|
GUARANTEE
AGREEMENT
by and between
COMMUNITY BANK SYSTEM, INC.
and
WILMINGTON TRUST COMPANY
Dated as of December 8, 2006
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (this
"Guarantee"), dated as of December 8, 2006, is executed and
delivered by Community Bank System, Inc., a Delaware corporation
(the "Guarantor"), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the "Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Capital
Securities (as defined herein) of Community Capital Trust IV, a
Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended
and Restated Declaration of Trust (the "Declaration"), dated as of
the date hereof among Wilmington Trust Company, not in its
individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial
interests in the assets of the Issuer, the Issuer is issuing on the
date hereof those undivided beneficial interests, having an
aggregate liquidation amount of $75,000,000.00 (the "Capital
Securities"); and
WHEREAS, as incentive for the
Holders to purchase the Capital Securities, the Guarantor desires
irrevocably and unconditionally to agree, to the extent set forth
in this Guarantee, to pay to the Holders of Capital Securities the
Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration
of the purchase by each Holder of the Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor,
the Guarantor executes and delivers this Guarantee for the benefit
of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1.
Definitions and Interpretation . In this Guarantee,
unless the context otherwise requires:
(a) capitalized terms used in
this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere
in this Guarantee has the same meaning throughout;
(c) all references to "the
Guarantee" or "this Guarantee" are to this Guarantee as modified,
supplemented or amended from time to time;
(d) all references in this
Guarantee to "Articles" or "Sections" are to Articles or Sections
of this Guarantee, unless otherwise specified;
(e) terms defined in the
Declaration as at the date of execution of this Guarantee have the
same meanings when used in this Guarantee, unless otherwise defined
in this Guarantee or unless the context otherwise requires; and
(f) a reference to the
singular includes the plural and vice versa.
" Affiliate " has the same
meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
" Beneficiaries " means any
Person to whom the Issuer is or hereafter becomes indebted or
liable.
" Capital Securities " has
the meaning set forth in the recitals to this Guarantee.
" Common Securities " means
the common securities issued by the Issuer to the Guarantor
pursuant to the Declaration.
" Corporate Trust Office "
means the office of the Guarantee Trustee at which the corporate
trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of
execution of this Guarantee is located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-1600, Attention:
Corporate Trust Administration.
" Covered Person " means
any Holder of Capital Securities.
" Debentures " means the
debt securities of the Guarantor designated the Floating Rate
Junior Subordinated Deferrable Interest Debentures due 2036 held by
the Institutional Trustee (as defined in the Declaration) of the
Issuer.
" Declaration Event of
Default " means an "Event of Default" as defined in the
Declaration.
" Event of Default " has
the meaning set forth in Section 2.4(a).
" Guarantee Payments "
means the following payments or distributions, without duplication,
with respect to the Capital Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions
(as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds
available therefor, (ii) the Redemption Price to the extent the
Issuer has funds available therefor, with respect to any Capital
Securities called for redemption by the Issuer, (iii) the
Special Redemption Price to the extent the Issuer has funds
available therefor, with respect to Capital Securities redeemed
upon the occurrence of a Special Event, and (iv) upon a
voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders of the Capital Securities
in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued
and unpaid Distributions on the Capital Securities to the date of
payment, to the extent the Issuer shall have funds available
therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution").
" Guarantee Trustee " means
Wilmington Trust Company, until a Successor Guarantee Trustee has
been appointed and has accepted such appointment pursuant to the
terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
" Guarantor " means
Community Bank System, Inc. and each of its successors and
assigns.
" Holder " means any
holder, as registered on the books and records of the Issuer, of
any Capital Securities; provided , however , that, in
determining whether the Holders of the requisite percentage of
Capital Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any
Affiliate of the Guarantor.
" Indemnified Person "
means the Guarantee Trustee, any Affiliate of the Guarantee
Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or
agents of the Guarantee Trustee.
" Indenture " means the
Indenture dated as of the date hereof between the Guarantor and
Wilmington Trust Company, not in its individual capacity but solely
as trustee, and any indenture
2
supplemental thereto pursuant to which the Debentures are to be
issued to the institutional trustee of the Issuer.
" Issuer " has the meaning
set forth in the opening paragraph to this Guarantee.
" Liquidation Distribution
" has the meaning set forth in the definition of "Guarantee
Payments" herein.
" Majority in liquidation
amount of the Capital Securities " means Holder(s) of
outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50%
of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all Capital Securities then
outstanding.
" Obligations " means any
costs, expenses or liabilities (but not including liabilities
related to taxes) of the Issuer other than obligations of the
Issuer to pay to holders of any Trust Securities the amounts due
such holders pursuant to the terms of the Trust Securities.
" Officer’s
Certificate " means, with respect to any Person, a certificate
signed by one Authorized Officer of such Person. Any
Officer’s Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee shall
include:
(a) a statement that the officer
signing the Officer’s Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the
nature and scope of the examination or investigation undertaken by
the officer in rendering the Officer’s Certificate;
(c) a statement that the 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 the officer, such condition or covenant has been
complied with.
" Person " means a legal
person, including any individual, corporation, estate, partnership,
joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of
whatever nature.
" Redemption Price " has
the meaning set forth in the Indenture.
" Responsible Officer "
means, with respect to the Guarantee Trustee, any officer within
the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular
corporate trust matter, any other officer to whom such matter is
referred because of that officer’s knowledge of and
familiarity with the particular subject.
" Special Event " has the
meaning set forth in the Indenture.
" Special Redemption Price
" has the meaning set forth in the Indenture.
3
" Successor Guarantee
Trustee " means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under
Section 3.1.
" Trust Securities " means
the Common Securities and the Capital Securities.
ARTICLE II
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
Section 2.1. Powers
and Duties of the Guarantee Trustee .
(a) This Guarantee shall be
held by the Guarantee Trustee for the benefit of the Holders of the
Capital Securities, and the Guarantee Trustee shall not transfer
this Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 4.4(b) or to
a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee
Trustee.
(b) If an Event of Default
actually known to a Responsible Officer of the Guarantee Trustee
has occurred and is continuing, the Guarantee Trustee shall enforce
this Guarantee for the benefit of the Holders of the Capital
Securities.
(c) The Guarantee Trustee,
before the occurrence of any Event of Default and after curing all
Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this
Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been waived pursuant to
Section 2.4) and is actually known to a Responsible Officer of
the Guarantee Trustee, the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(d) No provision of this
Guarantee shall be construed to relieve the Guarantee Trustee from
liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any
Event of Default and after the curing or waiving of all such Events
of Default that may have occurred:
(A) the duties and obligations of
the Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee, and the Guarantee Trustee shall not
be liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee, and no implied
covenants or obligations shall be read into this Guarantee against
the Guarantee Trustee; and
(B) in the absence of bad faith on
the part of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee; but in the
4
case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements
of this Guarantee;
(ii) the Guarantee Trustee shall
not be liable for any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless it shall be
proved that such Responsible Officer of the Guarantee Trustee or
the Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Guarantee Trustee shall
not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the written direction
of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or relating to the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this
Guarantee shall require the Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee or
security and indemnity, reasonably satisfactory to the Guarantee
Trustee, against such risk or liability is not reasonably assured
to it.
Section 2.2. Certain
Rights of Guarantee Trustee .
(a) Subject to the provisions
of Section 2.1:
(i) The Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper
party or parties.
(ii) Any direction or act of the
Guarantor contemplated by this Guarantee shall be sufficiently
evidenced by an Officer’s Certificate.
(iii) Whenever, in the
administration of this Guarantee, the Guarantee Trustee shall deem
it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely
upon an Officer’s Certificate of the Guarantor which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee shall
have no duty to see to any recording, filing or registration of any
instrument (or any re-recording, refiling or re-registration
thereof).
(v) The Guarantee Trustee may
consult with counsel of its selection, and the advice or opinion of
such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel
to the Guarantor or any
5
of its Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee from
any court of competent jurisdiction.
(vi) The Guarantee Trustee shall
be under no obligation to exercise any of the rights or powers
vested in it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Guarantee
Trustee such security and indemnity, reasonably satisfactory to the
Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses and the expenses of the
Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided ,
however , that nothing contained in this
Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon
the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Guarantee.
(vii) The Guarantee Trustee shall
not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as
it may see fit.
(viii) The Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the
Guarantee Trustee or its agents hereunder shall bind the Holders of
the Capital Securities, and the signature of the Guarantee Trustee
or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to
the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee
Trustee’s or its agent’s taking such action.
(x) Whenever in the administration
of this Guarantee the Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Guarantee Trustee
(i) may request instructions from the Holders of a Majority in
liquidation amount of the Capital Securities, (ii) may refrain
from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with
such instructions.
(xi) The Guarantee Trustee shall
not be liable for any action taken, suffered, or omitted to be
taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Guarantee.
(b) No provision of this
Guarantee shall be deemed to impose any duty or obligation on the
Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it
| 
