall survive, and the Trustee, on demand of the Corporation accompanied by any Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Corporation, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture, the Corporation, however, hereby agreeing to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Securities.

Section 11.02. Deposited Moneys and U.S. Government Obligations to Be Held in Trust by Trustee. Subject to the provisions of Section 11.04, all moneys and U.S. Government Obligations deposited with the Trustee pursuant to Sections 11.01 or 11.05 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Corporation if acting as its own paying agent), to the holders of the particular Securities for the payment of which such moneys or U.S. Government Obligations have been deposited with the Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest.

The Corporation shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 11.05 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the holders of Outstanding Securities.

Section 11.03. Paying Agent to Repay Moneys Held. Upon the satisfaction and discharge of this Indenture all moneys then held by any paying agent of the Securities (other than the Trustee) shall, upon written demand of the Corporation, be repaid to it or paid to the Trustee, and

thereupon such paying agent shall be released from all further liability with respect to such moneys.

Section 11.04. Return of Unclaimed Moneys. Any moneys deposited with or paid to the Trustee or any paying agent for payment of the principal of or premium, if any, or interest on Securities and not applied but remaining unclaimed by the holders of Securities for two years after the date upon which the principal of or premium, if any, or interest on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Corporation by the Trustee or such paying agent on Company Request; and the holder of any of the Securities shall thereafter look only to the Corporation for any payment which such holder may be entitled to collect and all liability of the Trustee or such paying agent with respect to such moneys shall thereupon cease.

Section 11.05. Defeasance upon Deposit of Moneys or U.S. Government Obligations. The Corporation shall be deemed to have been Discharged (as defined below) from its obligations with respect to the Securities on the 91st day after the conditions set forth below have been satisfied:

(1) The Corporation shall have deposited or caused to be deposited irrevocably with the Trustee or the Defeasance Agent (as defined below) as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities (i) money in an amount, (ii) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a combination of (i) and (ii), sufficient, in the opinion (with respect to (ii) and (iii)) of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee and the Defeasance Agent, if any, to pay and discharge each installment of principal of and interest and premium, if any, on the Outstanding Securities on the dates such installments of principal, interest or premium, if any, are due;

(2) if the Securities are then listed on any national securities exchange, the Corporation shall have delivered to the Trustee and the Defeasance Agent, if any, an Opinion of Counsel to the effect that the exercise of the option under this Section 11.05 would not cause such Securities to be delisted from such exchange;

(3) no Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit; and

(4) the Corporation shall have delivered to the Trustee and the Defeasance Agent, if any, an Opinion of Counsel to the effect that holders of the Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of the exercise of the option under this Section 11.05 and will be subject to United States federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised, and such opinion shall be based on a statute so providing or be accompanied by a private letter ruling to that effect

received from the United States Internal Revenue Service or a revenue ruling pertaining to a comparable form of transaction to that effect published by the United States Internal Revenue Service.

“Discharged” means that the Corporation shall be deemed to have paid and discharged the entire indebtedness represented by, and obligations under, the Securities and to have satisfied all the obligations under this Indenture relating to the Securities (and the Trustee, at the expense of the Corporation, shall execute proper instruments acknowledging the same), except (A) the rights of holders of Securities to receive, from the trust fund described in clause (1) above, payment of the principal of and the interest and premium, if any, on the Securities when such payments are due; (B) the Corporation’s obligations with respect to the Securities under Sections 2.02, 2.07, 2.08, 3.02, 3.04, 6.10 and 11.04; and (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder.

“Defeasance Agent” means another financial institution which is eligible to act as Trustee hereunder and which assumes all of the obligations of the Trustee necessary to enable the Trustee to act under this Article. In the event such a Defeasance Agent is appointed pursuant to this Section, the following conditions shall apply:

(1) The Trustee shall have approval rights over the document appointing such Defeasance Agent and the document setting forth such Defeasance Agent’s rights and responsibilities; and

(2) The Defeasance Agent shall provide verification to the Trustee acknowledging receipt of sufficient money and/or U.S. Government Obligations to meet the applicable conditions set forth in this Section 11.05.

Article XII
Immunity of Incorporators, Stockholders,
Officers and Directors

Section 12.01. Indenture and Securities Solely Corporate Obligations. No recourse for the payment of the principal of or premium, if any, or interest on any Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Corporation in this Indenture, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Corporation or of any successor Person to the Corporation, either directly or through the Corporation or any successor Person to the Corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities.

Article XIII

Miscellaneous Provisions

Section 13.01. Successors. All the covenants, stipulations, promises and agreements in this Indenture contained by the Corporation shall bind its successors and assigns whether so expressed or not.

Section 13.02. Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Corporation shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Corporation.

Section 13.03. Surrender of Corporation Powers. The Corporation by instrument in writing executed by authority of 2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Corporation, and thereupon such power so surrendered shall terminate both as to the Corporation, as the case may be, and as to any successor Person.

Section 13.04. Addresses for Notices, etc. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities on the Corporation may be given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Corporation with the Trustee for the purpose) to the Corporation, 300 Park Boulevard, Suite 400, Itasca, Illinois 60143, Attention: Chief Executive Officer. Any notice, direction, request or demand by any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration (unless another address is provided by the Trustee to the Corporation for the purpose).

Any notice or communication to a Holder shall be mailed by first class mail to his or her address shown on the Security Register kept by the Security registrar. Failure to mail a notice or communication to a holder of the Securities or any defect in it shall not affect its sufficiency with respect to other holders of the Securities.

Section 13.05. Governing Law. This Indenture and each Security shall be deemed to be a contract made under the laws of the State of Illinois, and for all purposes shall be governed by and construed in accordance with the laws of said state, without regard to conflicts of laws principles thereof.

Section 13.06. Evidence of Compliance with Conditions Precedent. Upon any application or demand by the Corporation to the Trustee to take any action under any of the provisions of this Indenture, the Corporation shall furnish to the Trustee an Officers’ Certificate stating that in the opinion of the signers all conditions precedent, if any, provided for in this Indenture relating to

the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (except pursuant to Section 3.05) shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

Section 13.07. Business Days. In any case where the date of payment of principal of or premium, if any, or interest on the Securities will not be a Business Day, the payment of such principal of or premium, if any, or interest on the Securities need not be made on such date but may be made on the next succeeding Business Day, with the same force and effect as if made on the date of payment and no interest shall accrue in respect of such payment for the period from and after such date.

Section 13.08. Trust Indenture Act to Control. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such imposed duties shall control.

Section 13.09. Table of Contents, Headings, etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

Section 13.10. Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 13.11. Separability . In case any one or more of the provisions contained in this Indenture or in the Securities shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of the Securities, but this Indenture and the Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

Section 13.12. Assignment . The Corporation will have the right at all times to assign any of its respective rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Corporation; provided that, in the event of any such assignment, the Corporation will remain primarily liable for all its obligations. Subject to the foregoing, the Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties thereto.

Section 13.13. Acknowledgement of Rights. The Corporation acknowledges that, with respect to any Securities held by First Midwest Capital Trust or a trustee of such trust, if the Property Trustee of such Trust fails to enforce its rights under this Indenture as the holder of the Securities held as the assets of First Midwest Capital Trust any holder of Capital Securities may institute legal proceedings directly against the Corporation to enforce such Property Trustee’s rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other Person.

Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Corporation to pay principal of or premium, if any, or interest on the Securities when due, the Corporation acknowledges that a holder of Capital Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or premium, if any, or interest on the Securities having a principal amount equal to the aggregate liquidation amount of the Capital Securities of such holder on or after the respective due date specified in the Securities.

Article XIV

Redemption of Securities

Section 14.01. Special Event Redemption. If a Special Event has occurred and is continuing then, notwithstanding Section 14.02(a) but subject to Section 14.02(b), the Corporation shall have the right at any time, upon (i) not less than 45 days written notice to the Trustee, which notice shall be accompanied by an Officers’ Certificate certifying that a Special Event entitling the Corporation to redeem the Securities pursuant to this Section, has occurred and (ii) not less than 30 days nor more than 60 days written notice to the Securityholders, to redeem the Securities, in whole (but not in part), within 90 days following the occurrence of such Special Event at the Special Event Redemption Price. Following a Special Event, the Corporation shall take such action as is necessary to promptly determine the Special Event Redemption Price, including without limitation the appointment by the Corporation of a Quotation Agent. The Special Event Redemption Price shall be paid prior to 12:00 noon, New York City time, on the date of such redemption or such earlier time as the Corporation determines; provided , that the Corporation shall deposit with the Trustee an amount sufficient to pay the Special Event Redemption Price by 10:00 a.m., New York City time, on the date such Special Event Redemption Price is to be paid. The Corporation shall provide the Trustee with written notice of the Special Event Redemption Price promptly after the calculation thereof, which notice shall include any calculation made by the Quotation Agent in connection with the determination of the Special Event Redemption Price.

Section 14.02. Optional Redemption by Corporation. (a) Subject to the provisions of this Article XIV, the Corporation shall have the right to redeem the Securities, in whole or in part, from time to time at any time prior to the Maturity Date, at the Optional Redemption Price.

If the Securities are only partially redeemed pursuant to this Section 14.02, the Securities will be redeemed by lot or by any other method utilized by the Trustee; provided, that if at the

time of redemption the Securities are registered as a Global Security, the Depositary shall determine, in accordance with its procedures, the principal amount of such Securities held for the account of its participants to be redeemed. The Optional Redemption Price shall be paid prior to 12:00 noon, New York City time, on the date of such redemption or at such earlier time as the Corporation determines; provided, that the Corporation shall deposit with the Trustee an amount sufficient to pay the Optional Redemption Price by 10:00 a.m., New York time, on the date such Optional Redemption Price is to be paid.

(b) Any redemption of Securities pursuant to Section 14.01 or Section 14.02 shall be subject to the Corporation obtaining the prior approval of the Federal Reserve, if such approval is then required under applicable capital guidelines or policies of the Federal Reserve.

Section 14.03. No Sinking Fund. The Securities are not entitled to the benefit of any sinking fund.

Section 14.04. Notice of Redemption; Selection of Securities. In case the Corporation shall desire to exercise the right to redeem all, or, as the case may be, any part of the Securities in accordance with their terms, it shall fix a date for redemption and shall mail a notice of such redemption at least 30 and not more than 60 days prior to the date fixed for redemption to the holders of Securities so to be redeemed as a whole or in part at their last addresses as the same appear on the Security Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

Each such notice of redemption shall specify the CUSIP number of the Securities to be redeemed, the date fixed for redemption, the redemption price at which the Securities are to be redeemed (or the method by which such redemption price is to be calculated), the place or places of payment, that payment will be made upon presentation and surrender of the Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. If less than all the Securities are to be redeemed, the notice of redemption shall specify the numbers of the Securities to be redeemed. In case any Security is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued.

By 10:00 a.m. New York City time on the redemption date specified in the notice of redemption given as provided in this Section, the Corporation will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the redemption date all the Securities so called for redemption at the appropriate Redemption Price, together with accrued interest to the date fixed for redemption.

The Corporation will give the Trustee notice not less than 45 days prior to the redemption date as to the aggregate principal amount of Securities to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Securities or portions thereof (in integral multiples of $1,000, except as otherwise set forth in the applicable form of Security) to be redeemed.

Section 14.05. Payment of Securities Called for Redemption. If notice of redemption has been given as provided in Section 14.04, the Securities or portions of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with interest accrued to the date fixed for redemption (subject to the rights of holders of Securities on the close of business on a regular record date in respect of an Interest Payment Date occurring on or prior to the redemption date), and on and after said date (unless the Corporation shall default in the payment of such Securities at the Redemption Price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue. On presentation and surrender of such Securities at a place of payment specified in said notice, the said Securities or the specified portions thereof shall be paid and redeemed by the Corporation at the applicable Redemption Price, together with interest accrued thereon to the date fixed for redemption (subject to the rights of holders of Securities on the close of business on a regular record date in respect of an Interest Payment Date occurring on or prior to the redemption date).

Upon presentation of any Security redeemed in part only, the Corporation shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Corporation, a new Security or Securities of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

Article XV

Subordination of Securities

Section 15.01. Agreement to Subordinate. The Corporation covenants and agrees, and each holder of Securities issued hereunder likewise covenants and agrees, that the Securities shall be issued subject to the provisions of this Article XV; and each holder of a Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions.

The payment by the Corporation of the principal of, premium, if any, and interest on all Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred.

No provision of this Article XV shall prevent the occurrence of any Default or Event of Default hereunder.

Section 15.02. Default on Senior Indebtedness. In the event and during the continuation of any default by the Corporation in the payment of principal, premium, if any, interest or any other payment due on any Senior Indebtedness, or in the event that the maturity of any Senior Indebtedness has been accelerated because of a default, then, in either case, no payment shall be made by the Corporation with respect to the principal (including redemption payments) of or premium, if any, or interest on the Securities.

In the event of the acceleration of the maturity of the Securities, then no payment shall be made by the Corporation with respect to the principal (including redemption payments) of or premium, if any, or interest on the Securities until the holders of all Senior Indebtedness outstanding at the time of such acceleration shall receive payment in full of such Senior Indebtedness (including any amounts due upon acceleration).

In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraphs of this Section 15.02, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee in writing, within 90 days of such payment on such Senior Indebtedness.

Section 15.03. Termination; Dissolution; Bankruptcy. Upon any payment by the Corporation or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or termination or reorganization of the Corporation, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all Senior Indebtedness of the Corporation shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Corporation on account of the principal, and premium, if any, or interest on the Securities; and upon any such dissolution or winding-up or termination or reorganization, any payment by the Corporation, or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, to which the Securityholders or the Trustee would be entitled to receive from the Corporation, except for the provisions of this Article XV, shall be paid by the Corporation or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Securityholders or by the Trustee under the Indenture if received by them or it, directly to the holders of Senior Indebtedness of the Corporation or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay Senior Indebtedness in full, in money, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Securityholders or to the Trustee.

In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness is paid in full, or

provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Corporation, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness.

For purposes of this Article XV, the words “cash, property or securities” shall not be deemed to include shares of stock of the Corporation as reorganized or readjusted, or securities of the Corporation or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XV with respect to the Securities to the payment of Senior Indebtedness that may at the time be outstanding; provided, that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Corporation with, or the merger of the Corporation into, another Person or the termination or dissolution of the Corporation following the sale, conveyance, transfer or lease of its property as an entirety, or substantially as an entirety, to another Person upon the terms and conditions provided for in Article X of this Indenture shall not be deemed a dissolution, winding-up, termination or reorganization for the purposes of this Section 15.03 if such other Person shall, as a part of such consolidation, merger, sale, conveyance, transfer or lease, comply with the conditions stated in Article X of this Indenture.

Section 15.04. Subrogation. Subject to the payment in full of Senior Indebtedness, the rights of the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Corporation, as the case may be, applicable to such Senior Indebtedness until the principal of and premium, if any, and interest on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Corporation, its creditors other than holders of Senior Indebtedness of the Corporation, and the holders of the Securities, be deemed to be a payment by the Corporation to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the holders of the Securities, on the one hand, and the holders of such Senior Indebtedness on the other hand.

Nothing contained in this Article XV or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Corporation, its creditors other than the holders of Senior Indebtedness of the Corporation, and the holders of the Securities, the obligation of the Corporation, which is absolute and unconditional, to pay to the holders of the Securities the principal of and premium, if any, and interest on the Securities as and when the same shall

become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of the Securities and creditors of the Corporation, as the case may be, other than the holders of Senior Indebtedness of the Corporation, as the case may be, nor shall anything herein or therein prevent the Trustee or the holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Article XV of the holders of such Senior Indebtedness in respect of cash, property or securities of the Corporation, as the case may be, received upon the exercise of any such remedy.

Section 15.05. Trustee to Effectuate Subordination. Each Securityholder by such Securityholder’s acceptance thereof authorizes and directs the Trustee on such Securityholder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XV and appoints the Trustee such Securityholder’s attorney-in-fact for any and all such purposes.

Section 15.06. Notice by the Corporation . The Corporation shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Corporation that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Securities pursuant to the provisions of this Article XV. Notwithstanding the provisions of this Article XV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article XV, unless and until a Responsible Officer of the Trustee assigned to its Principal Office shall have received written notice thereof from the Corporation or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 15.06 at least two Business Days prior to the date (i) upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of or premium, if any, or interest on any Security), or (ii) moneys and/or U.S. Government Obligations are deposited in trust pursuant to Article XI then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and U.S. Government Obligations and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

The Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Corporation (or a trustee or representative on behalf of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article XV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any

other facts pertinent to the rights of such Person under this Article XV, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

Upon any payment or distribution of assets of the Corporation referred to in this Article XV, the Trustee and the Securityholders shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, termination, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or to the Securityholders, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Corporation, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XV.

Section 15.07. Rights of the Trustee; Holders of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XV in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XV, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and, subject to the provisions of Article VI of this Indenture, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay over or deliver to Securityholders, the Corporation or any other Person money or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.

Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.06.

Section 15.08. Subordination May Not Be Impaired. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Corporation with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with.

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Securityholders, without incurring responsibility to the Securityholders and without impairing or releasing the subordination provided in this Article XV or the obligations hereunder of the holders of the Securities to the holders of Senior Indebtedness, do any one or

more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Corporation and any other Person.

Article XVI

Extension of Interest Payment Period

Section 16.01. Extension of Interest Payment Period. So long as no Event of Default has occurred and is continuing, the Corporation shall have the right, at any time and from time to time during the term of the Securities, to defer payments of interest by extending the interest payment period of such Securities for a period not exceeding 10 consecutive semi-annual periods, including the first such semi-annual period during such extension period (the “Extended Interest Payment Period” ), during which Extended Interest Payment Period no interest shall be due and payable; provided, that no Extended Interest Payment Period shall end on a day other than an Interest Payment Date or extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 16.01, will bear interest thereon at the Coupon Rate compounded semi-annually for each semi-annual period of the Extended Interest Payment Period ( “Compounded Interest” ). At the end of the Extended Interest Payment Period, the Corporation shall pay all interest accrued and unpaid on the Securities, including any Additional Interest and Compounded Interest (together, “Deferred Interest” ) that shall be payable to the holders of the Securities in whose names the Securities are registered in the Security Register on the first record date preceding the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Corporation may further defer payments of interest by further extending such period; provided, that such Extended Interest Rate Period, together with all such previous and further extensions within such Extended Interest Payment Period, shall not exceed 10 consecutive semi-annual periods, including the first such semi-annual period during such Extended Interest Payment Period, or end on a date other than an Interest Payment Date or extend beyond the Maturity Date. Upon the termination of any Extended Interest Payment Period and the payment of all Deferred Interest then due, the Corporation may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Corporation may prepay at any time all or any portion of the interest accrued during an Extended Interest Payment Period.

Section 16.02. Notice of Extension. (a) If the Property Trustee is the only registered holder of the Securities at the time the Corporation elects an Extended Interest Payment Period, the Corporation shall give written notice to the Administrative Trustees, the Property Trustee and the Trustee of its election of such Extended Interest Payment Period five Business Days before the earlier of (i) the next succeeding date on which Distributions on the Trust Securities issued by

First Midwest Capital Trust are payable, or (ii) the date First Midwest Capital Trust is required to give notice of the record date, or the date such Distributions are payable, to any national securities exchange or to holders of the Capital Securities issued by First Midwest Capital Trust, but in any event at least five Business Days before such record date.

(b) If the Property Trustee is not the only holder of the Securities at the time the Corporation elects an Extended Interest Payment Period, the Corporation shall give the holders of the Securities and the Trustee written notice of its election of such Extended Interest Payment Period at least 10 Business Days before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Corporation is required to give notice of the record or payment date of such interest payment to any national securities exchange.

(c) The semi-annual period in which any notice is given pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10 semi-annual periods permitted in the maximum Extended Interest Payment Period permitted under Section 16.01.

Wilmington Trust Company hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth.

In Witness Whereof, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

First Midwest Bancorp, Inc.

By /s/ John M. O’Meara

Name: John M. O’Meara

Title: President and Chief Executive Officer

Wilmington Trust Company
as Trustee

By /s/ K. Long

Name: Kristin Long

Title: Financial Services Officer

Exhibit A

(Form of Face of Security)

[If the Security is a global security, insert - this Security is a global security within the meaning of the Indenture hereinafter referred to and is registered in the name of a depositary or a nominee of a depositary. This Security is exchangeable for securities registered in the name of a person other than the depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this security (other than a transfer of this Security as a whole by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary) may be registered except in limited circumstances.

Unless this Security is presented by an authorized representative of the Depository Trust Corporation, a New York Corporation ( “DTC” ), to the issuer or its Agent for registration of transfer, exchange or payment, and any security issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful in as much as since the registered owner hereof, Cede & Co., has an interest herein.]

This security has not been registered under the securities act of 1933, as amended (the “Securities Act” ) or any state securities laws or any other applicable securities law. Neither this Security nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, registration.

The Holder of this Security by its acceptance hereof agrees to offer, sell or otherwise transfer this Security, prior to the date (the “Resale Restriction Termination Date” ) which is two years after the later of the original issuance date hereof and the last date on which the corporation or any “affiliate” of the corporation was the owner of this security (or any predecessor of this security) only (a) to the Corporation, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) so long as this security is eligible for resale pursuant to Rule 144A under the Securities Act (Rule 144A” ), to a person it reasonably believes is a “Qualified Institutional Buyer” (as defined in Rule 144A) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales to non-U.S. Persons that occur outside the united states within the meaning of Regulation S under the Securities Act, (e) to an institutional “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring this security for its own account, or for the account of such an institutional accredited investor, for investment

purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, or (f) pursuant to any other available exemption from the registration requirements under the Securities Act, subject to the right of the corporation prior to any such offer, sale or transfer (i) pursuant to clause (d), (e) or (f) to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Corporation, and (ii) pursuant to clause (e), to require that the Transferor deliver to the Trustee a letter from the transferee substantially in the form of Annex A to the offering memorandum dated November 10, 2003 relating to the Series A Capital Securities. Such holder further agrees that it will deliver to each person to whom this Security is transferred a notice substantially to the effect of this legend.

No.

First Midwest Bancorp, Inc.

6.95% Series __ Junior
Subordinated Deferrable Interest Debenture

Due December 1, 2033

First Midwest Bancorp, Inc., a Delaware corporation (the “Corporation,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to [_______________________] or registered assigns, the principal sum of _________________ Dollars ($___________) on December 1, 2033 (the “Maturity Date” ), unless previously redeemed, and to pay interest on the outstanding principal amount hereof from November 18, 2003, or from the most recent interest payment date (each such date, an “Interest Payment Date” ) to which interest has been paid or duly provided for, semi-annually (subject to deferral as set forth herein) in arrears on June 1 and December 1 of each year, commencing June 1, 2004 at the rate of 6.95% per annum until the principal hereof shall have become due and payable, and at the same rate per annum on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded semi-annually. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months and, for any period less than a full calendar month, the actual number of days elapsed in such month. In the event that any date on which the principal of or premium, if any, or interest on this Security is payable is not a Business Day, then the payment payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such date. Pursuant to the Registration Rights Agreement, in certain limited circumstances the Corporation will be required to pay additional interest (in accordance with the Registration Rights Agreement) with respect to this Security.

The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the regular record date for such interest installment, which shall be the fifteenth day of the month which precedes the month in which the relevant Interest Payment Date falls. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the holder on such regular record date and may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the holders of Securities not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

The principal of and premium, if any, and interest on this Security shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that, payment of interest may be made at the option of the Corporation by (i) check mailed to the holder at such address as shall appear in the Security Register, or (ii) by transfer to an account maintained by the Person entitled thereto; provided, that proper written transfer instructions have been received by the relevant record date. Notwithstanding the foregoing, so long as the holder of this Security is the Trustee, the payment of the principal of and premium, if any, and interest on this Security will be made at such place and to such account as may be designated by the Trustee.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided, and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

This Security shall not be entitled to any benefit under the Indenture hereinafter referred to, or be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee.

The provisions of this Security are continued on the reverse side hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place.

In Witness Whereof, the Corporation has caused this instrument to be executed.

Dated ___________________

First Midwest Bancorp, Inc.

By

Name:

Title:

Attest:

Name:

Title:

(Form of Certificate of Authentication)

Certificate of Authentication

This is one of the Securities referred to in the within-mentioned Indenture.

Wilmington Trust Company, as Trustee

By

Authorized Officer

(Form of Reverse of Security)

This Security is one of the Securities of the Corporation (herein sometimes referred to as the “Securities” ), specified in the Indenture, all issued or to be issued under and pursuant to an Indenture, dated as of November 18, 2003 (the “Indenture” ), duly executed and delivered between the Corporation and Wilmington Trust Company, as Trustee (the “Trustee” ), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Corporation and the holders of the Securities.

Upon the occurrence and continuation of a Special Event, the Corporation shall have the right at any time, within 90 days following the occurrence of a Special Event, to redeem this Security in whole (but not in part) at the Special Event Redemption Price. “Special Event Redemption Price” shall mean, with respect to any redemption of the Securities following a Special Event, an amount in cash equal to the greater of (i) 100% of the principal amount to be redeemed, or (ii) the sum, as determined by a Quotation Agent, of the present values of the principal amount payable on the Maturity Date, together with scheduled payments of interest on the Securities from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any accrued and unpaid interest thereon, including Compounded Interest and Additional Interest, if any, to the date of such redemption.

The Corporation shall have the right at any time to redeem this Security in whole or in part at the Optimal Redemption Price. “Optional Redemption Price” shall mean, with respect to any redemption of the Securities, an amount in cash equal to the greater of (i) 100% of the principal amount to be redeemed, or (ii) the sum, as determined by a Quotation Agent, of the present values of the principal amount payable on the Maturity Date, together with scheduled payments of interest on the Securities from the redemption date to and including the Maturity Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any accrued and unpaid interest thereon, including Compounded Interest and Additional Interest, if any, to the date of such redemption.

The Optional Redemption Price or the Special Event Redemption Price, as the case requires, shall be paid prior to 12:00 noon, New York City time, on the date of such redemption or at such earlier time as the Corporation determines; provided, that the Corporation shall deposit with the Trustee an amount sufficient to pay the applicable Redemption Price by 10:00 a.m., New York City time, on the date such Redemption Price is to be paid. Any redemption pursuant to this paragraph will be made upon not less than 30 days nor more than 60 days notice. If the Securities are only partially redeemed by the Corporation pursuant to an Optional Redemption, the Securities will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided, that if, at the time of redemption, the Securities are registered as a Global Security, the Depositary shall determine in accordance with its procedures the principal amount of such Securities held for the account of its participants to be redeemed.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the holder hereof upon the cancellation hereof.

Notwithstanding the foregoing, any redemption of Securities by the Corporation shall be subject to the receipt by the Corporation of any required regulatory approval.

In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Securities may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Corporation and the Trustee, with the consent of the holders of a majority in aggregate principal amount of the Securities at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the holders of the Securities; provided, however, that no such supplemental indenture shall, without the consent of each holder of Securities then Outstanding and affected thereby, (i) extend the Maturity Date of any Securities, or reduce the principal amount thereof, or reduce any amount payable on redemption thereof, or reduce the rate or extend the time of payment of interest thereon (subject to Article XVI of the Indenture), or make the principal of, or interest or premium on, the Securities payable in any coin or currency other than U.S. dollars, or impair or affect the right of any holder of Securities to institute suit for the payment thereof, or (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture. The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Securities at the time Outstanding, on behalf of all of the holders of the Securities, to waive any past Default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except a Default in the payment of the principal of or premium, if any, or interest on any of the Securities or a Default in respect of any covenant or provision under which the Indenture cannot be modified or amended without the consent of each holder of Securities then Outstanding. Any such consent or waiver by the holder of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such holder and upon all future holders and owners of this Security and of any Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Security at the time and place and at the rate and in the money herein prescribed.

The Corporation shall have the right, at any time and from time to time during the term of the Securities, to defer payments of interest by extending the interest payment period of such Securities for a period (an “Extended Interest Payment Period” ) not exceeding 10 consecutive semi-annual periods, including the first such semi-annual period during such extension period;

provided, however, no Extended Interest Payment Period may end on a day other than an Interest Payment Date or extend beyond the Maturity Date of the Securities. At the end of an Extended Interest Payment Period, the Corporation shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Securities to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extended Interest Payment Period, the Corporation may further defer payments of interest by further extending such Extended Interest Payment Period; provided, that such Extended Interest Payment Period, together with all such previous and further extensions within such Extended Interest Payment Period, shall not exceed 10 consecutive semi-annual periods, including the first semi- annual period during such Extended Interest Payment Period or end on any date other than an Interest Payment Date or extend beyond the Maturity Date. Upon the termination of any such Extended Interest Payment Period and the payment of all accrued and unpaid interest and any additional amounts then due, the Corporation may commence a new Extended Interest Payment Period, subject to the foregoing requirements.

The Corporation has agreed that it will not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Corporation’s capital stock (which includes common and preferred stock), (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities issued by the Corporation (including the Debentures) that rank pari passu with or junior in right of payment to the Securities, or (iii) make any guarantee payments with respect to any guarantee by the Corporation of any securities or any Subsidiary of the Corporation (including Other Guarantees) if such guarantee ranks pari passu or junior in right of payment to the Securities (other than (a) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, Common Stock of the Corporation; (b) any declaration of a dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (c) payments under the Capital Securities Guarantee; (d) as a direct result of, and only to the extent required in order to avoid the issuance of fractional shares of capital stock following a reclassification of the Corporation’s capital stock or the exchange or the conversion of one class or series of the Corporation’s capital stock for another class or series of the Corporation’s capital stock; (e) the purchase of fractional interests in shares of the Corporation’s capital stock pursuant to the exchange or conversion of such capital stock or the security being exchanged or converted and (f) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Corporation’s benefit plans for its directors, officers or employees or the Corporation’s dividend reinvestment plan) if at such time (i) an Event of Default shall have occurred and be continuing, (ii) there shall have occurred any event of which the Corporation has actual knowledge that (a) is, or with the giving of notice or the lapse of time, or both, would constitute, an Event of Default, and (b) in respect of which the Corporation shall not have taken reasonable steps to cure, (iii) if such Securities are held by the Property Trustee on behalf of First Midwest Capital Trust, the Corporation shall be in default with respect to its payment obligations under the Capital Securities Guarantee, or (iv) the Corporation shall have given notice of its election of the exercise of its right to extend the interest payment period and any such extension shall be continuing.

The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 in principal amount (and integrals of $1,000 above $100,000) until the Series B Securities are registered pursuant to an effective registration statement filed under the Securities Act and as contemplated by the Registration Rights Agreement. Any transfer of Securities in violation of this Section having an aggregate principal amount of less than $100,000 will be void. After the Securities are registered pursuant to an effective registration statement filed under the Securities Act, the Securities may be transferred in blocks of $1,000 aggregate principal amount (one Security) or integral multiples thereof. As provided in the Indenture and subject to the transfer restrictions limitations as may be contained herein and therein from time to time, this Security is transferable by the holder hereof on the Security Register of the Corporation, upon surrender of this Security for registration of transfer at the office or agency of the Corporation in the State of Delaware accompanied by a written instrument or instruments of transfer in form satisfactory to the Corporation and the Security registrar duly executed by the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Security, the Corporation, the Trustee, any authenticating agent, any paying agent, any transfer agent and the Security registrar may deem and treat the holder hereof as the absolute owner hereof (whether or not this Security shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and (subject to the Indenture) interest due hereon and for all other purposes, and neither the Corporation nor the Trustee nor any authenticating agent nor any paying agent nor the Security registrar shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or premium, if any, or interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Corporation or of any predecessor or successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of Illinois without regard to conflict of law provisions thereof.

Exhibit 4.6

Series A Capital Securities Guarantee Agreement

First Midwest Bancorp, Inc.

Dated as of November 18, 2003

Table of Contents

Section Heading Page

Article I Definitions and Interpretation 1 *

Section 1.1. Definitions and Interpretation 1 *

Article II Trust Indenture Act 5 *

Section 2.1. Trust Indenture Act; Application 5 *

Section 2.2. Lists of Holders of Securities 5 *

Section 2.3. Reports by the Capital Securities Guarantee Trustee 5 *

Section 2.4. Periodic Reports to Capital Securities Guarantee Trustee 5 *

Section 2.5. Evidence of Compliance with Conditions Precedent 6 *

Section 2.6. Events of Default; Waiver 6 *

Section 2.7. Event of Default; Notice 6 *

Section 2.8. Conflicting Interests 6 *

Article III Powers, Duties and Rights of Capital Securities Guarantee Trustee 7 *

Section 3.1. Powers and Duties of the Capital Securities Guarantee Trustee 7 *

Section 3.2. Certain Rights of Capital Securities Guarantee Trustee 8 *

Section 3.3. Not Responsible for Recitals or Issuance of Series A Capital Securities Guarantee 10 *

Article IV Capital Securities Guarantee Trustee 11 *

Section 4.1. Capital Securities Guarantee Trustee; Eligibility 11 *

Section 4.2. Appointment, Removal and Resignation of Capital Securities Guarantee Trustee 11 *

Article V Guarantee 12 *

Section 5.1. Guarantee 12 *

Section 5.2. Waiver of Notice and Demand 12 *

Section 5.3. Obligations Not Affected 12 *

Section 5.4. Enforcement of Guarantee; Rights of Holders 13 *

Section 5.5. Guarantee of Payment. 14 *

Section 5.6. Subrogation 14 *

Section 5.7. Independent Obligations 14 *

Article VI Limitation of Transactions; Subordination 14 *

Section 6.1. Limitation of Transactions 14 *

Section 6.2. Ranking 15 *

Article VII Termination 15 *

Section 7.1. Termination 15 *

Article VIII Compensation and Expenses of Capital Securities Guarantee Trustee 16 *

Article IX Indemnification 16 *

Section 9.1. Exculpation 16 *

Section 9.2. Indemnification 17 *

Article X Miscellaneous 17 *

Section 10.1. Successors and Assigns 17 *

Section 10.2. Amendments 17 *

Section 10.3. Notices 17 *

Section 10.4. Exchange Offer 18 *

Section 10.5. Benefit 19 *

Section 10.6. Counterparts 19 *

Section 10.7. Governing Law 19 *

Series A Capital Securities Guarantee Agreement

This Guarantee Agreement (the "Series A Capital Securities Guarantee" ), dated as of November 18, 2003, is executed and delivered by First Midwest Bancorp, Inc., a Delaware corporation (the "Guarantor" ), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Capital Securities Guarantee Trustee" ), for the benefit of the Holders (as defined herein) from time to time of the Series A Capital Securities (as defined herein) of First Midwest Capital Trust I, a Delaware statutory trust (the "Issuer" ).

Witnesseth:

Whereas, pursuant to an Amended and Restated Declaration of Trust (the "Declaration" ), dated as of November 18, 2003, among the trustees of the Issuer, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof 125,000 capital securities, having an aggregate liquidation amount of $125,000,000 pursuant to the Purchase Agreement (as defined in the Declaration), such capital securities being designated the 6.95% Series A Capital Securities (collectively the "Series A Capital Securities" ) and, in connection with an Exchange Offer (as defined in the Declaration), has agreed, subject to the terms and conditions of the Declaration, to execute and deliver the Series B Capital Securities Guarantee (as defined in the Declaration) for the benefit of holders of the Series B Capital Securities (as defined in the Declaration); and

Whereas, as incentive for the Holders to purchase the Series A Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Series A Capital Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined below) and to make certain other payments on the terms and conditions set forth herein;

Now, Therefore, in consideration of the purchase by each Holder, which purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the Guarantor executes and delivers this Series A Capital Securities Guarantee for the benefit of the Holders.

Article I

Definitions and Interpretation

Section 1.1. Definitions and Interpretation . In this Series A Capital Securities Guarantee, unless the context otherwise requires:

(a) capitalized terms used in this Series A Capital Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) terms defined in the Declaration as of the date of execution of this Series A Capital Securities Guarantee have the same meaning when used in this Series A

Capital Securities Guarantee unless otherwise defined in this Series A Capital Securities Guarantee;

(d) all references to "the Series A Capital Securities Guarantee" or "this Series A Capital Securities Guarantee" are to this Series A Capital Securities Guarantee as modified, supplemented or amended from time to time;

(e) all references in this Series A Capital Securities Guarantee to Articles and Sections are to Articles and Sections of this Series A Capital Securities Guarantee, unless otherwise specified;

(f) a term defined in the Trust Indenture Act has the same meaning when used in this Series A Capital Securities Guarantee, unless otherwise defined in this Series A Capital Securities Guarantee or unless the context otherwise requires; and

(g) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule 405 under the Securities Act of 1933, as amended, or any successor rule thereunder.

"Business Day" means any day other than a Saturday or a Sunday, or a day on which banking institutions in The City of New York are authorized or required by law, executive order or regulation to close or a day on which the Corporate Trust Office of the Capital Securities Guarantee Trustee is closed for business.

"Capital Securities Guarantee Trustee" means Wilmington Trust Company, a Delaware banking corporation, until a Successor Capital Securities Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Series A Capital Securities Guarantee and thereafter means each such Successor Capital Securities Guarantee Trustee.

"Common Securities" means the securities representing common undivided beneficial interests in the assets of the Issuer.

"Corporate Trust Office" means the office of the Capital Securities Guarantee Trustee at which the corporate trust business of the Capital Securities Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.

"Covered Person" means any Holder or beneficial owner of Series A Capital Securities.

"Debentures" means the series of subordinated debt securities of the Guarantor designated the 6.95% Series A Junior Subordinated Deferrable Interest Debentures due December 1, 2033 held by the Property Trustee (as defined in the Declaration) of the Issuer.

"Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Series A Capital Securities Guarantee.

"Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Series A Capital Securities, to the extent not paid by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Declaration) that are required to be paid on such Series A Capital Securities, to the extent the Issuer has funds on hand legally available therefor at such time, (ii) the redemption price, including all accumulated and unpaid Distributions to the date of redemption (the "Redemption Price" ), to the extent the Issuer has funds on hand legally available therefor at such time, with respect to any Series A Capital Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding up or liquidation of the Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for Series A Capital Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid Distributions on the Series A Capital Securities to the date of payment, to the extent the Issuer has funds on hand legally available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders upon liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer as required by applicable law.

"Holder" shall mean any holder, as registered on the books and records of the Issuer, of any Series A Capital Securities; provided, however, that, in determining whether the holders of the requisite percentage of Series A Capital Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Capital Securities Guarantee Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Capital Securities Guarantee Trustee.

"Indenture" means the Indenture dated as of November 18, 2003, among the Guarantor (the "Debenture Issuer" ) and Wilmington Trust Company, as trustee, pursuant to which the Debentures are to be issued to the Property Trustee of the Issuer.

"Majority in liquidation amount of the Series A Capital Securities" means, except as provided by the Trust Indenture Act, a vote by Holder(s) of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Series A Capital Securities.

delivered with respect to compliance with a condition or covenant provided for in this Series A Capital Securities Guarantee (other than pursuant to Section 314(a)(4) of the Trust Indenture Act) shall include:

(a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by the officer rendering the Officers' Certificate;

(c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Other Debentures" means all junior subordinated debentures issued by the Guarantor from time to time and sold to trusts, in each case similar to the Issuer, to be established by the Guarantor (if any).

"Other Guarantees" means all guarantees to be issued by the Guarantor with respect to capital securities (if any) similar to the Series A Capital Securities issued by other trusts, in each case similar to the Issuer established by the Guarantor (if any).

"Registration Rights Agreement" means the Registration Rights Agreement, dated as of November 18, 2003, by and among the Guarantor, the Issuer and the Initial Purchasers named therein as such agreement may be amended, modified or supplemented from time to time.

"Responsible Officer" means, when used with respect to the Capital Securities Guarantee Trustee, any officer of the Capital Securities Guarantee Trustee with direct responsibility for the administration of this Capital Securities Guarantee and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that Officer's knowledge of and familiarity with the particular subject.

"Successor Capital Securities Guarantee Trustee" means a successor Capital Securities Guarantee Trustee possessing the qualifications to act as Capital Securities Guarantee Trustee under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Trust Securities" means the Common Securities, the Series A Capital Securities and Series B Capital Securities, collectively.

Article II

Trust Indenture Act

Section 2.1. Trust Indenture Act; Application . (a) This Series A Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Series A Capital Securities Guarantee and shall, to the extent applicable, be governed by such provisions;

(b) the Capital Securities Guarantee Trustee shall be the only trustee for purposes of the Trust Indenture Act; and

(c) if and to the extent that any provision of this Series A Capital Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.2. Lists of Holders of Securities . (a) The Guarantor shall provide the Capital Securities Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise the registrar of the Capital Securities) with a list, in such form as the Capital Securities Guarantee Trustee may reasonably require, of the names and addresses of the Holders ( "List of Holders" ) as of such date, (i) within one Business Day after May 1 and November 1 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Capital Securities Guarantee Trustee; provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.

(b) The Capital Securities Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3. Reports by the Capital Securities Guarantee Trustee . Within 60 days after May 15 of each year, commencing May 15, 2004, the Capital Securities Guarantee Trustee shall provide to the Holders such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Capital Securities Guarantee Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act.

certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314(a)(4) of the Trust Indenture Act; provided that such compliance certificate shall be delivered on or before 120 days after the end of each fiscal year of the Guarantor. Delivery of such documents, reports and information to the Capital Securities Guarantee Trustee is for informational purposes only and the Capital Securities Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Capital Securities Guarantee Trustee is entitled to rely exclusively on Officers' Certificates).

Section 2.5. Evidence of Compliance with Conditions Precedent . The Guarantor shall provide to the Capital Securities Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Series A Capital Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate.

Section 2.6. Events of Default; Waiver . The Holders of a Majority in liquidation amount of Series A Capital Securities may, by vote, on behalf of all the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Series A Capital Securities Guarantee, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

Section 2.7. Event of Default; Notice . (a) The Capital Securities Guarantee Trustee shall, within 60 days after the occurrence of an Event of Default with respect to this Capital Securities Guarantee, transmit by mail, first class postage prepaid, to all Holders, notices of such Event of Default actually known to a Responsible Officer of the Capital Securities Guarantee Trustee, unless such Event of Default has been cured before the giving of such notice; provided, that, except in the case of an Event of Default in the payment of any Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Capital Securities Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Series A Capital Securities.

(b) The Capital Securities Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Capital Securities Guarantee Trustee shall have received written notice from the Guarantor or a Holder, or a Responsible Officer of the Capital Securities Guarantee Trustee shall have obtained actual knowledge, of such Event of Default.

Section 2.8. Conflicting Interests . The Declaration and Indenture shall be deemed to be specifically described in this Series A Capital Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.

Article III

Powers, Duties and Rights of Capital Securities Guarantee Trustee

Section 3.1. Powers and Duties of the Capital Securities Guarantee Trustee . (a) This Series A Capital Securities Guarantee shall be held by the Capital Securities Guarantee Trustee for the benefit of the Holders, and the Capital Securities Guarantee Trustee shall not transfer this Series A Capital Securities Guarantee to any Person except a Holder exercising his or her rights pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of its appointment to act as Successor Capital Securities Guarantee Trustee. The right, title and interest of the Capital Securities Guarantee Trustee shall automatically vest in any Successor Capital Securities Guarantee Trustee, and such vesting and succession of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Capital Securities Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the Capital Securities Guarantee Trustee has occurred and is continuing, the Capital Securities Guarantee Trustee shall enforce this Series A Capital Securities Guarantee for the benefit of the Holders.

(c) The Capital Securities Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Series A Capital Securities Guarantee, and no implied covenants shall be read into this Series A Capital Securities Guarantee against the Capital Securities Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee shall exercise such of the rights and powers vested in it by this Series A Capital Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.

(d) No provision of this Series A Capital Securities Guarantee shall be construed to relieve the Capital Securities Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Capital Securities Guarantee Trustee shall be determined solely by the express provisions of this Series A Capital Securities Guarantee, and the Capital Securities Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Series A Capital Securities Guarantee, and no implied covenants or obligations shall be read into this Series A Capital Securities Guarantee against the Capital Securities Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Capital Securities Guarantee Trustee and conforming to the requirements of this Series A Capital Securities Guarantee; provided, however , in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Series A Capital Securities Guarantee;

(ii) the Capital Securities Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Capital Securities Guarantee Trustee, unless it shall be proved that the Capital Securities Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the Capital Securities Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a Majority in liquidation amount of the Series A Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Capital Securities Guarantee Trustee, or exercising any trust or power conferred upon the Capital Securities Guarantee Trustee under this Series A Capital Securities Guarantee; and

(iv) no provision of this Series A Capital Securities Guarantee shall require the Capital Securities Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Capital Securities Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Series A Capital Securities Guarantee or indemnity, reasonably satisfactory to the Capital Securities Guarantee Trustee, against such risk or liability is not reasonably assured to it.

(e) This Series A Capital Securities Guarantee and all moneys received by the Capital Securities Guarantee Trustee hereunder in respect of the Guarantee Payments will not be subject to any right, charge, security interest, loan or claim of any kind in favor of or for the benefit of the Capital Securities Guarantee Trustee or its agents or creditors.

Section 3.2. Certain Rights of Capital Securities Guarantee Trustee . (a) Subject to the provisions of Section 3.1:

(i) The Capital Securities Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated by this Series A Capital Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate.

(iii) Whenever, in the administration of this Series A Capital Securities Guarantee, the Capital Securities Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Capital Securities Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor.

(iv) The Capital Securities Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or registration thereof).

(v) The Capital Securities Guarantee Trustee may consult with counsel of its selection, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such written advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Capital Securities Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Series A Capital Securities Guarantee from any court of competent jurisdiction.

(vi) The Capital Securities Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Series A Capital Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Capital Securities Guarantee Trustee such security and indemnity, reasonably satisfactory to the Capital Securities Guarantee Trustee, against the costs, expenses (including reasonable attorneys' fees and expenses and the expenses of the Capital Securities Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Capital Securities Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Capital Securities Guarantee Trustee, upon the occurrence of an Event of Default which has not been cured or waived, of its obligation to exercise the rights and powers vested in it by this Series A Capital Securities Guarantee and to use the same degree of care as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.

(vii) The Capital Securities Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Capital Securities Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(viii) The Capital Securities Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Capital Securities Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

(ix) Any action taken by the Capital Securities Guarantee Trustee or its agents hereunder shall bind the Holders, and the signature of the Capital Securities Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Capital Securities Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Series A Capital Securities Guarantee, both of which shall be conclusively evidenced by the Capital Securities Guarantee Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Series A Capital Securities Guarantee the Capital Securities Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Capital Securities Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Series A Capital Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions.

(xi) The Capital Securities Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Series A Capital Securities Guarantee.

(b) No provision of this Series A Capital Securities Guarantee shall be deemed to impose any duty or obligation on the Capital Securities Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Capital Securities Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Capital Securities Guarantee Trustee shall be construed to be a duty.

Section 3.3. Not Responsible for Recitals or Issuance of Series A Capital Securities Guarantee . The recitals contained in this Series A Capital Securities Guarantee shall be taken as the statements of the Guarantor, and the Capital Securities Guarantee Trustee does not assume any responsibility for their correctness. The Capital Securities Guarantee Trustee makes no representation as to the validity or sufficiency of this Series A Capital Securities Guarantee.

Article IV

Capital Securities Guarantee Trustee

Section 4.1. Capital Securities Guarantee Trustee; Eligibility . (a) There shall at all times be a Capital Securities Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or Person permitted to act as a trustee by the Securities and Exchange Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000) and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Capital Securities Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Capital Securities Guarantee Trustee shall immediately resign in the manner and with the effect set forth in Section 4.2(c).

(c) If the Capital Securities Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, subject to the penultimate paragraph thereof.

Section 4.2. Appointment, Removal and Resignation of Capital Securities Guarantee Trustee . (a) Subject to Section 4.2(b), the Capital Securities Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default.

(b) The Capital Securities Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Capital Securities Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Capital Securities Guarantee Trustee and delivered to the Guarantor and to the Capital Securities Trustee being removed.

(c) The Capital Securities Guarantee Trustee shall hold office until a Successor Capital Securities Guarantee Trustee shall have been appointed or until its removal or resignation. The Capital Securities Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Capital Securities Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Capital Securities Guarantee Trustee has been appointed and has accepted such appointment by

an instrument in writing executed by such Successor Capital Securities Guarantee Trustee and delivered to the Guarantor and the resigning Capital Securities Guarantee Trustee.

(d) If no Successor Capital Securities Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of removal or resignation, the Capital Securities Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Capital Securities Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Capital Securities Guarantee Trustee.

(e) No Capital Securities Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Capital Securities Guarantee Trustee.

(f) Upon termination of this Series A Capital Securities Guarantee or removal or resignation of the Capital Securities Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to the date of such termination, removal or resignation.

Article V

Guarantee

Section 5.1. Guarantee . The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim that the Issuer may have or assert other than the defense of payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders.

Section 5.2. Waiver of Notice and Demand . The Guarantor hereby waives notice of acceptance of this Series A Capital Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 5.3. Obligations Not Affected . The obligations, covenants, agreements and duties of the Guarantor under this Series A Capital Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Series A Capital Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Series A Capital Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Series A Capital Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Series A Capital Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in, the Series A Capital Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred;

(g) the consummation of the Exchange Offer; or

(h) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor with respect to the Guarantee Payments shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.

Section 5.4. Enforcement of Guarantee; Rights of Holders . (a) The Holders of a Majority in liquidation amount of the Series A Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Capital Securities Guarantee Trustee in respect of this Series A Capital Securities Guarantee or exercising any trust or power conferred upon the Capital Securities Guarantee Trustee under this Series A Capital Securities Guarantee; provided, however, that, subject to Section 3.1, the Capital Securities Guarantee Trustee shall have the right to decline to follow any such direction if the Capital Securities Guarantee Trustee shall determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Capital Securities Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Capital Securities Guarantee Trustee shall determine, in good faith by its board of directors or trustees, executive committee, or a trust committee of directors

or trustees and/or Responsible Officers, that the action or proceedings so directed would involve the Capital Securities Guarantee Trustee in personal liability.

(b) If the Capital Securities Guarantee Trustee fails to enforce the Series A Capital Securities Guarantee, any Holder may institute a legal proceeding directly against the Guarantor to enforce the Capital Securities Guarantee Trustee's rights under this Series A Capital Securities Guarantee, without first instituting a legal proceeding against the Issuer, the Capital Securities Guarantee Trustee or any other Person or entity. The Guarantor waives any right or remedy to require that any action be brought first against the Issuer or any other Person or entity before proceeding directly against the Guarantor.

Section 5.5. Guarantee of Payment. This Series A Capital Securities Guarantee creates a guarantee of payment and not of collection.

Section 5.6. Subrogation . The Guarantor shall be subrogated to all, if any, rights of the Holders against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Series A Capital Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Series A Capital Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Series A Capital Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

Section 5.7. Independent Obligations . The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Series A Capital Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Series A Capital Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.

Article VI

Limitation of Transactions; Subordination

Section 6.1. Limitation of Transactions . So long as any Series A Capital Securities remain outstanding, the Guarantor shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor's capital stock (which includes common and preferred stock), (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities issued by the Guarantor (including any Other Debentures) that rank pari passu with or junior in right of payment to the Debentures, or (iii) make any guarantee payments with respect to any guarantee by the Guarantor of any securities of any subsidiary of the Guarantor (including Other Guarantees) if such guarantee ranks pari passu or junior in right of payment to the Debentures

(other than (a) dividends or distributions in shares of, or options, warrants, rights to subscribe for or purchase shares of, common stock of the Guarantor, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Series A Capital Securities Guarantee, (d) as a direct result of, and only to the extent required in order to avoid the issuance of fractional shares of capital stock following, a reclassification of the Guarantor's capital stock or the exchange or the conversion of one class or series of the Guarantor's capital stock for another class or series of the Guarantor's capital stock, (e) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, and (f) purchases of common stock related to the issuance of common stock or rights under any of the Guarantor's benefit plans for its directors, officers or employees or the Guarantor's dividend reinvestment plan) if at such time (i) an Event of Default (as defined in the Indenture) shall have occurred and be continuing, (ii) there shall have occurred any event of which the Guarantor has actual knowledge that (a) is, or with the giving of notice or the lapse of time, or both, would be an Event of Default (as defined in the Indenture), and (b) in respect of which the Guarantor shall not have taken reasonable steps to cure, (iii) if the Debentures are held by the Property Trustee, the Guarantor shall be in default with respect to its payment of any obligations under this Series A Capital Securities Guarantee, or (iv) the Guarantor shall have given notice of its election of the exercise of its right to extend the interest payment period pursuant to Section 16.01 of the Indenture and any such extension shall be continuing.

Section 6.2. Ranking . This Series A Capital Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment in full of Senior Indebtedness (as defined in the Indenture), to the same extent and in the same manner that the Debentures are subordinated to Senior Indebtedness pursuant to the Indenture, it being understood that the terms of Article XV of the Indenture shall apply to the obligations of the Guarantor under this Series A Capital Securities Guarantee as if (x) such Article XV were set forth herein in full, and (y) such obligations were substituted for the term "Securities" appearing in such Article XV, (ii) pari passu with the Debentures, the Other Debentures and with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any Other Guarantee (as defined herein) and any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock.

Article VII

Termination

Section 7.1. Termination . This Series A Capital Securities Guarantee shall terminate and be of no further force or effect (i) upon full payment of the Redemption Price (as defined in the Declaration) of all Series A Capital Securities, (ii) upon liquidation of the Trust, the full payment of the amounts payable in accordance with the Declaration or the distribution of the Debentures to the Holders of all of the Series A Capital Securities, or (iii) upon exchange of all the Series A Capital Securities for the Series B Capital Securities in the Exchange Offer and the

execution and delivery of the Series B Capital Securities Guarantee. Notwithstanding the foregoing, this Series A Capital Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid under the Series A Capital Securities or under this Series A Capital Securities Guarantee.

Article VIII

Compensation and Expenses of Capital Securities Guarantee Trustee

Section 8.1. Compensation and Expenses . The Guarantor covenants and agrees to pay to the Capital Securities Guarantee Trustee from time to time, and the Capital Securities Guarantee Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Guarantor and the Capital Securities Guarantee Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Guarantor will pay or reimburse the Capital Securities Guarantee Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Capital Securities Guarantee Trustee in accordance with any of the provisions of this Capital Securities Guarantee (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from or be incurred in connection with its negligence or bad faith. The Guarantor also covenants to indemnify each of the Capital Securities Guarantee Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Capital Securities Guarantee Trustee) incurred without negligence or bad faith on the part of the Capital Securities Guarantee Trustee and arising out of or in connection with the acceptance or administration of this guarantee, including the costs and expenses of defending itself against any claim of liability in the premises.

The provisions of this Article shall survive the resignation or removal of the Capital Securities Guarantee Trustee and the termination of this Capital Securities Guarantee.

Article IX

Indemnification

Section 9.1. Exculpation . (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person (as defined in the Declaration) for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Series A Capital Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Series A Capital Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and, if selected by such Indemnified Person, has been selected by such Indemnified Person with reasonable care, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders might properly be paid.

Section 9.2. Indemnification . The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 9.2 shall survive the resignation or removal of the Capital Securities Guarantee Trustee and the termination of this Series A Capital Securities Guarantee.

Article X

Miscellaneous

Section 10.1. Successors and Assigns . All guarantees and agreements contained in this Series A Capital Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders then outstanding.

Section 10.2. Amendments . Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Series A Capital Securities Guarantee may only be amended with the prior approval of the Holders of a Majority in liquidation amount of the Series A Capital Securities (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined). The provisions of the Declaration with respect to consents to amendments thereof (whether at a meeting or otherwise) shall apply to the giving of such approval.

Section 10.3. Notices . All notices provided for in this Series A Capital Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

(a) If given to the Issuer, in care of the Administrative Trustee at the Issuer's mailing address set forth below (or such other address as the Issuer may give notice of to the Holders and the Capital Securities Guarantee Trustee):

First Midwest Capital Trust I

c/o First Midwest Bancorp, Inc.

300 Park Boulevard, Suite 400

Itasca, Illinois 60143

Attention: Corporate Secretary

Telecopy: 630-875-7360

(b) If given to the Capital Securities Guarantee Trustee, at the Capital Securities Guarantee Trustee's mailing address set forth below (or such other address as the Capital Securities Guarantee Trustee may give notice of to the Holders and the Issuer):

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration

Telecopy: 302-636-4140

(c) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders and the Capital Securities Guarantee Trustee):

First Midwest Bancorp, Inc.

300 Park Boulevard, Suite 400

Itasca, Illinois 60143

Attention: Corporate Secretary

Telecopy: 630-875-7360

(d) If given to any Holder, at the address set forth on the books and records of the Issuer.

Section 10.4. Exchange Offer . In the event an Exchange Offer Registration Statement (as defined in the Registration Rights Agreement) becomes effective and the Issuer issues any Series B Capital Securities in the Exchange Offer, the Guarantor will enter into a new capital

securities guarantee agreement, in substantially the same form as the Series B Capital Securities Guarantee attached hereto as Exhibit A, with respect to the Series B Capital Securities.

Section 10.5. Benefit . This Series A Capital Securities Guarantee is solely for the benefit of the Holders and, subject to Section 3.1(a), is not separately transferable from the Series A Capital Securities.

Section 10.6. Counterparts . This Series A Capital Securities Guarantee may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

Section 10.7. Governing Law . This Series A Capital Securities Guarantee shall be governed by, and construed and interpreted in accordance with the laws of the State of Illinois, without regard to conflicts of laws principles thereof.

This Series A Capital Securities Guarantee is executed as of the day and year first above written.

First Midwest Bancorp, Inc.

By: __ _/s/ John M. O'Meara

Name: John M. O'Meara

Title: President and Chief Executive Officer

Wilmington Trust Company, as Capital Securities Guarantee Trustee

By: __ _/s/ K. Long

Name: Kristin Long

Title: Financial Services Officer

Exhibit A

Series B Capital Securities Guarantee Agreement

First Midwest Bancorp, Inc.

Dated as of ___________ __, ____

Table of Contents

Section Heading Page

Article I Definitions and Interpretation 5 *

Section 1.1. Definitions and Interpretation 5 *

Article II Trust Indenture Act 9 *

Section 2.1. Trust Indenture Act; Application 9 *

Section 2.2. Lists of Holders of Securities 9 *

Section 2.3. Reports by the Capital Securities Guarantee Trustee 9 *

Section 2.4. Periodic Reports to Capital Securities Guarantee Trustee 9 *

Section 2.5. Evidence of Compliance with Conditions Precedent 11 *

Section 2.6. Events of Default; Waiver 11 *

Section 2.7. Event of Default; Notice 11 *

Section 2.8. Conflicting Interests 11 *

Article III Powers, Duties and Rights of Capital Securities Guarantee Trustee 12 *

Section 3.1. Powers and Duties of the Capital Securities Guarantee Trustee 12 *

Section 3.2. Certain Rights of Capital Securities Guarantee Trustee 14 *

Section 3.3. Not Responsible for Recitals or Issuance of Series B Capital Securities Guarantee 18 *

Article IV Capital Securities Guarantee Trustee 19 *

Section 4.1. Capital Securities Guarantee Trustee; Eligibility 19 *

Section 4.2. Appointment, Removal and Resignation of Capital Securities Guarantee Trustee 19 *

Article V Guarantee 21 *

Section 5.1. Guarantee 21 *

Section 5.2. Waiver of Notice and Demand 21 *

Section 5.3. Obligations Not Affected 21 *

Section 5.4. Enforcement of Guarantee; Rights of Holders 22 *

Section 5.5. Guarantee of Payment 23 *

Section 5.6. Subrogation 23 *

Section 5.7. Independent Obligations 23 *

Article VI Limitation of Transactions; Subordination 23 *

Section 6.1. Limitation of Transactions 23 *

Section 6.2. Ranking 25 *

Article VII Termination 25 *

Section 7.1. Termination 25 *

Article VIII Compensation and Expenses of Capital Securities Guarantee Trustee 26 *

Article IX Indemnification 26 *

Section 9.1. Exculpation 26 *

Section 9.2. Indemnification 28 *

Article X Miscellaneous 28 *

Section 10.1. Successors and Assigns 28 *

Section 10.2. Amendments 28 *

Section 10.3. Notices 28 *

Section 10.4. Benefit 29 *

Section 10.5. Counterparts 29 *

Section 10.6. Governing Law 29 *

Series B Capital Securities Guarantee Agreement

This Guarantee Agreement (the "Series B Capital Securities Guarantee" ), dated as of __________ __, ____, is executed and delivered by First Midwest Bancorp, Inc., a Delaware corporation (the "Guarantor" ), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Capital Securities Guarantee Trustee" ), for the benefit of the Holders (as defined herein) from time to time of the Series B Capital Securities (as defined herein) of First Midwest Capital Trust I, a Delaware statutory trust (the "Issuer" ).

Witnesseth:

Whereas, as incentive for the Holders to exchange the Series A Capital Securities for the Series B Capital Securities in the Exchange Offer, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Series B Capital Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined below) and to make certain other payments on the terms and conditions set forth herein;

Now, Therefore, in consideration of the purchase by each Holder, which exchange the Guarantor hereby acknowledges shall benefit the Guarantor, the Guarantor executes and delivers this Series B Capital Securities Guarantee for the benefit of the Holders.

Article I

Definitions and Interpretation

Section 1.1. Definitions and Interpretation . In this Series B Capital Securities Guarantee, unless the context otherwise requires:

(a) capitalized terms used in this Series B Capital Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) terms defined in the Declaration as of the date of execution of this Series B Capital Securities Guarantee have the same meaning when used in this Series B Capital Securities Guarantee unless otherwise defined in this Series B Capital Securities Guarantee;

(d) all references to "the Series B Capital Securities Guarantee" or "this Series B Capital Securities Guarantee" are to this Series B Capital Securities Guarantee as modified, supplemented or amended from time to time;

(e) all references in this Series B Capital Securities Guarantee to Articles and Sections are to Articles and Sections of this Series B Capital Securities Guarantee, unless otherwise specified;

(f) a term defined in the Trust Indenture Act has the same meaning when used in this Series B Capital Securities Guarantee, unless otherwise defined in this Series B Capital Securities Guarantee or unless the context otherwise requires; and

(g) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule 405 under the Securities Act of 1933, as amended, or any successor rule thereunder.

"Capital Securities Guarantee Trustee" means Wilmington Trust Company, a Delaware banking corporation, until a Successor Capital Securities Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Series B Capital Securities Guarantee and thereafter means each such Successor Capital Securities Guarantee Trustee.

"Common Securities" means the securities representing common undivided beneficial interests in the assets of the Issuer.

"Covered Person" means any Holder or beneficial owner of Series B Capital Securities.

"Debentures" means the series of subordinated debt securities of the Guarantor designated the 6.95% Series B Junior Subordinated Deferrable Interest Debentures due December 1, 2033 held by the Property Trustee (as defined in the Declaration) of the Issuer.

"Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Series B Capital Securities Guarantee.

"Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Series B Capital Securities, to the extent not paid by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Declaration) that are required to be paid on such Series B Capital Securities, to the extent the Issuer has funds on hand legally available therefor at such time, (ii) the redemption price, including all accumulated and unpaid Distributions to the date of redemption (the "Redemption Price" ), to the extent the Issuer has funds on hand legally available therefor at such time, with respect to any Series B Capital Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding up or liquidation of the Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for Series B Capital Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid Distributions on the Series B Capital Securities to the date of payment, to the extent the Issuer has funds on hand legally available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders upon liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer as required by applicable law.

"Holder" shall mean any holder, as registered on the books and records of the Issuer, of any Series B Capital Securities; provided, however, that, in determining whether the holders of the requisite percentage of Series B Capital Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor.

"Majority in liquidation amount of the Series B Capital Securities" means, except as provided by the Trust Indenture Act, a vote by Holder(s) of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Series B Capital Securities.

"Officers' Certificate" means, with respect to the Guarantor, a certificate signed by the Chairman, the Chief Executive Officer, the President, a Vice President, the Chief Financial Officer, the Secretary or an Assistant Secretary, of the Guarantor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Series B Capital Securities Guarantee (other than pursuant to Section 314(a)(4) of the Trust Indenture Act) shall include:

(a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by the officer rendering the Officers' Certificate;

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Other Guarantees" means all guarantees to be issued by the Guarantor with respect to capital securities (if any) similar to the Series B Capital Securities issued by other trusts, in each case similar to the Issuer established by the Guarantor (if any).

"Registration Rights Agreement" means the Registration Rights Agreement, dated as of November 18, 2003, by and among the Guarantor, the Issuer and the Initial Purchaser named therein as such agreement may be amended, modified or supplemented from time to time.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

"Trust Securities" means the Common Securities, the Series A Capital Securities and Series B Capital Securities, collectively.

Article II

Trust Indenture Act

Section 2.1. Trust Indenture Act; Application . (a) This Series B Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Series B Capital Securities Guarantee and shall, to the extent applicable, be governed by such provisions;

(b) the Capital Securities Guarantee Trustee shall be the only trustee for purposes of the Trust Indenture Act; and

(c) if and to the extent that any provision of this Series B Capital Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.2. Lists of Holders of Securities . (a) The Guarantor shall provide the Capital Securities Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise the registrar of the Capital Securities) with a list, in such form as the Capital Securities Guarantee Trustee may reasonably require, of the names and addresses of the Holders ( "List of Holders" ) as of such date, (i) within one Business Day after May 1 and November 1 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Capital Securities Guarantee Trustee; provided , that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.

(b) The Capital Securities Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.4. Periodic Reports to Capital Securities Guarantee Trustee . The Guarantor shall provide to the Capital Securities Guarantee Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act, if any, and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314(a)(4) of the Trust Indenture Act; provided that such compliance certificate shall be delivered on or before 120 days after the end of each fiscal year of the Guarantor. Delivery of such documents, reports and information to the Capital Securities

Guarantee Trustee is for informational purposes only and the Capital Securities Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Capital Securities Guarantee Trustee is entitled to rely exclusively on Officers' Certificates).

Section 2.6. Events of Default; Waiver . The Holders of a Majority in liquidation amount of Series B Capital Securities may, by vote, on behalf of the Holders of all of the Series B Capital Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Series B Capital Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

Section 2.7. Event of Default; Notice . (a) The Capital Securities Guarantee Trustee shall, within 60 days after the occurrence of an Event of Default with respect to this Capital Securities Guarantee, transmit by mail, first class postage prepaid, to all Holders, notices of such Event of Default actually known to a Responsible Officer of the Capital Securities Guarantee Trustee, unless such Event of Default has been cured before the giving of such notice; provided, that, except in the case of default in the payment of any Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Capital Securities Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Series B Capital Securities.

Section 2.8. Conflicting Interests . The Declaration and Indenture shall be deemed to be specifically described in this Series B Capital Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.

Article III

Powers, Duties and Rights of Capital Securities Guarantee Trustee

Section 3.1. Powers and Duties of the Capital Securities Guarantee Trustee. (a) This Series B Capital Securities Guarantee shall be held by the Capital Securities Guarantee Trustee for the benefit of the Holders, and the Capital Securities Guarantee Trustee shall not transfer this Series B Capital Securities Guarantee to any Person except a Holder exercising his or her rights pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of its appointment to act as Successor Capital Securities Guarantee Trustee. The right, title and interest of the Capital Securities Guarantee Trustee shall automatically vest in any Successor Capital Securities Guarantee Trustee, and such vesting and succession of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Capital Securities Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the Capital Securities Guarantee Trustee has occurred and is continuing, the Capital Securities Guarantee Trustee shall enforce this Series B Capital Securities Guarantee for the benefit of the Holders.

(c) The Capital Securities Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Series B Capital Securities Guarantee, and no implied covenants shall be read into this Series B Capital Securities Guarantee against the Capital Securities Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee shall exercise such of the rights and powers vested in it by this Series B Capital Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.

(d) No provision of this Series B Capital Securities Guarantee shall be construed to relieve the Capital Securities Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Capital Securities Guarantee Trustee shall be determined solely by the express provisions of this Series B Capital Securities Guarantee, and the Capital Securities Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Series B Capital Securities Guarantee, and no implied covenants or obligations shall be read into this Series B Capital Securities Guarantee against the Capital Securities Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Capital Securities Guarantee Trustee and conforming to the requirements of this Series B Capital Securities Guarantee; provided, however , in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Capital Securities Guarantee Trustee, the Capital Securities Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Series B Capital Securities Guarantee;

(iii) the Capital Securities Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a Majority in liquidation amount of the Series B Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Capital Securities Guarantee Trustee, or exercising any trust or power conferred upon the Capital Securities Guarantee Trustee under this Series B Capital Securities Guarantee; and

(iv) no provision of this Series B Capital Securities Guarantee shall require the Capital Securities Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Capital Securities Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Series B Capital Securities Guarantee or indemnity, reasonably satisfactory to the Capital Securities Guarantee Trustee, against such risk or liability is not reasonably assured to it.

(e) This Series B Capital Securities Guarantee and all moneys received by the Capital Securities Guarantee Trustee hereunder in respect of the Guarantee Payments will not be subject to any right, charge, security interest, loan or claim of any kind in favor of or for the benefit of the Capital Securities Guarantee Trustee or its agents or creditors.

Section 3.2. Certain Rights of Capital Securities Guarantee Trustee. (a) Subject to the provisions of Section 3.1:

(ii) Any direction or act of the Guarantor contemplated by this Series B Capital Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate.

(iii) Whenever, in the administration of this Series B Capital Securities Guarantee, the Capital Securities Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Capital Securities Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor.

(iv) The Capital Securities Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or registration thereof).

(v) The Capital Securities Guarantee Trustee may consult with counsel of its selection, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such written advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Capital Securities Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Series B Capital Securities Guarantee from any court of competent jurisdiction.

(vi) The Capital Securities Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Series B Capital Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Capital Securities Guarantee Trustee such security and indemnity, reasonably satisfactory to the Capital Securities Guarantee Trustee, against the costs, expenses (including reasonable attorneys' fees and expenses and the expenses of the Capital Securities Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Capital Securities Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Capital Securities Guarantee Trustee, upon the occurrence of an Event of Default which has not been cured or waived, of its obligation to exercise the rights and powers vested in it by this Series B Capital Securities Guarantee and to use the same degree of care as a prudent Person would exercise or use under the circumstances in the conduct of his or her own affairs.

(ix) Any action taken by the Capital Securities Guarantee Trustee or its agents hereunder shall bind the Holders, and the signature of the Capital Securities Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Capital Securities Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Series B Capital Securities Guarantee, both of which shall be conclusively evidenced by the Capital Securities Guarantee Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Series B Capital Securities Guarantee the Capital Securities Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Capital Securities Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Series B Capital Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions.

(b) No provision of this Series B Capital Securities Guarantee shall be deemed to impose any duty or obligation on the Capital Securities Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Capital Securities Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Capital Securities Guarantee Trustee shall be construed to be a duty.

Section 3.3. Not Responsible for Recitals or Issuance of Series B Capital Securities Guarantee . The recitals contained in this Series B Capital Securities Guarantee shall be taken as the statements of the Guarantor, and the Capital Securities Guarantee Trustee does not assume any responsibility for their correctness. The Capital Securities Guarantee Trustee makes no representation as to the validity or sufficiency of this Series B Capital Securities Guarantee.

Article IV

Capital Securities Guarantee Trustee

Section 4.1. Capital Securities Guarantee Trustee; Eligibility . (a) There shall at all times be a Capital Securities Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or Person permitted to act as a trustee by the Securities and Exchange Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000) and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

an instrument in writing executed by such Successor Capital Securities Guarantee Trustee and delivered to the Guarantor and the resigning Capital Securities Guarantee Trustee.

(e) No Capital Securities Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Capital Securities Guarantee Trustee.

(f) Upon termination of this Series B Capital Securities Guarantee or removal or resignation of the Capital Securities Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to the date of such termination, removal or resignation.

Article V

Guarantee

Section 5.2. Waiver of Notice and Demand . The Guarantor hereby waives notice of acceptance of this Series B Capital Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 5.3. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Series B Capital Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Series B Capital Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Series B Capital Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Series B Capital Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Series B Capital Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;

(e) any invalidity of, or defect or deficiency in, the Series B Capital Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor with respect to the Guarantee Payments shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.

Section 5.4. Enforcement of Guarantee; Rights of Holders . (a) The Holders of a Majority in liquidation amount of the Series B Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Capital Securities Guarantee Trustee in respect of this Series B Capital Securities Guarantee or exercising any trust or power conferred upon the Capital Securities Guarantee Trustee under this Series B Capital Securities Guarantee; provided, however, that, subject to Section 3.1, the Capital Securities Guarantee Trustee shall have the right to decline to follow any such direction if the Capital Securities Guarantee Trustee shall determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Capital Securities Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Capital Securities Guarantee Trustee shall determine, in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees and/or Responsible Officers, that the action or proceedings so directed would involve the Capital Securities Guarantee Trustee in personal liability.

(b) If the Capital Securities Guarantee Trustee fails to enforce the Series B Capital Securities Guarantee, any Holder may institute a legal proceeding directly against the Guarantor to enforce the Capital Securities Guarantee Trustee's rights under this Series B Capital Securities Guarantee, without first instituting a legal proceeding against the Issuer, the Capital Securities Guarantee Trustee or any other Person or entity. The Guarantor waives any right or remedy to require that any action be brought first against the Issuer or any other Person or entity before proceeding directly against the Guarantor.

Section 5.5. Guarantee of Payment . This Series B Capital Securities Guarantee creates a guarantee of payment and not of collection.

Section 5.6. Subrogation . The Guarantor shall be subrogated to all, if any, rights of the Holders against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Series B Capital Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Series B Capital Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Series B Capital Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

Section 5.7. Independent Obligations . The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Series B Capital Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Series B Capital Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.

Article VI

Limitation of Transactions; Subordination

Section 6.1. Limitation of Transactions . So long as any Series B Capital Securities remain outstanding, the Guarantor shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor's capital stock (which includes common and preferred stock), (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities issued by the Guarantor (including any Other Debentures) that rank pari passu with or junior in right of payment to the Debentures, or (iii) make any guarantee payments with respect to any guarantee by the Guarantor of any securities of any subsidiary of the Guarantor (including Other Guarantees) if such guarantee ranks pari passu or junior in right of payment to the Debentures (other than (a) dividends or distributions in shares of, or options, warrants, rights to subscribe for or purchase shares of, common stock of the Guarantor, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under

any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under this Series B Capital Securities Guarantee, (d) as a direct result of, and only to the extent required in order to avoid the issuance of fractional shares of capital stock following, a reclassification of the Guarantor's capital stock or the exchange or the conversion of one class or series of the Guarantor's capital stock for another class or series of the Guarantor's capital stock, (e) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, and (f) purchases of common stock related to the issuance of common stock or rights under any of the Guarantor's benefit plans for its directors, officers or employees or the Guarantor's dividend reinvestment plan) if at such time (i) an Event of Default (as defined in the Indenture) shall have occurred and be continuing, (ii) there shall have occurred any event of which the Guarantor has actual knowledge that (a) is, or with the giving of notice or the lapse of time, or both, would be an Event of Default (as defined in the Indenture), and (b) in respect of which the Guarantor shall not have taken reasonable steps to cure, (iii) if the Debentures are held by the Property Trustee, the Guarantor shall be in default with respect to its payment of any obligations under this Series B Capital Securities Guarantee, or (iv) the Guarantor shall have given notice of its election of the exercise of its right to extend the interest payment period pursuant to Section 16.01 of the Indenture and any such extension shall be continuing.

Section 6.2. Ranking . This Series B Capital Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment in full of Senior Indebtedness (as defined in the Indenture), to the same extent and in the same manner that the Debentures are subordinated to Senior Indebtedness pursuant to the Indenture, it being understood that the terms of Article XV of the Indenture shall apply to the obligations of the Guarantor under this Series B Capital Securities Guarantee as if (x) such Article XV were set forth herein in full, and (y) such obligations were substituted for the term "Securities" appearing in such Article XV, (ii) pari passu with the Debentures, the Other Debentures and with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with the Series A Capital Securities Agreement and any Other Guarantee (as defined herein) and any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock.

Article VII

Termination

Section 7.1. Termination . This Series B Capital Securities Guarantee shall terminate and be of no further force or effect (i) upon full payment of the Redemption Price (as defined in the Declaration) of all Series B Capital Securities, or (ii) upon liquidation of the Issuer, the full payment of the amounts payable in accordance with the Declaration or the distribution of the Debentures to the Holders of all of the Series B Capital Securities. Notwithstanding the foregoing, this Series B Capital Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid under the Series B Capital Securities or under this Series B Capital Securities Guarantee.

Article VIII

Compensation and Expenses of Capital Securities Guarantee Trustee

Section 8.1. Compensation and Expenses . The Guarantor covenants and agrees to pay to the Capital Securities Guarantee Trustee from time to time, and the Capital Securities Guarantee Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Guarantor and the Capital Securities Guarantee Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Guarantor will pay or reimburse the Capital Securities Guarantee Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Capital Securities Guarantee Trustee in accordance with any of the provisions of this Capital Securities Guarantee (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from or be incurred in connection with its negligence or bad faith. The Guarantor also covenants to indemnify each of the Capital Securities Guarantee Trustees (and their officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Capital Securities Guarantee Trustee) incurred without negligence or bad faith on the part of the Capital Securities Guarantee Trustee and arising out of or in connection with the acceptance or administration of this guarantee, including the costs and expenses of defending itself against any claim of liability in the premises.

The provisions of this Article shall survive the resignation or removal of the Capital Securities Guarantee Trustee and the termination of this Capital Securities Guarantee.

Article IX

Indemnification

Section 9.1. Exculpation . (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person (as defined in the Declaration) for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Series B Capital Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Series B Capital Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions.

information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders might properly be paid.

Article X

Miscellaneous

Section 10.1. Successors and Assigns . All guarantees and agreements contained in this Series B Capital Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders then outstanding.

Section 10.2. Amendments . Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Series B Capital Securities Guarantee may only be amended with the prior approval of the Holders of a Majority in liquidation amount of the Series B Capital Securities (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined). The provisions of the Declaration with respect to consents to amendments thereof (whether at a meeting or otherwise) shall apply to the giving of such approval.

Section 10.3. Notices . All notices provided for in this Series B Capital Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

First Midwest Capital Trust I

c/o First Midwest Bancorp, Inc.

300 Park Boulevard, Suite 400

Itasca, Illinois 60143

Attention: Corporate Secretary

Telecopy: 630-875-7360

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration

Telecopy: 302-636-4140

(c) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Series B Capital Securities and the Capital Securities Guarantee Trustee):

First Midwest Bancorp, Inc.

300 Park Boulevard, Suite 400

Itasca, Illinois 60143

Attention: Corporate Secretary

Telecopy: 630-875-7360

(d) If given to any Holder, at the address set forth on the books and records of the Issuer.

Section 10.4. Benefit . This Series B Capital Securities Guarantee is solely for the benefit of the Holders and, subject to Section 3.1(a), is not separately transferable from the Series B Capital Securities.

Section 10.5. Counterparts . This Series B Capital Securities Guarantee may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

Section 10.6. Governing Law . This Series B Capital Securities Guarantee shall be governed by, and construed and interpreted in accordance with the laws of the State of Illinois, without regard to conflicts of laws principles thereof.

[Remainder of Page Intentionally Left Blank]

This Series B Capital Securities Guarantee is executed as of the day and year first above written.

First Midwest Bancorp, Inc., as Guarantor

By:

Name:

Title:

Wilmington Trust Company, as Capital Securities Guarantee Trustee

By:_________________________________

Name:

Title:

Exhibit 12

First Midwest Bancorp, Inc.

Ratio of Earnings to Fixed Charges ⁽¹⁾


	Years ended December 31,
	2003			2002			2001			2000			1999
	(Dollar Amounts in Thousands)
*Ratio 1—Including Interest on Deposits*
Earnings available for fixed charges:
Income from continuing operations	$	92,778		$	90,150		$	82,138		$	75,540		$	70,909
Add:
Income tax provision		30,889			32,133			26,668			23,759			24,520
Fixed charges		81,964			111,498			181,439			232,597			169,313


Total earnings available for fixed charges	$	205,631		$	233,781		$	290,245		$	331,896		$	264,742


Fixed charges ⁽²⁾
Interest on deposits	$	56,272		$	81,616		$	134,497		$	155,887		$	129,177
Interest on borrowed funds		23,962			29,294			46,341			76,019			39,438
Interest on subordinated debt—trust preferred securities		1,079			—			—			—			—
Portion of rental expense representative of interest factor		651			588			601			691			698


Total fixed charges	$	81,964		$	111,498		$	181,439		$	232,597		$	169,313


Ratio of earnings to fixed charges		2.51	x		2.10	x		1.60	x		1.43	x		1.56	x

*Ratio 2—Excluding Interest on Deposits*
Earnings available for fixed charges:
Income from continuing operations	$	92,778		$	90,150		$	82,138		$	75,540		$	70,909
Add:
Income tax provision		30,889			32,133			26,668			23,759			24,520
Fixed charges		25,692			29,882			46,942			76,710			40,136


Total earnings available for fixed charges	$	149,359		$	152,165		$	155,748		$	176,009		$	135,565


Fixed charges ⁽²⁾ :
Interest on borrowed funds	$	23,962		$	29,294		$	46,341		$	76,019		$	39,438
Interest on subordinated debt—trust preferred securities		1,079			—			—			—			—
Portion of rental expense representative of interest factor		651			588			601			691			698

Total fixed charges	$	25,692		$	29,882		$	46,942		$	76,710		$	40,136

Ratio of earnings to fixed charges		5.81	x		5.09	x		3.32	x		2.29	x		3.38	x

⁽¹⁾	The ratio of earnings to fixed charges represents the number of times “fixed charges” are covered by “earnings.”

⁽²⁾	“Fixed charges” consist of interest on outstanding debt plus one-third (the proportion deemed representative of the interest factor) of operating lease expense.

Exhibit 14.1

FIRST MIDWEST BANCORP, INC.

CODE OF ETHICS AND

STANDARDS OF CONDUCT

INTRODUCTION

This Code of Ethics and Standards of Conduct (the “Code”) has been adopted by the Board of Directors (the “Board”) of First Midwest Bancorp, Inc. The purpose of the Code is to provide guidance to the employees, officers, and directors of First Midwest Bancorp, Inc. and its subsidiaries and affiliates (the “Corporation”) in an effort to promote honest and ethical conduct and compliance with applicable laws, rules, and regulations. For purposes of the Code, the term “employees” includes officers, and, when they are acting on behalf of the Corporation, directors. In administering the Code, each manager shall be responsible for seeing that all employees under his or her supervision are familiar with the Code, understand its importance and meaning, and are applying it consistently in all of their business dealings. Each employee must comply with the provisions of the Code, and direct others to do so. Employees failing to comply with the Code will be subject to disciplinary action, possibly including termination.

Questions regarding the interpretation or application of the Code should be directed to the Corporate Secretary or to an immediate supervisor, branch manager, regional Human Resources manager, or any executive vice president.

BASIC PRINCIPLES AND PRACTICES

COMPLIANCE WITH LAWS

It is the Corporation’s policy to comply with all laws, rules, and regulations applicable to its businesses. While various policies, procedures, systems, and functions exist that promote the Corporation’s adherence to applicable laws and regulations, it remains each employee’s responsibility to adhere to the standards and restrictions imposed by such laws and regulations. Where applicable laws, rules, and regulations are ambiguous, management shall obtain legal advice from the Corporate Secretary to clarify their meaning and assure compliance.

PUBLIC DISCLOSURE

The Corporation is committed to full, fair, accurate, timely and understandable disclosure in its public communications, including filings with the Securities and Exchange Commission (“SEC”) and banking regulators. Employees are prohibited from knowingly misrepresenting, or causing others to misrepresent, information about the Corporation in public disclosures and government filings. All employees are responsible for acting in furtherance of this policy.

In particular, employees must act to:

* Ensure that all transactions are properly recorded and supported by adequate documentation to provide a complete, accurate, and auditable record.

* Provide accurate and complete information to the Corporation’s officers, legal counsel, internal auditors, independent auditors, banking regulators and any other person authorized to receive the information.

* Report to the Corporation’s Disclosure Committee: (1) any information of which he or she may become aware that affects the disclosures made by the Corporation in public disclosures or government filings or otherwise; (2) deficiencies in the design or operation of internal controls which could adversely affect the Corporation’s ability to record, process, summarize and report financial data; or (3) any fraud, whether or not material, that involves management or other employees who have a role in the Corporation’s financial reporting, disclosures or internal controls.

CONFIDENTIALITY

Employees should maintain the confidentiality of information entrusted to them by the Corporation, its customers or other third parties, except when disclosure is authorized or is legally mandated. Confidential information includes all non-public information about the Corporation and any non-public information provided by a third party with the expectation that the information will be kept confidential and used solely for the business purpose for which it was conveyed. All employees must be careful not to disclose non-public information to unauthorized persons, either within or outside of the Corporation, and must exercise care to protect the confidentiality of such information received from another party.

In accordance with federal and state regulations, the Corporation has developed a Consumer Privacy Policy (the “Privacy Policy”) which outlines the Corporation’s policies regarding the use and sharing of customer information and which limits how employees may use or share customer information. All employees are expected to be familiar with the Privacy Policy and use and share customer information only in the manner permitted by that Policy. If employees are unsure whether information may be disclosed, they should consult with the Compliance Department or the Corporate Secretary.

CONFLICTS OF INTEREST

While the Corporation respects the privacy of its employees in the conduct of their personal affairs, it is expected that all employees will fully discharge their employment obligations to the Corporation. Employees should avoid any activity in which their personal interests may come into conflict, or may appear to conflict, with the interests of the Corporation in its relations with current or prospective suppliers, customers, or competitors. Employees must report actual or potential conflicts of interest to the Corporate Secretary.

A conflict of interest may exist where the employee is, or could be, in a position to influence the Corporation’s relationship with the competitor, supplier, or customer and where the employee’s judgment could be affected, or could appear to be affected, as it relates to the competitor, supplier or customer because of the significance of the employee’s personal interest. Without limiting the general scope of this policy, the following relationships and courses of conduct will be considered to involve a conflict of interest unless, in special circumstances, they are specifically approved and waived by the Corporation:

* Concurrent employment by the Corporation and by any other firm or person if the employment encroaches materially on time or attention that should be devoted to the Corporation’s affairs.

* Concurrent employment of employees by the Corporation and by a current or potential competitor, supplier, or customer of the Corporation.

* Holding by an employee, or immediate relatives of an employee, of a significant financial interest in any current or potential competitor, supplier, or customer of the Corporation. The term “ financial interest” refers to any form of ownership or amount of ownership. Generally, an employee’s financial interest will not be considered “ significant ” if the employee and the employee’s immediate relatives own less than 1% of a publicly held company.

* Acceptance by an employee, or an immediate relative of an employee, of membership on the Board of Directors, of a current or potential competitor, supplier, or customer of the Corporation.

* Acting as a consultant or advisor to a current or potential competitor of the Corporation.

* Participation by an employee in any charitable organization, or nomination or appointment to any public office, where the employee may be expected to divulge privileged or confidential information or trade secrets of the Corporation or take any other action that may subvert the Corporation’s interest, reputation, or goodwill or where the participation encroaches materially on time or attention that should be devoted to the Corporation’s affairs.

CORPORATE OPPORTUNITY

Employees shall not take for their own advantage opportunities that could reasonably be available to the Corporation. An employee is prohibited from directly or indirectly: (1) selling, or otherwise using for personal gain, information to which a person has access because of his/her position; (2) acquiring rights to any property that the employee knows the Corporation may also be interested in acquiring; (3) receiving compensation, including any commission or fee, which would otherwise accrue to the corporation; and (4) diverting business or personnel from the Corporation. Employees should advance the legitimate interests of the Corporation when the opportunity to do so arises.

HONESTY AND FAIR DEALING

When interacting with the Corporation’s employees, competitors, suppliers, or customers, each employee should strive to act with integrity and honesty and shall be prohibited from engaging in any illegal, unfair, unethical practice, including, but not limited to, the following:

* Entering into arrangements with competitors for the purpose of setting or controlling prices, rates, trade practices, or marketing policies or otherwise engaging in restraint of competition.

* Offering or giving, to any individual, organization, government, political party, or other entity or representative thereof, a bribe, kickback, or similar unlawful remuneration or consideration.

* Deliberately withholding any knowledge of illegal or unethical practices by an employee or director of the Corporation.

* Soliciting or accepting competitive information that such person believes to be confidential that may have been obtained through improper means.

* Otherwise taking advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practices.

GIFTS, GRATUITIES, AND ENTERTAINMENT

Employees are prohibited from soliciting for themselves, or for any third party, anything of value or personal benefit in return for any business, service, or confidential information of the Corporation. Receiving business gifts, including the acceptance of meals and transportation, of nominal value is permissible where customary. Receiving cash or gifts of significant value is strictly prohibited.

Customary business entertainment, including meals or transportation, is proper unless the value, cost, or frequency of the business entertainment is such that it could be interpreted as affecting an otherwise objective business decision. When determining if a gift could be interpreted as affecting an employee’s otherwise objective business decision, the position of the employee and whether the employee is or could be in a position to influence the Corporation’s relationship with the competitor, supplier, or customer will be taken into account.

If employees are unsure whether gifts, gratuities or entertainment are appropriate, they should consult with the Corporate Secretary.

INSIDER TRADING

Employees may not trade in the Corporation’s securities or the securities of other companies, including customers, suppliers, and others, on the basis of material non-public information. Information is material if it may affect an investor’s decision to buy, sell, or hold securities of a company.

The Corporation has developed a Corporate Insider Policy (the “Insider Policy”) which addresses: (1) those aspects of the securities laws that relate to Insiders (as defined in the Insider Policy) of the Corporation; (2) the restrictions, including permanent and special trading quarantines, placed upon such Insiders in executing transactions involving securities of the Corporation; (3) the reporting requirements of the Insiders; and (4) the guidelines to be followed by the Insiders and other employees when they come into possession of material undisclosed information regarding FMBI and its business prospects.

All employees are expected to be familiar with and adhere to the provisions of the Insider Policy.

PROTECTION AND PROPER USE OF CORPORATE PROPERTY

Employees should protect the Corporation’s assets and ensure their efficient use. The theft, embezzlement or misuse, including unauthorized personal use, of any of the Corporation’s premises, assets, information, and influence is strictly prohibited.

REPORTING VIOLATIONS OF THE CODE

An employee who becomes aware of a violation of the Code, or believes that a violation may take place in the future, must report the matter to the Corporate Secretary or to the employee’s immediate supervisor who, in turn, must report it to the Corporate Secretary. The employee also may report the violation through the Corporation’s “In Touch” hotline. To ensure that a reporting employee is protected from reprisal, a request for anonymity will be respected to the extent that it does not result in the violation of the rights of another employee. A person making a good-faith report of a possible violation of the Code will not be subject to retaliation. Any attempt at reprisal against the reporting employee will result in disciplinary action, possibly including termination.

WAIVERS

If an employee (other than a director) believes that a waiver of the Code is necessary or appropriate, a request for a waiver and the reasons for the request must be submitted in writing to the Corporate Secretary of the Corporation. Any waiver for an executive officer will be disclosed promptly to the Chairman of the Nominating and Corporate Governance Committee (the “Chairman”.) A director must submit the request for a waiver to the Chairman. Any waiver of the Code for an executive officer or director will be disclosed as required by SEC and NASDAQ Stock Market, Inc. rules.

ANNUAL REPORTING

In order to promote effective administration of the Code, the following annual reporting will be required:

* Each employee must certify that they have reviewed, are familiar with, and are in compliance with the Code.

* Each officer must disclose outside employment, board memberships, public offices held, significant financial interests in current or potential competitors, suppliers, or customers, and aggregate gifts in excess of $500.

* Each officer in salary grade 13 or greater must submit a personal financial statement.

The personal financial statement will be treated as highly confidential and will be used only for monitoring compliance with the Code.

The Corporate Secretary shall have the authority to establish procedures to implement the required annual reporting, including to whom reporting shall be made.

Approved by the Board of Directors February 24, 2004

6

Exhibit 14.2

FIRST MIDWEST BANCORP, INC.

CODE OF ETHICS FOR

SENIOR FINANCIAL OFFICERS

Introduction

This Code of Ethics for Senior Financial Officers ("Code") has been adopted by the Board of Directors (the "Board") of First Midwest Bancorp, Inc. (the "Corporation"). The Code is intended to promote: (1) honest and ethical conduct; (2) full and proper disclosure of financial information; and (3) compliance with applicable laws, rules, and regulations.

Application

The Code shall apply to all Senior Financial Officers, which, for the purposes of the Code, shall mean the Chief Executive Officer, Chief Financial Officer, Controller, and any Executive or Senior Vice President with financial responsibilities.

Basic Principles and Practices

In carrying out their duties and responsibilities, each Senior Financial Officer shall:

act with honesty and integrity, avoid actual or apparent conflicts of interest (as defined in the Corporation's Code of Ethics and Standards of Conduct) in personal and professional relationships;

report to the Audit Committee of the Board any conflict of interest that may arise and any material transaction or relationship that could reasonably give rise to a conflict;

promote full, fair, accurate, timely and understandable disclosure in the Corporation's public communications, including reports filed with, or submitted to, the Securities and Exchange Commission ("SEC");

report to the Corporation's Disclosure and Certification Committee: (a) any material information of which he or she may become aware that affects the disclosures made by the Corporation in public filings or otherwise; (b) significant deficiencies in the design or operation of internal controls which could adversely affect the Corporation's ability to record, process, summarize, and report financial data; or (c) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation's financial reporting, disclosures or internal controls;

comply with, and take reasonable action to cause others to comply with, applicable governmental laws, rules, and regulations; and

promptly report any violation of the Code to the Audit Committee.

Senior Financial Officers must also comply with the "Code of Ethics and Standards of Conduct" applicable to the Corporation's directors, officers, and other employees.

Waivers and Amendments

The Board shall have the sole authority to approve any waiver or deviation from the Code and any amendments or changes to the Code. Any request for a waiver of any provision of the Code must be submitted in writing to the Board. Any waiver of the Code and the grounds for such waiver shall be promptly disclosed on Form 8-K or in such other manner as may be required by the SEC or NASDAQ.

Compliance and Accountability

Senior Financial officers are expected to adhere to the Code. Violation of the Code shall result in disciplinary action reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code. In addition, violation of the Code shall be promptly reported to the Board.

Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
	State of Jurisdiction
Subsidiary	of Organization	Type of Subsidiary
First Midwest Bank	Illinois	Corporation
First Midwest Insurance Company	Arizona	Corporation
First Midwest Capital Trust I	Delaware	Statutory Business Trust

Exhibit 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following documents of our report dated January 20, 2004, with respect to the consolidated financial statements of First Midwest Bancorp, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 2003:

*	Registration Statement (Form S-3 No. 33-20439) pertaining to the First Midwest Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan.
*	Registration Statement (Form S-8 No. 33-42980) pertaining to the First Midwest Bancorp, Inc. 1989 Omnibus Stock and Incentive Plan.
*	Registration Statement (Form S-8 No. 33-25136) pertaining to the First Midwest Bancorp Savings and Profit Sharing Plan.
*	Registration Statement (Form S-8 No. 333-42273) pertaining to the First Midwest Bancorp, Inc. 1989 Omnibus Stock and Incentive Plan.
*	Registration Statement (Form S-8 No. 333-63095) pertaining to the First Midwest Bancorp, Inc. Non-employee Director Stock Option Plan.
*	Registration Statement (Form S-8 No. 333-50140) pertaining to the First Midwest Bancorp, Inc. Non-employee Director Stock Option Plan.
*	Registration Statement (Form S-8 No. 333-63097) pertaining to the First Midwest Bancorp, Inc. Nonqualified Retirement Plan.
*	Registration Statement (Form S-8 No. 333-61090) pertaining to the First Midwest Bancorp, Inc. 1989 Omnibus Stock and Incentive Plan.

/s/ERNST & YOUNG LLP

Chicago, Illinois

March 6, 2003

Exhibit 31.1

CERTIFICATION

I, John M. O’Meara, certify that:
	1.	I have reviewed this annual report on Form 10-K of First Midwest Bancorp Inc.;
	2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
		a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b.	Designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
		a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:	March 8, 2004			/s/ JOHN M. O’MEARA
				[Signature] President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Michael L. Scudder, certify that:
	1.	I have reviewed this annual report on Form 10-K of First Midwest Bancorp Inc.;
	2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
	3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
		a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b.	Designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
		a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:	March 8, 2004			/s/ MICHAEL L. SCUDDER
				[Signature] Executive Vice President, Chief Financial Officer, and Principal Accounting Officer

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, the undersigned officer of First Midwest Bancorp, Inc. (the “Company”), hereby certifies that:

The Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JOHN M. O’MEARA
Name:	John M. O’Meara
Title:	President and Chief Executive Officer

Dated: March 8, 2004

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, the undersigned officer of First Midwest Bancorp, Inc. (the “Company”), hereby certifies that:

The Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ MICHAEL L. SCUDDER

Name:

Michael L. Scudder

Title:

Executive Vice President, Chief
Financial Officer and Principal
Accounting Officer

Dated: March 8, 2004

/s/ MICHAEL L. SCUDDER
Name:	Michael L. Scudder
Title:	Executive Vice President, Chief Financial Officer and Principal Accounting Officer