EXHIBIT 10-11
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GUARANTEE AGREEMENT
between
Southcoast Financial Corporation,
as Guarantor,
and
THE BANK OF NEW YORK,
as Guarantee Trustee
Dated as of December 16, 2002
Southcoast Capital Trust II
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Table of Contents
ARTICLE I Interpretation and Definitions.............................................................2
Section 1.1. Interpretation....................................................................2
Section 1.2. Definitions.......................................................................2
ARTICLE II Reports....................................................................................5
Section 2.1. List of Holders...................................................................5
Section 2.2. Periodic Reports to the Guarantee Trustee.........................................6
Section 2.3. Event of Default; Waiver..........................................................6
Section 2.4. Event of Default; Notice..........................................................6
ARTICLE III Powers, Duties and Rights of the Guarantee Trustee.........................................7
Section 3.1. Powers and Duties of the Guarantee Trustee........................................7
Section 3.2. Certain Rights of the Guarantee Trustee...........................................8
Section 3.3. Compensation......................................................................9
Section 3.4. Indemnity.........................................................................9
Section 3.5. Securities.......................................................................10
ARTICLE IV Guarantee Trustee.........................................................................10
Section 4.1. Guarantee Trustee; Eligibility...................................................10
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee....................11
ARTICLE V Guarantee.................................................................................11
Section 5.1. Guarantee........................................................................11
Section 5.2. Waiver of Notice and Demand......................................................12
Section 5.3. Obligations Not Affected.........................................................12
Section 5.4. Rights of Holders................................................................13
Section 5.5. Guarantee of Payment.............................................................13
Section 5.6. Subrogation......................................................................13
Section 5.7. Independent Obligations..........................................................13
Section 5.8. Enforcement......................................................................13
ARTICLE VI Covenants and Subordination...............................................................14
Section 6.1. Dividends, Distributions and Payments............................................14
Section 6.2. Subordination....................................................................14
Section 6.3. Pari Passu Guarantees............................................................14
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Table of Contents
(continued)
ARTICLE VII Termination...............................................................................15
Section 7.1. Termination......................................................................15
ARTICLE VIII Miscellaneous.............................................................................15
Section 8.1. Successors and Assigns...........................................................15
Section 8.2. Amendments.......................................................................15
Section 8.3. Notices..........................................................................16
Section 8.4. Benefit..........................................................................16
Section 8.5. Governing Law....................................................................17
Section 8.6. Submission to Jurisdiction.......................................................17
Section 8.7. Counterparts.....................................................................17
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GUARANTEE AGREEMENT, dated as of December 16, 2002, executed and
delivered by SOUTHCOAST FINANCIAL CORPORATION, a South Carolina corporation (the
"Guarantor") having its principal office at 000 Xxxxxxx Xxxxx Xxxxxxxxx, Xx.
Xxxxxxxx, XX 00000, and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (in such capacity, the "Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities (as
defined herein) of SOUTHCOAST CAPITAL TRUST II, a Delaware statutory trust (the
"Issuer").
W I T N E S S E T H :
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of the date hereof (the "Trust Agreement"), among the Guarantor, as Depositor,
the Property Trustee, the Delaware Trustee and the Administrative Trustees named
therein and the holders from time to time of the Preferred Securities (as
hereinafter defined), the Issuer is issuing Seven Million Dollars ($7,000,000)
aggregate Liquidation Amount (as defined in the Trust Agreement) of its Floating
Rate Preferred Securities (Liquidation Amount $1,000 per preferred security)
(the "Preferred Securities") representing preferred undivided beneficial
interests in the assets of the Issuer and having the terms set forth in the
Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Notes (as
defined in the Trust Agreement) of the Guarantor; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Preferred Securities:
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.2;
(b) the words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) the words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Guarantee Agreement as a whole and not to
any particular Article, Section or other subdivision;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
Section 1.2. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, that the Issuer shall not be
deemed to be an Affiliate of the Guarantor. For the purposes of this
definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.
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"Board of Directors" means either the board of directors of the
Guarantor or any duly authorized committee of that board.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person, whether currently existing or
hereafter incurred, and whether or not contingent and without duplication,
(i) every obligation of such Person for money borrowed; (ii) every
obligation of such Person 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 such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person;
(iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable arising in the ordinary course of business); (v) every capital
lease obligation of such Person; (vi) all indebtedness of such Person,
whether incurred on or prior to the date of this Guarantee Agreement or
thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward
contracts, options, swaps and similar arrangements; (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, such
Person has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise; and (viii) any renewals, extensions,
refundings, amendments or modifications of any obligation of the type
referred to in clauses (i) through (vii).
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, that
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default from the Guarantee Trustee
and shall not have cured such default within thirty (30) days after receipt
of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the
extent not paid or made by or on behalf of the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Trust Agreement) required to be
paid on the Preferred Securities, to the extent the Issuer shall have funds
on hand available therefor at such time, (ii) the Redemption Price with
respect to any Preferred Securities to the extent the Issuer shall have
funds on hand available therefor at such time, and (iii) upon a voluntary
or involuntary termination, winding up or liquidation of the Issuer, unless
Notes are distributed to the Holders, the lesser of (a) the aggregate of
the Liquidation Amount of $1,000 per Preferred Security plus accumulated
and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent that the Issuer shall have funds available therefor
at such time and (b) the amount of assets of the Issuer remaining available
for distribution to Holders in liquidation of the Issuer after satisfaction
of liabilities to creditors of the Issuer in accordance with applicable law
(in either case, the "Liquidation Distribution").
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"Guarantee Trustee" means The Bank of New York, until a
Successor Guarantee Trustee, as defined below, has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee
Agreement, and thereafter means each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, that, in
determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor, the Guarantee
Trustee or any Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture, dated as
of the date hereof, as supplemented and amended, between the Guarantor
and The Bank of New York, as trustee.
"List of Holders" has the meaning specified in Section 2.1.
"Majority in Liquidation Amount of the Preferred Securities"
means a vote by the Holder(s), voting separately as a class, of more
than fifty percent (50%) of the aggregate Liquidation Amount of all
then outstanding Preferred Securities issued by the Issuer.
"Obligations" means any costs, expenses or liabilities (but
not including liabilities related to taxes) of the Issuer, other than
obligations of the Issuer to pay to holders of any Trust Securities the
amounts due such holders pursuant to the terms of the Trust Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, Chief Financial
Officer, President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any
Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Guarantee Agreement (other
than the certificate provided pursuant to Section 2.4) 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 each officer in rendering the Officers'
Certificate;
(c) a statement that each 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 officer,
such condition or covenant has been complied with.
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"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated
association, government or any agency or political subdivision thereof
or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any Senior Vice President, any Vice President, any Assistant
Vice President, the Secretary, any Assistant Secretary, the Treasurer,
any Assistant Treasurer, any Trust Officer or Assistant Trust Officer
or any other officer of the Corporate Trust Department of the Guarantee
Trustee 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.
"Senior Debt" means the principal of and any premium and
interest on (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor
whether or not such claim for post-petition interest is allowed in such
proceeding) all Debt of the Guarantor, whether incurred on or prior to
the date of the Indenture or thereafter incurred, unless it is provided
in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, that such obligations are not superior in
right of payment to the Preferred Securities; provided, that if the
Guarantor is subject to the regulation and supervision of an
"appropriate Federal banking agency" within the meaning of 12 U.S.C.
1813(q), the Guarantor shall have received the approval of such
appropriate Federal banking agency prior to issuing any such
obligation; and provided, further, that Senior Debt shall not include
any other debt securities and guarantees in respect of such debt
securities issued to any trust other than the Trust (or a trustee of
any such trust), partnership or other entity affiliated with the
Guarantor that is a financing vehicle of the Guarantor (a "financing
entity") in connection with the issuance by such financing entity of
equity securities or other securities that are treated as equity
capital for regulatory capital purposes guaranteed by the Guarantor
pursuant to an instrument that ranks pari passu with or junior in right
of payment to the Indenture, including, without limitation, securities
issued by Southcoast Capital Trust I.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended and as in effect on the date of this Guarantee Agreement.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under
Section 4.1.
Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement as in
effect on the date hereof.
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ARTICLE II
REPORTS
Section 2.1. List of Holders.
The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee at such times as the Guarantee Trustee may request in writing, within
thirty (30) days after the receipt by the Guarantor of any such request, a list,
in such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders (the "List of Holders") as of a date not more than
fifteen (15) days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Guarantor and is
not identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
Section 2.2. Periodic Reports to the Guarantee Trustee.
The Guarantor shall deliver to the Guarantee Trustee, within one hundred
and twenty (120) days after the end of each fiscal year of the Guarantor ending
after the date of this Guarantee Agreement, an Officers' Certificate covering
the preceding fiscal year, stating whether or not to the knowledge of the
signers thereof the Guarantor is in default in the performance or observance of
any of the terms or provisions or any of the conditions of this Guarantee
Agreement (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Guarantor shall be in default thereof,
specifying all such defaults and the nature and status thereof of which they
have knowledge.
Section 2.3. Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred Securities
may, on behalf of 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 Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
Section 2.4. Event of Default; Notice.
(a) The Guarantee Trustee shall, within ninety (90) days after the
occurrence of a default, transmit to the Holders notices of all defaults
actually known to the Guarantee Trustee, unless such defaults have been cured or
waived before the giving of such notice; provided, that, except in the case of a
default in the payment of a Guarantee Payment, the 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 Guarantee Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders. For the purpose of this
Section 2.4, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of Default
from the Guarantor or a Holder.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising its rights pursuant
to Section 5.4(d) or to a Successor Guarantee Trustee upon acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, 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
Guarantee Trustee.
(b) The rights, immunities, duties and responsibilities of the
Guarantee Trustee shall be as provided by this Guarantee Agreement and there
shall be no other duties or obligations, express or implied, of the Guarantee
Trustee. Notwithstanding the foregoing, no provisions of this Guarantee
Agreement shall require the Guarantee Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not herein expressly so provided, every provision of this Guarantee
Agreement relating to the conduct or affecting the liability of or affording
protection to the Guarantee Trustee shall be subject to the provisions of this
Section 3.1. To the extent that, at law or in equity, the Guarantee Trustee has
duties and liabilities relating to the Guarantor or the Holders, the Guarantee
Trustee shall not be liable to any Holder for the Guarantee Trustee's good faith
reliance on the provisions of this Guarantee Agreement. The provisions of this
Guarantee Agreement, to the extent that they restrict the duties and liabilities
of the Guarantee Trustee otherwise existing at law or in equity, are agreed by
the Guarantor and the Holders to replace such other duties and liabilities of
the Guarantee Trustee.
(c) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
negligent failure to act or own willful misconduct, except that:
(i) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the
Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made; and
(ii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less
than a Majority in Liquidation Amount of the Preferred
Securities relating to the time, method and place of
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conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee
Agreement.
Section 3.2. Certain Rights of the Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting in good
faith and in accordance with the terms hereof 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 reasonably 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
Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein;
(iii)the Guarantee Trustee may consult with counsel, and the
advice of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted to be taken by it hereunder in good
faith and in reliance thereon and in accordance with such
advice. Such counsel may be counsel to the Guarantee
Trustee, the Guarantor or any of its Affiliates and may be
one of its employees. The Guarantee Trustee shall have the
right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction;
(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any
Holder, unless such Holder shall have provided to the
Guarantee Trustee reasonable security or indemnity against
the costs, expenses (including reasonable attorneys' fees
and expenses) 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 Guarantee
Trustee; provided, that, nothing contained in this Section
3.2(a)(iv) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement;
(v) the 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 Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and if the
Guarantee Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Guarantor, personally or by
agent or attorney;
(vi) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through its agents, attorneys, custodians
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or nominees and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any such agent, attorney, custodian or nominee appointed
with due care by it hereunder;
(vii)whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
hereunder, the Guarantee Trustee (A) may request
instructions from the Holders of a Majority in Liquidation
Amount of the Preferred Securities, (B) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received and (C) shall be
protected in acting in accordance with such instructions;
(viii) except as otherwise expressly provided by this Guarantee
Agreement, the Guarantee Trustee shall not be under any
obligation to take any action that is discretionary under
the provisions of this Guarantee Agreement; and
(ix) whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or
omitting to take any action hereunder, the Guarantee Trustee
(unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of
such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the 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 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 Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
Section 3.3. Compensation.
The Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provisions of law in regard to the
compensation of a trustee of an express trust) and to reimburse the Guarantee
Trustee upon request for all reasonable expenses, disbursements and advances
(including the reasonable fees and expenses of its attorneys and agents)
incurred or made by the Guarantee Trustee in accordance with any provisions of
this Guarantee Agreement.
Section 3.4. Indemnity.
The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee
and any of its Affiliates and any of their officers, directors, shareholders,
employees, representatives or agents from and against any loss, damage,
liability, tax (other than income, franchise or other taxes imposed on amounts
paid pursuant to Section 3.3), penalty, expense or claim of any kind or nature
whatsoever incurred without negligence, bad faith or willful misconduct on its
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part, arising out of or in connection with the acceptance or administration of
this Guarantee Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Guarantee Trustee will not claim or
exact any lien or charge on any Guarantee Payments as a result of any amount due
to it under this Guarantee Agreement. This indemnity shall survive the
termination of this Agreement or the resignation or removal of the Guarantee
Trustee.
In no event shall the Guarantee Trustee be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if the Guarantee Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
In no event shall the Guarantee Trustee be liable for any failure or delay
in the performance of its obligations hereunder because of circumstances beyond
its control, including, but not limited to, acts of God, flood, war (declared or
undeclared), terrorism, fire, riot, embargo, government action, including any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Guarantee Agreement.
Section 3.5. Securities.
The Guarantee Trustee or any other agent of the Guarantee Trustee, in its
individual or any other capacity, may become the owner or pledgee of Common or
Preferred Securities.
ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a 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 or of any State thereof, authorized to
exercise corporate trust powers, having a combined capital
and surplus of at least fifty million dollars ($50,000,000),
subject to supervision or examination by Federal or State
authority and having an office within the United States. If
such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such
supervising or examining authority, then, for the purposes
of this Section 4.1, 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 Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall either eliminate such interest or resign in the manner
and with the effect set out in Section 4.2(c).
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Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor, except during an Event of
Default.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within thirty (30) days
after delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.
(a) The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by or on behalf of the Issuer), as and when due, regardless of
any defense (except for the defense of payment by the Issuer), right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders. The Guarantor shall give prompt written notice to the
Guarantee Trustee in the event it makes any direct payment to the Holders
hereunder.
(b) The Guarantor hereby also agrees to assume any and all Obligations
of the Issuer, and, in the event any such Obligation is not so assumed, subject
to the terms and conditions hereof, the Guarantor hereby irrevocably and
unconditionally guarantees to each Beneficiary the full payment, when and as
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due, of any and all Obligations to such Beneficiaries. This Guarantee is
intended to be for the Beneficiaries who have received notice hereof.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
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 Guarantee Agreement 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 Preferred
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 (other than an extension of time for
payment of Distributions that results from the extension of any
interest payment period on the Notes as provided in the Indenture),
Redemption Price, Liquidation Distribution or any other sums payable
under the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out of, or
in connection with, the Preferred Securities;
(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
Preferred 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 Preferred
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 hereunder shall be absolute and unconditional under any and
all circumstances.
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There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.
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 the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, that, the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights it may acquire by way of subrogation
or any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. 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 Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3.
Section 5.8. Enforcement.
A Beneficiary may enforce the Obligations of the Guarantor contained in
Section 5.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.
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ARTICLE VI
COVENANTS AND SUBORDINATION
Section 6.1. Dividends, Distributions and Payments.
So long as any Preferred Securities remain outstanding, if there shall have
occurred and be continuing an Event of Default or the Guarantor shall have
entered into an Extension Period as provided for in the Indenture and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make liquidation payment with respect to, any of
the Guarantor's capital stock or (b) make any payment of principal of or any
interest or premium on or repay, repurchase or redeem any debt securities of the
Guarantor that rank pari passu in all respects with or junior in interest to the
Preferred Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Guarantor in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one of more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Guarantor (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the occurrence of such Event of
Default or the applicable Extension Period, (ii) as a result of an exchange or
conversion of any class or series of the Guarantor's capital stock (or any
capital stock of a subsidiary of the Guarantor) for any class or series of the
Guarantor's capital stock or any class of series of the Guarantor's indebtedness
for any class or series of the Guarantor's capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversions or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any rights plan, the issuance of rights, stock or other property under any
rights plan or the redemption or repurchase of rights pursuant thereto, or (v)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock).
Section 6.2. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor.
Section 6.3. Pari Passu Guarantees.
(a) The obligations of the Guarantor under this Guarantee Agreement
shall rank pari passu with the obligations of the Guarantor under any similar
guarantee agreements issued by the Guarantor with respect to preferred
securities (if any) similar to the Preferred Securities, issued by trusts other
than the Issuer established or to be established by the Guarantor (if any), in
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each case similar to the Issuer, including, without limitation, the guarantee
agreement issued by the Guarantor with respect to the preferred securities
issued by Southcoast Capital Trust I.
(b) The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Debt of the Guarantor, under any indenture or
agreement that the Guarantor may enter into in the future or otherwise.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Notes to the Holders in exchange for all of
the Preferred Securities or (c) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement 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 with respect to Preferred Securities or
this Guarantee Agreement. The obligations of the Guarantor under Sections 3.3
and 3.4 shall survive any such termination or the resignation and removal of the
Guarantee Trustee.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its rights or delegate its obligations hereunder without the prior approval of
the Holders of a Majority in Liquidation Amount of the Preferred Securities.
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Section 8.2. Amendments.
Except with respect to any changes that do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Guarantor, the Guarantee Trustee and the Holders of not less
than a Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings or consents
of the Holders shall apply to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or facsimile number
set forth below or such other address, facsimile number or to the
attention of such other Person as the Guarantor may give notice to the
Guarantee Trustee and the Holders:
Southcoast Financial Corporation
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
(b) if given to the Issuer, at the Issuer's address or facsimile
number set forth below or such other address, facsimile number or to
the attention of such other Person as the Issuer may give notice to
the Guarantee Trustee and the Holders:
Southcoast Capital Trust II
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
(c) if given to the Guarantee Trustee, at the address or
facsimile number set forth below or such other address, facsimile
number or to the attention of such other Person as the Guarantee
Trustee may give notice to the Guarantor and the Holders:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Corporate Trust Administration
(d) if given to any Holder, at the address set forth on the books
and records of the Issuer.
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All notices hereunder 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 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Preferred Securities.
Section 8.5. Governing Law.
This Guarantee Agreement and the rights and obligations of each party
hereto, shall be construed and enforced in accordance with and governed by the
laws of the State of New York without reference to its conflict of laws
provisions (other than Section 5-1401 of the General Obligations Law).
Section 8.6. Submission to Jurisdiction.
ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF
THIS GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS GUARANTEE AGREEMENT.
Section 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Guarantee Agreement as of
the date first above written.
[SIGNATURES OMITTED]
