|
As
filed with the Securities and Exchange Commission on April 16,
2007
|
File
No. 333-141203
|
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Pre-Effective
Amendment No. 1
to
FORM
S-4
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
UNITED
COMMUNITY BANKS, INC.
(Exact
name of issuer as specified in its charter)
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Georgia
(State
or other jurisdiction of
incorporation
or organization)
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6022
(Primary
Standard Industrial
Classification
Code Number)
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58-1807304
(I.R.S.
Employer
Identification
Number)
|
|
United
Community Banks, Inc.
63
Highway 515
Blairsville,
Georgia 30512
(706)
745-2151
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
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Jimmy
C. Tallent
63
Highway 515
Blairsville,
Georgia 30512
(706)
745-2151
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
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Copies
to:
|
Richard
R. Cheatham
Kilpatrick
Stockton LLP
1100
Peachtree Street, Suite 2800
Atlanta,
Georgia 30309-4530
(404)
815-6500
|
Kathryn
L. Knudson
Powell
Goldstein LLP
One
Atlantic Center, 14th
Floor
1201
West Peachtree Street
Atlanta,
Georgia 30309
(404)
572-6600
|
Approximate
date of commencement of proposed sale to the public:
The
exchange of Registrant’s shares for shares of common stock of Gwinnett
Commercial Group, Inc. will take place upon consummation of the merger of
Gwinnett Commercial Group, Inc. into the Registrant.
If
the
securities being registered on this form are being offered in connection with
the formation of a holding company and there is compliance with General
Instruction G, check the following box. o
If
this
form is filed to register additional securities of an offering pursuant to
Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o____________________
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o____________________
CALCULATION
OF REGISTRATION FEE
|
Title
of Each Class of Securities
to be Registered |
Amount
to be
Registered |
Proposed
Maximum
Offering Price per Share |
Proposed
Maximum
Aggregate Offering Price |
Amount
of
Registration Fee |
|
Common
Stock, par value $1.00 per share
|
5,692,082(1)
|
Not
Applicable
|
48,176,181(2)
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$1,479.01(2)(3)
|
|
(1)
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The
number of shares of the Registrant’s common stock being registered
hereunder is based upon the anticipated maximum number of such shares
required to consummate the proposed merger of Gwinnett Commercial
Group,
Inc. into the Registrant. The Registrant will remove from registration
by
means of a post-effective amendment any shares being registered that
are
not issued in connection with such
merger.
|
|
(2)
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In
accordance with Rule 457(f)(2) and (3), the registration fee is based
on
$48,176,181, which is the result of (i) $70,489,435, the maximum
number of
shares of common stock of Gwinnett Commercial Group, Inc. that may
be
received by the Registrant pursuant to the merger (2,830,901) multiplied
by the book value per share of Gwinnett Commercial Group, Inc. as
of
February 28, 2007 ($24.90), minus (ii) $22,313,254 in cash to be
paid by
the Registrant in the proposed
merger.
|
|
(3)
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Previously
paid.
|
The
Registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the Registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
The
information in this document is not complete and may be changed. We may not
sell
the securities offered by this document until the registration statement filed
with the Securities and Exchange Commission is effective. This document is
not
an offer to sell these securities, and we are not soliciting an offer to buy
these securities, in any state where the offer or sale is not
permitted.
PROXY
STATEMENT/PROSPECTUS
 |
 |
These
materials are a proxy statement of Gwinnett Commercial Group, Inc. and a
prospectus of United Community Banks, Inc. They are furnished to you in
connection with the notice of special meeting of shareholders to be held
on
____________
___, 2007.
At the
special meeting of Gwinnett shareholders, you will be asked to vote on the
merger of Gwinnett with and into United described in more detail herein.
As of
___________ ___, 2007, the record date for the Gwinnett shareholders meeting,
there were 2,830,901 shares
of
common stock outstanding and entitled to vote at that meeting. Approval of
the
merger requires the affirmative vote of holders of a majority of those shares.
Subject
to the election and adjustment procedures described in this document, in
connection with the merger if approved and consummated, holders of Gwinnett
common stock will be entitled to receive, in exchange for each share of Gwinnett
common stock, consideration equal to either (i) 2.2545 shares of United common
stock, or (ii) $72.8865 in cash, without interest; provided,
that an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. As a result, up to
an
aggregate of 5,692,082 shares of United common stock may be issued to Gwinnett
shareholders if the merger is approved and consummated and there is no
adjustment. This document is a United prospectus with respect to the offering
and issuance of such 5,692,082 shares of United common stock.
United’s
common stock trades on the Nasdaq Stock Market under the ticker symbol
“UCBI”.
The
accompanying materials contain information regarding the proposed merger
and the
companies participating in the merger, and the Agreement and Plan of
Reorganization pursuant to which the merger will be consummated if approved.
We
encourage you to read the entire document carefully. Please
also see the “Risk Factors” section of United’s Form 10-K for the year ended
December 31, 2006, which is incorporated herein by reference, for a description
of the factors that you should consider that may affect the value of United
common stock to be issued in the merger.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved these securities or passed upon the adequacy or accuracy
of these materials. Any representation to the contrary is a criminal offense.
Shares of common stock of United are not savings accounts, deposits or other
obligations of any bank and are not insured or guaranteed by the Federal
Deposit
Insurance Corporation or any other governmental agency.
The
date of these materials are_______ ___, 2007, and they are expected to be
first
mailed to shareholders on or about______ ___, 2007.
GWINNETT
COMMERCIAL GROUP, INC.
2230
Riverside Parkway
Lawrenceville,
Georgia 30043
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Notice
Of Special Meeting Of Shareholders
To
Be Held On ___________ __, 2007
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A
special
meeting of shareholders of Gwinnett Commercial Group, Inc. will be held on
____________ ___, 2007, at _______, at the main office of First Bank of the
South, 2230 Riverside Parkway, Lawrenceville, Georgia 30043 for the following
purposes:
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1.
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to
consider and vote on an Agreement and Plan of Reorganization, under
which
Gwinnett Commercial Group, Inc. (“Gwinnett”) will merge with and into
United Community Banks, Inc. (“United”), as more particularly described in
the accompanying materials; and
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2.
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to
transact such other business as may properly come before the special
meeting or any adjournments of the special
meeting.
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If
Gwinnett shareholders approve the merger, Gwinnett will be merged with and
into
United. Unless adjusted pursuant to the terms of the merger agreement, Gwinnett
shareholders may elect to receive shares of United common stock or cash in
exchange for each of their shares of Gwinnett common stock in the merger on
the
following basis:
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·
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2.2545
shares of United common stock; or
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·
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$72.8865
in cash, without interest;
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provided,
that an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. If the aggregate cash
elections are greater than the maximum, all such cash elections will be subject
to proration, and, if the aggregate stock elections are greater than the
maximum, all such stock elections will be subject to proration, all as more
fully explained under the heading “Details of the Proposed Merger-The Merger
Consideration” (page 14).
Approval
of the merger will require the approval of the holders of at least a
majority of
the
Gwinnett common stock entitled to vote at the special meeting. Only shareholders
of record of Gwinnett common stock at the close of business on __________ ___,
2007 will be entitled to vote at the special meeting or any adjournments
thereof. Gwinnett’s board of directors has adopted a resolution approving the
merger and the merger agreement and unanimously recommends that you vote for
the
proposal to approve the merger.
If
the
merger is completed, Gwinnett shareholders who dissent with respect to the
merger will be entitled to receive a cash payment for their shares of Gwinnett
common stock if they comply with certain statutory provisions of Article 13
of
the Georgia Business Corporation Code regarding the rights of dissenting
shareholders, all as more fully explained under the heading “Details of the
Proposed Merger-Rights of Dissenting Shareholders” (page 28) and in Appendix B
to the accompanying materials.
Business
and financial information about Gwinnett is available without charge to you
upon
written or oral request made to Andrew R. Pourchier, Executive Vice
President, Chief
Financial Officer and Secretary, Gwinnett Commercial Group, Inc., 2230 Riverside
Parkway, Lawrenceville, Georgia 30043, telephone number (770) 237-0007. To
obtain delivery of such business and financial information before the special
meeting, your request must be received no later than ______ __,
2007.
A
form of
proxy for use by you is enclosed. To ensure representation at the special
meeting, each Gwinnett shareholder is requested to sign, date, and return the
proxy card promptly in the enclosed, stamped envelope. A previously submitted
proxy may be revoked by notifying Andrew R. Pourchier, Executive Vice President,
Chief Financial Officer and Secretary of Gwinnett, in writing, or by submitting
an executed, later-dated proxy prior to the special meeting to Andrew R.
Pourchier, Gwinnett Commercial Group, Inc., 2230 Riverside Parkway,
Lawrenceville, Georgia 30043. A previously submitted proxy also may be revoked
by attending the special meeting and requesting the right to vote in person.
A
properly signed and returned proxy card, if not revoked, will be voted at the
special meeting in the manner specified by the duly submitted
proxy.
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By
Order of the Board of Directors,
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|
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________
__, 2007
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____________________________
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Lawrenceville,
Georgia
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John
D. Stephens, Chairman
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TABLE
OF CONTENTS
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Page
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42
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45
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48
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48
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51
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52
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Appendix
A - Agreement and Plan of Reorganization
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Appendix
B - Georgia Dissenters’ Rights Statute
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Appendix
C - Fairness Opinion
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Q: What
am I being asked to approve?
A: You
are
being asked to approve the Agreement and Plan of Reorganization by and between
Gwinnett and United, pursuant to which Gwinnett will be merged with and into
United. Approval of the merger requires the affirmative vote of a majority
of
the outstanding shares of Gwinnett common stock. The
Gwinnett board of directors has unanimously approved and adopted the Agreement
and Plan of Reorganization and recommends voting FOR approval of this merger
agreement.
Q: When
is the merger expected to be completed?
A: We
plan
to complete the merger during the second quarter of 2007.
Q: What
will I receive in the merger?
A: Unless
adjusted pursuant to the terms of the merger agreement, you will receive either
(i) 2.2545 shares
of
United common stock, or (ii) $72.8865 in cash, without interest, for each share
of Gwinnett common stock; provided,
that an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. United will not issue
fractional shares in the merger. Instead, you will receive a cash payment,
without interest, for the value of any fraction of a share of United common
stock that you would otherwise be entitled to receive based on $32.33 per
share.
For
example:
Assuming
the stock exchange ratio remains 2.2545 and stock elections are not subject
to
proration, if you own 100 shares of Gwinnett common stock and elect to receive
all stock in the merger, you will be entitled to 225 shares of United common
stock (100 x 2.2545, rounded down to the nearest whole share). In addition,
you
will be entitled to receive $14.55 in cash for your .45 fractional share of
United (.45 x $32.33).
To
review
what you will receive in the merger in greater detail, see “Details of the
Proposed Merger-The Merger Consideration” beginning on page
17.
Q: What
should I do now?
A: Indicate
on the enclosed proxy card how you want to vote with respect to the proposed
merger, and sign and mail the proxy card in the enclosed envelope as soon as
possible so that your shares will be represented at the meeting. If you sign
and
send in a proxy card but do not indicate how you want to vote, your proxy will
be voted in favor of the proposal to approve the merger. A special shareholders
meeting will take place on _________ ___, 2007, at _____ at the main office
of
First Bank of the South, 2230 Riverside Parkway, Lawrenceville, Georgia 30043,
to vote on the merger proposal.
You
may
withdraw your proxy up to and including the day of the special meeting by
notifying Gwinnett prior to the meeting, in writing, or by submitting an
executed, later-dated proxy to: Andrew R. Pourchier, Executive Vice President,
Chief Financial Officer and Secretary, Gwinnett Commercial Group, Inc., 2230
Riverside Parkway, Lawrenceville, Georgia 30043.
-1-
Q: How
can I elect stock, cash or both?
A: You
may
indicate a preference to receive United common stock, cash or a combination
of
both in the merger by completing the enclosed election form. However,
an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. Accordingly,
if the aggregate cash elections are greater than the maximum, each cash election
will be reduced pro rata based on the amount that the aggregate cash elections
exceed the maximum. Alternatively, if the aggregate stock elections are greater
than the maximum, each stock election will be reduced pro rata based on the
amount that the aggregate stock elections exceed the maximum. If
you do
not make an election by __________ ___, 2007, you will be treated as though
you
elected to receive all cash unless cash has been fully subscribed by the
electing Gwinnett shareholders, in which event you will be treated as if you
elected all stock. Gwinnett’s
board of directors makes no recommendation as to whether you should choose
United common stock or cash or a combination of both for your shares of Gwinnett
Commercial Group, Inc. common stock. You should consult with your own financial
advisor on that decision.
Q: What
information should I consider?
A: We
encourage you to read this entire document carefully. You should also review
the
factors considered by each company’s board of directors discussed in “Details of
the Proposed Merger-Background of and Reasons for the Merger” beginning on page
14.
Q: What
will I receive as consideration for the Gwinnett stock options and/or stock
appreciation rights I hold?
A: Each
Gwinnett option holder has agreed not to exercise his or her options prior
to
the closing of the merger. In exchange, United has agreed to pay the holder
of
each option $72.8865 in cash less the exercise price of each option. United
has
also agreed to pay the holder of each Gwinnett stock appreciation right, which
we refer to as a “SAR”, $72.8865 in cash less the exercise price of each SAR.
Q: What
are the tax consequences of the merger to me?
A: We
expect
that the exchange of shares of Gwinnett common stock for United common stock
by
Gwinnett shareholders generally will be tax-free to you for federal income
tax
purposes. However, you will have to pay taxes at either capital gains or
ordinary income rates, depending upon individual circumstances, on cash received
(i) in exchange for your shares of Gwinnett common stock; (ii) in lieu of
fractional shares of United Stock; (iii) if you are a Gwinnett option and/or
SARs holder, in exchange for your options and/or SARs; and (iv) upon your
exercise of dissenters’ rights. To review the tax consequences to Gwinnett
shareholders and option and SARs holders in greater detail, see “Details of the
Proposed Merger-Material Federal Income Tax Consequences of the Merger and
Opinion of Tax Counsel” beginning on page 30.
Your
tax consequences will depend on your personal situation. You should consult
your
tax adviser for a full understanding of the tax consequences of the merger
to
you.
-2-
Q: Should
I send in my stock certificates now?
A: No.
After
the merger is completed, you will receive written instructions from United
for
exchanging your Gwinnett common stock certificates for United common stock
and/or cash.
Q: Who
should I call with questions?
A: You
should call Andrew R. Pourchier, Executive Vice President, Chief Financial
Officer and Secretary of Gwinnett at (770) 237-0007.
-3-
SUMMARY
This
summary highlights material information from these materials regarding the
proposed merger. For a more complete description of the terms of the proposed
merger, you should carefully read this entire document, and the related
documents to which it refers. The Agreement and Plan of Reorganization and
Agreement and Plan of Merger, which are the legal documents that govern the
proposed merger, are in Appendix A to these materials. In addition, the sections
entitled “Where You Can Find More Information”, on page 50, and “Incorporation
of Certain Documents By Reference”, on page 51, contain references to additional
sources of information about United.
| · |
The
Companies (see pages 42 and
46)
|
United
Community Banks, Inc.
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
63 Highway 515
Blairsville, Georgia 30512
(706) 745-2151
United
is
the third largest bank holding company based in Georgia with assets of $7.1
billion, loans of $5.4 billion, deposits of $5.8 billion, and stockholders’
equity of $617 million at December 31, 2006. United conducts substantially
all
of its operations through 26 separate “community banks” with 102 locations in
north Georgia, metro Atlanta, coastal Georgia, western North Carolina, and
east
Tennessee through two wholly-owned state chartered bank subsidiaries: United
Community Bank, Blairsville, Georgia, and United Community Bank, Murphy, North
Carolina. United’s community banks offer a full range of retail and corporate
banking services, including checking, savings and time deposit accounts, secured
and unsecured loans, wire transfers, brokerage services and other financial
services.
United
also operates United Community Mortgage Services, a full-service retail mortgage
lending operation approved as a seller/servicer for Fannie Mae and the Federal
Home Mortgage Corporation, as a division of its Georgia bank subsidiary, and
Brintech, Inc., a New Smyrna Beach, Florida based consulting firm for the
financial services industry. Additionally, United provides retail brokerage
services through a third party broker/dealer.
|
Gwinnett
Commercial Group, Inc.
2230
Riverside Parkway
Lawrenceville,
Georgia 30043
(770)
237-0007
|
|
Gwinnett
is a bank holding company based in Lawrenceville, Georgia with assets
of
$675 million, loans of $536 million, deposits of $583 million, and
shareholders’ equity of $79 million as of December 31, 2006. Gwinnett is
the parent company of First Bank of the South, a full service bank
with
its main office in Lawrenceville, Georgia. First Bank of the South
operates branch locations in Embry Hills in DeKalb County, Johns
Creek in
north Fulton County, and Buford and Snellville in Gwinnett County.
The
bank offers a full range of lending products and traditional banking
products and services, including commercial, real estate, and consumer
loans, cash management services, and savings and time deposit
accounts.
|
-4-
If
Gwinnett shareholders approve the merger and subject to required regulatory
approvals, Gwinnett will be merged with and into United. Unless adjusted
pursuant to the terms of the merger agreement, Gwinnett shareholders may elect
to receive shares of United common stock or cash in exchange for each of their
shares of Gwinnett common stock in the merger on the following
basis:
|
·
|
2.2545
shares of United common stock; or
|
|
·
|
$72.8865
in cash, without interest;
|
provided,
that an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. You may elect any
combination of stock or cash for all of your Gwinnett shares. If the aggregate
cash elections are greater than the maximum, all such cash elections will be
subject to proration, and, if the aggregate stock elections are greater than
the
maximum, all such stock elections will be subject to proration.
You
will
also receive a cash payment, without interest, for the value of any fraction
of
a share of United common stock that you would otherwise be entitled to receive
based on $32.33 per share.
Following
the merger, Gwinnett’s subsidiary, First Bank of the South, will be merged with
and into United Community Bank, a wholly-owned Georgia bank subsidiary of
United, and United Community Bank will be the surviving bank.
The
boards of directors of Gwinnett and United support the merger and believe that
it is in the best interests of both companies and their respective shareholders.
The board of directors of Gwinnett believes that the merger will allow Gwinnett
to better serve its customers and markets and that the merger will permit
Gwinnett shareholders to have an equity interest in a resulting financial
institution with greater financial resources, significant economies of scale
and
a larger shareholder base, which will increase the liquidity of the Gwinnett
shareholders’ equity investments. The board of directors of United believes that
Gwinnett provides United with an expansion opportunity in an attractive market
area. Both boards of directors believe that the terms of the merger are fair
and
equitable and that following the merger the combined bank will maintain the
competitive advantage of a community banking business model.
The
special meeting of shareholders of Gwinnett will be held on ________ __, 2007
at
_____, at the main office of First Bank of the South, 2230 Riverside Parkway,
Lawrenceville, Georgia 30043, for the purpose of voting on approval of the
merger.
-5-
You
are
entitled to vote at the shareholders’ meeting if you owned shares of Gwinnett
common stock on __________ __, 2007.
Approval
by holders of a majority of the Gwinnett common stock outstanding on ________
__, 2007, is required to approve the merger. As of such date, 2,830,901 shares
of Gwinnett common stock were issued and outstanding, each of which is entitled
to one vote per share.
All of
the directors, executive officers and 5% shareholders of Gwinnett have agreed
to
vote their shares in favor of the merger. Gwinnett’s directors, executive
officers and 5% shareholders own 1,228,697 shares,
or 43.40%, of Gwinnett common stock
(excluding options).
The
merger will not occur unless certain conditions are met, and United or Gwinnett
can terminate the merger agreement if specified events occur or fail to occur.
The merger must also be approved by the Gwinnett shareholders. Following the
merger, Gwinnett’s subsidiary, First Bank of the South, will be merged into
United’s Georgia bank subsidiary, United Community Bank.
The
merger and the bank merger have been approved by the Board of Governors of
the
Federal Reserve System, the Federal Deposit Insurance Corporation and the
Department of Banking and Finance of the State of Georgia.
The
closing of the merger will occur after the merger is approved by Gwinnett
shareholders and the foregoing regulators and after the certificate of merger
is
filed as required under Georgia law.
You
are
entitled to dissent from the merger and to receive a cash payment for your
Gwinnett common stock if you follow certain statutory provisions regarding
the
rights of dissenting shareholders under Article 13 of the Georgia Business
Corporation Code.
Gwinnett
has received an opinion from Kilpatrick Stockton LLP stating that, assuming
the
merger is completed as currently anticipated, Gwinnett will not recognize any
gain or loss for federal income tax purposes, and shareholders of Gwinnett
to
the extent they receive solely United stock will not recognize any gain or
loss
for federal income tax purposes. All cash you receive as a result of the merger
(i) pursuant to a cash election, (ii) in lieu of fractional shares, (iii) if
you
are a Gwinnett option and/or SARs holder, in exchange for your options and/or
SARs, and (iv) as payment for exercising your right to dissent, will be fully
or
partially subject to income tax under the Internal Revenue Code as either
ordinary income or a capital gain or loss, depending upon your particular
circumstances. Neither United nor Gwinnett has requested a ruling to this effect
from the Internal Revenue Service.
-6-
The
merger will be accounted for as a purchase for financial reporting and
accounting purposes.
Burke
Capital Group, L.L.C. has rendered an opinion to Gwinnett that based on and
subject to the procedures, matters, and limitations described in its opinion
and
other matters it considered relevant, as of the date of its opinion, the merger
consideration is fair from a financial point of view to the shareholders of
Gwinnett. A summary of Burke’s opinion begins on page 29 and the full opinion is
attached as Appendix C to these materials.
United’s
common stock trades on the Nasdaq Stock Market under the ticker symbol “UCBI”.
The following table sets forth, for the periods indicated, the high, low and
closing sales prices per share of United’s common stock as quoted on Nasdaq.
Amounts have been restated to reflect the pro forma effect of United’s
three-for-two split effective April 28, 2004:
|
High
|
Low
|
Close
|
||||||||
|
2007
|
||||||||||
|
Second
Quarter (through April 13, 2007)
|
$
|
33.03
|
$
|
30.16
|
$
|
30.48
|
||||
|
First
Quarter
|
34.98
|
30.81
|
32.79
|
|||||||
|
2006
|
||||||||||
|
Fourth
Quarter
|
33.37
|
29.03
|
32.32
|
|||||||
|
Third
Quarter
|
33.10
|
27.51
|
30.05
|
|||||||
|
Second
Quarter
|
31.26
|
27.02
|
30.44
|
|||||||
|
First
Quarter
|
29.64
|
26.02
|
28.15
|
|||||||
|
2005
|
||||||||||
|
Fourth
Quarter
|
30.50
|
25.32
|
26.66
|
|||||||
|
Third
Quarter
|
29.36
|
25.75
|
28.50
|
|||||||
|
Second
Quarter
|
26.44
|
21.70
|
26.02
|
|||||||
|
First
Quarter
|
27.92
|
23.02
|
23.73
|
|||||||
|
2004
|
||||||||||
|
Fourth
Quarter
|
29.60
|
23.17
|
26.93
|
|||||||
|
Third
Quarter
|
25.45
|
21.75
|
24.27
|
|||||||
|
Second
Quarter
|
25.36
|
21.89
|
25.18
|
|||||||
|
First
Quarter
|
24.62
|
21.37
|
23.73
|
|||||||
The
closing sales price of United common stock as of February 5, 2007, the date
the
merger agreement was executed, was $33.06. The closing sales price of United
common stock as of April 13, 2007, the most recent date feasible for inclusion
in these materials, was $30.48.
There
has
been no public trading market for Gwinnett common stock. We believe the last
sale of Gwinnett common stock among shareholders in a private transaction was
on
November 13, 2006 at a price of $60.00
per
share, based on unofficial information that Gwinnett management believes is
reliable.
-7-
Assuming
there is no adjustment in the merger consideration, if the merger had been
completed on February 5, 2007, the implied value of one share of Gwinnett
common
stock, exchanged for shares of United common stock in the event of a stock
election, would have been $74.53 based on United’s closing sales price on that
date, and, on April 13, 2007, the implied value of one share of Gwinnett
common
stock, exchanged for shares of United common stock, would have been $73.97.
The
value of one share of Gwinnett common stock exchanged for cash is fixed at
$72.8865.
There
were 287 shareholders of record of Gwinnett common stock as of April 13,
2007.
United
declared cash dividends of $.09 per share in the first quarter of 2007, $.32
per
share in 2006, $.28 per share in 2005 and $.24 per share in 2004. United intends
to continue paying cash dividends, but the amount and frequency of cash
dividends, if any, will be determined by United’s board of directors after
consideration of certain non-financial and financial factors including earnings,
capital requirements, and the financial condition of United, and will depend
on
cash dividends paid to it by its subsidiary banks. The ability of United’s
subsidiary banks to pay dividends to it is restricted by certain regulatory
requirements.
Pursuant
to the terms of the merger agreement, Gwinnett declared a cash dividend of
$3.80
per share (which includes a regular annual cash dividend of $1.55 per share)
to
record holders as of February 5, 2007 payable on March 12, 2007. Gwinnett
declared cash dividends of $1.45 per share in 2006, $1.35 per share in 2005
and
$1.25 per share in 2004.
Following
the merger you will no longer be a Gwinnett shareholder and, if you receive
shares of United common stock following the merger, your rights as a shareholder
will no longer be governed by Gwinnett’s articles of incorporation and bylaws.
You will be a United shareholder, and your rights as a United shareholder will
be governed by United’s articles of incorporation and bylaws. Your former rights
as a Gwinnett shareholder and your new rights as a United shareholder are
different in certain ways, including the following:
|
·
|
Gwinnett’s
board of directors consists of 15 members, while United’s consists of 11
members.
|
|
·
|
The
bylaws of Gwinnett set forth different requirements for removal of
directors than do the articles of incorporation and bylaws of
United.
|
|
·
|
United
has different special procedures in its articles of incorporation
requiring supermajority approval and disinterested shareholder approval
of
some business transactions.
|
|
·
|
The
articles of incorporation of United require a supermajority shareholder
vote to amend most provisions of its articles of incorporation and
bylaws.
Gwinnett’s articles of incorporation and bylaws do
not.
|
|
·
|
United
is subject to filing requirements under the Securities Exchange Act.
Gwinnett is not subject to such
requirements.
|
-8-
Some
of
the directors and officers of Gwinnett have interests in the merger in addition
to their interests as shareholders generally, including the
following:
|
·
|
Glenn
S. White, President and Chief Executive Officer of Gwinnett will
terminate
his employment agreement with Gwinnett and has entered into a settlement
agreement with United for a payment equal to $939,550, as required
by his
existing employment agreement upon his termination following a
change in
control of Gwinnett and reduced to prevent such payment from being
an
amount that would be considered an “excess parachute payment” under the
Internal Revenue Code. Mr. White has entered into a new employment
agreement with United for a rolling three-year term, and will be
granted
10,000 shares of restricted stock, which will vest on the fifth
anniversary of the closing of the merger, and options to purchase
25,000
shares. The options vest as follows: 50% on the third anniversary,
25% on
the fourth anniversary and 25% on the fifth anniversary of the
closing of
the merger.
|
|
·
|
Steven
W. Williams, President of First Bank of the South and Executive
Vice-President of Gwinnett will terminate his employment agreement
with
Gwinnett and has entered into a settlement agreement with United
for a
payment equal to $443,467, as required by his existing employment
agreement upon his termination following a change in control of Gwinnett.
Mr. Williams has entered into a new employment agreement with United
for a
rolling two-year term, and will be granted 7,000 shares of restricted
stock, which will vest on the fifth anniversary of the closing of
the
merger, and options to purchase 17,500 shares. The options vest as
follows: 50% on the third anniversary, 25% on the fourth anniversary
and
25% on the fifth anniversary of the closing of the
merger.
|
|
·
|
Andrew
R. Pourchier, Executive Vice President, Chief Financial Officer and
Secretary of Gwinnett, has entered into a one year consulting agreement
with United and will terminate his employment agreement with Gwinnett
for
a payment equal to $442,467, as required by his existing employment
agreement upon his termination following a change in control of
Gwinnett.
|
|
·
|
At
the closing of the merger, various other Gwinnett officers will terminate
their respective employment agreement with Gwinnett and have entered
into
a settlement agreement with United for a payment equal to the amount
required by their existing employment agreements upon their respective
termination following a change in control of Gwinnett. Each of these
officers have entered into an employment agreement with
United.
|
|
·
|
In
exchange for a payment by United, various Gwinnett lending officers
have
entered into non-competition agreements with United that will prohibit
the
officers from competing with United after the closing of the merger
if
their employment is terminated.
|
|
·
|
United
will generally indemnify and provide liability insurance to the present
directors and officers of Gwinnett Commercial and First Bank of the
South
for a period of three years following the closing of the merger for
actions taken by such directors and officers in such
capacity.
|
|
·
|
United
has agreed to appoint John D. Stephens, chairman of the board of
directors
of Gwinnett, to the board of directors of United following the closing
of
the merger.
|
-9-
We
are
providing the following information to help you analyze the financial aspects
of
the merger. The following tables set forth summary historical operations and
financial condition data and summary performance, asset quality and other
information of United at and for the periods indicated. You should read this
data in conjunction with United’s Consolidated Financial Statements and notes
thereto incorporated herein by reference from United’s Annual Report on Form
10-K for the year ended December 31, 2006. United’s “net operating income” is
determined by methods other than in accordance with generally accepted
accounting principles, or GAAP.
Please
see the following “GAAP Reconciliation and Explanation” below for a
reconciliation of the difference between United’s non-GAAP net operating income
and its GAAP net income.
United’s
per share amounts and weighted average shares outstanding have been restated
to
reflect the three-for-two stock split effective April 28, 2004 and the
two-for-one stock split effective May 29, 2002.
|
For
the Year Ended December 31,
|
||||||||||||||||
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
|
(in
thousands, except per share data; taxable equivalent)
|
||||||||||||||||
|
INCOME
SUMMARY
|
||||||||||||||||
|
Interest
revenue
|
$
|
446,695
|
$
|
324,225
|
$
|
227,792
|
$
|
198,689
|
$
|
185,498
|
||||||
|
Interest
expense
|
208,815
|
127,426
|
74,794
|
70,600
|
76,357
|
|||||||||||
|
Net
interest revenue
|
237,880
|
196,799
|
152,998
|
128,089
|
109,141
|
|||||||||||
|
Provision
for loan losses
|
14,600
|
12,100
|
7,600
|
6,300
|
6,900
|
|||||||||||
|
Fee
Revenue
|
49,095
|
46,148
|
39,539
|
38,184
|
30,734
|
|||||||||||
|
Total
revenue
|
272,375
|
230,847
|
184,937
|
159,973
|
132,975
|
|||||||||||
|
Operating
expenses(1)
|
162,070
|
140,808
|
110,974
|
97,251
|
80,690
|
|||||||||||
|
Income
before taxes
|
110,305
|
90,039
|
73,963
|
62,722
|
52,285
|
|||||||||||
|
Income
taxes
|
41,490
|
33,297
|
26,807
|
23,247
|
19,505
|
|||||||||||
|
Net
operating income
|
68,815
|
56,742
|
47,156
|
39,475
|
32,780
|
|||||||||||
|
Merger-related
charges, net of tax
|
—
|
—
|
565
|
1,357
|
—
|
|||||||||||
|
Net
income
|
$
|
68,815
|
$
|
56,742
|
$
|
46,591
|
$
|
38,118
|
$
|
32,780
|
||||||
|
OPERATING
PERFORMANCE(1)
|
||||||||||||||||
|
Earnings
per common share:
|
||||||||||||||||
|
Basic
|
$
|
1.70
|
$
|
1.47
|
$
|
1.31
|
$
|
1.15
|
$
|
1.02
|
||||||
|
Diluted
|
1.66
|
1.43
|
1.27
|
1.12
|
.99
|
|||||||||||
|
Return
on tangible equity(2)(3)
|
17.52
|
%
|
18.99
|
%
|
19.74
|
%
|
19.24
|
%
|
17.88
|
%
|
||||||
|
Return
on assets
|
1.09
|
1.04
|
1.07
|
1.06
|
1.11
|
|||||||||||
|
Efficiency
ratio
|
56.35
|
57.77
|
57.65
|
58.39
|
57.72
|
|||||||||||
|
Dividend
payout ratio
|
18.82
|
19.05
|
18.32
|
17.39
|
16.34
|
|||||||||||
|
GAAP
PERFORMANCE
|
||||||||||||||||
|
Per
common share:
|
||||||||||||||||
|
Basic
earnings
|
$
|
1.70
|
$
|
1.47
|
$
|
1.29
|
$
|
1.11
|
$
|
1.02
|
||||||
|
Diluted
earnings
|
1.66
|
1.43
|
1.25
|
1.08
|
.99
|
|||||||||||
|
Cash
dividends declared (rounded)
|
.32
|
.28
|
.24
|
.20
|
.17
|
|||||||||||
|
Book
value
|
14.37
|
11.80
|
10.39
|
8.47
|
6.89
|
|||||||||||
|
Tangible
book value(3)
|
10.57
|
8.94
|
7.34
|
6.52
|
6.49
|
|||||||||||
|
Key
performance ratios:
|
||||||||||||||||
|
Return
on equity(2)
|
13.28
|
%
|
13.46
|
%
|
14.39
|
%
|
14.79
|
%
|
16.54
|
%
|
||||||
|
Return
on assets
|
1.09
|
1.04
|
1.05
|
1.02
|
1.11
|
|||||||||||
|
Net
interest margin
|
4.05
|
3.85
|
3.71
|
3.68
|
3.95
|
|||||||||||
|
Dividend
payout ratio
|
18.82
|
19.05
|
18.60
|
18.02
|
16.34
|
|||||||||||
|
Equity
to assets
|
8.06
|
7.63
|
7.45
|
7.21
|
7.01
|
|||||||||||
|
Tangible
equity to assets(3)
|
6.32
|
5.64
|
5.78
|
6.02
|
6.60
|
|||||||||||
|
ASSET
QUALITY
|
||||||||||||||||
|
Allowance
for loan losses
|
$
|
66,566
|
$
|
53,595
|
$
|
47,196
|
$
|
38,655
|
$
|
30,914
|
||||||
|
Non-performing
assets
|
13,654
|
12,995
|
8,725
|
7,589
|
8,019
|
|||||||||||
|
Net
charge-offs
|
5,524
|
5,701
|
3,617
|
4,097
|
3,111
|
|||||||||||
|
Allowance
for loan losses to loans
|
1.24
|
%
|
1.22
|
%
|
1.26
|
%
|
1.28
|
%
|
1.30
|
%
|
||||||
|
Non-performing
assets to total assets
|
.19
|
.22
|
.17
|
.19
|
.25
|
|||||||||||
|
Net
charge-offs to average loans
|
.12
|
.14
|
.11
|
.15
|
.14
|
|||||||||||
-10-
|
For
the Year Ended December 31,
|
||||||||||||||||
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
|
(in
thousands, except per share data; taxable equivalent)
|
||||||||||||||||
|
AVERAGE
BALANCES
|
||||||||||||||||
|
Loans
|
$
|
4,800,981
|
$
|
4,061,091
|
$
|
3,322,916
|
$
|
2,753,451
|
$
|
2,239,875
|
||||||
|
Investment
Securities
|
1,041,897
|
989,201
|
734,577
|
667,211
|
464,468
|
|||||||||||
|
Earning
assets
|
5,877,483
|
5,109,053
|
4,119,327
|
3,476,030
|
2,761,265
|
|||||||||||
|
Total
assets
|
6,287,148
|
5,472,200
|
4,416,835
|
3,721,284
|
2,959,295
|
|||||||||||
|
Deposits
|
5,017,435
|
4,003,084
|
3,247,612
|
2,743,087
|
2,311,717
|
|||||||||||
|
Shareholders’
equity
|
506,946
|
417,309
|
329,225
|
268,446
|
207,312
|
|||||||||||
|
Common
shares outstanding:
|
||||||||||||||||
|
Basic
|
40,393
|
38,477
|
36,071
|
34,132
|
32,062
|
|||||||||||
|
Diluted
|
41,575
|
39,721
|
37,273
|
35,252
|
33,241
|
|||||||||||
|
AT
YEAR END
|
||||||||||||||||
|
Loans
|
$
|
5,376,538
|
$
|
4,398,286
|
$
|
3,734,905
|
$
|
3,015,997
|
$
|
2,381,798
|
||||||
|
Investment
securities
|
1,107,153
|
990,687
|
879,978
|
659,891
|
559,390
|
|||||||||||
|
Earning
assets
|
6,565,730
|
5,470,718
|
4,738,389
|
3,796,332
|
3,029,409
|
|||||||||||
|
Total
assets
|
7,101,249
|
5,865,756
|
5,087,702
|
4,068,834
|
3,211,344
|
|||||||||||
|
Deposits
|
5,772,886
|
4,477,600
|
3,680,516
|
2,857,449
|
2,385,239
|
|||||||||||
|
Shareholders’
equity
|
616,767
|
472,686
|
397,088
|
299,373
|
221,579
|
|||||||||||
|
Common
shares outstanding
|
42,891
|
40,020
|
38,168
|
35,289
|
31,895
|
|||||||||||
|
(1)
|
Excludes
pre-tax merger-related and restructuring charges totaling $.9 million,
or
$.02 per diluted common share, recorded in 2004 and $2.1 million,
or $.04
per diluted common share, recorded in
2003.
|
|
(2)
|
Net
income available to common stockholders, which excludes preferred
stock
dividends, divided by average realized common equity which excludes
accumulated other comprehensive income
(loss).
|
|
(3)
|
Excludes
effect of acquisition related intangibles and associated
amortization.
|
GAAP
Reconciliation and Explanation
United’s
net operating income is determined by methods other than in accordance with
GAAP
and excludes merger-related charges. United excludes these charges because
management believes that non-GAAP operating results provide a helpful measure
for assessing United’s financial performance since the excluded charges are
non-recurring and operating income more closely reflects what United earned
during the applicable periods disregarding the non-operating impact of
acquisitions. United’s net operating income should not be viewed as a substitute
for net income determined in accordance with GAAP and is not necessarily
comparable to non-GAAP performance measures that may be presented by other
companies. The following is a reconciliation of United’s net operating income to
GAAP net income:
|
For
the Years Ended December 31,
|
||||||||||||||||
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
|
(in
thousand)
|
||||||||||||||||
|
Total
merger-related charges
|
$
|
—
|
$
|
—
|
$
|
870
|
$
|
2,088
|
$
|
—
|
||||||
|
Income
tax effect of above charges
|
—
|
—
|
305
|
731
|
—
|
|||||||||||
|
After-tax
effect of
merger-related charges
|
$
|
—
|
$
|
—
|
$
|
565
|
$
|
1,357
|
$
|
—
|
||||||
|
Net
Income Reconciliation
|
||||||||||||||||
|
Net
operating income
|
$
|
68,815
|
$
|
56,742
|
$
|
47,156
|
$
|
39,475
|
$
|
32,780
|
||||||
|
After-tax
effect of merger-related charges
|
—
|
—
|
(565
|
)
|
(1,357
|
)
|
—
|
|||||||||
|
Net
income (GAAP)
|
$
|
68,815
|
$
|
56,742
|
$
|
46,591
|
$
|
38,118
|
$
|
32,780
|
||||||
|
Basic
Earnings Per Share Reconciliation
|
||||||||||||||||
|
Basic
operating earnings per share
|
$
|
1.70
|
$
|
1.47
|
$
|
1.31
|
$
|
1.15
|
$
|
1.02
|
||||||
|
Per
share effect of merger-related charges
|
—
|
—
|
(.02
|
)
|
(.04
|
)
|
—
|
|||||||||
|
Basic
earnings per share (GAAP)
|
$
|
1.70
|
$
|
1.47
|
$
|
1.29
|
$
|
1.11
|
$
|
1.02
|
||||||
|
Diluted
Earnings Per Share Reconciliation
|
||||||||||||||||
|
Diluted
operating earnings per share
|
$
|
1.66
|
$
|
1.43
|
$
|
1.27
|
$
|
1.12
|
$
|
.99
|
||||||
|
Per
share effect of merger-related charges
|
—
|
—
|
(.02
|
)
|
(.04
|
)
|
—
|
|||||||||
|
Diluted
earnings per share (GAAP)
|
$
|
1.66
|
$
|
1.43
|
$
|
1.25
|
$
|
1.08
|
$
|
.99
|
||||||
-11-
RISK
FACTORS
In
addition to the other information, including risk factors, incorporated by
reference herein from United’s Annual Report on Form 10-K for the year ended
December 31, 2006 , you should carefully read and consider the following factors
in evaluating the merger and in deciding whether to elect to receive cash,
shares of United common stock or some combination thereof in the
merger.
Because
the market price of United common stock will fluctuate, Gwinnett shareholders
electing to receive stock cannot be sure of the value of the merger
consideration they will receive.
Upon
completion of the merger, each share of Gwinnett common stock will be converted
into the merger consideration consisting of shares of United common stock or
cash. The market value of the merger consideration received by Gwinnett
shareholders who receive all or part of the merger consideration in the form
of
United shares will vary with the price of United’s common stock. United’s stock
price changes daily as a result of a variety of factors other than the business
and relative prospects of United, including general market and economic
conditions, industry trends, and the regulatory environment. These factors
are
beyond United’s control.
Gwinnett
shareholders may receive a form of consideration different from what they
elect.
Although
each Gwinnett shareholder may elect to receive all cash or all stock, an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. Accordingly,
if the aggregate cash elections are greater than the maximum, each cash election
will be reduced pro rata based on the amount that the aggregate cash elections
exceed the maximum. Alternatively, if the aggregate stock elections are greater
than the maximum, each stock election will be reduced pro rata based on the
amount that the aggregate stock elections exceed the maximum.
For
example, if you elect to receive cash for 1,000 Gwinnett shares and the
aggregate cash elections exceed by 10% the 306,137 Gwinnett
share
maximum, the shares for which you will be paid cash will be reduced to the
number determined by dividing your cash election by the aggregate cash elections
and multiplying that quotient by the 306,137 cash election maximum. This
proration will result in you receiving cash for 909 of your Gwinnett shares
and
being treated as if you had elected to receive stock for your remaining 91
shares.
At
the
time you vote with respect to the merger agreement, you will not know how much
cash or the number of United shares you will receive as a result of the
merger.
Gwinnett’s
officers and directors have interests in the merger in addition to or different
from your interests as a Gwinnett shareholder.
Some
of
Gwinnett’s executive officers participated in negotiations of the merger
agreement with United, and the board of directors approved the merger agreement
and is recommending that Gwinnett shareholders vote for the merger agreement.
In
considering these facts and the other information contained in these materials,
you should be aware that certain of Gwinnett’s executive officers and directors
have economic interests in the merger in addition to the interests that they
share with you as a Gwinnett shareholder. These
interests include the payment of certain benefits in consideration of the
termination of existing employment agreements, the employment of several
of
Gwinnett’s current executive officers by United following completion of the
merger and the appointment of John D. Stephens, the chairman of the board
of
directors of Gwinnett, to the board of directors of United. See
“Details of the
Proposed Merger — Interest of the Directors and Officers of Gwinnett in the
Merger” on page 24.
-12-
United
may be unable to successfully integrate Gwinnett’s operations and retain its key
employees.
The
merger involves the integration of two companies that previously operated
independently. The difficulties of combining the companies’ operations include
integrating personnel, departments, systems, operating procedures and
information technologies and retaining key employees. Failures in integrating
operations or the loss of key personnel could have a material adverse effect
on
the business and results of operations of the combined company.
If
the merger is not completed, United and Gwinnett common stock could be
materially adversely affected.
The
merger is subject to customary conditions to closing, including the approval
of
the Gwinnett shareholders. In addition, United and Gwinnett may terminate the
merger agreement under certain circumstances. If United and Gwinnett do not
complete the merger, the market price of United common stock or Gwinnet common
stock may fluctuate to the extent that the current market prices of those shares
reflect a market assumption that the merger will be completed. Further, whether
or not the merger is completed, United and Gwinnett will also be obligated
to
pay certain investment banking, legal and accounting fees and related expenses
in connection with the merger, which could negatively impact results of
operations when incurred. In addition, neither company would realize any of
the
expected benefits of having completed the merger. If the merger is not
completed, United and Gwinnett cannot assure their respective shareholders
that
additional risks will not materialize or not materially adversely affect the
business, results of operations and stock prices of United and
Gwinnett.
The
termination fee contained in the merger agreement may discourage other companies
from trying to acquire Gwinnett.
Gwinnett
has agreed to pay a termination fee of $7.5 million to United if, under certain
circumstances, the merger agreement is terminated and, at the time of
termination, a competing offer is outstanding or such offer has been accepted
by
Gwinnett. This fee could discourage other companies from trying to acquire
Gwinnett.
-13-
In
exercising their fiduciary responsibilities to shareholders, Gwinnett’s
management and board of directors regularly assess the local banking industry,
including the regulatory and competitive environment for banking services.
The
board of directors has, over time, considered the possibility of a number of
strategic options in evaluating ways to maximize shareholder value. As a result
of Gwinnett’s historical growth and performance, management and the board of
directors began to consider the company’s strategic alternatives in the summer
of 2006, including, but not limited to, capital planning, a de novo branching
strategy, acquisitions of other community banks, and pursuing a sale or merger
transaction.
In
June
2006, Gwinnett elected to engage an investment banking firm to advise it on
general investment banking matters including the operating and merger and
acquisition environment in Atlanta and, more specifically, the potential
acquisition of other community banks or the sale of the company. Gwinnett
engaged Burke Capital Group, L.L.C. as its financial advisor based on its
extensive experience advising financial institutions and other qualifications.
Burke has detailed knowledge of Gwinnett, is very familiar with the Southeastern
U.S. banking market and, to a greater extent, the Atlanta banking market, and
had significant knowledge of potential partners for a merger or sale of
Gwinnett.
Burke
held discussions with senior management of Gwinnett to compile a list of the
most likely strategic partners in the event that Gwinnett decided to pursue
a
sale transaction. In the following weeks, Burke obtained and reviewed several
detailed reports provided by Gwinnett including: company history, markets,
management, past and current financial performance, projected financial
performance, business plan, asset quality, branch locations and a variety of
other financial and non-financial information. Burke utilized this data to
compile a package of confidential financial and business information regarding
Gwinnett to be used by Burke as a marketing tool for initial discussions with
selected strategic partners.
From
June
through August 2006, Burke contacted ten bank holding companies with known
interest in the Atlanta marketplace. Burke entered into confidentiality
agreements on behalf of Gwinnett with seven of these companies and provided
each
with a package of confidential financial and business information regarding
Gwinnett. From August through December 2006, several of these companies,
including United, held meetings with senior management of Gwinnett to discuss
Gwinnett’s strategic direction and a potential acquisition of the company.
During
December 2006, Gwinnett held several meetings with the management of United
to
assess combining the respective organizations. In late December 2006, Gwinnett,
United and Burke met to discuss the preliminary terms of a potential acquisition
by United. United expressed an oral preliminary indication of interest utilizing
85% stock and 15% cash consideration for a purchase price of approximately
$205
million.
On
January 4, 2006, Burke met with the Gwinnett board of directors to discuss
the
initial oral indication of interest received from United. Burke and Gwinnett
considered the United offer as well as the timing and expectation of offers
from
the other interested parties. Gwinnett discussed its obligations to give due
consideration to all relevant factors, including the short-term and long-term
interests of Gwinnett’s employees, customers, shareholders and other
constituents. The Gwinnett board of directors authorized the executive officers
of Gwinnett and Burke to continue to negotiate the price and other terms of
a
transaction with United.
-14-
Throughout
January 2007, the parties continued to negotiate the merger consideration,
the
treatment of outstanding options to purchase Gwinnett common stock in the
merger
and the ability of Gwinnett to pay a pre-closing dividend to its shareholders.
As the parties negotiated that purchase price, they also discussed whether
(1)
the purchase price would be a fixed amount and the exchange ratio for United
stock would fluctuate or the exchange ratio for United stock would be fixed
and
the purchase price would fluctuate, and (2) the purchase price would be subject
to adjustment in the event of a substantial increase or decrease in the market
price of United’s stock.
After
extensive negotiations, the parties agreed on a purchase price of $216.5
million
based on the recent average trading price of United common stock of $32.33,
which equated to 5.7 million shares of United common stock and $32.5 million
in
cash to stockholders and holders of Gwinnett options and stock appreciation
rights. In addition to the merger consideration, the parties agreed that
Gwinnett shareholders would receive their regularly scheduled annual cash
dividend of $1.55 from Gwinnett payable in March 2007 and a special cash
dividend not to exceed $2.25 per share (which is in part attributable to
2007
earnings), both payable prior to the closing of the transaction, and that
United
would purchase outstanding Gwinnett stock options and stock appreciation
rights
for cash. On January 10, 2007, United provided a term sheet to Gwinnett,
which
summarized the material terms of the proposed transaction.
The
Gwinnett board of directors met on January 16, 2007 and approved the term sheet
and authorized the executive officers to proceed with the negotiation and
preparation of a definitive merger agreement. The board also reviewed a
memorandum provided by Powell Goldstein LLP, legal counsel to Gwinnett,
regarding the legal standards applicable to its decisions and actions with
respect to the proposed transactions. The parties then scheduled their
respective due diligence investigations of the other party, and counsel for
each
party began the preparation of a definitive merger agreement.
On
February 5, 2007, the Gwinnett board of directors met to evaluate and discuss
the proposed definitive merger agreement between Gwinnett and United. Burke
rendered to the Gwinnett board of directors its oral opinion (subsequently
confirmed in writing) that, as of the date of its opinion and based upon and
subject to the considerations described in its opinion and other matters that
Burke considered relevant, the proposed merger consideration was fair, from
a
financial point of view, to Gwinnett’s common stockholders. Powell Goldstein
briefly reviewed the memorandum that was previously provided to the Gwinnett
board of directors regarding the legal standards applicable to its decisions
and
actions with respect to the proposed transactions. Powell Goldstein also
reviewed the legal terms of the proposed merger and the related agreements.
On
February 5, 2007, following a thorough review and discussion, the Gwinnett
board
of directors voted to approve the Agreement and Plan of Reorganization providing
for the merger of Gwinnett with United. Gwinnett and United finalized, executed,
and delivered the definitive agreements for the transaction on that date. The
transaction was announced publicly prior to the opening of the trading markets
on February 6, 2007.
Without
assigning any relative or specific weights, the board of directors of Gwinnett
considered the following material factors in approving the merger:
Positive
Factors:
|
·
|
The
value and form of the consideration to be received by Gwinnett
shareholders relative to the actual, tangible and leveraged book
value,
core deposits and aggregate and per share earnings of Gwinnett;
|
-15-
|
·
|
Information
concerning the financial condition, results of operations and business
prospects of Gwinnett and of United;
|
|
·
|
The
financial terms of recent business combinations in the financial
services
industry and a comparison of the multiples of selected combinations
with
the terms of the proposed transaction with United;
|
|
·
|
A
report and opinion presented by Burke as to the fairness, from a
financial
point of view, of the consideration to be paid to the company’s
shareholders in the merger;
|
|
·
|
Gwinnett
shareholders’ ability to elect to receive United common stock or cash in
exchange for their Gwinnett common
stock;
|
|
·
|
The
special dividend of $2.25 per share to be paid to Gwinnett’s shareholders
in addition to their regular annual dividend of $1.55 per
share;
|
|
·
|
The
liquidity of the consideration to be received by Gwinnett’s shareholders
in the merger in light of United’s status as a Nasdaq-listed
company;
|
|
·
|
The
cultural fit between the Gwinnett and United community banking business
models;
|
|
·
|
United’s
positive record in retaining customers and employees following business
combination transactions;
|
|
·
|
The
alternatives to the merger, including remaining an independent
institution;
|
|
·
|
The
competitive and regulatory environment for financial institutions
generally; and
|
|
·
|
The
fact that the merger is structured as a tax-free reorganization and
the
exchange of Gwinnett common stock for United common stock will occur
on a
tax-free basis.
|
Negative
Factors:
·
Gwinnett
shareholders will receive a dividend downgrade of approximately 46% based on
Gwinnett’s and United’s respective dividend rates as of December 31,
2006;
·
Collectively,
the Gwinnett shareholders will not hold a controlling interest in the resulting
company; and
·
The
risk
that the combined company may not realize the expected benefits from the merger
if United and Gwinnett are not successful in integrating the two companies
following the merger.
The
Gwinnett board of directors believes that analyses performed by Burke in
connection with rendering its opinion to the board, taken as a whole, support
the boards’ recommendation to the Gwinnett shareholders to approve the proposed
merger. The Gwinnett board of directors considered in its review of the analyses
performed by Burke all of the individual factors that did not support a
recommendation to the Gwinnett shareholders to approve the proposed merger.
These factors included:
|
·
|
the
price to the last twelve months earnings multiple and the associated
implied value of the merger consideration was less than the median
price
to the last twelve months earnings multiples and associated implied
values
of the consideration received in 10 comparable southeast transactions
and
25 comparable U.S. transactions;
|
-16-
|
·
|
the
price to actual book value multiple and the associated implied value
of
the merger consideration was less than the median price to actual
book
value multiples and associated implied values of the consideration
received in 10 comparable southeast transactions and 25 comparable
U.S.
transactions;
|
|
·
|
the
price to tangible book value multiple and the associated implied
value of
the merger consideration was less than the median price to tangible
book
value multiples and associated implied values of the consideration
received in 10 comparable southeast transactions and 25 comparable
U.S.
transactions;
|
|
·
|
the
contribution analysis indicated that the pro forma ownership of United
common stock issuable to Gwinnett shareholders assuming a hypothetical
100% stock transaction in the merger was slightly less than the earnings
contributed to United by Gwinnett;
and
|
|
·
|
the
selected peer group analysis of United indicated that the liquidity
for
United’s common stock is low compared to the selected peer
group.
|
After
careful consideration of these factors and the potential short- and long-term
benefits to Gwinnett shareholders, the Gwinnett board of directors determined
that the overall potential benefits of the merger outweighed these negative
factors.
The
board
of directors of Gwinnett believes the merger is in the best interest of its
shareholders and will allow Gwinnett to better serve its customers and markets.
The merger will permit Gwinnett shareholders to have an equity interest in
a
resulting financial institution with greater financial resources, significant
economies of scale and a larger shareholder base, which will increase the
liquidity of the Gwinnett shareholders’ equity investments. The board of
directors of Gwinnett also believes that the terms of the merger, including
the
basis of exchange of United common stock for Gwinnett common stock, which was
determined through arms-length negotiations between United and Gwinnett, are
fair and equitable and take into account the relative earning power of United
and Gwinnett, historic and anticipated operations, the economies of scale to
be
achieved through the merger, the trading prices of the shares of the respective
companies, and other pertinent factors.
The
board
of directors of Gwinnett believes that in the current regulatory and competitive
environment, a partnership with a larger organization with a more diverse
franchise, greater economies of scale, larger capital base, more diverse product
line, and a superior ability to attract talented employees provides a distinct
competitive advantage, and that following the merger the combined bank will
maintain the competitive advantage of a community banking business
model.
Unless
adjusted pursuant to the terms of the merger agreement, Gwinnett shareholders
may elect to receive shares of United common stock or cash in exchange for
each
of their shares of Gwinnett common stock in the merger on the following
basis:
|
·
|
2.2545
shares of United common stock; or
|
|
·
|
$72.8865
in cash, without interest;
|
provided,
that an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. Although each Gwinnett
shareholder may elect to receive cash or stock, if
the
aggregate cash elections are greater than the maximum, each cash election will
be reduced pro rata based on the amount that the aggregate cash elections exceed
the maximum. Alternatively, if the aggregate stock elections are greater than
the maximum, each stock election will be reduced pro rata based on the amount
that the aggregate stock elections exceed the maximum.
-17-
For
example, if you elect to receive cash for 1,000 Gwinnett shares and the
aggregate cash elections exceed by 10% the 306,137 Gwinnett
share
maximum, the shares for which you will be paid cash will be reduced to the
number determined by dividing your cash election by the aggregate cash elections
and multiplying that quotient by the 306,137 cash election maximum. This
proration will result in you receiving cash for 909 of your Gwinnett shares
and
being treated as if you had elected to receive stock for your remaining 91
shares.
At
the
time you vote with respect to the merger agreement, you will not know how much
cash or the number of United shares you will receive as a result of the merger.
United
will not issue fractional shares in the merger. Instead, you will receive a
cash
payment, without interest, for the value of any fraction of a share of United
common stock that you would otherwise be entitled to receive based on $32.33
per
share.
Because
a
portion of the merger consideration includes United common stock payable
at a
fixed exchange ratio for Gwinnett common stock and the market
value of the United common stock changes daily, the total value of the merger
consideration will fluctuate. Neither United nor Gwinnett can give you any
assurance as to the price of United common stock or the value of the merger
consideration when the merger becomes effective or when United’s shares are
delivered to you. As
an
illustration, assuming the merger had been completed on February 5, 2007,
the
date the merger agreement was executed, the aggregate merger consideration
payable pursuant to stock and cash elections (which does not include $10,165,563
payable to holders of Gwinnett options and SARs) would have been $210,493,434.
However, assuming the merger had been completed on April 13, 2007, the most
recent date available before these materials were mailed, the aggregate merger
consideration payable pursuant to stock and cash elections would have been
$195,807,914.
Under
the
merger agreement, the merger consideration may be adjusted if the average
closing price of United common stock for the 30 day period preceding the six
trading days prior to the Closing Date is greater than $33.56 or less than
$29.09 per share and the percentage change in the United stock price is greater
than the concurrent percentage change in the average price per share of the
peer
group of comparable companies specified in the merger agreement. In such case,
the stock or cash portion of the merger consideration may be adjusted by the
amount which would cause the value of the portion of the merger consideration
payable in United stock to be increased or decreased by the lesser of (i) the
difference between the percentage change in the United stock price and the
percentage change in the peer group stock price, or (ii) the difference between
the percentage change in the United stock price and a 10% change.
For
example, assume that United’s average closing price decreased 15% from $32.33 to
$27.48 and that the concurrent average price per share of the peer group
decreased 12%. In that case, the aggregate merger consideration would have
decreased from the $210,493,434 value on February 5, 2007 to $178,731,625.
Gwinnett would then have the right to terminate the merger agreement because
the
percentage decrease in the United stock price is greater than 10% and the
percentage change in the United stock price is greater than the percentage
change in the average price per share of the peer group. United can prevent
the
merger agreement from terminating by electing to increase the merger
consideration by an amount equal to 3% of the value of the stock consideration.
In this example, 3% is the difference between the percentage change in the
United stock price and the percentage change in the peer group stock price,
which is less than the difference between the percentage change in the United
stock price and 10%. This increase would cause the total merger consideration
to
increase to $184,252,375. If United elected not to make the adjustment, Gwinnett
could, but would not be required to, terminate the merger agreement and the
merger would not be completed.
-18-
Alternatively,
assume that United’s average closing price increased 15% from $32.33 to $37.18
and that the concurrent change in the average price per share of the peer group
increased 12%. In that case, the aggregate merger consideration would have
increased from the $210,493,434 value on February 5, 2007 to $233,944,805.
United would then have the right to adjust the merger consideration because
the
percentage increase in the United stock price is greater than 10% and the
percentage change in the United stock price is greater than the percentage
change in the average price per share of the peer group. United could elect
to
decrease the merger consideration by an amount equal to 3% of the value of
the
stock consideration. In this example, 3% is the difference between the
percentage change in the stock price and the percentage change in the peer
group
stock price, which is less than the difference between the percentage change
in
the United stock price and 10%. This decrease would cause the total merger
consideration to decrease to $228,424,055. Gwinnett would then have the right
to
terminate the merger agreement because of the adjustment and the merger would
not be completed. If United elected not to make the adjustment, the merger
agreement would not terminate.
This
summary highlights selected information regarding the merger consideration
adjustment and termination provisions in the merger agreement. For a more
complete description of these terms, you should carefully read the Agreement
and
Plan of Reorganization included in Appendix A to these materials. In addition,
we
urge you
to obtain current information on the market value of United shares. See
“Summary —
Markets for Common Stock” on page 7.
The
material features of the merger agreement are summarized below:
Effective
Date
The
merger agreement provides that the merger will be effective upon the approval
of
the Agreement and Plan of Reorganization by the shareholders of Gwinnett and
the
filing of the Certificate of Merger reflecting the merger with the Secretary
of
State of the State of Georgia.
The
merger and the bank merger have been approved by the Board of Governors of
the
Federal Reserve System, the Federal Deposit Insurance Corporation and the
Department of Banking and Finance of the State of Georgia. Management of United
and Gwinnett anticipate that the merger will become effective during the second
quarter of 2007.
Terms
of the Merger
If
Gwinnett shareholders approve the merger and subject to required regulatory
approvals, Gwinnett will be merged with and into United. In connection with
the
merger, Gwinnett shareholders will receive United common stock or cash or a
combination of both in exchange for their Gwinnett common stock, subject to
adjustment and proration as previously described. United shareholders will
continue to hold their existing United common stock.
-19-
If,
prior
to the merger closing, the outstanding shares of United common stock or Gwinnett
common stock are increased through a stock dividend, stock split, subdivision,
recapitalization, or reclassification of shares, or are combined into a lesser
number of shares by reclassification, reverse stock split, recapitalization,
reduction of capital or other transaction, the number of shares of United common
stock and/or cash to be delivered pursuant to the merger in exchange for a
share
of Gwinnett common stock will be proportionately adjusted.
If
the
merger is completed, Gwinnett will be merged with and into United. Following
the
merger, the articles of incorporation, bylaws, corporate identity, and existence
of United will not be changed, and Gwinnett will cease to exist as a separate
entity. Following the merger, Gwinnett’s subsidiary, First Bank of the South,
will be merged with and into United Community Bank, Blairsville, Georgia, a
wholly-owned Georgia bank subsidiary of United, and United Community Bank will
be the surviving bank.
Registration
of United Common Stock
As
a
condition to the merger, United agreed to register with the Securities and
Exchange Commission the shares of United common stock to be exchanged for shares
of Gwinnett common stock and to maintain the effectiveness of such registration
through the issuance of such shares in connection with the closing of the
merger. However, such registration will not cover resales of United common
stock
by any former holders of Gwinnett common stock, and United is under no
obligation to maintain the effectiveness of such registration, or to prepare
and
file any post-effective amendments to such registration, after the issuance
of
such shares in connection with the closing of the merger.
Gwinnett
Option and SAR Holders
Each
Gwinnett option holder has agreed not to exercise his or her options prior
to
the closing of the merger. In exchange, United has agreed to pay the holder
of
each option $72.8865 in cash less the exercise price of each option. United
has
also agreed to pay the holder of each Gwinnett stock appreciation right, which
we refer to as a SAR, $72.8865 in cash less the exercise price of each SAR.
Termination
and Conditions of Closing
The
merger agreement may be terminated at any time either before or after approval
of the merger agreement by the shareholders of Gwinnett, but not later than
the
effective date of the merger:
|
(1)
|
by
either party, if a material adverse change in the financial condition
or
business of the other party has occurred, or if material loss or
damage to
the other party’s properties or assets has occurred, which change, loss or
damage materially affects or impairs such party’s ability to conduct its
business;
|
|
(2)
|
by
either party, if the other party has not substantially complied with,
or
substantially performed, the terms, covenants or conditions of the
merger
agreement, and such non-compliance has not otherwise been
waived;
|
|
(3)
|
by
either party, in the event of a material breach by the other party
of any
covenant, agreement or obligation contained in the merger agreement
which
breach has not been cured within 20 days after the giving of written
notice of the breach or, if such breach is not capable of being cured
within 20 days, the breaching party has not begun to cure such breach
within 20 days after such written
notice;
|
|
(4)
|
by
either party, if the terminating party learns of any facts or conditions
not disclosed by the other party in the merger agreement, or by United
if
it learns of any facts or conditions not disclosed by Gwinnett in
its
financial statements or disclosure memorandum, or by Gwinnett if
it learns
of any facts or conditions not disclosed by United in its SEC reports,
which facts or conditions were required to be disclosed, and which
materially and adversely affects such business, properties, assets,
or
earnings or the ownership, value or continuance
thereof;
|
-20-
|
(5)
|
by
either party, if any action, suit or proceeding is instituted or
threatened against either party seeking to restrain, prohibit or
obtain
substantial damages in respect of the merger agreement or the consummation
of the transactions, which, in the good faith opinion of the terminating
party makes consummation of the transactions
inadvisable;
|
|
(6)
|
by
either party, if the merger has not occurred on or before July 31,
2007;
|
|
(7)
|
by
United, if the holders of more than 5% of the outstanding shares
of
Gwinnett common stock elect to exercise statutory dissenters’ rights;
|
|
(8)
|
by
either party, if the Gwinnett shareholders do not approve the merger
agreement; or
|
|
(9)
|
by
Gwinnett, as described in “—
Merger Consideration Adjustment and Termination Rights” on page
18;
|
Gwinnett
must pay to United a termination fee of $7.5 million, if, while a competing
offer for the acquisition of Gwinnett by a party other than United is
outstanding or after such an offer has been accepted by Gwinnett:
| · |
either
party terminates the agreement because the Gwinnett shareholders
did not
approve the merger;
|
| · |
Gwinnett
terminates the agreement other than pursuant to either (1)-(4) listed
above; or
|
| · |
United
terminates the agreement pursuant to either (2)-(5) listed
above.
|
The
following summarizes the required conditions of closing:
| · |
the
accuracy of the representations and warranties of all parties contained
in
the merger agreement and related documents as of the date when made
and
the effective date;
|
| · |
the
performance of all agreements and the satisfaction of all conditions
required by the merger agreement;
|
|
·
|
the
delivery of officers’ certificates, secretary’s certificates, and legal
opinions to Gwinnett and United by the
other;
|
|
·
|
the
execution of an agreement by each director and executive officer
of
Gwinnett, pursuant to which each of them agrees: (i) to recommend,
subject
to any applicable fiduciary duty, to Gwinnett shareholders approval
of the
merger; (ii) to vote the capital stock of Gwinnett owned or controlled
by
them in favor of the merger; (iii) to transfer or assign shares of
United
common stock, received by them in connection with the merger only
in
compliance with the 1933 Securities Exchange Act, applicable state
securities laws and the rules and regulations promulgated under either;
and (iv) with respect to directors only, to not compete with United
for a
period of two years after the closing date of the
merger.
|
| · |
approval
of the merger by at least a majority of the shares held by Gwinnett
shareholders;
|
| · |
approvals
of governmental authorities, and the expiration of any regulatory
waiting
periods;
|
-21-
|
·
|
effectiveness
of the registration statement of United relating to the shares of
United
common stock to be issued to Gwinnett shareholders in the merger,
of which
this document forms a part;
|
| · |
the
receipt by United of a letter from Mauldin & Jenkins Certified Public
Accounts, LLC with respect to Gwinnett’s unaudited financial statements
from December 31, 2006 through the date of the most recent monthly
financial statements available in the ordinary course of business;
and
|
| · |
the
issuance of certificate of merger by the Secretary of State of the
State
of Georgia.
|
Surrender
of Certificates and Election of Consideration
After
the
effective date of the merger, each holder of Gwinnett common stock (as of that
date) will be required to deliver the certificates representing such holder’s
shares of Gwinnett common stock to United’s exchange agent, Illinois Stock
Transfer, in order to receive payment of the consideration from United in
connection with the merger. Each holder of Gwinnett common stock must complete
and return the enclosed election form by _______ __, 2007 indicating his, her
or
its preference as to the proportion of United common stock and/or cash he,
she
or it wishes to receive upon delivery of his, her or its shares of Gwinnett
common stock.
Although
each Gwinnett shareholder may elect to receive all cash or all stock, an
aggregate of no more than 306,137 shares of Gwinnett common stock may be
exchanged for cash and an aggregate of no more than 2,524,764 shares of Gwinnett
common stock may be exchanged for United common stock. Accordingly,
if the aggregate cash elections are greater than the maximum, each cash election
will be reduced pro rata based on the amount that the aggregate cash elections
exceed the maximum. Alternatively, if the aggregate stock elections are greater
than the maximum, each stock election will be reduced pro rata based on the
amount that the aggregate stock elections exceed the maximum.
If a
holder does not make an election by ________ ___, 2007, the holder will be
treated as though it elected to receive cash unless cash has been fully
subscribed by the electing Gwinnett shareholders, in which event such holder
will be treated as if he, she or it elected stock.
After
delivering shares of Gwinnett common stock, the holder will receive either
2.2545 shares of United common stock, or a cash payment of $72.8865, without
interest per share of Gwinnett common stock that such holder owned on the
effective date of the merger. In lieu of a fractional share, a cash payment,
without interest, will be paid for any fractional interest in United common
stock.
Until
a
holder delivers Gwinnett common stock to United, the holder may not receive
payment of any dividends or other distributions on shares of United common
stock
into which his, her, or its shares of Gwinnett common stock have been converted,
if any, and may not receive any notices sent by United to its shareholders
with
respect to those shares.
The
holders of a majority of the outstanding shares of Gwinnett common stock
entitled to vote at the special meeting must approve the merger agreement for
the merger to be completed. Abstentions from voting and broker non-votes will
be
included in determining whether a quorum is present and will have the effect
of
a vote against the merger agreement.
As
of
_______ __, 2007, the record date for determining the shareholders entitled
to
notice of and to vote at the special meeting, the outstanding voting securities
of Gwinnett consisted of 2,830,901 shares of Gwinnett common stock, with each
registered holder of Gwinnett common stock being entitled to one vote per share.
All of the directors, executive officers and 5% shareholders of Gwinnett have
agreed to vote their shares in favor of the merger. Gwinnett’s directors,
executive officers and 5% shareholders own 1,228,697 shares,
or 43.40%, of Gwinnett common stock (excluding options).
-22-
Under
the
terms of the merger agreement, after the closing of the merger United plans
to
increase the size of its Board from 11 members to 12 and appoint John D.
Stephens, the current chairman of the board of directors of Gwinnett, to the
board of directors of United. Mr. Stephens, age 66, has served as the chairman
of the board of directors of Gwinnet and its bank subsidiary, First Bank of
the
South, since May 2000. Mr. Stephens is also the president and chief executive
officer of Stephens Rock & Dirt, a position he has held since
2001.
As
a
director of United, Mr. Stephens will receive an annual retainer of $20,000
and
a separate meeting fee of $3,000 for each board meeting he attends in 2007.
The
annual retainer and meeting fees are payable in cash or may be deferred pursuant
to United’s Deferred Compensation Plan. In addition to the retainer and meeting
fees, United reimburses non-employee directors for their travel expenses
incurred in attending meetings of the board of directors or its committees,
as
well as for fees and expenses incurred in attending director education seminars
and conferences. Directors do not receive any stock option or other equity
awards nor any other personal benefits.
All
expenses incurred by United in connection with the merger, including all fees
and expenses of its agents, representatives, counsel and accountants and the
fees and expenses related to filing these materials and all regulatory
applications with state and federal authorities will be paid by United. All
expenses incurred by Gwinnett in connection with the merger agreement, including
all fees and expenses of its agents, representatives, counsel and accountants
will be paid by Gwinnett. The cost of reproducing and mailing these materials
will be shared by the parties, with each party paying 50%.
The
merger agreement provides that, pending consummation of the merger, Gwinnett
will, except with the written consent of United:
| · |
conduct
its business in the ordinary course, without the creation of any
indebtedness for borrowed money other than deposits and ordinary
and
customary accounts and credit
arrangements;
|
| · |
maintain
its properties and assets in good operating condition, ordinary wear
and
tear excepted;
|
| · |
maintain
and keep in full force and effect all required
insurance;
|
| · |
preserve
its capital structure and make no change in its authorized or issued
capital stock or other securities, and grant no right or option to
purchase or otherwise acquire any of its capital stock or
securities;
|
| · |
not
pay cash dividends other than cash dividends payable prior to the
effective date of closing not to exceed, in the aggregate, $3.80
per share
of Gwinnett common stock to record holders as of February 5,
2007;
|
-23-
|
·
|
not
redeem, purchase or otherwise acquire, directly or indirectly, any
of its
capital stock;
|
| · |
make
no amendment to its articles of incorporation or bylaws, and preserve
its
corporate existence and powers;
|
| · |
acquire
no business, corporation, partnership, association or other entity
or
division thereof, and no assets which are material, in the aggregate,
to
it;
|
| · |
not
sell, mortgage, lease, buy or otherwise acquire, transfer or dispose
of
any real property or interest therein, or any tangible or intangible
asset
(other than in the ordinary course of
business);
|
| · |
make
no change in its banking and safe deposit
arrangements;
|
| · |
not
enter into, renew or cancel any material
contracts;
|
| · |
maintain
all books and records in the usual, regular and ordinary
course;
|
| · |
file
all reports required to be filed with any regulatory or governmental
agencies, and deliver copies of such reports to United promptly after
they
are filed; and
|
| · |
adopt
no new severance plan and grant no severance or termination payments
to
any officer, director or employee, other than in accordance with
existing
agreements or the agreements that are conditions to the closing of
the
merger.
|
In
addition, the merger agreement provides that Gwinnett will promptly advise
United, orally and in writing, of any change or event having, or which the
Gwinnett management believes could have, a material adverse effect on the
assets, liabilities, business, operations or financial condition of
Gwinnett.
Except
as
set forth below, no director or officer of Gwinnett, or any of their associates,
has any direct or indirect material interest in the merger other than owning
shares of Gwinnett common stock which will be converted in the merger into
United common stock and cash. United and Gwinnett do not anticipate that the
merger will result in any material change in compensation to employees of
Gwinnett other than as set forth below.
Glenn
S.
White, President and Chief Executive Officer of Gwinnett will terminate his
employment agreement with Gwinnett and has entered into a settlement agreement
with United for a payment of three times the sum of his current base salary,
average annual bonus of the three most recent years and annual automobile
allowance, or $939,550, as required by his existing employment agreement upon
his termination following change in control of Gwinnett and reduced to prevent
such payment from being an amount that would be considered an “excess parachute
payment” under the Internal Revenue Code.
Mr.
White
has entered into a new employment agreement with United for a rolling three-year
term that provides for a payment of an amount equal to three times the sum
of
his base salary then in effect, an amount equal to his average annual bonus
of
the three most recent years and his monthly automobile allowance multiplied
by
twelve, subject to any reduction necessary to prevent such payment from being
considered an “excess parachute payment”, if, within six months following a
change of control of United, either Mr. White terminates his employment or
United terminates Mr. White other than for cause. The agreement also provides
that, if Mr. White is terminated at any time by United without cause, Mr. White
will receive (i) his base salary for a period of thirty-six months, and (ii)
an
amount equal to two times the average annual bonus paid to Mr. White for the
three most recent fiscal years. Additionally, if Mr. White terminates his
employment from United with cause he will be entitled to receive his base salary
for a period of the lesser of thirty-six months following the effective date
of
the termination or the remaining term of the agreement. United will also grant
Mr. White 10,000 shares of restricted stock, which will vest on the fifth
anniversary of the closing of the merger, and options to purchase 25,000 shares.
The options vest as follows: 50% on the third anniversary, 25% on the fourth
anniversary and 25% on the fifth anniversary of the closing of the
merger.
-24-
Steven
W.
Williams, President of First Bank of the South and Executive Vice-President
of
Gwinnett will terminate his employment agreement with Gwinnett and has entered
into a settlement agreement with United for a payment of two times the sum
of
his current base salary, average annual bonus of the three most recent years
and
annual automobile allowance, or $443,467, as required by his existing employment
agreement upon his termination following change in control of
Gwinnett.
Mr.
Williams has entered into a new employment agreement with United for a rolling
two-year term that provides for a payment of an amount equal to two times the
sum of his base salary then in effect, an amount equal to his average annual
bonus of the three most recent years and his monthly automobile allowance
multiplied by twelve, subject to any reduction necessary to prevent such payment
from being considered an “excess parachute payment”, if, within six months
following a change of control of United, either Mr. Williams terminates his
employment or United terminates Mr. Williams other than for cause. The agreement
also provides that, if Mr. Williams is terminated at any time by United without
cause, Mr. Williams will continue to receive his base salary for a period of
twenty-four months. Additionally, if Mr. Williams terminates his employment
from
United with cause he will be entitled to receive his base salary for a period
of
the lesser of twenty-four months following the effective date of the termination
or the remaining term of the agreement. United will also grant Mr. Williams
7,000 shares of restricted stock, which will vest on the fifth anniversary
of
the closing of the merger, and options to purchase 17,500 shares. The options
vest as follows: 50% on the third anniversary, 25% on the fourth anniversary
and
25% on the fifth anniversary of the closing of the merger.
Andrew
R.
Pourchier, Executive Vice President, Chief Financial Officer and Secretary
of
Gwinnett, has entered into a one year consulting agreement with United and
will
terminate his employment agreement with Gwinnett for a payment of two times
the
sum of his current base salary, average annual bonus of the three most recent
years and annual automobile allowance, or $442,467, as required by his existing
employment agreement upon his termination following a change in control of
Gwinnett.
At
the
closing of the merger, four other Gwinnett officers will terminate their
respective employment agreement with Gwinnett and have entered into a settlement
agreement with United for aggregate payments of $972,667, as required by their
existing employment agreements upon their respective termination following
a
change in control of Gwinnett. Each of these officers have entered into an
employment agreement with United that provides for a payment upon their
respective termination following a change in control.
In
exchange for a payment by United, twelve Gwinnett lending officers have entered
into non-competition agreements with United that will prohibit the officers
from
competing with United after the closing of the merger if their employment is
terminated in exchange for aggregate payments of $700,000.
United
will generally indemnify and provide liability insurance to the present
directors and officers of Gwinnett Commercial and First Bank of the South for
a
period of three years following the closing of the merger for actions taken
by
such directors and officers in such capacity.
-25-
United
has agreed to provide to officers and employees of Gwinnett who continue
employment with United or its subsidiaries employee benefits under employee
benefit plans, on terms and conditions substantially similar to those currently
provided to similarly situated United officers and employees.
United
has agreed to appoint John D. Stephens, chairman of the board of directors
of
Gwinnett, to the board of directors of United following the closing of the
merger.
Following
the merger you will no longer be a Gwinnett shareholder and, if you receive
shares of United following the merger, your rights as a shareholder will no
longer be governed by Gwinnett’s articles of incorporation and bylaws. You will
be a United shareholder and your rights as a United shareholder will be governed
by United’s articles of incorporation and bylaws. Your former rights as a
Gwinnett shareholder and your new rights as a United shareholder are different
in certain ways, including the following:
Composition
of Board of Directors
Gwinnett’s
board of directors consists of 15 members, while United’s consists of 11
members.
Removal
of Directors
The
bylaws of Gwinnett provide that directors may be removed with or without cause,
upon the affirmative vote of the holders of a majority of the issued and
outstanding shares entitled to vote in an election of Directors.
The
articles of incorporation of United provide that directors may be removed only
for cause and only upon the affirmative vote of the holders of two-thirds of
the
issued and outstanding shares entitled to vote on the removal.
Approval
of Business Transactions
Neither
the articles of incorporation nor bylaws of Gwinnett require any supermajority
approval of business transactions.
Neither
the articles of incorporation nor bylaws of United require any supermajority
approval of business transactions generally. The articles of incorporation
of
United provide that in order to engage in a merger, consolidation, sale or
transfer or disposition of all or substantially all of the assets of United,
sale of $1 million or more in securities, a plan of liquidation, or any other
transaction with any holder of 10% or more of the issued and outstanding shares
of United that would increase the percentage ownership of such shareholder,
such
transaction must be approved by either a resolution adopted by at least
three-fourths of the directors then in office, or the affirmative vote of the
holders of at least 75% of the outstanding shares of common stock of United
and
the separate affirmative vote of at least 75% of the outstanding shares of
common stock, excluding those shares held by such shareholder.
Amendments
to Articles of Incorporation and Bylaws
Gwinnett’s
articles of incorporation provide that action by the shareholders with respect
to bylaws shall be taken by an affirmative vote of a majority of all shares
entitled to elect Directors, and action by the Board of Directors with respect
to bylaws shall be taken by an affirmative vote of a majority of all Directors
then holding office. The shareholder may provide by resolution that any bylaw
provision repealed, amended, adopted or altered by them may not be repealed,
amended, adopted or altered by the Board of Directors.
-26-
The
articles of incorporation of United provide that its articles of incorporation
may be amended to increase its authorized shares by a majority vote of the
outstanding shares. Otherwise, its articles of incorporation and bylaws may
be
amended only by the affirmative vote of holders of two-thirds of the shares
of
United capital stock then issued and outstanding and entitled to
vote.
Securities
Exchange Act Reporting
United
is
subject to filing requirements under the Securities Exchange Act. These filing
requirements are both periodic and transaction-based obligations whereby United
discloses certain information to the Securities and Exchange Commission, and
this information is subsequently made available to the public.
Gwinnett
is not subject to any of the filing requirements with the Securities and
Exchange Commission.
United
declared cash dividends of $.09 per share in the first quarter of 2007, $.32
per
share in 2006, $.28 per share in 2005 and $.24 per share in 2004. United intends
to continue paying cash dividends, but the amount and frequency of cash
dividends, if any, will be determined by United’s board of directors after
consideration of certain non-financial and financial factors including earnings,
capital requirements, and the financial condition of United, and will depend
on
cash dividends paid to it by its subsidiary banks. The ability of United’s
subsidiary banks to pay dividends to it is restricted by certain regulatory
requirements.
Pursuant
to the terms of the merger agreement, Gwinnett declared a cash dividend of
$3.80
per share (which includes a regular cash dividend of $1.55 per share) to record
holders as of February 5, 2007 payable on March 12, 2007. Gwinnett declared
cash
dividends of $1.45 per share in 2006, $1.35 per share in 2005 and $1.25 per
share in 2004.
The
merger will be accounted for as a purchase for financial reporting and
accounting purposes. After the merger, the results of operations of Gwinnett
will be included in the consolidated financial statements of United. The merger
consideration will be allocated based on the fair values of the assets acquired
and the liabilities assumed. Any excess of cost over fair value of the net
tangible and identified intangible assets of Gwinnett acquired will be recorded
as goodwill. Any identified intangible asset may be amortized by charges to
operations under generally accepted accounting principles.
Although
United, through these materials, will register the United common stock to be
issued in the merger under the Securities Act of 1933, the former directors,
executive officers, and 10% or greater shareholders of Gwinnett and certain
other affiliates of United (as defined in Rule 405 of the Securities Act) may
not resell the United common stock received by them unless those sales are
made
pursuant to an effective registration statement under the Securities Act, or
under Rules 144 and 145 of the Securities Act, or another exemption from
registration under the Securities Act. Rules 144 and 145 limit the amount of
United common stock or other equity securities of United that those persons
may
sell during any three-month period, and require that certain current public
information with respect to United be available and that the United common
stock
be sold in a broker’s transaction or directly to a market maker in United common
stock.
-27-
The
Board
of Governors of the Federal Reserve System has approved the merger. In
determining whether to grant that approval, the Federal Reserve considered
the
effect of the merger on the financial and managerial resources and future
prospects of the companies and banks concerned and the convenience and needs
of
the communities to be served.
The
Georgia Department of Banking and Finance has also approved the merger.
The
Department of Banking and Finance’s review of the application did not include an
evaluation of the proposed transaction from the financial perspective of the
individual shareholders of Gwinnett. Further, no shareholder should construe
an
approval of the application by the Department of Banking and Finance to be
a
recommendation that the shareholders vote to approve the proposal. Each
shareholder entitled to vote should evaluate the proposal to determine the
personal financial impact of the completion of the proposed transaction.
Shareholders not fully knowledgeable in such matters are advised to obtain
the
assistance of competent professionals in evaluating all aspects of the proposal
including any determination that the completion of the proposed transaction
is
in the best financial interest of the shareholder.
Georgia
law confers rights upon shareholders of corporations organized under Georgia
law, such as Gwinnett, in certain circumstances, to demand payment for the
fair
value of all or a portion of their shares, and it establishes procedures for
the
exercise of those rights. These shareholder rights are referred to within this
document as “dissenters’ rights”.
In
general, if the merger is completed, under Article 13 of the Georgia Business
Corporation Code, a Gwinnett shareholder who dissents from the merger, and
who
otherwise complies with the provisions of Article 13, is entitled to demand
and
receive payment in cash of an amount equal to the fair value of all, but not
less than all, of such shareholder’s shares of Gwinnett common
stock.
For
the
purpose of determining the amount to be received in connection with the exercise
of statutory dissenters’ rights under the Georgia Business Corporation Code,
Georgia law provides that the fair value of a dissenting Gwinnett shareholder’s
common stock equals the value of the shares immediately before the effective
date of the merger, excluding any appreciation or depreciation in anticipation
of the merger.
A
dissenting shareholder of Gwinnett must exercise dissenters’ rights with respect
to all of the shares owned of record by such shareholder, other than those
shares registered in the dissenting shareholder’s name but beneficially owned by
another person. Shares registered in the name of a dissenting shareholder but
beneficially owned by another person, may be excluded from a dissenting
shareholder’s dissent only if the dissenting shareholder notifies Gwinnett in
writing of the name and address of each person on whose behalf dissenters’
rights are being asserted and the number of shares owned beneficially by such
person.
-28-
A
Gwinnett shareholder who choosing to dissent from the merger and to receive
payment in cash of the fair value of shares of Gwinnett common stock owned
by
such shareholder in accordance with the requirements of the Georgia Business
Corporation Code must:
| · |
deliver
to Gwinnett, prior to the time the shareholder vote on the merger
agreement is taken, a written notice of such shareholder’s intent to
demand payment for those shares registered in the dissenting shareholder’s
name if the merger is completed;
and
|
| · |
not
vote those shares in favor of the merger
agreement.
|
Any
filing of a written notice of intent to dissent with respect to the merger
should be sent to: Andrew R. Pourchier, Executive Vice President, Chief
Financial Officer and Secretary, Gwinnett Commercial Group, Inc., 2230 Riverside
Parkway, Lawrenceville, Georgia 30043. A
vote against the merger agreement alone will not satisfy the requirements for
compliance with Article 13 of the Georgia Business Corporation Code. A
shareholder who wishes to dissent from the merger must, as an initial matter,
separately comply with all
of applicable conditions listed above.
Within
ten days after the vote of Gwinnett shareholders is taken at the special
meeting, Gwinnett will provide to each shareholder who timely submitted a
written notice of intent to dissent, and who did not vote in favor of the merger
at the special meeting, a dissenters’ notice that:
| · |
states
where the dissenting shareholder must send a payment demand, and
where and
when the certificates for the dissenting shareholder’s shares, if any, are
to be deposited;
|
| · |
sets
a date by which Gwinnett must receive the dissenting shareholder’s payment
demand; and
|
| · |
is
accompanied by a copy of Article 13 of the Georgia Business Corporation
Code.
|
Following
receipt of the dissenters’ notice from Gwinnett, each dissenting Gwinnett
shareholder must deposit Gwinnett share certificates representing the shares
subject to the dissent with Gwinnett, or its successor and demand payment from
Gwinnett in accordance with the terms of the dissenters’ notice. A
dissenting shareholder who does not deposit those share certificate(s) and
demand payment from Gwinnett by the date set forth in the dissenters’ notice
will forfeit any right to payment under Article 13 of the Georgia Business
Corporation Code.
Within
ten days after the later of the date that the vote of Gwinnett shareholders
is
taken at the special meeting, or the date on which Gwinnett receives a payment
demand, Gwinnett will send a written offer to each shareholder who complied
with
the provisions set forth in the dissenters’ notice to pay each such shareholder
an amount that Gwinnett estimates to be the fair value of those shares, plus
accrued interest. The offer of payment will be accompanied by:
| · |
Gwinnett’s
balance sheet as of the end of a fiscal year ending not more than
16
months before the date of making an offer, an income statement for
that
year, a statement of changes in shareholders’ equity for that year, and
the latest available interim financial statements, if
any;
|
| · |
an
explanation of how any interest was
calculated;
|
| · |
a
statement of the dissenting shareholder’s right to demand payment of a
different amount under Section 14-2-1327 of the Georgia Business
Corporation Code; and
|
| · |
a
copy of Article 13 of the Georgia Business Corporation
Code.
|
A
dissenting shareholder choosing to accept Gwinnett’s offer of payment must do so
by written notice to Gwinnett within 30 days after receipt of Gwinnett’s offer
of payment. A dissenting shareholder not responding to that offer within the
30-day period will be deemed to have accepted the offer of payment. Gwinnett
must make payment to each shareholder who responds to the offer of payment
within 60 days after the making of the offer of payment, or the effective date
of the merger, whichever is later. Upon payment, the dissenting shareholder
will
cease to have any interest in such shares of Gwinnett common stock.
-29-
If
a
dissenting shareholder does not accept, within 30 days after Gwinnett’s offer,
the estimate of fair value in payment for such shares and interest due thereon
and demands payment of some other estimate of the fair value of the shares
and
interest due thereon, then Gwinnett, within 60 days after receiving the payment
demand of a different amount from a dissenting shareholder, must file an action
in the Superior Court in Gwinnett County, Georgia, requesting that the fair
value of those shares be determined. Gwinnett must make all dissenting
shareholders whose demands remain unsettled parties to the proceeding. If
Gwinnett does not commence the proceeding within that 60-day period, it will
be
required to pay each dissenting shareholder whose demand remains unsettled
the
amount demanded by the dissenting shareholder.
Gwinnett
urges its shareholders to read all of the dissenter’s rights provisions of the
Georgia Business Corporation Code, which are reproduced in full in Appendix
B to
these materials and which are incorporated herein by reference.
Consideration
Received for Gwinnett Common Stock
Gwinnett
has received an opinion from Kilpatrick Stockton, LLP to the effect that,
assuming the merger is completed in accordance with the terms of the merger
agreement:
| · |
the
merger and the issuance of shares of United common stock in connection
with the merger, as described in the merger agreement, will constitute
a
tax-free reorganization under Section 368(a)(1)(A) of the Internal
Revenue
Code of 1986, as amended;
|
| · |
no
gain or loss will be recognized by Gwinnett as a result of the
merger;
|
| · |
no
gain or loss will be recognized by holders of Gwinnett common stock
upon
the exchange of Gwinnett common stock solely for United common stock
as a
result of the merger;
|
| · |
if
pursuant
to the merger a Gwinnett shareholder exchanges all of his or her
shares of
Gwinnett common stock for a combination of United stock and cash,
the
Gwinnett shareholder will generally recognize gain (but not loss)
in an
amount equal to the lesser of (i) the amount of gain realized
(i.e.,
the excess of the sum of the amount of cash, but not cash received
in lieu
of a fractional share, and the fair market value of the United common
stock received pursuant to the merger over such shareholder’s adjusted tax
basis in its shares of Gwinnett common stock surrendered), and
(ii) the amount of cash (but not cash in lieu of a fractional share)
received pursuant to the merger. Any recognized gain will generally
be
long-term capital gain if the Gwinnett shareholder’s holding period with
respect to the Gwinnett common stock surrendered is more than one
year.
If, however, the cash received has the effect of the distribution
of a
dividend, the gain would be treated as a dividend to the extent of
the
holder’s ratable share of Gwinnett’s
accumulated earnings and profits as calculated for federal income
tax
purposes;
|
|
·
|
gain
or loss will be recognized pursuant to Section 302 of the Internal
Revenue
Code of 1986, as amended, by Gwinnett common stockholders upon their
receipt of solely cash for their shares of Gwinnett common stock,
including cash received (i) as a result of a cash election; (ii)
in lieu
of fractional shares of United common stock, and (iii) upon their
exercise
of dissenters’ rights;
|
-30-
| · |
the
aggregate tax basis of United common stock received by shareholders
of
Gwinnett pursuant to the merger will be the same as the tax basis
of the
shares of Gwinnett common stock exchanged therefore, (i) decreased
by any
portion of such tax basis allocated to fractional shares of United
common
stock that are treated as redeemed by United, (ii) decrease by the
amount
of cash received by a shareholder in the merger (other than cash
received
with respect to fractional shares), and (iii) increased by the amount
of
gain recognized by a shareholder in the merger (other than gain recognized
with respect to fractional shares);
|
| · |
the
holding period of the shares of United common stock received by the
shareholders of Gwinnett will include the holding period of the shares
of
Gwinnett common stock exchanged, provided that the common stock of
Gwinnett is held as a capital asset on the date of the consummation
of the
merger; and
|
|
·
|
as
a result of the subsidiary merger of First Bank of the South into
United
Community Bank, no gain or loss shall be recognized to any of First
Bank
of the South, United Community Bank, Gwinnett, United or holders
of
Gwinnett common stock.
|
Consideration
Received for Gwinnett Options and SARs
Holders
of Gwinnett options and/or SARs issued to the holder in connection with their
employment by Gwinnett will recognize ordinary income upon their receipt of
cash
in exchange for or cancellation of each option or SAR, and may be subject to
payroll tax withholding on such payment. Holders of Gwinnett options or warrants
received other than in connection with their employment by Gwinnett will
recognize ordinary income or capital gain (or loss) upon the receipt of cash
in
exchange for or cancellation of such option or warrant depending on a variety
of
individual circumstances, including how long such options or warrants were
held
and the circumstances under which they were granted. No opinion has been
provided by Kilpatrick Stockton regarding the character of such income or gain
resulting from the receipt of cash with respect to such options or warrants,
and
such holders are advised to consult with their own tax advisors as to any tax
consequences of the exchange of their options or warrants.
No
ruling
will be requested from the Internal Revenue Service with respect to any Federal
income tax consequences of the merger.
The
preceding discussion relates to the material federal income tax consequences
of
the merger to Gwinnett shareholders generally. You are advised to consult your
own tax advisors as to any state, local, or other tax consequences of the
merger.
-31-
Gwinnett
retained Burke Capital Group, L.L.C. to act as its financial advisor in
connection with a possible business combination, and Burke acted as financial
advisor to Gwinnett in connection with its proposed merger with United and
participated in certain of the negotiations leading to the merger agreement.
In
connection with Burke’s engagement, Gwinnett asked Burke to evaluate the
fairness of the merger consideration to Gwinnett’s stockholders from a financial
point of view. At the February 5, 2007 meeting of the Gwinnett board to evaluate
the merger, Burke delivered to the board its oral and written opinion that,
based upon and subject to various matters set forth in its opinion, the merger
consideration was fair to Gwinnett’s stockholders from a financial point of
view. At this meeting, Gwinnett’s board voted to approve the merger and
subsequently executed the merger agreement. Burke has consented to the inclusion
of its opinion in these materials.
THE
FULL TEXT OF BURKE’S WRITTEN OPINION IS ATTACHED AS APPENDIX C TO THESE
MATERIALS.
THE OPINION OUTLINES MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS
ON
THE REVIEW UNDERTAKEN BY BURKE IN RENDERING ITS OPINION. THE DESCRIPTION OF
THE
OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
OPINION. WE URGE YOU TO READ THE ENTIRE OPINION CAREFULLY IN CONNECTION WITH
YOUR CONSIDERATION OF THE PROPOSED MERGER.
BURKE’S
OPINION SPEAKS ONLY AS OF THE DATE OF THE OPINION. THE OPINION WAS DIRECTED
TO
THE GWINNETT BOARD AND IS DIRECTED ONLY TO THE FAIRNESS OF THE MERGER
CONSIDERATION TO GWINNETT SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW. IT DOES
NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF GWINNETT TO ENGAGE IN THE MERGER
OR ANY OTHER ASPECT OF THE MERGER AND IS NOT A RECOMMENDATION TO ANY GWINNETT
SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SHAREHOLDER MEETING
WITH RESPECT TO THE MERGER, OR ANY OTHER MATTER.
In
connection with rendering its February 5, 2007 opinion, Burke reviewed and
considered, among other things:
|
·
|
The
merger agreement and certain of the schedules in the related disclosure
memorandum;
|
|
·
|
Certain
publicly available financial statements and other historical financial
information of Gwinnett and United that it deemed relevant;
|
|
·
|
Projected
earnings estimates for Gwinnett for the years ending December 31,
2007
through 2011 that are not publicly available, prepared by and reviewed
with senior management of Gwinnett and the views of senior management
regarding Gwinnett’s business, financial condition, results of operations
and future prospects;
|
|
·
|
Internal
financial and operating information with respect to the business,
operations and prospects of Gwinnett furnished to Burke by Gwinnett
that
is not publicly available;
|
|
·
|
The
reported prices and trading activity of United common stock and compared
those prices and activity with other publicly-traded companies that
Burke
deemed relevant;
|
|
·
|
The
pro forma financial impact of the merger on United’s ability to complete a
transaction from a regulatory standpoint with an emphasis on the
pro forma
capital ratios, based on assumptions determined by senior management
of
Gwinnett and Burke;
|
-32-
|
·
|
The
financial terms of other recent business combinations in the commercial
banking industry, to the extent publicly
available;
|
|
·
|
The
current market environment generally and the banking environment
in
particular; and
|
|
·
|
Such
other information, financial studies, analyses and investigations
and
financial, economic and market criteria as it considered relevant.
|
Gwinnett’s
Board of Directors did not limit the investigations made or the procedures
followed by Burke in giving its opinion.
In
performing its reviews and analyses and in rendering its opinion, Burke assumed
and relied upon the accuracy and completeness of all the financial information,
analyses and other information that was publicly available or otherwise
furnished to, reviewed by or discussed with it and further relied on the
assurances of management of Gwinnett and United that they were not aware of
any
facts or circumstances that would make such information inaccurate or
misleading. Burke was not asked to and did not independently verify the accuracy
or completeness of such information and it did not assume responsibility or
liability for the accuracy or completeness of any of such information. Burke
did
not make an independent evaluation or appraisal of the assets, the collateral
securing assets or the liabilities, contingent or otherwise, of Gwinnett or
United or any of their respective subsidiaries, or the ability to collect any
such assets, nor was it furnished with any such evaluations or appraisals.
Burke
is not an expert in the evaluation of allowances for loan losses and it did
not
make an independent evaluation of the adequacy of the allowance for loan losses
of Gwinnett or United, nor did it review any individual credit files relating
to
Gwinnett or United. With Gwinnett’s consent, Burke assumed that the respective
allowances for loan losses for both Gwinnett and United were adequate to cover
such losses and will be adequate on a pro forma basis for the combined entity.
In addition, Burke did not conduct any physical inspection of the properties
or
facilities of Gwinnett or United. Burke is not an accounting firm and it relied
on the reports of the independent accountants of Gwinnett and the directors
of
United for the accuracy and completeness of the financial statements furnished
to it.
Burke’s
opinion was necessarily based upon market, economic and other conditions as
they
existed on, and could be evaluated as of, the date of its opinion. Burke
assumed, in all respects material to its analysis, that all of the
representations and warranties contained in the merger agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements and that the conditions precedent in the merger agreement are not
waived. Burke also assumed that there has been no material change in Gwinnett’s
and United’s assets, financial condition, results of operations, business or
prospects since the date of the last financial statements made available to
them, that Gwinnett and United will remain as going concerns for all periods
relevant to its analyses.
In
rendering its February 5, 2007 opinion, Burke performed a variety of financial
analyses. The following is a summary of the material analyses performed by
Burke, but is not a complete description of all the analyses underlying Burke’s
opinion. The summary includes information presented in tabular format. In order
to fully understand the financial analyses, these tables must be read together
with the accompanying text. The tables alone do not constitute a complete
description of the financial analyses. The preparation of a fairness opinion
is
a complex process involving subjective judgments as to the most appropriate
and
relevant methods of financial analysis and the application of those methods
to
the particular circumstances. The process, therefore, is not necessarily
susceptible to a partial analysis or summary description. Burke believes that
its analyses must be considered as a whole and that selecting portions of the
factors and analyses considered without considering all factors and analyses,
or
attempting to ascribe relative weights to some or all such factors and analyses,
could create an incomplete view of the evaluation process underlying its
opinion. Also, no company included in Burke’s comparative analyses described
below is identical to Gwinnett or United and no transaction is identical to
the
merger. Accordingly, an analysis of comparable companies or transactions
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors
that
could affect the public trading values or merger transaction values, as the
case
may be, of Gwinnett or United and the companies to which they are being
compared.
-33-
The
earnings projections used and relied upon by Burke in its analyses were based
upon internal projections of Gwinnett. Burke assumed for purposes of its
analyses that such performance would be achieved. Burke expressed no opinion
as
to such financial projections or the assumptions on which they were based.
The
financial projections furnished to Burke by Gwinnett were prepared for internal
purposes only and not with a view towards public disclosure. These projections,
as well as the other estimates used by Burke in its analyses, were based on
numerous variables and assumptions which are inherently uncertain and,
accordingly, actual results could vary materially from those set forth in such
projections.
In
performing its analyses, Burke also made numerous assumptions with respect
to
industry performance, business and economic conditions and various other
matters, many of which cannot be predicted and are beyond the control of
Gwinnett, United and Burke. The analyses performed by Burke are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Burke prepared its analyses
solely for purposes of rendering its opinion and provided such analyses to the
Gwinnett board at the February 5, 2007 meeting. Estimates on the values of
companies do not purport to be appraisals or necessarily reflect the prices
at
which companies or their securities may actually be sold. Such estimates are
inherently subject to uncertainty and actual values may be materially different.
Accordingly, Burke’s analyses do not necessarily reflect the value of Gwinnett’s
common stock or United’s common stock or the prices at which Gwinnett’s or
United’s common stock may be sold at any time.
Summary
of Proposed Merger
Burke
reviewed the financial terms of the proposed transaction whereby the holders
of
Gwinnett common stock shall be entitled to receive, in exchange for their shares
of Gwinnett stock, 2.2545 shares of United common stock, $72.8865 in cash or
a
combination thereof subject to the limitations as described in the merger
agreement. Holders of outstanding options and SARs shall receive cash, equal
to
$72.8865 minus the applicable exercise price per option or SAR. Based upon
the
terms of the merger agreement and United’s closing stock price of $32.96 on
February 2, 2007, Burke calculated merger consideration of $220,089,447 and
a
special cash dividend of $6,369,527 for an aggregate transaction valuation
of
$226,458,974 or $76.24 per fully diluted Gwinnett share on February 5, 2007,
the
date of the Gwinnett board meeting.
-34-
Utilizing
Gwinnett’s December 31, 2006 unaudited financial information, Burke calculated
the following ratios:
|
|
Deal
Value Considerations:
|
|
|
Deal
Multiples:
|
|
|
||
|
|
Aggregate
Price/Fully Diluted Share
|
$
|
76.24
|
|
Transaction
Value/ 2006 Net Income
|
19.05
|
x
|
|
|
|
Merger
Consideration for Common Shares
|
$
|
209,924,226
|
|
Transaction
Value / Book Value
|
2.86
|
x
|
|
|
|
Merger
Consideration for Outstanding Opinions / SARs
|
$
|
10,165,221
|
|
Transaction
Value / Tangible Book Value
|
3.35
|
x
|
|
|
|
Aggregate
Cash Dividend(1)
|
$
|
6,369,527
|
|
Transaction
Value / Leveraged Book Value(2)
|
4.42
|
x
|
|
|
|
Total
Transaction Value
|
$
|
226,458,974
|
|
Core
Deposit Premium
|
33.6
|
%
|
| * |
Deal
multiples based on December 31, 2006 unaudited financial
result.
|
| (1) |
Represents
a $2.25 special cash dividend to all record Gwinnett shareholders
as of
December 31, 2006.
|
| (2) |
Assumes
tangible equity to tangible assets of 7%. Excess equity valued
at 1.0x.
|
The
fully
diluted share count is based upon Gwinnett’s 2,830,901 outstanding common
shares, 208,321 outstanding options to purchase common shares at a weighted
average exercise price of $28.72 and 22,000 stock appreciation rights at a
weighted average exercise price of $29.06. This analysis assumes no options
are
exercised prior to closing. Any exercise of options prior to closing would
change the fully diluted share count and would slightly change the per share
consideration, but not the total transaction valuation.
Analysis
of Gwinnett
Selected
Peer Group Analysis.
Burke
used publicly available information to compare selected financial information
for Gwinnett and a group of selected financial institutions. The group consisted
of Gwinnett and 68 banks, which we refer to as the “Gwinnett Peer Group”. The
Gwinnett Peer Group consisted of selected Southeast banks with assets between
$500 million and $1.5 billion and having earned at least 1.00% on average assets
for the trailing twelve months.
The
analysis compared the median performance of the Gwinnett Peer Group, based
upon
the latest publicly available financial data, to Gwinnett’s December 31, 2006
unaudited financial results. The table below sets forth the comparative data.
|
Revenues
|
Earnings
|
Capital
Implications
|
Asset
Quality
|
Employee
Productivity
|
Asset
Growth
|
|||||||||||||||||||||||||||||
|
Net
Interest Margin
|
Noninterest
Income/Average Assets
|
Efficiency
|
ROAA
(1)
|
ROAE
(2)
|
Pre-Provision,
Pre-Tax Margin
|
Equity
/ Assets
|
Asset
Utilization
|
NPAs/Total
Assets(3)
|
Assets
/ Employee
|
1-yr
|
||||||||||||||||||||||||
|
Peer
Group Median
|
4.31
|
%
|
0.90
|
%
|
56.22
|
%
|
1.21
|
%
|
15.05
|
%
|
2.18
|
%
|
8.68
|
%
|
93.31
|
%
|
0.20
|
%
|
3,925
|
12.70
|
%
|
|||||||||||||
|
Gwinnett
|
4.90
|
%
|
0.13
|
%
|
35.58
|
%
|
1.87
|
%
|
17.63
|
%
|
3.25
|
%
|
11.74
|
%
|
93.50
|
%
|
0.00
|
%
|
9,120
|
43.34
|
%
|
|||||||||||||
| (1) |
Return
on average assets.
|
| (2) |
Return
on average equity.
|
| (3) |
Non-performing
assets to total assets.
|
-35-
Gwinnett’s
performance is above the Gwinnett Peer Group.
Analysis
of Selected Merger Transactions
Southeastern
Transactions.
In
order to address the specific valuation considerations within the Southeastern
market that Gwinnett serves, Burke selected a group of comparable Southeastern
merger and acquisition transactions and compared the pricing multiples to the
multiples implied by the merger consideration. Specifically, Burke selected
bank
merger and acquisition transactions according to the following criteria:
|
·
|
Merger
and acquisition transactions announced after January 1,
2003.
|
|
·
|
Seller
located within the Southeastern United States - AL, AR, FL, GA, LA,
MS,
NC, SC, TN & VA.
|
|
·
|
Seller
assets between $500 million and $1.5
billion.
|
|
·
|
Seller
with ROAA greater than 1.25% in the latest quarter prior to announcement.
|
Burke
selected 10 transactions fitting the criteria listed above as being comparable
to the proposed merger. The 10 comparable transactions selected included the
following:
|
Buyer
|
State
|
Seller
|
State
|
|||
|
Banco
Sabadell SA
|
Spain
|
Transatlantic
Holding Corp.
|
FL
|
|||
|
Park
National Corp.
|
OH
|
Vision
Bancshares Inc.
|
FL
|
|||
|
Alabama
National BanCorp.
|
AL
|
PB
Financial Services Crop.
|
GA
|
|||
|
BB&T
Corp.
|
NC
|
First
Citizens Bancorp
|
TN
|
|||
|
Pinnacle
Financial Partners
|
TN
|
Cavalry
Bancorp Inc.
|
TN
|
|||
|
Synovus
Financial Corp.
|
GA
|
Riverside
Bancshares Inc.
|
GA
|
|||
|
Liberty
Bancshares Inc.
|
AR
|
Russellville
Bancshares Inc.
|
AR
|
|||
|
Boston
Private Equity Financial
|
MA
|
Gibraltar
Financial Corp.
|
FL
|
|||
|
Provident
Bankshares Corp.
|
MD
|
Southern
Financial Bancorp
|
VA
|
|||
|
Fulton
Financial Corp.
|
PA
|
Resource
Bankshares Corp.
|
VA
|
Burke
reviewed the multiples of transaction value at announcement to last twelve
months’ (“LTM”) earnings, transaction value to most recent quarterly (“MRQ”)
earnings annualized, transaction value to book value, transaction value to
tangible book value, transaction value to leveraged book value, and book premium
to core deposits and computed high, low, mean, median, and quartile multiples
and premiums for the transactions. These multiples and premiums were applied
to
Gwinnett’s financial information as of and for the period ended December 31,
2006 and were used to impute a transaction price. As illustrated in the
following table, Burke derived an imputed range of values per share of
Gwinnett’s common stock of $63.66 to $92.45 based upon the median and mean
multiples of the selected Southeastern transactions.
-36-
|
Median
Multiple
|
Implied
Value / Share |
Gwinnett
Merger Consideration
|
||||||||
|
Transaction
Value / LTM Earnings
|
19.96
|
x |
$
|
79.68
|
19.05
|
x | ||||
|
Transaction
Value / MRQ Earnings (annualized)
|
17.91
|
x |
$
|
72.76
|
18.76
|
x | ||||
|
Transaction
Value / Book Value
|
3.49
|
x |
$
|
92.45
|
2.86
|
x | ||||
|
Transaction
Value / Tangible Book Value
|
3.53
|
x |
$
|
80.12
|
3.35
|
x | ||||
|
Transaction
Value / Leveraged Book Value*
|
3.55
|
x |
$
|
63.66
|
4.42
|
x | ||||
|
Tangible
Book Premium / Core Deposits
|
26.41
|
%
|
$
|
64.96
|
33.66
|
%
|
||||
|
Average
Valuation
|
$
|
75.61
|
$
|
76.24
|
||||||
|
Implied
Range
|
$
|
63.66
|
$
|
92.45
|
||||||
| * |
Assumes
7%
tangible equity to tangible assets. Excess equity valued at
1.0x.
|
The
analysis showed that the merger consideration of $76.24 per fully diluted share
is within the range of values imputed by the mean and median multiples of the
comparable Southeastern transactions and slightly above the implied average
valuation of the comparables universe.
U.S.
Transactions. Burke,
in
addition to analyzing Southeastern transactions, selected a group of comparable
U.S. merger and acquisition transactions and compared the pricing multiples
to
the multiples implied by the merger consideration. Specifically, Burke selected
bank merger and acquisition transactions according to the following criteria:
|
·
|
Merger
and acquisition transactions announced after January 1,
2003.
|
|
·
|
Seller
located within the continental United
States.
|
|
·
|
Seller
assets between $500 million and $1.5
billion.
|
|
·
|
Seller
with ROAA greater than 1.25% in the latest quarter prior to
announcement.
|
-37-
Burke
selected 25 transactions fitting the criteria listed above as being comparable
to the proposed merger. The 25 comparable transactions selected included the
following:
|
Buyer
|
State
|
Seller
|
State
|
|||
|
Banco
Sabadell SA
|
Spain
|
Transatlantic
Holding Corp
|
FL
|
|||
|
Franklin
Bank Corp.
|
TX
|
First
NB of Bryan
|
TX
|
|||
|
Lehman
Brothers Holdings Inc.
|
NY
|
Capital
Crossing Bank
|
MA
|
|||
|
Sterling
Financial Corp.
|
WA
|
Northern
Empire Bancshares
|
CA
|
|||
|
Park
National Corp.
|
OH
|
Vision
Bancshares Inc.
|
FL
|
|||
|
Alabama
National BanCorp.
|
AL
|
PB
Financial Services Corp.
|
GA
|
|||
|
First
Republic Bank
|
CA
|
BWC
Financial Corp.
|
CA
|
|||
|
First
Community Bankcorp
|
CA
|
Community
Bancorp Inc.
|
CA
|
|||
|
Placer
Sierra Bancshares
|
CA
|
Southwest
Community Bancorp
|
CA
|
|||
|
Umpqua
Holdings Corp.
|
OR
|
Western
Sierra Bancorp
|
CA
|
|||
|
Grupo
Financiero Banorte
|
Mexico
|
INB
financial Corporation
|
TX
|
|||
|
BB&T
Corp.
|
NC
|
First
Citizens Bancorp
|
TN
|
|||
|
Marshall
& Ilsley Corp.
|
WI
|
Trustcorp
Financial
|
MO
|
|||
|
First
Community Bancorp
|
CA
|
Foothill
Independent Bancorp
|
CA
|
|||
|
First
Midwest Bancorp Inc.
|
IL
|
Bank
Calumet Inc.
|
IN
|
|||
|
Wintrust
Financial Corp.
|
IL
|
Hinsbrook
Bancshares Inc.
|
IL
|
|||
|
Rabobank
Nederland
|
Netherlands
|
Central
Coast Bancorp
|
CA
|
|||
|
Pinnacle
Financial Partners
|
TN
|
Cavalry
Bancorp Inc.
|
TN
|
|||
|
Synovus
Financial Corp.
|
GA
|
Riverside
Bancshares Inc.
|
GA
|
|||
|
Liberty
Bancshares Inc.
|
AR
|
Russellville
Bancshares Inc.
|
AR
|
|||
|
Boston
Private Financial
|
MA
|
Gibraltar
Financial Corp.
|
FL
|
|||
|
Westamerica
Bancorp.
|
CA
|
Redwood
Empire Bancorp
|
CA
|
|||
|
Southwest
Bankcorp. Of Texas
|
TX
|
Klein
Bancshares Inc.
|
TX
|
|||
|
Provident
Bankshares Corp.
|
MD
|
Southern
Financial Bancorp
|
VA
|
|||
|
Fulton
Financial Corp.
|
PA
|
Resource
Bankshares Corp.
|
VA
|
Burke
reviewed the multiples of transaction value at announcement to LTM earnings,
transaction value to MRQ earnings annualized, transaction value to book value,
transaction value to tangible book value, transaction value to leveraged book
value and book premium to core deposits and computed high, low, mean, median,
and quartile multiples and premiums for the transactions. These multiples and
premiums were applied to Gwinnett’s financial information as of and for the
period ended December 31, 2006 and were used to impute a transaction price.
As
illustrated in the following table, Burke derived an imputed range of values
per
share of Gwinnett’s common stock of $65.85 to $89.10 based upon the median and
mean multiples of the selected U.S. transactions.
-38-
|
Median
Multiple
|
Implied
Value
/ Share
|
Gwinnett
Merger
Consideration
|
||||||||
|
Transaction
Value / LTM Earnings
|
19.73
|
x |
$
|
78.79
|
19.05
|
x | ||||
|
Transaction
Value / MRQ Earnings (annualized)
|
17.62
|
x |
$
|
71.61
|
18.76
|
x | ||||
|
Transaction
Value / Book Value
|
3.36
|
x |
$
|
89.10
|
2.86
|
x | ||||
|
Transaction
Value / Tangible Book Value
|
3.53
|
x |
$
|
80.05
|
3.35
|
x | ||||
|
Transaction
Value / Leveraged Book Value*
|
3.70
|
x |
$
|
65.85
|
4.42
|
x | ||||
|
Tangible
Book Premium / Core Deposits
|
28.05
|
%
|
$
|
67.49
|
33.66
|
%
|
||||
|
Average
Valuation
|
$
|
75.20
|
$
|
76.24
|
||||||
|
Implied
Range
|
$
|
65.85
|
$
|
89.10
|
||||||
| * |
Assumes
7% tangible equity to tangible assets. Excess equity valued at
1.0x.
|
The
analysis showed that the merger consideration of $76.24 per fully diluted share
is within the range of values imputed by the mean and median multiples of the
comparable U.S. transactions and slightly above the implied average valuation
of
the comparables universe.
Discounted
Cash Flow Analysis
Using
a
discounted cash flow analysis, Burke estimated the present value of the future
stream of earnings and dividends that Gwinnett could produce based upon an
internal earnings and balance sheet forecast for 2007 through 2011. Burke
performed discounted cash flow analyses based upon terminal values to both
earnings and tangible equity.
In
order
to derive the terminal value of Gwinnett’s earnings stream beyond 2010, Burke
assumed terminal value multiples ranging from 15.0x to 18.0x of fiscal year
2011
net income. The dividend streams and terminal values were then discounted to
present values using different estimated discount rates (ranging from 14.0%
to
16.0%) chosen to reflect different assumptions regarding the required rates
of
return to holders or prospective buyers of Gwinnett common stock. This
discounted cash flow analysis indicated a value range between $55.43 and $70.35
per share of Gwinnett common stock.
The
value
of the consideration offered by United to Gwinnett in the merger is $76.24
per
fully diluted share of Gwinnett common stock on, which is above the range of
values imputed from the discounted cash flow analysis.
Contribution
Analysis
Burke
computed the contribution of United and Gwinnett to various elements of the
pro
forma entity’s income statement, excluding estimated cost savings and operating
synergies, balance sheet and franchise. The following table compares the pro
forma ownership in the combined company, assuming a hypothetical 100%
transaction, to each company’s respective contribution to each element of the
analysis.
-39-
|
Contribution
|
|||||||
|
Gwinnett
|
United
|
||||||
|
Pro
Forma Fully Diluted Ownership
|
13.26
|
%
|
86.74
|
%
|
|||
|
Earnings
(000’s)
|
|||||||
|
2006
Actual Earnings
|
14.73
|
%
|
85.27
|
%
|
|||
|
2007
Estimated Earnings
|
13.58
|
%
|
86.42
|
%
|
|||
|
Balance
Sheet (12/31/2006) (000’s)
|
|||||||
|
Loans,
net
|
9.00
|
%
|
91.00
|
%
|
|||
|
Assets
|
8.68
|
%
|
91.32
|
%
|
|||
|
Deposits
|
9.17
|
%
|
90.83
|
%
|
|||
|
Equity
|
11.38
|
%
|
88.62
|
%
|
|||
|
Tangible
Equity
|
13.07
|
%
|
86.93
|
%
|
|||
|
Branches
|
5.15
|
%
|
94.85
|
%
|
|||
The
contribution analysis indicated that the pro forma ownership of United common
stock issuable to Gwinnett shareholders assuming a hypothetical 100% stock
transaction in the merger was greater than loans, assets, deposits, equity,
tangible equity and branches and slightly less than earnings contributed to
United by Gwinnett.
Analysis
of United
Selected
Peer Group Analysis
Burke
used publicly available information to compare selected financial information
for United and a group of selected financial institutions. The group consisted
of United and 31 bank holding companies, which we refer to as the United Peer
Group. The United Peer Group consisted of selected publicly traded U.S. banks
with assets between $5 billion and $10 billion.
|
Peer
Group
Medians |
United
|
Quartile
|
||||||||
|
Trading
Characteristics
|
||||||||||
|
Price
/ Book
|
1.90
|
x |
2.29
|
x |
1
|
|||||
|
Price
/ Tangible Book
|
3.03
|
x |
3.11
|
x |
2
|
|||||
|
Price
/ LTM Core EPS(1)
|
16.60
|
x |
19.70
|
x |
1
|
|||||
|
Price
/ 2007 Estimated EPS
|
15.60
|
x |
17.50
|
x |
1
|
|||||
|
Price
/ 2008 Estimated EPS
|
14.20
|
x |
15.60
|
x |
1
|
|||||
|
Public
Market Data
|
||||||||||
|
Market
Capitalization (in millions)
|
$
|
1,357
|
$
|
1,410
|
2
|
|||||
|
Current
Dividend Yield
|
2.51
|
%
|
1.09
|
%
|
4
|
|||||
|
3-Month
Average Trading Volume
|
$
|
165,187
|
$
|
89,486
|
4
|
|||||
|
3-Month
Average Trading Volume (in thousands)
|
$
|
4,958
|
$
|
2,942
|
4
|
|||||
|
Weekly
Volume Shares Outstanding
|
1.61
|
%
|
1.04
|
%
|
4
|
|||||
| (1) |
Earnings
per share.
|
United’s
common stock trading characteristics are at the high end of the selected peer
group, while liquidity metrics are at the low end of the selected peer
group.
-40-
Relative
Stock Price Performance
Burke
analyzed the price performance of United common stock from February 1, 2006
to
February 2, 2007 and compared that performance to the performance of the S&P
Bank Index (WCB: BIX) and the S&P 500 Index (WCB: GSPC) over the same
period. The S&P Bank Index is a market cap weighted price index composed of
25 major financial company stocks. The S&P Bank Index is not traded but is
quoted under the symbol “BIX”. This analysis indicated the following cumulative
changes in price over the period:
|
United:
|
15.00%
|
|
S&P
Bank Index:
|
11.12%
|
|
S&P
500 Index:
|
12.15%
|
Burke
noted that United’s stock price outperformed both indices from February 1, 2006
to February 2, 2007, the prior trading day to Burke’s oral and written opinion.
Other
Factors And Analyses
Burke
took into consideration various other factors and analyses, including:
historical market prices and trading volumes for United’s common stock;
movements in the common stock of selected publicly-traded companies and
movements in the S&P Bank Index.
Information
Regarding Burke
Pursuant
to a letter agreement dated December 13, 2006, Gwinnett paid Burke a fee of
$50,000 upon the execution of the merger agreement. In addition, Gwinnett has
agreed to pay Burke a financial advisory fee that will fluctuate based upon
the
ultimate value received by Gwinnett at the closing of the merger, including
both
the merger consideration, consideration paid to the holders of Gwinnett options
and SARs, and the 2007 cash dividend that Gwinnett intends to pay prior to
closing of the merger. As of the date of the announcement of the merger, the
fee
payable to Burke at the closing of the merger would have been $2,214,190. In
addition, Gwinnett has agreed to reimburse Burke for its reasonable
out-of-pocket expenses and to indemnify Burke and certain related persons
against certain liabilities arising out of or in conjunction with its rendering
of services under its engagement, including certain liabilities under the
federal securities laws.
Burke
is
a nationally recognized investment banking firm whose principal business
specialty is financial institutions. In the ordinary course of its investment
banking business, Burke is regularly engaged in the valuation of financial
institutions and their securities in connection with mergers and acquisitions
and other corporate transactions.
-41-
Financial
and other information about United is set forth on United’s Form 10-K for the
year ended December 31, 2006 (which includes certain provisions of United’s
Proxy Statement for its 2007 Annual Meeting) which is incorporated herein by
reference.
The
authorized capital stock of United currently consists of 100,000,000 shares
of
common stock, $1.00 par value per share and 10,000,000 shares of preferred
stock, $1.00 par value per share. As of April 13, 2007, 43,054,803 shares
of
common stock were issued and outstanding, exclusive of 35,956 shares issuable
to
participants in United’s Deferred Compensation Plan and 2,520,300 shares
reserved for issuance upon the exercise of outstanding options and vesting
of
restricted stock. At that date, United had 32,200 shares of Series A
Non-Cumulative Preferred Stock issued and outstanding.
Common
Stock
All
voting rights are vested in the holders of the common stock. Each holder of
common stock is entitled to one vote per share on any issue requiring a vote
at
any meeting. The shares do not have cumulative voting rights. Subject to the
right of holders of United’s Series A Non-Cumulative Preferred Stock to receive
dividends, all shares of United common stock are entitled to share equally
in
any dividends that United’s board of directors may declare on United common
stock from sources legally available for distribution. The determination and
declaration of dividends is within the discretion of United’s board of
directors. Upon liquidation, holders of United common stock are entitled to
receive on a pro rata basis, after payment or provision for payment of all
debts
and liabilities of United, and after all distributions payments are made to
holders of United’s Series A Non-Cumulative Preferred Stock, all assets of
United available for distribution, in cash or in kind.
The
outstanding shares of United common stock are, and the shares of United common
stock to be issued by United in connection with the merger will be, duly
authorized, validly issued, fully paid, and nonassessable.
Preferred
Stock
United
is
authorized to issue 10,000,000 shares of preferred stock, issuable in specified
series and having specified voting, dividend, conversion, liquidation, and
other
rights and preferences as United’s board of directors may determine. The
preferred stock may be issued for any lawful corporate purpose without further
action by United shareholders. The issuance of any preferred stock that has
conversion rights might have the effect of diluting the interests of United’s
other shareholders. In addition, shares of preferred stock could be issued
with
certain rights, privileges, and preferences, which would deter a tender or
exchange offer or discourage the acquisition of control of United.
United’s
board of directors has designated 287,411 of the 10,000,000 authorized shares
of
preferred stock as “Series A Non-Cumulative Preferred Stock”, of which 32,200
remain outstanding. The Series A stock has a stated value of $10.00 per share,
and holders of Series A stock are entitled to a preferential annual dividend
of
6%, payable quarterly on each January 1, April 1, July 1 and October 1. The
declaration of dividends with respect to the Series A stock is within the
discretion of United’s board of directors.
-42-
In
addition, holders of the Series A stock are entitled to receive, on a pro rata
basis, distributions upon liquidation prior to any payment by United to the
holders of its common stock, in an amount equal to the stated value per share
of
the Series A stock, plus any accrued but unpaid dividends. The Series A stock
has no voting rights, except as required under the Georgia Business Corporation
Code, and is not convertible into shares of common stock or other securities
of
United. United may, at its option, redeem all or part of the Series A stock
outstanding by paying cash for such shares in an amount equal to the stated
value per share, plus any accrued but unpaid dividends.
6.75%
Subordinated
Notes due 2012
United
has outstanding $31.5 million aggregate principal amount of 6.75% Subordinated
Notes, due 2012. Interest is payable semi-annually in arrears in cash on June
15
and December 15 of each year. The notes may not be redeemed prior to their
maturity. No sinking fund is provided for the notes. The notes are general
unsecured obligations of United, subordinated to all existing and future secured
and senior indebtedness, and payment of principal of the notes may be
accelerated only in the case of bankruptcy, insolvency, receivership,
conservatorship or reorganization of United or one of United’s bank
subsidiaries.
Subordinated
Step-up Notes due 2015
United
has outstanding $35 million aggregate principal amount of Subordinated Step-up
Notes due 2015. The notes bear interest at a fixed rate of 6.25% through
September 30, 2010, and at a fixed rate of 7.5% thereafter until maturity or
earlier redemption. Interest is payable semi-annually in arrears in cash on
March 31 and September 30 of each year. The notes are callable at par on
September 30, 2010, and September 30 of each year thereafter until maturity
on
September 30, 2015. The notes are general unsecured obligations of United,
subordinated to all existing and future secured and senior indebtedness, and
payment of principal of the notes may be accelerated only in the case of
bankruptcy, insolvency, receivership, conservatorship or reorganization of
United or one of United’s bank subsidiaries.
Trust
Preferred Securities
United
has five wholly owned statutory trusts, which issued guaranteed preferred
interests in United’s junior subordinated deferrable interest debentures. The
debentures represent the sole asset of each of the trusts. These debentures
qualify as Tier I capital under Federal Reserve Board guidelines. All of the
common securities of the trusts are owned by United. United has entered into
contractual arrangements which, taken collectively, fully and unconditionally,
guarantee payment of: (1) accrued and unpaid distributions required to be paid
on the securities; (2) the redemption price with respect to any securities
called for redemption by the respective trust; and (3) payments due upon a
voluntary or involuntary dissolution, winding up or liquidation of the
respective trust. The following is a description of each trust preferred
security.
10.60%
Trust Preferred Securities
In
September 2000, United formed a wholly owned Connecticut statutory business
trust, United Community Statutory Trust I (“United Statutory Trust”), which
issued $5 million of guaranteed preferred beneficial interests in United’s
junior subordinated deferrable interest debentures. The proceeds from the
issuance of the securities were used by United Statutory Trust to purchase
$5.2
million of junior subordinated debentures of United, which carry a fixed
interest rate of 10.60%. The securities accrue and pay distributions
semiannually at a fixed rate of 10.60% per annum of the stated liquidation
value
of $1,000 per capital security and are mandatorily redeemable upon maturity
of
the debentures on September 7, 2030, or upon earlier redemption as provided
in
the indenture. United has the right to redeem the debentures purchased by United
Statutory Trust in whole or in part, on or after September 7, 2010. As specified
in the indenture, if the debentures are redeemed prior to maturity, the
redemption price will be the principal amount, any accrued but unpaid interest,
plus a premium ranging from 5.3% in 2010 to .53% beginning in 2019.
-43-
11.295%
Trust Preferred Securities
In
July
2000, United formed a wholly owned Delaware statutory business trust, United
Community Capital Trust II (“United Trust II”), which issued $10 million of
guaranteed preferred beneficial interests in United’s junior subordinated
deferrable interest debentures. The proceeds from the issuance of the securities
were used by United Trust II to purchase $10.3 million of junior subordinated
debentures of United, which carry a fixed rate of 11.295%. The securities accrue
and pay distributions at a fixed rate of 11.295% per annum of the stated
liquidation value of $1,000 per capital security. The securities are mandatorily
redeemable upon maturity of the debentures on July 19, 2030, or upon earlier
redemption as provided in the indenture. United has the right to redeem the
debentures purchased by United Trust II in whole or in part, on or after July
19, 2010. As specified in the indenture, if the debentures are redeemed prior
to
maturity, the redemption price will be the principal amount, any accrued but
unpaid interest, plus a premium ranging from 2.824% in 2010 to .565% beginning
in 2019.
8.125%
Trust Preferred Securities
In
July
1998, United formed a wholly owned Delaware statutory business trust, United
Community Capital Trust (“United Trust”), which issued $21 million of guaranteed
preferred beneficial interests in United’s junior subordinated deferrable
interest debentures. The proceeds from the issuance of the securities were
used
by United Trust to purchase $21.7 million of junior subordinated debentures
of
United that carry a fixed interest rate of 8.125%. The securities accrue and
pay
distributions semiannually at a fixed rate of 8.125% per annum of the stated
liquidation value of $1,000 per capital security. The securities are mandatorily
redeemable upon maturity of the debentures on July 15, 2028, or upon earlier
redemption as provided in the indenture. United has the right to redeem the
debentures purchased by United Trust: (1) in whole or in part, on or after
July
15, 2008, and (2) in whole (but not in part) at any time within 90 days
following the occurrence and during the continuation of a tax event, investment
company event or capital treatment time (as defined in the indenture). As
specified in the indenture, if the debentures are redeemed prior to maturity,
the redemption price will be the principal amount, any accrued but unpaid
interest, plus a premium ranging from 4.06% in 2008 to .41% in
2017.
Floating
Rate Trust Preferred Securities
In
June
2004, United acquired Fairbanco Holding Company, Inc. and its wholly owned
Delaware statutory business trust, Fairbanco Capital Trust I (“Fairbanco
Trust”), which issued $5 million of guaranteed preferred beneficial interests in
Fairbanco’s junior subordinated deferrable interest debentures. The proceeds
from the issuance of the securities were used by Fairbanco Trust to purchase
$5.2 million of junior subordinated debentures of Fairbanco that bear interest
at the rate of 3.65% per annum over the three-day London Interbank Offered
Rate,
as calculated quarterly pursuant to the indenture. The securities accrue and
pay
distributions quarterly at the then applicable interest rate. The securities
mature on July 30, 2032 unless the maturity date is accelerated pursuant to
the
indenture after June 30, 2007. United has the right to redeem the debentures
purchased by Fairbanco Trust: (1) in whole or in part, on or after June 30,
2007
at par, and (2) in whole (but not in part) at any time before June 30, 2007
within 60 days following the occurrence and during the continuation of a tax
event, investment company event or capital treatment time (as defined in the
indenture) at a premium of 3.00%. As specified in the indenture, if the
debentures are redeemed prior to maturity, the redemption price will include
any
accrued but unpaid interest.
-44-
In
September 2006, United acquired Southern Bancorp, Inc. (“SBC”) and its wholly
owned Delaware statutory trust, Southern Bancorp Capital Trust I (“SBC Trust”),
which issued $4.25 million of floating rate capital securities of SBC Trust
and
$132,000 in floating rate common securities to SBC. The proceeds from the
issuance of the securities were used by SBC Trust to purchase $4.382 million
of
junior subordinated debentures of SBC that bear interest at a rate, reset
quarterly, equal to the prime rate plus 100 basis points. The securities accrue
and pay distributions quarterly at the then applicable interest rate. The
securities mature on March 31, 2034 unless the maturity date is accelerated
pursuant to the indenture after March 31, 2009. United has the right to redeem
the debentures purchase by SBC Trust: (1) in whole or in part, on or after
March
31, 2009 at par, and (2) in whole (but not in part), at any time, within 90
days
following the occurrence and during the continuation of a tax event, an
investment company event or a capital treatment event at par. As specified
in
the debenture, if the debentures are redeemed prior to maturity, the redemption
price will include any accrued but unpaid interest.
Transfer
Agent and Registrar
The
transfer agent and registrar for United’s common stock and the debentures is
Computershare Ltd.
Ability
to Consider Other Constituencies
United’s
articles of incorporation permit its board of directors, in determining what
is
believed to be in the best interest of United and its shareholders, to consider
the interests of its employees, customers, suppliers and creditors, the
communities in which its offices and establishments are located and all other
factors that they consider pertinent, in addition to considering the effects
of
any actions on United and its shareholders. This provision permits United’s
board of directors to consider numerous judgmental or subjective factors
affecting a proposal, including some non-financial matters, and on the basis
of
these considerations may oppose a business combination or some other transaction
which, viewed exclusively from a financial perspective, might be attractive
to
some, or even a majority, of its shareholders.
Amendments
to Articles of Incorporation and Bylaws
United’s
articles of incorporation specifically provide that neither the articles of
incorporation nor the bylaws of United may be amended without the affirmative
vote the holders of two-thirds of the shares issued and outstanding and entitled
to vote thereon, except for provisions relating to increasing the number of
authorized shares of common and preferred stock of United. This provision could
allow the holders of 33.4% of the outstanding capital stock of United to
exercise an effective veto over a proposed amendment to the articles or bylaws,
despite the fact that the holders of 66.6% of the shares favor the proposal.
This provision protects, among other things, the defensive measures included
in
United’s articles of incorporation and bylaws by making more difficult future
amendments to the articles of incorporation and bylaws that could result in
the
deletion or revision of such defensive measures.
Supermajority
Approval of Interested Business Combinations
United’s
articles of incorporation provide that if a proposed business combination
between United and any interested shareholder is not approved by three-fourths
of all directors of United then in office, the business combination must be
approved by the affirmative vote of the holders of at least 75% of the
outstanding shares of United’s common stock, including the affirmative vote of
the holders of at least 75% of the outstanding shares of common stock held
by
shareholders other than the interested shareholder. This provision may
discourage attempts by other corporations or groups to acquire control of
United, without negotiation with management, through the acquisition of a
substantial number of shares of United’s stock followed by a forced merger. This
provision may also enable a minority of the shareholders of United to prevent
a
transaction favored by a majority of the shareholders, and may discourage tender
offers or other non-open market acquisitions of United’s common stock because of
the potentially higher vote requirements for shareholder approval of any
subsequent business combination. Additionally, in some circumstances, United’s
board of directors could, by withholding its consent to such a transaction,
cause the 75%/75% shareholder vote to be required to approve a business
combination, thereby enabling management to retain control over the affairs
of
United and their present positions with United.
-45-
Removal
of Directors
United’s
articles of incorporation provide that a member of United’s board of directors
may only be removed for cause, and only upon the affirmative vote of two-thirds
of the outstanding shares of capital stock of United entitled to vote thereon.
This provision may prevent a significant shareholder from avoiding board
scrutiny of a proposed business combination by merely removing directors with
conflicting views, and may encourage individuals or groups who desire to propose
takeover bids or similar transactions to negotiate with the board of directors.
However, outside of the context of an acquisition attempt, it may serve as
an
impediment to a more legitimate need to remove a director.
Gwinnett
is a Georgia corporation and a registered bank holding company in Lawrenceville,
Georgia. Gwinnett was formed in May 1999 and conducts its operations through
its
wholly owned subsidiary, First Bank of the South, a commercial bank organized
under the laws of the State of Georgia.
Gwinnett
had assets of $675 million, loans of $536 million, deposits of $583 million,
and
shareholders’ equity of $79 million as of December 31, 2006. Net income for the
year ended December 31, 2006 was approximately $11.9 million.
Gwinnett’s
business is conducted wholly through its subsidiary, First Bank of the South,
a
full service bank with its main office at 2230 Riverside Parkway, Lawrenceville,
Georgia. First Bank of the South operates branch locations at Embry Hills in
DeKalb County, Johns Creek in north Fulton County, and Buford and Snellville
in
Gwinnett County and a loan production office in Loganville, Walton County.
The
bank began its banking operations in May 2000, and offers a full range of
lending products and traditional banking products and services, including
commercial, real estate, and consumer loans, cash management services, and
savings and time deposit accounts.
With
an
emphasis on responsive and customized service, First Bank of the South offers
a
range of commercial and retail banking products and services including checking,
savings and time deposits, residential and commercial mortgages, home equity
loans, consumer loans, investment loans, small business loans, commercial lines
of credit and letters of credit, and commercial treasury management services.
First Bank of the South focuses on providing individual service and attention
to
its target customers, which include individuals and small- to medium-sized
businesses. First Bank of the South believes it responds to its customers’
credit requests more quickly and is more flexible in approving complex loans
because of the bank’s personal knowledge of its customers.
-46-
Gwinnett’s
principal business is to accept deposits from the public and to make loans
and
other investments. The principal sources of funds for the bank’s loans and
investments are demand, time, savings and other deposits, repayment of loans
and
borrowings. The principal source of income for the bank is interest collected
on
loans and other investments. The principal expenses of the bank are interest
paid on deposits, transaction processing costs, employee compensation, office
expenses and other overhead expenses.
Lending
Services
First
Bank of the South’s primary lending activity is making real estate loans,
particularly construction loans for new residential and commercial properties.
Gwinnett’s loan portfolio consists primarily of construction and development
loans, commercial real estate loans and residential real estate loans primarily
in and around DeKalb, Fulton, Gwinnett and Walton Counties. First Bank of the
South also makes non-real estate related commercial loans and consumer loans
to
individuals in and around DeKalb, Fulton and Gwinnett Counties. These loans
include certain commercial loans where the bank takes a security interest in
accounts receivable and furniture, fixtures and equipment as supplemental,
but
not principal, collateral. Home equity loans and lines of credit are classified
as consumer loans. The composition of First Bank of the South’s loan portfolio
at December 31, 2006 was as follows:
|
Loan
Category
|
Ratio
|
|||
|
Real
estate construction and acquisition and development
|
59
|
%
|
||
|
Commercial
and commercial real estate
|
39
|
%
|
||
|
Consumer
lending
|
2
|
%
|
Deposit
Services
First
Bank of the South seeks to establish core deposits, including checking accounts
and money market accounts, as well as a variety of time deposit accounts. The
primary sources of core deposits are residents of, and businesses and their
employees located in, Gwinnett’s primary market area. First Bank of the South
also obtains deposits through personal solicitation by the bank’s officers and
directors, direct mail solicitations, and local advertising. First Bank of
the
South makes deposit services accessible to customers by offering direct deposit,
wire transfer, internet banking, night depository, and banking by
mail.
Other
Banking Services
Given
client demand for increased convenience and account access, First Bank of the
South offers a range of products and services, including 24-hour internet
banking with free bill pay service, direct deposit, traveler’s checks, and
automatic account transfers. First Bank of the South also participates in a
shared network of automated teller machines and a debit card system that the
bank’s customers may use throughout Georgia and in other states.
-47-
First
Bank of the South competes with national and state banks, financial
institutions, brokerage firms and credit unions for loans and deposits primarily
in DeKalb, Fulton and Gwinnett Counties in the northeastern metropolitan Atlanta
area.
First
Bank of the South encounters competition in its three-county primary market
from
76 other FDIC-insured financial institutions with 673 branches. These
competitors offer a full range of banking services and vigorously compete for
all types of services, especially deposits. In addition, in certain aspects
of
its banking business, First Bank of the South also competes with credit unions,
small loan companies, consumer finance companies, brokerage firms, insurance
companies, money market funds and other financial institutions. Many of First
Bank of the South’s competitors enjoy competitive advantages, including greater
financial resources, a wider geographic presence, more accessible branch office
locations, the ability to offer additional services, more favorable pricing
alternatives and lower origination and operating costs. Some of First Bank
of
the South’s competitors have been in business for
many
years and have an established customer base and name recognition. In addition,
First Bank of the South’s competitors that are not depository institutions
are generally not subject to the extensive regulations that apply to
banks.
However, First Bank of the South believes that its competitive pricing,
personalized service and community involvement enable it to effectively compete
in the greater DeKalb/Fulton/Gwinnett County area.
First
Bank of the South currently employs 75 persons on a full-time or part-time
basis, including 31 officers. Gwinnett has no employees that are not also
employees of First Bank of the South.
From
time
to time, Gwinnett is involved in litigation relating to claims arising out
of
operations in the normal course of business. As of the date hereof, Gwinnett
is
not engaged in any legal proceedings that are expected, individually or in
the
aggregate, to have a material effect on Gwinnett.
-48-
The
following table sets forth information with respect to the beneficial ownership,
as of April 13, 2007, of shares of Gwinnett common stock by (1) each person
known by Gwinnett to be the beneficial owner of more than 5% of Gwinnett’s
issued and outstanding common stock, (2) each of Gwinnett’s directors and
executive officers, and (3) all directors and executive officers as a group.
Except as noted below, Gwinnett believes that each person listed below has
sole
investment and voting power with respect to the shares included in the table.
Because of the rules of beneficial ownership as defined by Rule 13d-3 under
the
Exchange Act, some shares are reported as being owned by multiple parties
in the
table below. Please see the footnotes to the table for further
information.
|
Name
|
Number
of
Shares(1) |
Number
of
Options
or
Warrants
Exercisable
within 60 Days |
Percent
of
Total
Outstanding |
|||||||
|
Directors
and Executive Officers:
|
||||||||||
|
David
J. Bowen
|
29,282
|
(2)
|
—
|
1.03
|
%
|
|||||
|
R.
Millard Bowen
|
74,970
|
(3)
|
—
|
2.65
|
%
|
|||||
|
Richard
B. Chandler, Jr.
|
6,948
|
—
|
0.25
|
%
|
||||||
|
Jacqueline
Embry Chiusano
|
213,096
|
(4)
|
—
|
7.53
|
%
|
|||||
|
Randall
W. Dixon
|
146,157
|
—
|
5.16
|
%
|
||||||
|
Thomas
P. Hughes
|
5,680
|
—
|
0.20
|
%
|
||||||
|
Doyle
Johnson
|
57,500
|
—
|
2.03
|
%
|
||||||
|
James
S. Kennedy
|
36,830
|
—
|
1.30
|
%
|
||||||
|
Randall
Pierce
|
36,951
|
—
|
1.31
|
%
|
||||||
|
Andrew
R. Pourchier
|
51,596
|
8,700
|
2.12
|
%
|
||||||
|
Wayne
T. Sikes
|
27,667
|
—
|
0.98
|
%
|
||||||
|
David
E. Snell
|
97,047
|
(5)
|
—
|
3.43
|
%
|
|||||
|
John
D. Stephens
|
172,134
|
(6)
|
—
|
6.08
|
%
|
|||||
|
Glenn
S. White
|
88,855
|
(7)
|
12,650
|
3.57
|
%
|
|||||
|
Steven
W. Williams
|
23,234
|
(8)
|
5,000
|
1.00
|
%
|
|||||
|
All
Gwinnett directors and executive officers
|
1,067,947
|
26,350
|
38.54
|
%
|
||||||
|
Additional
5% Shareholders:
|
||||||||||
|
Sarah
E. Embry
|
212,096
|
(9)
|
—
|
7.49
|
%
|
|||||
|
Wayne
H. Mason
|
187,100
|
—
|
6.61
|
%
|
||||||
|
(1)
|
The
information set forth in this table with respect to Gwinnett common
stock
ownership reflects “beneficial ownership” as determined in accordance with
Rule 13d-3 under the Exchange Act, as amended. “Beneficial
ownership” includes shares for which an individual, directly or
indirectly, has or shares voting or investment power or both and
also
includes options and warrants which are exercisable within 60 days
of the
date hereof. The percentages are based upon 2,830,901 shares outstanding.
The percentages for each of those parties who hold presently exercisable
options and warrants are based upon the sum of 2,830,901 shares plus
the
number of shares subject to presently exercisable options and or
warrants
held by each such party.
|
|
(2)
|
Includes
3,722 shares held by Mr. Bowen as custodian for his children and
17,986
shares held by Bowen Business Interests, LLC, in which Mr. Bowen
holds a
1% ownership interest and his children hold a 99% ownership
interest.
|
|
(3)
|
Includes
12,272 shares held by Mr. Bowen’s
spouse.
|
-49-
|
(4)
|
Includes 23,258
shares held by the 1976 Mary Jacqueline Embry Trust, Marlene C.
Embry and
Stuart Cashin, Trustees, of which Ms. Chiusano is a
beneficiary.
|
|
(5)
|
Includes
97,047 shares held by Snell Investments, LLC, in which Mr. Snell
holds a
9.6% ownership interest.
|
|
(6)
|
Includes
8,202 shares held by John D. Stephens & Sons, LP, in which Mr.
Stephens holds a 93.2% ownership
interest.
|
|
(7)
|
Includes
12,750 shares held by Mr. White’s
spouse.
|
|
(8)
|
Includes
1,000 shares held by his
children.
|
|
(9)
|
Includes
179,553 shares held by IAGO Enterprises, LLP, in which Ms. Embry
holds a
75% ownership interest and the 1976 Mary Jacqueline Embry Trust,
Marlene
C. Embry and Stuart Cashin, Trustees, holds a 25% ownership interest.
Ms.
Embry is a beneficiary of the 1976 Mary Jacqueline Embry
Trust.
|
Interests
of executive officers and directors of Gwinnett in the proposed merger are
discussed above under the heading “Details of the Proposed Merger-Interests of
the Directors and Officers of Gwinnett in the Merger”, at page
24.
Kilpatrick
Stockton LLP, counsel to United, has provided an opinion as to the legality
of
the United common stock to be issued in connection with the merger and the
income tax consequences of the merger. As of the date of these materials,
members of Kilpatrick Stockton LLP participating in this matter own an aggregate
of 32,872
shares of United common stock.
The
audited consolidated financial statements of United and its subsidiaries
incorporated by reference in these materials and elsewhere in the registration
statement have been audited by Porter Keadle Moore, LLP, independent registered
public accountants, as stated in their report, which is incorporated by
reference herein, and has been so incorporated in reliance upon the report
of
such firm given upon their authority as experts in accounting and
auditing.
Management
of Gwinnett knows of no other matters which may be brought before the special
shareholders’ meeting. If any matter other than the proposed merger or related
matters should properly come before the special meeting, however, the persons
named in the enclosed proxies will vote proxies in accordance with their
judgment on those matters.
United
is
subject to the information requirements of the Securities Exchange Act of 1934,
which means that they are required to file certain reports, proxy statements,
and other information, all of which are available at the Public Reference Room
of the Securities and Exchange Commission at 100 F. Street N.E., Washington,
D.C. 20549. You may also obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site at http://www.sec.gov where you can access reports, proxy,
information and registration statements, and other information regarding
registrants that file electronically with the SEC. Such filings are also
available at United’s Internet site at http://www.ucbi.com.
-50-
United
has filed a registration statement on Form S-4 to register the United common
stock to be issued to you in the merger. These materials are a part of that
registration statement and constitute a prospectus of United in addition
to
being a proxy statement of Gwinnett for the special meeting of Gwinnett
shareholders to be held on _______ ___, 2007, as described herein. As allowed
by
SEC rules, these materials do not contain all of the information you can
find in
the registration statement or the exhibits to the registration statement.
These
materials summarize some of the documents that are exhibits to the registration
statement, and you should refer to the exhibits for a more complete description
of the matters covered by those documents.
This
document incorporates important business and financial information about United
that is not included in or delivered with these materials. The following
documents previously filed by United under the Securities Exchange Act of 1934
are incorporated herein by reference:
| · |
United’s
Form 10-K for the fiscal year ended December 31, 2006 (which incorporates
certain portions of United’s Proxy Statement for the 2007 Annual
Meeting);
|
| · |
All
other reports filed by United pursuant to Sections 13(a) or 15(d)
of the
Exchange Act since December 31, 2006 and prior to the date the merger
is
completed; and
|
| · |
All
documents subsequently filed pursuant to Sections 13(a), 13(c), 14
or
15(d) of the Exchange Act prior to the date the merger is
completed.
|
Documents
incorporated by reference are available from United without charge, excluding
all exhibits, unless an exhibit has been specifically incorporated by reference.
You may obtain documents incorporated by reference by requesting them in writing
or by telephone from Investor Relations, United Community Banks, Inc., at P.O.
Box 398, 63 Highway 515, Blairsville, Georgia 30512, telephone number (706)
745-2151. If you would like to request documents, please do so by _________,
2007 to receive them before the special shareholders
meeting.
All
information concerning United and its subsidiaries has been furnished by United,
and all information concerning Gwinnett and its subsidiary has been furnished
by
Gwinnett. You should rely only on the information contained or incorporated
by
reference in these materials in making a decision to vote on the merger. No
person has been authorized to provide you with information that is different
from that contained in these materials.
These
materials are dated _______ __, 2007. You should not assume that the information
contained in these materials is accurate as of any date other than such date,
and neither the mailing of these materials to shareholders nor the issuance
of
United common stock in the merger shall create any implication to the
contrary.
These
materials do not constitute an offer to sell, or a solicitation of an offer
to
buy, any securities, or the solicitation of a proxy, in any jurisdiction to
or
from any person to whom it is not lawful to make any such offer or solicitation
in such jurisdiction. Neither the delivery of these materials nor any
distribution of securities made hereunder shall, under any circumstances, create
an implication that there has been no change in the affairs of United or
Gwinnett since the date hereof, or that the information herein is correct as
of
any time subsequent to its date.
-51-
These
materials (and other documents to which they refer) contain forward-looking
statements regarding United and Gwinnett, including, without limitation,
statements relating to United’s and Gwinnett’s expectations with respect to
revenue, credit losses, levels of nonperforming assets, expenses, earnings
and
other measures of financial performance. Words such as “may”, “could”, “would”,
“should”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”,
“targets” or similar expressions are intended to identify forward-looking
statements. These statements are based on the beliefs, assumptions, and
expectations of United’s and Gwinnett’s management, and on information currently
available to those members of management. They are expressions based on
historical fact, but do not guarantee future performance. Forward-looking
statements include information concerning possible or assumed future results
of
operations of United after the proposed merger. Forward-looking statements
involve risks, uncertainties, and assumptions, and certain factors could cause
actual results to differ from results expressed or implied by the
forward-looking statements, including:
| · |
economic
conditions (both generally, and more specifically in the markets
where
United and Gwinnett operate);
|
| · |
competition
from other companies that provide financial services similar to those
offered by United and Gwinnett;
|
| · |
government
regulation and legislation;
|
| · |
changes
in interest rates;
|
| · |
unexpected
changes in the financial stability and liquidity of United’s and
Gwinnett’s credit customers;
|
| · |
combining
the businesses of United and Gwinnett may cost more or take longer
than
expected;
|
| · |
integrating
the businesses and technologies of United and Gwinnett may be more
difficult than expected;
|
| · |
retaining
key personnel of United and Gwinnett may be more difficult than
expected;
|
| · |
revenues
of the combined entity following the merger may be lower than expected,
and the operating costs of the combined entity may be higher than
expected;
|
| · |
expected
cost savings resulting from the merger may not be fully realized,
or may
not be realized as soon as expected;
and
|
| · |
technological
changes may increase competitive pressures and increase
costs.
|
We
believe these forward-looking statements are reasonable, but we caution that
the
foregoing list of factors is not exclusive and that you should not place undue
reliance on these forward-looking statements, because the future results and
shareholder values of United following completion of the merger may differ
materially from those expressed or implied by these forward-looking statements.
We do not intend to update any forward-looking statement, whether written or
oral, relating to the matters discussed in these materials.
-52-
APPENDIX
A
AGREEMENT
AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (the
“Agreement”)
is
made and entered into as of this 5th
day of
February, 2007, by and between GWINNETT
COMMERCIAL GROUP, INC.,
a
Georgia business corporation (“GCG”
and,
unless the context otherwise requires, the term “GCG” shall include GCG and its
wholly-owned subsidiary bank, FIRST
BANK OF THE SOUTH,
a
Georgia bank with its main office in Lawrenceville, Georgia (the “Bank”)),
and
UNITED
COMMUNITY BANKS, INC.,
a
Georgia business corporation (“United”).
WHEREAS,
the
respective boards of directors of GCG and United deem it advisable and
in the
best interests of each such entity and their respective shareholders
that GCG
merge with United (the “Merger”),
with
United being the surviving corporation, in a transaction valued at $216.6
million based on the thirty (30) day average closing price for United’s common
stock, $1.00 par value per share, (“United
Stock”)
of
$32.35 as of February 2, 2007, consisting of a combination of United
Stock and
cash. The Merger is conditioned upon the terms and conditions hereinafter
set
forth (including, without limitation, the purchase price adjustment provision
of
Article
XI)
and as
set forth in the Agreement and Plan of Merger attached hereto as Exhibit
A
and
incorporated herein by reference (the “Merger
Agreement”);
and
WHEREAS,
the
respective boards of directors of GCG and United deem it advisable and
in the
best interests of each such entity and their respective shareholders
that the
Bank merge with United’s Georgia banking subsidiary, United Community Bank
(“UCB
Georgia”),
with
UCB Georgia being the surviving bank (the “Bank
Merger”),
all
upon the terms hereinafter set forth and as set forth in the Agreement
and Plan
of Merger attached hereto as Exhibit
B
and
incorporated herein by reference (the “Bank
Merger Agreement”);
and
WHEREAS,
the
boards of directors of the respective entities believe that the merger
of GCG
and United and their subsidiary banks and the operating effectiveness
and
synergies produced thereby will enhance and strengthen the franchises
and future
prospects of both companies and each of the banks;
NOW,
THEREFORE,
for and
in consideration of the premises and the mutual covenants and agreements
herein
contained, and other good and valuable consideration, the receipt and
adequacy
of which as legally sufficient consideration are hereby acknowledged,
the
parties hereto agree as follows:
ARTICLE
I
CLOSING
The
transactions contemplated herein shall be consummated (the “Closing”)
at the
offices of Kilpatrick Stockton LLP, Suite 2800, 1100 Peachtree Street,
Atlanta,
Georgia, on the first business day following receipt of all approvals
from any
governmental authorities having jurisdiction over the transactions contemplated
by this Agreement, the Merger Agreement and the Bank Merger Agreement,
and the
expiration of any waiting or similar period required by applicable law
(the
“Closing
Date”),
or at
such other time and place as may be mutually satisfactory to the parties
hereto.
A-1
ARTICLE
II
MERGER
2.1 The
Merger.
Pursuant to the terms and conditions provided herein or otherwise in
the Merger
Agreement, on the Closing Date GCG shall be merged with and into United.
The
surviving corporation following the Merger will operate under the articles
of
incorporation of United. The Bank shall be merged with and into UCB Georgia
in
accordance with and in the manner set forth in the Bank Merger
Agreement.
2.2 Payment
of Purchase Price. Pursuant
to the terms and conditions provided herein or otherwise in the Merger
Agreement, United shall make available on or before the Closing Date
for
delivery to the holders of issued and outstanding shares of voting common
stock,
no par value per share, of GCG (“GCG
Stock”),
outstanding options to acquire GCG Stock (the “GCG
Stock Options”)
and
outstanding GCG stock appreciation rights (the “GCG
SARs”):
(a) a
sufficient number of shares of United Stock to be issued upon conversion
of the
shares of GCG Stock for stock elections in the Merger, and (b) sufficient
funds
to make cash election payments in the Merger (such cash election payments
and
the stock election payments described in (a) above, the “Merger
Consideration”),
cash
payments for outstanding GCG Stock Options and GCG SARs and payments
in lieu of
the issuance of fractional shares, as provided in the Merger Agreement;
provided,
however,
that no
more than 306,137 shares of GCG Stock may be exchanged for cash (the
“Maximum
Cash Election”)
and no
more than 2,524,764 shares of GCG Stock may be exchanged for United Stock
(the
“Maximum
Stock Election”).
If
any GCG Stock certificate, option or right shall have been lost, stolen
or
destroyed, United may, in its reasonable discretion and as a condition
precedent
to the issuance of any United Stock or cash payment, require the owner
of such
lost, stolen or destroyed GCG Stock certificate to provide a bond and
an
appropriate affidavit and indemnity agreement (reasonably satisfactory
to
United) as indemnification against any claim that may be made against
United
with respect to such GCG Stock certificate, option or right.
ARTICLE
III
OTHER
AGREEMENTS
3.1 Registration
and Listing of United Stock.
(a)
United agrees to file with the Securities and Exchange Commission (the
“SEC”)
as
soon as reasonably practicable a registration statement (the “United
Registration Statement”)
under
the Securities Act of 1933, as amended (the “1933
Act”),
on
Form S-4 or some other appropriate form covering the issuance of the
shares of
United Stock to the shareholders of GCG pursuant to this Agreement and
the
Merger Agreement and to use its reasonable best efforts to cause the
United
Registration Statement to become effective and to remain effective through
the
Closing Date. United agrees to take any action required to be taken under
the
applicable state securities laws in connection with the issuance of shares
of
United Stock upon consummation of the Merger. GCG agrees to provide United
reasonable assistance as necessary in the preparation of the United Registration
Statement, including, without limitation, providing United with all material
facts regarding the operations, business, assets, liabilities and personnel
of
GCG, together with the audited financial statements of GCG, all as and
to the
extent required by the 1933 Act and the rules, regulations and practices
of the
SEC, for inclusion in the United Registration Statement. The United Registration
Statement shall not cover resales of United Stock by any of the shareholders
of
GCG, and United shall have no obligation to cause the United Registration
Statement to continue to be effective after the Closing or to prepare
or file
any post-effective amendments to the United Registration Statement after
the
Closing.
A-2
(b) United
agrees to list on the Nasdaq Global Select Market, by the Closing Date,
the
shares of United Stock to be issued to the shareholders of GCG pursuant
to this
Agreement and the Merger Agreement.
3.2 Meeting
of GCG Shareholders.
GCG
shall call a special meeting of its shareholders (the “Special
Meeting”)
to be
held not more than thirty (30) days after the United Registration Statement
becomes effective under the 1933 Act for the purpose of submitting the
Merger
Agreement to such shareholders for their approval. In connection with
the
Special Meeting, United and GCG shall prepare and submit to the GCG shareholders
a notice of meeting, proxy statement and proxy (the “GCG
Proxy Materials”),
which
shall include the final prospectus from the United Registration Statement
in the
form filed with the SEC.
3.3 Access
to Properties, Books, Etc.
GCG
shall allow the United and its authorized representatives full access
during
normal business hours from and after the date hereof and prior to the
Closing
Date to all of GCG’s properties, books, contracts, commitments and records and
those of its subsidiaries and shall furnish the United and its authorized
representatives such information concerning its affairs and the affairs
of its
subsidiaries as United may reasonably request provided that such request
shall
be reasonably related to the transactions contemplated by this Agreement
and
shall not interfere unreasonably with normal operations. GCG shall cause
its and
its subsidiaries’ personnel, employees and other representatives to assist
United in making any such investigation. During such investigation, United
and
its authorized representatives shall have the right to make copies of
such
records, files, tax returns and other materials as it may deem advisable
and
shall advise GCG of those items of which copies are made. No investigation
made
heretofore or hereafter by either party and its authorized representatives
shall
affect the representations and warranties of either such party hereunder.
3.4 Confidentiality.
(a)
Prior to consummation of the Merger, the parties to this Agreement will
provide
one another with information which may be deemed by the party providing
the
information to be confidential. Each party agrees that it will hold confidential
and protect all information provided to it by the other party to this
Agreement
or such party’s affiliates, except that the obligations contained in this
Section
3.4
shall
not in any way restrict the rights of any party or person to use information
that: (a) was known to such party prior to the disclosure by the other
party;
(b) is or becomes generally available to the public other than by breach
of this
Agreement; (c) is provided by one party for disclosure concerning such
party in
the United Registration Statement; or (d) otherwise becomes lawfully
available
to a party to this Agreement on a non-confidential basis from a third
party who
is not under an obligation of confidence to the other party to this Agreement.
If this Agreement is terminated prior to the Closing, upon request each
party
hereto agrees to return all documents, statements and other written materials,
whether or not confidential, and all copies thereof, provided to it by
or on
behalf of the other party to this Agreement. The provisions of this Section
3.4
shall
survive termination, for any reason whatsoever, of this Agreement, and,
without
limiting the remedies of the parties hereto in the event of any breach
of this
Section
3.4,
the
parties hereto will be entitled to seek injunctive relief against the
other
party in the event of a breach or threatened breach of this Section
3.4.
3.5 Full
Cooperation.
The
parties shall cooperate fully with each other in connection with any
acts or
actions required to be taken as part of their respective obligations
under this
Agreement.
3.6 Expenses.
All of
the expenses incurred by United in connection with the authorization,
preparation, execution and performance of this Agreement and the Merger
Agreement including, without limitation, all fees and expenses of its
agents,
representatives, counsel and accountants and the fees and expenses related
to
filing the United Registration Statement and all regulatory applications
with
state and federal authorities in connection with the transactions contemplated
hereby and thereby, (the “United
Expenses”)
shall
be paid by United. All expenses incurred by GCG in connection with the
authorization, preparation, execution and performance of this Agreement,
the
Merger Agreement and the Bank Merger Agreement, including, without limitation,
all fees and expenses of its agents, representatives, counsel and accountants
(the “GCG
Expenses”),
shall
be paid by GCG. The cost of reproducing and mailing the GCG Proxy Materials
shall be shared by the parties, with each party paying 50 percent
(50%).
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3.7 Preservation
of Goodwill.
Each
party hereto shall use its best efforts to preserve its business organization
and the business organization of its subsidiaries, to keep available
the
services of its present employees and of the present employees of its
subsidiaries, and to preserve the goodwill of customers and others having
business relations with such party or its subsidiaries.
3.8 Approvals
and Consents.
Each
party hereto represents and warrants to and covenants with the other
that it
will use its best efforts, and will cause its officers, directors, employees
and
agents and its subsidiaries and any subsidiary’s officers, directors, employees
and agents to use their best efforts, to obtain as soon as is reasonably
practicable all approvals and consents of state and federal departments
or
agencies required or deemed necessary for consummation of the transactions
contemplated by this Agreement and the Merger Agreement.
3.9 Agreements
by GCG Executive Officers, Directors and Shareholders.
(a)
Each of the directors and executive officers of GCG will, contemporaneously
with
the execution of this Agreement, execute and deliver to United an agreement,
the
form of which is attached hereto as Exhibit
C,
pursuant to which each of them agrees: (a) to recommend, subject to any
applicable fiduciary duty, to GCG shareholders approval of the Merger;
(b) to
vote the capital stock of GCG owned or controlled by them in favor of
the
Merger; (c) to transfer or assign shares of United Stock received by
them in
connection with the Merger only in compliance with the 1933 Act, applicable
state securities laws and the rules and regulations promulgated under
either;
and (d) with respect to directors only, to not compete with United for
a period
of two (2) years after the Closing Date. GCG agrees that it will use
its
reasonable best efforts to obtain an agreement in the form attached hereto
as
Exhibit
C
from any
beneficial owner of 5% or more of the issued and outstanding shares of
GCG Stock
who is not an officer or director.
3.10 Press
Releases.
Prior
to the Closing Date, United and GCG shall each approve the form and substance
of
any press release or other public disclosure materially related to this
Agreement or any other transaction contemplated hereby; provided,
however,
that
nothing in this Section
3.10
shall be
deemed to prohibit any party from making any disclosure which its counsel
deems
necessary or advisable in order to satisfy such party’s disclosure obligations
imposed by law.
3.11 Employee
Benefits.
(a)
Following the Closing Date, United shall provide generally to employees
of GCG
who continue employment with United (“GCG
Employees”)
medical, dental and long-term disability benefits, medical and dependent
care
flexible spending accounts and life insurance (collectively, “Employee
Benefits”),
on
terms and conditions which, when taken as a whole, are substantially
similar to
those then currently provided by United to its other similarly situated
employees. No GCG Employee shall be provided vacation benefits at a level
less
than he or she had attained with GCG immediately prior to the Closing
Date. For
purposes of eligibility to participate and any vesting determinations
(but not
benefit accruals) in connection with the provision of any such Employee
Benefits
by United to the GCG Employees, service with GCG prior to the Closing
Date shall
be counted. The GCG Employees’ prior service with GCG shall also be credited for
purposes of all waiting periods for participation in any of such Employee
Benefits; provided,
however,
that
United shall not impose a waiting period greater in duration than that
in effect
immediately prior to the Closing Date under GCG’s applicable Employee Benefit
plans with respect to those GCG Employees whose waiting periods had commenced
under any such plans prior to the Closing Date. United shall also waive
all
restrictions and limitations for preexisting conditions under United’s Employee
Benefit plans, to the extent such restrictions or limitations would not
apply to
the GCG Employees under GCG’s existing Employee Benefit plans.
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(b) From
the
Closing Date through December 31, 2007, United shall provide Employee
Benefits
to GCG Employees by maintaining GCG’s existing Employee Benefit plans, subject
to United’s right to amend such plans as may be required by law and except as
provided in Section
3.12
below.
Thereafter, the GCG Employees shall be permitted to enroll in United’s Employee
Benefit plans.
3.12 401(k)
Plan.
Subject
to applicable legal requirements, United and GCG shall take such other
actions
prior to the Closing Date as may be reasonably necessary to enable the
employees
of GCG as soon as reasonably practicable after the Closing Date to transfer
the
amount credited to their accounts under the Gwinnett Commercial Group,
Inc.
401(k) and Employee Stock Ownership Plan (“GCG
401(k) Plan”)
through a rollover contribution into either the United Community Banks,
Inc.
Profit Sharing Plan (the “United
401(k) Plan”)
or a
separate third party individual retirement account, or to take a cash
distribution from the GCG 401(k) Plan, provided,
that
GCG’s
Board of Directors shall adopt resolutions to terminate the GCG 401(k)
Plan
prior to the Closing Date. For purposes of any vesting determinations
(but not
benefit accruals) in connection with the United 401(k) Plan, service
with GCG
prior to the Closing Date shall be counted. For purposes of eligibility
to
participate in any “Profit Sharing Contribution” or receive any “Matching
Contribution” (each as defined in the United 401(k) Plan) under the United
401(k) Plan, the one (1) year waiting period in the United 401(k) Plan
shall be
applied to all GCG Employees and only compensation earned for periods
after the
Closing Date shall be counted; provided,
that the
GCG
Employees’ prior service with GCG shall also be credited for purposes of such
waiting periods under the United 401(k) Plan. For calendar year 2007,
prior to
the Closing Date GCG shall make any necessary employer contributions
to the GCG
401(k) Plan due such GCG Employees for compensation paid by GCG during
calendar
year 2007.
3.13 Directors
and Officers Insurance Coverage. Prior
to
Closing, GCG shall purchase for, and on behalf of, its current and former
officers and directors, extended coverage under the current directors’ and
officers’ liability insurance policy maintained by GCG to provide for
continued coverage of such insurance for a period of three (3) years
from the
Closing Date, unless United’s directors’ and officers’ liability insurance
policy provides for coverage for such former officers and directors for
actions
taken prior to the Merger.
3.14 Governance
of United. Following
the Closing Date, United shall take all action necessary to (i) increase
the size of United’s Board of Directors from 11 members to 12 members, and
(ii) cause John D. Stephens to be named as a director of
United.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF GCG
As
an
inducement to United to enter into this Agreement and to consummate the
transactions contemplated hereby, GCG represents, warrants, covenants
and agrees
as follows:
4.1 Disclosure
Memorandum.
GCG has
delivered to United a memorandum (the “Disclosure
Memorandum”)
containing certain information regarding GCG as indicated at various
places in
this Agreement. All information set forth in the Disclosure Memorandum
or in
documents incorporated by reference in the Disclosure Memorandum is true,
correct and complete, does not omit to state any fact necessary in order
to make
the statements therein not misleading, and shall be deemed for all purposes
of
this Agreement to constitute part of the representations and warranties
of GCG
under this Article
IV.
The
information contained in the Disclosure Memorandum shall be deemed to
be part of
and qualify all representations and warranties contained in this Article
IV
and the
covenants in Article
V
to
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the
extent applicable. All information in each of the documents and other
writings
furnished to United pursuant to this Agreement or the Disclosure Memorandum
is
or will be true, correct and complete and does not and will not omit
to state
any fact necessary in order to make the statements therein not misleading.
GCG
shall promptly provide United with written notification of any event,
occurrence
or other information necessary to maintain the Disclosure Memorandum
and all
other documents and writings furnished to United pursuant to this Agreement
as
true, correct and complete at all times prior to and including the Closing.
4.2 Corporate
and Financial.
4.2.1 Corporate
Status. GCG
is a
corporation duly organized, validly existing and in good standing under
the laws
of the State of Georgia and has no direct or indirect subsidiaries other
than
the Bank. The Bank is a bank duly organized, validly existing, and in
good
standing under the laws of the State of Georgia. GCG and the Bank have
all of
the requisite corporate power and authority and are entitled to own or
lease
their respective properties and assets and to carry on their businesses
as and
in the places where such properties or assets are now owned, leased or
operated
and such businesses are now conducted.
4.2.2 Authority.
Except
as set forth in the Disclosure Memorandum and subject to the required
regulatory
approvals, as stated in Section
4.6.1
and the
approval of GCG shareholders, the execution, delivery and performance
of this
Agreement and the other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the passage
of time,
or both:
(a) violate
any provision of federal or state law applicable to GCG, the violation
of which
could be reasonably expected to have an adverse effect on the business,
operations, properties, assets, financial condition or prospects of GCG;
(b) violate
any provision of the articles of incorporation or bylaws of GCG;
(c) conflict
with or result in a breach of any provision of, or termination of, or
constitute
a default under any instrument, license, agreement, or commitment to
which GCG
is a party, which, singly or in the aggregate, could reasonably be expected
to
have an adverse effect on the business, operations, properties, assets,
financial condition or prospects of GCG; or
(d) constitute
a violation of any order, judgment or decree to which GCG is a party,
or by
which GCG or any of its assets or properties are bound.
Assuming
this Agreement constitutes the valid and binding obligation of United,
this
Agreement constitutes the valid and binding obligation of GCG, and is
enforceable in accordance with its terms, except as limited by laws affecting
creditors’ rights generally and by the discretion of courts to compel specific
performance.
4.2.3 Capital
Structure.
(a) As
of the date of this Agreement, GCG has authorized capital stock consisting
solely of (i) 12,000,000 shares of GCG Stock, of which 2,830,901 shares
are
issued and outstanding as of the date hereof, exclusive of 208,321 shares
reserved for issuance upon exercise of outstanding GCG Stock Options,
and (ii)
2,000,000 shares of nonvoting common stock, no par value, none of which
is
issued and outstanding. The Bank has authorized capital stock consisting
solely
of 12,000,000 shares of common stock, $5.00 par value per share (“Bank
Stock”),
1,060,000 of which are issued and outstanding as of the date hereof.
All of the
issued and outstanding shares of GCG Stock and Bank Stock are duly and
validly
issued, fully paid and non-assessable and were offered, issued and sold
in
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compliance
with all applicable federal and state securities laws. No person has
any right
of rescission or claim for damages under federal or state securities
laws with
respect to the issuance of any shares GCG Stock or Bank Stock previously
issued.
None of the shares of GCG Stock or Bank Stock has been issued in violation
of
any preemptive or other rights of its respective shareholders. All of
the issued
and outstanding shares of the Bank Stock are owned by GCG.
(b) Except
for the GCG Stock Options and as otherwise described in the Disclosure
Memorandum, GCG does not have outstanding any securities which are either
by
their terms or by contract convertible or exchangeable into capital stock
of
GCG, or any other securities or debt of GCG, or any preemptive or similar
rights
to subscribe for or to purchase, or any options or warrants or agreements
or
understandings for the purchase or the issuance (contingent or otherwise)
of, or
any calls, commitments or claims of any character relating to, its capital
stock
or securities convertible into its capital stock. Except as otherwise
described
in the Disclosure Memorandum, GCG is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire, or to register,
any
shares of its capital stock.
(c) Except
as
disclosed in the GCG Disclosure Memorandum and other than restrictions
required
by applicable federal and state securities laws, there is no agreement,
arrangement or understanding to which GCG is a party restricting or otherwise
relating to the transfer of any shares of capital stock of GCG.
(d) All
shares of common stock or other capital stock, or any other securities
or debt,
of GCG, which have been purchased or redeemed by GCG have been purchased
or
redeemed in accordance with all applicable federal, state and local laws,
rules,
and regulations, including, without limitation, all federal and state
securities
laws and rules and regulations of any securities exchange or system on
which
such stock, securities or debt are, or at such time were, traded, and
no such
purchase or redemption has resulted or will, with the giving of notice
or lapse
of time, or both, result in a default or acceleration of the maturity
of, or
otherwise modify, any agreement, note, mortgage, bond, security agreement,
loan
agreement or other contract or commitment of GCG.
(e) Except
as
set forth on the Disclosure Memorandum, no person beneficially owns more
than 5%
of the issued and outstanding shares of GCG Stock.
4.2.4 Corporate
Records.
The
stock records and minute books of GCG: (a) fully and accurately reflect
all
issuances, transfers and redemptions of the Common Stock; (b) correctly
show the
record addresses and the number of shares of such stock issued and outstanding
on the date hereof held by the shareholders of GCG; (c) correctly show
all
corporate action taken by the directors and shareholders of GCG (including
actions taken by consent without a meeting); and (d) contain true and
correct
copies or originals of the respective articles of incorporation or association
and all amendments thereto, bylaws as amended and currently in force,
and the
minutes of all meetings or consent actions of its directors and shareholders.
No
resolutions, regulations or bylaws have been passed, enacted, consented
to or
adopted by such directors or shareholders except those contained in the
minute
books. All corporate records have been maintained in accordance with
all
applicable statutory requirements and are complete and accurate.
4.2.5 Tax
Returns; Taxes.
(a) GCG
has duly filed: (i) all required federal and state tax returns and reports;
and
(ii) all required returns and reports of other governmental units having
jurisdiction with respect to taxes imposed upon its income, properties,
revenues, business, franchises, operations or other assets or taxes imposed
which might create a material lien or encumbrance on any of such assets.
Such
returns or reports were true, complete and correct, and GCG has paid,
to the
extent such taxes or other governmental charges required to be have become
due,
all taxes and other governmental charges set forth in such returns or
reports.
All unpaid federal, state and local taxes and
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other
governmental charges payable by GCG have been accrued or reserved on
its books
in accordance with generally accepted accounting principles applied on
a basis
consistent with prior periods (“GAAP”).
Adequate reserves for the payment of taxes have been established on the
books of
GCG for all periods through the date hereof, whether or not due and payable
and
whether or not disputed. Until the Closing Date, GCG shall continue to
provide
adequate reserves for the payment of expected tax liabilities in accordance
with
GAAP. GCG has not received any notice of a tax deficiency or assessment
of
additional taxes of any kind and, to the knowledge of GCG, there is no
threatened claim against GCG or any basis for any such claim, for payment
of any
additional federal, state, local or foreign taxes for any period prior
to the
date of this Agreement in excess of the accruals or reserves with respect
to any
such claim shown in the GCG Financial Statements (as defined in Section
4.2.6)
or
disclosed in the notes thereto. There are no waivers or agreements by
GCG for
the extension of time for the assessment of any taxes. No federal or
state
income, employment or property tax return is currently the subject of
an audit
or other governmental investigation or inquiry.
(b) Except
as
set forth in the Disclosure Memorandum, proper and accurate amounts have
been
withheld by GCG from its employees for all periods in full and complete
compliance with the tax withholding provisions of applicable federal,
state and
local tax laws, and proper and accurate federal, state and local tax
returns
have been filed by GCG for all periods for which returns were due with
respect
to withholding, social security and unemployment taxes, and the amounts
required
to be shown thereon to be due and payable have been paid in full.
4.2.6 Financial
Statements.
(a) GCG
has delivered to United true, correct and complete copies, including
notes, of
the financial statements of GCG for the years ended December 31, 2006,
2005,
2004 and 2003, including consolidated balance sheets, consolidated statements
of
earnings, consolidated statements of cash flows, consolidated statements
of
comprehensive income and consolidated statements of changes in shareholders’
equity (the financial statements for the years ended December 31, 2006,
2005,
2004 and 2003 being herein referred to as the “GCG
Financial Statements”).
All
of such financial statements have been prepared in accordance with GAAP,
and
present fairly the assets, liabilities and financial condition of GCG
as of the
dates indicated therein and the results of its operations for the respective
periods indicated therein.
(b) GCG
has
maintained a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with
GAAP and to maintain accountability for assets, (iii) access to assets
is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is
taken with
respect to any differences. No changes have been made to GCG’s internal control
over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f)
of the
Securities Exchange Act of 1934, as amended (the “1934
Act”),
since
December 31, 2006 that materially affected, or are reasonably likely
to
materially affect, its internal control over financial reporting.
4.2.7 Regulatory
Reports.
GCG has
made available to United for review and inspection the year-end and quarterly
Reports of Condition and Income filed by the Bank with the Federal Deposit
Insurance Corporation (the “FDIC”)
and
the Forms F.R. Y-6 and F.R. Y-9C filed
by
GCG with the Board of Governors of the Federal Reserve System (the “Federal
Reserve”)
for
each of the three (3) years ended December 31, 2006, 2005 and 2004, together
with all such other reports filed by GCG and the Bank for the same three-year
period with the Georgia Department of the Banking and Finance (the “Georgia
Department”),
if
any, and
with
any other applicable regulatory or governmental agencies (collectively,
the
“GCG
Reports”).
All
of the GCG Reports have been prepared in accordance with applicable rules
and
regulations applied on a basis consistent with prior periods and contain
all
information required to be presented therein in accordance with such
rules and
regulations.
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4.2.8 Accounts. The
Disclosure Memorandum contains a list of each and every bank and other
institution in which GCG maintains an account or safety deposit box,
the account
numbers, and the names of all persons who are presently authorized to
draw
thereon, have access thereto or give instructions regarding distribution
of
funds or assets therein.
4.2.9 Notes
and Obligations.
(a)
Except as set forth in the Disclosure Memorandum or as provided for in
the loss
reserve described in subsection (b) below, all notes receivable or other
obligations owned by GCG or due to it shown in the GCG Financial Statements
and
any such notes receivable and obligations on the date hereof and on the
Closing
Date are and will be genuine, legal, valid and collectible obligations
of the
respective makers thereof and are not and will not be subject to any
offset or
counterclaim. Except as set forth in subsection (b) below, all such notes
and
obligations are evidenced by written agreements, true and correct copies
of
which will be made available to United for examination prior to the Closing
Date. All such notes and obligations were entered into by GCG in the
ordinary
course of its business and in compliance with all applicable laws and
regulations.
(b) GCG
has
established a loss reserve in the GCG Financial Statements and as of
the date of
this Agreement and will establish a loss reserve as of the Closing Date
which is
adequate to cover losses reasonably anticipated to result from such items
as the
insolvency or default of borrowers or obligors on such loans or obligations,
defects in the notes or evidences of obligation (including losses of
original
notes or instruments), offsets or counterclaims properly chargeable to
such
reserve, or the availability of legal or equitable defenses which might
preclude
or limit the ability of GCG to enforce the note or obligation, and the
representations set forth in subsection (a) above are qualified in their
entirety by the aggregate of such loss reserve. At the Closing Date,
the ratio
of the loss reserve to total loans outstanding at such time shall not
exceed the
ratio of the loan loss reserve to the total loans outstanding as reflected
in
the December 31, 2006 GCG Financial Statements.
4.2.10
Liabilities.
GCG has
no debt, liability or obligation of any kind required to be shown pursuant
to
GAAP on the consolidated balance sheet of GCG, whether accrued, absolute,
known
or unknown, contingent or otherwise, including, but not limited to: (a)
liability or obligation on account of any federal, state or local taxes
or
penalty, interest or fines with respect to such taxes; (b) liability
arising
from or by virtue of the distribution, delivery or other transfer or
disposition
of goods, personal property or services of any type, kind or variety;
(c)
unfunded liabilities with respect to the GCG 401(k) Plan or any other
any
pension, profit sharing or employee stock ownership plan, whether operated
by
GCG or any other entity covering employees of GCG; or (d) environmental
liabilities, except: (i) those reflected in the GCG Financial Statements;
and
(ii) as disclosed in the Disclosure Memorandum.
4.2.11
Absence
of Changes.
Except
as specifically provided for in this Agreement or specifically set forth
in the
Disclosure Memorandum, since December 31, 2006:
(a) there
has
been no change in the business, assets, liabilities, results of operations
or
financial condition of GCG, or in any of its relationships with customers,
employees, lessors or others, other than changes in the ordinary course
of
business, none of which individually or in the aggregate has had, or
which could
reasonably be expected to have, an adverse effect on such businesses
or
properties;
(b) there
has
been no damage, destruction or loss to the assets, properties or business
of
GCG, whether or not covered by insurance, which has had, or which may
reasonably
be expected to have, an adverse effect thereon;
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(c) the
business of GCG has been operated in the ordinary course, and not
otherwise;
(d) the
properties and assets of GCG used in its business have been maintained
in good
order, repair and condition, ordinary wear and tear excepted;
(e) the
books, accounts and records of GCG have been maintained in the usual,
regular
and ordinary manner;
(f) there
has
been no declaration, setting aside or payment of any dividend or other
distribution on or in respect of the capital stock of GCG;
(g) there
has
been no increase in the compensation or in the rate of compensation or
commissions payable or to become payable by GCG to any director or executive
officer, or to any employee earning $50,000 or more per annum, or any
general
increase in the compensation or in the rate of compensation payable or
to become
payable to employees of GCG earning less than $50,000 per annum (“general
increase”
for
the
purpose hereof meaning any increase generally applicable to a class or
group of
employees, but not including increases granted to individual employees
for
merit, length of service, change in position or responsibility or other
reasons
applicable to specific employees and not generally to a class or group
thereof),
or any increase in any payment of or commitment to pay any bonus, profit
sharing
or other extraordinary compensation to any employee;
(h) there
has
been no change in the charter or bylaws of GCG or the Bank;
(i) there
has
been no labor dispute, unfair labor practice charge or employment discrimination
charge, nor, to the knowledge of GCG, any organizational effort by any
union, or
institution or threatened institution, of any effort, complaint or other
proceeding in connection therewith, involving GCG, or affecting its
operations;
(j) there
has
been no issuance, sale, repurchase, acquisition, or redemption by GCG
of any of
its capital stock except as set forth on the Disclosure Memorandum, bonds,
notes, debt or other securities, and there has been no modification or
amendment
of the rights of the holders of any outstanding capital stock, bonds,
notes,
debt or other securities thereof;
(k) there
has
been no mortgage, lien or other encumbrance or security interest (other
than
liens for current taxes not yet due or purchase money security interests
arising
in the ordinary course of business) created on or in (including without
limitation, any deposit for security) any asset or assets of GCG or assumed
by
it with respect to any asset or assets;
(l) there
has
been no indebtedness or other liability or obligation (whether absolute,
accrued, contingent or otherwise) incurred by GCG which would be required
to be
reflected on a balance sheet of GCG prepared as of the date hereof in
accordance
with GAAP, except as incurred in the ordinary course of business;
(m) no
obligation or liability of GCG has been discharged or satisfied, other
than in
the ordinary course of business;
(n) there
have been no sales, transfers or other dispositions of any asset or assets
of
GCG, other than sales in the ordinary course of business; and
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(o) there
has
been no amendment, termination or waiver of any right of GCG under any
contract
or agreement or governmental license, permit or permission which has
had, or
could reasonably be expected to have, an adverse effect on its business
or
properties.
4.2.12
Litigation
and Proceedings.
Except
as set forth on the Disclosure Memorandum, there are no actions, decrees,
suits,
counterclaims, claims, proceedings or governmental actions or investigations,
pending or, to the knowledge of GCG, threatened against, by or affecting
GCG, or
any officer, director, employee or agent in such person’s capacity as an
officer, director, employee or agent of GCG or relating to the business
or
affairs of GCG, in any court or before any arbitrator or governmental
agency,
and no judgment, award, order or decree of any nature has been rendered
against
or with respect thereto by any agency, arbitrator, court, commission
or other
authority, nor does GCG have, to the knowledge of GCG, any unasserted
contingent
liabilities which are reasonably likely to have an adverse effect on
its assets
or on the operation of its businesses or which could reasonably be expected
to
prevent or impede the consummation of the transactions contemplated by
this
Agreement.
4.2.13
Proxy
Materials. Neither
the GCG Proxy Materials nor other materials furnished by GCG to the GCG
shareholders in connection with the transactions contemplated by this
Agreement
or the Merger Agreement, or in any amendments thereof or supplements
thereto,
will, at the times such documents are distributed to the holders of shares
of
GCG Stock and through the acquisition of shares of GCG Stock by United
pursuant
to the Merger, contain with respect to GCG any untrue statement of a
material
fact or omit to state any information required to be stated therein or
omit to
state any material fact necessary in order to make the statements therein,
in
light of the circumstances under which they are made, not
misleading.
4.2.14
No
Adverse Change.
Since
December 31, 2005, there has not been any change in the condition of
GCG, any
contracts entered into by GCG, or other changes in the operations of
GCG which,
in any case, has had, or is reasonably likely to have, an adverse effect
on GCG
on a consolidated basis taken as a whole.
4.3 Business
Operations.
4.3.1
Customers.
To the
knowledge of GCG, there are no presently existing facts which could reasonably
be expected to result in the loss of any borrower or depositor or in
GCG’s
inability to collect amounts due therefrom or to return funds deposited
thereby,
except as set forth on the Disclosure Memorandum.
4.3.2 Permits;
Compliance with Law.
(a) GCG
has all permits, licenses, approvals, authorizations and registrations
under all
federal, state, local and foreign laws required for GCG to carry on its
business
as presently conducted, and all of such permits, licenses, approvals,
authorizations and registrations are in full force and effect, and no
suspension
or cancellation of any of them is pending or, to the knowledge of GCG,
threatened.
(b) GCG
has
complied with all laws, regulations, ordinances, rules, and orders applicable
to
it or its business, except for any non-compliance which could not reasonably
be
expected to have a material adverse effect on GCG. The Disclosure Memorandum
contains a list of any known violations of such laws, regulations, ordinances,
rules or orders by any present officer, director, or employee of GCG,
and which
resulted in any order, proceeding, judgment or decree which would be
required to
be disclosed pursuant to Item 401(f) of Regulation S-K promulgated by
the SEC.
No past violation of any such law, regulation, ordinance, rule or order
has
occurred which could impair the right or ability of GCG to conduct its
business.
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(c) Except
as
set forth in the Disclosure Memorandum, no notice, inquiry or warning
from any
governmental authority with respect to any failure or alleged or possible
failure of GCG to comply in any respect with any law, regulation, ordinance,
rule or order has been received, nor, to the knowledge of GCG, is any
such
notice or warning proposed or threatened.
4.3.3 Environmental.
(a)
Except as set forth in the Disclosure Memorandum:
(i)
GCG
has
not caused or permitted the generation, manufacture, use, or handling
or the
release or presence of, any Hazardous Material (as defined below) on,
in, under
or from any properties or facilities currently owned or leased by GCG
or
adjacent to any properties so owned or leased that requires notification,
investigation or remediation pursuant to any environmental law;
(ii)
to
the
knowledge of GCG, there are no non-compliance orders, warning letters
or notices
of violations, actions, suits or other claims asserted or threatened
against GCG
or administrative or judicial investigations arising from or relating
to the
environmental condition of any property currently owned or leased by
GCG or the
generation, manufacture, use, or handling or the release or presence
of, any
Hazardous Material at any property currently owned or leased by
GCG;
(iii)
GCG
has
complied in all material respects with, and has kept all records and
made all
filings or reports required by, and is otherwise in compliance with all
applicable federal, state and local laws, regulations, orders, permits
and
licenses relating to the generation, treatment, manufacture, use, handling,
release or presence of any Hazardous Material on, in, under or from any
properties or facilities currently owned or leased by GCG; and
(iv)
to
the
knowledge of GCG, the improvements on the property are free from the
presence or
growth of mold, fungi, spores or bacteria that could be reasonably expected
to
cause property damage or personal injury, and the improvements on the
property
are, and have been, reasonably free of conditions that could lead to
the growth
or presence of mold, fungi, spores or bacteria, including, without limitation,
air conditioner malfunction, water intrusion, water leaks, sewage backflows
and
construction defects.
(v) to
the
knowledge of GCG, there are not now nor have there ever been any underground
storage tanks for the storage of Hazardous Material on, in or under any
properties or facilities currently owned or leased by GCG.
(b) Neither
GCG nor, to the knowledge of GCG, any of its officers, directors, employees
or
agents, in the course of such individual’s employment by GCG, has given advice
with respect to, or participated in any respect in, the management or
operation
of any entity or concern regarding the generation, storage, handling,
disposal,
transfer, production, use or processing of Hazardous Material.
(c) To
the
knowledge of GCG, except as set forth in the GCG Disclosure Memorandum,
GCG has
not foreclosed on any property on which there is a threatened release
of any
Hazardous Material or on which there has been a release and remediation
has not
been completed to the extent required by environmental laws.
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(d) Except
as
set forth in the Disclosure Memorandum, neither GCG nor any of its executive
officers or directors is aware of, has been told of, or has observed,
the
presence of any Hazardous Material on, in, under, or around property
on which
GCG holds a legal or security interest, in violation of, or creating
a liability
under, federal, state, or local environmental statutes, regulations,
or
ordinances.
(e) GCG
has
delivered to United true, correct and complete copies of all reports
or tests
with respect to compliance of any of the properties or facilities currently
owned or operated by GCG with any environmental laws or the presence
of
Hazardous Materials that were prepared for GCG or prepared for other
persons and
are in the possession, custody or control of GCG.
(f) The
term
“Hazardous
Material”
means
any substance whose nature, use, manufacture, or effect render it subject
to
federal, state or local regulation governing that material’s investigation,
remediation or removal as a threat or potential threat to human health
or the
environment and includes, without limitation, any substance within the
meaning
of “hazardous
substances”
under
the Comprehensive Environmental Response, Compensation and Liability
Act, 42
U.S.C. § 9601, “hazardous
wastes”
within
the meaning of the Resource Conservation and Recovery Act, 42 U.S.C.
§ 6921, any
petroleum product, including any fraction of petroleum, or any friable
asbestos
containing materials. However, the term “Hazardous
Material”
shall
not include those substances which are normally and reasonably used or
present
in connection with the development, occupancy or operation of office
buildings
(such as cleaning fluids, and supplies normally used in the day to day
operation
of business offices) in quantities reasonable in relation to such use
and in
compliance with applicable law or such that may be naturally occurring
in any
ambient air, surface water, ground water, land surface or subsurface
strata.
4.3.4 Insurance.
The
Disclosure Memorandum contains a complete list and description (including
the
expiration date, premium amount and coverage thereunder) of all policies
of
insurance and bonds presently maintained by, or providing coverage for,
GCG or
through GCG for any of its officers, directors and employees, all of
which are,
and will be maintained through the Closing Date, in full force and effect,
together with a complete list of all pending claims under any of such
policies
or bonds. All material terms, obligations and provisions of each of such
policies and bonds have been complied with, all premiums due thereon
have been
paid, and no notice of cancellation with respect thereto has been received.
Except as set forth in the Disclosure Memorandum, such policies and bonds
provide coverage to insure the properties and businesses of GCG and the
activities of its officers, directors and employees against such risks
and in
such amounts as are customary. GCG will not as of the Closing Date have
any
liability for premiums or for retrospective premium adjustments for any
period
prior to the Closing Date. GCG has heretofore made available to United
a true,
correct and complete copy of each insurance policy and bond in effect
since
January 1, 2003 with respect to the business and affairs of GCG.
4.4 Properties
and Assets.
4.4.1 Contracts
and Commitments.
The
Disclosure Memorandum contains a list identifying and briefly describing
all
written contracts, purchase orders, agreements, security deeds, guaranties
or
commitments (other than loans, loan commitments and deposits made by
or with GCG
in the ordinary course of business), to which GCG is a party or by which
it may
be bound involving the payment or receipt, actual or contingent, of more
than
$25,000 or having a term or requiring performance over a period of more
than
ninety (90) days. Each such contract, agreement, guaranty and commitment
of GCG
is in full force and effect and is valid and enforceable in accordance
with its
terms, and constitutes a legal and binding obligation of the respective
parties
thereto and is not the subject of any notice of default, termination,
partial
termination or of any ongoing, pending, completed or threatened
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investigation,
inquiry or other proceeding or action that may give rise to any notice
of
default, termination or partial termination. GCG has complied with the
provisions of such contracts, agreements, guaranties and commitments.
A true and
complete copy of each such document has been or will be made available
to United
for examination.
4.4.2 Licenses;
Intellectual Property.
GCG has
all patents, trademarks, trade names, service marks, copyrights, trade
secrets
and know-how reasonably necessary to conduct its business as presently
conducted
and, except as described in the Disclosure Memorandum, GCG is not a party,
either as licensor or licensee, to any agreement for any patent, process,
trademark, service mark, trade name, copyright, trade secret or other
confidential information and there are no rights of third parties with
respect
to any trademark, service mark, trade secrets, confidential information,
trade
name, patent, patent application, copyright, invention, device or process
owned
or used by GCG or presently expected to be used by it in the future.
All
patents, copyrights, trademarks, service marks, trade names, and applications
therefor or registrations thereof, owned or used by GCG, are listed in
the
Disclosure Memorandum. GCG has complied with all applicable laws relating
to the
filing or registration of “fictitious
names”
or
trade names.
4.4.3 Personal
Property.
GCG has
good and marketable title to all of its personal property, tangible and
intangible, reflected in the most recent GCG Financial Statements (except
as
since sold or otherwise disposed of by it in the ordinary course of business),
free and clear of all encumbrances, liens or charges of any kind or character,
except: (a) those referred to in the notes to the GCG Financial Statements
as
securing specified liabilities (with respect to which no default exists
or, to
the knowledge of GCG, is claimed to exist); (b) those described in the
Disclosure Memorandum; and (c) liens for taxes not due and payable.
4.4.4 GCG
Leases.
(a) All
leases (the “GCG
Leases”)
pursuant to which GCG is lessor or lessee of any real or personal property
(such
property, the “Leased
Property”)
are
valid and enforceable in accordance with their terms; there is not under
any of
the GCG Leases, to the knowledge of GCG, any default or any claimed default
by
GCG, or event of default or event which with notice or lapse of time,
or both,
would constitute a default by GCG and in respect of which adequate steps
have
not been taken to prevent a default on its part from occurring.
(b) The
copies of the GCG Leases heretofore furnished or made available by GCG
to United
are true, correct and complete, and the GCG Leases have not been modified
in any
respect other than pursuant to amendments, copies of which have been
concurrently delivered or made available to United, and are in full force
and
effect in accordance with their terms.
(c) Except
as
set forth in the Disclosure Memorandum, there are no contractual obligations,
agreements in principle or present plans for GCG to enter into new leases
of
real property or to renew or amend existing GCG Leases prior to the Closing
Date.
4.4.5 Real
Property.
(a) GCG
does not own any interest in any real property (other than as lessee)
except as
set forth in the Disclosure Memorandum (such properties being referred
to herein
as “GCG
Realty”).
Except as disclosed in the Disclosure Memorandum, GCG has good title
to the GCG
Realty and the titles to the GCG Realty are covered by title insurance
policies
providing coverage in the amount of the original purchase price, true,
correct
and complete copies of which have been or will be furnished to United
with the
Disclosure Memorandum. GCG has not encumbered the GCG Realty since the
effective
dates of the respective title insurance policies.
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(b) Except
as
set forth in the Disclosure Memorandum, the interests of GCG in the GCG
Realty
and in and under each of the GCG Leases are free and clear of any and
all liens
and encumbrances and are subject to no present claim, contest, dispute,
action
or, to the knowledge of GCG, threatened action at law or in equity.
(c) The
present and past use and operations of, and improvements upon, the GCG
Realty
and all real properties included in the Leased Properties (the “GCG
Leased Real Properties”)
are in
compliance with all applicable building, fire, zoning and other applicable
laws,
ordinances and regulations and with all deed restrictions of record,
no notice
of any violation or alleged violation thereof has been received, and
there are
no proposed changes therein that would affect the GCG Realty, the GCG
Leased
Real Properties or their uses.
(d) Except
as
set forth in the Disclosure Memorandum, no rent has been paid in advance
and no
security deposit has been paid by, nor is any brokerage commission payable
by or
to, GCG with respect to any Lease pursuant to which it is lessor or
lessee.
(e) GCG
is
not aware of any proposed or pending change in the zoning of, or of any
proposed
or pending condemnation proceeding with respect to, any of the GCG Realty
or the
GCG Leased Real Properties which may adversely affect the GCG Realty
or the GCG
Leased Real Properties or the current or currently contemplated use
thereof.
(f) The
buildings and structures owned, leased or used by GCG are, taken as a
whole, in
good operating order (except for ordinary wear and tear), usable in the
ordinary
course of business, and are sufficient and adequate to carry on the business
and
affairs of GCG.
4.5 Employees
and Benefits.
4.5.1 Directors
or Officers of Other Corporations.
Except
as set forth in the Disclosure Memorandum, no director, officer, or employee
of
GCG serves, or in the past five (5) years has served, as a director or
officer
of any other corporation on behalf of or as a designee of GCG.
4.5.2 Employee
Benefits. (a) Except
as
set forth in the Disclosure Memorandum, (i) GCG does not provide and
is not
obligated to provide, directly or indirectly, any benefits for employees,
including, without limitation, any pension, profit sharing, stock option,
retirement, bonus, hospitalization, medical, insurance, vacation or other
employee benefits under any practice, agreement or understanding, and
(ii) GCG
does not have any employment, severance, change in control or similar
agreements
with any of its employees.
(b) The
Disclosure Memorandum lists separately any employee benefit plan within
the
meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974,
as amended (“ERISA”),
sponsored, maintained or contributed to by GCG (collectively, “ERISA
Plans”).
True,
correct and complete copies of all ERISA Plans and, to the extent applicable,
all related trust agreements, insurance contracts, summary plan descriptions,
Internal Revenue Service determination letters and filings, the past
three (3)
years of actuarial reports and valuations, annual reports and Form 5500
filings
(including attachments), and any other related documents requested by
United or
its counsel have been, or prior to the Closing Date will be, made available
to
United.
(c) GCG
is
not currently and has never been in the past required to contribute to
a
multiemployer plan as defined in Section 3(37)(A) of ERISA. GCG does
not
maintain or contribute to, nor within the past six (6) years has it maintained
or contributed to, an employee pension benefit plan as defined in Section
3(2)
of ERISA that is or was subject to Title IV of ERISA.
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(d) Each
ERISA Plan has been operated and administered in accordance with, and
has been
amended to comply in all material respects with (unless such amendment
is not
yet required), all applicable laws, rules and regulations, including,
without
limitation, ERISA, the Internal Revenue Code (the “Code”),
and
the regulations issued under ERISA and the Code. With respect to each
ERISA
Plan, other than routine claims for benefits submitted in the ordinary
course of
the benefits process, no litigation or administrative or other proceeding
is
pending or, to the knowledge of GCG, threatened involving such ERISA
Plan or any
of its fiduciaries. With respect to each ERISA Plan, neither GCG nor
any of its
directors, officers, employees or agents, nor any “party
in interest”
or
“disqualified
person”
(as
such terms are defined in Section 3(14) of ERISA and Section 4975 of
the Code)
has been engaged in or been a party to any transaction relating to the
ERISA
Plan which would constitute a breach of fiduciary duty under ERISA or
a
“prohibited
transaction”
(as
such term is defined in Section 406 of ERISA or Section 4975 of the Code),
unless such transaction is specifically permitted under Sections 407
or 408 of
ERISA, Section 4975 of the Code or a class or administrative exemption
issued by
the Department of Labor. Each ERISA Plan that is a group health plan
within the
meaning of Section 607(l) of ERISA and Section 4980B of the Code is in
material
compliance with the continuation coverage requirements of Section 501
of ERISA
and Section 4980B of the Code.
(e) Of
the
ERISA Plans, only the GCG 401(k) Plan is an “employee
pension benefit plan”
within
the meaning of Section 3(2) of ERISA. With respect to the GCG 401(k)
Plan,
except as set forth on the Disclosure Memorandum: (i) the GCG 401(k)
Plan
constitutes a qualified plan within the meaning of Section 401(a) of
the Code
and the trust is exempt from federal income tax under Section 501(a)
of the
Code; (ii) the GCG 401(k) Plan has been maintained and operated in compliance
in
all material respects with all applicable provisions of Sections 409
and 4975 of
the Code and Sections 406 and 408 of ERISA and the regulations and rulings
thereunder; (iii) all contributions required by such plan have been made
or will
be made on a timely basis; and (iv) no termination, partial termination
or
discontinuance of contributions has occurred without a determination
by the IRS
that such action does not affect the tax-qualified status of such
plan.
(f) As
of the
Closing Date, with respect to each ERISA Plan, GCG will have provided
adequate
reserves, or insurance or qualified trust funds, to provide for all payments
and
contributions required, or reasonably expected to be required, to be
made under
the provisions of such ERISA Plan or required to be made under applicable
laws,
rules and regulations, with respect to any period prior to the Closing
Date to
the extent reserves are required under GAAP, based on an actuarial valuation
satisfactory to the actuaries of GCG representing a projection of claims
expected to be incurred under such ERISA Plan.
(g) Except
as
disclosed on the Disclosure Memorandum, GCG does not provide and has
no
obligation to provide benefits, including, without limitation, death,
health or
medical benefits (whether or not insured) with respect to current or
former
employees of GCG beyond their retirement or other termination of service
with
GCG other than: (i) coverage mandated by applicable Law; (ii) benefits
under the
GCG 401(k) Plan; or (iii) benefits the full cost of which is borne by
the
current or former employee or his beneficiary.
(h) Except
as
set forth in the Disclosure Memorandum, neither this Agreement nor any
transaction contemplated hereby will: (i) entitle any current or former
employee, officer or director of GCG to severance pay, unemployment compensation
or any similar or other payment, (ii) accelerate the time of payment
or vesting
of, or increase the amount of compensation or benefits due any such employee,
officer or director, or (iii) cause the payment of any “excess parachute
payment” (as defined in Section 280G of the Code).
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(i) Each
plan
or agreement listed pursuant to Section
4.5.2
that is
subject to Section 409A of the Code has been administered and operated
in
compliance, in all material respects, with Section 409A and the regulations
and
rulings thereunder.
4.5.3 Employment
and Labor Matters.
Except
as described in the Disclosure Memorandum, GCG is not, and has not been,
a party
to any collective bargaining agreement or agreement of any kind with
any union
or labor organization or to any agreement with any of its employees which
is not
terminable at will or upon ninety (90) days notice at the election of,
and
without cost or penalty to, GCG. GCG has not received at any time in
the past
five (5) years, any demand for recognition from any union, and no attempt
has
been made, or will have been made as of the Closing Date, to organize
any of its
employees. GCG has complied in all material respects with all obligations
under
the National Labor Relations Act, as amended, the Age Discrimination
in
Employment Act, as amended, and all other federal, state and local labor
laws
and regulations applicable to employees. Except as described in the Disclosure
Memorandum, (i) there are no unfair labor practice charges pending or
threatened
against GCG, and (ii) there are, and in the past three (3) years there
have
been, no charges, complaints, claims or proceedings, pending, threatened
against, or involving, as the case may be, GCG with respect to any alleged
violation of any wage and hour laws, age discrimination act laws, employment
discrimination laws or any other claims arising out of any employment
relationship as to any of GCG’s employees or as to any person seeking employment
therefrom, and no such violations exist.
4.5.4 Related
Party Transactions.
Except
for: (a) loans and extensions of credit made on substantially the same
terms,
including interest rates and collateral, as those prevailing at the time
for
comparable transactions by GCG with other persons who are not affiliated
with
GCG, and which do not involve more than the normal risk of repayment
or present
other unfavorable features; (b) deposits, all of which are on terms and
conditions identical to those made available to all customers of GCG
at the time
such deposits were entered into; and (c) transactions specifically described
in
the Disclosure Memorandum, there are no contracts with or commitments
to present
or former five percent (5%) or greater shareholders, directors, officers,
or
employees involving the expenditure of more than $60,000 as to any one
individual, including with respect to any business directly or indirectly
controlled by any such person, or $100,000 for all such contracts or
commitments
in the aggregate for all such individuals (other than contracts or commitments
relating to services to be performed by any officer, director or employee
as a
currently-employed employee of GCG).
4.6 Other
Matters.
4.6.1 Approvals,
Consents and Filings.
Except
for the Federal Reserve, the FDIC and the Georgia Department, or as set
forth in
the Disclosure Memorandum, neither the execution and delivery of this
Agreement
nor the consummation of the transactions contemplated hereby or thereby
will:
(a) require any consent, approval, authorization or permit of, or filing
with or
notification to, any governmental or regulatory authority; or (b) violate
any
order, writ, injunction, decree, statute, rule or regulation applicable
to GCG,
or any of GCG’s assets.
4.6.
Default.
(a)
Except for those consents described in or set forth pursuant to Section
4.6.1
above
and as described in the Disclosure Memorandum, neither the execution
of this
Agreement nor consummation of the transactions contemplated herein:
(i)
constitutes
a breach of or default under any contract or commitment to which GCG
is a party
or by which any of GCG’s properties or assets are bound;
A-17
(ii)
does
or
will result in the creation or imposition of any security interest, lien,
encumbrance, charge, equity or restriction of any nature whatsoever in
favor of
any third party upon any assets of GCG; or
(iii)
constitutes
an event permitting termination of any agreement or the acceleration
of any
indebtedness of GCG.
(b) GCG
is
not in violation of its charter documents or bylaws or in default under
any term
or provision of any material security deed, mortgage, indenture or security
agreement, or of any other material contract or instrument to which GCG
is a
party or by which it or any of its material properties is bound.
4.6.3 Representations
and Warranties.
No
representation or warranty contained in this Article
IV
or in
any written statement delivered by or at the direction of GCG pursuant
hereto or
in connection with the transactions contemplated hereby contains or will
contain
any untrue statement, nor will such representations and warranties taken
as a
whole omit any statement necessary in order to make any statement not
misleading. Copies of all documents that have been or will be furnished
to
United in connection with this Agreement or pursuant hereto are or shall
be
true, correct and complete.
4.6.4 Absence
of Brokers.
Except
for Burke Capital Group, L.L.C. (“Burke”),
which
has provided financial advisory services to GCG, no broker, finder or
other
financial consultant has acted on GCG’s behalf in connection with this Agreement
or the transactions contemplated hereby.
4.6.5 Opinions.
Prior
to
the execution of this Agreement, GCG has received an opinion from Burke
to the
effect that, as of the date of such opinion and based on and subject
to the
matters set forth in such opinion, the Merger Consideration is fair to
the
shareholders of GCG from a financial point of view. Such opinion has
not been
amended or rescinded as of the date of this Agreement. GCG has provided
United
with a true and complete copy of such opinion for informational
purposes.
ARTICLE
V
CONDUCT
OF BUSINESS OF GCG PENDING CLOSING
Except
as
expressly otherwise provided herein or in the Disclosure Memorandum,
GCG
covenants and agrees that, without the prior written consent of United
between
the date hereof and the Closing Date:
5.1 Conduct
of Business.
GCG
will conduct its business only in the ordinary course, without the creation
of
any indebtedness for borrowed money (other than deposit and similar accounts
and
customary credit arrangements between banks in the ordinary course of
business).
5.2 Maintenance
of Properties.
GCG
will maintain its properties and assets in good operating condition,
ordinary
wear and tear excepted.
5.3 Insurance.
GCG
will maintain and keep in full force and effect all of the insurance
referred to
in Section
4.3.4
hereof
or other insurance equivalent thereto.
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5.4 Capital
Structure.
No
change will be made in the authorized or issued capital stock or other
securities of GCG, and GCG will not issue or grant any right or option
to
purchase or otherwise acquire any of the capital stock or other securities
of
GCG. This Section
5.4
prohibits, without limitation, the issuance or sale by GCG of any GCG
Stock to
the GCG 401(k) Plan.
5.5 Dividends.
No
dividend, distribution or payment will be declared or made in respect
to the GCG
Stock other than cash dividends payable prior to Closing not to exceed,
in the
aggregate, $3.80 per share of GCG Stock to record holders as of February
5,
2007, and GCG will not, directly or indirectly, redeem, purchase or otherwise
acquire any of its capital stock.
5.6 Amendment
of Articles of Incorporation or Bylaws; Corporate
Existence.
GCG
will not amend its articles of incorporation or bylaws, and GCG will
maintain
its corporate existence and powers.
5.7 No
Acquisitions.
GCG
shall not, without the express written consent of United, acquire by
merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or
by any other manner, any business or any corporation, partnership, association
or other entity or division thereof or otherwise acquire or agree to
acquire any
assets which are material, individually or in the aggregate, to
GCG.
5.8 No
Real Estate Acquisitions or Dispositions.
GCG
will not sell, mortgage, lease, buy or otherwise acquire, transfer or
dispose of
any real property or interest therein (except for sales in the ordinary
course
of business) and GCG will not, except in the ordinary course of business,
sell
or transfer, mortgage, pledge or subject to any lien, charge or other
encumbrance any other tangible or intangible asset.
5.9 Banking
Arrangements.
No
change will be made in the banking and safe deposit arrangements referred
to in
Section
4.2.8
hereof.
5.10
Contracts.
GCG
will not, without the express written consent of United, enter into any,
renew
or cancel or terminate any contract of the kind described in Section
4.4.1
hereof.
5.11
Books
and Records.
The
books and records of GCG will be maintained in the usual, regular and
ordinary
course.
5.12
Advice
of Changes.
GCG
shall promptly advise United orally and in writing of any change or event
having, or which could reasonably be expected to have, a material adverse
effect
on the assets, liabilities, business, operations or financial condition
of
GCG.
5.13
Reports.
GCG
shall file all reports required to be filed with any regulatory or governmental
agencies between the date of this Agreement and the Closing Date and
shall
deliver to United copies of all such reports promptly after the same
are
filed.
5.14
Benefit
Plans and Programs; Severance or Termination Payments.
GCG
shall not adopt any new benefit plans or programs or amend any existing
benefit
plans or programs, the effect of which is to increase benefits to employees
or
the liabilities of GCG or its successors. GCG shall not grant or institute
any
new severance pay, termination pay, retention pay or transaction or deal
bonus
or arrangement.
A-19
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF UNITED
As
an
inducement to GCG to enter into this Agreement and to consummate the
transactions contemplated hereby, United represents, warrants, covenants
and
agrees as follows:
6.1 Corporate
Status. United
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of Georgia. United is entitled to own or lease its
properties
and to carry on its business in the places where such properties are
now owned,
leased or operated and such business is now conducted.
6.2 Authority.
Subject
to the required regulatory approvals and notice filing, as stated in
Section
4.6.1,
and the
approval of GCG shareholders, the execution, delivery and performance
of this
Agreement and the other transactions contemplated or required in connection
herewith will not, with or without the giving of notice or the passage
of time,
or both:
(a) violate
any provision of federal or state law applicable to United, the violation
of
which could be reasonably expected to have an adverse effect on the business,
operations, properties, assets, financial condition or prospects of
United;
(b) violate
any provision of the articles of incorporation or bylaws of United;
(c) conflict
with or result in a breach of any provision of, or termination of, or
constitute
a default under any instrument, license, agreement, or commitment to
which
United is a party, which, singly or in the aggregate, could reasonably
be
expected to have an adverse effect on the business, operations, properties,
assets, financial condition or prospects of United; or
(d) constitute
a violation of any order, judgment or decree to which United is a party,
or by
which United or any of its assets or properties are bound.
Assuming
this Agreement constitutes the valid and binding obligation of GCG, this
Agreement constitutes the valid and binding obligation of United, and
is
enforceable in accordance with its terms, except as limited by laws affecting
creditors’ rights generally and by the discretion of courts to compel specific
performance.
6.3 Capital
Structure.
(a) As
of the date of this Agreement, United has authorized capital stock consisting
solely of 100,000,000 shares of common stock, par value $1.00 per share,
of
which 42,990,645 shares are issued and outstanding as of the date hereof,
exclusive of 33,834 shares issuable to participants in United’s Deferred
Compensation Plan and 1,436,362 shares reserved for issuance upon the
exercise
of outstanding options and vesting of restricted stock (the “United
Stock Options and Awards”)
and
10,000,000 shares of preferred stock, par value $1.00 per share (the
“Preferred
Stock”),
of
which 32,200 shares are issued and outstanding as of the date hereof.
All of the
issued and outstanding shares of United Stock are duly and validly issued,
fully
paid and nonassessable and were offered, issued and sold in compliance
with all
applicable federal or state securities laws. No person has any right
of
rescission or claim for damages under federal or state securities laws
with
respect to the issuance of shares of United Stock previously issued.
None of the
shares of United Stock have been issued in violation of the preemptive
or other
rights of its shareholders.
(b) Except
for the United Stock Options and Awards, United does not have outstanding
any
securities which are either by their terms or by contract convertible
or
exchangeable into United Stock or Preferred Stock, or any other securities
or
debt, of United, or any preemptive or similar
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rights
to
subscribe for or to purchase, or any options or warrants or agreements
or
understandings for the purchase or the issuance (contingent or otherwise)
of, or
any calls, commitments or claims of any character relating to, its capital
stock
or securities convertible into its capital stock. United is not subject
to any
obligation (contingent or otherwise) to repurchase or otherwise acquire
or
retire, or to register, any shares of its capital stock.
(c) There
is
no material agreement, arrangement or understanding to which United is
a party
restricting or otherwise relating to the transfer of any shares of United
Stock
other than restrictions required by applicable federal and state securities
laws.
(d) All
shares of common stock or other capital stock, or any other securities
or debt,
of United, which have been purchased or redeemed by United have been
purchased
or redeemed in accordance with all applicable federal, state and local
laws,
rules, and regulations, including, without limitation, all federal and
state
securities laws and rules and regulations of any securities exchange
or system
on which such stock, securities or debt are, or at such time were, traded,
and
no such purchase or redemption has resulted or will, with the giving
of notice
or lapse of time, or both, result in a default or acceleration of the
maturity
of, or otherwise modify, any agreement, note, mortgage, bond, security
agreement, loan agreement or other contract or commitment of
United.
6.4 Disclosure
Reports.
United
has a class of securities registered pursuant to Section 12(g) of the
1934 Act.
United’s (a) Annual Report on Form 10-K for its fiscal year ended December 31,
2005; (b) Proxy Statement for its 2006 Annual Meeting of Shareholders;
(c)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June
30, 2006 and September 30, 2006; and (d) other reports filed by United
pursuant
to Sections 13(a) or 15(d) of the Exchange Act since December 31, 2005
(collectively, the “United
SEC Reports”),
taken
together, correctly describe, among other things, the business, operations
and
principal properties of United in accordance with the requirements of
the
applicable report forms of the SEC. As of the respective dates of filing
(or, if
amended or superseded by a filing prior to the date of this Agreement,
then on
the date of such amended or superceded filing), none of the United SEC
Reports
contained any untrue statement of a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made,
not misleading.
6.5 No
Adverse Change.
Since
the date of its latest published financial statements included in the
United SEC
Reports, there has not been any change in the condition of United or
other
changes in the operations of United which, in any case, have had, or
are
reasonably likely to have, an adverse effect on United on a consolidated
basis
taken as a whole.
6.6 Representations
and Warranties.
No
representation or warranty contained in this Article
VI
or in
any written statement delivered by or at the direction of United pursuant
hereto
or in connection with the transactions contemplated hereby contains or
will
contain any untrue statement, nor will such representations and warranties
taken
as a whole omit any statement necessary in order to make any statement
not
misleading. Copies of all documents that have been or will be furnished
to GCG
in connection with this Agreement or pursuant hereto are or shall be
true,
correct and complete.
6.7 Proxy
Materials.
Neither
the GCG Proxy Materials nor other materials furnished by United to the
GCG
shareholders in connection with the transactions contemplated by this
Agreement
or the Merger Agreement, or in any amendments thereof or supplements
thereto,
will, at the times such documents are distributed to the holders of shares
of
GCG Stock and through the acquisition of shares of United Stock by GCG
pursuant
to the Merger, contain with respect to United any untrue statement of
a material
fact or omit to state any information required to be stated therein or
omit to
state any material fact necessary in order to make the statements therein,
in
light of the circumstances under which they are made, not
misleading.
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ARTICLE
VII
CONDITIONS
TO OBLIGATIONS OF UNITED
All
of
the obligations of United under this Agreement are subject to the fulfillment
prior to or at the Closing Date of each of the following conditions,
any one or
more of which may be waived by United:
7.1 Veracity
of Representations and Warranties.
The
representations and warranties of GCG contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof,
or in
connection herewith, shall be true as of the date when made and shall
be deemed
to be made again at and as of the Closing Date and shall be true at and
as of
such time, except as a result of changes or events expressly permitted
or
contemplated herein or where the failure to be so, either individually
or in the
aggregate, is not reasonably likely to have a material adverse effect
on the
business, operations or financial condition of GCG on a consolidated
basis.
7.2 Performance
of Agreements.
GCG
shall have performed and complied with all agreements and conditions
required by
this Agreement to be performed or complied with by it prior to or on
the Closing
Date.
7.3 Compliance
by GCG Executive Officers and Directors.
The
directors and executive officers of GCG shall have complied in full with
the
requirements of Section
3.9
hereof.
7.4 Certificates,
Resolutions, Opinion.
GCG
shall have delivered to United:
(a) a
certificate executed by the Chief Executive Officer or President of GCG,
dated
as of the Closing Date, and certifying in such detail as United may reasonably
request to the fulfillment of the conditions specified in Sections
7.1
and
7.2
hereof;
(b) a
certificate executed by the Secretary of GCG, dated as of the Closing
Date,
certifying and attesting to the: (i) articles of incorporation of GCG;
(ii)
bylaws of GCG; and (iii) duly adopted resolutions of the Board of Directors
and
shareholders of GCG (1) authorizing and approving the execution of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated herein and therein in accordance with their respective terms,
and
(2) authorizing all other necessary and proper corporate action to enable
GCG to
comply with the terms hereof and thereof;
(c) certificates
executed by the Secretary or equivalent officer of the Bank, dated as
of the
Closing Date, certifying and attesting to the: (i) articles of incorporation
of
the Bank; (ii) bylaws of the Bank; and (iii) duly adopted resolutions
of the
Board of Directors and sole shareholder of the Bank (1) authorizing and
approving the execution of the Bank Merger Agreement and the consummation
of the
transactions contemplated herein and therein, and (2) authorizing all
other
necessary and proper corporate action to enable the bank to comply with
the
terms hereof and thereof;
(d) a
certificate executed by the Chief Executive Officer or President of GCG,
dated
as of the Closing Date, enabling Kilpatrick Stockton LLP to provide the
opinion
referred to in Section
8.3(d);
(e) certificates
of the valid existence of GCG and the Bank under the laws of the State
of
Georgia, executed by the Secretary of State of Georgia, and dated not
more than
ten (10) business days prior to the Closing Date;
A-22
(f) certificates
from the appropriate public officials of the State of Georgia, dated
not more
than ten (10) business days prior to the Closing Date, certifying that
GCG has
filed all corporate tax returns required by the laws of such state and
has paid
all taxes shown thereon to be due; and
(g) an
opinion of Powell Goldstein LLP, counsel for GCG, dated the Closing Date,
in the
form attached hereto as Exhibit
D.
7.5 Accountants’
Letter.
United
shall have received a letter from Mauldin & Jenkins, LLC, dated the Closing
Date, to the effect that: At the request of GCG they have carried out
procedures
to a specified date not more than five (5) business days prior to the
Closing
Date, which procedures did not constitute an examination in accordance
with
generally accepted auditing standards, of the financial statements of
GCG, as
follows:
(a) read
the
unaudited consolidated balance sheets, consolidated statements of earnings,
consolidated statements of cash flows, consolidated statements of comprehensive
income and consolidated statements of changes in shareholders’ equity, of GCG
from December 31, 2005 through the date of the most recent monthly financial
statements available in the ordinary course of business;
(b) read
the
minutes of the meetings of shareholders and Board of Directors of GCG
from
December 31, 2005 to said date not more than five (5) business days prior
to the Closing Date; and
(c) consulted
with certain officers and employees of GCG responsible for financial
and
accounting matters and, based on such procedures, nothing has come to
their
attention which would cause them to believe that:
(i)
such
unaudited financial statements are not fairly presented in conformity
with
GAAP;
(ii)
as
of
said date not more than five (5) business days prior to the Closing Date,
the
shareholders’ equity, long-term debt, reserve for possible loan losses and total
assets of GCG, in each case as compared with the amounts shown in the
December
31, 2005 GCG Financial Statements, are not different except as set forth
in such
letter, or
(iii)
for
the
period from December 31, 2005 to said date not more than five (5) business
days
prior to the Closing Date, the net interest income, total and per-share
amounts
of consolidated income and net income of GCG, as compared with the corresponding
portion of the preceding twelve (12) month period, are not different
except as
set forth in such letter.
ARTICLE
VIII
CONDITIONS
TO OBLIGATIONS OF GCG
All
of
the obligations of GCG under this Agreement are subject to the fulfillment
prior
to or at the Closing Date of each of the following conditions, any one
or more
of which may be waived by it:
A-23
8.1 Veracity
of Representations and Warranties.
The
representations and warranties of United contained herein or in any certificate,
schedule or other document delivered pursuant to the provisions hereof,
or in
connection herewith, shall be true as of the date when made and shall
be deemed
to be made again at and as of the Closing Date and shall be true at and
as of
such time, except as a result of changes or events expressly permitted
or
contemplated herein or where the failure to be so, either individually
or in the
aggregate, is not reasonably likely to have a material adverse effect
on the
business, operations or financial condition of United on a consolidated
basis.
8.2 Performance
of Agreements.
United
shall have performed and complied with all agreements and conditions
required by
this Agreement to be performed or complied with by it prior to or at
the Closing
Date.
8.3 Certificates,
Resolutions, Opinion.
United
shall have delivered to GCG:
(a) a
certificate executed by the President or an Executive Vice President
of United,
dated the Closing Date, certifying in such detail as GCG may reasonably
request
to the fulfillment of the conditions specified in Sections
8.1
and
8.2
hereof;
(b) a
certificate executed by the Secretary or an Assistant Secretary of United,
dated
as of the Closing Date, certifying and attesting to the: (i) articles
of
incorporation of United; (ii) bylaws of United; and (iii) duly adopted
resolutions of the board of directors of United (1) authorizing and approving
the execution of this Agreement and the Merger Agreement on behalf of
United,
and the consummation of the transactions contemplated herein and therein
in
accordance with their respective terms, and (2) authorizing all other
necessary
and proper corporate actions to enable United to comply with the terms
hereof
and thereof;
(c) a
certificate of the valid existence of United, under the laws of the State
of
Georgia executed by the Secretary of State of the State of Georgia, dated
not
more than five (5) business days prior to the Closing Date;
(d) an
opinion of Kilpatrick Stockton LLP, counsel for United, dated the Closing
Date,
in the form attached hereto as Exhibit
E;
(e) a
certificate executed by the President or an Executive Vice President
of United,
dated as of the Closing Date, enabling Kilpatrick Stockton LLP to provide
the
opinion referred to in Section
8.3(d);
and
(f) certificates
from the appropriate public officials of the State of Georgia, dated
not more
than five (5) business days prior to the Closing Date, certifying that
United
has filed all corporate tax returns required by the laws of such state
and has
paid all taxes shown thereon to be due.
8.4 Tax
Opinion.
GCG
shall have received from Kilpatrick Stockton LLP its opinion, in form
and
substance reasonably satisfactory to GCG, to the effect that:
(a) The
Merger and the issuance of shares of United Stock in connection therewith,
as
described herein and in the Merger Agreement, will constitute a tax-free
reorganization under Section 368(a)(1)(A) of the Code;
(b) No
gain
or loss will be recognized by GCG as a result of the Merger;
A-24
(c) No
gain
or loss will be recognized by holders of GCG Stock upon the exchange
of such
stock for United Stock as a result of the Merger;
(d) Gain
or
loss will be recognized by holders of GCG Stock upon their receipt of
cash,
including cash (i) as a result of a cash election, (ii) in lieu of fractional
shares of United Stock, and (iii) upon their exercise of dissenters’
rights;
(e) The
aggregate tax basis of United Stock received by shareholders of GCG pursuant
to
the Merger will be the same as the tax basis of the shares of GCG Stock
exchanged (i) decreased by any portion of such tax basis allocated to
fractional
shares of United Stock that are treated as redeemed by United, (ii) decreased
by
the amount of cash received by a GCG shareholder in the Merger (other
than cash
received with respect to fractional shares), and (iii) increased by the
amount
of gain recognized by a GCG shareholder in the Merger (other than gain
recognized with respect to fractional shares);
(f) The
holding period of the shares of United Stock received by the shareholders
of GCG
will include the holding period of the shares of GCG Stock exchanged,
provided
that the stock of GCG is held as a capital asset on the date of the consummation
of the Merger; and
(g) No
gain
or loss will be recognized by GCG or the Bank in connection with the
Bank
Merger.
ARTICLE
IX
CONDITIONS
TO OBLIGATIONS OF BOTH PARTIES
9.1 Shareholder
Approval.
The
Merger Agreement shall have been approved by the vote of the holders
of at least
a majority of the issued and outstanding shares of GCG Stock.
9.2 Regulatory
Approvals.
Any and
all governmental authorities, bodies or agencies having jurisdiction
over the
transactions contemplated by this Agreement, the Merger Agreement and
the Bank
Merger Agreement, including, but not limited to the Federal Reserve,
the FDIC
and the Georgia Department shall have granted such consents, authorizations
and
approvals as are necessary for the consummation hereof and thereof, and
all
applicable waiting or similar periods required by law shall have
expired.
9.3 Effective
Registration Statement.
The
United Registration Statement shall have been declared effective by the
SEC and
no stop order shall have been entered with respect thereto.
9.4 Certificate
of Merger.
The
Secretary of State of the State of Georgia shall have issued a certificate
of
merger, with respect to the Merger, in accordance with the provisions
of the
Georgia Business Corporation Code, and with respect to the Bank Merger,
in
accordance with the Financial Institution Code of Georgia.
ARTICLE
X
WARRANTIES,
NOTICES, ETC.
10.1
Warranties.
All
statements contained in any certificate or other instrument delivered
by or on
behalf of GCG or United pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations and warranties hereunder
by
them. Unless the context otherwise requires, the representations and
warranties
required of GCG shall be required to be made, and shall be considered
made, on
behalf of GCG and the Bank.
A-25
10.2
Survival
of Provisions.
All
representations, warranties, covenants, and agreements made by either
party
hereto in or pursuant to this Agreement or in any instrument, exhibit,
or
certificate delivered pursuant hereto shall be deemed to have been material
and
to have been relied upon by the party to which made, but, except as set
forth
hereafter or specifically stated in this Agreement, such representations,
warranties, covenants, and agreements shall expire and be of no further
force
and effect upon the consummation of the Merger; provided,
however,
that the
following shall survive consummation of the Merger and the transactions
contemplated hereby:
(a) the
opinions of counsel referred to in Sections
7.4(g)
and
8.3(d)
of this
Agreement;
(b) any
intentional misrepresentation of any material fact made by either party
hereto
in or pursuant to this Agreement or in any instrument, document or certificate
delivered pursuant hereto; and
(c) the
covenant with respect to the confidentiality of certain information contained
in
Section
3.4
hereof.
10.3
Notices.
All
notices or other communications required or permitted to be given or
made
hereunder shall be in writing and delivered personally or sent by pre-paid,
first class certified or registered mail, return receipt requested, or
by
facsimile transmission, to the intended recipient thereof at its address
or
facsimile number set out below. Any such notice or communication shall
be deemed
to have been duly given immediately (if given or made in person or by
facsimile
confirmed by mailing a copy thereof to the recipient in accordance with
this
Section
10.3
on the
date of such facsimile), or five (5) days after mailing (if given or
made by
mail), and in proving same it shall be sufficient to show that the envelope
containing the same was delivered to the delivery service and duly addressed,
or
that receipt of a facsimile was confirmed by the recipient. Either party
may
change the address to which notices or other communications to such party
shall
be delivered or mailed by giving notice thereof to the other party hereto
in the
manner provided herein.
|
To
GCG:
|
Gwinnett
Commercial Group, Inc.
2230
Riverside Parkway
Lawrenceville,
Georgia 30043
Attention: Glenn
S. White
Facsimile:
(770) 237-9261
|
|
| With copies to: |
Powell
Goldstein LLP
One
Atlantic Center - Fourteenth Floor
1201
West Peachtree Street, NW
Atlanta,
Georgia 30309
Attention: Kathryn
Knudson
Facsimile:
(404) 572-6999
|
A-26
|
To
United:
|
United
Community Banks, Inc.
P.O.
Box 398
Blairsville,
Georgia 30514
Attention: Jimmy
C. Tallent
Facsimile:
(706) 745-1335
|
|
|
With
copies to:
|
Kilpatrick
Stockton LLP
Suite
2800
1100
Peachtree Street
Atlanta,
Georgia 303039-4530
Attention:
Richard R. Cheatham
Facsimile:
(404) 815-6555
|
10.4
Entire
Agreement.
This
Agreement and the Merger Agreement supersede all prior discussions and
agreements between GCG and United with respect to the Merger and the
other
matters contained herein and therein, and this Agreement and the Merger
Agreement contain the sole and entire agreement between GCG and United
with
respect to the transactions contemplated herein and therein.
10.5
Waiver;
Amendment.
Prior
to or on the Closing Date, United shall have the right to waive any default
in
the performance of any term of this Agreement by GCG, to waive or extend
the
time for the fulfillment by GCG of any or all of GCG’s obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of United under this Agreement, except any condition which,
if not
satisfied, would result in the violation of any law or applicable governmental
regulation. Prior to or on the Closing Date, GCG shall have the right
to waive
any default in the performance of any term of this Agreement by United,
to waive
or extend the time for the fulfillment by United of any or all of United’s
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of GCG under this Agreement, except any
condition
which, if not satisfied, would result in the violation of any law or
applicable
governmental regulation. This Agreement may be amended by a subsequent
writing
signed by the parties hereto, provided,
however,
that the
provisions of Section
9.2
requiring regulatory approval shall not be amended by the parties hereto
without
regulatory approval.
ARTICLE
XI
TERMINATION
AND PRICE ADJUSTMENT
11.1
Material
Adverse Change.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date
by
United upon written notice to GCG, if, after the date hereof, a material
adverse
change in the financial condition or business of GCG shall have occurred,
or if
GCG shall have suffered a material loss or damage to any of its properties
or
assets, which change, loss or damage materially affects or impairs its
ability
to conduct its business.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date
by GCG
upon written notice to United, if, after the date hereof, a material
adverse
change in the financial condition or business of United shall have occurred
which change would reasonably be expected to have a material adverse
effect on
the market price of United Stock, or if United shall have suffered a
material
loss or damage to any its properties or assets, which change, loss or
damage
materially affects or impairs its ability to conduct its business.
A-27
11.2
Noncompliance.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date
by
United upon written notice to GCG, (i) if the terms, covenants or conditions
of
this Agreement to be complied with or performed by GCG before the Closing
shall
not have been substantially complied with or substantially performed
at or
before the Closing Date and such noncompliance or nonperformance shall
not have
been waived by United; or (ii) in the event of a material breach by GCG
of any
covenant, agreement, or obligation contained in this Agreement which
breach has
not been cured within twenty (20) days after the giving of written notice
to
United of such breach or, if such breach is not capable of being cured
within
twenty (20) days, GCG has not begun to cure such breach within twenty
(20) days
after such written notice; provided,
however,
that in
no event shall the cure periods provided in this Section
11.2
extend
past the time period in Section
11.5
or
otherwise limit United’s rights thereunder.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date
by GCG
upon written notice to United, (i) if the terms, covenants or conditions
of this
Agreement to be complied with or performed by United before the Closing
shall
not have been substantially complied with or substantially performed
at or
before the Closing Date and such noncompliance or nonperformance shall
not have
been waived by GCG; or (ii) in the event of a material breach by United
of any
covenant, agreement, or obligation contained in this Agreement which
breach has
not been cured within twenty (20) days after the giving of written notice
to GCG
of such breach or, if such breach is not capable of being cured within
twenty
(20) days, United has not begun to cure such breach within twenty (20)
days
after such written notice; provided,
however,
that in
no event shall the cure periods provided in this Section
11.2
extend
past the time period in Section
11.5
or
otherwise limit GCG’s rights thereunder.
11.3
Failure
to Disclose.
(a) This
Agreement may be terminated at any time prior to or on the Closing Date
by
United upon written notice to GCG, if it learns of any fact or condition
not
disclosed in this Agreement, the Disclosure Memorandum, or the GCG Financial
Statements, which was required to be disclosed by GCG pursuant to the
provisions
of this Agreement with respect to the business, properties, assets or
earnings
of GCG which materially and adversely affects such business, properties,
assets
or earnings or the ownership, value or continuance thereof.
(b) This
Agreement may be terminated at any time prior to or on the Closing Date
by GCG
upon written notice to United,
if it
learns of any fact or condition not disclosed in this Agreement or the
United
SEC Reports, which was required to be disclosed by United pursuant to
the
provisions of this Agreement with respect to the business, properties,
assets or
earnings of United which materially and adversely affects such business,
properties, assets or earnings or the ownership, value or continuance
thereof.
11.4
Adverse
Proceedings.
This
Agreement may be terminated at any time prior to or on the Closing Date
by
either party upon written notice to the other party, if any action, suit
or
proceeding shall have been instituted or threatened against either party
to this
Agreement to restrain or prohibit, or to obtain substantial damages in
respect
of, this Agreement or the consummation of the transactions contemplated
herein,
which, in the good faith opinion of the terminating party makes consummation
of
the transactions herein contemplated inadvisable.
11.5
Termination
Date.
This
Agreement may be terminated at any time prior to or on the Closing Date
by
either party upon written notice to the other party, if the Closing Date
shall
not have occurred on or before July 31, 2007.
A-28
11.6
Dissenters.
This
Agreement may be terminated at any time prior to or on the Closing Date
by
United upon written notice to GCG, if the holders of more than five percent
(5%)
of the shares of the outstanding GCG Stock elect to exercise their statutory
right to dissent from the Merger and demand payment in cash for the
“fair
value”
of
their shares.
11.7
Shareholders
Vote.
This
Agreement may be terminated at any time prior to or on the Closing Date
by
either party upon written notice to the other party, if the Merger Agreement
is
not approved by the vote of the holders of GCG Stock as required by applicable
law.
11.8
Change
in Price of United Stock.
(a) If
the
Average Closing Price of United is less than $32.33, this Agreement may
be
terminated prior to the Closing Date by GCG if 2.00 minus the United
Change (the
“United
Decrease”)
is
greater than 1.10 and the United Decrease is greater than 2.00 minus
the Peer
Change (the “Peer
11.8(a) Variation”),
subject to the following provisions of this Section
11.8(a).
If GCG
elects to exercise its termination right pursuant to the immediately
preceding
sentence, it shall give prompt written notice of such election to United.
During
the Decision Period, United may elect to adjust the Merger Consideration
by
paying additional shares of United Stock and/or cash, as determined by
United in
its sole discretion, by increasing the Stock Exchange Ratio (as defined
in the
Merger Agreement) and/or the Cash Exchange Rate (as defined in the Merger
Agreement) as necessary to cause the Merger Consideration to be increased
by the
result determined by subtracting the Stock Consideration from the product
of the
Stock Consideration multiplied by the factor equal to 1.00 plus the lesser
of
(i) the United Decrease minus 1.10 or (ii) the United Decrease minus
the Peer
11.8(a) Variation. Such adjustment, if any, shall be reflected in the
payment of
the adjusted Merger Consideration as provided in accordance with the
Merger
Agreement. If United decides to make such adjustment within the Decision
Period,
it shall give prompt written notice to GCG of such adjustment, whereupon
GCG
shall have no right to terminate the Agreement pursuant to this Section
11.8(a)
and this
Agreement shall remain in full force and effect in accordance with its
terms.
(b) If
the
Average Closing Price of United is greater than $32.33, during the Election
Period United may elect to adjust the Merger Consideration if the United
Change
minus 1.00 (the “United
Increase”)
is
greater than 0.10 and the United Increase is greater than the Peer Change
minus
1.00 (the “Peer
11.8(b) Variation”),
subject to the following provisions of this Section
11.8(b).
If
United elects to adjust the Merger Consideration pursuant to the immediately
preceding sentence, United shall give prompt written notice of such election
to
GCG, and this Agreement may be terminated prior to the Closing Date by
GCG. If
United makes an election under this Section
11.8(b),
United
may adjust the Merger Consideration by paying less shares of United Stock
and/or
cash, as determined by United in its sole discretion, by decreasing the
Stock
Exchange Ratio (as defined in the Merger Agreement) and/or the Cash Exchange
Rate (as defined in the Merger Agreement) as necessary to cause the Merger
Consideration to be decreased by the result determined by subtracting
from the
Stock Consideration the product of the Stock Consideration multiplied
by the
factor equal to 1.00 minus the lesser of (i) the United Increase minus
0.10 or
(ii) the United Increase minus the Peer 11(b) Variation. Such adjustment,
if
any, shall be reflected in the payment of the adjusted Merger Consideration
as
provided in accordance with the Merger Agreement. If United does not
decide to
make such adjustment within the Election Period, GCG shall have no right
to
terminate the Agreement pursuant to this Section
11.8(b)
and this
Agreement shall remain in full force and effect in accordance with its
terms.
(c) For
purposes of this Section
11.8,
the
following terms shall have the following meanings:
A-29
(i)
“Average
Closing Price”
means
the average closing price of United Stock, as reported on the NASDAQ
Stock
Market (as reported by the Wall Street Journal or, if not reported thereby,
another authoritative source), and the common stock of the companies
comprising
the Peer Group, as reported on the consolidated transaction reporting
system for
the market or exchange on which common stock is listed (as reported by
the Wall
Street Journal or, if not reported thereby, another authoritative source),
for
the thirty (30) consecutive Trading Days prior to the Determination Date.
(ii)
“Decision
Period”
means
the three (3) day period commencing with United’s receipt of such a termination
notice from GCG pursuant to Section
11.8(a).
(iii)
“Determination
Date”
means
the day which is six (6) Trading Days prior to the Closing Date.
(iv)
“Election
Period”
means the
three
(3) day period commencing on the Determination Date.
(v) “Peer
Change”
means
the average change of all companies comprising the Peer Group as of the
Determination Date whereas the change in stock price for a company is
calculated
by dividing the Average Closing Price by the average closing price for
the
thirty (30) consecutive trading days as of January 9, 2007.
(vi) “Peer
Group”
means
the group set forth in the Disclosure Memorandum, the common stock of
all of
which shall be publicly traded and as to which there shall have not been
a
publicly announced proposal for the acquisition of 20% or more of any
such
company’s outstanding shares or as to which any such company shall have
made a proposal to acquire another company in which 20% or more of its
outstanding shares would be issued, in each case at any time during the
period
beginning on the date of this Agreement and ending on the Determination
Date. In
the event that, at any time during the period beginning on the date of
this
Agreement and ending on the Determination Date, the common stock of any
such
company ceases to be publicly traded, a proposal to acquire 20% or more
of any
such company ‘s common stock is announced, or such company announces an
acquisition proposal in which 20% or more of such company’s outstanding shares
are to be issued, such company will be removed from the Peer Group.
(vii)
“Stock
Consideration”
means
the aggregate value of $184,025,000.
(viii)
“Trading
Day”
means
any day on which the NASDAQ Stock Market is open for trading.
(ix)
“United
Change”
means
the Average Closing Price of United divided by $32.33.
11.9
Termination
Fee.
(a) If,
while a Competing Offer (as defined in (b) below) is outstanding or after
such
an offer has been accepted, (i) either party terminates this Agreement
pursuant
to Section
11.7,
(ii)
GCG terminates this Agreement other than pursuant to Section
11.1(b),
11.2(b)
or
11.3(b),
or
(iii) United terminates this agreement pursuant to Section 11.2(a),
11.3(a)
or
11.4,
then
GCG shall pay, or cause to be paid to United, at the time of the termination
of
this Agreement, an amount equal to $7.5 million (the “Termination
Fee”),
which
shall be the sole and exclusive remedy of United for all claims under
this
Agreement.
A-30
(b) “Competing
Offer”
means
any inquiry, proposal or offer, whether in writing or otherwise, from
anyone
other than United to acquire beneficial ownership (as determined under
Rule
13d-3 of the 1934 Act) of all or a material portion of the assets of
GCG or the
Bank or 15% or more of any class of equity securities of GCG or the Bank
pursuant to a merger, consolidation or other business combination, sale
of
shares of capital stock, sale of assets, tender offer, exchange offer
or similar
transaction with respect to either GCG or the Bank, including any single
or
multi-step transaction or series of related transactions, which is structured
to
permit such party to acquire beneficial ownership of any material portion
of the
assets of, or 15% or more of the equity interest in either GCG or the
Bank.
11.10
Effect
of Termination.
Except
as set forth in Section
11.10,
in the
event of the termination of this Agreement pursuant to this Article
XI,
this
Agreement shall become void and have no effect, and neither party shall
have any
liability of any nature whatsoever under this Agreement or in connection
with
the transactions contemplated by this Agreement except that (i) the provisions
of this Article
XI
and
Section
3.4
shall
survive any such termination and (ii) such termination shall not relieve
any
party from liability arising from any willful breach of any provision
of this
Agreement
ARTICLE
XII
COUNTERPARTS,
HEADINGS, ETC.
This
Agreement may be executed simultaneously in any number of counterparts,
each of
which shall be deemed an original, but all of which shall constitute
one and the
same instrument. The headings herein set out are for convenience of reference
only and shall not be deemed a part of this Agreement. A pronoun in one
gender
includes and applies to the other genders as well.
ARTICLE
XIII
NO
THIRD PARTY BENEFICIARY
No
provision of this Agreement shall be deemed to create any third party
beneficiary rights in any anyone, including any employee or former employee
of
GCG (including any beneficiary or dependent thereof).
ARTICLE
XIV
BINDING
EFFECT
This
Agreement shall be binding upon and shall inure to the benefit of the
parties
hereto and their respective successors and assigns; provided,
however,
that
this Agreement may not be assigned by either party without the prior
written
consent of the other.
ARTICLE
XV
GOVERNING
LAW
The
validity and effect of this Agreement and the Merger Agreement and the
rights
and obligations of the parties hereto and thereto shall be governed by
and
construed and enforced in accordance with the laws of the State of
Georgia.
A-31
IN
WITNESS WHEREOF,
GCG and
United have caused this Agreement to be executed by their respective
duly
authorized corporate officers and their respective corporate seals to
be affixed
hereto as of the day and year first above written.
|
GWINNETT
COMMERCIAL GROUP, INC
|
|
|
(CORPORATE
SEAL)
|
|
|
ATTEST:
|
|
|
By:
/s/
Glenn S.
White
|
|
|
/s/ Andrew R.
Pourchier
|
Name:
Glenn
S. White
|
|
Secretary
|
Title:
Chief
Executive Officer
|
|
UNITED
COMMUNITY BANKS, INC.
|
|
|
(CORPORATE
SEAL)
|
|
|
ATTEST:
|
|
|
/s/ Lori
McKay
|
By:
/s/
Jimmy C
.Tallent
|
|
Assistant
Secretary
|
Name:
Jimmy
C .Tallent
|
|
|
Title:
President & Chief Executive
Officer
|
A-32
EXHIBIT
A
AGREEMENT
AND PLAN OF MERGER
(Merger
Agreement)
THIS
AGREEMENT AND PLAN OF MERGER (the
“Agreement”)
is
made and entered into as of this 5th
day of
February, 2007, by and between UNITED
COMMUNITY BANKS, INC.,
a
Georgia corporation (“United”)
and
GWINNETT
COMMERCIAL GROUP, INC.,
a
Georgia corporation (“GCG”,
and
together with United, the “Constituent
Corporations”).
WHEREAS,
the
authorized capital stock of United consists of 100,000,000 shares of
Common
Stock, $1.00 par value per share (the “United
Stock”),
of
which 42,990,645 shares are issued and outstanding and 10,000,000 shares
of
Preferred Stock, $1.00 par value per share, of which 32,200 shares are
issued
and outstanding; and
WHEREAS,
the
authorized capital stock of GCG consists of 12,000,000 shares of voting
Common
Stock, no par value per share, of which 2,830,901 shares are issued and
outstanding (the “GCG
Stock”)
and
2,000,000 shares of nonvoting common stock, no par value per share, none
of
which is issued and outstanding; and
WHEREAS,
the
respective Boards of Directors of the Constituent Corporations deem it
advisable
and in the best interests of each such corporation and its shareholders
that GCG
merge with and into United, with United being the surviving corporation;
and
WHEREAS,
the
respective Boards of Directors of the Constituent Corporations, by resolutions
duly adopted, have approved and adopted this Agreement, and the Board
of
Directors of GCG, by resolution duly adopted, has directed that this
Agreement
be submitted to the shareholders of GCG for their approval; and
WHEREAS,
United
has agreed to issue shares of United Stock which shareholders of GCG
will be
entitled to receive, according to the terms and conditions contained
herein, on
or after the Effective Date (as defined herein) of the merger provided
for
herein.
NOW,
THEREFORE,
for and
in consideration of the premises and the mutual agreements herein contained,
and
other good and valuable consideration, the receipt and adequacy of which
as
legally sufficient consideration are hereby acknowledged, the parties
hereto
have agreed and do hereby agree, as follows:
|
1.
|
Merger.
|
Pursuant
to and with the effects provided in the applicable provisions of Article
11 of
the Georgia Business Corporation Code, as amended (Chapter 2 of Title
14 of the
Official Code of Georgia), GCG (sometimes referred to as the “Merged
Corporation”)
shall
be merged with and into United (the “Merger”).
United shall be the surviving corporation (the “Surviving
Corporation”)
and
shall continue under the name “United Community Banks, Inc.” On the Effective
Date (as defined herein) of the Merger, the individual existence of the
Merged
Corporation shall cease and terminate.
A-33
|
2.
|
Actions
to be Taken.
|
The
acts
and things required to be done by the Georgia Business Corporation Code
in order
to make this Agreement effective, including the submission of this Agreement
to
the shareholders of the Merged Corporation and the filing of the certificate
of
merger in Georgia, relating hereto in the manner provided in said laws,
shall be
attended to and done by the proper officers of the Constituent Corporations
with
the assistance of counsel as soon as practicable.
|
3.
|
Effective
Date.
|
The
Merger shall be effective upon the approval of this Agreement by the
shareholders of the Merged Corporation and the filing of the certificate
of
merger in Georgia, relating hereto in the manner provided in the Georgia
Business Corporation Code (the “Effective
Date”).
| 4. |
Articles
of Incorporation and Bylaws of the Surviving
Corporation.
|
(a) The
Amended and Restated Articles of Incorporation of United, as heretofore
amended,
shall on the Effective Date be the Articles of Incorporation of the Surviving
Corporation.
(b) Until
altered, amended or repealed, as therein provided, the Amended and Restated
Bylaws of United as in effect on the Effective Date shall be the Bylaws
of the
Surviving Corporation.
|
5.
|
Manner
and Basis of Converting Shares of Capital Stock; Capital Structure
of the
Surviving Corporation.
|
Unless
amended pursuant to Section 11.8 of that certain Agreement and Plan of
Reorganization of even date herewith by and between GCG and United (the
“Acquisition
Agreement”),
the
manner and basis of converting the shares of capital stock of each of
the
Constituent Corporations into shares of the Surviving Corporation shall
be as
follows:
(a) In
the
Merger, the holders of GCG Stock shall be entitled to elect to receive,
in
exchange for their shares of GCG Stock, shares of United Stock, cash
or a
combination thereof, in the amounts specified by such holders in accordance
with
the provisions of Section
5(b)
below,
and each share of GCG Stock outstanding immediately prior to the Effective
Date
shall, by virtue of the Merger, be converted on the Effective Date into
fully
paid and nonassessable shares of United Stock and/or cash as follows,
subject to
any adjustments occurring after the date hereof as contemplated by Section
5(d)
below:
(1) 2.2545
shares of United Stock for each outstanding share of GCG Stock (the
“Stock
Exchange Ratio”);
(2) $72.8865
in cash, without interest, per share of GCG Stock (the “Cash
Exchange Rate”);
or
(3) any
combination thereof;
provided,
however,
that no
more than 306,137 shares
of
GCG Stock may be exchanged for cash (the “Maximum
Cash Election”)
and no
more than 2,524,764 shares of GCG Stock may be exchanged for United Stock
(the
“Maximum
Stock Election”)
and
any shares of GCG Stock elected to be exchanged for cash above the Maximum
Cash
Election or stock above the Maximum Stock Election shall be subject to
proration
as provided in Section
5(b)
below.
A-34
(b) At
the
same time that the notice of special meeting of GCG shareholders (the
“Special
Meeting”)
is
first mailed to GCG shareholders, a form of election shall also be mailed
to
each GCG shareholder (the date of such form of election being referred
to herein
as the “Mailing
Date”).
Each
GCG shareholder shall indicate thereon his, her or its preference as
to the
proportion of United Stock and/or cash which he, she or it desires to
receive in
exchange for his, her or its GCG Stock, and shall return the form to
the
Secretary of GCG prior to the date of the Special Meeting. If a GCG shareholder
does not make such an election by the date of the Special Meeting, such
shareholder shall receive cash as set forth in Section
5(a)(2)
above
unless the number of shares for which cash elections have been received
exceeds
the Maximum Cash Election, in which case such shareholder shall receive
United
Stock as set forth in Section
5(a)(1)
above.
If holders of GCG Stock elect to receive cash for a number of shares
of GCG
Stock in excess of the Maximum Cash Election or elect to receive United
Stock
for an aggregate number of shares of GCG Stock in excess of the Maximum
Stock
Election, then the number of shares exchanged for cash or United Stock,
respectively, by each shareholder so electing will be reduced such that
the
amount of shares exchanged for cash equals the Maximum Cash Election
and the
amount of shares exchanged for United Stock equals the Maximum Stock
Election,
based on the ratio that the number of shares elected to be exchanged
by such
shareholder bears to the total number of shares elected to be exchanged
for cash
or United Stock by all GCG shareholders. To the extent a GCG shareholder
does
not receive the number of shares of United Stock determined pursuant
to
Section
5(a)
above
for each share of GCG Stock such shareholder elected to be exchanged
for United
Stock or the amount in cash determined pursuant to Section
5(a)
above
for each share of GCG Stock such shareholder elected to be exchanged
for cash
due to the proration provided in this Section
5(b),
such
shareholder shall be entitled to receive the amount in cash determined
pursuant
to Section
5(a)
above
for each remaining share of GCG Stock not exchanged for United Stock
or the
number of shares of United Stock determined pursuant to Section
5(a)
for each
remaining share of GCG Stock not exchanged for cash, respectively.
(c) Upon
the
Effective Date, all rights with respect to GCG Stock pursuant to stock
options
(the “GCG
Stock Options”)
and
stock appreciation rights (the “GCG
SARs”)
granted by GCG which are outstanding at the Effective Date, whether or
not
exercisable, shall be converted on the Effective Date, subject to any
adjustments occurring after the date hereof as contemplated by Section
5(d)
below,
into an amount in cash, without interest, equal to the result of $72.8865
minus
the
applicable “Exercise Price” or “Strike Price” for such GCG Stock Options or GCG
SARs, respectively, as defined in the applicable stock option or stock
appreciation right agreement.
(d) If
either
party should change the number of its outstanding shares as a result
of a stock
split, stock dividend, or similar recapitalization with respect to such
shares
prior to the Effective Date then the shares to be issued hereunder to
holders of
GCG Stock shall be proportionately adjusted.
(e) No
scrip
or fractional share certificates of United Stock shall be issued in connection
with the Merger and an outstanding fractional share interest will not
entitle
the owner thereof to vote, to receive dividends or to have any of the
rights of
a shareholder with respect to such fractional interest. In lieu of any
fractional interest, there shall be paid in cash, without interest, an
amount
(computed to the nearest cent) equal to such fraction multiplied by
$32.33.
(f) As
soon
as practicable after the Effective Date, each holder as of the Effective
Date of
any of the shares of GCG Stock to be converted by such holder as elected
by such
holder as above provided, upon presentation and surrender of the certificates
representing such shares to United, shall be entitled to receive in exchange
therefor a certificate representing the number of shares of United Stock,
and
cash, to which such shareholder shall be entitled according to the terms
of this
Agreement. Until such surrender, each such outstanding certificate which
prior
to the Effective Date represented GCG Stock shall be deemed for all corporate
purposes to evidence ownership of the number of shares of United Stock
into
which the same shall have been converted as elected by such holder as
above
provided, the right to receive cash by such holder as above provided,
and the
right to receive payment for fractional shares.
A-35
(g) Upon
the
Effective Date, each share of United Stock issued and outstanding immediately
prior to the Effective Date shall continue unchanged and shall continue
to
evidence a share of common stock of the Surviving Corporation.
(h) Except
as
otherwise provided in this Section
5,
in no
event shall the total number of shares of United Stock issued in connection
with
the Merger exceed 5,692,082.
6. Termination
of Separate Existence.
Upon
the
Effective Date, the separate existence of the Merged Corporation shall
cease and
the Surviving Corporation shall possess all of the rights, privileges,
immunities, powers and franchises, as well of a public nature as of a
private
nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all other
choses
in action, and all and every other interest of or belonging to or due
to each of
the Constituent Corporations shall be taken and deemed to be transferred
to and
vested in the Surviving Corporation without further act or deed, and
the title
to any real estate or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of
the Merger.
The Surviving Corporation shall thenceforth be responsible and liable
for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim existing or action or proceeding, civil or
criminal,
pending by or against either of said Constituent Corporations may be
prosecuted
as if the Merger had not taken place, or the Surviving Corporation may
be
substituted in its place, and any judgment rendered against either of
the
Constituent Corporations may thenceforth be enforced against the Surviving
Corporation; and neither the rights of creditors nor any liens upon the
property
of either of the Constituent Corporations shall be impaired by the
Merger.
7. Further
Assignments.
If
at any
time the Surviving Corporation shall consider or be advised that any
further
assignments or assurances in law or any other things are necessary or
desirable
to vest in said corporation, according to the terms hereof, the title
to any
property or rights of the Merged Corporation, the proper officers and
directors
of the Merged Corporation shall and will execute and make all such proper
assignments and assurances and do all things necessary and proper to
vest title
in such property or rights in the Surviving Corporation, and otherwise
to carry
out the purposes of this Agreement.
8. Conditions
Precedent to Consummation of the Merger.
This
Agreement is subject to, and consummation of the Merger is conditioned
upon, the
fulfillment as of the Effective Date of each of the following
conditions:
(a) Approval
of this Agreement by the affirmative vote of the holders of a majority
of the
outstanding voting shares of GCG Stock; and
(b) All
the
terms, covenants, agreements, obligations and conditions of the Acquisition
Agreement to be complied with, satisfied and performed on or prior to
the
Closing Date (as defined therein), shall have been complied with, satisfied
and
performed in all material respects unless accomplishment of such covenants,
agreements, obligations and conditions has been waived by the party benefited
thereby.
A-36
| 9. |
Termination.
|
This
Agreement may be terminated and the Merger abandoned in accordance with
the
terms of the Acquisition Agreement, at any time before or after adoption
of this
Agreement by the directors of either of the Constituent Corporations,
notwithstanding favorable action on the Merger by the shareholders of
the Merged
Corporation, but not later than the issuance of the certificate of merger
by the
Secretary of State of the State of Georgia with respect to the Merger
in
accordance with the provisions of the Georgia Business Corporation
Code.
| 10. |
Counterparts;
Title; Headings.
|
This
Agreement may be executed simultaneously in any number of counterparts,
each of
which shall be deemed an original, but all of which shall constitute
one and the
same instrument. The title of this Agreement and the headings herein
set out are
for the convenience of reference only and shall not be deemed a part
of this
Agreement.
|
11.
|
Amendments;
Additional Agreements.
|
At
any
time before or after approval and adoption by the shareholders of GCG,
this
Agreement may be modified, amended or supplemented by additional agreements,
articles or certificates as may be determined in the judgment of the
respective
Boards of Directors of the Constituent Corporations to be necessary,
desirable
or expedient to further the purposes of this Agreement, to clarify the
intention
of the parties, to add to or modify the covenants, terms or conditions
contained
herein or to effectuate or facilitate any governmental approval of the
Merger or
this Agreement, or otherwise to effectuate or facilitate the consummation
of the
transactions contemplated hereby; provided,
however,
that no
such modification, amendment or supplement shall reduce to any extent
the
consideration into which shares of GCG Stock shall be converted in the
Merger
pursuant to Section
5
hereof.
A-37
IN
WITNESS WHEREOF,
the
Constituent Corporations have each caused this Agreement to be executed
on their
respective behalfs and their respective corporate seals to be affixed
hereto as
of the day and year first above written.
|
(CORPORATE
SEAL)
ATTEST:
__________________________________
Secretary
|
GWINNETT
COMMERCIAL GROUP, INC.
By:
________________________________
Name:
______________________________
Title:
_______________________________
|
|
(CORPORATE
SEAL)
ATTEST:
__________________________________
Assistant
Secretary
|
UNITED
COMMUNITY BANKS, INC.
By:
________________________________
Name:
______________________________
Title:
_______________________________ |
A-38
EXHIBIT
B
AGREEMENT
AND PLAN OF MERGER
(the
Bank
Merger Agreement)
THIS
AGREEMENT AND PLAN OF MERGER
(the
“Agreement”)
is
made and entered into as of this 5th
day of
February 2007, by and between UNITED
COMMUNITY BANK,
a
Georgia bank (“UCB
Georgia”),
and
FIRST
BANK OF THE SOUTH,
a
Georgia bank with its main office in Lawrenceville, Georgia (the “Bank”,
and
together with United, the “Constituent
Banks”).
WHEREAS,
the Bank
has authorized capital stock consisting solely of 1,060,000 shares of
common
stock, par value $5.00 per share (the “Bank
Stock”);
and
WHEREAS,
the
authorized capital stock of UCB Georgia consists of 100,000 shares of
common
stock, $10.00 par value per share, of which 85,000 shares are issued
and
outstanding (the “UCB
Georgia Stock”);
and
WHEREAS,
the
respective Boards of Directors of the Constituent Banks deem it advisable
and in
the best interests of each such bank and its shareholders that the Bank
merge
with UCB Georgia, with UCB Georgia being the surviving bank; and
WHEREAS,
the
respective Boards of Directors of the Constituent Banks, by resolutions
duly
adopted, have unanimously approved and adopted this Agreement and directed
that
it be submitted to the sole shareholder of each of the Bank and UCB Georgia
for
their approval;
NOW,
THEREFORE,
for and
in consideration of the premises and the mutual agreements herein contained,
and
other good and valuable consideration, the receipt and adequacy of which
as
legally sufficient consideration are hereby acknowledged, the parties
hereto
have agreed and do hereby agree, as follows:
|
1.
|
Merger.
|
Pursuant
to and with the effects provided in the applicable provisions of Article
2 of
the Financial Institution Code of Georgia, Chapter 1 of Title 7 of the
Official
Code of Georgia (the “Code”),
the
Bank (sometimes referred to as the “Merged
Bank”)
shall
be merged with and into UCB Georgia (the “Merger”).
UCB
Georgia shall be the surviving bank (the “Surviving
Bank”)
and
shall continue under the name “United
Community Bank”.
On the
Effective Date (as defined herein) of the Merger, the individual existence
of
the Merged Bank shall cease and terminate.
|
2.
|
Actions
to be Taken.
|
The
acts
and things required to be done by the Code in order to make this Agreement
effective, including the submission of this Agreement to the shareholders
of the
Constituent Banks and the filing of the articles of merger relating hereto
in
the manner provided in said Code, shall be attended to and done by the
proper
officers of the Constituent Banks with the assistance of counsel as soon
as
practicable.
A-39
|
3.
|
Effective
Date.
|
The
Merger shall be effective upon the approval of this Agreement by the
shareholder
of the Merged Bank and the filing of the articles of merger relating
to each
merger in the manner provided in the Code (the “Effective
Date”).
|
4.
|
Articles
of Incorporation and Bylaws of the Surviving Bank.
|
(a) The
Articles of Incorporation of UCB Georgia, as heretofore amended, as in
effect on
the Effective Date shall be the Articles of Incorporation of the Surviving
Bank.
(b) Until
altered, amended or repealed, as therein provided, the Bylaws of UCB
Georgia as
in effect on the Effective Date shall be the Bylaws of the Surviving
Bank.
| 5. |
Directors.
|
Upon
the
Merger contemplated herein becoming effective, the directors of the Surviving
Bank shall be the individuals set forth on Attachment
1
hereto.
Said persons shall hold office until the next annual meeting of the shareholder
of the Surviving Bank and until their successors are elected in accordance
with
the Bylaws of the Surviving Bank. If on the Effective Date any vacancy
shall
exist on the Board of Directors of the Surviving Bank, such vacancy shall
be
filled in the manner specified in the Bylaws of the Surviving Bank.
|
6.
|
Cancellation
of Shares of Merged Bank; Capital Structure of the Surviving
Bank.
|
(a) Upon
the
Effective Date, each share of the respective Merged Bank’s Bank Stock
outstanding on the Effective Date shall be cancelled.
(b) Upon
the
Effective Date, each share of the Surviving Bank issued and outstanding
immediately prior to the Effective Date shall remain outstanding.
|
7.
|
Termination
of Separate Existence.
|
Upon
the
Effective Date, the separate existence of the Merged Bank shall cease
and the
Surviving Bank shall possess all of the rights, privileges, immunities,
powers
and franchises, as well of a public nature as of a private nature, of
each of
the Constituent Banks; and all property, real, personal and mixed, and
all debts
due on whatever account, and all other choses in action, and all and
every other
interest of or belonging to or due to each of the Constituent Banks shall
be
taken and deemed to be transferred to and vested in the Surviving Bank
without
further act or deed, and the title to any real estate or any interest
therein,
vested in either of the Constituent Banks shall not revert or be in any
way
impaired by reason of the Merger. The Surviving Bank shall thenceforth
be
responsible and liable for all the liabilities, obligations and penalties
of
each of the Constituent Banks; and any claim existing or action or proceeding,
civil or criminal, pending by or against either of said Constituent Banks
may be
prosecuted as if the Merger had not taken place, or the Surviving Bank
may be
substituted in its place, and any judgment rendered against either of
the
Constituent Banks may thenceforth be enforced against the Surviving Bank;
and
neither the rights of creditors nor any liens upon the property of either
of the
Constituent Banks shall be impaired by the Merger.
A-40
|
8.
|
Further
Assignments.
|
If
at any
time the Surviving Bank shall consider or be advised that any further
assignments or assurances in law or any other things are necessary or
desirable
to vest in said bank, according to the terms hereof, the title to any
property
or rights of the Merged Bank, the proper officers and directors of the
Merged
Bank shall and will execute and make all such proper assignments and
assurances
and do all things necessary and proper to vest title in such property
or rights
in the Surviving Bank, and otherwise to carry out the purposes of this
Agreement.
|
9.
|
Condition
Precedent to Consummation of the Merger.
|
This
Agreement is subject to, and consummation of the Merger is conditioned
upon, the
fulfillment as of the Effective Date of approval of this Agreement by
the
affirmative vote of the sole shareholders of each of UCB Georgia and
the
Bank.
|
10.
|
Termination.
|
This
Agreement may be terminated and the Merger abandoned at any time before
or after
adoption of this Agreement by the directors of either of the Constituent
Banks,
notwithstanding favorable action on the Merger by the shareholders of
the Merged
Bank, but not later than the issuance of the certificates of merger by
the
Secretary of State of Georgia with respect to the Merger in accordance
with the
provisions of the Code.
|
11.
|
Counterparts;
Title; Headings.
|
This
Agreement may be executed simultaneously in any number of counterparts,
each of
which shall be deemed an original, but all of which shall constitute
one and the
same instrument. The title of this Agreement and the headings herein
set out are
for the convenience of reference only and shall not be deemed a part
of this
Agreement.
|
12.
|
Amendments;
Additional Agreements.
|
At
any
time before or after approval and adoption by the shareholder of the
Bank, this
Agreement may be modified, amended or supplemented by additional agreements,
articles or certificates as may be determined in the judgment of the
respective
Boards of Directors of the Constituent Banks to be necessary, desirable
or
expedient to further the purposes of this Agreement, to clarify the intention
of
the parties, to add to or modify the covenants, terms or conditions contained
herein or to effectuate or facilitate any governmental approval of the
Merger or
this Agreement, or otherwise to effectuate or facilitate the consummation
of the
transactions contemplated hereby; provided,
however,
that no
such modification, amendment or supplement shall reduce to any extent
the
consideration into which shares of the Bank Stock shall be converted
in the
Merger pursuant to Section
6
hereof.
A-41
IN
WITNESS WHEREOF,
the
Constituent Banks have each caused this Agreement to be executed on their
respective behalfs and their respective bank seals to be affixed hereto
as of
the day and year first above written.
|
(BANK
SEAL)
ATTEST:
__________________________________
Assistant
Secretary
|
UNITED
COMMUNITY BANK
By:
________________________________
Name:
______________________________
Title:
_______________________________ |
|
(BANK
SEAL)
ATTEST:
__________________________________
Secretary
|
FIRST
BANK OF THE SOUTH
By:
________________________________
Name:
______________________________
Title:
_______________________________ |
A-42
ATTACHMENT
1
Directors
of the Surviving Bank
Billy
M.
Decker
Dr.
G.
David Gowder III
Robert
L.
Head, Jr.
Charles
E. Hill
Jack
C.
Lance, Sr.
W.C.
Nelson, Jr.
Paul
B.
Owenby
Jimmy
C.
Tallent
Andrew
M.
Williams III
A-43
EXHIBIT
C
FORM
OF OFFICER, DIRECTOR AND SHAREHOLDER AGREEMENT
February
5, 2007
United
Community Banks, Inc.
P.O.
Box
398
Blairsville,
GA 30514
Ladies
and Gentlemen:
To
induce
you to agree to the proposed merger (the “Merger”)
of
Gwinnett Commercial Group, Inc. (“GCG”)
with
and into United Community Banks, Inc. (“United”),
pursuant to the Agreement and Plan of Reorganization of even date herewith
between United and GCG (the “Acquisition
Agreement”),
the
undersigned hereby covenants, represents and warrants as follows:
1. Recommendation
for Merger and Voting of GCG Stock.
Subject
to any applicable fiduciary duty, the undersigned agrees to recommend
to all
holders of the capital stock of GCG (“GCG
Stock”)
that
they vote in favor of the Merger. In addition, the undersigned agrees
to vote
any and all shares of GCG Stock owned or controlled by him or her in
favor of
the Merger.
2. Compliance
with Securities Laws.
The
undersigned acknowledges that he or she will be subject to the restrictions
on
resales contained in Rule 145 of the Rules and Regulations of the Securities
and
Exchange Commission (“SEC”)
under
the Securities Act of 1933, as amended, and agrees to sell, transfer
or
otherwise dispose of any shares of capital stock of United (“United
Stock”)
received by him or her pursuant to the Merger only in compliance with
the
provisions of such Act and Rule. The undersigned acknowledges that United
is not
under any obligation to file a registration statement with the SEC covering
the
disposition of the undersigned’s shares of United Stock to be received pursuant
to the Merger.
3. Restrictive
Legend.
The
undersigned agrees that the certificates representing shares of United
Stock to
be issued to the undersigned pursuant to the Merger will be stamped or
otherwise
imprinted with a legend in substantially the following form:
The
shares represented by this certificate may not be sold, transferred or
otherwise
disposed of except in a transaction covered by an effective registration
statement under the Securities Act of 1933, as amended, or in accordance
with
Rule 145 promulgated thereunder, or in accordance with a legal opinion
satisfactory to United that such sale or transfer is otherwise exempt
from the
requirements of such Act.
4. [This
provision only in director form.] Covenant
Not to Compete.
(a) The
undersigned agrees that during for a period of two (2) years after the
date the
Merger is consummated, he or she will not, directly or indirectly, individually,
or on behalf of any Person other than the United or its Georgia bank
subsidiary,
United Community Bank (the “Bank”):
(i)
solicit
any customers of the Bank for the purpose of providing services identical
to or
reasonably substitutable for the Bank’s Business;
(ii)
solicit
or induce, or in any manner attempt to solicit or induce, any Person
employed by
the Bank or United to leave such employment, whether or not such employment
is
pursuant to a written contract with the Bank or United or is at will;
A-44
(iii)
engage
in
the Bank’s Business within the Territory, accept employment or an engagement as
a director, advisory board member, officer, executive, manager, or business
consultant for, or engage in any activities as an organizer of, or in
connection
with the organization of, any Person or proposed to be engaged or prepared
to be
engaged in the Bank’s Business anywhere within the Territory; or
(iv)
knowingly
or intentionally damage or destroy the goodwill and esteem of United,
the Bank,
the Bank’s Business or United’s or the Bank’s suppliers, employees, patrons,
customers, and others who may at any time have or have had relations
with United
or the Bank.
(b) For
purposes of this Agreement, the following terms shall have the meanings
specified below:
(i)
“Bank’s
Business”
means
the business of operating a commercial or retail bank, savings association,
mutual thrift or credit union.
(ii)
“Person”
means
any individual, corporation, bank, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or other
entity.
(iii)
“Territory”
means
Gwinnett County, Georgia and any county adjacent to Gwinnett
County.
This
Agreement is the complete agreement between United and the undersigned
concerning the subject matters hereof and shall be governed by and construed
and
enforced in accordance with the laws of the State of Georgia, without
regard to
its conflicts of laws provisions.
|
Sincerely,
[Director,
Executive Officer or 5%
Shareholder]
|
A-45
EXHIBIT
D
(1) GCG
was
duly organized as a corporation, and is existing and in good standing,
under the
laws of the State of Georgia. The Bank was duly organized as a bank,
and is
existing and in good standing, under the laws of the State of Georgia.
(2) GCG
has
the corporate power to execute and deliver the Acquisition Agreement
and Merger
Agreement to perform its obligations thereunder, to own and use its assets
and
to conduct its business.
(3) GCG
has
duly authorized the execution and delivery of the Acquisition Agreement
and the
Merger Agreement and all performance by GCG thereunder, and has duly
executed
and delivered the Acquisition Agreement and the Merger Agreement.
(4) No
consent, approval, authorization or other action filed by, or filing
with, any
governmental authority of the United States or the State of Georgia is
required
for GCG’s execution and delivery of the Acquisition Agreement and the Merger
Agreement and consummation of the Transaction, which consent, approval
or
authorization has not been previously received.
(5) The
Acquisition Agreement and the Merger Agreement are enforceable against
GCG.
(6) The
authorized capital stock of GCG consists of (i) 12,000,000 shares of
voting
common stock, no par value per share, (“GCG
Stock”)
with
2,830,901 shares issued and outstanding, exclusive of 208,321 shares
reserved
for issuance upon exercise of currently outstanding options (the “GCG
Stock Options”),
and
(ii) 2,000,000 shares of nonvoting common stock, no par value, none of
which is
issued and outstanding. The authorized capital stock of the Bank consists
of
12,000,000 shares of common stock, $5.00 par value per share, (“Bank
Stock”)
1,060,000 of which are issued and outstanding. All of the issued and
outstanding
shares of GCG Stock and Bank Stock are duly and validly issued, fully
paid and
non-assessable and, to our knowledge and based on the certificates of
officers
of GCG, were offered, issued and sold in compliance with all applicable
federal
and state securities laws. To our knowledge, no person has any right
of
rescission or claim for damages under federal or state securities laws
with
respect to the issuance of any shares GCG Stock or Bank Stock previously
issued.
None of the shares of GCG Stock or Bank Stock has been issued in violation
of
any preemptive or other rights of its respective shareholders. All of
the issued
and outstanding shares of the Bank Stock are owned by GCG.
A-46
EXHIBIT
E
(1) United
was duly organized as a corporation, and is existing and in good standing,
under
the laws of the State of Georgia.
(2) United
has the corporate power to execute and deliver the Acquisition Agreement
and
Merger Agreement to perform its obligations thereunder, to own and use
its
Assets and to conduct its business.
(3) United
has duly authorized the execution and delivery of the Acquisition Agreement
and
the Merger Agreement and all performance by United thereunder, and has
duly
executed and delivered the Acquisition Agreement and Merger
Agreement:
(4) No
consent, approval, authorization or other action filed by, or filing
with, any
governmental authority of the United States or the State of Georgia is
required
for United’s execution and delivery of the Acquisition Agreement and the Merger
Agreement and consummation of the Transaction, which consent, approval
or
authorization has not been previously received.
(5) The
Acquisition Agreement and the Merger Agreement are enforceable against
United.
(6) The
shares of United Stock to be issued upon consummation of the Merger have
been
duly authorized and upon issuance as contemplated in the Merger Agreement,
will
be validly issued, fully paid and non-assessable
A-47
APPENDIX
B
GEORGIA
DISSENTERS’ RIGHTS STATUTE
14-2-1301.
Definitions.
As
used
in this article, the term:
(1) “Beneficial
shareholder” means the person who is a beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) “Corporate
action” means the transaction or other action by the corporation that creates
dissenters’ rights under Code Section 14-2-1302.
(3) “Corporation”
means the issuer of shares held by a dissenter before the corporate
action, or
the surviving or acquiring corporation by merger or share exchange
of that
issuer.
(4) “Dissenter”
means a shareholder who is entitled to dissent from corporate action
under Code
Section 14-2-1302 and who exercises that right when and in the manner
required
by Code Sections 14-2-1320 through 14- 2-1327.
(5) “Fair
value,” with respect to a dissenter’s shares, means the value of the shares
immediately before the effectuation of the corporate action to which
the
dissenter objects, excluding any appreciation or depreciation in anticipation
of
the corporate action.
(6) “Interest”
means interest from the effective date of the corporate action until
the date of
payment, at a rate that is fair and equitable under all the
circumstances.
(7) “Record
shareholder” means the person in whose name shares are registered in the records
of a corporation or the beneficial owner of shares to the extent of
the rights
granted by a nominee certificate on file with a corporation.
(8) “Shareholder”
means the record shareholder or the beneficial shareholder. (Code 1981,
§
14-2-1301, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1993, p.1231, §
16.)
14-2-1302.
Right to dissent.
(a) A
record
shareholder of the corporation is entitled to dissent from, and obtain
payment
of the fair value of his or her shares in the event of, any of the
following
corporate actions:
(1) Consummation
of a plan of merger to which the corporation is a party:
(A) If
approval of the shareholders of the corporation is required for the
merger by
Code Section 14-2-1103 or the articles of incorporation and the shareholder
is
entitled to vote on the merger, unless:
(i)
The
corporation is merging into a subsidiary corporation pursuant to Code
Section
14-2-1104;
(ii)
Each
shareholder of the corporation whose shares were outstanding immediately
prior
to the effective time of the merger shall receive a like number of
shares of the
surviving corporation, with designations, preferences, limitations
and relative
rights identical to those previously held by each shareholder;
and
B-1
(iii)
The
number and kind of shares of the surviving corporation outstanding
immediately
following the effective time of the merger, plus the number and kind
of shares
issuable as a result of the merger and by conversion of securities
issued
pursuant to the merger, shall not exceed the total number and kind
of shares of
the corporation authorized by its articles of incorporation immediately
prior to
the effective time of the merger; or
(B) If
the
corporation is a subsidiary that is merged with its parent under Code
Section
14-2-1104;
(2) Consummation
of a plan of share exchange to which the corporation is a party as
the
corporation whose shares will be acquired, if the shareholder is entitled
to
vote on the plan;
(3) Consummation
of a sale or exchange of all or substantially all of the property of
the
corporation if a shareholder vote is required on the sale or exchange
pursuant
to Code Section 14-2-1202, but not including a sale pursuant to court
order or a
sale for cash pursuant to a plan by which all or substantially all
of the net
proceeds of the sale will be distributed to the shareholders within
one year
after the date of sale;
(4) An
amendment of the articles of incorporation with respect to a class
or series of
shares that reduces the number of shares of a class or series owned
by the
shareholder to a fraction of a share if the fractional share so created
is to be
acquired for cash under Code Section 14-2-604; or
(5) Any
corporate action taken pursuant to a shareholder vote to the extent
that Article
9 of this chapter, the articles of incorporation, bylaws, or a resolution
of the
board of directors provides that voting or nonvoting shareholders are
entitled
to dissent and obtain payment for their shares.
(b) A
shareholder entitled to dissent and obtain payment for his or her shares
under
this article may not challenge the corporate action creating his or
her
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws
of the
corporation or the vote required to obtain approval of the corporate
action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter’s rights.
(c) Notwithstanding
any other provision of this article, there shall be no right of dissent
in favor
of the holder of shares of any class or series which, at the record
date fixed
to determine the shareholders entitled to receive notice of and to
vote at a
meeting at which a plan of merger or share exchange or a sale or exchange
of
property or an amendment of the articles of incorporation is to be
acted on,
were either listed on a national securities exchange or held of record
by more
than 2,000 shareholders, unless:
(1) In
the
case of a plan of merger or share exchange, any holders of shares of
the class
or series are required under the plan of merger or share exchange to
accept for
their shares:
(A) Anything
except shares of the surviving corporation or another publicly held
corporation
which at the effective date of the merger or share exchange are either
listed on
a national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares;
or
(B) Any
shares of the surviving corporation or another publicly held corporation
which
at the effective date of the merger or share exchange are either listed
on a
national securities exchange or held of record by more than 2,000 shareholders
that are different, in type or exchange ratio per share, from the shares
to be
provided or offered to any other holder of shares of the same class
or series of
shares in exchange for such shares; or
B-2
(2) The
articles of incorporation or a resolution of the board of directors
approving
the transaction provides otherwise. (Code 1981, § 14-2-1302, enacted by Ga. L.
1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 58; Ga. L. 1999, p. 405, § 11; Ga. L.
2003, p. 897, § 11.)
14-2-1303.
Dissent by nominees and beneficial owners.
A
record
shareholder may assert dissenters’ rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose
behalf he
asserts dissenters’ rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and
his other
shares were registered in the names of different shareholders. (Code
1981, §
14-2-1303, enacted by Ga. L. 1988, p. 1070, § 1.)
14-2-1320.
Notice of dissenters’ rights.
(a) If
proposed corporate action creating dissenters’ rights under Code Section
14-2-1302 is submitted to a vote at a shareholders’ meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters’ rights
under this article and be accompanied by a copy of this article.
(b) If
corporate action creating dissenters’ rights under Code Section 14- 2-1302 is
taken without a vote of shareholders, the corporation shall notify
in writing
all shareholders entitled to assert dissenters’ rights that the action was taken
and send them the dissenters’ notice described in Code Section 14- 2-1322 no
later than ten days after the corporate action was taken. (Code 1981,
§
14-2-1320, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1993, p. 1231, §
17.)
14-2-1321.
Notice of intent to demand payment.
(a) If
proposed corporate action creating dissenters’ rights under Code Section
14-2-1302 is submitted to a vote at a shareholders’ meeting, a record
shareholder who wishes to assert dissenters’ rights:
(1) Must
deliver to the corporation before the vote is taken written notice
of his intent
to demand payment for his shares if the proposed action is effectuated;
and
(2) Must
not
vote his shares in favor of the proposed action.
(b) A
record
shareholder who does not satisfy the requirements of subsection (a)
of this Code
section is not entitled to payment for his shares under this article.
(Code
1981, § 14-2-1321, enacted by Ga. L. 1988, p. 1070, § 1.)
14-2-1322.
Dissenters’ notice.
(a) If
proposed corporate action creating dissenters’ rights under Code Section
14-2-1302 is authorized at a shareholders’ meeting, the corporation shall
deliver a written dissenters’ notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The
dissenters’ notice must be sent no later than ten days after the corporate
action was taken and must:
(1) State
where the payment demand must be sent and where and when certificates
for
certificated shares must be deposited;
(2) Inform
holders of uncertificated shares to what extent transfer of the shares
will be
restricted after the payment demand is received;
B-3
(3) Set
a
date by which the corporation must receive the payment demand, which
date may
not be fewer than 30 nor more than 60 days after the date the notice
required in
subsection (a) of this Code section is delivered; and
(4) Be
accompanied by a copy of this article. (Code 1981, § 14-2-1322, enacted by Ga.
L. 1988, p. 1070, § 1.)
14-2-1323.
Duty to demand payment.
(a) A
record
shareholder sent a dissenters’ notice described in Code Section 14-2-1322 must
demand payment and deposit his certificates in accordance with the
terms of the
notice.
(b) A
record
shareholder who demands payment and deposits his shares under subsection
(a) of
this Code section retains all other rights of a shareholder until these
rights
are canceled or modified by the taking of the proposed corporate
action.
(c) A
record
shareholder who does not demand payment or deposit his share certificates
where
required, each by the date set in the dissenters’ notice, is not entitled to
payment for his shares under this article. (Code 1981, § 14-2-1323, enacted by
Ga. L. 1988, p. 1070, § 1.)
14-2-1324.
Share restrictions.
(a) The
corporation may restrict the transfer of uncertificated shares from
the date the
demand for their payment is received until the proposed corporate action
is
taken or the restrictions released under Code Section 14-2-1326.
(b) The
person for whom dissenters’ rights are asserted as to uncertificated shares
retains all other rights of a shareholder until these rights are canceled
or
modified by the taking of the proposed corporate action. (Code 1981,
§
14-2-1324, enacted by Ga. L. 1988, p. 1070, § 1.)
14-2-1325.
Offer of payment.
(a) Except
as
provided in Code Section 14-2-1327, within ten days of the later of
the date the
proposed corporate action is taken or receipt of a payment demand,
the
corporation shall by notice to each dissenter who complied with Code
Section
14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to
be the fair value of his or her shares, plus accrued interest.
(b) The
offer
of payment must be accompanied by:
(1) The
corporation’s balance sheet as of the end of a fiscal year ending not more than
16 months before the date of payment, an income statement for that
year, a
statement of changes in shareholders’ equity for that year, and the latest
available interim financial statements, if any;
(2) A
statement of the corporation’s estimate of the fair value of the
shares;
(3) An
explanation of how the interest was calculated;
(4) A
statement of the dissenter’s right to demand payment under Code Section
14-2-1327; and
(5) A
copy of
this article.
(c) If
the
shareholder accepts the corporation’s offer by written notice to the corporation
within 30 days after the corporation’s offer or is deemed to have accepted such
offer by failure to respond within said 30 days, payment for his or
her shares
shall be made within 60 days after the making of the offer or the taking
of the
proposed corporate action, whichever is later. (Code 1981, § 14-2-1325, enacted
by Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 59; Ga. L. 1993, p. 1231, §
18.)
B-4
14-2-1326.
Failure to take action.
(a) If
the
corporation does not take the proposed action within 60 days after
the date set
for demanding payment and depositing share certificates, the corporation
shall
return the deposited certificates and release the transfer restrictions
imposed
on uncertificated shares.
(b) If,
after
returning deposited certificates and releasing transfer restrictions,
the
corporation takes the proposed action, it must send a new dissenters’ notice
under Code Section 14-2-1322 and repeat the payment demand procedure.
(Code
1981, § 14-2-1326, enacted by Ga. L. 1988, p. 1070, § 1; Ga. L. 1990, p. 257, §
20.)
14-2-1327.
Procedure if shareholder dissatisfied with payment or
offer.
(a) A
dissenter may notify the corporation in writing of his own estimate
of the fair
value of his shares and amount of interest due, and demand payment
of his
estimate of the fair value of his shares and interest due, if:
(1) The
dissenter believes that the amount offered under Code Section 14- 2-1325
is less
than the fair value of his shares or that the interest due is incorrectly
calculated; or
(2) The
corporation, having failed to take the proposed action, does not return
the
deposited certificates or release the transfer restrictions imposed
on
uncertificated shares within 60 days after the date set for demanding
payment.
(b) A
dissenter waives his or her right to demand payment under this Code
section and
is deemed to have accepted the corporation’s offer unless he or she notifies the
corporation of his or her demand in writing under subsection (a) of
this Code
section within 30 days after the corporation offered payment for his
or her
shares, as provided in Code Section 14-2-1325.
(c) If
the
corporation does not offer payment within the time set forth in subsection
(a)
of Code Section 14-2-1325:
(1) The
shareholder may demand the information required under subsection (b)
of Code
Section 14-2-1325, and the corporation shall provide the information
to the
shareholder within ten days after receipt of a written demand for the
information; and
(2) The
shareholder may at any time, subject to the limitations period of Code
Section
14-2-1332, notify the corporation of his own estimate of the fair value
of his
shares and the amount of interest due and demand payment of his estimate
of the
fair value of his shares and interest due. (Code 1981, § 14-2-1327, enacted by
Ga. L. 1988, p. 1070, § 1; Ga. L. 1989, p. 946, § 60; Ga. L. 1990, p. 257, § 21;
Ga. L. 1993, p. 1231, § 19.)
14-2-1330.
Court action.
(a) If
a
demand for payment under Code Section 14-2-1327 remains unsettled,
the
corporation shall commence a proceeding within 60 days after receiving
the
payment demand and petition the court to determine the fair value of
the shares
and accrued interest. If the corporation does not commence the proceeding
within
the 60 day period, it shall pay each dissenter whose demand remains
unsettled
the amount demanded.
(b) The
corporation shall commence the proceeding, which shall be a nonjury
equitable
valuation proceeding, in the superior court of the county where a corporation’s
registered office is located. If the surviving corporation is a foreign
corporation without a registered office in this state, it shall commence
the
proceeding in the county in this state where the registered office
of the
domestic corporation merged with or whose shares were acquired by the
foreign
corporation was located.
B-5
(c) The
corporation shall make all dissenters, whether or not residents of
this state,
whose demands remain unsettled parties to the proceeding, which shall
have the
effect of an action quasi in rem against their shares. The corporation
shall
serve a copy of the petition in the proceeding upon each dissenting
shareholder
who is a resident of this state in the manner provided by law for the
service of
a summons and complaint, and upon each nonresident dissenting shareholder
either
by registered or certified mail or statutory overnight delivery or
by
publication, or in any other manner permitted by law.
(d) The
jurisdiction of the court in which the proceeding is commenced under
subsection
(b) of this Code section is plenary and exclusive. The court may appoint
one or
more persons as appraisers to receive evidence and recommend decision
on the
question of fair value. The appraisers have the powers described in
the order
appointing them or in any amendment to it. Except as otherwise provided
in this
chapter, Chapter 11 of Title 9, known as the “Georgia Civil Practice Act,”
applies to any proceeding with respect to dissenters’ rights under this
chapter.
(e) Each
dissenter made a party to the proceeding is entitled to judgment for
the amount
which the court finds to be the fair value of his shares, plus interest
to the
date of judgment. (Code 1981, § 14-2-1330, enacted by Ga. L. 1988, p. 1070, § 1;
Ga. L. 1989, p. 946, § 61; Ga. L. 1993, p. 1231, § 20; Ga. L. 2000, p. 1589, §
3.)
14-2-1331.
Court costs and counsel fees.
(a) The
court
in an appraisal proceeding commenced under Code Section 14- 2-1330
shall
determine all costs of the proceeding, including the reasonable compensation
and
expenses of appraisers appointed by the court, but not including fees
and
expenses of attorneys and experts for the respective parties. The court
shall
assess the costs against the corporation, except that the court may
assess the
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section
14-2-1327.
(b) The
court
may also assess the fees and expenses of attorneys and experts for
the
respective parties, in amounts the court finds equitable:
(1) Against
the corporation and in favor of any or all dissenters if the court
finds the
corporation did not substantially comply with the requirements of Code
Sections
14-2-1320 through 14-2-1327; or
(2) Against
either the corporation or a dissenter, in favor of any other party,
if the court
finds that the party against whom the fees and expenses are assessed
acted
arbitrarily, vexatiously, or not in good faith with respect to the
rights
provided by this article.
(c) If
the
court finds that the services of attorneys for any dissenter were of
substantial
benefit to other dissenters similarly situated, and that the fees for
those
services should not be assessed against the corporation, the court
may award to
these attorneys reasonable fees to be paid out of the amounts awarded
the
dissenters who were benefited. (Code 1981, § 14-2-1331, enacted by Ga. L. 1988,
p. 1070, § 1.)
14-2-1332.
Limitation of actions.
No
action
by any dissenter to enforce dissenters’ rights shall be brought more than three
years after the corporate action was taken, regardless of whether notice
of the
corporate action and of the right to dissent was given by the corporation
in
compliance with the provisions of Code Section 14-2-1320 and Code Section
14-2-1322. (Code 1981, § 14-2-1332, enacted by Ga. L. 1988, p. 1070, §
1.)
B-6
APPENDIX
C
FAIRNESS
OPINION
Burke
Capital Group, L.L.C.
February
5, 2007
Board
of
Directors
Gwinnett
Commercial Group, Inc.
2230
Riverside Parkway
Lawrenceville,
GA 30043
Members
of the Board of Directors:
Gwinnett
Commercial Group, Inc. ("GCG") and United Community Banks, Inc. (“United”) are
considering entering into an Agreement and Plan of Merger (the “Agreement”),
dated as of the 5th day of February, 2007, whereby GCG will merge with
and into
United (the “Merger”), with United being the surviving corporation. Pursuant to
the terms of the Agreement, holders of GCG Stock shall be entitled
to elect to
receive, in exchange for their shares of GCG Stock, $72.8865 in cash,
2.2545
shares of United (“United Stock”) or a combination thereof subject to the
limitations as described in the Agreement. Holders of outstanding options
to
acquire GCG Stock (the “GCG Stock Options”) and holders of outstanding GCG stock
appreciation rights (the “GCG SARs”) shall receive cash, equal to the result of
$72.8865 minus the applicable exercise price for such GCG Stock Options
or GCG
SARs. In addition to the terms described above, record holders of GCG
Stock as
of December 31, 2006 shall receive a special cash dividend payable
prior to
closing not to exceed $2.25 per share. This cash dividend is in addition
to the
$1.55 regularly scheduled dividend payable in March. The terms and
conditions of
the Merger are more fully set forth in the Agreement. You have requested
our
opinion as to the fairness, from a financial point of view, as of the
date
hereof, of the Merger consideration that United will render.
Burke
Capital Group, L.L.C. (“BCG”) is an investment banking firm which specializes in
financial institutions in the United States. GCG has retained us to
render our
opinion to its Board of Directors.
In
connection with this opinion, we have reviewed, among other things:
| (i) |
The
Agreement and certain of the schedules thereto;
|
|
(ii)
|
Certain
publicly available financial statements and other historical
financial
information of GCG and United that it deemed relevant;
|
|
(iii)
|
Projected
earnings estimates for GCG for the years ending December
31, 2007 through
2011 prepared by and reviewed with senior management of GCG
and the views
of senior management regarding GCG’s business, financial condition,
results of operations and future prospects;
|
|
(iv)
|
Internal
financial and operating information with respect to the business,
operations and prospects of GCG furnished to BCG by GCG that
is not
publicly available;
|
C-1
Board
of
Directors - Gwinnett Commercial Group, Inc.
February
5, 2007
Page
2
|
(v)
|
The
reported prices and trading activity of United’s common stock and compared
those prices and activity with other publicly-traded companies
that BCG
deemed relevant;
|
|
(vi)
|
The
pro forma financial impact of the merger on United’s ability to complete a
transaction from a regulatory standpoint, based on assumptions
determined
by senior management of GCG and BCG;
|
|
(vii)
|
The
financial terms of other recent business combinations in
the commercial
banking industry, to the extent publicly available;
|
|
(viii)
|
The
current market environment generally and the banking environment
in
particular;
|
|
(ix)
|
Such
other information, financial studies, analyses and investigations
and
financial, economic and market criteria as it considered
relevant.
|
In
performing our review, we have relied upon the accuracy and completeness
of the
financial and other information that was available to us from public
sources,
that GCG and United or their respective representatives provided to
us or that
was otherwise reviewed. We have further relied on the assurances of
management
of GCG and United that they are not aware of any facts or circumstances
that
would make any of such information inaccurate or misleading. We have
not been
asked to and have not undertaken an independent verification of any
of such
information and we do not assume any responsibility or liability for
the
accuracy or completeness thereof. We did not make an independent evaluation
or
appraisal of the specific assets, the collateral securing assets or
the
liabilities (contingent or otherwise) of GCG, United or any of their
subsidiaries, or the collectibility of any such assets, nor have we
been
furnished with any such evaluations or appraisals. We did not make
an
independent evaluation of the adequacy of the allowance for loan losses
of GCG
or United, nor have we reviewed any individual credit files relating
to GCG or
United. We have assumed, with your consent, that the respective allowances
for
loan losses for both GCG and United are adequate to cover such losses
and will
be adequate on a pro forma basis for the combined entity. With respect
to the
earnings estimates for GCG and United and all projections of transaction
costs,
purchase accounting adjustments and expected cost savings that we reviewed
with
the management of GCG, BCG assumed, with your consent, that they reflected
the
best currently available estimates and judgments of the respective
managements
of the respective future financial performances of GCG and United and
that such
performances will be achieved. We express no opinion as to such earnings
estimates or financial projections or the assumptions on which they
are based.
We have assumed in all respects material to our analysis that GCG and
United
will remain as going concerns for all periods relevant to our analyses,
that all
of the representations and warranties contained in the Agreement and
all related
agreements are true and correct, that each party to the Agreement and
such other
related agreements will perform all of the covenants they are required
to
perform thereunder and that the conditions precedent in the Agreement
and such
other related agreements are not waived.
Our
opinion is necessarily based on financial, economic, market and other
conditions
as in effect on, and the information made available to us as of, the
date
hereof. Events occurring after the date hereof could materially affect
this
opinion. We have not undertaken to update, revise, reaffirm or withdraw
this
opinion or otherwise comment upon events occurring after the date hereof.
We are
expressing no opinion herein as to what the price at which GCG’s common stock
may trade at any time.
C-2
Board
of
Directors - Gwinnett Commercial Group, Inc.
February
5, 2007
Page
3
We
will
receive a fee for our services as financial advisor to GCG and for
rendering
this opinion. BCG does not have an investment banking relationship
with United;
nor does it have any contractual relationship with United.
This
opinion is directed to the Board of Directors of GCG and may not be
reproduced,
summarized, described or referred to or given to any other person without
our
prior consent.
Based
upon and subject to the foregoing, it is our opinion that, as of the
date
hereof, the amount of the Merger consideration is fair from a financial
point of
view.
Very
Truly Yours,
/s/
Burke
Capital Group, L.L.C.
Burke
Capital Group, L.L.C.
C-3
PART
II.
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
20. Indemnification of Directors and Officers.
United’s
Articles of Incorporation, as amended, provide that no director of United shall
be personally liable to United or its shareholders for breach of his or her
duty
of care or other duty as a director, but only to the extent permitted from
time
to time by the Georgia Business Corporation Code.
United’s
Bylaws require it to indemnify its directors, officers, employees, and agents
against judgments, fines, penalties, amounts paid in settlement, and expenses,
including attorney’s fees, resulting from various types of legal actions or
proceedings instituted by third parties if the actions of the director, officer,
employee, or agent being indemnified meet the standards of conduct specified
therein.
In
addition, United’s Bylaws require it to indemnify its directors, officers,
employees, and agents for expenses actually and reasonably incurred in
connection with legal actions or proceedings instituted by or in the right
of
United to procure a judgment in its favor, if the actions of the director,
officer, employee, or agent being indemnified meet the standards of conduct
set
forth therein. However, United will not indemnify a director, officer, employee,
or agent for such expenses if such person is adjudged liable to United, unless
so ordered by the court in which the legal action or proceeding is
brought.
A
determination concerning whether or not the applicable standard of conduct
has
been met by a director, officer, employee, or agent seeking indemnification
must
be made by (1) a disinterested majority of the board of directors, (2) United’s
legal counsel, if a quorum of disinterested directors is not obtainable or
if
the disinterested directors so order, or (3) an affirmative vote of a majority
of shares held by the shareholders. No indemnification may be made to or on
behalf of a director, officer, employee or agent in connection with any other
proceeding in which such person was adjudged liable on the basis that personal
benefit was improperly received by him or her.
As
provided under Georgia law, the liability of a director may not be eliminated
or
limited (1) for any appropriation, in violation of his duties, of any business
opportunity of United, (2) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (3) for unlawful corporate
distributions, or (4) for any transaction from which the director received
an
improper benefit.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to United’s directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, United has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
United’s
directors and officers are insured against losses arising from any claim against
them as such for wrongful acts or omissions, subject to certain
limitations.
Item
21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
|
Exhibit
No.
|
Exhibit
|
|
|
2.1
|
Agreement
and Plan of Reorganization, dated as of February 5, 2007, by and
between
United and Gwinnett.*
|
|
|
3.1
|
Restated
Articles of Incorporation of United Community Banks, Inc., (incorporated
herein by reference to Exhibit 3.1 to United Community Banks, Inc.’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001,
File
No. 0-21656, filed with the Commission on August 14,
2001).
|
|
|
3.2
|
Amendment
to the Restated Articles of Incorporation of United Community Banks,
Inc.
(incorporated herein by reference to Exhibit 3.3 to United Community
Banks, Inc.’s Registration Statement on Form S-4, File
No. 333-118893, filed with the Commission on September 9,
2004).
|
|
|
3.3
|
Amended
and Restated Bylaws of United Community Banks, Inc., dated September
12,
1997 (incorporated herein by reference to Exhibit 3.1 to United Community
Banks, Inc.’s Annual Report on Form 10-K, for the year ended December 31,
1997, File No. 0-21656, filed with the Commission on March 27,
1998).
|
|
|
4.1
|
See
Exhibits 3.1, 3.2 and 3.2 for provisions of Restated Articles of
Incorporation, as amended, and Amended and Restated Bylaws, which
define
the rights of the Shareholders.
|
|
|
4.2
|
Junior
Subordinated Indenture between United Community Banks, Inc. and The
Chase
Manhattan Bank, as Trustee, dated as of July 20, 1998 (incorporated
herein
by reference to Exhibit 4.1 to United’s Registration Statement on Form
S-4, File No. 333-64911, filed with the Commission on September 30,
1998).
|
|
|
4.3
|
Form
of Certificate of Junior Subordinated Debenture (incorporated herein
by
reference to Exhibit 4.2 to United’s Registration Statement on Form S-4,
File No. 333-64911, filed with the Commission on September 30,
1998).
|
|
|
4.4
|
Certificate
of Trust of United Community Capital Trust (incorporated herein by
reference to Exhibit 4.3 to United’s Registration Statement on Form S-4,
File No. 333-64911, filed with the Commission on September 30,
1998).
|
|
|
4.5
|
Amended
and Restated Trust Agreement among United Community Banks, Inc.,
as
depositor, The Chase Manhattan Bank, as Property Trustee, and Chase
Manhattan Bank Delaware, as Delaware Trustee, dated as of July 20,
1998
(incorporated herein by reference to Exhibit 4.4 to United’s Registration
Statement on Form S-4, File No. 333-64911, filed with the Commission
on
September 30, 1998).
|
|
|
4.6
|
Form
of New Capital Security Certificate for United Community Capital
Trust
(incorporated herein by reference to Exhibit 4.5 to United’s Registration
Statement on Form S-4, File No. 333-64911, filed with the Commission
on
September 30, 1998).
|
|
4.7
|
Guarantee
Agreement between United Community Banks, Inc., as Guarantor, and
The
Chase Manhattan Bank, as Guarantee Trustee, dated as of July 20,
1998
(incorporated herein by reference to Exhibit 4.6 to United’s Registration
Statement on Form S-4, File No. 333-64911, filed with the Commission
on
September 30, 1998).
|
|
Exhibit
No.
|
Exhibit
|
|
|
4.8
|
Registration
Rights Agreement dated July 20, 1998 among United Community Banks,
Inc.,
United Community Capital Trust and Wheat First Securities, Inc.
as Initial
Purchaser of 8.125% Junior Subordinated Deferrable Interest Debentures
Due
July 15, 2028 (incorporated herein by reference to Exhibit 4.7
to United’s
Registration Statement on Form S-4, File No. 333-64911, filed with
the
Commission on September 30, 1998).
|
|
|
4.9
|
Indenture,
dated November 26, 2002, by and between United and Marshall & Ilsley
Trust Company, N.A., as Trustee (incorporated herein by reference
to
Exhibit 4.9 to United’s Registration Statement on Form S-4/A, File No.
333-103024, filed with the Commission on February 21,
2003).
|
|
|
4.10
|
Form
of 6.75% Subordinated Notes due 2012 (incorporated herein by reference
to
Exhibit 4.10 to United’s Registration Statement on Form S-4/A, File No.
333-103024, filed with the Commission on February 21,
2003).
|
|
|
|
||
|
4.11
|
Indenture,
dated September 24, 2003, by and between United and Marshall & Ilsley
Trust Company, N.A. as Trustee (incorporated herein by reference
to
Exhibit 4.12 to United’s Annual Report on Form 10-K for the year ended
December 31, 2003, File No. 0-21656).
|
|
|
4.12
|
Form
of Subordinated Step-up Notes due 2015 (incorporated herein by
reference
to Exhibit 4.13 to United’s Annual Report on Form 10-K for the year ended
December 31, 2003, File No. 0-21656).
|
|
|
4.13
|
Indenture,
dated March 9, 2004, by and between Southern Bancorp, Inc. and
Wilmington
Trust Company as Trustee.
|
|
|
4.14
|
Form
of Floating Rate Junior Subordinated Debentures due March 31, 2034
(included as part of Exhibit 4.13).
|
|
|
4.15
|
First
Supplemental Indenture, dated March 8, 2007, by and between United
and
Wilmington Trust Company as Trustee.
|
|
|
5.1
|
Opinion
and Consent of Kilpatrick Stockton, LLP.*
|
|
|
8.1
|
Opinion
and Consent of Kilpatrick Stockton, LLP as to the federal income
tax
consequences to the merger of United and Gwinnett.
|
|
|
23.1
|
Consent
of Porter Keadle Moore, LLP.
|
|
|
23.2
|
Consent
of Kilpatrick Stockton, LLP (included as part of Exhibits 5 and
8).
|
|
|
23.3
|
Consent
of Burke Capital Group, L.L.C.*
|
|
|
24.1
|
Power
of Attorney.*
|
|
|
99.1
|
Form
of Proxy.*
|
|
|
99.2
|
Form
of Election.
|
(b) Financial
Statement Schedules: No financial statements schedules are required to be filed
as part of
this
Registration Statement.
|
(c)
|
Report,
Opinion or Appraisal: The opinion of Burke Capital Group is included
as
Appendix C to the materials filed as a part of this Registration
Statement.
|
|
*
|
Previously
filed.
|
Item
22. Undertakings
(a) The
undersigned registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the registrant’s
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be
the initial bona
fide
offering
thereof.
(b) The
undersigned registrant hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or given,
the
latest annual report to security holders that is incorporated by reference
in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to
be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(c) The
undersigned registrant hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who
is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by
the
other items of the applicable form.
(d) The
undersigned registrant hereby undertakes that every prospectus (i) that is
filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933, as amended,
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) The
undersigned registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date
of responding to the request.
(f) The
undersigned registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
(g) Insofar
as indemnification for liabilities arising under the Securities Act of 1933
may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the
securities being registered, the registrant will, unless in the opinion of
its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it
is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, United Community Banks,
Inc.
has duly caused this Amendment No. 1 to Registration Statement to be signed
on
its behalf by the undersigned, thereunto duly authorized, in the City of
Blairsville, State of Georgia, on April 16, 2007.
|
UNITED
COMMUNITY BANKS, INC.
|
||
| |
|
|
| By: | /s/ Jimmy C. Tallent | |
|
|
||
|
Jimmy
C. Tallent
President and Chief Executive Officer |
||
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Amendment
No. 1 to Registration Statement has been signed by the following persons in
the
capacities indicated on April 16, 2007.
|
Signature
|
Title
|
|
|
/s/
Jimmy C. Tallent
|
President,
Chief Executive Officer and Director
(Principal
Executive Officer)
|
|
|
Jimmy
C. Tallent
|
||
|
*
|
Executive
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
|
|
Rex
S. Schuette
|
||
|
*
|
Senior
Vice President, Controller and Chief Accounting Officer (Principal
Accounting Officer)
|
|
|
Alan
H. Kumler
|
||
|
*
|
Chairman
of the Board
|
|
|
Robert
L. Head, Jr.
|
||
|
*.
|
Vice
Chairman of the Board
|
|
|
W.
C. Nelson, Jr.
|
||
|
*
|
Director
|
|
|
A.
William Bennett
|
||
|
*
|
Director
|
|
|
Robert
Blalock
|
[signatures
continued on next page]
[signatures
continued from previous page]
|
*
|
Director
|
|
|
Guy
W. Freeman
|
||
|
*
|
Director
|
|
|
Thomas
C. Gilliland
|
||
|
*
|
Director
|
|
|
Charles
Hill
|
||
|
*
|
Director
|
|
|
Hoyt
O. Holloway
|
||
|
*
|
Director
|
|
|
Clarence
W. Mason, Sr.
|
||
|
*
|
Director
|
|
|
Tim
Wallis
|
|
By:
|
/s/
Jimmy C. Tallent
|
|||
|
Jimmy
C. Tallent
Attorney-in-fact
|
EXHIBIT
INDEX
|
Exhibit
|
Description
of Exhibit
|
|
|
4.13
|
Indenture,
dated March 9, 2004, by and between Southern Bancorp, Inc. and
Wilmington
Trust Company as Trustee.
|
|
|
4.15
|
First
Supplemental Indenture, dated March 8, 2007, by and between United
and
Wilmington Trust Company as Trustee.
|
|
|
8.1
|
Opinion
and Consent of Kilpatrick Stockton, LLP as to the federal income
tax
consequences to the merger of United and Gwinnett.
|
|
|
23.1
|
Consent
of Porter Keadle Moore, LLP.
|
|
|
99.1
|
Form
of Election.
|
Exhibit
4.13
JUNIOR
SUBORDINATED INDENTURE
Between
SOUTHERN
BANCORP, INC.
(as
Company)
and
WILMINGTON
TRUST COMPANY
(as
Trustee)
dated
as of March 9, 2004
SOUTHERN
BANCORP CAPITAL TRUST I
Certain
Sections of this Junior Subordinated Indenture relating
to
Sections 310 through 318 of the
Trust
Indenture Act of 1939:
|
Trust
Indenture
Act
Section
|
Junior
Subordinated
Indenture
Section
|
|||
|
Section
310
|
(a)(1)
|
6.9
|
||
|
(a)(2)
|
6.9
|
|||
|
(a)(3)
|
Not
Applicable
|
|||
|
(a)(4)
|
Not
Applicable
|
|||
|
(a)(5)
|
6.9
|
|||
|
(b)
|
6.8,
6.10
|
|||
|
Section
311
|
(a)
|
6.13
|
||
|
(b)
|
6.13
|
|||
|
(b)(2)
|
7.3(a)
|
|||
|
Section
312
|
(a)
|
7.1,
7.2(a)
|
||
|
(b)
|
7.2(b)
|
|||
|
(c)
|
7.2(c)
|
|||
|
Section
313
|
(a)
|
7.3
(a)
|
||
|
(a)(4)
|
7.3(a)
|
|||
|
(b)
|
7.3(b)
|
|||
|
(c)
|
7.3(a)
|
|||
|
(d)
|
7.3(c)
|
|||
|
Section
314
|
(a)
|
7.4
|
||
|
(b)
|
7.4
|
|||
|
(c)(1)
|
1.2
|
|||
|
(c)(2)
|
1.2
|
|||
|
(c)(3)
|
Not
Applicable
|
|||
|
(e)
|
1.2
|
|||
|
Section
315
|
(a)
|
6.1(a)
|
||
|
(b)
|
6.2,
7.3
|
|||
|
(c)
|
6.1(b)
|
|||
|
(d)
|
6.1(c)
|
|||
|
(e)
|
5.14
|
|||
|
Section
316
|
(a)
|
5.12
|
||
|
(a)(1)(A)
|
5.12
|
|||
|
(a)(1)(B)
|
5.13
|
|||
|
(a)(2)
|
Not
Applicable
|
|||
|
(b)
|
5.8
|
|||
|
(c)
|
1.4(f)
|
|||
|
Section
317
|
(a)(1)
|
5.3
|
||
|
(a)(2)
|
5.4
|
|||
|
(b)
|
10.3
|
|||
|
Section
318
|
(a)
|
1.7
|
-
i
-
| Note: |
This
reconciliation and tie shall not, for any purpose, be deemed to be
a part
of the Indenture.
|
-
ii
-
TABLE
OF CONTENTS
|
Page
|
||||
|
ARTICLE
I.
|
DEFINITIONS
AND OTHER PROVISIONS OF GENERAL APPLICATION
|
1
|
||
|
Section
1.1.
|
Definitions
|
1
|
||
|
Section
1.2.
|
Compliance
Certificate and Opinions
|
11
|
||
|
Section
1.3.
|
Forms
of Documents Delivered to Trustee
|
11
|
||
|
Section
1.4.
|
Acts
of Holders
|
12
|
||
|
Section
1.5.
|
Notices,
Etc
|
14
|
||
|
Section
1.6.
|
Notice
to Holders; Waiver
|
14
|
||
|
Section
1.7.
|
Conflict
with Trust Indenture Act
|
15
|
||
|
Section
1.8.
|
Effect
of Headings and Table of Contents
|
15
|
||
|
Section
1.9.
|
Successors
and Assigns
|
15
|
||
|
Section
1.10.
|
Separability
Clause
|
15
|
||
|
Section
1.11.
|
Benefits
of Indenture
|
15
|
||
|
Section
1.12.
|
Governing
Law
|
15
|
||
|
Section
1.13.
|
Non-Business
Days
|
16
|
||
|
ARTICLE
II.
|
SECURITY
FORMS
|
16
|
||
|
Section
2.1.
|
Forms
Generally
|
16
|
||
|
Section
2.2.
|
Form
of Face of Security
|
17
|
||
|
Section
2.3.
|
Additional
Provisions Required in Global Security
|
17
|
||
|
Section
2.4.
|
Form
of Trustee’s Certificate of Authentication
|
17
|
||
|
ARTICLE
III.
|
THE
SECURITIES
|
18
|
||
|
Section
3.1.
|
Title
and Terms
|
18
|
||
|
Section
3.2.
|
Denominations
|
21
|
||
|
Section
3.3.
|
Execution,
Authentication, Delivery and Dating
|
21
|
||
|
Section
3.4.
|
Temporary
Securities
|
22
|
||
|
Section
3.5.
|
Global
Securities
|
23
|
||
|
Section
3.6.
|
Registration,
Transfer and Exchange Generally; Certain Transfers and
Exchanges
|
24
|
||
|
Section
3.7.
|
Mutilated,
Lost and Stolen Securities
|
26
|
||
|
Section
3.8.
|
Payment
of Interest and Additional Interest; Interest Rights
Preserved
|
27
|
||
|
Section
3.9.
|
Persons
Deemed Owners
|
28
|
||
|
Section
3.10.
|
Cancellation
|
28
|
||
|
Section
3.11.
|
Computation
of Interest
|
29
|
||
|
Section
3.12.
|
Deferrals
of Interest Payment Dates
|
29
|
||
|
Section
3.13.
|
Right
of Set-Off
|
30
|
||
|
Section
3.14.
|
Agreed
Tax Treatment
|
30
|
||
|
Section
3.15.
|
Shortening
or Extension of Stated Maturity
|
31
|
||
|
Section
3.16.
|
CUSIP
Numbers
|
31
|
||
|
ARTICLE
IV.
|
SATISFACTION
AND DISCHARGE
|
31
|
-
iii
-
Table
of Contents
(continued)
|
Page
|
||||
|
Section
4.1.
|
Satisfaction
and Discharge of Indenture
|
31
|
||
|
Section
4.2.
|
Application
of Trust Money
|
32
|
||
|
ARTICLE
V.
|
REMEDIES
|
33
|
||
|
Section
5.1.
|
Events
of Default
|
33
|
||
|
Section
5.2.
|
Acceleration
of Maturity; Rescission and Annulment
|
34
|
||
|
Section
5.3.
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
35
|
||
|
Section
5.4.
|
Trustee
May File Proofs of Claim
|
36
|
||
|
Section
5.5.
|
Trustee
May Enforce Claim Without Possession of Securities
|
37
|
||
|
Section
5.6.
|
Application
of Money Collected
|
37
|
||
|
Section
5.7.
|
Limitation
on Suits
|
37
|
||
|
Section
5.8.
|
Unconditional
Right of Holders to Receive Principal, Premium and Interest; Direct
Action
by Holders of Capital Securities
|
38
|
||
|
Section
5.9.
|
Restoration
of Rights and Remedies
|
38
|
||
|
Section
5.10.
|
Rights
and Remedies Cumulative
|
39
|
||
|
Section
5.11.
|
Delay
or Omission Not Waiver
|
39
|
||
|
Section
5.12.
|
Control
by Holders
|
39
|
||
|
Section
5.13.
|
Waiver
of Past Defaults
|
40
|
||
|
Section
5.14.
|
Undertaking
for Costs
|
40
|
||
|
Section
5.15.
|
Waiver
of Usury, Stay or Extension Laws
|
41
|
||
|
ARTICLE
VI.
|
THE
TRUSTEE
|
41
|
||
|
Section
6.1.
|
Certain
Duties and Responsibilities
|
41
|
||
|
Section
6.2.
|
Notice
of Defaults
|
42
|
||
|
Section
6.3.
|
Certain
Rights of Trustee
|
42
|
||
|
Section
6.4.
|
Not
Responsible for Recitals or Issuance of Securities
|
43
|
||
|
Section
6.5.
|
May
Hold Securities
|
43
|
||
|
Section
6.6.
|
Money
Held in Trust
|
44
|
||
|
Section
6.7.
|
Compensation
and Reimbursement
|
44
|
||
|
Section
6.8.
|
Disqualification;
Conflicting Interests
|
45
|
||
|
Section
6.9.
|
Corporate
Trustee Required; Eligibility
|
45
|
||
|
Section
6.10.
|
Resignation
and Removal; Appointment of Successor
|
46
|
||
|
Section
6.11.
|
Acceptance
of Appointment by Successor
|
47
|
||
|
Section
6.12.
|
Merger,
Conversion, Consolidation or Succession to Business
|
48
|
||
|
Section
6.13.
|
Preferential
Collection of Claims Against Company
|
48
|
||
|
Section
6.14.
|
Appointment
of Authenticating Agent
|
48
|
||
|
ARTICLE
VII.
|
HOLDER’S
LISTS AND REPORTS BY TRUSTEE, PAYING AGENT AND COMPANY
|
50
|
||
|
Section
7.1.
|
Company
to Furnish Trustee Names and Addresses of Holders
|
50
|
||
|
Section
7.2.
|
Preservation
of Information; Communications to Holders
|
50
|
||
|
Section
7.3.
|
Reports
by Trustee and Paying Agent
|
51
|
||
|
Section
7.4.
|
Reports
by Company
|
51
|
-
iv
-
Table
of Contents
(continued)
|
Page
|
||||
|
ARTICLE
VIII.
|
CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE
|
51
|
||
|
Section
8.1.
|
Company
May Consolidate, Etc
|
51
|
||
|
Section
8.2.
|
Successor
Company Substituted
|
52
|
||
|
ARTICLE
IX.
|
SUPPLEMENTAL
INDENTURES
|
53
|
||
|
Section
9.1.
|
Supplemental
Indentures Without Consent of Holders
|
53
|
||
|
Section
9.2.
|
Supplemental
Indentures with Consent of Holders
|
54
|
||
|
Section
9.3.
|
Execution
of Supplemental Indentures
|
56
|
||
|
Section
9.4.
|
Effect
of Supplemental Indentures
|
56
|
||
|
Section
9.5.
|
Conformity
with Trust Indenture Act
|
56
|
||
|
Section
9.6.
|
Reference
in Securities to Supplemental Indentures
|
56
|
||
|
ARTICLE
X.
|
COVENANTS
|
56
|
||
|
Section
10.1.
|
Payment
of Principal, Premium and Interest
|
56
|
||
|
Section
10.2.
|
Maintenance
of Office or Agency
|
56
|
||
|
Section
10.3.
|
Money
for Security Payments to be Held in Trust
|
57
|
||
|
Section
10.4.
|
Statement
as to Compliance
|
58
|
||
|
Section
10.5.
|
Waiver
of Certain Covenants
|
59
|
||
|
Section
10.6.
|
Additional
Sums
|
59
|
||
|
Section
10.7.
|
Additional
Covenants
|
59
|
||
|
Section
10.8.
|
Furnishing
Annual Information
|
60
|
||
|
ARTICLE
XI.
|
REDEMPTION
OF SECURITIES
|
61
|
||
|
Section
11.1.
|
Applicability
of This Article
|
61
|
||
|
Section
11.2.
|
Election
to Redeem; Notice to Trustee
|
61
|
||
|
Section
11.3.
|
Selection
of Securities to be Redeemed
|
61
|
||
|
Section
11.4.
|
Notice
of Redemption
|
62
|
||
|
Section
11.5.
|
Deposit
of Redemption Price
|
63
|
||
|
Section
11.6.
|
Payment
of Securities Called for Redemption
|
63
|
||
|
Section
11.7.
|
Right
of Redemption of Securities Initially Issued to an Issuer
Trust
|
64
|
||
|
ARTICLE
XII.
|
SINKING
FUNDS
|
64
|
||
|
ARTICLE
XIII.
|
SUBORDINATION
OF SECURITIES
|
64
|
||
|
Section
13.1.
|
Securities
Subordinate to Senior Indebtedness
|
64
|
||
|
Section
13.2.
|
No
Payment When Senior Indebtedness in Default; Payment Over of Proceeds
Upon
Dissolution, Etc
|
64
|
||
|
Section
13.3.
|
Payment
Permitted If No Default
|
66
|
||
|
Section
13.4.
|
Subrogation
to Rights of Holders of Senior Indebtedness; Etc
|
67
|
||
|
Section
13.5.
|
Provisions
Solely to Define Relative Rights
|
67
|
||
|
Section
13.6.
|
Trustee
to Effectuate Subordination
|
67
|
||
|
Section
13.7.
|
No
Waiver of Subordination Provisions
|
68
|
-
v
-
Table
of Contents
(continued)
|
Page
|
||||
|
Section
13.8.
|
Notice
to Trustee
|
68
|
||
|
Section
13.9.
|
Reliance
on Judicial Order or Certificate of Liquidating Agent
|
69
|
||
|
Section
13.10.
|
Trustee
Not Fiduciary for Holders of Senior Indebtedness
|
69
|
||
|
Section
13.11.
|
Rights
of Trustee as Holder of Senior Indebtedness; Preservation of Trustee’s
Rights
|
69
|
||
|
Section
13.12.
|
Article
Applicable to Paying Agents
|
69
|
||
|
Section
13.13.
|
Certain
Conversions or Exchanges Deemed Payment
|
70
|
||
|
EXHIBIT
A
|
FORM
OF DEBENTURE
|
1
|
||
|
EXHIBIT
B
|
FORM
OF RESTRICTED SECURITIES CERTIFICATE
|
1
|
-
vi
-
JUNIOR
SUBORDINATED INDENTURE
THIS
JUNIOR SUBORDINATED INDENTURE, dated as of March 9, 2004, is between SOUTHERN
BANCORP, INC., a Georgia corporation (the “Company”),
having its principal office at 200 Cherokee Street, Marietta, Georgia 30060,
and
WILMINGTON TRUST COMPANY, as Trustee, having its principal office at 1100 North
Market Street, Wilmington, Delaware 19890-0001 (the “Trustee”).
RECITALS
OF THE COMPANY
The
Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance from time to time of its unsecured junior subordinated
debt securities in one or more series (hereinafter called the “Securities”)
of
substantially the tenor hereinafter provided, including Securities issued to
evidence loans made to the Company from the proceeds from the issuance from
time
to time by one or more statutory trusts (each an “Issuer
Trust”)
of
undivided preferred beneficial interests in the assets of such Issuer Trusts
(the “Capital
Securities”)
and
undivided common interests in the assets of such Issuer Trusts (the
“Common
Securities”
and,
collectively with the Capital Securities, the “Trust
Securities”),
and
to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and
All
things necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.
NOW
THEREFORE, THIS INDENTURE WITNESSETH:
For
and
in consideration of the premises and the purchase of the Securities by the
Holders (as such term is defined in Section 1.1 hereof) thereof, the parties
hereto, intending to be legally bound, mutually covenant and agree, for the
equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE
I.
DEFINITIONS
AND OTHER PROVISIONS
OF
GENERAL APPLICATION
SECTION
1.1. Definitions.
For
all
purposes of this Indenture, except as otherwise expressly provided or unless
the
context otherwise requires:
(1) The
terms
defined in this Article have the meanings assigned to them in this Article,
and
include the plural as well as the singular;
(2) All
other
terms used herein that are defined in the Trust Indenture Act, either directly
or by reference therein, have the meanings assigned to them
therein;
-
1
-
(3) The
words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”;
(4) All
accounting terms not otherwise defined herein have the meanings assigned to
them
in accordance with generally accepted accounting principles as in effect at
the
time of determination;
(5) Whenever
the context may require, any gender shall be deemed to include the
other;
(6) Unless
the context otherwise requires, any reference to an “Article” or a “Section”
refers to an Article or a Section, as the case may be, of this Indenture;
and
(7) The
words
“hereby,” “herein,” “hereof’ and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or
other subdivision.
“Act”
when
used with respect to any Holder has the meaning specified in Section
1.4(a).
“Additional
Interest”
means
the interest, if any, that shall accrue on any interest on the Securities of
any
series the payment of which has not been made on the applicable Interest Payment
Date and which shall accrue at the rate per annum specified or determined as
specified in such Security, to the extent permitted by applicable
law.
“Additional
Sums”
has
the
meaning specified in Section 10.6.
“Additional
Taxes”
means
any additional taxes, duties and other governmental charges to which an Issuer
Trust has become subject from time to time as a result of a Tax
Event.
“Administrator”
means,
in respect of any Issuer Trust, each Person appointed in accordance with the
related Trust Agreement, solely in such Person’s capacity as Administrator of
such Issuer Trust and not in such Person’s individual capacity, or any successor
Administrator appointed as therein provided.
“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. 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.
“Agent
Member”
means
any member of, or participant in, the Depositary.
“Applicable
Procedures”
means,
with respect to any transfer or transaction involving a Global Security or
beneficial interest therein, the rules and procedures of the Depositary for
such
Global Security, in each case to the extent applicable to such transaction
and
as in effect from time to time.
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“Authenticating
Agent”
means
any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf
of the Trustee to authenticate Securities of one or more series.
“Bankruptcy
Code”
means
the United States Bankruptcy Code, 11 U.S.C. 101, et seq. as amended, and any
successor provisions thereto.
“Board
of Directors”
means
the board of directors of the Company or the Executive Committee of the board
of
directors of the Company (or any other committee of the board of directors
of
the Company performing similar functions) or, for purposes of this Indenture,
a
committee designated by the board of directors of the Company (or such
committee), comprised of two or more members of the board of directors of the
Company or officers of the Company, or both.
“Board
Resolution”
means
a
copy of a resolution certified by the Secretary or any Assistant Secretary
of
the Company to have been duly adopted by the Board of Directors, or such
committee of the Board of Directors or officers of the Company to which
authority to act on behalf of the Board of Directors has been delegated, and
to
be in full force and effect on the date of such certification, and delivered
to
the Trustee.
“Business
Day”
means
any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in the City of New York, New York or the City of Wilmington,
Delaware are authorized or required by law or executive order to remain closed,
or (iii) a day on which the Corporate Trust Office of the Trustee, or, with
respect to the Securities of a series initially issued to an Issuer Trust,
the
“Corporate Trust Office” (as defined in the related Trust Agreement) of the
Property Trustee or the Delaware Trustee under the related Trust Agreement,
is
closed for business.
“Capital
Securities”
has
the
meaning specified in the first recital of this Indenture.
“Capital
Treatment Event”
means,
in respect of any Issuer Trust, receipt by the Property Trustee of such Issuer
Trust of an Opinion of Counsel, experienced in such matters and who may be
counsel to the Company, and determination by the Company that, as a result
of
the occurrence of any amendment to, or change (including any announced
prospective change) in, the laws (or any rules or regulations thereunder) of
the
United States or any political subdivision thereof or therein, or as a result
of
any official or administrative pronouncement or action (including any action
taken in connection with a regulatory examination or in connection with or
as a
result of any change in regulatory policy) or judicial decision interpreting
or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of
the
issuance of the Capital Securities of such Issuer Trust, there is more than
an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of such Capital Securities as “Tier I Capital”
(or the then equivalent thereof) for purposes of the risk-based capital adequacy
guidelines of the Board of Governors of the Federal Reserve System, as then
in
effect and applicable to the Company.
“Clearing
Agency”
means
an organization registered as a “clearing agency” pursuant to Section 17A of the
Exchange Act.
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“Clearing
Agency Participant”
means
a
broker, dealer, bank, other financial institution or other Person for whom
from
time to time a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
“Commission”
means
the United States Securities and Exchange Commission, or any successor
thereto.
“Common
Securities”
has
the
meaning specified in the first recital of this Indenture.
“Common
Stock”
means
the Company’s common stock, $1.00 par value per share.
“Company”
means
the Person named as the “Company” in the first paragraph of this instrument
until a successor entity shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Company” shall mean such successor
entity.
“Company
Request”
and
“Company
Order”
mean,
respectively, the written request or order signed in the name of the Company
by
its Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, its President, Chief Executive Officer or a Senior Vice President
or
Vice President, and by its Chief Financial Officer, its Treasurer or an
Assistant Treasurer, or its Secretary or an Assistant Secretary, and delivered
to the Trustee.
“Corporate
Trust Office”
means
the principal office of the Trustee at which at any particular time its
corporate trust business shall be administered.
“Creditor”
has
the
meaning specified in Section 6.7(c).
“Defaulted
Interest”
has
the
meaning specified in Section 3.8.
“Delaware
Trustee”
means,
with respect to any Issuer Trust, the Person identified as the “Delaware
Trustee” in the related Trust Agreement, solely in its capacity as Delaware
Trustee of such Issuer Trust under such Trust Agreement and not in its
individual capacity, or its successor in interest in such capacity, or any
successor Delaware trustee appointed as therein provided.
“Depositary”
means,
with respect to the Securities of any series issuable or issued in whole or
in
part in the form of one or more Global Securities, the Person designated as
Depositary by the Company pursuant to Section 3.1 with respect to such series
(or any successor thereto).
“Discount
Security”
means
any security that provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 5.2.
“Dollar”
or
“$”
means
the currency of the United States of America that, as at the time of payment,
is
legal tender for the payment of public and private debts.
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“Entity”
includes a bank, corporation, partnership, association, company, limited
liability company, joint-stock company or business trust.
“Event
of Default”
unless
otherwise specified in the supplemental indenture creating a series of
Securities, has the meaning specified in Article V.
“Exchange
Act”
means
the Securities Exchange Act of 1934 and any statute successor thereto, in each
case as amended from time to time.
“Expiration
Date”
has
the
meaning specified in Section 1.4(f).
“Extension
Period”
has
the
meaning specified in Section 3.12.
“Federal
Reserve”
means
the Board of Governors of the Federal Reserve System and its
delegees.
“Global
Security”
means a
Security in the form prescribed in Article II evidencing all or part of a series
of Securities, issued to the Depositary or its nominee for such series, and
registered in the name of such Depositary or its nominee.
“Guarantee”
means,
with respect to any Issuer Trust, the obligations of the Company under the
Guarantee Agreement.
“Guarantee
Agreement”
means
any Guarantee Agreement executed by the Company for the benefit of the Holders
of the Capital Securities issued by each Issuer Trust, as modified, amended
or
supplemented from time to time.
“Holder”
means
a
Person in whose name a Security is registered in the Securities
Register.
“Indenture”
means
this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms
of
each particular series of Securities established as contemplated by Section
3.1.
“Interest
Payment Date”
means,
as to each series of Securities, the Stated Maturity of an installment of
interest on such Securities.
“Investment
Company Act”
means
the Investment Company Act of 1940 and any statute successor thereto, in each
case as amended from time to time.
“Investment
Company Event”
means
the receipt by an Issuer Trust of an Opinion of Counsel (as defined in the
relevant Trust Agreement) experienced in such matters to the effect that, as
a
result of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application
of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that such Issuer
Trust is or will be considered an “investment company” that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after
the
date of the issuance of the Capital Securities of such Issuer
Trust.
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“Issuer
Trust”
has
the
meaning specified in the first recital of this Indenture.
“Liquidation
Amount”
shall
have the meaning assigned in the applicable related Trust
Agreement.
“Maturity”
when
used with respect to any Security means the date on which the principal of
such
Security becomes due and payable as therein or herein provided, whether at
the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
“Notice
of Default”
means
a
written notice of the kind specified in Section 5.1(3).
“Officers’
Certificate”
means
a
certificate signed by the Chairman of the Board of Directors, Vice Chairman
of
the Board of Directors, Chief Executive Officer, the President or any Vice
President, and by the Chief Financial Officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the party provided herein. Any Officers’ Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Indenture (other than the certificates provided pursuant to Section 10.4) shall
include:
(a) a
statement by each officer signing the Officers’ Certificate that such officer
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 such officer in rendering the Officers’ Certificate;
(c) a
statement that such officer has made such examination or investigation as,
in
such officer’s opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a
statement as to whether, in the opinion of each such officer, such condition
or
covenant has been complied with.
“Opinion
of Counsel” means a written opinion of counsel, who may be counsel for or an
employee of the Company or any Affiliate of the Company.
“Original
Issue Date” means the date of issuance specified as such in each
Security.
“Outstanding”
means, when used in reference to any Securities, as of the date of
determination, all Securities theretofore authenticated and delivered under
this
Indenture, except:
(i) Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
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(ii) Securities
for whose payment money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Holders of such
Securities; and
(iii) Securities
in substitution for or in lieu of which other Securities have been authenticated
and delivered or that have been paid pursuant to Section 3.6, unless proof
satisfactory to the Trustee is presented that any such Securities are held
by
Holders in whose hands such Securities are valid, binding and legal obligations
of the Company; provided,
however,
in
determining whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or such other
obligor (other than the Issuer Trust to which Securities of the applicable
series were initially issued) shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities that the Trustee knows to be so owned shall
be so disregarded. Securities so owned that have been pledged in good faith
may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the
Trustee the pledgee’s right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or
any
Affiliate of the Company or such other obligor (other than such Issuer Trust).
Upon the written request of the Trustee, the Company shall furnish to the
Trustee promptly an Officers’ Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor (other than, for the avoidance of doubt, such
Issuer Trust), and, subject to the provisions of Section 6.1, the Trustee shall
be entitled to accept such Officers’ Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
“Paying
Agent”
means
the Trustee or any Person authorized by the Company to pay the principal of
(or
premium, if any) or interest on, or other amounts in respect of any Securities
on behalf of the Company.
“Person”
means
any individual, corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
“Place
of Payment”
means,
with respect to the Securities of any series, the place or places where the
principal of (and premium, if any) and interest on the Securities of such series
are payable pursuant to Section 3.1.
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“Predecessor
Security”
of
any
particular Security means every previous Security evidencing all or a portion
of
the same debt as that evidenced by such particular Security. For the purposes
of
this definition, any security authenticated and delivered under Section 3.7
in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
“Principal
Subsidiary”
means
(i) Southern National Bank, a chartered national bank, (ii) any other subsidiary
of the Company the consolidated assets of which constitute 20% or more of the
consolidated assets of the Company and its consolidated subsidiaries, (iii)
any
other subsidiary designated as a Principal Subsidiary pursuant to a Board
Resolution and set forth in an Officers’ Certificate delivered to the Trustee,
and (iv) any subsidiary of the Company that owns, directly or indirectly, any
voting securities, or options, warrants or rights to subscribe for or purchase
voting securities, of any Principal Subsidiary under clause (i), (ii), (iii)
or
(iv), and in the case of clause (i), (ii), (iii), (iv) or (v), their respective
successors (whether by consolidation, merger, conversion, transfer of
substantially all their assets and business or otherwise) so long as any such
successor is a banking subsidiary (in the case of clause (i), (ii), (iii) or
(iv) or a subsidiary (in the case of clause (v)) of the Company.
“Proceeding”
has
the
meaning specified in Section 13.2.
“Property
Trustee”
means,
with respect to any Issuer Trust, the Person identified as the “Property
Trustee” in the related Trust Agreement, solely in its capacity as Property
Trustee of such Issuer Trust under such Trust Agreement and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as therein provided.
“Redemption
Date”
when
used with respect to any Security to be redeemed, means the date fixed for
such
redemption by or pursuant to this Indenture or the terms of such
Security.
“Redemption
Price”
when
used with respect to any Security to be redeemed, means the price at which
it is
to be redeemed pursuant to this Indenture or the terms of such
Security.
“Regular
Record Date”
for
the
interest payable on any Interest Payment Date with respect to the Securities
of
a series means, unless otherwise provided pursuant to Section 3.1 with respect
to Securities of such series, the close of business on the fifteenth day of
the
month in which such Interest Payment Date occurs (whether or not a Business
Day).
“Responsible
Officer”
when
used with respect to the Trustee means any officer assigned to the Corporate
Trust Office, including any managing director, vice president, principal,
assistant vice president, assistant treasurer, assistant secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Indenture, and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular
subject.
“Restricted
Security”
means
all Securities including those represented by the debenture attached hereto
as
Exhibit
A
or those
represented by the Restricted Securities Certificate attached hereto as
Exhibit
B.
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“Restricted
Securities Certificate”
means
a
certificate substantially in the form set forth to Exhibit
B.
“Rights
Plan”
means
any plan of the Company providing for the issuance by the Company to all holders
of its Common Stock, of rights entitling the holders thereof to subscribe for
or
purchase shares of any class or series of capital stock of the Company which
rights (i) are deemed to be transferred with such shares of such Common Stock,
(ii) are not exercisable, and (iii) are also issued in respect of future
issuances of such Common Stock, in each case until the occurrence of a specified
event or events.
“Securities”
or
“Security”
means
any debt securities or debt security, as the case may be, authenticated and
delivered under this Indenture.
“Securities
Act”
means
the Securities Act of 1933, as modified, amended or supplemented from time
to
time.
“Securities
Register”
and
“Securities
Registrar”
have
the respective meanings specified in Section 3.6(a).
“Senior
Indebtedness”
means,
whether recourse is to all or a portion of the assets of the Company and whether
or not contingent: (i) every obligation of the Company for borrowed money;
(ii)
every obligation of the Company evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of the Company with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of the Company; (iv)
every obligation of the Company issued or assumed as the deferred purchase
price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital
lease
obligation of the Company; (vi) every obligation of the Company for claims
(as
defined in Section 101(4) of the Bankruptcy Code) in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts, swaps, options, caps, collars and similar arrangements; and (vii)
every obligation of the type referred to in clauses (i) through (vi) of another
Person the payment of which the Company has guaranteed or is responsible or
liable, directly or indirectly, as obligor or otherwise. “Senior Indebtedness”
excludes (i) any obligations which, by their terms, are expressly stated to
rank
part passu in right of payment with, or to not be superior in right of payment
to, the Junior Subordinated Debentures, (ii) any indebtedness of the Company
which when incurred and without respect to any election under Section 1111(b)
of
the Bankruptcy Code was without recourse to the Company, (iii) any indebtedness
of the Company to any of its subsidiaries, (iv) indebtedness to any executive
officer or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or
other
entity affiliated with the Company that is a financing entity of the Company
in
connection with the issuance of such financing entity of securities that are
similar to the Capital Securities.
“Special
Record Date”
for
the
payment of any Defaulted Interest means a date fixed by the Trustee pursuant
to
Section 3.8.
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“Stated
Maturity,”
when
used with respect to any Security or any installment of principal thereof or
interest thereon, means the date specified pursuant to the terms of such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable, as such date may,
in
the case of such principal, be shortened or extended as provided pursuant to
the
terms of such Security and this Indenture.
“Subsidiary”
means
an entity more than 50% of the outstanding voting stock of which is owned,
directly or indirectly, by the Company or by one or more other Subsidiaries,
or
by the Company and one or more other Subsidiaries. For purposes of this
definition, “voting stock” means stock that ordinarily has voting power for the
election of directors, whether at all times or only so long as no senior class
of stock has such voting power by reason of any contingency.
“Successor
Security”
of
any
particular Security means every Security issued after, and evidencing all or
a
portion of the same debt as that evidenced by, such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered
under Section 3.7 in exchange for or in lieu of a mutilated, destroyed, lost
or
stolen Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
“Tax
Event”
means
the receipt by an Issuer Trust of an Opinion of Counsel (as defined in the
relevant Trust Agreement) experienced in such matters to the effect that, as
a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or
any
political subdivision or taxing authority thereof or therein, or as a result
of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Capital Securities of such Issuer Trust (including, without
limitation, any of the foregoing arising with respect to, or resulting from,
any
proposal, proceeding or other action commencing on or before such date), there
is more than an insubstantial risk that (i) such Issuer Trust is, or will be
within 90 days of the delivery of such Opinion of Counsel, subject to United
States Federal income tax with respect to income received or accrued on the
corresponding series of Securities issued by the Company to such Issuer Trust,
(ii) interest payable by the Company on such corresponding series of Securities.
is not, or within 90 days of the delivery of such Opinion of Counsel will not
be, deductible by the Company, in whole or in part, for United States Federal
income tax purposes, or (iii) such Issuer Trust is, or will be within 90 days
of
the delivery of such Opinion of Counsel, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
“Trust
Agreement”
means,
with respect to any Issuer Trust, the trust agreement or other governing
instrument of such Issuer Trust, as amended from time to time.
“Trustee”
means
the Person named as the “Trustee” in the first paragraph of this Indenture,
solely in its capacity as such and not in its individual capacity, until a
successor Trustee shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter “Trustee” shall mean or include each Person
who is then a Trustee hereunder and, if at any time there is more than one
such
Person, “Trustee” as used with respect to the Securities of any series shall
mean the Trustee with respect to Securities of that series.
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“Trust
Indenture Act”
means
the Trust Indenture Act of 1939, as modified, amended or supplemented from
time
to time.
“Trust
Securities”
has
the
meaning specified in the first recital of this Indenture.
“Vice
President,”
when
used with respect to the Company, means any duly appointed vice president,
whether or not designated by a number or a word or words added before or after
the title “vice president.”
SECTION
1.2. Compliance
Certificate and Opinions.
Upon
any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers’ Certificate stating that all conditions precedent (including
covenants, the compliance with which constitutes a condition precedent), if
any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than the certificates provided pursuant
to
Section 10.4) shall include:
(1) a
statement by each individual signing such certificate or opinion that such
individual has read such covenant or condition and the definitions herein
relating thereto;
(2) a
brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions of such individual contained in such
certificate or opinion are based;
(3) a
statement that, in the opinion of such individual, he or she has made such
examination or investigation as is necessary to enable him or her to express
an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a
statement as to whether, in the opinion of such individual, such condition
or
covenant has been complied with.
SECTION
1.3. Forms
of Documents Delivered to Trustee.
In
any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
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Any
certificate or opinion of an officer of the Company may be based, insofar as
it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to
matters upon which his or her certificate or opinion is based are erroneous.
Any
such certificate or Opinion of Counsel may be based, insofar as it relates
to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect
to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are
erroneous.
Where
any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions, or other instruments under this
Indenture, they may, but need not, be consolidated and form one
instrument.
SECTION
1.4. Acts
of Holders.
(a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given to or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as an “Act”
of
the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor
of
the Trustee and the Company, if made in the manner provided in this
Section.
(b) The
fact
and date of the execution by any Person of any such instrument or writing may
be
proved by the affidavit of a witness of such execution or by the certificate
of
any notary public or other officer authorized by law to take acknowledgments
of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him or her the execution thereof Where such execution is by
a
Person acting in other than his or her individual capacity, such certificate
or
affidavit shall also constitute sufficient proof of his or her
authority.
(c) The
fact
and date of the execution by any Person of any such instrument or writing,
or
the authority of the Person executing the same, may also be provided in any
other manner that the Trustee deems sufficient and in accordance with such
reasonable rules as the Trustee may determine.
(d) The
ownership of Securities shall be proved conclusively by the Securities
Register.
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(e) Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the
same
Security and the Holder of every Security issued upon the transfer thereof
or in
exchange therefor or in lieu thereof in respect of anything done or suffered
to
be done by the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(f) The
Company may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities of any series entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities of such series, provided that the Company may not set
a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next succeeding paragraph. If any record date
is
set pursuant to this paragraph, the Holders of Outstanding Securities of the
relevant series on such record date, and no other Holders, shall be entitled
to
take the relevant action, whether or not such Holders remain Holders after
such
record date, provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date (as defined below) by
Holders of the requisite principal amount of Outstanding Securities of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which
a
record date previously has been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph,
the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to
the
Trustee in writing and to each Holder of Securities of the relevant series
in
the manner set forth in Section 1.6.
The
Trustee may set any day as a record date for the purpose of determining the
Holders of Outstanding Securities of any series entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(3), or (iv) any direction referred to in Section 5.12, in
each
case with respect to Securities of such series. If any record date is set
pursuant to this paragraph, the Holders of Outstanding Securities of such series
on such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain
Holders after such record date, provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities of such series
on
such record date. Nothing in this paragraph shall be construed to prevent the
Trustee from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect) and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Company’s expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Company
in writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 1.6.
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With
respect to any record date set pursuant to this Section, the party hereto that
sets such record date may designate any day as the “Expiration
Date”
and
from time to time may change the Expiration Date to any earlier or later day,
provided
that
no such
change shall be effective unless notice of the proposed new Expiration Date
is
given to the other party hereto in writing, and to each Holder of Securities
of
the relevant series in the manner set forth in Section 1.6 on or prior to the
existing Expiration Date. If an Expiration Date is not designated with respect
to any record date set pursuant to this Section, the party hereto that set
such
record date shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
(g) Without
limiting the foregoing, a Holder entitled hereunder to take any action hereunder
with regard to any particular Security may do so with regard to all or any
part
of the principal amount of such Security or by one or more duly appointed agents
each of which may do so pursuant to such appointment with regard to all or
any
part of such principal amount.
SECTION
1.5. Notices,
Etc. to Trustee and Company.
Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the
Trustee by any Holder, any holder of Capital Securities or the Company shall
be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(2) the
Company by the Trustee, any Holder or any holder of Capital Securities shall
be
sufficient for every purpose (except as otherwise provided in Section 5.1)
hereunder if in writing and mailed, first class, postage prepaid, to the Company
addressed to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company.
SECTION
1.6. Notice
to Holders; Waiver.
Where
this Indenture provides for notice to Holders of any event, such notice shall
be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first class postage prepaid, to each Holder affected by such event,
at the address of such Holder as it appears in the Securities Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. If, by reason of the suspension of or
irregularities in regular mail services or for any other reason, it shall be
impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture
or of
the relevant Securities, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect
to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee,
but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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SECTION
1.7. Conflict
with Trust Indenture Act.
If
any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the provision of the Trust Indenture Act shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be
deemed to apply to this Indenture as so modified or to be excluded, as the
case
maybe.
SECTION
1.8. Effect
of Headings and Table of Contents.
The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION
1.9. Successors
and Assigns.
All
covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION
1.10. Separability
Clause.
If
any
provision in this Indenture or in the Securities shall be invalid, illegal
or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION
1.11. Benefits
of Indenture.
Nothing
in this Indenture or in the Securities, express or implied, shall give to any
Person, other than the parties hereto and their successors and assigns, the
holders of Senior Indebtedness, the Holders of the Securities and, to the extent
expressly provided in Sections 5.2, 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 9.1 and
9.2, the holders of Capital Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION
1.12. Governing
Law.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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SECTION
1.13. Non-Business
Days.
If
any
Interest Payment Date, Redemption Date or Stated Maturity of any Security shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities) payment of interest or principal (and premium,
if
any) or other amounts in respect of such Security need not be made on such
date,
but may be made on the next succeeding Business Day (and no interest shall
accrue in respect of the amounts whose payment is so delayed for the period
from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as
the
case may be, until such next succeeding Business Day), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made
on the immediately preceding Business Day (in each case with the same force
and
effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE
II.
SECURITY
FORMS
SECTION
2.1. Forms
Generally.
The
Securities of each series and the Trustee’s certificate of authentication shall
be in substantially the forms set forth in this Article, or in such other form
or forms as shall be established by or pursuant to a Board Resolution or in
one
or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks
of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws, banking laws, or the rules of
any
securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 3.3 with respect to the authentication and
delivery of such Securities.
The
Trustee’s certificates of authentication shall be substantially in the form set
forth in this Article.
The
definitive Securities shall be printed, lithographed or engraved or produced
by
any combination of these methods, if required by any securities exchange on
which the Securities may be listed, on a steel engraved border or steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange, if any, on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Securities
distributed to holders of Global Capital Securities (as defined in the
applicable Trust Agreement) upon the dissolution of an Issuer Trust shall be
distributed in the form of one or more Global Securities registered in the
name
of a Depositary or its nominee, and deposited with the Securities Registrar,
as
custodian for such Depositary, or with such Depositary, for credit by the
Depositary to the respective accounts of the beneficial owners of the Securities
represented thereby (or such other accounts as they may direct). Securities
distributed to holders of Capital Securities other than Global Capital
Securities upon the dissolution of an Issuer Trust shall not be issued in the
form of a Global Security or any other form intended to facilitate book-entry
trading in beneficial interests in such Securities.
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SECTION
2.2. Form
of Face of Security. The
Securities shall be generally in the form of Exhibit
A
hereto.
SECTION
2.3. Additional
Provisions Required in Global Security.
Unless
otherwise specified as contemplated by Section 3.1, any Global Security issued
hereunder shall, in addition to the provisions contained in Sections 2.1 and
2.2, bear a legend in substantially the following form:
THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT
AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN
THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION
2.4. Form
of Trustee’s Certificate of Authentication.
The
Trustee’s certificate of authentication shall be in substantially the following
form:
This
is
one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
| Dated:_____________________ |
WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as
Trustee
|
|
| |
|
|
| By: | ||
|
Authorized Signatory |
||
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ARTICLE
III.
THE
SECURITIES
SECTION
3.1. Title
and Terms.
The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited.
The
Securities may be issued in one or more series. There shall be established
in or
pursuant to a Board Resolution and, subject to Section 3.3, set forth or
determined in the manner provided, in an Officers’ Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities as a series:
(a) the
title
of the securities of such series, which shall distinguish the Securities of
the
series from all other Securities;
(b) the
limit, if any, upon the aggregate principal amount of the Securities of such
series that may be authenticated and delivered under this Indenture (except
for
Securities authenticated and delivered upon registration of transfer of, or
in
exchange for, or in lieu of, other Securities of the series pursuant to Sections
3.4, 3.5, 3.6, 9.6 or 11.6 and except for any Securities that, pursuant to
Section 3.3, are deemed never to have been authenticated and delivered
hereunder); provided,
however,
the
authorized aggregate principal amount of such series may be increased above
such
amount by a Board Resolution to such effect;
(c) the
Person to whom any interest on a Security of the series shall be payable, if
other than the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest;
(d) the
Stated Maturity or Maturities on which the principal of the Securities of such
series is payable or the method of determination thereof, and any dates on
which
or circumstances under which, the Company shall have the right to extend or
shorten such Stated Maturity or Maturities;
(e) the
rate
or rates, if any, at which the Securities of such series shall bear interest,
if
any, the rate or rates and extent to which Additional Interest, if any, shall
be
payable with respect to any Securities of such series, the date or dates from
which any such interest or Additional Interest shall accrue, the Interest
Payment Dates on which such interest shall be payable, the right, pursuant
to
Section 3.12 or as otherwise set forth therein, of the Company to defer or
extend an Interest Payment Date, and the Regular Record Date for the interest
payable on any Interest Payment Date, or the method by which any of the
foregoing shall be determined;
(f) the
place
or places where the principal of (and premium, if any), interest or Additional
Interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, any restrictions that may be applicable to any such
transfer or exchange in addition to or in lieu of those set forth herein and
the
place or places where notices and demands to or upon the Company in respect
of
the Securities of such series may be made;
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(g) the
period or periods within or the date or dates on which, if any, the price or
prices at which and the terms and conditions upon which the Securities of such
series may be redeemed, in whole or in part, at the option of the Company,
and
if other than by a Board Resolution, the manner in which any election by the
Company to redeem such Securities shall be evidenced;
(h) the
obligation or the right, if any, of the Company to redeem, repay or purchase
the
Securities of such series pursuant to any sinking fund, amortization or
analogous provisions, or at the option of a Holder thereof, and the period
or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the other terms and conditions
upon which Securities of the series shall be redeemed, repaid or purchased,
in
whole or in part, pursuant to such obligation;
(i) the
denominations in which any Securities of such series shall be issuable, if
other
than integral multiples of $1,000;
(j) if
other
than Dollars, the currency or currencies (including any currency unit or units)
in which the principal of (and premium, if any) and interest and Additional
Interest, if any, on the Securities of the series shall be payable, or in which
the Securities of the series shall be denominated and the manner of determining
the equivalent thereof in Dollars for purposes of the definition of
Outstanding;
(k) the
additions, modifications or deletions, if any, in the Events of Default or
covenants of the Company set forth herein with respect to the Securities of
such
series;
(l) if
other
than the principal amount thereof, the portion of the principal amount of
Securities of such series that shall be payable upon declaration of acceleration
of the Maturity thereof;
(m) if
the
principal amount payable at the Stated Maturity of any Securities of the series
will not be determinable as of any one or more dates prior to the Stated
Maturity, the amount which shall be deemed to be the principal amount of such
Securities as of any such date for any purpose thereunder or hereunder,
including the principal amount thereof which shall be due and payable upon
any
Maturity other than the Stated Maturity or which shall be deemed to be
Outstanding as of any date prior to the Stated Maturity (or, in any such case,
the manner in which such amount deemed to be the principal amount shall be
determined);
(n) if
applicable, that the Securities of the series, in whole or in any specified
part, shall be defeasible and, if other than by a Board Resolution, the manner
in which any election by the Company to defease such Securities shall be
evidenced;
(o) the
additions or changes, if any, to this Indenture with respect to the Securities
of such series as shall be necessary to permit or facilitate the issuance of
the
Securities of such series in bearer form, registrable or not registrable as
to
principal, and with or without interest coupons;
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(p) any
index
or indices used to determine the amount of payments of principal of and premium,
if any, on the Securities of such series or the manner in which such amounts
will be determined;
(q) if
applicable, that any Securities of the series shall be issuable in whole or
in
part in the form of one or more Global Securities and, in such case, the
respective Depositaries for such Global Securities, the form of any legend
or
legends that shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances in addition to
or in
lieu of those set forth in Section 3.5 in which any such Global Security may
be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or
names
of Persons other than the Depositary for such Global Security or a nominee
thereof;
(r) the
appointment of any Paying Agent or agents for the Securities of such
series;
(s) the
terms
of any right to convert or exchange Securities of such series into any other
securities or property of the Company, and the additions or changes, if any,
to
this Indenture with respect to the Securities of such series to permit or
facilitate such conversion or exchange;
(t) if
such
Securities are to be issued to an Issuer Trust, the form or forms of the Trust
Agreement and Guarantee relating thereto;
(u) if
other
than as set forth herein, the relative degree, if any, to which the Securities
or the series shall be senior to or be subordinated to other series of
Securities in right of payment, whether such other series of Securities are
Outstanding or not;
(v) any
addition to or change in the Events of Default which applies to any Securities
of the series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the principal amount thereof due and
payable pursuant to Section 5.2;
(w) any
addition to or change in the covenants set forth in Article X which applies
to
Securities of the series; and
(x) any
other
terms of the Securities of such series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section
9.1(3)).
All
Securities of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided herein or in or pursuant
to
such Board Resolution and set forth, or determined in the manner provided,
in
such Officers’ Certificate or in any indenture supplemental hereto.
If
any of
the terms of the series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified
by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Officers’ Certificate setting forth
the terms of the series.
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The
securities shall be subordinated in right of payment to Senior Indebtedness
as
provided in Article XIII.
SECTION
3.2. Denominations.
The
Securities of each series shall be in registered form without coupons and shall
be issuable in integral multiples of $1,000, unless otherwise specified as
contemplated by Section 3.1(i).
SECTION
3.3. Execution,
Authentication, Delivery and Dating.
The
Securities shall be executed on behalf of the Company by its Chairman of the
Board of Directors, its Vice Chairman of the Board of Directors, its President,
its Chief Executive Officer or one of its Vice Presidents, under its corporate
seal reproduced or impressed thereon and attested by its Secretary or one of
its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities
bearing the manual or facsimile signatures of individuals who were at any time
the proper officers of the Company shall bind the Company, notwithstanding
that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices
at
the date of such Securities. At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Securities
of
any series executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Securities,
and
the Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities of the series have
been
established by or pursuant to one or more Board Resolutions as permitted by
Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall
be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if
the
form of such Securities has been established by or pursuant to Board Resolution
as permitted by Section 2.1, that such form has been established in conformity
with the provisions of this Indenture;
(2) if
the
terms of such Securities have been established by or pursuant to Board
Resolution as permitted by Section 3.1, that such terms have been established
in
conformity with the provisions of this Indenture; and
(3) that
such
Securities, when authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such Opinion
of
Counsel, will constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles.
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If
such
form or terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant to this
Indenture will affect the Trustee’s own rights, duties or immunities under the
Securities and this Indenture or otherwise in a manner that is not reasonably
acceptable to the Trustee.
Notwithstanding
the provisions of Section 3.1 and the preceding paragraph, if all Securities
of
a series are not to be originally issued at one time, it shall not be necessary
to deliver the Officers’ Certificate otherwise required pursuant to Section 3.1
or the Company Order and Opinion of Counsel otherwise required pursuant to
such
preceding paragraph at or prior to the authentication of each Security of such
series if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be
issued.
Each
Security shall be dated the date of its authentication.
No
Security shall be entitled to any benefit under this Indenture or be valid
or
obligatory for any purpose, unless there appears on such Security a certificate
of authentication substantially in the form provided for herein executed by
the
Trustee by the manual signature of one of its authorized officers or
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by
the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION
3.4. Temporary
Securities.
Pending
the preparation of definitive Securities of any series, the Company may execute,
and upon receipt of a Company Order the Trustee shall authenticate and deliver,
temporary Securities that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities of such series in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as evidenced
by their execution of such Securities.
If
temporary Securities of any series are issued, the Company will cause definitive
Securities of such series to be prepared without unreasonable delay. After
the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or
more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive securities
of the same series, of any authorized denominations having the same Original
Issue Date and Stated Maturity and having the same terms as such temporary
Securities. Until so exchanged, the temporary Securities of any series shall
in
all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
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SECTION
3.5. Global
Securities.
(a) Each
Global Security issued under this Indenture shall be registered in the name
of
the Depositary designated by the Company for such Global Security or a nominee
thereof and delivered to such Depositary or a nominee thereof or custodian
therefor, and each such Global Security shall constitute a single Security
for
all purposes of this Indenture.
(b) Notwithstanding
any other provision in this Indenture, no Global Security may be exchanged
in
whole or in part for Securities registered, and no transfer of a Global Security
in whole or in part may be registered, in the name of any Person other than
the
Depositary for such Global Security or a nominee thereof unless (i) such
Depositary advises the Trustee in writing that such Depositary is no longer
willing or able to properly discharge its responsibilities as Depositary with
respect to such Global Security, and the Company is unable to locate a qualified
successor, (ii) the Company executes and delivers to the Trustee a Company
Order
stating that the Company elects to terminate the book-entry system through
the
Depositary, or (iii) there shall have occurred and be continuing an Event of
Default or any event which after notice or lapse of time or both would be an
Event of Default.
(c) If
any
Global Security is to be exchanged for other Securities or cancelled in whole,
it shall be surrendered by or on behalf of the Depositary or its nominee to
the
Securities Registrar for exchange or cancellation as provided in this Article
III. If any Global Security is to be exchanged for other Securities or cancelled
in part, or if another Security is to be exchanged in whole or in part for
a
beneficial interest in any Global Security, then either (i) such Global Security
shall be so surrendered for exchange or cancellation as provided in this Article
III or (ii) the principal amount thereof shall be reduced, subject to Section
3.6(b)(iii), or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the principal amount of such other Security
to be so exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Securities
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security by the Depositary, accompanied by registration
instructions, the Trustee shall, subject to Section 3.6(b) and as otherwise
provided in this Article III, authenticate and deliver any Securities issuable
in exchange for such Global Security (or any portion thereof) in accordance
with
the instructions of the Depositary. The Trustee shall not be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be fully protected in relying on, such instructions.
(d) Every
Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof, whether
pursuant to this Article III, Section 9.6 or 11.6 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e) The
Depositary or its nominee, as the registered owner of a Global Security, shall
be the Holder of such Global Security for all purposes under this Indenture
and
the Securities, and owners of beneficial interests in a Global Security shall
hold such interests pursuant to the Applicable Procedures. Accordingly, any
such
owner’s beneficial interest in a Global Security shall be shown only on, and the
transfer of such interest shall be effected only through, records maintained
by
the Depositary or its nominee or agent Neither the Trustee nor the Securities
Registrar shall have any liability in respect of any transfers effected by
the
Depositary.
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(f) The
rights of owners of beneficial interests in a Global Security shall be exercised
only through the Depositary and shall be limited to those established by law
and
agreements between such owners and the Depositary and/or its Agent
Members.
SECTION
3.6. Registration,
Transfer and Exchange Generally; Certain Transfers and
Exchanges.
(a) The
Company shall cause to be kept at the Corporate Trust Office of the Trustee
a
register in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and transfers
of
Securities. Such register is herein sometimes referred to as the “Securities
Register.”
The
Trustee is hereby appointed “Securities
Registrar”
for
the
purpose of registering Securities and transfers of Securities as herein
provided.
Upon
surrender for registration of transfer of any Security at the offices or
agencies of the Company designated for that purpose, the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of the same series of
any
authorized denominations of like tenor and principal amount and bearing such
restrictive legends as may be required by this Indenture.
At
the
option of the Holder, Securities may be exchanged for other Securities of the
same series in any authorized denominations, of like tenor and aggregate
principal amount and bearing such restrictive legends as may be required by
this
Indenture, upon surrender of the Securities to be exchanged at such office
or
agency. Whenever any securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
that the Holder making the exchange is entitled to receive.
All
Securities issued upon any transfer or exchange of Securities shall be the
valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such transfer
or exchange.
Every
Security presented or surrendered for transfer or exchange shall (if so required
by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities
Registrar, duly executed by the Holder thereof or such Holder’s attorney duly
authorized in writing.
No
service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover
any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
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Neither
the Company nor the Trustee shall be required, pursuant to the provisions of
this Section, (i) to issue, register the transfer of or exchange any Security
of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities of that series pursuant to
Article XI and ending at the close of business on the day of mailing of the
notice of redemption, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except, in the case
of
any such Security to be redeemed in part, any portion thereof not to be
redeemed.
(b) Certain
Transfers and Exchanges.
Notwithstanding any other provision of this Indenture, transfers and exchanges
of Securities and beneficial interests in a Global Security shall be made only
in accordance with this Section 3.6(b).
(i) Restricted
Non-Global Security to Global Security. If the Holder of a Restricted Security
(other than a Global Security) wishes at any time to transfer all or any portion
of such Security to a Person who wishes to take delivery thereof in the form
of
a beneficial interest in a Global Security, such transfer may be effected only
in accordance with the provisions of this clause (b)(i) and subject to the
Applicable Procedures. Upon receipt by the Securities Registrar of (A) such
Security as provided in Section 3.6(a) and instructions satisfactory to the
Securities Registrar directing that a beneficial interest in the Global Security
in a specified principal amount not greater than the principal amount of such
Security be credited to a specified Agent Member’s account and (B) a Restricted
Securities Certificate duly executed by such Holder or such Holder’s attorney
duly authorized in writing, then the Securities Registrar shall cancel such
Security (and issue a new Security in respect of any untransferred portion
thereof) as provided in Section 3.10 and increase the aggregate principal amount
of the Global Security by the specified principal amount as provided in Section
3.5(c).
(ii) Non-Global
Security to Non-Global Security. A Security that is not a Global Security may
be
transferred, in whole or in part, to a Person who takes delivery in the form
of
another Security that is not a Global Security as provided in Section 3.6(a),
provided
that
if the
Security to be transferred in whole or in part is a Restricted Security, the
Securities Registrar shall have received a Restricted Securities Certificate
duly executed by the transferor Holder or such Holder’s attorney duly authorized
in writing and the Securities Registrar shall only be required to register
the
transfer of such Restricted Securities Certificate upon direction from the
Company that such transfer is permissible.
(iii) Exchanges
Between Global Security and Non-Global Security. A beneficial interest in a
Global Security may be exchanged for a Security that is not a Global Security
as
provided in Section 3.5.
(iv) Certain
Initial Transfers of Non-Global Securities. In the case of Securities initially
issued other than in global form, an initial transfer or exchange of such
Securities that does not involve any change in beneficial ownership may be
made
to an institutional accredited investor or investors as if such transfer or
exchange were not an initial transfer or exchange; provided
that
written
certification shall be provided by the transferee and transferor of such
Securities to the Securities Registrar that such transfer or exchange does
not
involve a change in beneficial ownership.
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(v) Limitations
Relating to Principal Amount. Notwithstanding any other provision of this
Indenture and unless otherwise specified as permitted by Section 3.1; Securities
or portions thereof may be transferred or exchanged only in principal amounts
of
not less than $1,000. To the fullest extent permitted by applicable law, any
transfer, exchange or other disposition of Securities in contravention of this
Section 3.6(b)(v) shall be deemed to be void and of no legal effect whatsoever,
any such transferee shall be deemed not to be the Holder or owner of any
beneficial interest in such Securities for any purpose, including but not
limited to the receipt of interest payable on such Securities, and such
transferee shall be deemed to have no interest whatsoever in such Securities
and, the Securities Registrar shall not record any such transfer in the
Securities Registrar.
SECTION
3.7. Mutilated,
Lost and Stolen Securities.
If
any
mutilated Security is surrendered to the Trustee together with such security,
or
indemnity, and/or other assurance as may be required by the Company or the
Trustee, in their discretion, to save each of them harmless, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor
a
new Security of the same series, of like tenor and aggregate principal amount,
bearing the same legends, and bearing a number not contemporaneously
outstanding.
If
there
shall be delivered to the Company and to the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security, and (ii) such
security, indemnity and/or other assurance as may be required by them, in their
discretion, to save each of them harmless, then, in the absence of notice to
the
Company or the Trustee that such Security has been acquired by a bona
fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series, of like tenor and principal amount
and bearing the same legends as such destroyed, lost or stolen Security, and
bearing a number not contemporaneously Outstanding.
If
any
such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing
a
new Security, pay such Security.
Upon
the
issuance of any new Security under this Section 3.7, the Company may require
the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every
new
Security issued pursuant to this Section in lieu of any destroyed, lost or
stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Security shall
be
at any time enforceable by anyone, and shall be entitled to all the benefits
of
this Indenture equally and proportionately with any and all other Securities
of
such series duly issued hereunder.
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The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.
SECTION
3.8. Payment
of Interest and Additional Interest; Interest Rights
Preserved.
Interest
and Additional Interest on any Security of any series that is payable, and
is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities of such series, except that, unless
otherwise provided in the Securities of such series, interest payable on the
Stated Maturity of the principal of a Security shall be paid to the Person
to
whom principal is paid. The initial payment of interest on any Security of
any
series that is issued between a Regular Record Date and the related Interest
Payment Date shall be payable as provided in such Security or in the Board
Resolution pursuant to Section 3.1 with respect to the related series of
Securities.
Any
interest on any Security that is due and payable, but is not timely paid or
duly
provided for, on any Interest Payment Date for Securities of such series (herein
called “Defaulted
Interest”),
shall
forthwith cease to be payable to the registered Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in clause
(1) or (2) below:
(1) The
Company may elect to make payment of any Defaulted Interest to the Persons
in
whose names the Securities of such series in respect of which interest is in
default (or their respective Predecessor Securities) are registered at the
close
of business on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on
each Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon, the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be
mailed, first class, postage prepaid, to each Holder of a Security of such
series at the address of such Holder as it appears in the Securities Register
not less than 10 days prior to such Special Record Date. The Trustee may, in
its
discretion, in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper, customarily published
in
the English language on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, New York, but such publication
shall
not be a condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest shall
be
paid to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered on such Special Record Date
and shall no longer be payable pursuant to the following clause
(2).
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(2) The
Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange on which
the
Securities of the series in respect of which interest is in default may be
listed and, upon such notice as may be required by such exchange (or by the
Trustee if the Securities are not listed), if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause (2), such payment
shall be deemed practicable by the Trustee.
Subject
to the foregoing provisions of this Section, each Security delivered under
this
Indenture upon transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue interest,
that were carried by such other Security.
SECTION
3.9. Persons
Deemed Owners.
The
Company, the Trustee and any agent of the Company or the Trustee shall treat
the
Person in whose name any Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and (subject to Section
3.8) any interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to
the
contrary.
No
holder
of any beneficial interest in any Global Security held on its behalf by a
Depositary shall have any rights under this Indenture with respect to such
Global Security, and such Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the owner of such Global Security
for all purposes. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished
by a
Depositary or impair, as between a Depositary and such holders of beneficial
interests, the operation of customary practices governing the exercise of the
rights of the Depositary (or its nominee) as Holder of any
Security.
SECTION
3.10. Cancellation.
All
Securities surrendered for payment, redemption, transfer or exchange shall,
if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Securities and Securities surrendered directly to the Trustee
for
any such purpose shall be promptly canceled by it. Notwithstanding any other
provisions of this Indenture, the Company may at any time deliver to the Trustee
for cancellation any Securities previously authenticated and delivered hereunder
that the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall
be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver
to
the Company a certificate of such destruction.
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SECTION
3.11. Computation
of Interest.
Except
as
otherwise specified as contemplated by Section 3.1 for Securities of any series,
interest on the Securities of each series for any full quarterly period shall
be
computed on the basis of a 360-day year of twelve 30-day months. Interest on
the
Securities of each series for any period less than a full quarter shall be
computed on the basis of a 360-day year and the actual number of days elapsed
during that period.
SECTION
3.12. Deferrals
of Interest Payment Dates.
If
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
Securities of a particular series, so long as no Event of Default has occurred
and is continuing, the Company shall have the right, at any time during the
term
of such series, from time to time to defer the payment of interest on such
Securities for such period or periods (each an “Extension
Period”)
not to
exceed the number of consecutive quarterly, semi-annual or other periods that
equal five years with respect to each Extension Period, during which Extension
Periods the Company shall, if so specified as contemplated by Section 3.1,
have
the right to make no payments or partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period, the Company shall pay
all
interest then accrued and unpaid on the Securities (together with Additional
Interest thereon, if any, at the rate specified for the Securities of such
series to the extent permitted by applicable law); provided,
however,
that no
Extension Period shall extend beyond the Stated Maturity of the principal of
the
Securities of such series; and provided
further,
however, that, during any such Extension Period, the Company shall not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company’s capital
stock, or (ii) make any payment of principal of or interest or premium, if
any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari
passu
in all
respects with or junior in interest to the Securities of such series (other
than
(a) repurchases, redemptions or other acquisitions of shares of capital stock
of
the Company in connection with any employment contract, benefit or incentive
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants of the Company or its
Subsidiaries, in connection with a dividend reinvestment or stock purchase
plan
or in connection with the issuance of capital stock of the Company (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of an exchange or conversion of any class
or
series of the Company’s capital stock (or any capital stock of a Subsidiary of
the Company) for any class or series of the Company’s capital stock or of any
class or series of the Company’s indebtedness for any class or series of the
Company’s capital stock, (c) the purchase of fractional interests in shares of
the Company’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari
passu
with or
junior to such stock or (f) payments by the Company under the Guarantee). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided
that
no Event
of Default has occurred and is continuing and provided
further,
that no
Extension Period shall exceed the period or periods specified in such
Securities, extend beyond the Stated Maturity of the principal of such
Securities or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued
and
unpaid interest and any Additional Interest then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above conditions. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each installment
of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest as and to the extent specified by Section
3.1. The Company shall give the Holders of the Securities of such series and
the
Trustee notice of its election to begin any such Extension Period at least
one
Business Day prior to the next succeeding Interest Payment Date on which
interest on Securities of such series would be payable but for such deferral
or,
with respect to any Securities of a series issued to an Issuer Trust, so long
as
any such Securities are held by such Issuer Trust, at least one Business Day
prior to the earlier of (i) the next succeeding date on which Distributions
on
the Capital Securities of such Issuer Trust would be payable but for such
deferral, and (ii) the record date for determining the holders of such Capital
Securities entitled to such Distributions on the Capital
Securities.
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The
Trustee shall promptly give notice of the Company’s election to begin any such
Extension Period to the Holders of the Outstanding Securities of such
series.
SECTION
3.13. Right
of Set-Off.
With
respect to the Securities of a series initially issued to an Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of
any
such Security to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee relating
to
such Security or to a holder of Capital Securities pursuant to an action
undertaken under Section 5.8 of this Indenture.
SECTION
3.14. Agreed
Tax Treatment
Each
Security issued hereunder shall provide that the Company and, by its acceptance
of a Security or a beneficial interest therein, the Holder of, and any Person
that acquires a beneficial interest in, such Security agree that for United
States Federal, state and local tax purposes it is intended that such Security
constitutes indebtedness.
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SECTION
3.15. Shortening
or Extension of Stated Maturity.
As
provided by Section 2.1 or Section 3.1 with respect to the Securities of a
particular series, the Company shall have the right to (i) shorten the Stated
Maturity of the principal of the Securities of such series at any time to any
date and (ii) extend the Stated Maturity of the principal of the Securities
of
such series at any time at its election for one or more periods, provided
that,
if the
Company elects to exercise its right to extend the Stated Maturity of the
principal of the Securities of such series pursuant to clause (ii) above, at
the
time such election is made and at the time of extension, such conditions as
may
be specified in such Securities shall have been satisfied, and provided
further,
that no
such reduction or extension of the Stated Maturity shall be or cause a Capital
Treatment Event.
SECTION
3.16. CUSIP
Numbers.
The
Company, in issuing the Securities, may use “CUSIP” numbers (if then generally
in use or if a CUSIP number has been obtained for the Securities), and, if
so,
the Trustee shall use “CUSIP” numbers in notice of redemption and other similar
or related materials as a convenience to Holders; provided
that
any such
notice or other materials may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of redemption or other materials and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such
redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE
IV.
SATISFACTION
AND DISCHARGE
SECTION
4.1. Satisfaction
and Discharge of Indenture.
This
Indenture shall, upon Company Request, cease to be of further effect (except
as
to any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for and as otherwise provided in this Section 4.1)
and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all
Securities theretofore authenticated and delivered (other than (i) Securities
that have been destroyed, lost or stolen and that have been replaced or paid
as
provided in Section 3.7 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust,
as
provided in Section 10.3) have been delivered to the Trustee for cancellation;
or
(B)
all
such
Securities not theretofore delivered to the Trustee for
cancellation
(i)
have
become due and payable, or
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(ii) will
become due and payable at their Stated Maturity within one year of the date
of
deposit, or
(iii) are
to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name,
and
at the expense, of the Company,
and
the
Company, in the case of subclause (B)(i), (ii) or (iii) above, has deposited
or
caused to be deposited with the Trustee as trust funds in trust for such purpose
an amount in the currency or currencies in which the Securities of such series
are payable sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for the
principal (and premium, if any) and interest (including Additional Interest,
if
any) to the date of such deposit (in the case of Securities that have become
due
and payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(3) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel each stating that all conditions precedent herein provided relating
to
the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 6.7, the obligations of the Trustee to any
Authenticating Agent under Section 6.14 and, if money shall have been deposited
with the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of Section
10.3 shall survive.
Notwithstanding
the foregoing, in any case where the Securities are not due and payable and
have
not been called for redemption, such Securities shall remain recourse
obligations of the Company.
SECTION
4.2. Application
of Trust Money.
Subject
to the provisions of the last paragraph of Section 10.3, all money deposited
with the Trustee pursuant to Section 4.1 shall be held in trust and applied
by
the Trustee, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium,
if
any) and interest (including Additional Interest, if any) for the payment of
which such money or obligations have been deposited with or received by the
Trustee.
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ARTICLE
V.
REMEDIES
SECTION
5.1. Events
of Default.
“Event
of Default,”
wherever used herein with respect to the Securities of any series, means any
one
of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law
or pursuant to any judgment, decree or order of any court or any order, rule
or
regulation of any administrative or governmental body):
(1) default
in the payment of any interest upon any Security of that series, including
any
Additional Interest in respect thereof, when it becomes due and payable, and
continuance of such default for a period of 30 days (subject to the deferral
of
any due date in the case of any Extension Period); or
(2) default
in the payment of the principal of (or premium, if any, on) any Security of
that
series at its Maturity, upon redemption, by declaration of acceleration or
otherwise; or
(3) failure
on the part of the Company duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the Company in the
Securities of that series or in this Indenture for a period of 90 days after
the
date on which written notice of such failure, requiring the Company to remedy
the same, shall have been received by the Company from (i) the Trustee by
registered or certified mail or (ii) Holders of at least 25% in aggregate
principal amount of the Outstanding Securities of that series; or
(4) entry
by
a court having jurisdiction in the premises of (A) a decree or order for relief
in respect of the Company in an involuntary case or proceeding under the
Bankruptcy Code, or any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable federal or state law appointing a custodian,
receiver, conservator, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of substantially all of the property of
the
Company, or ordering the winding-up or liquidation of its affairs, and in the
case of (A) or (B) the continuance of any such decree of order for relief or
any
such other decree or order unstayed and in effect for a period of 60 consecutive
days; or
(5) (A)
the
commencement by the Company of a voluntary case or proceeding under the
Bankruptcy Code, or any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or (B) the consent by the Company to the
entry of a decree of order for relief in respect of itself in an involuntary
case or proceeding under the Bankruptcy Code or any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against the
Company, or (C) the filing by the Company of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law
or
(D) the consent by the Company to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, conservator,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of all or substantially all of the property of the Company, or (E)
the making by the Company of an assignment for the benefit of creditors;
or
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(6) any
other
Event of Default provided with respect to Securities of that
series.
SECTION
5.2. Acceleration
of Maturity; Rescission and Annulment.
If
an
Event of Default (other than an Event of Default specified in Section 5.1(4)
or
5.1(5)) with respect to Securities of any series at the time Outstanding occurs
and is continuing, then, and in every such case, the Trustee or the Holders
of
not less than 25% in aggregate principal amount of the Outstanding Securities
of
that series may declare the principal amount (or, if the Securities of that
series are Discount Securities, such portion of the principal amount as may
be
specified in the terms of that series) of all the Securities of that series
to
be due and payable immediately, by a notice in writing to the Company (and
to
the Trustee if given by Holders), provided
that,
in the
case of the Securities of a series issued to an Issuer Trust, if, upon an Event
of Default, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of such series fail to declare
the principal of all the Outstanding Securities of such series to be immediately
due and payable, the holders of at least 25% in aggregate Liquidation Amount
of
the related series of Capital Securities issued by such Issuer Trust then
outstanding shall have the right to make such declaration by a notice in writing
to the Company and the Trustee; and upon any such declaration such principal
amount (or specified portion thereof) of and the accrued interest (including
Additional Interest, if any) on all the Securities of such series shall become
immediately due and payable. If an Event of Default specified in Sections 5.1(4)
or 5.1(5) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of such series (or, if the
Securities of such series are Discount Securities, such portion of the principal
amount of such Securities as may be specified by the terms of that series)
shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable. Payment of principal
and interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII notwithstanding that such
amount shall become immediately due and payable as herein provided.
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At
any
time after such a declaration of acceleration with respect to Securities of
any
series has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter provided in this Article,
the Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series, by written notice to the Company and the Trustee,
may
rescind and annul such declaration and its consequences and waive the Event
of
Default if:
(1) the
Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all
overdue installments of interest on all Securities of such series;
(B) any
accrued Additional Interest, if any, on all Securities of such
series;
(C) the
principal of (and premium, if any, on) any Securities of such series that have
become due otherwise than by such declaration of acceleration and interest
and
Additional Interest, if any, thereon at the rate borne by the Securities;
and
(D) all
sums
paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and
(2) all
Events of Default with respect to Securities of that series, other than the
non-payment of the principal of Securities of that series that has become due
solely by such acceleration, have been cured or waived as provided in Section
5.13.
In
the
case of Securities of a series initially issued to an Issuer Trust, if the
Holders of such Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount of the
related series of Capital Securities issued by such Issuer Trust then
outstanding shall also have the right to rescind and annul such declaration
and
its consequences by written notice to the Company and the Trustee, subject
to
the satisfaction of the conditions set forth in the immediately preceding
clauses (1) and (2) above of this Section 5.2.
No
such
rescission or waiver shall affect or apply to any subsequent default or Event
of
Default or impair any right consequent thereon.
SECTION
5.3. Collection
of Indebtedness and Suits for Enforcement by Trustee.
The
Company covenants that if:
(1) default
is made in the payment of any installment of interest (including Additional
Interest, if any) on any Security of any series when such interest becomes
due
and payable and such default continues for a period of 30 days, or
(2) default
is made in the payment of the principal of (and premium, if any, on) any
Security at the Maturity thereof,
the
Company will, upon demand of the Trustee, pay to the Trustee, for the benefit
of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest (including
Additional Interest, if any), and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
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If
the
Company fails to pay such amounts forthwith upon such demand, the Trustee,
in
its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Company or any other obligor upon such Securities and collect the monies
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Securities, wherever
situated.
If
an
Event of Default with respect to Securities of any series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its
rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION
5.4. Trustee
May File Proofs of Claim.
In
case
of any receivership, conservatorship, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon
the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the
Trustee (irrespective of whether the principal of the Securities of any series
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
on
the Company for the payment of overdue principal (and premium, if any) or
interest (including Additional Interest, if any)) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to
file
and prove a claim for the whole amount of principal (and premium, if any) and
interest (including Additional Interest, if any) owing and unpaid in respect
to
the Securities and to file such other papers or documents as may be necessary
or
advisable and to take any and all actions as are authorized under the Trust
Indenture Act in order to have the claims of the Holders, the Trustee and any
predecessor to the Trustee under Section 6.7 allowed in any such judicial or
administrative proceedings; and
(ii) in
particular, the Trustee shall be authorized to collect and receive any monies
or
other property payable or deliverable on any such claims and to distribute
the
same in accordance with Section 5.6; and
(b) any
custodian, receiver, conservator, assignee, trustee, liquidator, sequestrator,
(or other similar official) in any such judicial or administrative proceeding
is
hereby authorized by each Holder to make such payments to the Trustee for
distribution in accordance with Section 5.6, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
to
the Trustee any amount due to it and any predecessor Trustee under Section
6.7.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding; provided,
however,
the
Trustee may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors’ or other similar
committee.
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SECTION
5.5. Trustee
May Enforce Claim Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any
such proceeding instituted by the Trustee shall be brought in its own name
as
trustee of an express trust, and any recovery of judgment shall, subject to
Article XIII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION
5.6. Application
of Money Collected.
Any
money
or property collected or to be applied by the Trustee with respect to a series
of Securities pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution
of
such money or property on account of principal (or premium, if any) or interest
(including Additional Interest, if any), upon presentation of the Securities
and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To
the
payment of all amounts due the Trustee and any predecessor Trustee under Section
6.7;
SECOND:
Subject
to Article XIII, to the payment of all amounts then due and unpaid upon
Securities of such series for principal (and premium, if any) and interest
(including Additional Interest, if any) in respect of which or for the benefit
of which such money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including
Additional Interest, if any), respectively; and
THIRD: The
balance, if any, to the Person or Persons entitled thereto.
SECTION
5.7. Limitation
on Suits.
Subject
to Section 5.8, no Holder of any Securities of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, conservator, assignee, trustee,
liquidator, sequestrator (or other similar official) or for any other remedy
hereunder, unless:
(1) an
Event
of Default with respect to Securities of any series has occurred and is
continuing, and the Company has not paid or deposited with the Trustee all
amounts then payable;
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(2) such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of that series;
(3) the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(4) such
Holder or Holders have offered to the Trustee reasonable indemnity against
the
costs, expenses and liabilities to be incurred in compliance with such
request;
(5) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(6)
no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in aggregate principal
amount of the Outstanding Securities of that series;
it
being
understood and intended that no one or more of such Holders shall have any
right
in any manner whatever by virtue of, or by availing itself of, any provision
of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Securities, or to obtain or to seek to obtain priority or preference over
any
other of such Holders or to enforce any right under this Indenture, except
in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION
5.8. Unconditional
Right of Holders to Receive Principal, Premium and Interest; Direct Action
by
Holders of Capital Securities.
Notwithstanding
any other provision in this Indenture, the Holder of any Security of any series
shall have the right, which is absolute and unconditional, to receive payment
of
the principal of (and premium, if any) and (subject to Sections 3.8 and 3.12)
interest (including Additional Interest, if any) on such Security on the
respective Stated Maturities expressed in such Security (or in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement
of
any such payment, and such right shall not be impaired without the consent
of
such Holder. In the case of Securities of a series issued to an Issuer Trust,
any registered holder of Capital Securities issued by such Issuer Trust shall,
to the fullest extent permitted by applicable law, have the right, upon the
occurrence of an Event of Default described in Sections 5.1(1) or 5.1(2) and
subject to the same terms and conditions as provided in Section 5.7 above,
provided
the term
“Holder” used therein shall be changed for purposes of this sentence to “holder
of Capital Securities” to institute a suit directly against the Company for
enforcement of payment to such holder of principal of (and premium, if any)
and
(subject to Sections 3.8 and 3.12) interest (including Additional Interest,
if
any) on the Securities having a principal amount equal to the aggregate
Liquidation Amount of such Capital Securities held by such holder.
SECTION
5.9. Restoration
of Rights and Remedies.
If
the
Trustee, any Holder or any holder of Capital Securities issued by any Issuer
Trust has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee, such Holder or such holder
of
Capital Securities, then, and in every such case, the Company, the Trustee,
such
Holders and such holder of Capital Securities shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
the
Trustee, such Holder and such holder of Capital Securities shall continue as
though no such proceeding had been instituted.
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SECTION
5.10. Rights
and Remedies Cumulative.
Except
as
otherwise provided in the last paragraph of Section 3.7, no right or remedy
herein conferred upon or reserved to the Trustee or the Holders is intended
to
be exclusive of any other right or remedy, and every right and remedy shall,
to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity
or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other
appropriate right or remedy.
SECTION
5.11. Delay
or Omission Not Waiver.
No
delay
or omission of the Trustee, any Holder of any Security with respect to the
Securities of the related series or any holder of any Capital Security to
exercise any right or remedy accruing upon any Event of Default with respect
to
the Securities of the related series shall impair any such right or remedy
or
constitute a waiver of any such Event of Default or an acquiescence
therein.
Every
right and remedy given by this Article, or by law to the Trustee or to the
Holders and the right and remedy given to the holders of Capital Securities
by
Sections 5.2 and 5.8 may be exercised from time to time, and as often as may
be
deemed expedient, by the Trustee, the Holders or the holders of Capital
Securities, as the case may be.
SECTION
5.12. Control
by Holders.
The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series, provided
that:
(1) such
direction shall not be in conflict with any rule of law or with this
Indenture;
(2) the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction; and
(3) subject
to the provisions of Section 6.1, the Trustee shall have the right to decline
to
follow such direction if a Responsible Officer or Officers of the Trustee shall,
in good faith, determine that the proceeding so directed would be unjustly
prejudicial to the Holders not joining in any such direction or would involve
the Trustee in personal liability.
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SECTION
5.13. Waiver
of Past Defaults.
The
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of any series affected thereby and, in the case of any
Securities of a series initially issued to an Issuer Trust, the holders of
a
majority in aggregate Liquidation Amount of the Capital Securities issued by
such Issuer Trust may waive any past default hereunder and its consequences
with
respect to such series, except a default:
(1) in
the
payment of the principal of (and premium, if any) or interest (including
Additional Interest, if any) on any Security of such series (unless such default
has been cured and the Company has paid to or deposited with the Trustee a
sum
sufficient to pay all matured installments of interest (including Additional
Interest, if any) and all principal of (and premium, if any, on) all Securities
of that series due otherwise than by acceleration); or
(2) in
respect of a covenant or provision hereof that under Article IX cannot be
modified or amended without the consent of each Holder of any Outstanding
Security of such series affected.
Any
such
waiver shall be deemed to be on behalf of the Holders of all the Securities
of
such series, or in the case of any Securities of a series initially issued
to an
Issuer Trust, shall be deemed to be a waiver by holders of Capital Securities
issued by such Issuer Trust, by all holders of Capital Securities issued by
such
Issuer Trust.
Upon
any
such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other default
or
Event of Default or impair any right consequent thereon.
SECTION
5.14. Undertaking
for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or
omitted by it as Trustee, the filing by any party litigant in such suit of
an
undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding
in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (and premium, if any) or interest
(including Additional Interest, if any) on any Security on or after the
respective Stated Maturities expressed in such Security, or in the case of
any
redemption, on or after the Redemption Date for the enforcement of the payment
of the Redemption Price or the right to exchange such Securities for Capital
Securities, as provided herein or in the related Trust Agreement.
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SECTION
5.15. Waiver
of Usury, Stay or Extension Laws.
The
Company covenants (to the extent that it may lawfully do so) that it will not
at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted,
now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any
power herein granted to the Trustee, but will suffer and permit the execution
of
every such power as though no such law had been enacted.
ARTICLE
VI.
THE
TRUSTEE
SECTION
6.1. Certain
Duties and Responsibilities.
(a) Except
during the continuance of an Event of Default,
(1) the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee;
and
(2) in
the
absence of bad faith on its part, the Trustee may conclusively rely, as to
the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture, but in the case of any such certificates or
opinions that by any provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(b) In
case
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own
affairs.
(c) No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or
its
own willful misconduct except that
(1) this
subsection shall not be construed to limit the effect of subsection (a) of
this
Section;
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(2) the
Trustee shall not be liable for any error of judgment made in good faith by
a
Responsible Officer, unless it shall be proved that the Trustee was negligent
in
ascertaining the pertinent facts; and
(3) the
Trustee shall not be liable with respect to any action taken or omitted to
be
taken by it in good faith in accordance with the direction of Holders pursuant
to Section 5.12 relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or
power conferred upon the Trustee, under this Indenture with respect to the
Securities of a series.
(d) No
provision of this Indenture shall require the 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
there shall be reasonable grounds for believing that repayment of such funds
or
adequate indemnity against such risk or liability is not reasonably assured
to
it.
(e) Whether
or not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
SECTION
6.2. Notice
of Defaults.
Within
90
days after actual knowledge by a Responsible Officer of the Trustee of the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit by mail to all Holders of Securities of
such
series, as their names and addresses appear in the Securities Register, notice
of such default, unless such default shall have been cured or waived;
provided,
however,
except
in the case of a default in the payment of the principal of (and premium, if
any) or interest (including Additional Interest, if any) on any Security of
such
series, the Trustee shall be protected in withholding such notice if and so
long
as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of
Securities of such series; and provided
further,
in the
case of any default of the character specified in Section 5.1(3), no such notice
to Holders of Securities of such series shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
“default”
means
any event that is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
SECTION
6.3. Certain
Rights of Trustee.
Subject
to the provisions of Section 6.1:
(a) the
Trustee may rely and shall be protected in acting or refraining from acting
upon
any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, Security or other paper
or
document believed by it to be genuine and to have been signed or presented
by
the proper party or parties;
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(b) any
request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Board
of Directors maybe sufficiently evidenced by a Board Resolution;
(c) whenever
in the administration of this Indenture the Trustee shall deem it desirable
that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an Officers’
Certificate;
(d) the
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel 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
reliance thereon;
(e) the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(f) the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, indenture, Security or other
paper or document, but the Trustee in its discretion may make such inquiry
or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such inquiry or investigation, it shall be entitled
to
examine the books, records and premises of the Company, personally or by agent
or attorney; and
(g) the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the 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.
SECTION
6.4. Not
Responsible for Recitals or Issuance of Securities.
The
recitals contained herein and in the Securities, except the Trustee’s
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities of any series or of the
Capital Securities. Neither the Trustee nor any Authenticating Agent shall
be
accountable for the use or application by the Company of the Securities or
the
proceeds thereof.
SECTION
6.5. May
Hold Securities.
The
Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar
or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 6.8 and
6.13,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar
or
such other agent.
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SECTION
6.6. Money
Held in Trust.
Money
held by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law. The Trustee shall be under no liability
for interest on any money received by it hereunder except as otherwise agreed
with the Company.
SECTION
6.7. Compensation
and Reimbursement.
(a) The
Company agrees to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder in such amounts as the Company and
the
Trustee shall agree from time to time (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust).
(b) The
Company agrees to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its
negligence or bad faith.
(c) Since
the
Issuer Trust is being formed solely to facilitate an investment in the Trust
Securities, the Company, as Depositor of the Issuer Trust under the Trust
Agreement, hereby covenants to pay all debts and obligations (other than with
respect to the Capital Securities and the Common Securities) and all reasonable
costs and expenses of the Issuer Trust (including without limitation all
reasonable costs and expenses relating to the organization of the Issuer Trust,
the fees and expenses of the trustees and all costs and expenses relating to
the
operation of the Issuer Trust) and to pay any and all taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed on the Issuer Trust by the United States, or any taxing authority,
so
that the net amounts received and retained by the Issuer Trust and the Property
Trustee after paying such expenses will be equal to the amounts the Issuer
Trust
and the Property Trustee would have received had no such costs or expenses
been
incurred by or imposed on the Issuer Trust. The foregoing obligations of the
Company are for the benefit of, and shall be enforceable by, any person to
whom
any such debts, obligations, costs, expenses and taxes are owed (each, a
“Creditor”),
whether or not such Creditor has received notice thereof. Any such Creditor
may
enforce such obligations directly against the Company, and the Company
irrevocably waives any right or remedy to require that any such Creditor take
any action against the Issuer Trust or any other person before proceeding
against the Company. The Company shall execute such additional agreements as
may
be necessary or desirable to give full effect to the foregoing.
(d) The
Company shall indemnify the Trustee for, and hold it harmless against, any
loss,
liability or expense (including the reasonable compensation and the expenses
and
disbursements of its agents and counsel) incurred without negligence or bad
faith, arising out of or in connection with the acceptance or administration
of
this trust or the performance of its duties hereunder, including the reasonable
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. This indemnification shall survive the termination of this Indenture
or the resignation or removal of the Trustee.
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When
the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 5.1(4) or 5.1(5) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under the
Bankruptcy Code.
SECTION
6.8. Disqualification;
Conflicting Interests.
The
Trustee for the Securities of any series issued hereunder shall be subject
to
the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein
shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 310(b). To the
extent permitted by the Trust Indenture Act, the Trustee shall not be deemed
to
have a conflicting interest with respect to Securities of any series by virtue
of being a trustee under this Indenture with respect to any other series
hereunder. The Trust Agreement and the Guarantee Agreement shall be deemed
to be
specifically described in this Indenture for purposes of clause (i) of the
first
proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION
6.9. Corporate
Trustee Required; Eligibility.
There
shall at all times be a Trustee hereunder which shall be:
(a)
an
entity
organized and doing business under the laws of the United States of America
or
of any state or territory thereof or of the District of Columbia, authorized
under such laws to exercise corporate trust powers and subject to supervision
or
examination by Federal, state, territorial or District of Columbia authority;
or
(b)
an
entity
or other Person organized and doing business under the laws of a foreign
government that is permitted to act as Trustee pursuant to a rule, regulation
or
order of the Commission, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional trustees;
in
either
case having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for
the
purposes of this Section, the combined capital and surplus of such entity shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to
be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as Trustee
for the Securities of any series issued hereunder.
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SECTION
6.10. Resignation
and Removal; Appointment of Successor.
(a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11.
(b) The
Trustee may resign at any time with respect to the Securities of one or more
series by giving written notice thereof to the Company. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment
of
a successor Trustee with respect to the Securities of such series.
(c) The
Trustee may be removed at any time with respect to the Securities of any series
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If
at any
time:
(1) the
Trustee shall fail to comply with Section 6.8 after written request therefor
by
the Company or by any Holder who has been a bona fide Holder of a Security
for
at least six months; or
(2) the
Trustee shall cease to be eligible under Section 6.9 and shall fail to resign
after written request therefor by the Company or by any such Holder;
or
(3) the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver, conservator, liquidator or similar official of the
Trustee or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, receivership, conservation, winding up or
liquidation;
then,
in
any such case, (i) the Company, acting pursuant to the authority of a Board
Resolution, may remove the Trustee with respect to the Securities of all series
issued hereunder, or (ii) subject to Section 5.14, any Holder who has been
a
bona fide Holder of a Security for at least six months may, on behalf of such
Holder and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to the Securities
of
all series issued hereunder and the appointment of a successor Trustee or
Trustees.
(e) If
the
Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause with respect to the
Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee with respect to the Securities of that
or
those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
such series delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee with respect to the Securities of such series
and
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
of such series for at least six months may, subject to Section 5.14, on behalf
of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
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(f) The
Company shall give notice of each resignation and each removal of the Trustee
with respect to the Securities of any series and each appointment of a successor
Trustee with respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to the Holders of Securities
of such series as their names and addresses appear in the Securities Register.
Each notice shall include the name of the successor Trustee with respect to
the
Securities of such series and the address of its Corporate Trust
Office.
SECTION
6.11. Acceptance
of Appointment by Successor.
(a) In
case
of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held
by
such retiring Trustee hereunder.
(b) In
case
of the appointment hereunder of a successor Trustee with respect to the
Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or
more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain
such
provisions as shall be necessary or desirable to transfer and confirm to, and
to
vest in, each successor Trustee all the rights, powers, trusts and duties of
the
retiring Trustee with respect to the Securities of that or those series to
which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions
as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of
the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees or co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each removal of the retiring Trustee, without any further act,
deed
or conveyance, shall become vested with all the rights, powers, trusts, and
duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities
of
that or those series to which the appointment of such successor Trustee
relates.
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(c) Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all rights, powers and trusts referred to in paragraphs (a)
or
(b) of this Section 6.11, as the case may be.
(d) No
successor Trustee shall accept its appointment unless, at the time of such
acceptance, such successor Trustee shall be qualified and eligible under this
Article VI.
SECTION
6.12. Merger,
Conversion, Consolidation or Succession to Business.
Any
entity into which the Trustee may be merged or converted or with which it may
be
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding
to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided
such
entity shall be otherwise qualified and eligible under this Article, without
the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or
consolidation to such authenticating Trustee may adopt such authentication
and
deliver the Securities so authenticated, and in case any Securities shall not
have been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor Trustee or in the name of
such
successor Trustee, and in all cases the certificate of authentication shall
have
the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.
SECTION
6.13. Preferential
Collection of Claims Against Company.
If
and
when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions
of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION
6.14. Appointment
of Authenticating Agent
The
Trustee may appoint an Authenticating Agent or Agents with respect to one or
more series of Securities, which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon original issue
and
upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled
to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by
the
Trustee or the Trustee’s certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be an entity organized and doing business under
the laws of the United States of America, or of any state or territory thereof
or of the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this
Section.
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Any
entity into which an Authenticating Agent may be merged or converted or with
which it may be consolidated,. or any entity resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a party,
or any entity succeeding to all or substantially all of the corporate trust
business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such entity shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part
of
the Trustee or the Authenticating Agent.
An
Authenticating Agent may resign at any time by giving written notice thereof
to
the Trustee and to the Company. The Trustee may at any time terminate the agency
of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. My
successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision
of
this Section.
The
Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section, and the Trustee shall be
entitled to be reimbursed for such payment, subject to the provisions of Section
6.7.
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If
an
appointment with respect to one or more series is made pursuant to this Section,
the Securities of such series may have endorsed thereon, in addition to the
Trustee’s certificate of authentication, an alternative certificate of
authentication in the following form:
This
is
one of the Securities referred to in the within mentioned
Indenture.
| Dated: __________________________________ |
WILMINGTON
TRUST COMPANY,
as
Trustee
|
|
| |
|
|
| By: | ||
|
As Authenticating Agent for the Trustee |
||
| By: |
Name
of Authorized Officer
Title:
|
|
ARTICLE
VII.
HOLDER’S
LISTS AND REPORTS BY TRUSTEE,
PAYING
AGENT AND COMPANY
SECTION
7.1. Company
to Furnish Trustee Names and Addresses of Holders.
The
Company will furnish or cause to be furnished to the Trustee with respect to
Securities of each series for which it acts as Trustee hereunder:
(a) quarterly,
not more than 15 days after each regular record date for each Interest Payment
Date in each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of each such record date;
and
(b) at
such
other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content
as of a date not more than 15 days prior to the time such list is furnished;
provided,
however,
no such
list need be furnished, if and so long as the Trustee is the Securities
Registrar.
SECTION
7.2. Preservation
of Information; Communications to Holders.
(a) The
Trustee shall preserve, in as current a form as is reasonably practicable,
the
names and addresses of Holders contained in the most recent list furnished
to
the Trustee as provided in Section 7.1 and the names and addresses of Holders
received by the Trustee in its capacity as Securities Registrar. The Trustee
may
destroy any list furnished to it as provided in Section 7.1 upon receipt of
a
new list so furnished.
(b) The
rights of Holders to communicate with other Holders with respect to their rights
under this Indenture or under the Securities, and the corresponding rights
and
privileges of the Trustee, shall be as provided in the Trust Indenture
Act.
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(c) Every
Holder of Securities, by receiving and holding the same, agrees with the Company
and the Trustee that neither the Company nor the Trustee nor any agent of either
of them shall be held accountable by reason of the disclosure of information
as
to the names and addresses of the Holders made pursuant to the Trust Indenture
Act.
SECTION
7.3. Reports
by Trustee and Paying Agent.
(a) The
Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act, at the times and in the manner provided pursuant thereto.
(b) Reports
so required to be transmitted at stated intervals of not more than 12 months
shall be transmitted no later than January 31 in each calendar year, commencing
with the first January 31 after the first issuance of Securities under this
Indenture.
(c) A
copy of
each such report shall, at the time of such transmission to Holders, be filed
by
the Trustee with each securities exchange, if any, upon which any Securities
are
listed, and also with the Commission, if and to the extent then required by
the
Commission’s rules and regulations. The Company will notify the Trustee when any
Securities are listed on any securities exchange.
(d) The
Paying Agent shall comply with all withholding, backup withholding, tax and
information reporting requirements under the Internal Revenue Code of 1986,
as
amended, and the Treasury Regulations issued thereunder with respect to payments
on, or with respect to, the Securities.
SECTION
7.4. Reports
by Company.
The
Company shall file or cause to be filed with the Trustee and with the
Commission, if and to the extent then required by the Commission’s rules and.
regulations, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act, if this Indenture is then qualified under and subject to the Trust
Indenture Act. In the case of information, documents or reports required to
be
filed with the Commission pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, the Company shall file or cause the filing of such information
documents or reports with the Trustee within 15 days after the same are required
to be filed with the Commission. Annually, by April 30 of each year, the Company
will file with the Trustee a certificate of compliance with all conditions
and
covenants applicable to the Company hereunder.
ARTICLE
VIII.
CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION
8.1. Company
May Consolidate, Etc., Only on Certain Terms.
The
Company shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to
any
Person, unless:
(1) the
Person resulting from such consolidation or merger or the Person to which the
Company conveys, transfers or leases its properties and assets substantially
as
an entirety shall be an entity organized and existing under the laws of the
United States of America or any state thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any), interest (including
Additional Interest, if any) and Additional Sums, if any, on all the Securities
of every series and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed; provided,
however,
nothing
herein shall be deemed to restrict or prohibit, and no supplemental indenture
shall be required in the case of, the merger of a Principal Subsidiary with
and
into a Principal Subsidiary or the Company, the consolidation of Principal
Subsidiaries into a Principal Subsidiary or the Company, or the sale or other
disposition of all or substantially all of the assets of any Principal
Subsidiary to another Principal Subsidiary or the Company, if, in any such
case
in which the surviving, resulting or acquiring entity is not the Company, the
Company would own, directly or indirectly, at least 80% of the voting securities
of the Principal Subsidiary (and in the case of any other Principal Subsidiary,
any voting securities of which are owned, directly or indirectly, by such
Principal Subsidiary) surviving such merger, resulting from such consolidation
or acquiring such assets;
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(2) immediately
after giving effect to such transaction, no Event of Default, and no event
that,
after notice or lapse of time, or both, would constitute an Event of Default,
shall have occurred and be continuing; and
(3) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer
or
lease and any such supplemental indenture comply with this Article and that
all
conditions precedent herein provided for relating to such transaction have
been
complied with and met. The Trustee, subject to Section 6.1, may rely upon such
Officers’ Certificates and Opinions of Counsel as conclusive evidence that such
transaction complies with this Section 8.1.
SECTION
8.2. Successor
Company Substituted.
Upon
any
consolidation or merger by the Company with or into any other Person, or any
conveyance, transfer or lease by the Company of its properties and assets
substantially as an entirety to any Person in accordance with Section 8.1,
the
successor entity formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed
to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; and in the event of any conveyance, transfer or
lease of the Company’s properties and assets substantially as an entirety and
not as part of a merger or consolidation, the Company shall be discharged from
all obligations and covenants under the Indenture and the
Securities.
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Such
successor Person may cause to be executed, and may issue either in its
own name
or in the name of the Company, any or all of the Securities issuable hereunder
that theretofore shall not have been signed by the Company and delivered
to the
Trustee; and, upon the order of such successor Person instead of the Company
and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
that
previously shall have been signed and delivered by the officers of the
Company
to the Trustee for authentication pursuant to such provisions and any Securities
that such successor Person thereafter shall cause to be executed and delivered
to the Trustee on its behalf for the purpose pursuant to such provisions.
All
the Securities so issued shall in all respects have the same legal rank
and
benefit under this Indenture as the Securities theretofore or thereafter
issued
in accordance with the terms of this Indenture.
In
case
of any such consolidation, merger, sale, conveyance or lease, such changes
in
phraseology and form may be made in the Securities thereafter to be issued
as
may be appropriate.
ARTICLE
IX.
SUPPLEMENTAL
INDENTURES
SECTION
9.1. Supplemental
Indentures Without Consent of Holders.
Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may amend or waive any
provision of this Indenture or may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to
evidence the succession of another Person to the Company, and the assumption
by
any such successor of the covenants of the Company herein and in the Securities
contained; or
(2) to
convey, transfer, assign, mortgage or pledge any property to or with the
Trustee, or to surrender any right or power herein conferred upon the Company;
or
(3) to
establish the form or terms of Securities of any series as permitted by Sections
2.1 or 3.1; or
(4) to
facilitate the issuance of Securities of any series in certificated or other
definitive form; or
(5) to
add to
the covenants of the Company for the benefit of the Holders of all or any series
of Securities (and if such covenants are to be for the benefit of less than
all
series of Securities, stating that such covenants are expressly being included
solely for the benefit of the series specified), or to surrender any right
or
power herein conferred upon the Company; or
(6) to
add
any additional Events of Default for the benefit of the Holders of all or any
series of Securities (and if such additional Events of Defaults are to be for
the benefit of less than all series of Securities, stating that such additional
Events of Default are expressly being included solely for the benefit of the
series specified); or
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(7) to
change
or eliminate any of the provisions of this Indenture, provided
that any
such change or elimination shall (a) become effective only when there is no
Security Outstanding of any series created prior to the execution of such
supplemental indenture that is entitled to the benefit of such provision or
(b)
not apply to any Outstanding Securities; or
(8) to
cure
any ambiguity, to correct or supplement any provision herein that may be
defective or inconsistent with any other provision herein or in any Trust
Agreement establishing an Issuer Trust to which Securities have been or are
to
be issued, or to make any other provisions with respect to matters or questions
arising under this Indenture, provided
that
such
action pursuant to this clause (8) shall not adversely affect the (i) interests
of the Holders of Securities of any series in any material respect or, (ii)
in
the case of the Securities of a series issued to an Issuer Trust and for so
long
as any of the corresponding series of Capital Securities issued by such Issuer
Trust shall remain outstanding, the interests of holders of such Capital
Securities; or
(9) to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to
or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11(b); or
(10) to
comply
with the requirements of the Commission in order to effect or maintain the
qualification of this Indenture under the Trust Indenture Act.
SECTION
9.2. Supplemental
Indentures with Consent of Holders.
With
the
consent of the Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee,
the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided
no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security of each series affected thereby,
(1) change
the Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, change any obligation of the Company to pay
Additional Sums pursuant to Section 10.6 hereof (except as contemplated by
Section 8.1 and permitted by Section 9.1(1)), or change the place of payment
where, or the coin or currency in which, any Security or interest thereon or
any
other sum is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in the case
of
redemption, on or after the Redemption Date), or
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(2) reduce
the percentage in aggregate principal amount of the Outstanding Securities
of
any series, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture,
or
(3) modify
any of the provisions of this Section, Section 5.13 or Section 10.5, except
to
increase any such percentage or to provide that certain other provisions of
this
Indenture cannot be modified or waived without the consent of the Holder of
each
Security affected thereby;
provided,
further,
that,
in the case of the Securities of a series issued to an Issuer Trust, so long
as
any of the corresponding series of Capital Securities issued by such Issuer
Trust remains outstanding, (i) no such amendment shall be made that adversely
affects the holders of such Capital Securities in any material respect, and
no
termination of this Indenture shall occur, and no waiver of any Event of Default
or compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of such Capital Securities then outstanding, unless and
until
the principal of (and premium, if any, on) the Securities of such series and
all
accrued and (subject to Section 3.8) unpaid interest (including Additional
Interest, if any) thereon have been paid in full, and (ii) no amendment shall
be
made to Section 5.8 of this Indenture that would impair the rights of the
holders of Capital Securities issued by an Issuer Trust provided therein without
the prior consent of the holders of each such Capital Security then outstanding
unless and until the principal of (and premium, if any, on) the Securities
of
such series and all accrued and (subject to Section 3.8) unpaid interest
(including Additional Interest, if any) thereon have been paid in
full.
A
supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or any corresponding
series of Capital Securities of an Issuer Trust that holds the Securities of
any
series, or that modifies the rights of the Holders of Securities of such series
or the holders of such Capital Securities of such corresponding series with
respect to such covenant or other provision, shall be deemed not to affect
the
rights under this Indenture of the Holders of Securities of any other series
or
the holders of Capital Securities of any other such corresponding
series.
It
shall
not be necessary for any Act of Holders under this Section to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
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SECTION
9.3. Execution
of Supplemental Indentures.
In
executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers’
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent herein provided for relating to such action have been
complied with. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture that affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise.
SECTION
9.4. Effect
of Supplemental Indentures.
Upon
the
execution of any supplemental indenture under this Article, this Indenture
shall
be modified in accordance therewith, and such supplemental indenture shall
form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION
9.5. Conformity
with Trust Indenture Act.
Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION
9.6. Reference
in Securities to Supplemental Indentures.
Securities
of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required
by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by
the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE
X.
COVENANTS
SECTION
10.1. Payment
of Principal, Premium and Interest.
The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay the principal of (and premium, if any) and
interest (including Additional Interest, if any) on the Securities of that
series in accordance with the terms of such Securities and this
Indenture.
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SECTION
10.2. Maintenance
of Office or Agency.
The
Company will maintain in each Place of Payment for any series of Securities
an
office or agency where Securities of that series may be presented or surrendered
for payment, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company
in
respect of the Securities of that series and this Indenture may be served.
The
Company initially appoints the Trustee, acting through its Corporate Trust
Office, as its agent for said purposes. The Company will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and
demands.
The
Company may also from time to time designate one or more other offices or
agencies where the Securities may be presented or surrendered for any or all
of
such purposes, and may from time to time rescind such designations; provided,
however, no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change
in
the location of any such office or agency.
SECTION
10.3. Money
for Security Payments to be Held in Trust.
If
the
Company shall at any time act as its own Paying Agent with respect to any series
of Securities, it will, on or before each due date of the principal of (and
premium, if any) or interest (including Additional Interest, if any) on any
of
the Securities of such series, segregate and hold in trust for the benefit
of
the Persons entitled thereto a sum sufficient to pay the principal (and premium,
if any) or interest (including Additional Interest) so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided,
and will promptly notify the Trustee of its failure so to act.
Whenever
the Company shall have one or more Paying Agents, it will, prior to 10:00 A.M.
Eastern Time, on each due date of the principal of (or premium, if any) or
interest, including Additional Interest on any Securities, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest,
including Additional Interest so becoming due, such sum to be held in trust
for
the benefit of the Persons entitled to such principal (and premium, if any)
or
interest, including Additional Interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure so to
act.
The
Company will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with
the Trustee, subject to the provisions of this Section, that such Paying Agent
will:
(1) hold
all
sums held by it for the payment of the principal of (and premium, if any) or
interest (including Additional Interest) on the Securities of a series in trust
for the benefit of the Persons entitled thereto until such sums shall be paid
to
such Persons or otherwise disposed of as herein provided;
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(2) give
the
Trustee notice of any default by the Company (or any other obligor upon such
Securities) in the making of any payment of principal (and premium, if any)
or
interest (or Additional Interest) in respect of any Security of any
series;
(3) at
any
time during the continuance of any default with respect to a series of
Securities, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent with respect to such
series; and
(4) comply
with the provisions of the Trust Indenture Act applicable to it as a Paying
Agent.
The
Company may, at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the
same
terms as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such
money.
Any
money
deposited with the Trustee or any Paying Agent, or then held by the Company
in
trust for the payment of the principal of (and premium, if any), and/or interest
(including Additional Interest) on, any Security and remaining unclaimed for
two
years after such principal (and premium, if any), and/or interest (including
Additional Interest) has become due and payable shall (unless otherwise required
by mandatory provision of applicable escheat or abandoned or unclaimed property
law) be paid on Company Request to the Company, or (if then held by the Company)
shall (unless otherwise required by mandatory provision of applicable escheat
or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor,
look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, the Trustee or
such
Paying Agent, before being required to make any such repayment, may, at the
expense of the Company, cause to be published once, in a newspaper published
in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, the City of New York and in each Place
of Payment, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION
10.4. Statement
as to Compliance.
The
Company shall deliver to the Trustee, within 120 days after the end of each
fiscal year of the Company ending after the date hereof, an Officers’
Certificate covering the preceding calendar year, stating whether or not to
the
best knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company
shall
be in default, specifying all such defaults and the nature and status thereof
of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
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SECTION
10.5. Waiver
of Certain Covenants.
Subject
to the rights of holders of Capital Securities specified in Section 9.2, if
any,
the Company may omit in any particular instance to comply with any covenant
or
condition provided pursuant to Section 3.1 with respect to the Securities of
any
series, if before or after the time for such compliance the Holders of at least
a majority in aggregate principal amount of the Outstanding Securities of such
series shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but
no
such waiver shall extend to or affect such covenant or condition except to
the
extent so expressly waived, and, until such waiver shall become effective,
the
obligations of the Company in respect of any such covenant or condition shall
remain in full force and effect.
SECTION
10.6. Additional
Sums.
In
the
case of the Securities of a series initially issued to an Issuer Trust, so
long
as no Event of Default has occurred and is continuing and except as otherwise
specified as contemplated by Section 2.1 or Section 3.1, if (i) an Issuer Trust
is the Holder of all of the Outstanding Securities of such series, and (ii)
a
Tax Event has occurred and is continuing in respect of such Issuer Trust, the
Company shall pay to such Issuer Trust (and its permitted successors or assigns
under the related Trust Agreement) for so long as such Issuer Trust (or its
permitted successors or assigns) is the registered holder of the Outstanding
Securities of such series, such additional sums as may be necessary in order
that the amount of Distributions (including any Additional Amounts (as defined
in such Trust Agreement)) then due and payable by such Issuer Trust on its
Capital Securities and Common Securities that at any time remain outstanding
in
accordance with the terms thereof shall not be reduced as a result of such
Additional Taxes (the “Additional Sums”). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal
of or
interest on the Securities, such mention shall be deemed to include mention
of
the payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of
the
payment of Additional Sums (if applicable) in any provisions hereof shall not
be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.12 on the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
SECTION
10.7. Additional
Covenants.
The
Company covenants and agrees with each Holder of Securities of each series
that
it shall not (x) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares
of
the Company’s capital stock, or (y) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the
Company that rank pari passu in all respects with or junior in interest to
the
Securities of such series (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit, or incentive plan or other similar arrangement
with or for the benefit of any one or more employees, officers, directors or
consultants of the Company or its Subsidiaries, in connection with a dividend
reinvestment or stock purchase plan or in connection with the issuance of
capital stock of the Company (or securities convertible into or exercisable
for
such capital stock) as consideration in an acquisition transaction entered
into
prior to the applicable Extension Period or other event referred to below,
(b)
as a result of an exchange or conversion of any class or series of the Company’s
capital stock (or any capital stock of a Subsidiary of the Company) for any
class or series of the Company’s capital stock or of any class or series of the
Company’s indebtedness for any class or series of the Company’s capital stock,
(c) the purchase of fractional interests in shares of the Company’s capital
stock pursuant to the conversion or exchange provisions of such capital stock
or
the security being converted or exchanged, (d) any declaration of a dividend
in
connection with any Rights Plan, or the issuance of rights, stock or other
property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options
or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pan passu with or junior to such stock), if
at
such time (i) there shall have occurred any event (A) of which the Company
has
actual knowledge that with the giving of notice or the lapse of time, or both,
would constitute an Event of Default under Sections 5.1(1), (2), (3), (4) or
(5)
with respect to the Securities of such series, and (B) which the Company shall
not have taken reasonable steps to cure, (ii) if the Securities of such series
are held by an Issuer Trust, the Company shall be in default with respect to
its
payment of any obligations under the Guarantee relating to the Capital
Securities issued by such Issuer Trust, or (iii) the Company shall have given
notice of its election to begin an Extension Period with respect to the
Securities of such series as provided herein and shall not have rescinded such
notice, or such Extension Period or any extension thereof shall be
continuing.
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The
Company also covenants with each Holder of Securities of a series issued to
an
Issuer Trust (i) to hold, directly or indirectly, 100% of the Common Securities
of such Issuer Trust, provided
that
any
permitted successor of the Company as provided under Section 8.2 may succeed
to
the Company’s ownership of such Common Securities, (ii) as holder of such Common
Securities, not to voluntarily terminate, wind up or liquidate such Issuer
Trust, other than (a) in connection with a distribution of the Securities of
such series to the holders of the related Capital Securities in liquidation
of
such Issuer Trust, or (b) in connection with certain mergers, consolidations
or
amalgamations permitted by the related Trust Agreement, and (iii) to use its
reasonable efforts, consistent with the terms and provisions of such Trust
Agreement, to cause such Issuer Trust to continue to be taxable as a grantor
trust for United States Federal income tax purposes.
SECTION
10.8. Furnishing
Annual Information.
On
or
before December 15 of each year during which any Securities are outstanding,
the
Company shall furnish to each Paying Agent such information as may be reasonably
requested by each Paying Agent in order that each Paying Agent may prepare
the
information which it is required to report for such year on Internal Revenue
Service Forms 1096 and 1099 pursuant to Section 6049 of the Internal Revenue
Code of 1986, as amended. Such information shall include the amount of any
original issue discount includable in income for each authorized minimum
denomination of principal amount at Stated Maturity of outstanding Securities
during such year.
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ARTICLE
XI.
REDEMPTION
OF SECURITIES
SECTION
11.1. Applicability
of This Article.
Redemption
of Securities of any series as permitted or required by the terms of any form
of
Security issued pursuant to this Indenture shall be made in accordance with
the
terms of such form of Security and this Article; provided,
however,
if any
provision of any such form of Security shall conflict with any provision of
this
Article, the provision of such form of Security shall govern. Any redemption
of
any Security prior to its Stated Maturity shall also be subject to prior notice,
and approval of (or notice of intent not to disapprove of) the redemption,
if
then required by the capital adequacy rules or otherwise by the Federal
Reserve.
SECTION
11.2. Election
to Redeem; Notice to Trustee.
The
election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of
the
Company, the Company shall, not less than 30 nor more than 60 days prior to
the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee and, in the case of Securities of a series held by an Issuer
Trust, the Property Trustee under the related Trust Agreement, of such date
and
of the principal amount of Securities of the applicable series to be redeemed
and provide the additional information required to be included in the notice
or
notices contemplated by Section 11.4; provided
that,
in the
case of any series of Securities initially issued to an Issuer Trust, for so
long as such Securities are held by such Issuer Trust, such notice shall be
given not less than 45 nor more than 75 days prior to such Redemption Date
(unless a shorter notice shall be satisfactory to the Property Trustee under
the
related Trust Agreement). In the case of any redemption of Securities prior
to
the expiration of any restriction on such redemption provided in the terms
of
such Securities, the Company shall furnish the Trustee with an Officers’
Certificate and an Opinion of Counsel evidencing compliance with such
restriction.
SECTION
11.3. Selection
of Securities to be Redeemed.
If
less
than all the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to
the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption
of a
portion of the principal amount of any Security of such series, provided
that
the
unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
The
Trustee shall promptly notify the Company in writing of the Securities selected
for partial redemption and the principal amount thereof to be redeemed. For
all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case
of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security that has been or is to be
redeemed.
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SECTION
11.4. Notice
of Redemption.
Notice
of
redemption shall be given by first-class mail, postage prepaid, mailed not
later
than 30 days, and not earlier than 60 days, prior to the Redemption Date, to
each Holder of Securities to be redeemed, at the address of such Holder as
it
appears in the Securities Register.
With
respect to Securities of such series to be redeemed, each notice of redemption
shall state:
(a) the
Redemption Date;
(b) the
Redemption Price or, if the Redemption Price cannot be calculated prior to
the
time the notice is required to be sent, the estimate of the Redemption Price
provided pursuant to the Indenture together with a statement that it is an
estimate and that the actual Redemption Price will be calculated on the third
Business Day prior to the Redemption Date (if such an estimate of the Redemption
Price is given, a subsequent notice shall be given as set forth above setting
forth the Redemption Price promptly following the calculation
thereof);
(c) if
less
than all Outstanding Securities of such particular series are to be redeemed,
the identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Securities to be redeemed;
(d) that,
on
the Redemption Date, the Redemption Price will become due and payable upon
each
such Security or portion thereof, and that interest thereon (including
Additional Interest, if any), if any, shall cease to accrue on and after said
date;
(e) the
Place
or Places of Payment where such Securities are to be surrendered for payment
of
the Redemption Price;
(f) such
other provisions as may be required in respect of the terms of a particular
series of Securities;
(g) that
the
redemption is for a sinking fund, if such is the case; and
(h) the
CUSIP
number, if any.
Notice
of
redemption of Securities to be redeemed at the election of the Company shall
be
given by the Company or, at the Company’s request, by the Trustee in the name
and at the expense of the Company and shall be irrevocable. The notice, if
mailed in the manner provided above, shall be conclusively presumed to have
been
duly given, whether or not the Holder receives such notice. In any case, a
failure to give such notice by mail or any defect in the notice to the Holder
of
any Security designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other
Security.
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SECTION
11.5. Deposit
of Redemption Price.
Prior
to
10:00 A.M. Eastern Time, on the Redemption Date specified in the notice of
redemption given as provided in Section 11.4, the Company will deposit with
the
Trustee or with one or more Paying Agents (or if the Company is acting as its
own Paying Agent, the Company will segregate and hold in trust as provided
in
Section 10.3) an amount of money sufficient to pay the Redemption Price of,
and
any accrued interest (including Additional Interest) on, all the Securities
(or
portions thereof) that are to be redeemed on that date.
SECTION
11.6. Payment
of Securities Called for Redemption.
If
any
notice of redemption has been given as provided in Section 11.4, the Securities
or portion of Securities with respect to which such notice has been given shall
become due and payable on the date and at each Place of Payment stated in such
notice at the applicable Redemption Price, together with accrued interest
(including Additional Interest, if any) to the Redemption Date. On presentation
and surrender of such Securities duly endorsed or accompanied by written
instruments of transfer executed by the Holder or its duly authorized attorney,
in form satisfactory to the Company, the Trustee and the Securities Registrar,
at a Place of Payment in said notice specified, the said Securities or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable Redemption Price, together with accrued interest (including
Additional Interest, if any) to the Redemption Date; provided,
however,
unless
otherwise specified as contemplated by Section 3.1, installments of interest
(including Additional Interest) whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on
the
relevant record dates according to their terms and the provisions of Section
3.8.
Upon
presentation of any Security redeemed in part only, duly endorsed or accompanied
by written instrument of transfer executed by the Holder or its duly authorized
attorney, in form satisfactory to the Company, the Trustee and the Securities
Registrar, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security
or
Securities of the same series, of authorized denominations, in an aggregate
principal amount equal to the unredeemed portion of the Security so presented
and having the same Original Issue Date, Stated Maturity and terms.
Unless
the Company fails to deposit or pay the Redemption Price, together with accrued
interest (including Additional Interest, if any), upon the Redemption Date
the
Securities to be redeemed shall no longer be Outstanding and no interest
(including Additional Interest, if any) shall accrue thereon, and upon receipt
of any certification representing the redeemed Securities shall be cancelled
as
provided in Section 3.10. If any Security called for redemption shall not be
so
paid under surrender thereof for redemption, the principal of and premium,
if
any, on such Security shall, until paid, bear interest from the Redemption
Date
at the rate prescribed therefor in the Security.
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SECTION
11.7. Right
of Redemption of Securities Initially Issued to an Issuer
Trust.
In
the
case of the Securities of a series initially issued to an Issuer Trust, except
as otherwise specified by Section 3.1, the Company, at its option, may redeem
such Securities (i) on or after the date specified in such Security, in whole
at
any time or in part from time to time, or (ii) upon the occurrence and during
the continuation of a Tax Event, an Investment Company Event or a Capital
Treatment Event, at any time within 90 days following the occurrence and during
the continuation of such Tax Event, Investment Company Event or Capital
Treatment Event, in whole (but not in part), in each case at a Redemption Price
specified in such Security, together with accrued interest (including Additional
Interest, if any) to the Redemption Date.
If
less
than all the Securities of any such series are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect
to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement related to the Issuer Trust to which such Securities were issued,
including any requirement in such Trust Agreement as to the minimum Liquidation
Amount (as defined in such Trust Agreement), if any, of Capital Securities
that
may be held by a holder under such Trust Agreement.
ARTICLE
XII.
SINKING
FUNDS
Except
as
may be provided in any supplemental or amended indenture, no sinking fund shall
be established or maintained for the retirement of Securities of any
series.
ARTICLE
XIII.
SUBORDINATION
OF SECURITIES
SECTION
13.1. Securities
Subordinate to Senior Indebtedness.
The
Company covenants and agrees, and each Holder of a Security, by its acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article, the payment of the principal of (and
premium, if any) and interest (including Additional Interest, if any) on each
and all of the Securities of each and every series are hereby expressly made
subordinate and junior to and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and the Securities of each and every series
issued initially to an Issuer Trust shall be pari
passu
with all
other Securities issued initially hereunder to Issuer Trusts.
SECTION
13.2. No
Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon
Dissolution, Etc.
If
the
Company shall default in the payment of any principal of (or premium, if any)
or
interest on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration of
acceleration or otherwise, then, upon written notice of such default to the
Company by the holders of Senior Indebtedness or any trustee therefor, unless
and until such default shall have been cured or waived or shall have ceased
to
exist, no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) shall be made or agreed to be made on account of the principal
of
(or premium, if any) or interest (including Additional Interest, if any) on
any
of the Securities, or in respect of any redemption, repayment, retirement,
purchase or other acquisition of any of the Securities.
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In
the
event of (i) any insolvency, bankruptcy, receivership, conservatorship,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding-up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors
or
(iv) any other marshalling of the assets of the Company (each such event, if
any, herein sometimes referred to as a “Proceeding”),
all
Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall
be
made to any Holder of any of the Securities on account thereof. Any payment
or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment, the payment of which is subordinate, at least
to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for these subordination provisions) be payable or deliverable
in
respect of the Securities of any series shall be paid or delivered directly
to
the holders of Senior Indebtedness in accordance with the priorities then
existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall have
been paid in full.
In
the
event of any Proceeding, after payment in full of all sums owing with respect
to
Senior Indebtedness, the Holders of the Securities, together with the holders
of
any obligations of the Company ranking on a parity with the Securities, shall
be
entitled to be paid from the remaining assets of the Company the amounts at
the
time due and owing on account of unpaid principal of (and premium, if any)
and
interest (including Additional Interest, if any) on the Securities and such
other obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or any
obligations of the Company ranking junior to the Securities and such other
obligations.
If,
notwithstanding the foregoing, any payment or distribution of any character
or
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment, the payment of which is subordinate, at least
to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received
by
the Trustee or any Holder in contravention of any of the terms hereof and before
all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder
of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
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65
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No
present or future holder of any Senior Indebtedness shall be prejudiced in
the
right to enforce subordination of the indebtedness evidenced by the Securities
by any act or failure to act on the part of the Company. Nothing contained
herein shall impair, as between the Company and the Holders of Securities of
each series, the obligation of the Company to pay to such Holders the principal
of (and premium, if any) and interest (including Additional Interest) on such
Securities or prevent the Trustee or the Holder (or to the extent expressly
provided herein, the holder of any Capital Securities) from exercising all
rights, powers and remedies otherwise permitted by applicable law or hereunder
upon a default or Event of Default hereunder, all subject to the rights of
the
holders of the Senior Indebtedness to receive cash, securities or other property
otherwise payable or deliverable to the Holders.
Senior
Indebtedness shall not be deemed to have been paid in full unless the holders
thereof shall have received cash, securities or other property equal to the
amount of such Senior Indebtedness then outstanding.
The
Trustee and the Holders shall take such action (including, without limitation,
the delivery of this Indenture to an agent for the holders of Senior
Indebtedness or consent to the filing of a financing statement with respect
hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
The
provisions of this Section 13.2 shall not impair any rights, interests, remedies
or powers of any secured creditor of the Company in respect of any security
interest the creation of which is not prohibited by the provisions of this
Indenture.
The
securing of any obligations of the Company, otherwise ranking on a parity with
the Securities or ranking junior to the Securities shall not be deemed to
prevent such obligations from constituting, respectively, obligations ranking
on
a parity with the Securities or ranking junior to the Securities.
SECTION
13.3. Payment
Permitted If No Default.
Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time, except during the
pendency of the conditions described in the first paragraph of Section 13.2
or
of any Proceeding referred to in Section 13.2, from making payments at any
time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any monies
deposited with it hereunder to the payment of or on account of the principal
of
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time
of
such application by the Trustee, the Trustee did not have knowledge that such
payment would have been prohibited by the provisions of this
Article.
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66
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SECTION
13.4. Subrogation
to Rights of Holders of Senior Indebtedness; Etc.
Upon
and
following the payment in full of all amounts due or to become due on all Senior
Indebtedness, or the provision for such payment in cash or cash equivalents
or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, the
Holders of the Securities of each series shall be subrogated to all rights
of
the holders of such Senior Indebtedness (equally and ratably with the holders
of
all indebtedness of the Company that by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities of such series are subordinated to the Senior Indebtedness and is
entitled to like rights of subrogation by reason of any payments or
distributions made to holders of such Senior Indebtedness) to receive any
further payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium if any) and
interest (including Additional Interest) on the Securities of such series,
if
any, shall be paid in full. No payments or distributions to the holders of
the
Senior Indebtedness of any cash, property or securities to which the Holders
of
the Securities of each series or the Trustee would be entitled except for the
provisions of this Article XIII, and no payments over pursuant to the provisions
of this Article XIII to or for the benefit of the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or
on
account of the Senior Indebtedness.
SECTION
13.5. Provisions
Solely to Define Relative Rights.
The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained
in
this Article or elsewhere in this Indenture or in the Securities is intended
to
or shall: (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay
to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when
the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders
of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
(or to the extent expressly provided herein, the holder of any Capital Security)
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, including filing and voting claims in any Proceeding,
subject to the rights, if any, under this Article of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION
13.6. Trustee
to Effectuate Subordination.
Each
Holder of a Security by his or her acceptance thereof authorizes and directs
the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
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SECTION
13.7. No
Waiver of Subordination Provisions.
No
right
of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or
impaired by any act or failure to act on the part of the Company or by any
act
or failure to act, in good faith, by any such holder, or by any noncompliance
by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or be
otherwise charged with.
Without
in any way limiting the generality of the immediately preceding paragraph,
the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities of
any
series, without incurring responsibility to such Holders of the Securities
and
without impairing or releasing the subordination provided in this Article or
the
obligations hereunder of such Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding, (ii) sell, exchange, release or otherwise deal
with
any property pledged, mortgaged or otherwise securing Senior Indebtedness,
(iii)
release any Person liable in any manner for the collection of Senior
Indebtedness, and (iv) exercise or refrain from exercising any rights against
the Company and any other Person; and Senior Indebtedness shall continue to
be
Senior Indebtedness entitled to the benefits of the subordination provisions
of
this Article XIII.
SECTION
13.8. Notice
to Trustee.
The
Company shall give prompt written notice to a Responsible Officer of the Trustee
of any fact known to the Company that would prohibit the making of any payment
to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts that would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until a Responsible Officer of the Trustee shall have
received written notice thereof from the Company or a holder of Senior
Indebtedness or from any trustee, agent or representative therefor; provided,
however,
if the
Trustee shall not have received the notice provided for in this Section at
least
two Business Days prior to the date upon which by the terms hereof any monies
may become payable for any purpose (including, the payment of the principal
of
(and premium, if any, on) or interest (including any Additional Interest) on
any
Security), then, anything herein contained to the contrary notwithstanding,
the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary that may be received by it within two Business
Days prior to such date.
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Subject
to the provisions of Section 6.1, the Trustee shall be entitled to rely on
the
delivery to it of a written notice by a Person representing himself or herself
to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee or attorney-in-fact therefor). The Trustee shall
immediately notify the Company by telephone of the receipt of any such notice.
In the event that the Trustee determines in good faith that further evidence
is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to famish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights
of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination
as
to the right of such Person to receive such payment.
SECTION
13.9. Reliance
on Judicial Order or Certificate of Liquidating Agent.
Upon
any
payment or distribution of assets of the Company referred to in this Article,
the Trustee, subject to the provisions of Section 6.1, and the Holders of the
Securities shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such Proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, conservator, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other
facts pertinent thereto or to this Article.
SECTION
13.10. Trustee
Not Fiduciary for Holders of Senior Indebtedness.
The
Trustee, in its capacity as trustee under this Indenture, shall not be deemed
to
owe any fiduciary duty to the holders of Senior Indebtedness and shall not
be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
SECTION
13.11. Rights
of Trustee as Holder of Senior Indebtedness; Preservation of Trustee’s
Rights.
The
Trustee in its individual capacity shall be entitled to all the rights set
forth
in this Article with respect to any Senior Indebtedness that may at any time
be
held by it, to the same extent as any other holder of Senior Indebtedness,
and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such
holder.
SECTION
13.12. Article
Applicable to Paying Agents.
In
case
at any time any Paying Agent other than the Trustee shall have been appointed
by
the Company and be then acting hereunder, the term “Trustee” as used in this
Article shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully
for
all intents and purposes as if such Paying Agent were named in this Article
in
addition to or in place of the Trustee.
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69
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SECTION
13.13. Certain
Conversions or Exchanges Deemed Payment.
For
purposes of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Securities of any series shall not
be
deemed to constitute a payment or distribution on account of the principal
of
(or premium, if any, on) or interest (including any Additional Interest) on
such
Securities or on account of the purchase or other acquisition of such
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security of any series shall be deemed to constitute payment on account of
the
principal of such security. For the purposes of this Section, the term “junior
securities” means (i) shares of capital stock of any class of the Company, and
(ii) securities of the Company that are subordinated in right of payment to
all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this
Article.
****
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.
[Remainder
of page left intentionally blank; signatures appear on following
page.]
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70
-
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
| SOUTHERN BANCORP, INC. | ||
| |
|
|
| By: | /s/ J. Edward Mulkey, Jr. | |
|
Name:
J. Edward Mulkey, Jr.
Title:
Chairman and Chief Executive
Officer
|
||
ATTEST:
| /s/ Priscilla D. Gamwell | |||
|
Priscilla D. Gamwell
Secretary
|
[CORPORATE
SEAL]
|
WILMINGTON
TRUST COMPANY,
as
Trustee, and not in its individual
capacity
|
||
| |
|
|
| By: | /s/ Joann A. Rozell | |
|
Name: Joann A. Rozell
Title: Financial Services
Officer
|
||
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71
-
EXHIBIT
A
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
OR ANY APPLICABLE STATE OR OTHER JURISDICTION’S SECURITIES OR BLUE SKY LAWS, AND
NO SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR DISPOSED OF ABSENT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR SUCH OTHER APPLICABLE SECURITIES OR BLUE
SKY LAWS COVERING SUCH SECURITIES OR SUCH TRANSFER IS MADE IN ACCORDANCE WITH
AN
AVAILABLE EXEMPTION UNDER THE SECURITIES ACT, WHICH MAY INCLUDE EXEMPTIONS
UNDER
REGULATION S, RULE 144A, RULE 144 OR ANY OTHER AVAILABLE EXEMPTION UNDER THE
SECURITIES ACT, AND ANY OTHER APPLICABLE SECURITIES OR BLUE SKY LAWS, AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL FROM THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH OFFER, SALE, TRANSFER,
ASSIGNMENT, PLEDGE, HYPOTHECATION, OR DISPOSITION IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SUCH SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES OR BLUE SKY LAWS.
THIS
SECURITY IS NOT A DEPOSIT OR AN OBLIGATION OF ANY DEPOSITORY INSTITUTION, IS
NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
GOVERNMENT AGENCY, AND IS NOT SECURED.
SOUTHERN
BANCORP, INC.
FLOATING
RATE
JUNIOR
SUBORDINATED DEBENTURES
DUE
MARCH 31, 2034
|
Aggregate
Principal Amount
|
||
|
Certificate
No. -001-
|
$4,382,000
|
-
A-1
-
SOUTHERN
BANCORP, INC., a Georgia corporation (the “Company,”
which
term includes any successor Person under the Indenture hereinafter referred
to),
for value received, hereby promises to pay to WILMINGTON TRUST COMPANY, not
in
its individual capacity but solely as Property Trustee of SOUTHERN BANCORP
CAPITAL TRUST I, a statutory trust created under the laws of the State of
Delaware, or registered assigns, the principal sum of FOUR MILLION THREE HUNDRED
EIGHTY-TWO THOUSAND AND NO/100 DOLLARS ($4,382,000) on March 31, 2034;
provided
that
the
Company may shorten the Stated Maturity of the principal of this Security to
a
date not earlier than March 31, 2009, subject to certain conditions specified
in
Section 3.15 of the Indenture, and to redemption by the Company as provided
in
Section 11.7 of the Indenture, but in no event shall the Stated Maturity be
a
date later than March 31, 2034. The Company further promises to pay interest
on
said principal from the date of issuance, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, quarterly
(subject to deferral as set forth herein) in arrears on March 31, June 30,
September 30, and December 31 of each year, except that if any such date falls
on a day that is not a Business Day, the Company promises to pay interest on
the
next succeeding Business Day, unless such Business Day is in the next succeeding
calendar year, in which case the Company promises to pay interest on the
immediately preceding Business Day (each,
a
“Distribution
Date”),
commencing March 31, 2004 at the floating rate per annum, reset quarterly on
each Distribution Date for the next succeeding quarter, equal to the prime
rate
of interest so published in the “Money Rates” table in the Eastern Edition of
The
Wall Street Journal
for the
last business day of each of March, June, September and December, as applicable
(or if more than one rate is so indicated in The
Wall Street Journal,
the
prime rate shall equal the highest rate provided), plus
100
basis points (the “Floating
Rate”)
on the
principal amount outstanding hereunder, together with Additional Sums, if any,
as provided in Section 10.6 of the Indenture, until the principal hereof is
paid
or duly provided for or made available for payment. Any principal, premium
or
Additional Sums and any overdue installment of interest not paid when due shall
bear Additional Interest at the Floating Rate (to the extent that the payment
of
such interest shall be legally enforceable), compounded quarterly, from the
dates such amounts are due until they are paid or made available for payment.
The amount of interest payable for any full quarterly period shall be computed
on the basis of a 360-day year consisting of twelve 30-day months. The amount
of
interest payable for any period less than a full quarter shall be computed
on
the basis of a 360-day year and the actual number of days elapsed during that
period. The interest so payable, and punctually paid or duly provided for,
on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Holder at the close of business on the Regular Record Date for such interest
installment. Any such interest not so punctually paid or dilly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Holder registered at the close of business on
a
Special Record Date for the payment of such Defaulted Interest to be fixed
by
the Trustee (notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date) or be paid
at
any time in any other lawful manner not inconsistent with the requirements
of
any securities exchange, if any, on which the Securities of this series may
be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
-
A-2
-
So
long
as no Event of Default has occurred and is continuing, the Company shall have
the right as provided in Section 3.12 of the Indenture, at any time during
the
term of this Security, from time to time to defer the payment of interest on
this Security for up to 20 consecutive quarterly interest payment periods with
respect to each deferral period (each, an “Extension
Period”),
during which Extension Periods the Company shall have the right to make no
payments or partial payments of interest on any Interest Payment Date, and
at
the end of which the Company shall pay all interest then accrued and unpaid
including Additional Interest, as provided below; provided,
however,
that no
Extension Period shall extend beyond the Stated Maturity of the principal of
this Security and no such Extension Period may end on a date other than an
Interest Payment Date; and provided,
further,
however, during any such Extension Period, the Company shall not (i) declare
or
pay any dividends or distributions on, or redeem, purchase, acquire or make
a
liquidation payment with respect to, any of the Company’s capital stock, or (ii)
make any payment of principal or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari
passu
in all
respects with or junior in interest to this Security (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of
the
Company in connection with any employment contract, benefit or incentive plan
or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants of the Company or any of its subsidiaries,
in
connection with a dividend reinvestment or stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company’s
capital stock (or any capital stock of a Subsidiary of the Company) for any
class or series of the Company’s capital stock or of any class or series of the
Company’s indebtedness for any class or series of the Company’s capital stock,
(c) the purchase of fractional interests in shares of the Company’s capital
stock pursuant to the conversion or exchange provisions of such capital stock
or
the security being converted or exchanged, (d) any declaration of a dividend
in
connection with any Rights Plan, or the issuance of rights, stock or other
property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, (e) any dividend in the form of stock, warrants, options
or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari
passu
with or
junior to such stock, or (f) payments by the Company under the Guarantee).
Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided
that
no Event
of Default has occurred and is continuing and provided further, no Extension
Period shall exceed 20 consecutive quarterly interest payment periods, extend
beyond the Stated Maturity of the principal of this Security or end on a date
other than an Interest Payment Date. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may
elect
to begin a new Extension Period, subject to the above conditions. No interest
shall be due and payable during an Extension Period, except at the end thereof,
but each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest (to the extent
that
the payment of such interest shall be legally permissible) at the Floating
Rate
per annum, compounded quarterly and calculated as set forth in the first
paragraph of this Security, from the date on which such amounts would otherwise
have been due and payable until paid or made available for payment. The Company
shall give the Holders of this Security and the Trustee notice of its election
to begin any Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on this Security would be
payable but for such deferral, or so long as such securities are held by the
Issuer Trust, at least one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions on the Capital Securities of such issuer
Trust would be payable but for such deferral, and (ii) the record date for
determining the holders of such Capital Securities entitled to such
Distributions on the Capital Securities.
-
A-3
-
Payment
of the principal of (and premium, if any) and interest on this Security will
be
made at the office or agency of the Company maintained for that purpose in
the
United States, in such coin or currency of the United States of America as
at
the time of payment is legal tender for payment of public and private debts,
which unless otherwise changed by the Company shall be the Corporate Trust
Office.
The
indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and subject in right of payments to the prior payment
in
full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions,
(b)
authorizes and directs the Trustee on his or her behalf to take such actions
as
may be necessary or appropriate to effectuate the subordination so provided,
and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
Reference
is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by manual signature, this Security shall
not
be entitled to any benefit under the Indenture or be valid or obligatory for
any
purpose.
IN
WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal.
| SOUTHERN BANCORP, INC. | ||
| |
|
|
| By: | ||
|
Name:
J. Edward Mulkey, Jr.
Title:
Chairman and Chief Executive
Officer
|
||
ATTEST:
|
Priscilla D. Gamwell
Secretary
[CORPORATE
SEAL]
|
This
is
one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
| Dated: _____________________ |
WILMINGTON
TRUST COMPANY,
not
in its individual capacity, but solely as Trustee
|
|
| |
|
|
| By: | ||
|
Authorized
signatory
|
||
-
A-4
-
Reverse
of Security
This
Security is one of a duly authorized issue of securities of the Company (herein
called the “Securities”),
issued and to be issued in one or more series under the Junior Subordinated
Indenture, dated as of March 9, 2004 (herein called the “Indenture”),
between the Company and Wilmington Trust Company, as Trustee (herein called
the
“Trustee,”
which
term includes any successor trustee under the Indenture), to which Indenture
and
all indentures supplemental thereto reference is hereby made for a statement
of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities, and of the terms upon which the Securities are, and are
to
be, authenticated and delivered. This Security is one of the series - designated
on the face hereof, and is limited to the aggregate principal amount of
$4,382,000.
All
terms
used but not defined in this Security, shall have the respective meanings
provided in the Indenture or in the Amended and Restated Trust Agreement, dated
as of March 9, 2004 (as modified, amended or supplemented from time to time
the
“Trust
Agreement”),
relating to Southern Bancorp Capital Trust I (“Issuer
Trust”),
among
the Company, as Depositor, the Issuer Trustees named therein, the Administrators
named therein, and the Holders from time to time of the Trust Securities issued
pursuant thereto. -
The
Company has the right to redeem this Security (i) on or after March 31, 2009
in
whole at any time or in part from time to time, or (ii) in whole (but not in
part), at any time within 90 days following the occurrence and during the
continuation of a Tax Event, Investment Company Event, or Capital Treatment
Event, in each case at the Redemption Price described below. The redemption
of
Securities of any series as permitted or required by the terms of this
Certificate or the Indenture shall be made in accordance with the terms of
this
Certificate and Article XI of the Indenture; provided,
however,
if any
provision of this Certificate shall conflict with any provision of such Article
XI, the provision of this Certificate shall govern. Any redemption of any
Security prior to its Stated Maturity shall also be subject to prior notice,
and
approval of (or notice of intent not to disapprove) the redemption, if then
required by the capital adequacy rules or otherwise by the Federal
Reserve.
The
Redemption Price in the case of a redemption under clauses (i) or (ii) in the
preceding paragraph shall equal the principal amount hereof (or portion thereof
to be redeemed in a partial redemption), together with accrued interest
(including Additional Interest, if any) up to but excluding the date fixed
for
redemption.
In
the
event of redemption of this Security in part only, a new Security or Securities
of this series for the unredeemed portion hereof will be issued in the name
of
the Holder hereof upon the cancellation hereof.
The
Indenture permits, with certain exceptions as provided therein, the Company
and
the Trustee at any time to enter into a supplemental indenture or indentures
for
the purpose of modifying in any manner the rights and obligations of the Company
and of the Holders of the Securities, with the consent of the Holders of not
less than a majority in aggregate principal amount of the Outstanding Securities
of each series to be affected by such supplemental indenture. The Indenture
also
contains provisions permitting Holders of specified percentages in aggregate
principal amount of the Securities of each series at the time Outstanding,
on
behalf of the Holders of all Securities of such series, to waive compliance
by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
-
A-5
-
As
provided in and subject to the provisions of the Indenture, if an Event of
Default with respect to the Securities of this series at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
of this series may declare the principal amount of all the Securities of this
series to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), provided
that,
if the
Outstanding Securities have been issued to and are held by an Issuer Trust,
if
upon an Event of Default, the Trustee or such Holders fail to declare the
principal of all the Outstanding Securities of this series to be immediately
due
and payable, the Holders of at least 25% in aggregate Liquidation Amount of
the
related series of Capital Securities issued by the Issuer Trust then outstanding
shall have the right to make such declaration by a notice in writing to the
Company and the Trustee; and upon any such declaration, the principal amount
of
and the accrued interest (including Additional Interest, if any) on all the
Securities of this series shall become immediately due and payable, provided
that
the
payment of principal and interest (including any Additional Interest) on such
Securities shall remain subordinated to the extent provided in Article XIII
of
the Indenture.
No
reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any) and interest
(including Additional Interest) on this Security at the times, place and rate,
and in the coin or currency, herein prescribed.
As
provided in the Indenture and subject to certain limitations set forth therein,
the transfer of this Security is registrable in the Securities Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company maintained under Section 10.2 of the Indenture for such purpose,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by,
the
Holder hereof or such Holder’s attorney duly authorized in writing, and
thereupon one or more new Securities of this series, of like tenor, of
authorized denominations and for the same aggregate principal amount, will
be
issued to the designated transferee or transferees.
The
Securities of this series are issuable only in registered form without coupons
in minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof. To the fullest extent permitted by applicable law, any transfer,
exchange or other disposition of Securities in contravention of Section
3.6(b)(v) of the Indenture shall be deemed to be void and of no legal effect
whatsoever, any such transferee shall be deemed not to be the Holder or owner
of
any beneficial interest in such Securities for any purpose, including but not
limited to the receipt of interest payable on such Securities, and such
transferee shall be deemed to have no interest whatsoever in such Securities.
As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
-
A-6
-
In
the
event of a distribution of the Securities to holders of the Trust Securities,
as
provided in Section 9.4 of the Trust Agreement, the Securities will be issued
in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof to holders of the Common Securities issued by the Issuer Trust, and
in
minimum denominations of $50,000 and integral multiples of $50,000 in excess
thereof to holders of the Capital Securities issued by the Issuer
Trust.
No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior
to
due presentment of this Security for registration of transfer, the Company,
the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
The
Company and, by its acceptance of this Security or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial interest
in,
this Security, each agrees that for United States Federal, state and local
tax
purposes it is intended that this Security constitute indebtedness and shall
be
treated as such.
THIS
SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS.
-
A-7
-
EXHIBIT
B
RESTRICTED
SECURITIES CERTIFICATE
(For
transfers pursuant to § 3.6(b) of the Indenture)
Wilmington
Trust Company,
as
Security Registrar
1100
North Market Street
Wilmington,
Delaware 19890-0001
Attention:
Corporate Trust Administration
|
Re:
|
Floating
Rate Junior Subordinated Debentures Due March 31, 2034 (“Junior
Subordinated Debentures”)
of Southern Bancorp, Inc. (the “Company”)
|
Reference
is made to the Junior Subordinated Indenture, dated as of March 9, 2004 (the
“Indenture”),
among
the Company and Wilmington Trust Company, as Trustee (as defined therein).
Terms
used herein and defined in the Junior Subordinated Indenture or in Regulation
D,
Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the “Securities
Act”)
are
used herein as so defined.
This
certificate relates to $__________ aggregate
Liquidation Amount of Junior Subordinated Debentures, which are evidenced by
the
following certificate(s) (the “Specified
Securities”):
CUSIP
No(s). ___________________________
CERTIFICATE
No(s). _____________________
CURRENTLY
IN BOOK-ENTRY FORM: _______ Yes
__________No
(check
one)
The
person in whose name this certificate is executed below (the “Undersigned”)
hereby
certifies that either (i) it is the sole beneficial owner of the Specified
Securities or (ii) it is acting on behalf of all the beneficial owners of the
Specified Securities and is duly authorized by them to do so. Such beneficial
owner or owners are referred to herein collectively as the “Owner.” If the
Specified Securities are represented by a Global Security, they are held through
the Clearing Agency or a Clearing Agency Participant in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are
not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
-
B-1
-
The
Owner
has requested that the Specified Securities be transferred to a person (the
“Transferee”)
who
will take delivery in the form of a Restricted Security. In connection with
such
transfer, the Owner hereby certifies that, unless such transfer is being
effected pursuant to an effective registration statement under the Securities
Act, it is being effected in accordance with Rule 144A, Rule 904 or Rule 144
under the Securities Act or other exemption from registration under the
Securities Act, and all applicable securities laws of the states of the United
States and other jurisdictions. Accordingly, the Owner hereby further certifies
as follows:
1. Rule
144A Transfers.
If the
transfer is being effected in accordance with Rule 144A:
(A) the
Specified Securities are being transferred to a person that the Owner and any
person acting on its behalf reasonably believe is a “qualified institutional
buyer”
within the meaning of Rule 144A, acquiring for its own account or for the
account
of a
qualified institutional buyer; and
(B) the
Owner
and any person acting on its behalf have taken reasonable steps to ensure that
the Transferee is aware that the Owner may be relying on Rule 144A in connection
with the transfer; and
2. Rule
904 Transfers.
If the
transfer is being effected in accordance with Rule 904:
(A) the
Owner
is not a distributor of the Securities, an affiliate of the Company or the
Issuer Trust or any such distributor or a person acting on behalf of any of
the
foregoing;
(B) the
offer
of the Specified Securities was not made to a person in the United
States;
(C) either:
| (i) |
at
the time the buy order was originated, the Transferee was outside
the
United States or the Owner and any person acting on its behalf reasonably
believed that the Transferee was outside the United States,
or
|
| (ii) |
the
transaction is being executed in, on or through the facilities of
the
Eurobond market, as regulated by the Association of International
Bond
Dealers, or another designated offshore securities market and neither
the
Owner nor any person acting on its behalf knows that the transaction
has
been prearranged with a buyer in the United
States;
|
(D) no
directed selling efforts within the meaning of Rule 902 of Regulation S have
been made in the United States by or on behalf of the Owner or any affiliate
thereof; and
(E) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act.
3. Rule
144 Transfers. If
the
transfer is being effected pursuant to Rule 144:
(A) the
transfer is occurring after a holding period of at least one year (computed
in
accordance with paragraph (d) of Rule 144 or such shorter time as may be
provided therein) has elapsed since the date the Specified Securities were
acquired from the Company or the Issuer Trust or from an affiliate (as such
term
is defined in Rule 144) of the Company or the Issuer Trust, with the full amount
of the purchase price paid at the date of purchase, whichever is later, and
is
being effected in accordance with the applicable amount, manner of sale and
notice requirements of paragraphs (c), (e), (f) and (h) of Rule 144;
or
-
B-2
-
(B) the
transfer is occurring after a holding period of at least two years (or such
shorter time as may be provided in Rule 144(k) has elapsed since the date the
Specified Securities were acquired from the Company or the Issuer Trust or
from
an affiliate (as such term is defined in Rule 144) of the Company or the Issuer
Trust, with the full amount of the purchase price paid at the date of purchase,
whichever is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Company or the Issuer Trust.
4. Other
Transfers.
If the
Owner seeks to make a transfer in reliance of any other exemption under the
Securities Act, it shall attach hereto a letter stating the exemption relied
upon and the facts under which such exemption is available for the requested
transfer, and shall attach an opinion of counsel satisfactory to the Company
stating that such exemption is available and is being properly
used.
This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company, the Issuer Trust and the Holders.
| Dated: __________________________________ | _________________________________________________________ | |
| |
(Print
the name of
the Undersigned, as such term is defined in the second paragraph of
this
certificate.) |
|
| By: | ____________________________________________________ | |
| Name: | ____________________________________________________ | |
| Title: | ____________________________________________________ | |
|
(If
the Undersigned is a corporation, partnership, fiduciary or entity,
the
correct name of the entity, and the name and title of the person
signing
on behalf of the Undersigned must be
stated.)
|
||
-
B-3
-
Exhibit
4.15
FIRST
SUPPLEMENTAL INDENTURE
THIS
FIRST SUPPLEMENTAL INDENTURE
(this
“Supplemental
Indenture”)
is
dated as of March 8, 2007, by and between UNITED
COMMUNITY BANKS, INC.,
a
Georgia corporation, having its principal office at 63 Highway 515, Blairsville,
Georgia 30514 (“United”),
and
WILMINGTON
TRUST COMPANY,
as
Trustee, having its principal office at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890 (the “Trustee”).
WHEREAS,
Southern Bancorp, Inc., a Georgia corporation (“SBC”)
and
the Trustee entered into an Indenture dated as of March 9, 2004 (the
“Indenture”),
pursuant to which the Floating Rate Junior Subordinated Debt Securities due
March 31, 2034 (the “Securities”)
have
been issued by SBC; and
WHEREAS,
on the
date of this Supplemental Indenture, SBC has been merged with and into United,
with United being the surviving corporation (the “Merger”),
whereupon the separate corporate existence of SBC has ceased; and
WHEREAS,
Section
8.1 of the Indenture requires that United expressly assume, by a supplemental
indenture executed and delivered to the Trustee by United, the due and punctual
payment of the principal of (and premium, if any), interest (including
Additional Interest, if any) and Additional Sums, if any, on all of the
Securities in accordance with their terms, and the performance of every covenant
of the Indenture on the part of SBC to be performed or observed;
and
WHEREAS,
Section
9.1(1) of the Indenture authorizes, without the consent of any Holders, the
execution of a supplemental indenture to evidence the succession of another
Person to SBC, and the assumption by any such successor of the covenants
of SBC
and in the Securities under the Indenture; and
WHEREAS,
capitalized terms used and not otherwise defined herein shall have the
respective meanings assigned to such terms in the Indenture.
NOW,
THEREFORE,
in
compliance with Section 8.1 of the Indenture, and in consideration of the
covenants contained herein and intending to be legally bound hereby, United
and
the Trustee, for the benefit of the Holders, agree as follows:
1. Assumption
of Payment and Performance.
United
hereby expressly assumes the due and punctual payment of the principal of
(and
premium, if any), interest (including Additional Interest, if any) and
Additional Sums, if any, on all of the Securities in accordance with their
terms, and the performance of every covenant of the Indenture on the part
of SBC
to be performed or observed.
2. Effect
of Supplemental Indenture.
Upon the
execution of this Supplemental Indenture, (i) the Indenture has been and
hereby
is modified in accordance herewith; (ii) this Supplemental Indenture forms
a
part of the Indenture for all purposes; (iii) except as modified and amended
by
this Supplemental Indenture, the Indenture shall continue in full force and
effect; (iv) the Securities shall continue to be governed by the Indenture;
and
(v) every Holder heretofore or hereafter under the Indenture shall be bound
by
this Supplemental Indenture.
1
3. Notation
on Securities.
Securities authenticated and delivered on or after the date hereof shall
bear
the following notation, which may be printed or typewritten
thereon:
“Effective
September 5, 2006, Southern Bancorp, Inc., a Georgia corporation (“SBC”),
was
merged with and into United Community Banks, Inc., a Georgia corporation
(“United”).
Pursuant to the First Supplemental Indenture, dated as of March 8, 2007,
United
has assumed the obligations of SBC and the performance of every covenant
and
condition of the Indenture on the part of SBC to be performed or
observed.”
If
United
shall so determine, new Securities so modified as to conform to the Indenture
as
hereby supplemented, in form satisfactory to the Trustee, may at any time
hereafter be prepared and executed by United and authenticated and delivered
by
the Trustee or the Authenticating Agent in exchange for the Securities then
outstanding, and thereafter the notation herein provided shall no longer
be
required. Anything herein or in the Indenture to the contrary notwithstanding,
the failure to affix the notation herein provided as to any Security or to
exchange any Security for a new Security modified as herein provided shall
not
affect any of the rights of the holder of such Security.
4. The
Trustee.
The
Trustee shall not be responsible in any manner whatsoever for or in respect
of
the validity or sufficiency of this Supplemental Indenture or for or in respect
of the recitals contained herein, all of which recitals are made solely by
United.
5. Governing
Law.
This
Supplemental Indenture shall be governed by and construed in accordance with
the
laws of the State of New York.
6. Successors
and Assigns.
This
Supplemental Indenture shall be binding upon and inure to the benefit of
and be
enforceable by the respective successors and assigns of the parties hereto
and
the holders of any Securities then outstanding.
7. Headings.
The
headings used in this Supplemental Indenture are inserted for convenience
only
and shall not in any way affect the meaning or construction of any provision
of
this Supplemental Indenture.
8. Counterparts.
This
Supplemental Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute one and the same
instrument.
[The
rest of this page is intentionally left blank.]
2
IN
WITNESS WHEREOF,
the
parties hereto have caused this Supplemental Indenture to be duly executed
by
their respective officers thereunto duly authorized, as of the day and year
first above written.
|
UNITED
COMMUNITY BANKS, INC.
By:
/s/
Thomas C. Gilliland
Thomas C. Gilliland
Executive Vice President
WILMINGTON
TRUST COMPANY, as Trustee,
and
not in its individual capacity
By:
/s/
Michael G. Oller, Jr.
Michael G. Oller, Jr.
Senior Financial Services Officer
|
[Signature
Page for First Supplemental
Indenture]
Exhibit
8.1
 |
Atlanta
GA 30309-4530
t
404 815 6500 f 404 815 6555
www.KilpatrickStockton.com
|
Gwinnett
Commercial Group, Inc.
Lawrenceville,
Georgia 30043
Ladies
and Gentlemen:
We
have
been requested to render our opinion expressed below in connection with the
proposed merger (the “Merger”) of Gwinnett Commercial Group, Inc. (“Gwinnett”),
a Georgia corporation, with and into United Community Banks, Inc. (“United”), a
Georgia corporation, with United being the surviving entity, pursuant to
the
terms and conditions of that certain Agreement and Plan of Reorganization
dated
February 5, 2007, (the “Agreement”), by and between Gwinnett and United. You
have also requested that we render an opinion of the tax consequences of
the
simultaneous proposed merger (the “Subsidiary Merger”) of First Bank of the
South, a Georgia bank and wholly-owned subsidiary of Gwinnett, into United
Community Bank, a Georgia bank and a wholly-owned subsidiary of United, with
United Community Bank as the surviving entity as set forth in the Agreement.
Unless otherwise indicated, terms used herein shall have the same meaning
as
defined in the Agreement.
In
rendering our opinion, we have examined the Agreement, the Merger Agreement,
applicable law, regulations, rulings and decisions.
Our
opinions set forth below are subject to the following assumptions,
qualifications, and exceptions:
A. During
the course of all of the foregoing examinations, we have assumed (i) the
genuineness of all signatures, (ii) the authenticity of all documents submitted
to us as originals, (iii) the legal capacity of all individuals, (iv) the
conformity to original documents of all documents submitted to us as certified,
conformed, or photo static copies, and (v) the authority of each person or
persons who executed any document on behalf of another person.
B. As
to
various factual matters that are material to our opinions set forth herein,
we
have relied upon the factual representations and warranties set forth in
the
Agreement and related documents. We have not independently verified, nor
do we
assume any responsibility for, the factual accuracy or completeness of any
such
representations, warranties, statements, or certificates.
 |
Gwinnett
Commercial Group, Inc.
April
13, 2007
Page
2
|
Based
on
and in reliance on the foregoing and the further qualifications set forth
below,
and provided that the Merger is consummated in accordance with the Agreement,
it
is our opinion that:
|
1.
|
The
Merger and the issuance of shares of United common stock in connection
therewith, as described in the Agreement, will constitute a tax-free
reorganization under Section 368(a)(1)(A) of the Internal Revenue
Code of
1986, as amended (the “Code”).
|
|
2.
|
No
gain or loss will be recognized by Gwinnett as a result of the
Merger.
|
|
3.
|
No
gain or loss will be recognized by holders of Gwinnett common stock
upon
the exchange of Gwinnett common stock solely for United common
stock as a
result of the Merger.
|
|
4.
|
If
pursuant
to the Merger a Gwinnett shareholder exchanges all of his or her
shares of
Gwinnett common stock for a combination of United stock and cash,
the
Gwinnett shareholder will generally recognize gain (but not loss)
in an
amount equal to the lesser of (i) the amount of gain realized
(i.e.,
the excess of the sum of the amount of cash, but not cash received
in lieu
of a fractional share, and the fair market value of the United
common
stock received pursuant to the Merger over such shareholder’s adjusted tax
basis in its shares of Gwinnett common stock surrendered) and
(ii) the amount of cash (but not cash in lieu of a fractional share)
received pursuant to the Merger. Any recognized gain will generally
be
long-term capital gain if the Gwinnett shareholder’s holding period with
respect to the Gwinnett common stock surrendered is more than one
year.
If, however, the cash received has the effect of the distribution
of a
dividend, the gain would be treated as a dividend to the extent
of the
holder’s ratable share of Gwinnett’s
accumulated earnings and profits as calculated for federal income
tax
purposes.
|
|
5.
|
Gain
or loss will be recognized pursuant to Section 302 of the Internal
Revenue
Code of 1986, as amended, by Gwinnett common stockholders upon
their
receipt of solely cash for their shares of Gwinnett common stock,
including cash received (i) as a result of a cash election; (ii)
in lieu
of fractional shares of United common stock, and (iii) upon their
exercise
of dissenters’ rights.
|
|
6.
|
The
aggregate tax basis of United common stock received by shareholders
of
Gwinnett pursuant to the Merger will be the same as the tax basis
of the
shares of Gwinnett common stock exchanged therefor, (i) decreased
by any
portion of such tax basis allocated to fractional shares of United
common
stock that are treated as redeemed by United, (ii) decreased by
the amount
of cash received by a shareholder in the Merger (other than cash
received
with respect to fractional shares), and (iii) increased by the
amount of
gain recognized by a shareholder in the Merger (other than gain
recognized
with respect to fractional shares).
|
| |
Gwinnett
Commercial Group, Inc.
April
13, 2007
Page
3
|
|
7.
|
The
holding period of the shares of United common stock received by
the
shareholders of Gwinnett will include the holding period of the
shares of
Gwinnett common stock exchanged therefor, provided that the common
stock
of Gwinnett is held as a capital asset on the date of the consummation
of
the Merger.
|
|
8.
|
As
a result of the Subsidiary Merger, no gain or loss shall be recognized
to
any of First Bank of the South, United Community Bank, Gwinnett,
United or
holders of Gwinnett common stock.
|
In
the
event that a Gwinnett shareholder has shares of Gwinnett common stock acquired
at different times or with differing tax basis, the above determinations
will
need to be made separately with respect to each such share (or block of shares)
exchanged by such shareholder in the Merger.
In
general, cash received by holders of Gwinnett common stock exercising their
dissenters’ rights will be treated as amounts received from the sale of their
shares of Gwinnett common stock, and (provided that such Gwinnett common
stock
is a capital asset in the hands of such shareholders) each such shareholder
will
recognize capital gain or loss (short or long term, as appropriate) measured
by
the difference between the sale price of such Gwinnett common stock and such
shareholder’s tax basis in such Gwinnett common stock.
We
express no opinion as to the following: (a) the tax consequences that might
be
relevant to a particular holder of Gwinnett common stock who is subject to
special treatment under certain federal income tax laws, such as dealers
in
securities, banks, insurance companies, tax-exempt organizations, non-United
States persons, persons who do not hold their Gwinnett common stock as “capital
assets” within the meaning of section 1221 of the Code, and persons who acquired
their Gwinnett common stock pursuant to the exercise of options or otherwise
as
compensation, or (b) other than the validity of the Merger for state law
purposes and its qualification as a tax free reorganization under Section
368(a)(1)(A) of the Code, any consequences arising under the laws of any
state,
locality, or foreign jurisdiction, or (c) the tax consequences that might
be
relevant to a holder of Gwinnett stock options or stock appreciation rights
receiving cash in exchange for such options or rights.
| |
Gwinnett
Commercial Group, Inc.
April
13, 2007
Page
4
|
This
letter is not to be used, circulated, quoted, or referred to or relied upon
by
any other person for whatever reason without our prior written
consent.
|
Sincerely,
|
|
|
KILPATRICK
STOCKTON LLP
|
|
|
By:/s/
Scott M.
Dayan
|
|
|
Scott M. Dayan, a Partner
|
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
have
issued our report dated February 27, 2006, included in the Annual Report
of
United Community Banks, Inc. and subsidiaries, on Form 10-K for the year
ended
December 31, 2006. We hereby consent to the incorporation by reference of
said
report in this Registration Statement of United Community Banks, Inc. on
Form
S-4 and to the use of our name as it appears under the caption
“Experts.”
|
/s/
Porter Keadle Moore, LLP
Porter
Keadle Moore, LLP
|
Atlanta,
Georgia
April
16,
2007
Exhibit
99.2
GWINNETT
COMMERCIAL GROUP, INC.
ELECTION
FORM
With
respect to the
Merger
of Gwinnett Commercial Group, Inc.
with
and into United Community Banks, Inc.
In
connection with the merger of Gwinnett Commercial Group, Inc. (“Gwinnett”)
with
and into United Community Banks, Inc. (“United”),
you
may indicate your preference for receiving United common stock, cash or a
combination of both for your shares of Gwinnett common stock on this Election
Form.
Please
read the Instructions on the back of this Election Form before completing
it.
In order
to make a valid election, (1) this Election Form must be completed and signed
in
the space provided, and (2) this Election Form must be mailed or delivered
to:
Andrew
R.
Pourchier
Executive
Vice President, Chief Financial Officer and Secretary
Gwinnett
Commercial Group, Inc.
2230
Riverside Parkway
Lawrenceville,
Georgia 30043
For
information, call Andrew R. Pourchier at (770) 237-0007.
| Name
and Address of Registered
Holder
(If
blank, please fill in exactly as name appears on
certificates
|
Number
of Shares Elected to be Exchanged for
|
|
|
Stock
Consideration
|
Cash
Consideration
|
|
|
|
|
|
|
Total
Number of Shares:
|
|
|
| _____ |
Check
here if the above elections represent a revocation of any earlier
elections.
|
| _____ |
Check here if any of your certificates have
been lost,
stolen or destroyed and indicate here the certificate number, issue
date
and number of shares represented thereby:
________________________________________________________________
|
If
you fail to submit this Election Form by the Election Deadline, you will
be
treated as though you elected to receive all cash unless cash has been fully
subscribed by the electing Gwinnett shareholders, in which event you will
be
treated as if you elected to received all stock.
DO
NOT SEND YOUR STOCK CERTIFICATES NOW.
SEE
REVERSE SIDE
SIGNATURE
|
INDIVIDUAL
SHAREHOLDER:
Signature
Print
name
Date
If
Jointly Held, Additional Shareholder:
Signature
Print
name
Date
|
ENTITY
SHAREHOLDER:
Name
of entity (Please Print)
Signature
of authorized representative
Print
name and title of authorized representative
Date
|
INSTRUCTIONS
This
Election Form or a copy of it, is to be properly completed and received by
Gwinnett by the Election Deadline if you desire to make a stock election
or a
cash election. You
must make the appropriate elections on the Election Form to make an effective
stock election or cash election.
Your
election is subject to certain terms, conditions and limitations that have
been
set out in the proxy statement/prospectus included with this Election Form
and
the merger agreement set forth in Appendix A to the proxy statement/prospectus.
Additional copies of these materials may be requested from Andrew R. Pourchier,
Executive Vice President, Chief Financial Officer and Secretary, Gwinnett
Commercial Group, Inc., 2230 Riverside Parkway, Lawrenceville, Georgia 30043.
The filing of this Election Form with Gwinnett is acknowledgment of the receipt
of the proxy statement/prospectus.
1. ELECTION
GENERALLY.
Each
Gwinnett shareholder is entitled to make a stock election or a cash election
or
a combination of both, provided the Election Form for any holder making such
elections is properly completed and received by Gwinnett prior to the Election
Deadline. For any election to be considered, this Election Form, properly
completed, must be received by Gwinnett, at the address set forth on the
Election Form, no later than _________ __, 2007.
2. REVOKING
OR CHANGING ELECTION FORM.
Elections may be revoked or amended, but only by written notice received
by
Gwinnett prior to the Election Deadline.
3. NO
FRACTIONAL INTERESTS.
United
will not issue fractional shares in the merger. Instead, each Gwinnett
shareholder will receive a cash payment, without interest, for the value
of any
fraction of a share of United common stock that such holder would otherwise
be
entitled to receive based on $32.33 per share.
4. DELIVERY
OF FORM OF ELECTION.
This
Election Form, properly completed should be delivered to Gwinnett at the
address
set forth on the Election Form. Please do not send your form to Gwinnett
by facsimile. Do
not send your stock certificates now. Once the merger is completed, you will
receive written instructions from United for exchanging your Gwinnett common
stock certificates for United common stock and/or cash. The
method of delivery is at your election and risk. However, if this form is
sent
by mail, it is recommended that it be sent by registered mail with return
receipt requested.
5. MISCELLANEOUS.
Neither
United, Gwinnett nor United’s exchange agent, Illinois Stock Transfer, is under
any duty to give notification of defects in any Election Form. United, Gwinnett
and the Exchange Agent shall not incur any liability for failure to give
such
notification, and each of United, Gwinnett and the Exchange Agent has the
absolute right to reject any and all Election Forms not in proper form or
to
waive any irregularities in any Election Form.