Exhibit 10.5(vii)
AMENDED AND RESTATED
PREFERRED SECURITIES GUARANTEE AGREEMENT
BY AND BETWEEN
AMERICAN COMMUNITY BANCSHARES, INC.
AND
WILMINGTON TRUST COMPANY,
AS GUARANTEE TRUSTEE
MARCH 1, 2002
AMENDED AND RESTATED
PREFERRED SECURITIES GUARANTEE AGREEMENT
THIS AMENDED AND RESTATED PREFERRED SECURITIES GUARANTEE AGREEMENT (the
"Preferred Securities Guarantee"), dated as of March 1, 2002, is executed and
delivered by AMERICAN COMMUNITY BANCSHARES, INC., a North Carolina corporation
(the "Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of
American Community Capital Trust I, a Delaware statutory business trust (the
"Trust").
RECITALS
WHEREAS, the Guarantor and the Guarantee Trustee entered into that certain
Preferred Securities Guarantee Agreement, dated as of December 31, 2001 (the
"Interim Guarantee Agreement"); and
WHEREAS, the Guarantor and the Guarantee Trustee desire to amend and
restate the Interim Guarantee Agreement in its entirety as set forth herein; and
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of March 1, 2002, among the trustees of the Trust named
herein, the Guarantor, as depositor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
an additional 1,500 shares of its preferred securities, having an aggregate
liquidation amount of $1,000 per share, designated the 9% Trust Preferred
Securities (the "Preferred Securities," which term shall include all previously
issued and outstanding preferred securities issued by the Trust), representing
undivided beneficial ownership interests in the assets of the Trust and having
the terms set forth in the Trust Agreement; and
WHEREAS, additional Preferred Securities, in an aggregate liquidation
amount of $1,500,000 will be issued by the Trust and the proceeds thereof,
together with the proceeds from the issuance of the Trust's Common Securities,
will be used to purchase a 9% Deferrable Interest Junior Subordinated Debenture
due March 1, 2032 (the "Debenture") of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, following the issuance of such additional Preferred Securities,
the aggregate liquidation amount of all outstanding Preferred Securities issued
by the Trust will be $3,500,000; and
WHEREAS, as an incentive for the Holders to purchase such additional
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, 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 the Holders of
$1,500,000 aggregate liquidation amount Preferred Securities, which purchase the
Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Preferred Securities Guarantee for the benefit of the Holder, and
any subsequent Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred 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 Trust Agreement in effect on the date of execution
of this Preferred Securities Guarantee have the same meaning when used in this
Preferred Securities Guarantee unless otherwise defined herein;
(c) a term defined anywhere in this Preferred Securities Guarantee has the
same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities Guarantee,
unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with 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 executive officer, director or general partner.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of Monroe, North Carolina are authorized
or required by law, executive order or regulation to close or a day on which the
Corporate Trust Office of the Guarantee Trustee is closed for business.
"Corporate Trust Office" means the office of the Guarantee Trustee at which
the corporate trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Agreement is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the 9% Deferrable Interest Junior Subordinated
Debentures due March 1, 2032, of the Debenture Issuer held by the Property
Trustee of the Trust.
"Debenture Issuer" means the Guarantor.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent: (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 or accrued liabilities 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 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 payments of which, in either case, such Person has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guarantee.
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Preferred Securities Guarantee and thereafter means each
such Successor Guarantee Trustee.
"Guarantor" means American Community Bancshares, Inc., a North Carolina
corporation, or any permitted successors or assigns.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accrued and unpaid Distributions (as defined in the
Trust Agreement) that are required to be paid on such Preferred Securities, to
the extent the Trust shall have funds available therefor, (ii) the Redemption
Price, to the extent the Trust has funds available therefor, with respect to any
Preferred Securities called for redemption by the Trust, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution
of Debentures to the Holders in exchange for Preferred Securities as provided in
the Trust Agreement or a redemption of all of the Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
the Trust shall have funds available therefor, and (b) the amount of assets of
the Trust remaining available for distribution to Holders in liquidation of the
Trust (the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
the Trust, of any Preferred Securities; provided, however, 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 or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.
"Indenture" means the Indenture dated as of December 31, 2001, among the
Debenture Issuer and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto (including but not limited to that certain Supplemental
Indenture dated as of March 1, 2002, among the Debenture Issuer and Wilmington
Trust Company, as trustee) pursuant to which certain subordinated debt
securities of the Debenture Issuer are to be issued to the Property Trustee of
the Trust.
"Liquidation Distribution" has the meaning provided therefor in the
definition of Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided in the terms of the Preferred Securities or, except as provided by
the Trust Indenture Act, a vote by Holder(s) of Preferred Securities, voting
separately as a class, of more than 50% of the liquidation amount of all of the
Outstanding Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Preferred Securities Guarantee 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 upon which the statements contained in
the certificate are based in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Other Debentures" means all junior subordinated debentures ranking pari
passu or junior to the Debentures (other than the Debentures) issued by the
Guarantor from time to time and sold to trusts established or to be established
by the Guarantor, in each case similar to the Trust to issue securities intended
to qualify for Tier I capital treatment.
"Other Guarantees" means all guarantees (other than the Preferred
Securities Guarantee), issued or to be issued by the Guarantor from time to time
with respect to preferred securities or preference stock issued to trusts (other
than the Trust) established or to be established by the Guarantor, in each case
similar to the Trust.
"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.
"Preferred Securities" means all of the outstanding 9% Trust Preferred
Securities issued by American Community Capital Trust I.
"Redemption Price" has the meaning provided therefor in Section 3.2 of the
Indenture.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer of the Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, any assistant treasurer or other
officer customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing or 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), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided however, that Senior
Debt shall not be deemed to include (i) any debt of the Guarantor which when
incurred and without respect to any election under Section 1111 (b) of the
United States Bankruptcy Code of 1978, as amended, was without recourse to the
Guarantor, (ii) any debt of the Guarantor to any of its subsidiaries and (iii)
debt to any employee of the Guarantor.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is not subject to the provisions of
the Trust Indenture Act pursuant to the exemption provided in Sections 304(a)(9)
and 304(b) of such act. However, notwithstanding the foregoing, the parties
hereto agree to be governed by the provisions of the Trust Indenture Act as they
apply to the rights and obligations of the Guarantor, Preferred Securities
Trustee and Holders.
(b) If and to the extent that any provision of this Preferred 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 Guarantee Trustee with a list, in such
form as the Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Preferred Securities ("List of Holders") as of January 1
and June 30 of each year, and at such other times as the Guarantee Trustee may
reasonably request in writing within 30 days after the receipt by the
Corporation of any such request; 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 Guarantee Trustee
by the Guarantor. The Guarantee Trustee shall preserve the list of Holders and
all information contained therein in as current a form as is reasonably
practicable, but may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a) of the Trust Indenture Act (but excluding from the operation of such
Section a creditor relationship arising in the circumstances described in
Section 311(b) of the Trust Indenture Act) and under Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE.
The Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by, and otherwise in
compliance with, Section 313 of the Trust Indenture Act, where applicable. The
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act, where applicable.
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE.
The Guarantor shall provide to the 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 of the Trust Indenture Act. Delivery of such reports, information and
documents to the Guarantee Trustee is for informational purposes only and the
Guarantee Trustee's receipt of such shall not constitute constructive notice of
any information contained therein or determinable from information contained
herein, including the Guarantor's compliance with any of its covenants hereunder
(as to which the Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates). The Guarantor also shall transmit to the Holders of the Preferred
Securities, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of the foregoing documents, reports and
information as may be required by rules and regulations prescribed by the
Commission.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act that may be required by such Section. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c) of the Trust Indenture Act shall 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 Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred 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 Preferred
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 Guarantee Trustee shall, within 90 days after the occurrence of a
default hereunder, transmit by mail to the Holders of the Preferred Securities
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act notice of all defaults hereunder actually known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided, that except in the case of payment defaults, the Guarantee Trustee
shall be protected in withholding such notice if and so long as the Guarantee
Trustee determines in accordance with Section 315(b) of the Trust Indenture Act
in good faith that the withholding of such notice is in the interest of the
Holders of the Preferred Securities.
(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 of which a Responsible
Officer of the Guarantee Trustee charged with the administration of the Trust
Agreement shall have obtained actual knowledge.
SECTION 2.8 CONFLICTING INTERESTS.
The Trust Agreement and Indenture shall be deemed to be specifically
described in this Preferred 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 GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the Guarantee
Trustee for the benefit of the Holders of the Preferred Securities,
and the Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Guarantee Trustee on 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, and such vesting and
cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment
of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The 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 Preferred Securities Guarantee, and no implied covenants
shall be read into this Preferred Securities Guarantee against the
Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6), the Guarantee
Trustee shall exercise such of the rights and powers vested in it by
this Preferred Guantee, 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 provisions of this Preferred Securities Guarantee shall be
construed to relieve the 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 Guarantee Trustee shall be
determined solely by the express provisions of this
Preferred Securities Guarantee, and the Guarantee Trustee
shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities
Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed herein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in
the case of any such certificates or opinions that by any
provision hereof are required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Preferred Securities
Guarantee;
(ii) 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;
(iii) 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 conducting any
proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall require
the 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 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 Preferred
Securities Guarantee or indemnity, reasonably satisfactory to the
Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF 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 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
Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever, in the administration of the Preferred Securities
Guarantee, the Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering, or
omitting any action hereunder, the Guarantee Trustee may (unless
other evidence is herein specifically prescribed), 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 Guarantee Trustee shall have no duty to see any recording,
filing or registration of any instrument (or any rerecording,
refilling, or reregistration thereof);
(v) the Guarantee Trustee may consult with counsel of its selection,
and the 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 advice or
opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction;
(vi) the Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Guarantee Trustee
such security and indemnity, reasonably satisfactory to the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the 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 Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(vi) 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 Preferred Securities Guarantee;
(vii) 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;
(viii) the 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
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 Guarantee Trustee or its agents hereunder
shall bind the Holders of the Preferred Securities, and the
signature of the Preferred 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 Guarantee Trustee to so act or as to its compliance with any
of the terms and provisions of his Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action; and
(x) whenever in the administration of this Preferred Securities
Guarantee the Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Preferred
Guarantee Trustee (i) may request written instructions from the
Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right
or taking such other action until such written instructions are
received, and (iii) shall be protected in relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee 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.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The Recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness. The
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
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 of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted
by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, 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 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 and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act, if applicable.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEES
(a) Subject to Section 4.2(c), the Guarantee Trustee may be appointed or
removed with or without cause at any time by the Guarantor.
(b) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 608 of the Trust Agreement) of the Holders of at
least a Majority in liquidation amount of the Preferred Securities, delivered to
the Guarantee Trustee.
(c) The Guarantee Trustee shall not be removed in accordance with Sections
4.2(a) and 4.2(b) 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.
(d) The Guarantee Trustee appointed to office shall hold office until a
Successor Guarantee Trustee shall have been appointed and 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.
(e) If no Successor 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 resignation, the resigning Guarantee Trustee may
petition 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.
(f) No Guarantee Trustee shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.
(g) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Guarantee Trustee all amounts accrued to the date of such
termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by the Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Trust to pay such
amounts to the Holders.
SECTION 5.2 WAIVERS.
The Guarantor hereby irrevocably waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the 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 (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or consent
required in connection with the Preferred Securities (or the common equity
securities issued by the Trust), including the failure to receive any regulatory
approval required in connection with the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(h) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Guarantor expressly acknowledges that: (i) this Guarantee will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Preferred Securities
Guarantee; and (iii) 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 Preferred Securities Guarantee or exercising any trust or power
conferred upon the Guarantee Trustee under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT.
This Preferred Securities Guarantee creates a guarantee of payment and not
of collection. This Preferred Securities Guarantee will not be discharged except
by payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Trust).
SECTION 5.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Preferred 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 Preferred Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Preferred Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Trust with respect to the 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 Preferred 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 Preferred Securities remain outstanding, if there shall have
occurred an Event of Default under this Preferred Securities Guarantee, an Event
of Default under the Trust Agreement or during an Extended Interest Payment
Period (as defined in the Indenture), then (a) the Guarantor shall not and shall
not permit any Subsidiary to declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
the reclassification of any class of the Corporation's capital stock into
another class of capital stock, (ii) dividends or distributions payable in any
class of the Corporation's common stock, (iii) any declaration of a dividend in
connection with the implementation of a shareholder 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 and (iv) purchases of the Corporation's common
stock related to the rights under any of the Corporation's benefit plans for its
or its subsidiaries' directors, officers or employees), and (b) the Guarantor
shall not and shall not permit any Subsidiary to make any payment of interest or
principal on or repay, repurchase, redeem or make guarantee payments related to
any debt securities issued by the Guarantor (including Other Debentures) or any
Subsidiary which rank pari passu with or junior to the Debentures; and (c) the
Guarantor shall not redeem, purchase or acquire less than all of the outstanding
Debentures or any of the Preferred Securities.
SECTION 6.2 RANKING.
This Preferred Securities Guarantee will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all Senior Debt of the Guarantor, (ii) pari passu with the Debentures, and (iii)
senior to the Guarantor's stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
This Preferred Securities Guarantee shall terminate upon (i) full payment
of the Redemption Price of all Preferred Securities, (ii) upon full payment of
the amounts payable in accordance with the Trust Agreement upon liquidation of
the Trust, or (iii) upon distribution of the Debentures to the Holders of the
Preferred Securities. Notwithstanding the foregoing, this Preferred Securities
Guarantee shall continue to be effective or shall be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred 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
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION.
The Guarantor agrees to indemnify, to the fullest extent permitted by law,
each Indemnified Person for, and to hold each Indemnified Person harmless
against, any and all loss, liability or expense, including taxes (other than
taxes based on the income of the Guarantee Trustee) incurred without negligence
or bad faith on the part of such Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding. Guarantor shall not assign its
obligations hereunder except in connection with a consolidation, merger, sale or
other transaction involving the Guarantor that is permitted under Article XII of
the Indenture and unless the assignee thereof agrees in writing, in form and
substance reasonably satisfactory to the
Preferred Guaranty Trustee, to perform all the Guarantor's obligations hereunder
with the same effect as if it had been named herein as Guarantor, and any
purported assignment that is not in accordance with these provisions shall be
void.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may only be amended with the prior written
approval of the Holders of at least a Majority in liquidation amount of the
Preferred Securities; provided that such prior written approval shall be
required with respect to all changes whatsoever during any time there are five
or fewer Holders.
SECTION 9.3 NOTICES.
All notices provided for in this Preferred 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 Guarantee Trustee, at the Guarantee Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Preferred Securities):
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Preferred Securities):
American Community Bancshares, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 BENEFIT.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
This Preferred Securities Guarantee is executed as of the day and year
first above written.
AMERICAN COMMUNITY BANCSHARES, INC., WILMINGTON TRUST COMPANY,
GUARANTOR AS GUARANTEE TRUSTEE
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. St. Amand
--------------------- -------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxx X. St. Amand
------------------ ----------------------
Title: President and CEO Title: Senior Vice President
------------------ ----------------------
