PREFERRED SECURITIES GUARANTY AGREEMENT
UNITED COMMUNITY BANCSHARES, INC.
AND
WILMINGTON TRUST COMPANY
DATED: JANUARY , 1997
TABLE OF CONTENTS
Page No.
ARTICLE I - DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions and Interpretation. . . . . . . . . . . . . . . . 1
ARTICLE II - TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . 4
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . 4
SECTION 2.3 Reports by the Preferred Guaranty
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Periodic Reports to Preferred
Guaranty Trustee . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Evidence of Compliance with
Conditions Precedent . . . . . . . . . . . . . . . . . . . 5
SECTION 2.6 Events of Default; Waiver. . . . . . . . . . . . . . . . . . 5
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Conflicting Interests. . . . . . . . . . . . . . . . . . . . 6
ARTICLE III - POWERS, DUTIES AND RIGHTS OF PREFERRED
GUARANTY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.1 Powers and Duties of the Preferred
Guaranty Trustee . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.2 Certain Rights of Preferred Guaranty
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3 Not Responsible for Recitals or
Issuance of Guaranty . . . . . . . . . . . . . . . . . . .10
ARTICLE IV - PREFERRED GUARANTY TRUSTEE . . . . . . . . . . . . . . . . . . .10
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SECTION 4.1 Preferred Guaranty Trustee; Eligibility. . . . . . . . . . .10
SECTION 4.2 Appointment, Removal and Resignation of
Preferred Guaranty Trustees. . . . . . . . . . . . . . . .10
ARTICLE V - GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . .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 Guaranty of Payment. . . . . . . . . . . . . . . . . . . . .13
SECTION 5.6 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 5.7 Independent Obligations. . . . . . . . . . . . . . . . . . .13
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION. . . . . . . . . . . .14
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . .14
SECTION 6.2 Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE VII - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE VIII - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 8.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 8.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE IX - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . .15
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .16
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SECTION 9.4 Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 9.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .17
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CROSS REFERENCE TABLE
Section of Trust Section of
Indenture Act of Guaranty
1939, as Amended Agreement
---------------- ----------
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1
315(d) 3.1(d)
316(a) 1.1, 3.6, 5.4
316(b) 5.3
316(c) 8.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(b)
318(b) 2.1
318(c) 2.1(a)
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PREFERRED SECURITIES GUARANTY AGREEMENT
This GUARANTY AGREEMENT (the "Preferred Securities Guaranty"), dated as of
January __, 1997, is executed and delivered by United Community Bancshares,
Inc., a Minnesota corporation (the "Guarantor"), and Wilmington Trust Company,
as trustee (the "Preferred Guaranty Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities (as defined
herein) of United Capital Trust I, a Delaware statutory business trust ("United
Capital").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of January __, 1997, among the trustees of United Capital
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of United Capital, United Capital
is issuing on the date hereof [ ] preferred
securities, having an aggregate liquidation amount of $[ ], designated
the _____% Cumulative Trust Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guaranty, to pay to the Holders of the
Preferred Securities the Guaranty 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 Preferred Securities
Guaranty for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guaranty, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guaranty but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guaranty has the
same meaning throughout;
(c) all references to "the Preferred Securities Guaranty" or "this
Preferred Securities Guaranty" are to this Preferred Securities Guaranty as
modified, supplemented or amended from time to time;
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(d) all references in this Preferred Securities Guaranty to Articles and
Sections are to Articles and Sections of this Preferred Securities Guaranty,
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guaranty, unless otherwise defined in this
Preferred Securities Guaranty or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Minnesota are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Preferred Guaranty Trustee's Corporate Trust Office is closed for business.
"Corporate Trust Office" means the office of the Preferred Guaranty Trustee
at which the corporate trust business of the Preferred Guaranty Trustee shall,
at any particular time, be principally administered, which office at the date of
execution of this Agreement is located at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guaranty.
"Guaranty Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by United Capital: (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 United Capital shall have funds available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent United Capital has funds
available therefor, with respect to any Preferred Securities called for
redemption by United Capital, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of United Capital (other than in
connection with the distribution of Junior Subordinated Debentures to the
Holders in exchange for Preferred Securities as provided in the Trust
Agreement), 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 United Capital shall have funds available therefor, and
(b) the amount of assets of United Capital remaining available for distribution
to Holders in liquidation of United Capital (in either case, the "Liquidation
Distribution").
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"Holder" shall mean any holder, as registered on the books and records of
United Capital 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 Preferred Guaranty Trustee, any Affiliate of
the Preferred Guaranty Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guaranty Trustee.
"Indenture" means the Subordinated Indenture dated as of January ___, 1997,
among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee, and any indenture supplemental thereto pursuant to which the Junior
Subordinated Debentures are to be issued to the Property Trustee of United
Capital.
"Junior Subordinated Debentures" means the series of junior subordinated
deferrable interest debt securities of the Guarantor designated the ___% Junior
Subordinated Deferrable Interest Debentures due 2027 held by the Property
Trustee (as defined in the Trust Agreement) of United Capital.
"Majority in liquidation amount of the Preferred Securities" means, 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 (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all 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 Guaranty shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition 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 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
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(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"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 Guaranty Trustee" means Wilmington Trust Company, until a
Successor Preferred Guaranty Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guaranty and
thereafter means each such Successor Preferred Guaranty Trustee.
"Responsible Officer" means, with respect to the Preferred Guaranty
Trustee, any officer within the Corporate Trust Office of the Preferred Guaranty
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Preferred Guaranty Trustee 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.
"Successor Preferred Guaranty Trustee" means a successor Preferred Guaranty
Trustee possessing the qualifications to act as Preferred Guaranty 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 Guaranty is subject to the provisions of the
Trust Indenture Act that are required to be part of this Preferred Securities
Guaranty and shall, to the extent applicable, be governed by such provisions;
and
(b) If and to the extent that any provision of this Preferred Securities
Guaranty 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 Preferred Guaranty Trustee with a
list, in such form as the Preferred Guaranty Trustee may reasonably require, of
the names and
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addresses of the Holders of the Preferred Securities ("List of Holders") (i) on
or before January 1 and July 1 of each year, and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders,
as of a date no more than 14 days before such List of Holders is given to the
Preferred Guaranty Trustee provided, that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guaranty Trustee by
the Guarantor. The Preferred Guaranty Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Preferred Guaranty Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guaranty Trustee
On or before July 15 of each year, the Preferred Guaranty 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 Section 313 of the Trust Indenture Act. The Preferred Guaranty
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guaranty Trustee
The Guarantor shall provide to the Preferred Guaranty 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.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guaranty Trustee such evidence
of compliance with the conditions precedent, if any, provided for in this
Preferred Securities Guaranty that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of 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 Guaranty, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
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SECTION 2.7 Event of Default; Notice
(a) The Preferred Guaranty Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guaranty
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guaranty Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Preferred Guaranty
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.
(b) The Preferred Guaranty Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guaranty Trustee shall have
received written notice, or of which a Responsible Officer of the Preferred
Guaranty Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Trust Agreement shall be deemed to be specifically described in this
Preferred Securities Guaranty 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
PREFERRED GUARANTY TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guaranty Trustee
(a) This Preferred Securities Guaranty shall be held by the Preferred
Guaranty Trustee for the benefit of the Holders of the Preferred Securities, and
the Preferred Guaranty Trustee shall not transfer this Preferred Securities
Guaranty to any Person except a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guaranty
Trustee on acceptance by such Successor Preferred Guaranty Trustee of its
appointment to act as Successor Preferred Guaranty Trustee. The right, title and
interest of the Preferred Guaranty Trustee shall automatically vest in any
Successor Preferred Guaranty 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 Preferred Guaranty
Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guaranty Trustee has occurred and is continuing, the Preferred
Guaranty Trustee shall enforce this Preferred Securities Guaranty for the
benefit of the Holders of the Preferred Securities.
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(c) The Preferred Guaranty 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 Guaranty, and no implied covenants shall be read into
this Preferred Securities Guaranty against the Preferred Guaranty Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guaranty Trustee, the Preferred Guaranty Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guaranty, and
use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Preferred Securities Guaranty shall be construed
to relieve the Preferred Guaranty 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 Preferred Guaranty
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guaranty, and the Preferred Guaranty Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guaranty, and no implied
covenants or obligations shall be read into this Preferred Securities
Guaranty against the Preferred Guaranty Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guaranty Trustee, the Preferred Guaranty Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred Guaranty
Trustee and conforming to the requirements of this Preferred Securities
Guaranty; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guaranty Trustee, the Preferred Guaranty Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guaranty;
(ii) the Preferred Guaranty Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guaranty Trustee, unless it shall be proved that the Preferred
Guaranty Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Preferred Guaranty 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
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Preferred Guaranty Trustee, or exercising any trust or power conferred upon the
Preferred Guaranty Trustee under this Preferred Securities Guaranty; and
(iv) no provision of this Preferred Securities Guaranty shall
require the Preferred Guaranty 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 Preferred
Guaranty 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 Guaranty or indemnity, reasonably
satisfactory to the Preferred Guaranty Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guaranty Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guaranty Trustee may conclusively rely upon,
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 Guaranty shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guaranty, the Preferred Guaranty Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guaranty Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guaranty Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).
(v) The Preferred Guaranty Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees. The
Preferred Guaranty Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred Securities
Guaranty from any court of competent jurisdiction.
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(vi) The Preferred Guaranty Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guaranty at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guaranty Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guaranty Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guaranty 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 Preferred Guaranty
Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be
taken to relieve the Preferred Guaranty 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 Guaranty.
(vii) The Preferred Guaranty 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 Preferred Guaranty Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Preferred Guaranty 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 Preferred Guaranty
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 Preferred Guaranty Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guaranty 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 Preferred Guaranty Trustee to
so act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guaranty, both of which shall be conclusively evidenced
by the Preferred Guaranty Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred Securities
Guaranty the Preferred Guaranty Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Preferred Guaranty Trustee (i) may request 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 instructions are received, and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guaranty shall be deemed to
impose any duty or obligation on the Preferred Guaranty Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in
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which it shall be illegal, or in which the Preferred Guaranty 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 Preferred Guaranty Trustee shall
be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guaranty
The recitals contained in this Preferred Securities Guaranty shall be taken
as the statements of the Guarantor, and the Preferred Guaranty Trustee does not
assume any responsibility for their correctness. The Preferred Guaranty Trustee
makes no representation as to the validity or sufficiency of this Preferred
Securities Guaranty.
ARTICLE IV
PREFERRED GUARANTY TRUSTEE
SECTION 4.1 Preferred Guaranty Trustee; Eligibility
(a) There shall at all times be a Preferred Guaranty 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 Preferred Guaranty Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guaranty Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guaranty Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guaranty Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guaranty Trustees
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(a) Subject to Section 4.2(b), the Preferred Guaranty Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guaranty Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Preferred Guaranty Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guaranty Trustee and delivered to the Guarantor.
(c) The Preferred Guaranty Trustee appointed to office shall hold office
until a Successor Preferred Guaranty Trustee shall have been appointed or until
its removal or resignation. The Preferred Guaranty Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guaranty Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guaranty Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guaranty Trustee and
delivered to the Guarantor and the resigning Preferred Guaranty Trustee.
(d) If no Successor Preferred Guaranty Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guaranty Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guaranty Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guaranty Trustee.
(e) No Preferred Guaranty Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guaranty Trustee.
(f) Upon termination of this Preferred Securities Guaranty or removal or
resignation of the Preferred Guaranty Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guaranty Trustee all amounts accrued to the
date of such termination, removal or resignation.
ARTICLE V
GUARANTY
SECTION 5.1 Guaranty
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guaranty Payments (without duplication of amounts theretofore paid
by United Capital), as and when due, regardless of any defense, right of set-off
or counterclaim that United Capital may have or assert. The Guarantor's
obligation to make a Guaranty Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing United Capital to
pay such amounts to the Holders.
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SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guaranty and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
United Capital 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 Guaranty 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 United Capital of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by United Capital;
(b) the extension of time for the payment by United Capital 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 Subordinated Debentures or any extension of the maturity date of the
Subordinated Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of United Capital 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, United Capital or any of the assets of
United Capital;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guarantied 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
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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 Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guaranty Trustee in
respect of this Preferred Securities Guaranty or exercising any trust or power
conferred upon the Preferred Guaranty Trustee under this Preferred Securities
Guaranty.
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guaranty, without first instituting a legal proceeding against United
Capital, the Preferred Guaranty Trustee or any other Person.
SECTION 5.5 Guaranty of Payment
This Preferred Securities Guaranty creates a guaranty of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against United Capital in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guaranty;
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 Guaranty, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guaranty. 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 United Capital with respect to the Preferred Securities,
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guaranty Payments pursuant to the terms of this Preferred Securities
Guaranty notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3.
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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 or an event of default under the Trust Agreement,
then (a) the Guarantor shall not declare or pay any dividend or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of its capital stock, (b) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor (including other Junior Subordinated
Debentures) which rank pari passu with or junior in interest to the Junior
Subordinated Debentures or (c) the Guarantor shall not make any guaranty
payments with respect to any guaranty by the Guarantor of the debt securities of
any subsidiary of the Guarantor if such guaranty ranks pari passu or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock, (b) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under this Preferred Securities Guaranty
and (d) purchases of common stock related to rights under any of the Guarantor's
benefit plans for its directors, officers of employees).
SECTION 6.2 Ranking
This Preferred Securities Guaranty will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guaranty now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guaranty 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
United Capital or (iii) upon distribution of the Junior Subordinated Debentures
to the holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guaranty will continue to be effective or will 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 Guaranty.
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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
Guaranty 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 Guaranty 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 each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guaranty.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guaranties and agreements contained in this Preferred Securities
Guaranty 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.
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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 Guaranty may only be amended with the prior approval
of the Holders of at least a Majority in liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all the outstanding Preferred Securities. The provisions of
Article VI of the Trust Agreement with respect to meetings of Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guaranty shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guaranty Trustee, at the Preferred Guaranty
Trustee's mailing address set forth below (or such other address as the
Preferred Guaranty Trustee may give notice of to the Holders of the Preferred
Securities):
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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):
United Community Bancshares, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Chief Financial Officer
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of United Capital.
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
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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 Guaranty 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 GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA.
THIS PREFERRED SECURITIES GUARANTY is executed as of the day and year first
above written.
UNITED COMMUNITY BANCSHARES, INC.,
as Guarantor
By:
----------------------------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
and
By:
----------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
WILMINGTON TRUST COMPANY,
as Preferred Guaranty Trustee
By:
----------------------------------------------------
Name:
Title:
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