EXHIBIT 4.2
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GUARANTEE AGREEMENT
between
COASTAL BANKING COMPANY, INC.,
As Guarantor,
and
WILMINGTON TRUST COMPANY,
As Guarantee Trustee
Dated as of June 30, 2006
COASTAL BANKING COMPANY TRUST II
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TABLE OF CONTENTS
ARTICLE I INTERPRETATION AND DEFINITIONS.......................................2
SECTION 1.1 Interpretation...................................................2
SECTION 1.2 Definitions......................................................2
ARTICLE II REPORTS.............................................................6
SECTION 2.1 List of Holders..................................................6
SECTION 2.2 Periodic Reports to the Guarantee Trustee........................6
SECTION 2.3 Event of Default; Waiver.........................................6
SECTION 2.4 Event of Default; Notice.........................................6
ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.................7
SECTION 3.1 Powers and Duties of the Guarantee Trustee.......................7
SECTION 3.2 Certain Rights of the Guarantee Trustee..........................8
SECTION 3.3 Compensation....................................................10
SECTION 3.4 Indemnity.......................................................10
SECTION 3.5 Securities......................................................11
ARTICLE IV GUARANTEE TRUSTEE..................................................11
SECTION 4.1 Guarantee Trustee; Eligibility..................................11
SECTION 4.2 Appointment, Removal and Resignation of the Guarantee
Trustee.......................................................12
ARTICLE V GUARANTEE...........................................................12
SECTION 5.1 Guarantee.......................................................12
SECTION 5.2 Waiver of Notice and Demand.....................................13
SECTION 5.3 Obligations Not Affected........................................13
SECTION 5.4 Rights of Holders...............................................14
SECTION 5.5 Guarantee of Payment............................................14
SECTION 5.6 Subrogation.....................................................14
SECTION 5.7 Independent Obligations.........................................14
SECTION 5.8 Enforcement.....................................................15
ARTICLE VI COVENANTS AND SUBORDINATION........................................15
SECTION 6.1 Dividends, Distributions and Payments...........................15
SECTION 6.2 Subordination...................................................16
SECTION 6.3 Pari Passu Guarantees...........................................16
ARTICLE VII TERMINATION.......................................................16
SECTION 7.1 Termination.....................................................16
ARTICLE VIII MISCELLANEOUS....................................................17
SECTION 8.1 Successors and Assigns..........................................17
SECTION 8.2 Amendments......................................................17
SECTION 8.3 Notices.........................................................17
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SECTION 8.4 Benefit.........................................................18
SECTION 8.5 Governing Law...................................................18
SECTION 8.6 Submission to Jurisdiction......................................18
SECTION 8.7 Counterparts; Facsimile.........................................19
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GUARANTEE AGREEMENT, dated as of June 30, 2006, executed and delivered by
COASTAL BANKING COMPANY, INC., a South Carolina corporation (the "Guarantor")
having its principal office at ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇, and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee
(in such capacity, the "Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Coastal Banking Company Trust II, a Delaware statutory trust (the
"Issuer").
WITNESSETH:
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
the date hereof (the "Trust Agreement"), among the Guarantor, as Depositor, the
Property Trustee, the Delaware Trustee and the Administrative Trustees named
therein and the holders from time to time of the Preferred Securities (as
hereinafter defined), the Issuer is issuing $4,000,000 aggregate Liquidation
Amount (as defined in the Trust Agreement) of its Preferred Securities
(Liquidation Amount $1,000 per preferred security) (the "Preferred Securities")
representing preferred undivided beneficial interests in the assets of the
Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Notes (as
defined in the Trust Agreement) of the Guarantor; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Preferred Securities:
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.2;
(b) the words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation";
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) the words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Guarantee Agreement as a whole and
not to any particular Article, Section or other subdivision;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 1.2 Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person; provided, that the Issuer shall
not be deemed to be an Affiliate of the Guarantor. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.
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"Board of Directors" means either the board of directors of the
Guarantor or any duly authorized committee of that board.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Debt" means with respect to any Person, whether recourse is to all
or a portion of the assets of such Person, whether currently existing or
hereafter incurred, and whether or not contingent and without duplication,
(i) every obligation of such Person for money borrowed; (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person;
(iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable arising in the ordinary course of business); (v) every capital
lease obligation of such Person; (vi) all indebtedness of such Person,
whether incurred on or prior to the date of this Guarantee Agreement or
thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward
contracts, options, swaps and similar arrangements; (vii) every obligation
of the type referred to in clauses (i) through (vi) of another Person and
all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise; and (viii) any renewals, extensions,
refundings, amendments or modifications of any obligation of the type
referred to in clauses (i) through (vii).
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided,
that except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received notice of default from the
Guarantee Trustee and shall not have cured such default within thirty (30)
days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the
extent not paid or made by or on behalf of the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Trust Agreement) required to
be paid on the Preferred Securities, to the extent the Issuer shall have
funds on hand available therefor at such time, (ii) the Redemption Price
(as defined in the Trust Agreement) with respect to any Preferred
Securities to the extent the Issuer shall have funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary
termination, winding up or liquidation of the Issuer, unless Notes are
distributed to the Holders, the lesser of (a) the aggregate of the
Liquidation Amount of $1,000 per Preferred Security plus accumulated and
unpaid Distributions on the Preferred Securities to the date of payment,
to the extent that the Issuer shall have funds available therefor at such
time and (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer after satisfaction of
liabilities to creditors of the Issuer in accordance with applicable law
(in either case, the "Liquidation Distribution").
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"Guarantee Trustee" means Wilmington Trust Company in its capacity
as trustee hereunder, until a Successor Guarantee Trustee, as defined
below, has been appointed and has accepted such appointment pursuant to
the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, that, in determining
whether the holders of the requisite percentage of Preferred Securities
have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Guarantee Trustee or any Affiliate of
the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture, dated as of the
date hereof, as supplemented and amended, between the Guarantor and
Wilmington Trust Company, as trustee.
"List of Holders" has the meaning specified in Section 2.1.
"Majority in Liquidation Amount of the Preferred Securities" means a
vote by the Holder(s), voting separately as a class, of more than fifty
percent (50%) of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer.
"Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than
obligations of the Issuer to pay to holders of any Trust Securities the
amounts due such holders pursuant to the terms of the Trust Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, Chief Financial
Officer, President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of such Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement (other than the
certificate provided pursuant to Section 2.4) shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association,
government or any agency or political subdivision thereof or any other
entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, any Financial Services Officer or Assistant Financial
Services Officer or any other officer in the Corporate Trust Office of the
Guarantee Trustee with direct responsibility for the administration of
this Guarantee Agreement and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Senior Debt" means the principal of and any premium and interest on
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Guarantor whether or not
such claim for post-petition interest is allowed in such proceeding) all
Debt of the Guarantor, whether incurred on or prior to the date of the
Indenture or thereafter incurred, unless it is provided in the instrument
creating or evidencing the same or pursuant to which the same is
outstanding, that such obligations are not superior in right of payment to
the Preferred Securities; provided, however, that if the Guarantor is
subject to the regulation and supervision of an "appropriate Federal
banking agency" within the meaning of 12 U.S.C. 1813(q), the Guarantor
shall have received the approval of such appropriate Federal banking
agency prior to issuing any such obligation if not otherwise generally
approved; provided further, that Senior Debt shall not include any other
debt securities, and guarantees in respect of such debt securities, issued
to any trust other than the Issuer (or a trustee of such trust),
partnership or other entity affiliated with the Guarantor that is a
financing vehicle of the Guarantor (a "financing entity"), in connection
with the issuance by such financing entity of equity securities or other
securities that are treated as equity capital for regulatory capital
purposes guaranteed by the Guarantor pursuant to an instrument that ranks
pari passu with or junior in right of payment to this Guarantee Agreement,
including, without limitation, securities issued by Coastal Banking
Company Statutory Trust I.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section
4.1.
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"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended and as in effect on the date of this Guarantee Agreement.
Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement as in
effect on the date hereof.
ARTICLE II
REPORTS
SECTION 2.1 List of Holders.
The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee at such times as the Guarantee Trustee may request in writing, within
thirty (30) days after the receipt by the Guarantor of any such request, a list,
in such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders (the "List of Holders") as of a date not more than
fifteen (15) days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Guarantor and is
not identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
SECTION 2.2 Periodic Reports to the Guarantee Trustee.
The Guarantor shall deliver to the Guarantee Trustee, within one hundred
and twenty (120) days after the end of each fiscal year of the Guarantor ending
after the date of this Guarantee Agreement, an Officers' Certificate covering
the preceding fiscal year, stating whether or not to the knowledge of the
signers thereof the Guarantor is in default in the performance or observance of
any of the terms or provisions or any of the conditions of this Guarantee
Agreement (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Guarantor shall be in default thereof,
specifying all such defaults and the nature and status thereof of which they
have knowledge.
SECTION 2.3 Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.
SECTION 2.4 Event of Default; Notice.
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(a) The Guarantee Trustee shall, within ninety (90) days after the
occurrence of a default, transmit to the Holders notices of all defaults
actually known to the Guarantee Trustee, unless such defaults have been
cured or waived before the giving of such notice, provided, that, except
in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so
long as the Board of Directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee
Trustee in good faith determine that the withholding of such notice is in
the interests of the Holders. For the purpose of this Section 2.4, the
term "default" means any event that is, or after notice or lapse of time
or both would become, an Event of Default.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any default or Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written
notice, of such default or Event of Default from the Guarantor or a
Holder.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising
its rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee
upon acceptance by such Successor Guarantee Trustee of its appointment to
act as Successor Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and 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) The rights, immunities, duties and responsibilities of the
Guarantee Trustee shall be as provided by this Guarantee Agreement and
there shall be no other duties or obligations, express or implied, of the
Guarantee Trustee. Notwithstanding the foregoing, no provisions of this
Guarantee Agreement shall require the Guarantee Trustee to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. Whether or not herein expressly
so provided, every provision of this Guarantee Agreement relating to the
conduct or affecting the liability of or affording protection to the
Guarantee Trustee shall be subject to the provisions of this Section 3.1.
To the extent that, at law or in equity, the Guarantee Trustee has duties
and liabilities relating to the Guarantor or the Holders, the Guarantee
Trustee shall not be liable to any Holder for the Guarantee Trustee's good
faith reliance on the provisions of this Guarantee Agreement. The
provisions of this Guarantee Agreement, to the extent that they restrict
the duties and liabilities of the Guarantee Trustee otherwise existing at
law or in equity, are agreed by the Guarantor and the Holders to replace
such other duties and liabilities of the Guarantee Trustee.
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(c) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
negligent failure to act or own willful misconduct, except that:
(i) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made; and
(ii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities relating
to the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee, or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee
Agreement.
SECTION 3.2 Certain Rights of the Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting in good faith
and in accordance with the terms hereof upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document reasonably
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein;
(iii) the Guarantee Trustee may consult with counsel, and the
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in reliance thereon and in
accordance with such advice. Such counsel may be counsel to the
Guarantee Trustee, the Guarantor or any of its Affiliates and may be
one of its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction;
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(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee reasonable
security or indemnity against the costs, expenses (including
reasonable attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided, that, nothing contained in this Section
3.2(a)(iv) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee Agreement;
(v) the Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and
if the Guarantee Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books, records
and premises of the Guarantor, personally or by agent or attorney;
(vi) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through its agents, attorneys, custodians or nominees and the
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent, attorney, custodian or
nominee appointed with due care by it hereunder;
(vii) whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
hereunder, the Guarantee Trustee (A) may request instructions from
the Holders of a Majority in Liquidation Amount of the Preferred
Securities, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received and
(C) shall be protected in acting in accordance with such
instructions;
(viii) except as otherwise expressly provided by this
Guarantee Agreement, the Guarantee Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Guarantee Agreement;
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(ix) whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting
to take any action hereunder, the Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor; and
(x) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument or other writing
(or any rerecording, refilling or reregistration thereof).
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in
which the Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to the Guarantee Trustee shall be construed to be a
duty to act in accordance with such power and authority.
SECTION 3.3 Compensation.
The Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provisions of law in regard to the
compensation of a trustee of an express trust) and to reimburse the Guarantee
Trustee upon request for all reasonable expenses, disbursements and advances
(including the reasonable fees and expenses of its attorneys and agents)
incurred or made by the Guarantee Trustee in accordance with any provisions of
this Guarantee Agreement.
SECTION 3.4 Indemnity.
The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee
(including in its individual capacity) and any of its Affiliates and any of
their officers, directors, shareholders, employees, representatives or agents
from and against any loss, damage, liability, tax (other than income, franchise
or other taxes imposed on amounts paid pursuant to Section 3.3), penalty,
expense or claim of any kind or nature whatsoever incurred without negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with the acceptance or administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its rights, powers or
duties hereunder. The Guarantee Trustee will not claim or exact any lien or
charge on any Guarantee Payments as a result of any amount due to it under this
Guarantee Agreement. This indemnity shall survive the termination of this
Agreement or the resignation or removal of the Guarantee Trustee.
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In no event shall the Guarantee Trustee be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if the Guarantee Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
In no event shall the Guarantee Trustee be liable for any failure or delay
in the performance of its obligations hereunder because of circumstances beyond
its control, including, but not limited to, acts of God, flood, war (declared or
undeclared), terrorism, fire, riot, embargo or government action, including any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Guarantee Agreement.
SECTION 3.5 Securities.
The Guarantee Trustee or any other agent of the Guarantee Trustee, in its
individual or any other capacity, may become the owner or pledgee of Common or
Preferred Securities.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States or of any State thereof, authorized to
exercise corporate trust powers, having a combined capital and
surplus of at least fifty million dollars ($50,000,000), subject to
supervision or examination by Federal or State authority and having
an office within the United States. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of such supervising or examining authority, then, for
the purposes of this Section 4.1, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee shall either eliminate such interest or resign in
the manner and with the effect set out in Section 4.2(c).
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SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor, except
during an Event of Default.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by instrument
in writing executed by such Successor Guarantee Trustee and delivered to
the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within thirty (30)
days after delivery to the Guarantor of an instrument of resignation, the
resigning Guarantee Trustee may petition, at the expense of the Guarantor,
any court of competent jurisdiction for appointment of a Successor
Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Guarantee
Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
(a) The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense (except for the defense of payment by the
Issuer), right of set-off or counterclaim which the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the Holders.
The Guarantor shall give prompt written notice to the Guarantee Trustee in
the event it makes any direct payment to the Holders hereunder.
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(b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer, and, in the event any such Obligation is not so
assumed, subject to the terms and conditions hereof, the Guarantor hereby
irrevocably and unconditionally guarantees to each Beneficiary the full
payment, when and as due, of any and all Obligations to such
Beneficiaries. This Guarantee is intended to be for the Beneficiaries who
have received notice hereof.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Notes as provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
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(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other Person.
SECTION 5.5 Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, that, the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights it may acquire by way of subrogation
or any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations.
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The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3.
SECTION 5.8 Enforcement.
A Beneficiary may enforce the Obligations of the Guarantor contained in
Section 5.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1 Dividends, Distributions and Payments.
So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing an Event of Default or the Guarantor shall have
entered into an Extension Period as provided for in the Indenture and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Guarantor's Equity Interests (as defined in the Indenture), (b) vote in
favor of or permit or otherwise allow any of its Subsidiaries (as defined in the
Indenture) to declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to or otherwise
retire, any of such Subsidiary's Equity Interests entitling the holders thereof
to a stated rate of return other than dividends or distributions on Equity
Interests payable to the Company or any Subsidiary thereof (for the avoidance of
doubt, whether such Equity Interests are perpetual or otherwise), or (c) make
any payment of principal of or any interest or premium on or repay, repurchase
or redeem any debt securities of the Guarantor that rank pari passu in all
respects with or junior in interest to the junior subordinated notes issued by
the Guarantor pursuant to the Indenture (other than (i) repurchases, redemptions
or other acquisitions of Equity Interests of the Guarantor in connection with
(1) any employment contract, benefit plan or other similar arrangement with or
for the benefit of any one or more employees, officers, directors or
consultants, (2) a dividend reinvestment or stockholder stock purchase or
similar plan with respect to any Equity Interests or (3) the issuance of Equity
Interests of the Guarantor (or securities convertible into or exercisable for
such Equity Interests) as consideration in an acquisition transaction entered
into prior to the occurrence of such Event of Default or the applicable
Extension Period, (ii) as a result of an exchange or conversion of any class or
series of the Guarantor's Equity Interests (or any Equity Interests of a
Subsidiary of the Guarantor) for any class or series of the Guarantor's Equity
Interests or any class of series of the Guarantor's indebtedness for any class
or series of the Guarantor's Equity Interests, (iii) the purchase of fractional
interests in Equity Interests of the Guarantor pursuant to the conversions or
exchange provisions of such Equity Interests or the security being converted or
exchanged, (iv) any declaration of a dividend in connection with any rights
plan, the issuance of rights, Equity Interests or other property under any
rights plan or the redemption or repurchase of rights pursuant thereto, or (v)
any dividend in the form of Equity Interests, warrants, options or other rights
where the dividend Equity Interests or the Equity Interests issuable upon
exercise of such warrants, options or other rights is the same Equity Interests
as that on which the dividend is being paid or ranks pari passu with or junior
to such Equity Interests).
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SECTION 6.2 Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor.
SECTION 6.3 Pari Passu Guarantees.
(a) The obligations of the Guarantor under this Guarantee Agreement
shall rank pari passu with the obligations of the Guarantor under any
similar guarantee agreements issued by the Guarantor with respect to
preferred securities (if any) similar to the Preferred Securities, issued
by trusts other than the Issuer established or to be established by the
Guarantor (if any), in each case similar to the Issuer, including, without
limitation, the Guarantee Agreement, dated May 17, 2004, issued by the
Guarantor with respect to the preferred securities issued by Coastal
Banking Company Statutory Trust I.
(b) The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation
or reorganization or otherwise is subject to the prior claims of creditors
of that subsidiary, except to the extent the Guarantor may itself be
recognized as a creditor of that subsidiary. Accordingly, the Guarantor's
obligations under this Guarantee will be effectively subordinated to all
existing and future liabilities of the Guarantor's subsidiaries, and
claimants should look only to the assets of the Guarantor for payments
hereunder. This Guarantee does not limit the incurrence or issuance of
other secured or unsecured debt of the Guarantor, including Senior Debt of
the Guarantor, under any indenture or agreement that the Guarantor may
enter into in the future or otherwise.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Notes to the Holders in exchange for all of
the Preferred Securities or (c) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to Preferred Securities or
this Guarantee Agreement. The obligations of the Guarantor under Sections 3.3
and 3.4 shall survive any such termination or the resignation and removal of the
Guarantee Trustee.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its rights or delegate its obligations hereunder without the prior approval of
the Holders of a Majority in Liquidation Amount of the Preferred Securities.
SECTION 8.2 Amendments.
Except with respect to any changes that do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Guarantor, the Guarantee Trustee and the Holders of not less
than a Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings or consents
of the Holders shall apply to the giving of such approval.
SECTION 8.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or facsimile number
set forth below or such other address, facsimile number or to the
attention of such other Person as the Guarantor may give by notice to the
Guarantee Trustee and the Holders:
Coastal Banking Company, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
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(b) if given to the Issuer, at the Issuer's address or facsimile
number set forth below or such other address, facsimile number or to the
attention of such other Person as the Issuer may give by notice to the
Guarantee Trustee and the Holders:
Coastal Banking Company Trust II
c/o Coastal Banking Company, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Administrative Trustee
(c) if given to the Guarantee Trustee, at the address or facsimile
number set forth below or such other address, facsimile number or to the
attention of such other Person as the Guarantee Trustee may give by notice
to the Guarantor and the Holders:
Wilmington Trust Company
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Capital Markets
(d) if given to any Holder, at the address set forth on the books
and records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4 Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Preferred Securities.
SECTION 8.5 Governing Law.
This Guarantee Agreement and the rights and obligations of each party
hereto, shall be construed and enforced in accordance with and governed by the
laws of the State of New York without reference to its conflict of laws
provisions (other than Section 5-1401 of the General Obligations Law).
SECTION 8.6 Submission to Jurisdiction.
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ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF
THIS GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS GUARANTEE AGREEMENT.
SECTION 8.7 Counterparts; Facsimile.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of an
executed signature page of this Guarantee Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Guarantee Agreement
as of the date first above written.
COASTAL BANKING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Guarantee Trustee
By: /s/ ▇.▇. ▇▇▇▇▇▇ ▇▇
------------------------------------
Name: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, II
Title: Assistant Vice President