As filed with the Securities and
Exchange Commission on July 21, 2008
Registration Statement
No. 333-
U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
Form S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
GATEWAY FINANCIAL HOLDINGS,
INC.
GATEWAY CAPITAL STATUTORY TRUST V
(Exact name of co-registrants as
specified in their charters)
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North Carolina
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56-2264354
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Delaware
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26-6461989
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(State or other jurisdiction
of
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(I.R.S. Employer ID
No.)
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incorporation or
organization)
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1580 Laskin Road
Virginia Beach, Virginia
23451
(757) 422-4055
(Address, including zip code,
and telephone number, including area code, of
co-registrants principal executive offices)
D. Ben Berry
Chairman, President and Chief
Executive Officer
Gateway Financial Holdings,
Inc.
1580 Laskin Road
Virginia Beach, Virginia
23451
(757) 422-4055
(Name, address, including zip
code, and telephone number, including area code, of agent for
service of each registrant)
Copy to:
Ronald D. Raxter, Esq.,
Kevin A. Prakke, Esq.
Williams
Mullen, P.C.
3200 Beechleaf Court, Suite 500,
Raleigh, North Carolina 27604-1064
(919) 981-4304, Fax: (919)
981-4300
Approximate Date of Commencement of Proposed Sale to the
Public:
From time to time after this registration
statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box.
o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please 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(c) 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 registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box.
o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box.
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2
of the
Exchange Act. (Check one):
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Large accelerated
filer
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Accelerated
filer
þ
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Non-accelerated
filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION
FEE
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Proposed Maximum
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Amount of
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Title of Each Class of
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Aggregate Offering
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Registration
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Securities to be Registered
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Price(1)
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Fee(2)
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Debt Securities of Gateway Financial Holdings, Inc.(3)
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Preferred Stock of Gateway Financial Holdings, Inc.(3)
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Depositary Shares of Gateway Financial Holdings, Inc.(3)
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Common Stock of Gateway Financial Holdings, Inc.(3)
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Warrants of Gateway Financial Holdings, Inc.(4)
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Purchase Contracts of Gateway Financial Holdings, Inc.(5)
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Units of Gateway Financial Holdings, Inc. and/or Gateway Capital
Statutory Trust V(6)
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Junior Subordinated Debt Securities of Gateway Financial
Holdings, Inc.(3) (7)
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Capital Securities of Gateway Capital Statutory Trust V(7)
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Guarantees of Capital Securities of Gateway Capital Statutory
Trust V(7)
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TOTAL:
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$50,000,000
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$1,965
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Footnotes continued on next
page
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(1)
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Estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(o)
under the Securities Act, and exclusive of accrued interest,
distributions and dividends, if any. Subject to Rule 462(b)
under the Securities Act, the aggregate public offering price of
all securities registered hereby will not exceed $50,000,000.
Such amount represents the issue price rather than the principal
amount of any debt securities issued at an original issue
discount.
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(2)
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Not specified as to each class of
securities to be registered hereunder pursuant to General
Instruction II(D) to Form S-3 under the Securities Act.
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(3)
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Such indeterminate principal amount
of debt securities, preferred stock or common stock as may, from
time to time, be issued (i) at indeterminate prices or
(ii) upon conversion, redemption, exercise or exchange of
securities registered hereunder, to the extent any such
securities are, by their terms, convertible into or exchangeable
for other securities registered hereunder. In the event
registrant elects to offer to the public fractional interests in
its shares of preferred stock registered hereunder, depositary
shares, evidenced by depository receipts issued pursuant to a
deposit agreement, will be distributed to those persons
purchasing fractional interests and the shares of preferred
stock will be issued to the depository under any such agreement.
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(4)
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Warrants may be sold separately or
together with debt securities, preferred stock, common stock or
depositary shares of Gateway Financial Holdings, Inc. or trust
preferred securities of Gateway Capital Statutory Trust V.
Includes an indeterminate number of debt securities, shares of
preferred stock, shares of common stock or depositary shares of
Gateway Financial Holdings, Inc. or trust preferred securities
of Gateway Capital Statutory Trust V to be issuable upon the
exercise of warrants for such securities.
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(5)
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Such indeterminate number of
purchase contracts as may, from time to time, be issued at
indeterminate prices obligating holders to purchase from or sell
to us, and obligating us to sell or purchase from the holders, a
specific number of shares of common stock, preferred stock, debt
securities or depositary shares of Gateway Financial Holdings,
Inc. or trust preferred securities of Gateway Capital Statutory
Trust V at a future date or dates.
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(6)
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Such indeterminate number of units
as may, from time to time, be issued at indeterminate prices,
each representing ownership of one or more of the securities
described herein.
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(7)
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Such indeterminate amount of trust
preferred securities issued by Gateway Capital Statutory Trust V
and guarantees issued by Gateway Financial Holdings, Inc. as
may, from time to time, be issued (i) at indeterminate
prices or (ii) upon conversion or exchange of securities
registered hereunder, to the extent any such securities are, by
their terms, convertible into or exchangeable for other
securities registered hereunder. In the event registrant elects
to offer to the public fractional interests in its shares of
trust preferred securities registered hereunder, depository
shares, evidenced by depository receipts issued pursuant to a
deposit agreement, will be distributed to those persons
purchasing fractional interests and the shares of trust
preferred securities will be issued to the depository under any
such agreement. Pursuant to Rule 457(h) under the Securities
Act, no additional registration fee is due for guarantees.
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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 the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Explanatory
Note
This registration statement contains two forms of prospectuses
to be used in connection with offerings of the following
securities in aggregate amount not to exceed $50,000,000.
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common stock, preferred stock, depositary shares, debt
securities, warrants, purchase contracts and units of Gateway
Financial Holdings, Inc.; and
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preferred securities of Gateway Capital Statutory Trust V,
junior subordinated debt securities of Gateway Financial
Holdings, Inc., and guarantees by Gateway Financial Holdings,
Inc. of the preferred securities of Gateway Capital Statutory
Trust V.
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Each offering of securities made under this registration
statement will be made pursuant to one of these two
prospectuses, with the specific terms of the securities offered
thereby set forth in an accompanying prospectus supplement.
The
information in this prospectus is not complete and may be
changed. This prospectus is included in a registration statement
that we filed with the Securities and Exchange Commission. We
may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
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SUBJECT TO COMPLETION,
DATED ,
2008
Prospectus
$
Common Stock
Preferred Stock
Depositary Shares
Debt Securities
Warrants
Purchase Contracts
Units
We may offer from time to time debt securities (which may be
senior or subordinated debt securities), preferred stock,
depositary shares, common stock, warrants, purchase contracts or
units. This prospectus describes the general terms of these
securities and the general manner in which we will offer the
securities.
The aggregate initial offering price of all securities we sell
under this prospectus will not exceed
$ .
The specific terms of any securities we offer will be included
in a supplement to this prospectus. The prospectus supplement
will also describe the specific manner in which we will offer
the securities. The prospectus supplement may also add, update
or change information contained in this prospectus.
Our common stock is traded on the Nasdaq Global Select Market
under the symbol GBTS.
You should read this prospectus and any supplements carefully
before you invest. Investing in our securities involves a high
degree of risk. See the section entitled Risk
Factors, beginning on page 3 of this prospectus and
in the documents we file with the SEC that are incorporated in
this prospectus by reference for certain risks and uncertainties
you should consider.
Neither the SEC nor any state securities commission has
approved or disapproved our securities or determined that this
prospectus is truthful or complete. It is illegal for anyone to
tell you otherwise.
These securities will not be savings accounts, deposits or
other obligations of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation, the Deposit
Insurance Fund or any other governmental agency or
instrumentality.
The date of this prospectus
is ,
2008.
About
This Prospectus
Unless the context requires otherwise, in this prospectus, we
use the terms we, us, our,
Gateway and the Company to refer to
Gateway Financial Holdings, Inc. and its subsidiaries. The term
bank refers to our principal operating subsidiary,
Gateway Bank & Trust Co. (unless the context
indicates another meaning).
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission, or SEC, using a
shelf registration process. Under the shelf
registration process, using this prospectus, together with a
prospectus supplement, we may sell, from time to time, in one or
more offerings, any combination of the securities described in
this prospectus in a dollar amount that does not exceed
$ , in the aggregate.
This prospectus provides you with a general description of the
securities we may offer. Each time we offer securities, we will
provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus
supplement may also add, update or change information contained
in this prospectus. You should read this prospectus, the
applicable prospectus supplement and the information
incorporated by reference in this prospectus before making an
investment in our securities. See Where You Can Find More
Information for more information. If there is any
inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in the
prospectus supplement.
Our SEC registration statement containing this prospectus,
including exhibits, provides additional information about us and
the securities offered under this prospectus. The registration
statement can be read at the SECs web site or at the
SECs offices. The SECs web site and street addresses
are provided under the heading Where You Can Find More
Information.
You should rely only on the information contained in or
incorporated by reference in this prospectus or a supplement to
this prospectus. We have not authorized anyone to provide you
with different information. This document may be used only in
jurisdictions where offers and sales of these securities are
permitted. You should not assume that information contained in
this prospectus, in any supplement to this prospectus, or in any
document incorporated by reference is accurate as of any date
other than the date on the front page of the document that
contains the information, regardless of when this prospectus is
delivered or when any sale of our securities occurs.
We may sell our securities to underwriters who will in turn sell
the securities to the public on terms fixed at the time of sale.
In addition, the securities may be sold by us directly or
through dealers or agents which we may designate from time to
time. If we, directly or through agents, solicit offers to
purchase the securities, we reserve the sole right to accept
and, together with our agents, to reject, in whole or in part,
any of those offers.
A prospectus supplement will contain the names of the
underwriters, dealers or agents, if any, together with the terms
of offering, the compensation of those underwriters and the net
proceeds to be received by Gateway. Any underwriters, dealers or
agents participating in the offering may be deemed
underwriters within the meaning of the Securities
Act of 1933.
In this prospectus, we rely on and refer to information and
statistics regarding the banking industry and the North Carolina
and Virginia market. We obtained this market data from
independent publications or other publicly available
information. Although we believe these sources are reliable, we
have not independently verified and do not guarantee the
accuracy and completeness of this information.
Where You
Can Find More Information
This prospectus is a part of a registration statement on
Form S-3
that we filed with the SEC under the Securities Act. This
prospectus does not contain all the information set forth in the
registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For
further information with respect to us and the securities
offered by this prospectus, reference is made to the
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registration statement, including the exhibits to the
registration statement and the documents incorporated by
reference.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our filings are available to
the public over the Internet at the SECs web site at
http://www.sec.gov.
You may also read and copy any document we file with the SEC at
its public reference facilities at 100 F Street, N.E.,
Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
facilities. Our SEC filings are also available on our web site
at
http://www.gatewaybankandtrust.com,
and at the office of the Nasdaq Global Select Market. Except for
those SEC filings, none of the other information on our web site
is part of this prospectus. For further information on obtaining
copies of our public filings at the Nasdaq Global Select Market,
you should call
(212) 656-5060
or visit the Nasdaq Global Select Market website
http://www.nasdaq.com.
Our commission file number is
000-33223
Documents
Incorporated by Reference
We incorporate by reference into this prospectus the
information we file with the SEC, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus.
Some information contained in this prospectus updates and
supersedes the information incorporated by reference and some
information that we file subsequently with the SEC will
automatically update this prospectus. We incorporate by
reference the documents listed below (except Items 2.02 and
7.01 of any Current Report on
Form 8-K
listed below, unless otherwise indicated in the
Form 8-K):
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, filed on
March 14, 2008.
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2008, filed on May 12,
2008.
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our Current Reports on
Form 8-K
filed with the SEC since December 31, 2007.
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our Definitive Proxy on Schedule 14A filed on
March 16, 2008; and
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the description of our common stock contained in our
Registration Statements filed pursuant to Section 12 of the
Exchange Act, as amended from time to time.
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We also incorporate by reference any filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the initial filing of the
registration statement that contains this prospectus and before
the time that all of the securities offered by this prospectus
are sold; provided, however, that we are not incorporating by
reference any information furnished under Item 2.02 or 7.01
of any Current Report on
Form 8-K
(unless otherwise indicated). Any statement contained in a
document incorporated by reference in this prospectus shall be
deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this
prospectus, or in any other document filed later which is also
incorporated in this prospectus by reference, modifies or
supersedes the statement. Any statement so modified or
superseded shall not be deemed to constitute a part of this
prospectus except as so modified or superseded. The information
contained in this prospectus should be read together with the
information in the documents incorporated in this prospectus by
reference.
You may obtain any of these incorporated documents from us
without charge, excluding any exhibits to these documents unless
the exhibit is specifically incorporated by reference in such
document, by requesting them from us in writing or by telephone
at the following address:
Mr. Theodore L. Salter
Gateway Financial Holdings, Inc.
1580 Laskin Road
Virginia Beach, VA 23451
(757) 422-8004
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These incorporated documents may also be available on our web
site at www.gatewaybankandtrust.com. Except for incorporated
documents, information contained on our web site is not a
prospectus and does not constitute part of this prospectus.
Note of
Caution Regarding Forward-Looking Statements
We make certain forward-looking statements in this prospectus,
any prospectus supplement, and in the documents incorporated by
reference into this prospectus that are based upon our current
expectations and projections about current events. You should
not rely on forward-looking statements in this prospectus, any
prospectus supplement, or the documents incorporated by
reference. We intend these forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995, and we are including this statement for purposes of
these safe harbor provisions. You can identify these statements
from our use of the words may, will,
should, could, would,
plan, potential, estimate,
project, believe, intend,
anticipate, expect, target
and similar expressions. Examples of forward-looking statements
include, but are not limited to, estimates with respect to the
financial condition, expected or anticipated revenue, results of
operations and business of the Company that are subject to
various factors which could cause actual results to differ
materially from these estimates. These factors include, but are
not limited to, general economic conditions, changes in interest
rates, deposit flows, loan demand, real estate values, and
competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulations; and other
economic, competitive, governmental, regulatory, and
technological factors affecting the Companys operations,
pricing, products and services.
You should also consider carefully the statements under
Risk Factors and other sections of this prospectus,
any prospectus supplement, and the documents we incorporate by
reference, which address additional facts that could cause our
actual results to differ from those set forth in the
forward-looking statements. We caution investors not to place
significant reliance on the forward-looking statements contained
in this prospectus, any prospectus supplement, and the documents
we incorporate by reference.
Because of these and other uncertainties, our actual future
results, performance or achievements, or industry results, may
be materially different from the results contemplated by these
forward-looking statements. In addition, our past results of
operations do not necessarily indicate our future results. You
should not place undue reliance on any forward-looking
statement, which speak only as of the date they were made. We do
not intend to update these forward-looking statements, even
though our situation may change in the future, unless we are
obligated to do so under the federal securities laws. We qualify
all of our forward-looking statements by these cautionary
statements.
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Prospectus
Summary
This summary highlights selected information about Gateway and a
general description of the securities we may offer. This summary
is not complete and does not contain all of the information that
may be important to you. For a more complete understanding of us
and the terms of the securities we will offer, you should read
carefully this entire prospectus, including the Risk
Factors section, the applicable prospectus supplement for
the securities and the other documents we refer to and
incorporate by reference. In particular, we incorporate
important business and financial information into this
prospectus by reference.
The
Securities We May Offer
We may use this prospectus to offer securities in an aggregate
amount of up to $ in one or more
offerings. A prospectus supplement, which we will provide each
time we offer securities, will describe the amounts, prices and
detailed terms of the securities and may describe risks
associated with an investment in the securities in addition to
those described in the Risk Factors section of this
prospectus. We will also include in the prospectus supplement,
where applicable, information about material United States
federal income tax considerations relating to the securities.
Terms used in this prospectus will have the meanings described
in this prospectus unless otherwise specified.
We may sell the securities to or through underwriters, dealers
or agents or directly to purchasers. We, as well as any agents
acting on our behalf, reserve the sole right to accept or to
reject in whole or in part any proposed purchase of our
securities. Each prospectus supplement will set forth the names
of any underwriters, dealers or agents involved in the sale of
our securities described in that prospectus supplement and any
applicable fee, commission or discount arrangements with them.
Common
Stock
We may sell our common stock, no par value per share. In a
prospectus supplement, we will describe the aggregate number of
shares offered and the offering price or prices of the shares.
Preferred
Stock; Depositary Shares
We may sell shares of our preferred stock in one or more series.
In a prospectus supplement, we will describe the specific
designation, the aggregate number of shares offered, the
dividend rate or manner of calculating the dividend rate, the
dividend periods or manner of calculating the dividend periods,
the ranking of the shares of the series with respect to
dividends, liquidation and dissolution, the stated value of the
shares of the series, the voting rights of the shares of the
series, if any, whether and on what terms the shares of the
series will be convertible or exchangeable, whether and on what
terms we can redeem the shares of the series, whether we will
offer depositary shares representing shares of the series and if
so, the fraction or multiple of a share of preferred stock
represented by each depositary share, whether we will list the
preferred stock or depositary shares on a securities exchange
and any other specific terms of the series of preferred stock.
Debt
Securities
Our debt securities may be senior or subordinated in priority of
payment. We will provide a prospectus supplement that describes
the ranking, whether senior or subordinated, the specific
designation, the aggregate principal amount, the purchase price,
the maturity, the redemption terms, the interest rate or manner
of calculating the interest rate, the time of payment of
interest, if any, the terms for any conversion or exchange,
including the terms relating to the adjustment of any conversion
or exchange mechanism, the listing, if any, on a securities
exchange and any other specific terms of the debt securities.
Purchase
Contracts
We may issue purchase contracts, including purchase contracts
issued as part of a unit with one or more other securities, for
the purchase or sale of our debt securities, preferred stock,
depositary shares or common stock. The price of our debt
securities or price per share of common stock, preferred stock
or depositary
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shares, as applicable, may be fixed at the time the purchase
contracts are issued or may be determined by reference to a
specific formula contained in the purchase contracts. We may
issue purchase contracts in such amounts and in as many distinct
series as we wish.
Units
We may sell any combination of one or more of the other
securities described in this prospectus, together as units. In a
prospectus supplement, we will describe the particular
combination of securities constituting any units and any other
specific terms of the units.
Warrants
We may sell warrants to purchase our debt securities, shares of
preferred stock or shares of our common stock. In a prospectus
supplement, we will inform you of the exercise price and other
specific terms of the warrants, including whether our or your
obligations, if any, under any warrants may be satisfied by
delivering or purchasing the underlying securities or their cash
value.
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Risk
Factors
Before making an investment decision, you should carefully
consider the risks described under Risk Factors in
the applicable prospectus supplement and in our most recent
Annual Report on
Form 10-K,
and in our updates to those Risk Factors in our Quarterly
Reports on
Form 10-Q,
together with all of the other information appearing in this
prospectus or incorporated by reference into this prospectus and
any applicable prospectus supplement, in light of your
particular investment objectives and financial circumstances. In
addition to those risk factors, there may be additional risks
and uncertainties of which management is not aware or focused on
or that management deems immaterial. Our business, financial
condition or results of operations could be materially adversely
affected by any of these risks. The trading price of our
securities could decline due to any of these risks, and you may
lose all or part of your investment.
Gateway
Financial Holdings, Inc.
Our
Company
We are a financial holding company incorporated under the laws
of North Carolina to serve as the holding company for Gateway
Bank & Trust Co., a North Carolina chartered
commercial bank with banking and insurance agency offices in
North Carolina and Virginia. The bank began operations on
December 1, 1998, and, effective October 1, 2001,
became our wholly-owned subsidiary.
The Bank has four wholly-owned subsidiaries: Gateway Bank
Mortgage, Inc., which began operations during the second quarter
of 2006, whose principal activity is to engage in originating
and processing mortgage loans, Gateway Investment Services,
Inc., whose principal activity is to engage in brokerage
services as an agent for non-bank investment products and
services, Gateway Title Agency, Inc., acquired in January
2007, with offices in Newport News, Hampton and Virginia Beach,
Virginia, whose principal activity is to engage in title
services for real estate transactions and Gateway Insurance
Services, Inc., an independent insurance agency with offices in
Edenton, Hertford, Elizabeth City, Moyock, Plymouth and Kitty
Hawk, North Carolina and Chesapeake and Newport News, Virginia.
Since inception, we have aggressively pursued the primary
objective of building a full-service commercial banking
operation, while effectively supplementing our banking
activities with other financial services intended to generate
significant non-interest income. Accordingly, a key component of
our growth strategy has been expanding our franchise through a
combination of opening newly constructed financial centers and
strategic bank and branch acquisitions. We have grown into a
regional community bank with a total of thirty-six full-service
financial centers and four loan production offices in Virginia
and North Carolina.
Since inception, we have concentrated our efforts on building a
franchise and infrastructure that can deliver and sustain
long-term profitability. We have been profitable every quarter
since March 31, 2001, producing net income of
$3.9 million in 2005, $5.3 million in 2006,
$11.0 million during the year ended December 31, 2007,
and $5.1 million for the six months ended June 30,
2008. While we anticipate continued profitability, future
expansion activity can be expected to generate significant
additional costs that can negatively impact earnings as we
pursue our growth strategies.
Market
Area and Growth Strategy
Our current market area consists of the following five
geographic regions: (1) the Richmond, Virginia metropolitan
statistical area; (2) the Greater Metropolitan Hampton
Roads area of Virginia; (3) the Northeastern coastal region
of North Carolina (geographically contiguous to Hampton Roads),
including the Outer Banks; (4) the Research Triangle area
of North Carolina (includes Raleigh); and, most recently,
(5) the Southeastern coastal region of North Carolina
(includes Wilmington).
We emphasize personalized service, access to decision makers,
and a quick turn around time on lending decisions. Our slogan is
Real People . . . Real Solutions. We have a
management team with extensive experience in our local markets.
We intend to leverage the core relationships we build by
providing a variety of services to our customers. With that
focus, we target:
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Small-and medium-sized businesses;
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Professionals and middle managers of locally based companies;
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Residential real estate developers; and
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Individual consumers.
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We believe that these segments are the most under-served by
local financial centers of national and super-regional financial
institutions. We also intend to continue to diversify our
revenue in order to continue to generate significant
non-interest income. We presently offer investment brokerage and
insurance services, and we originate mortgage loans for sale in
the secondary market.
Use of
Proceeds
We expect to use the net proceeds from the sale of any
securities for general corporate purposes, which may include:
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possible acquisitions;
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reducing or refinancing existing debt;
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investments at the holding company level;
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investing in, or extending credit to, our operating subsidiaries;
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stock repurchases; and
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other purposes as described in any prospectus supplement.
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Pending such use, we may temporarily invest the net proceeds of
any offering. The precise amounts and timing of the application
of proceeds will depend upon our funding requirements and the
availability of other funds. Except as indicated in a prospectus
supplement, allocations of the proceeds to specific purposes
will not have been made at the date of that prospectus
supplement.
We continually evaluate possible business combination
opportunities. As a result, future business combinations
involving cash, debt or equity securities may occur. Any future
business combination or series of business combinations that we
might undertake may be material, in terms of assets acquired,
liabilities assumed or otherwise, to our financial condition.
Ratio of
Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
The following table shows our consolidated ratio of earnings to
fixed charges and our consolidated ratio of earnings to combined
fixed charges and preferred stock dividends for the periods
indicated:
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Three Months
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Ended
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Year Ended December 31
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March 31, 2008
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2007
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2006
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2005
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2004
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2003
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Ratio of earnings to fixed charges
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Including deposit interest
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1.26x
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1.28x
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1.22x
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1.35x
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1.39x
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1.22x
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Excluding deposit interest
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2.35x
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2.47x
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1.97x
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2.49x
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2.41x
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1.88x
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Ratio of earnings to combined fixed charges and preferred stock
dividends(1)
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Including deposit interest
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1.25x
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1.28x
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1.22x
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1.35x
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1.39x
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1.22x
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Excluding deposit interest
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2.17x
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2.47x
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1.97x
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2.49x
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2.41x
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1.88x
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(1)
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Preferred stock dividends relate to 23,266 shares of
Series A Preferred Stock of Gateway, liquidation value of
$1,000 per share, issued on December 19, 2007. We are
required to pay quarterly non-cumulative cash dividends on these
shares at an annual rate of 8.75%.
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We have computed the ratio of earnings to fixed charges set
forth above by dividing earnings by fixed charges. We have
computed the ratio of earnings to combined fixed charges and
preferred stock dividends set forth above by dividing earnings
by combined fixed charges and preferred stock dividends. For the
purpose of determining the ratios, earnings include pre-tax
income from continuing operations plus fixed charges (excluding
capitalized interest). Fixed charges consist of interest on all
indebtedness (including capitalized
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interest) plus that portion of rent expense estimated to be
representative of the interest factor. Preferred stock dividends
consist of dividends and accretion on preferred stock.
Regulatory
Considerations
We are extensively regulated under both federal and state law.
We are a bank holding company, regulated under the Bank Holding
Company Act of 1956, that has elected to be treated as a
financial holding company. As such, the Federal Reserve Board
regulates, supervises and examines us. Our banking subsidiary
has deposit insurance provided by the Federal Deposit Insurance
Corporation through the Deposit Insurance Fund. For a discussion
of the material elements of the regulatory framework applicable
to financial holding companies, bank holding companies and their
subsidiaries and specific information relevant to us, please
refer to our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 and any
subsequent reports we file with the SEC, which are incorporated
by reference in this prospectus.
This regulatory framework is intended primarily for the
protection of depositors and the federal deposit insurance funds
and not for the protection of security holders. As a result of
this regulatory framework, our earnings are affected by actions
of the Federal Deposit Insurance Corporation, which insures the
deposits of our banking subsidiary within certain limits, the
state banking regulators in North Carolina and Virginia and the
Federal Reserve Board, which regulate us and our bank
subsidiaries, and the SEC.
Our earnings are also affected by general economic conditions,
our management policies and legislative action. In addition,
there are numerous governmental requirements and regulations
that affect our business activities. A change in applicable
statutes, regulations or regulatory policy may have a material
effect on our business.
Depository institutions, like our bank subsidiary, are also
affected by various federal and state laws, including those
relating to consumer protection and similar matters. We also
have other subsidiaries regulated, supervised and examined by
the Federal Reserve Board, as well as other relevant state and
federal regulatory agencies and self-regulatory organizations.
Our non-bank subsidiaries may be subject to other laws and
regulations of the federal government or the various states in
which they do business.
Description
of Capital Stock
As of the date of this prospectus, our capital structure
consists of 30,000,000 authorized shares of common stock, no par
value, and 1,000,000 shares of preferred stock, no par
value. Of the 1,000,000 authorized shares of preferred stock,
25,000 of such shares have been authorized and designated as
Series A Preferred Stock, and 975,000 shares are
undesignated preferred stock. As of June 30, 2008,
12,695,021 shares of our common stock were issued and
outstanding, 23,266 shares of Series A Preferred Stock
were issued and outstanding and no shares of undesignated
preferred stock were issued and outstanding.
Our common stock is traded on the Nasdaq Global Select Market
under the symbol GBTS. All of the outstanding shares
of common stock are, and any common stock issued and sold under
this prospectus will be, fully paid and nonassessable.
Description
of Common Stock
General
The following description summarizes the material provisions of
our common stock. This description is not complete, and is
qualified in its entirety by reference to the provisions of our
articles of incorporation, as amended, and our bylaws, as
amended, as well as the North Carolina Business Corporation Act,
or the NCBCA. Our articles and bylaws are, and any amendments to
them will be, incorporated by reference in our SEC registration
statement.
5
The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company,
59 Maiden Lane, Plaza Level, New York, NY 11219.
Each share of our common stock has the same relative rights as,
and is identical in all respects to, each other share of our
common stock.
Dividends
Holders of shares of common stock will be entitled to receive
such cash dividends as our Board of Directors may declare out of
funds legally available therefor. However, the payment of
dividends by us will be subject to the restrictions of North
Carolina law applicable to the declaration of dividends by a
business corporation. Under such provisions, cash dividends may
not be paid if a corporation will not be able to pay its debts
as they become due in the usual course of business after making
such cash dividend distribution or the corporations total
assets would be less than the sum of its total liabilities plus
the amount that would be needed to satisfy certain liquidation
preferential rights. In addition, the Federal Reserve Board
generally prohibits holding companies from paying dividends
except out of operating earnings, and the prospective rate of
earnings retention appears consistent with the holding
companys capital needs, asset quality and overall
financial condition. Notwithstanding the above, our ability to
pay dividends to the holders of shares of our common stock will
be principally dependent upon the amount of dividends our
subsidiary, Gateway Bank & Trust Co., is
permitted to pay to us as its parent holding company. The
ability of a North Carolina bank to pay dividends is restricted
under applicable law and regulations. Under North Carolina
banking law, dividends must be paid out of retained earnings and
no cash dividends may be paid if payment of the dividend would
cause the banks surplus to be less than 50% of its paid-in
capital. Also, under federal banking law, no cash dividend may
be paid if the bank is undercapitalized or insolvent or if
payment of the cash dividend would render the bank
undercapitalized or insolvent, and no cash dividend may be paid
by the bank if it is in default of any deposit insurance
assessment due to the FDIC. Holders of our Series A
Preferred Stock have, and holders of any additional series of
Preferred Stock that we may issue in the future may have,
priority over the holders of our common stock with respect to
dividends.
Voting
Rights
Each share of our common stock will entitle the holder thereof
to one vote on all matters upon which shareholders have the
right to vote. Holders of our common stock, together with
holders of any other class or series of capital stock with
voting rights, elect our board of directors and act on such
other maters as are required to be presented to them under North
Carolina law or our articles of incorporation or as otherwise
presented to them by the board of directors. Our shareholders
are not entitled to cumulate their votes for the election of
directors. See Certain Articles and Bylaw Provisions
Having Potential Anti-Takeover Effects below regarding
provisions that can affect the voting rights of our shareholders.
Liquidation
Rights.
In the event of any liquidation, dissolution, or winding up of
Gateway, the holders of shares of Gateway common stock will be
entitled to receive, after payment of all debts and liabilities
of Gateway and after satisfaction of all liquidation preferences
applicable to the preferred stock, all remaining assets of
Gateway available for distribution in cash or in kind. In the
event of any liquidation, dissolution, or winding up of our
subsidiary Gateway Bank & Trust Co., we, as the
holder of all shares of our subsidiarys common stock,
would be entitled to receive, after payment of all debts and
liabilities of the subsidiary (including all deposits and
accrued interest thereon), all remaining assets of the
subsidiary available for distribution in cash or in kind.
No
Preemptive Rights; Redemption and Assessment.
Holders of shares of our common stock will not be entitled to
preemptive rights with respect to any shares that may be issued.
Our common stock is not subject to redemption or any sinking
fund and the outstanding shares are fully paid and
non-assessable.
6
Securities
Are Not Insured by the FDIC.
Investments in the common stock or any of our equity or debt
securities will not qualify as deposits or savings accounts and
will not be insured or guaranteed by the FDIC or any other
governmental agency and are subject to investment risk,
including the possible loss of principal.
Certain
Articles and Bylaw Provisions Having Potential Anti-Takeover
Effects
General.
The following is a summary of the
material provisions of Gateways Articles of Incorporation
and Bylaws that address matters of corporate governance and the
rights of shareholders. Certain of these provisions may delay or
prevent takeover attempts not first approved by our board of
directors (including takeovers which certain shareholders may
deem to be in their best interests). These provisions also could
delay or frustrate the removal of incumbent directors or the
assumption of control by certain shareholders.
Issuance of Additional Shares.
Our board of
directors may issue additional authorized shares of our capital
stock to deter future attempts to gain control of Gateway, and
the board has the authority to determine the terms of any one or
more series of preferred stock, such as voting rights,
conversion rates, and liquidation preferences. As a result of
the ability to fix voting rights for a series of preferred
stock, the board has the power, to the extent consistent with
its fiduciary duty, to issue a series of preferred stock to
persons friendly to management in order to attempt to block a
merger or other transaction by which a third party seeks
control, and thereby assist the incumbent board of directors and
management to retain their respective positions.
Classification of the Board of
Directors.
Currently, the Bylaws provide that our
board of directors shall be divided, provided there are nine
(9) or more directors, into three classes, which shall be
as nearly equal in number as possible. In such case, each
director shall serve for a term ending on the date of the third
annual meeting of shareholders following the annual meeting at
which the director was elected. A director elected to fill a
vacancy shall serve until the earlier of: (a) the remainder
term of the present term of office of the class to which he or
she was elected; or (b) the next annual meeting of
shareholders held to elect directors. At the current time, there
are sixteen members of the board of directors, all of whom are
serving staggered three-year terms. As a result, approximately
one-third of the members of the Board of Directors of Gateway
Financial are elected each year, and two annual meetings are
required for our shareholders to change a majority of the
members constituting the board of directors.
Removal of Directors, Filling Vacancies.
Our
Bylaws provide that:
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shareholders may remove one or more of the directors with or
without cause;
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a director may be removed by the shareholders only if the number
of votes cast for the removal exceeds the number of votes cast
against the removal; and
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a director may not be removed by the shareholders at a meeting
unless the notice of the meeting states that the purpose, or one
of the purposes, of the meeting is removal of the director.
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Vacancies occurring in the board of directors may be filled by
the shareholders or a majority of the remaining directors, even
though less than a quorum, or by the sole remaining director.
Amendment of Bylaws.
Subject to certain
restrictions described below, either a majority of the board of
directors or the shareholders may adopt, amend or repeal the
Bylaws. A bylaw adopted, amended, or repealed by the
shareholders may not be readopted, amended or repealed by the
board of directors. Generally, our shareholders may adopt,
amend, or repeal the Bylaws in accordance with the NCBCA.
Annual Meetings of Shareholders.
Our Bylaws
provide that annual meetings of shareholders may be called only
by the President or by a majority vote of the board of directors.
North Carolina Control Share Acquisition
Act.
Gateway is subject to the North Carolina
Control Share Acquisition Act which generally provides that
shares of the common stock that are control shares
will not have certain voting rights unless the remaining
shareholders grant voting rights. Control shares are shares
acquired by a person under certain circumstances which, when
added to other shares owned by that person, would entitle that
person (except for the application of the statute) to
(i) one-fifth, (ii) one-third, or (iii) a
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majority, of all voting power in the election of the
companys directors. Voting rights may be restored to
control shares, however, by the affirmative vote of the holders
of a majority of the common stock (other than shares held by the
owner of the control shares and officers and employee directors
of Gateway). If voting rights are restored to control shares
which give the holder a majority of all voting power in the
election of our directors, then the other shareholders may
require us to redeem their shares at their fair value as of a
date prior to the date on which the vote was taken which
restored voting rights to the control shares.
North Carolina Shareholder Protection
Act.
Gateway is also subject to the North
Carolina Shareholder Protection Act which generally requires
that unless certain fair price and procedural
requirements are satisfied, the affirmative vote of the holders
of 95% of the outstanding shares of the common stock (excluding
shares owned by an interested shareholder) is
required to approve certain business combinations with other
entities that are the beneficial owners of more than 20% of the
common stock or which are affiliates of Gateway and previously
had been 20% beneficial holders of the common stock.
Business Combination Factors.
Our Articles of
Incorporation provide that the board of directors may consider
the social and economic effects of any matter presented for
their consideration on the communities in which we operate and
may consider the business and financial condition of a proposed
acquiror, its managements experience and integrity, and
the prospects of successful conclusion of the transaction when
evaluating any business combination.
Description
of Preferred Stock
General
As of the date of this prospectus, 25,000 shares of
Series A Preferred Stock are authorized, of which 23,266
are issued and outstanding. No other shares of preferred stock
are outstanding. We have 975,000 authorized shares of
undesignated preferred stock. Our board of directors may (or may
direct a board committee to) authorize the issuance of one or
more additional series of preferred stock and may establish and
designate series and the number of shares and the relative
rights, preferences and limitations of the respective series of
the preferred stock offered by this prospectus and the
applicable prospectus supplement. The shares of preferred stock,
when issued and sold, will be fully paid and nonassessable.
The number of shares and all of the relative rights, preferences
and limitations of the respective future series of preferred
stock authorized by the board of directors (or a committee
established by the board of directors) will be described in the
applicable prospectus supplement. The terms of particular series
of preferred stock may differ, among other things, in:
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Designation;
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number of shares that constitute the series;
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dividends (which may be cumulative or noncumulative), the
dividend rate, or the method of calculating the dividend rate;
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dividend periods, or the method of calculating the dividend
periods;
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redemption provisions, including whether, on what terms and at
what prices the shares will be subject to redemption at our
option and whether a sinking fund will be established;
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voting rights;
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preferences and rights upon liquidation or winding up;
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whether and on what terms the shares will be convertible into or
exchangeable for shares of any other class, series or security
of ours or any other corporation or any other property
(including whether the conversion or exchange is mandatory, at
the option of the holder or our option, the period during which
conversion or exchange may occur, the initial conversion or
exchange price or rate and the
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circumstances or manner in which the amount of common or
preferred stock or other securities issuable upon conversion or
exchange may be adjusted);
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for preferred stock convertible into our common stock, the
number of shares of common stock to be reserved in connection
with, and issued upon conversion of, the preferred stock
(including whether the conversion or exchange is mandatory, the
initial conversion or exchange price or rate and the
circumstances or manner in which the amount of common stock
issuable upon conversion or exchange may be adjusted) at the
option of the holder or our option and the period during which
conversion or exchange may occur;
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whether depositary shares representing the preferred stock will
be offered and, if so, the fraction or multiple of a share that
each depositary share will represent; and
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the other rights and privileges and any qualifications,
limitations or restrictions of those rights or privileges.
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Each series of preferred stock will rank, with respect to the
payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up:
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junior to any series of our capital stock expressly stated to be
senior to that series of preferred stock;
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senior to our common stock and any class of our capital stock
expressly stated to be junior to that series of preferred
stock; and
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on parity with the Series A Preferred Stock and each other
series of preferred stock and all other classes of our capital
stock.
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Dividends
The holders of shares of Series A Preferred Stock are
entitled to receive stated cash dividends from Gateway at an
annual rate of 8.75%, and no more, subject to declaration by our
board of directors, at its sole discretion, from funds legally
available for the payment of dividends. Dividends on the
Series A Preferred Stock will not be cumulative on a
year-to-year basis. Dividends will be payable as they are
declared by the board of directors at such time or times as it
elects, and no holder of Series A Preferred Stock will have
any right to receive any dividend unless and until that dividend
has been declared by the board of directors. The stated annual
dividend may be declared and paid in increments during each
calendar year. In connection with each dividend payment, the
board of directors may set a record date in advance of the
payment date for the purpose of determining the holders of
shares of Series A Preferred Stock who are entitled to
receive that dividend.
No dividend shall be declared or paid on our common stock during
any calendar year unless and until there shall have been paid in
full to the holders of Series A Preferred Stock (or set
apart for purposes of such payment), without preference or
priority as between such shares or other series of preferred
stock, not less than a pro rata portion of the stated annual
dividend thereon for that calendar year, at the rate provided
therefor, through the date on which we propose to pay the cash
dividend on the common stock. Shares of Series A Preferred
Stock shall not participate in dividends paid with respect to
any other class or series of our capital stock.
If described in the applicable prospectus supplement, we may pay
cumulative cash dividends to the holders of preferred stock,
when and as declared by the board of directors or the committee,
out of funds legally available for payment. The prospectus
supplement will detail, as applicable, the annual rate of
dividends or the method or formula for determining or
calculating them, and the payment dates and payment periods for
dividends. In the event that dividends are declared on the
preferred stock, the board of directors or the committee will
fix a record date for any such payment of dividends, which will
be paid on the preferred stock to the holders of record on that
record date.
We will not declare, pay or set aside for payment any dividends
on any preferred stock ranking on a parity as to payment of
dividends with the preferred stock unless we declare, pay or set
aside for payment dividends on all the outstanding shares of
preferred stock for all dividend payment periods ending on or
before the dividend payment date for that parity stock.
9
Unless we have paid in full all unpaid cumulative dividends, if
any, on the outstanding shares of preferred stock, we may not
take any of the following actions with respect to our common
stock or any other preferred stock of Gateway ranking junior or
on parity with the preferred stock as to dividend payments
(unless otherwise described in the prospectus supplement):
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declare, pay or set aside for payment any dividends, other than
dividends payable in our common stock;
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make other distributions;
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redeem, purchase or otherwise acquire our common stock or junior
preferred stock for any consideration; or
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make any payment to or available for a sinking fund for the
redemption of our common stock or junior preferred stock.
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Conversion
and Exchange
The Series A Preferred Stock is not convertible into or
exchangeable for shares of our common stock.
The prospectus supplement will indicate whether and on what
terms the shares of any future series of preferred stock will be
convertible into or exchangeable for shares of any other class,
series or security of Gateway or any other corporation or any
other property (including whether the conversion or exchange is
mandatory, at the option of the holder or our option, the period
during which conversion or exchange may occur, the initial
conversion or exchange price or rate and the circumstances or
manner in which the amount of common or preferred stock or other
securities issuable upon conversion or exchange may be
adjusted). It will also indicate for preferred stock convertible
into common stock, the number of shares of common stock to be
reserved in connection with, and issued upon conversion of, the
preferred stock (including whether the conversion or exchange is
mandatory, the initial conversion or exchange price or rate and
the circumstances or manner in which the amount of common stock
issuable upon conversion or exchange may be adjusted) at the
option of the holder or our option and the period during which
conversion or exchange may occur.
Redemption
After January 1, 2009, we have the right and option to
redeem all or a portion of the outstanding shares of
Series A Preferred Stock at the rate of $1,000.00 for each
one whole share of Series A Preferred Stock. In the case of
a redemption of less than all of the then outstanding shares of
Series A Preferred Stock, the shares will be redeemed
proportionately in such manner as our board of directors, at its
sole discretion, considers reasonable and appropriate.
The prospectus supplement will indicate whether, and on what
terms, shares of any future series of preferred stock will be
subject to mandatory redemption or a sinking fund provision. The
prospectus supplement will also indicate whether, and on what
terms, including the date on or after which redemption may
occur, we may redeem shares of a series of the preferred stock.
Liquidation
Rights
In the event of any liquidation, dissolution or winding up of
Gateway, the holders of shares of preferred stock, including our
Series A Preferred Stock, will be entitled to receive, out
of the assets of Gateway available for distribution to
shareholders, liquidating distributions in an amount equal to
the stated value per share of preferred stock, as described in
the articles of incorporation
and/or
the
applicable prospectus supplement, plus accrued and accumulated
but unpaid dividends, if any, to the date of final distribution,
before any distribution is made to holders of:
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any class or series of capital stock ranking junior to the
preferred stock as to rights upon liquidation, dissolution or
winding up; or
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our common stock.
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However, holders of the shares of preferred stock will not be
entitled to receive the liquidation price of their shares until
we have paid or set aside an amount sufficient to pay in full
the liquidation preference of any class or series of our capital
stock ranking senior as to rights upon liquidation, dissolution
or winding up. Unless otherwise provided in the applicable
prospectus supplement, neither a consolidation or merger of
Gateway with or into another corporation nor a merger of another
corporation with or into Gateway nor a sale or transfer of all
or part of Gateways assets for cash or securities will be
considered a liquidation, dissolution or winding up of Gateway.
If, upon any liquidation, dissolution or winding up of Gateway,
assets of Gateway then distributable are insufficient to pay in
full the amounts payable with respect to the preferred stock and
any other preferred stock ranking on parity with the preferred
stock as to rights upon liquidation, dissolution or winding up,
the holders of the preferred stock and of that other preferred
stock will share ratably in any distribution in proportion to
the full respective preferential amounts to which they are
entitled. After we have paid the full amount of the liquidating
distribution to which they are entitled, the holders of the
preferred stock will not be entitled to any further
participation in any distribution of assets by Gateway.
Voting
Rights
Unless otherwise determined by our board of directors and
indicated in the prospectus supplement, holders of the preferred
stock will not have any voting rights except as from time to
time required by law. Shares of our Series A Preferred
Stock are non-voting shares, and holders of Series A
Preferred Stock have no right to vote on matters submitted to a
vote of our shareholders except to the extent such voting rights
are required by applicable law.
So long as any shares of the preferred stock, other than
Series A Preferred Stock, remain outstanding, we will not,
without the consent of the holders of at least a majority of the
shares of preferred stock outstanding at the time, voting
together as one class with all other series of preferred stock
having similar voting rights that have been conferred and are
exercisable:
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issue or increase the authorized amount of any class or series
of stock ranking senior to the outstanding preferred stock as to
dividends or upon liquidation or dissolution; or
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amend, alter or repeal the provisions of our articles of
incorporation, whether by merger, consolidation or otherwise, so
as to materially and adversely affect any power, preference or
special right of the outstanding preferred stock or its holders.
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Depositary
Shares
We may, at our option, elect to offer fractional shares or some
multiple of shares of preferred stock, rather than individual
shares of preferred stock. If we choose to do so, we will issue
depositary receipts for depositary shares, each of which will
represent a fraction or a multiple of a share of a particular
series of preferred stock as described below.
The following statements concerning depositary shares,
depositary receipts, and the deposit agreement are not intended
to be comprehensive and are qualified in their entirety by
reference to the forms of these documents, which we have filed
or will file as exhibits to the registration statement. Each
investor should refer to the detailed provisions of those
documents.
General.
The shares of any series of preferred
stock represented by depositary shares will be deposited under a
deposit agreement among Gateway, a bank or trust company we
select, with its principal executive office in the United
States, as depository, which we refer to as the preferred stock
depository, and the holders from time to time of depositary
receipts issued under the agreement. Subject to the terms of the
deposit agreement, each holder of a depositary share will be
entitled, in proportion to the fraction or multiple of a share
of preferred stock represented by that depositary share, to all
the rights and preferences of the preferred stock represented by
that depositary share, including dividend, voting and
liquidation rights.
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The depositary shares will be evidenced by depositary receipts
issued under the deposit agreement. Depositary receipts will be
distributed to those persons purchasing the fractional or
multiple shares of the related series of preferred stock.
Immediately following the issuance of shares of any future
series of preferred stock, we will deposit those shares with the
preferred stock depository, which will then issue and deliver
the depositary receipts to the purchasers. Depositary receipts
will only be issued evidencing whole depositary shares. A
depositary receipt may evidence any number of whole depositary
shares.
Dividends and Other Distributions.
The
preferred stock depository will distribute all cash dividends or
other cash distributions received on the related series of
preferred stock to the record holders of depositary receipts
relating to those series in proportion to the number of the
depositary shares evidenced by depositary receipts those holders
own.
If we make a distribution other than in cash, the preferred
stock depository will distribute the property it receives to the
record holders of depositary receipts in proportion to the
number of depositary shares evidenced by depositary receipts
those holders own, unless the preferred stock depository
determines that the distribution cannot be made proportionately
among those holders or that it is not feasible to make the
distribution. In that event, the preferred stock depository may,
with our approval, sell the property and distribute the net
proceeds to the holders in proportion to the number of
depositary shares evidenced by depositary receipts they own.
The amount distributed to holders of depositary shares will be
reduced by any amounts required to be withheld by Gateway or the
preferred stock depository on account of taxes or other
governmental charges.
Conversion and Exchange.
If any series of
preferred stock underlying the depositary shares is subject to
conversion or exchange, the applicable prospectus supplement
will describe the rights or obligations of each record holder of
depositary receipts to convert or exchange the depositary shares.
Voting the Preferred Stock.
Upon receiving
notice of any meeting at which the holders of any series of the
preferred stock are entitled to vote, the preferred stock
depository will mail the information contained in the notice of
the meeting to the record holders of the depositary receipts
relating to that series of preferred stock. Each record holder
of the depositary receipts on the record date, which will be the
same date as the record date for the related series of preferred
stock, may instruct the preferred stock depositary how to
exercise his or her voting rights. The preferred stock
depository will endeavor, insofar as practicable, to vote or
cause to be voted the maximum number of whole shares of the
preferred stock represented by those depositary shares in
accordance with those instructions received sufficiently in
advance of the meeting, and we will agree to take all reasonable
action that may be deemed necessary by the preferred stock
depository in order to enable the preferred stock depository to
do so. The preferred stock depository will abstain from voting
shares of the preferred stock for which it does not receive
specific instructions from the holder of the depositary shares
representing them.
Redemption of Depositary Shares.
Depositary
shares will be redeemed from any proceeds received by the
preferred stock depository resulting from the redemption, in
whole or in part, of the series of the preferred stock
represented by those depositary shares. The redemption price per
depositary share will equal the applicable fraction or multiple
of the redemption price per share payable with respect to the
series of the preferred stock. If we redeem shares of a series
of preferred stock held by the preferred stock depository, the
preferred stock depository will redeem as of the same redemption
date the number of depositary shares representing the shares of
preferred stock that we redeem. If less than all the depositary
shares will be redeemed, the depositary shares to be redeemed
will be selected by lot or substantially equivalent method
determined by the preferred stock depository.
After the date fixed for redemption, the depositary shares
called for redemption will no longer be deemed to be
outstanding, and all rights of the holders of the depositary
shares will cease, except the right to receive the monies
payable and any other property to which the holders were
entitled upon the redemption upon surrender to the preferred
stock depository of the depositary receipts evidencing the
depositary shares. Any funds deposited by us with the preferred
stock depository for any depositary shares that the holders fail
to redeem will be returned to us after a period of two years
from the date the funds are deposited.
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Amendment and Termination of the Deposit
Agreement.
We may amend the form of depositary
receipt evidencing the depositary shares and any provision of
the deposit agreement at any time and from time to time by
agreement with the preferred stock depository. However, any
amendment that materially and adversely alters the rights of the
holders of depositary receipts will not be effective unless it
has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement will
automatically terminate after there has been a final
distribution on the related series of preferred stock in
connection with any liquidation, dissolution or winding up of
Gateway and that distribution has been made to the holders of
depositary shares or all of the depository shares have been
redeemed.
Charges of Preferred Stock Depository.
We will
pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary
arrangements. We will pay all charges of the preferred stock
depository in connection with the initial deposit of the related
series of preferred stock, the initial issuance of the
depositary shares, all withdrawals of shares of the related
series of preferred stock by holders of depositary shares and
the registration of transfers of title to any depositary shares.
However, holders of depositary shares will pay other transfer
and other taxes and governmental charges and the other charges
expressly provided in the deposit agreement to be for their
accounts.
Corporate Trust Office of Preferred Stock
Depository.
The preferred stock depositorys
corporate trust office will be set forth in the applicable
prospectus supplement relating to a series of depositary shares.
Unless otherwise stated in the applicable prospectus supplement,
the preferred stock depository will act as transfer agent and
registrar for depositary receipts, and, if shares of a series of
preferred stock are redeemable, the preferred stock depository
will act as redemption agent for the corresponding depositary
receipts.
Resignation and Removal of Preferred Stock
Depository.
The preferred stock depository may
resign at any time by delivering to us written notice of its
election to do so, and we may at any time remove the preferred
stock depository. Any resignation or removal will take effect
upon the appointment of a successor preferred stock depository.
A successor must be appointed by us within 60 days after
delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United
States.
Reports to Holders.
We will deliver all
required reports and communications to holders of the preferred
stock to the preferred stock depository, and it will forward
those reports and communications to the holders of depositary
shares.
Limitation on Liability.
Neither we nor the
preferred stock depository will be liable if either of us is
prevented or delayed by law or any circumstance beyond our
control in performing our respective obligations under the
deposit argument. Our obligations and those of the depository
will be limited to performance of our respective duties under
the deposit agreement without, in our case, negligence or bad
faith or, in the case of the depository, negligence or willful
misconduct. We and the depository may rely upon advice of
counsel or accountants, or upon information provided by persons
presenting the underlying preferred stock for deposit, holders
of depositary receipts or other persons believed by us in good
faith to be competent and on documents believed to be genuine.
Inspection by Holders.
Upon request, the
preferred stock depository will provide for inspection to the
holders of depositary shares the transfer books of the
depository and the list of holders of receipts; provided that
any requesting holder certifies to the preferred stock
depository that such inspection is for a proper purpose
reasonably related to such persons interest as an owner of
depositary shares evidenced by the receipts.
Description
of Debt Securities
Debt may
be Senior or Subordinated
We may issue senior or subordinated debt securities. The senior
debt securities and, in the case of debt securities in bearer
form, any coupons to these securities, will constitute part of
our senior debt and, except as otherwise provided in the
applicable prospectus supplement, will rank on a parity with all
of our other unsecured and unsubordinated debt. The subordinated
debt securities and any coupons will constitute part of
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our subordinated debt and will be subordinate and junior in
right of payment to all of our senior indebtedness
(as defined herein). If this prospectus is being delivered in
connection with a series of subordinated debt securities, the
accompanying prospectus supplement or the information we
incorporate in this prospectus by reference will indicate the
approximate amount of senior indebtedness outstanding as of the
end of the most recent fiscal quarter. If issued, there will be
one indenture for senior debt securities and one for
subordinated debt securities.
Payments
We may issue debt securities from time to time in one or more
series. The provisions of each indenture may allow us to
reopen a previous issue of a series of debt
securities and issue additional debt securities of that issue.
The debt securities may be denominated and payable in
U.S. dollars.
Debt securities may bear interest at a fixed rate or a floating
rate, which, in either case, may be zero, or at a rate that
varies during the lifetime of the debt security. Debt securities
may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. The
applicable prospectus supplement will describe the federal
income tax consequences and special considerations applicable to
any such debt securities.
Terms
Specified in Prospectus Supplement
The prospectus supplement will contain, where applicable, the
following terms of and other information relating to any offered
debt securities:
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classification as senior or subordinated debt securities and the
specific designation;
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aggregate principal amount, purchase price and denomination;
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currency in which the debt securities are denominated
and/or
in
which principal, and premium, if any,
and/or
interest, if any, is payable;
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date of maturity;
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the interest rate or rates or the method by which the interest
rate or rates will be determined, if any;
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the interest payment dates, if any;
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the place or places for payment of the principal of and any
premium
and/or
interest on the debt securities;
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any repayment, redemption, prepayment or sinking fund
provisions, including any redemption notice provisions;
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whether we will issue the debt securities in registered form or
bearer form or both and, if we are offering debt securities in
bearer form, any restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of those
debt securities in bearer form;
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whether we will issue the debt securities in definitive form and
under what terms and conditions;
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the terms on which holders of the debt securities may convert or
exchange these securities into or for common or preferred stock
or other securities of ours offered hereby, into or for common
or preferred stock or other securities of an entity affiliated
with us or debt or equity or other securities of an entity not
affiliated with us, or for the cash value of our stock or any of
the above securities, the terms on which conversion or exchange
may occur, including whether conversion or exchange is
mandatory, at the option of the holder or at our option, the
period during which conversion or exchange may occur, the
initial conversion or exchange price or rate and the
circumstances or manner in which the amount of common or
preferred stock or other securities issuable upon conversion or
exchange may be adjusted;
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information as to the methods for determining the amount of
principal or interest payable on any date
and/or
the
currencies, securities or baskets of securities, commodities or
indices to which the amount payable on that date is linked;
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any agents for the debt securities, including trustees,
depositories, authenticating or paying agents, transfer agents
or registrars;
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the depository for global certificated securities, if
any; and
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any other specific terms of the debt securities, including any
additional events of default or covenants, and any terms
required by or advisable under applicable laws or regulations.
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Registration
and Transfer of Debt Securities
Holders may present debt securities for exchange, and holders of
registered debt securities may present these securities for
transfer, in the manner, at the places and subject to the
restrictions stated in the debt securities and described in the
applicable prospectus supplement. We will provide these services
without charge except for any tax or other governmental charge
payable in connection with these services and subject to any
limitations provided in the applicable indenture.
If any of the securities are to be held in global form, the
procedures for transfer of interests in those securities will
depend upon the procedures of the depositary for those global
securities. See Global Securities.
Subordination
Provisions
The prospectus supplement relating to any offering of
subordinated debt securities will describe the specific
subordination provisions. However, unless otherwise noted in the
prospectus supplement, subordinated debt securities will be
subordinate and junior in right of payment to all of our senior
indebtedness, to the extent and in the manner set forth in the
subordinated indenture. The indenture for any subordinated debt
securities will define the applicable senior
indebtedness. Senior indebtedness shall continue to be
senior indebtedness and be entitled to the benefits of the
subordination provisions irrespective of any amendment,
modification or waiver of any term of such senior indebtedness.
The applicable prospectus supplement will describe the
circumstances under which we may withhold payment of principal
of, or any premium or interest on, any subordinated debt
securities. In such event, any payment or distribution under the
subordinated debt securities, whether in cash, securities or
other property, which would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the
subordinated debt securities, will be paid or delivered directly
to the holders of senior indebtedness or their representatives
or trustees in accordance with the priorities then existing
among such holders as calculated by us until all senior
indebtedness has been paid in full. If any payment or
distribution under the subordinated debt securities is received
by the trustee of any subordinated debt securities in
contravention of any of the terms of the subordinated indenture
and before all the senior indebtedness has been paid in full,
such payment or distribution will be received in trust for the
benefit of, and paid over or delivered to, the holders of the
senior indebtedness or their representatives or trustees at the
time outstanding in accordance with the priorities then existing
among such holders as calculated by us for application to the
payment of all senior indebtedness remaining unpaid to the
extent necessary to pay all such senior indebtedness in full.
Covenants
The applicable prospectus supplement will contain, where
applicable, the following information about any senior debt
securities issued under it:
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the terms and conditions of any restrictions on our ability to
create, assume, incur or guarantee any indebtedness for borrowed
money that is secured by a pledge, lien or other
encumbrance; and
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the terms and conditions of any restrictions on our ability to
merge or consolidate with any other person or to sell, lease or
convey all or substantially all of our assets to any other
person.
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Events of
Default
The indenture for any senior debt securities will provide
holders of the securities with the terms of remedies if we fail
to perform specific obligations, such as making payments on the
debt securities or other indebtedness, or if we become bankrupt.
Holders should review these provisions and understand which of
our actions trigger an event of default and which actions do
not. The indenture may provide for the issuance of debt
securities in one or more series and whether an event of default
has occurred may be determined on a series by series basis. The
events of default will be defined under the indenture and
described in the prospectus supplement.
The prospectus supplement will contain:
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the terms and conditions, if any, by which the securities
holders may declare the principal of all debt securities of each
affected series and interest accrued thereon to be due and
payable immediately; and
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the terms and conditions, if any, under which all of the
principal of all debt securities and interest accrued thereon
shall be immediately due and payable.
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The prospectus supplement will also contain a description of the
method by which the holders of the outstanding debt securities
may annul past declarations of acceleration of, or waive past
defaults of, the debt securities.
The indenture will contain a provision entitling the trustee,
subject to the duty of the trustee during a default to act with
the required standard of care, to be indemnified by the holders
of debt securities issued under the indenture before proceeding
to exercise any trust or power at the request of holders. The
prospectus supplement will contain a description of the method
by which the holders of outstanding debt securities may direct
the time, method and place of conducting any proceeding for any
remedy available to the applicable trustee, or exercising any
trust or power conferred on the trustee.
The indenture will provide that no individual holder of debt
securities may institute any action against us under the
indenture, except actions for payment of overdue principal and
interest. The prospectus supplement will contain a description
of the circumstances under which a holder may exercise this
right.
The indenture will contain a covenant that we will file annually
with the trustee a certificate of no default or a certificate
specifying any default that exists.
Discharge
The prospectus supplement will contain a description of our
ability to eliminate most or all of our obligations on any
series of debt securities prior to maturity provided we comply
with the provisions described in the prospectus supplement.
We will also have the ability to discharge all of our
obligations, other than as to transfers and exchanges, under any
series of debt securities at any time, which we refer to as
defeasance. We may be released with respect to any
outstanding series of debt securities from the obligations
imposed by any covenants limiting liens and consolidations,
mergers, and asset sales, and elect not to comply with those
sections without creating an event of default. Discharge under
those procedures is called covenant defeasance. The
conditions we must satisfy to exercise covenant defeasance with
respect to a series of debt securities will be described in the
applicable prospectus supplement.
Modification
of the Indenture
The prospectus supplement will contain a description of our
ability and the terms and conditions under which, with the
applicable trustee, we may enter into supplemental indentures
which make certain changes that do not adversely affect in any
material respect the interests of the holders of any series
without the consent of the holders of debt securities issued
under a particular indenture.
The prospectus supplement will contain a description of the
method by which we and the applicable trustee, with the consent
of the holders of outstanding debt securities, may add any
provisions to, or change in
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any manner or eliminate any of the provisions of, the applicable
indenture or modify in any manner the rights of the holders of
those debt securities. The prospectus supplement will also
describe the circumstances under which we may not exercise on
this right without the consent of each holder that would be
affected by such change.
We may not amend a supplemental indenture relating to
subordinated debt securities to alter the subordination of any
outstanding subordinated debt securities without the written
consent of each potentially adversely affected holder of
subordinated and senior indebtedness then outstanding.
Description
of Purchase Contracts
We may issue purchase contracts, including purchase contracts
issued as part of a unit with one or more other securities, for
the purchase or sale of our debt securities, preferred stock,
depositary shares or common stock. The price of our debt
securities or price per share of common stock, preferred stock
or depositary shares, as applicable, may be fixed at the time
the purchase contracts are issued or may be determined by
reference to a specific formula contained in the purchase
contracts. We may issue purchase contracts in such amounts and
in as many distinct series as we wish.
The applicable prospectus supplement may contain, where
applicable, the following information about the purchase
contracts issued under it:
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whether the purchase contracts obligate the holder to purchase
or sell, or both, our debt securities, common stock, preferred
stock or depositary shares, as applicable, and the nature and
amount of each of those securities, or method of determining
those amounts;
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whether the purchase contracts are to be prepaid or not;
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whether the purchase contracts are to be settled by delivery, or
by reference or linkage to the value, performance or level of
our common stock or preferred stock;
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any acceleration, cancellation, termination or other provisions
relating to the settlement of the purchase contracts;
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United States federal income tax considerations relevant to the
purchase contracts; and
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whether the purchase contracts will be issued in fully
registered global form.
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The applicable prospectus supplement will describe the terms of
any purchase contracts. The preceding description and any
description of purchase contracts in the applicable prospectus
supplement does not purport to be complete and is subject to and
is qualified in its entirety by reference to the purchase
contract agreement and, if applicable, collateral arrangements
and depositary arrangements relating to such purchase contracts.
Description
of Units
Units will consist of any combination of one or more of the
other securities described in this prospectus and may include
trust preferred securities issued by Gateway Capital Statutory
Trust V. The applicable prospectus supplement or
supplements will also describe:
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the designation and the terms of the units and of any
combination of the securities constituting the units, including
whether and under what circumstances those securities may be
held or traded separately;
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any additional terms of the agreement governing the units;
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any additional provisions for the issuance, payment, settlement,
transfer or exchange of the units or of the securities
constituting the units;
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any applicable United States federal income tax
consequences; and
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whether the units will be issued in fully registered form.
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The terms and conditions described under Description of
Debt Securities, Description of Warrants,
Description of Preferred Stock and Description
of Common Stock will apply to each unit that includes such
securities and to the securities included in each unit, unless
otherwise specified in the applicable prospectus supplement. If
applicable, the terms and conditions of any trust preferred
securities described in a prospectus or prospectus supplement
delivered by Gateway Capital Statutory Trust V will apply
to units that include trust preferred securities.
We will issue the units under one or more unit agreements to be
entered into between us and a bank or trust company, as unit
agent. We may issue units in one or more series, which will be
described in the applicable prospectus supplement.
Description
of Warrants
We may issue warrants for the purchase of debt securities, or
shares of preferred stock or common stock. Warrants may be
issued independently or together with any debt securities,
shares of preferred stock or common stock offered by any
prospectus supplement and may be attached to or separate from
the debt securities, shares of preferred stock or common stock.
The warrants are to be issued under warrant agreements to be
entered into between Gateway and a bank or trust company, as
warrant agent, as is named in the prospectus supplement relating
to the particular issue of warrants. The warrant agent will act
solely as an agent of Gateway in connection with the warrants
and will not assume any obligation or relationship of agency or
trust for or with any holders of warrants or beneficial owners
of warrants.
This section is a summary of the material terms of the warrant
agreement; it does not describe every aspect of the warrants. We
urge you to read the form of warrant agreement attached as an
exhibit to the registration statement because it, and not this
description, will define your rights as a warrant holder.
General
If warrants are offered, the prospectus supplement will describe
the terms of the warrants, including the following:
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the offering price;
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the designation, aggregate principal amount and terms of the
debt securities purchasable upon exercise of the debt warrants
and the price at which such debt securities may be purchased
upon such exercise;
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the designation, number of shares and terms of the preferred
stock purchasable upon exercise of the preferred stock warrants
and the price at which such shares of preferred stock may be
purchased upon such exercise;
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the designation, number of shares and terms of the common stock
purchasable upon exercise of the common stock warrants and the
price at which such shares of common stock may be purchased upon
such exercise;
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if applicable, the designation and terms of the debt securities,
preferred stock or common stock with which the warrants are
issued and the number of warrants issued with each such debt
security or share of preferred stock or common stock;
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if applicable, the date on and after which the warrants and the
related debt securities, preferred stock or common stock will be
separately transferable;
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the date on which the right to exercise the warrants shall
commence and the date on which such right shall expire;
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whether the warrants will be issued in registered or bearer form;
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a discussion of certain federal income tax, accounting and other
special considerations, procedures and limitations relating to
the warrants; and
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any other terms of the warrants.
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Warrants may be exchanged for new warrants of different
denominations.
If in registered form, warrants may be presented for
registration of transfer, and may be exercised at the corporate
trust office of the warrant agent or any other office indicated
in the prospectus supplement. Before the exercise of their
warrants, holders of warrants will not have any of the rights of
holders of the securities purchasable upon such exercise,
including the right to receive payments of principal of, any
premium on, or any interest on, the debt securities purchasable
upon such exercise or to enforce the covenants in the indenture
or to receive payments of dividends, if any, on the preferred
stock or common stock purchasable upon such exercise or to
exercise any applicable right to vote.
Exercise
of Warrants
Each warrant will entitle the holder to purchase such principal
amount of debt securities or such number of shares of preferred
stock or common stock at such exercise price as shall in each
case be set forth in, or can be calculated according to
information contained in, the prospectus supplement relating to
the warrant. Warrants may be exercised at such times as are set
forth in the prospectus supplement relating to such warrants.
After the close of business on the expiration date of the
warrants, or such later date to which such expiration date may
be extended by Gateway, unexercised warrants will become void.
Subject to any restrictions and additional requirements that may
be set forth in the prospectus supplement, warrants may be
exercised by delivery to the warrant agent of the certificate
evidencing such warrants properly completed and duly executed
and of payment as provided in the prospectus supplement of the
amount required to purchase the debt securities or shares of
preferred stock or common stock purchasable upon such exercise.
The exercise price will be the price applicable on the date of
payment in full, as set forth in the prospectus supplement
relating to the warrants. Upon receipt of such payment and the
certificate representing the warrants to be exercised, properly
completed and duly executed at the corporate trust office of the
warrant agent or any other office indicated in the prospectus
supplement, we will, as soon as practicable, issue and deliver
the debt securities or shares of preferred stock or common stock
purchasable upon such exercise. If fewer than all of the
warrants represented by such certificate are exercised, a new
certificate will be issued for the remaining amount of warrants.
Additional
Provisions
The exercise price payable and the number of shares of common
stock or preferred stock purchasable upon the exercise of each
stock warrant will be subject to adjustment in certain events,
including:
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the issuance of the stock dividend to holders of common stock or
preferred stock, respectively;
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a combination, subdivision or reclassification of common stock
or preferred stock, respectively; or
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any other event described in the applicable prospectus
supplement.
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In lieu of adjusting the number of shares of common stock or
preferred stock purchasable upon exercise of each stock warrant,
we may elect to adjust the number of stock warrants. No
adjustment in the number of shares purchasable upon exercise of
the stock warrants will be required until cumulative adjustments
require an adjustment of at least 1% thereof. We may, at our
option, reduce the exercise price at any time. No fractional
shares will be issued upon exercise of stock warrants, but we
will pay the cash value of any fractional shares otherwise
issuable. Notwithstanding the foregoing, in case of any
consolidation, merger, or sale or conveyance of the property of
Gateway as an entirety or substantially as an entirety, the
holder of each outstanding stock warrant shall have the right
upon the exercise thereof to the kind and amount of shares of
stock and other securities and property, including cash,
receivable by a holder of the number of shares of common stock
or preferred stock into which such stock warrants were
exercisable immediately prior thereto.
19
No Rights
as Stockholders
Holders of stock warrants will not be entitled, by virtue of
being such holders, to vote, to consent, to receive dividends,
to receive notice as stockholders with respect to any meeting of
shareholders for the election of directors of Gateway or any
other matter, or to exercise any rights whatsoever as
shareholders of Gateway.
Description
of Global Securities
Unless otherwise indicated in the applicable prospectus
supplement, we may issue the securities other than common stock
in the form of one or more fully registered global securities
that will be deposited with a depository or its nominee
identified in the applicable prospectus supplement and
registered in the name of that depository or its nominee. In
those cases, one or more registered global securities will be
issued in a denomination or aggregate denominations equal to the
portion of the aggregate principal or face amount of the
securities to be represented by registered global securities.
Unless and until it is exchanged in whole for securities in
definitive registered form, a registered global security may not
be transferred except as a whole by and among the depository for
the registered global security, the nominees of the depository
or any successors of the depository or those nominees.
If not described below, any specific terms of the depository
arrangement with respect to any securities to be represented by
a registered global security will be described in the prospectus
supplement relating to those securities. We anticipate that the
following provisions will apply to all depository arrangements.
Ownership of beneficial interests in a registered global
security will be limited to persons, called participants, that
have accounts with the depository or persons that may hold
interests through participants. Upon the issuance of a
registered global security, the depository will credit, on its
book-entry registration and transfer system, the
participants accounts with the respective principal or
face amounts of the securities beneficially owned by the
participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the
accounts to be credited.
Ownership of beneficial interests in a registered global
security will be shown on, and the transfer of ownership
interests will be effected only through, records maintained by
the depository, with respect to interests of participants, and
on the records of participants, with respect to interests of
persons holding through participants. The laws of some states
may require that some purchasers of securities take physical
delivery of these securities in definitive form. These laws may
impair your ability to own, transfer or pledge beneficial
interests in registered global securities.
So long as the depository, or its nominee, is the registered
owner of a registered global security, that depository or its
nominee, as the case may be, will be considered the sole owner
or holder of the securities represented by the registered global
security for all purposes. Except as described below, owners of
beneficial interests in a registered global security will not be
entitled to have the securities represented by the registered
global security registered in their names, will not receive or
be entitled to receive physical delivery of the securities in
definitive form and will not be considered the owners or holders
of the securities. Accordingly, each person owning a beneficial
interest in a registered global security must rely on the
procedures of the depository for that registered global security
and, if that person is not a participant, on the procedures of
the participant through which the person owns its interest, to
exercise any rights of a holder under the applicable indenture,
warrant agreement or unit agreement. We understand that under
existing industry practices, if we request any action of holders
or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is
entitled to give or take, the depository for the registered
global security would authorize the participants holding the
relevant beneficial interests to give or take that action, and
the participants would authorize beneficial owners owning
through them to give or take that action or would otherwise act
upon the instructions of beneficial owners holding through them.
Payments of principal of, and premium, if any, and interest on,
debt securities, and any payments to holders with respect to
warrants, units, or preferred stock, represented by a registered
global security registered in the name of a depository or its
nominee will be made to the depository or its nominee, as the
case may be, as the registered owner of the registered global
security. None of Gateway, the trustees, the warrant agents, the
20
unit agents or any other agent of Gateway, agent of the trustees
or agent of the warrant agents or unit agents will have any
responsibility or liability for any aspect of the records
relating to payments made on account of beneficial ownership
interests in the registered global security or for maintaining,
supervising or reviewing any records relating to those
beneficial ownership interests.
We expect that the depository for any of the securities
represented by a registered global security, upon receipt of any
payment of principal, premium, interest or other distribution of
underlying securities or other property to holders on that
registered global security, will immediately credit
participants accounts in amounts proportionate to their
respective beneficial interests in that registered global
security as shown on the records of the depository. We also
expect that payments by participants to owners of beneficial
interests in a registered global security held through
participants will be governed by standing customer instructions
and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered
in street name, and will be the responsibility of
those participants.
If the depository for any of these securities represented by a
registered global security is at any time unwilling or unable to
continue as depository or ceases to be a clearing agency
registered under the Exchange Act, and a successor depository
registered as a clearing agency under the Exchange Act is not
appointed by us within 90 days, we will issue securities in
definitive form in exchange for the registered global security
that had been held by the depository. In addition, under the
terms of the indenture, we may at any time and in our sole
discretion decide not to have any of the securities represented
by one or more registered global securities. We understand,
however, that, under current industry practices, the depository
would notify its participants of our request, but will only
withdraw beneficial interests from a global security at the
request of each participant. We would issue definitive
certificates in exchange for any such interests withdrawn. Any
securities issued in definitive form in exchange for a
registered global security will be registered in the name or
names that the depository gives to the applicable trustee,
warrant agent, unit agent or other relevant agent of ours or
theirs. It is expected that the depositorys instructions
will be based upon directions received by the depository from
participants with respect to ownership of beneficial interests
in the registered global security that had been held by the
depository.
Book-Entry
Issuance
General
The Depository Trust Company, DTC, may act as securities
depository for all of the debt securities unless otherwise
referred to in the prospectus supplement relating to an offering
of debt securities. The debt securities may be issued only as
fully-registered securities registered in the name of
Cede & Co. (DTCs nominee). One or more
fully-registered global certificates will be issued for the debt
securities, representing in the aggregate the total amount of
the debt securities, and will be deposited with DTC.
DTC, the worlds largest depository, is a limited-purpose
trust company organized under the New York Banking Law, a
banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
clearing corporation within the meaning of the New
York Uniform Commercial Code, and a clearing agency
registered pursuant to Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in participants accounts, thereby
eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations.
DTC is a wholly-owned subsidiary of the Depository
Trust & Clearing Corporation, DTCC. DTCC, in turn, is
owned by a number of its direct participants and members of the
National Securities Clearing Corporation, Government Securities
Clearing Corporation, MBS Clearing Corporation and Emerging
Markets Clearing Corporation, as well as by the New York Stock
Exchange, the American Stock Exchange and the Financial Industry
Regulatory Authority.
21
Access to the DTC system is also available to indirect
participants, such as securities brokers and dealers, and banks
and trust companies that clear through or maintain custodial
relationships with direct participants, either directly or
indirectly. The rules applicable to DTC and its participants are
on file with the SEC.
Purchases of debt securities within the DTC system must be made
by or through direct participants, which will receive a credit
for the debt securities on DTCs records. The ownership
interest of each actual purchaser of each debt security, as
beneficial owner, is in turn to be recorded on the direct and
indirect participants records. Beneficial owners will not
receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations
providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect
participants through which the beneficial owners purchased debt
securities. Transfers of ownership interests in the debt
securities are to be accomplished by entries made on the books
of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing
their ownership interest in debt securities except if use of the
book-entry-only system for the debt securities is discontinued.
The deposit of debt securities with DTC and their registration
in the name of Cede & Co. or such other nominee will
not effect any change in beneficial ownership. DTC will have no
knowledge of the actual beneficial owners of the debt
securities; DTCs records reflect only the identity of the
direct participants to whose accounts the debt securities are
credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of
their holdings on behalf of their customers.
The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that we believe
to be reliable, but we assume no responsibility for the accuracy
thereof. We do not have any responsibility for the performance
by DTC or its participants of their respective obligations as
described in this prospectus or under the rules and procedures
governing their respective operations.
Notices
and Voting
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct and indirect participants to beneficial owners
will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices will be sent to Cede & Co. as the
registered holder of the debt securities. If less than all of
the debt securities are being redeemed, DTCs current
practice is to determine by lot the amount of the interest of
each direct participant to be redeemed.
Although voting with respect to the debt securities is limited
to the holders of record of the debt securities, in those
instances in which a vote is required, neither DTC nor
Cede & Co. will itself consent or vote with respect to
the debt securities. Under its usual procedures, DTC would mail
an omnibus proxy to the relevant trustee as soon as possible
after the record date. The omnibus proxy assigns
Cede & Co.s consenting or voting rights to those
direct participants to whose accounts the debt securities are
credited on the record date.
Distribution
of Funds
The relevant trustee will make distribution payments on the debt
securities to DTC. DTCs practice is to credit direct
participants accounts on the relevant payment date in
accordance with their respective holdings shown on DTCs
records unless DTC has reason to believe that it will not
receive payments on the payment date. Payments by participants
to beneficial owners will be governed by standing instructions
and customary practices and will be the responsibility of the
participant and not of DTC, the relevant trustee or us, subject
to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the
responsibility of the relevant trustee, disbursement of the
payments to direct participants is the responsibility of DTC,
and disbursements of the payments to the beneficial owners is
the responsibility of direct and indirect participants.
22
Successor
Depositaries and Termination of Book-Entry System
DTC may discontinue providing its services with respect to any
of the debt securities at any time by giving reasonable notice
to the relevant trustee or us. If no successor securities
depositary is obtained, definitive certificates representing the
debt securities are required to be printed and delivered. We
also have the option to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary).
After an event of default under the indenture, the holders of a
majority in liquidation amount of debt securities may determine
to discontinue the system of book-entry transfers through DTC.
In these events, definitive certificates for the debt securities
will be printed and delivered.
Plan of
Distribution
General
We may sell the securities being offered hereby in one or more
of the following ways from time to time:
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through agents to the public or to investors;
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to underwriters for resale to the public or to investors;
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directly to investors; or
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through a combination of any of these methods of sale.
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We will set forth in a prospectus supplement the terms of that
particular offering of securities, including:
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the name or names of any agents or underwriters;
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the purchase price of the securities being offered and the
proceeds we will receive from the sale;
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any over-allotment options under which underwriters may purchase
additional securities from us;
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any agency fees or underwriting discounts and other items
constituting agents or underwriters compensation;
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any initial public offering price;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any securities exchanges or markets on which such securities may
be listed.
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Agents
We may designate agents who agree to use their reasonable
efforts to solicit purchases of our securities for a period of
their appointment or to sell our securities on a continuing
basis.
Underwriters
If we use underwriters for a sale of securities, the
underwriters will acquire the shares for their own account. The
underwriters may resell the securities in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The underwriters may sell the securities directly
or through underwriting syndicates by managing underwriters. The
obligations of the underwriters to purchase the shares will be
subject to the conditions set forth in the applicable
underwriting agreement. The underwriters will be obligated to
purchase all the shares if they purchase any of the shares. The
underwriters may change from time to time any initial public
offering price and any discounts or concessions the underwriters
allow or reallow or pay to dealers. We may use underwriters with
whom we have a material relationship. We will describe the
nature of any such relationship in any prospectus supplement
naming any such underwriter.
Underwriters, dealers and agents that participate in the
distribution of the securities may be underwriters as defined in
the Securities Act, and any discounts or commissions they
receive may be treated as underwriting
23
discounts and commissions under the Securities Act. We will
identify in the applicable prospectus supplement any
underwriters, dealers or agents and will describe their
compensation.
We may have agreements with the underwriters, dealers and agents
to indemnify them against various civil liabilities, including
liabilities under the Securities Act, or to contribute payments
that the agents, underwriters, dealers and remarketing firms may
be required to make as a result of those civil liabilities.
Underwriters, dealers and agents and their affiliates may be
customers of, engage in transactions with, or perform services
for us or our subsidiary companies in the ordinary course of
their businesses. In connection with the distribution of the
securities, we may enter into swap or other hedging transactions
with, or arranged by, underwriters or agents or their
affiliates. These underwriters or agents or their affiliates may
receive compensation, trading gain or other benefits from these
transactions.
Direct
Sales
We may also sell shares directly to one or more purchasers
without using underwriters or agents.
Stabilization
Activities
Any underwriter may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size,
which create a short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short
covering transactions involve purchases of the securities in the
open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a
selling concession from a dealer when the securities originally
sold by the dealer are purchased in a covering transaction to
cover short positions. Those activities may cause the price of
the securities to be higher than it would otherwise be. If
commenced, the underwriters may discontinue any of these
activities at any time.
Passive
Market Marking
Any underwriters who are qualified market markers on The Nasdaq
Global Select Market may engage in passive market making
transactions in the securities on The Nasdaq Global Select
Market in accordance with Rule 103 of Regulation M,
during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the securities.
Passive market makers must comply with applicable volume and
price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid
at a price not in excess of the highest independent bid for such
security. If all independent bids are lowered below the passive
market makers bid, however, the passive market
makers bid must then be lowered when certain purchase
limits are exceeded.
Trading
Markets and Listing of Securities
Unless otherwise specified in the applicable prospectus
supplement, each class or series of securities will be a new
issue with no established trading market, other than our common
stock, which is listed on The Nasdaq Global Select Market. Any
shares of common stock hereunder will be listed in the Nasdaq
Global Select Market. We may elect to list any other class or
series of securities on any additional exchange or market, but
we are not obligated to do so unless stated otherwise in a
prospectus supplement. It is possible that one or more
underwriters may make a market in a class or series of
securities, but the underwriters will not be obligated to do so
and may discontinue any market making at any time without
notice. We cannot give any assurance as to the liquidity of the
trading market for any of the securities.
General
Information
The securities may also be offered and sold, if so indicated in
the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more remarketing firms, acting as principals for their own
accounts or as agents for us. Any remarking firm will be
identified and terms of its agreement, if any, with us, and its
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compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters,
as that term is defined in the Securities Act, in connection
with the securities remarketed thereby.
Validity
of Securities
Unless otherwise indicated in the applicable prospectus
supplement, some legal matters will be passed upon for us by
Williams Mullen, P.C., Raleigh, North Carolina, our
counsel, and for any underwriters and agents by counsel selected
by such underwriters or agents.
Experts
Our consolidated financial statements as of December 31,
2007 and 2006, and for each of the three years in the period
ended December 31, 2007, included in our Annual Report
(Form 10-K)
for the year ended December 31, 2007, and the effectiveness
of our internal control over financial reporting as of
December 31, 2007 have been audited by Dixon Hughes, PLLC,
an independent registered public accounting firm, as stated in
their reports appearing therein and herein by reference. Such
consolidated financial statements have been so incorporated by
reference in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
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The
information in this prospectus is not complete and may be
changed. This prospectus is included in a registration statement
that we filed with the Securities and Exchange Commission. We
may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
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SUBJECT TO COMPLETION,
DATED ,
2008
Prospectus
$
Junior Subordinated Debt
Securities
Gateway Capital Statutory
Trust V
Capital Securities
Fully and unconditionally
guaranteed on a junior subordinated basis
by Gateway Financial Holdings,
Inc., as described in this prospectus
We will provide specific terms of these securities in
supplements to this prospectus. This prospectus may not be used
to consummate sales of securities unless accompanied by a
prospectus supplement and a pricing supplement, if any.
The aggregate initial offering price of all securities we sell
under this prospectus will not exceed
$ .
The specific terms of any securities we offer will be included
in a supplement to this prospectus. The prospectus supplement
will also describe the specific manner in which we will offer
the securities. The prospectus supplement may also add, update
or change information contained in this prospectus.
Our common stock is traded on the Nasdaq Global Select Market
under the symbol GBTS.
You should read this prospectus
and any supplements carefully before you invest. Investing in
our securities involves a high degree of risk. See the section
entitled Risk Factors, beginning on page 6 of
this prospectus and in the documents we file with the SEC that
are incorporated in this prospectus by reference for certain
risks and uncertainties you should consider.
Neither the SEC nor any state securities commission has
approved or disapproved our securities or determined that this
prospectus is truthful or complete. It is illegal for anyone to
tell you otherwise.
These securities will not be savings accounts, deposits or
other obligations of any bank and are not insured or guaranteed
by the Federal Deposit Insurance Corporation, the Deposit
Insurance Fund or any other governmental agency or
instrumentality.
The date of this prospectus is ,
2008.
Table of
Contents
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2
About
this Prospectus
This prospectus is part of a registration statement that we,
along with the Gateway Capital Statutory Trust V, filed
with the Securities and Exchange Commission, or SEC, using a
shelf registration process. Under this shelf
registration process, using this prospectus, together with a
prospectus supplement, we may sell junior subordinated debt
securities to the trust and the trust will:
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sell capital securities (representing undivided beneficial
interests in the trust) to the public; and
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sell common securities to us.
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As specified in the applicable prospectus supplement, the
capital securities may be converted into shares of our common or
preferred stock. These may be sold in one or more offerings.
Unless otherwise specified in the applicable prospectus
supplement, the trust will use the proceeds from sales of
capital securities to buy a series of our junior subordinated
debt securities with terms that correspond to the terms of the
capital securities.
We:
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will pay principal and interest on our junior subordinated debt
securities, subject to the payment of our more senior debt;
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may choose to distribute our junior subordinated debt securities
pro rata to the holders of the related capital securities and
common securities if we dissolve the related capital
trust; and
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will fully and unconditionally guarantee payments and other
distributions due on the capital securities of each trust, on a
junior subordinated basis, to the extent such trust has funds
available therefor from payments on the junior subordinated debt
securities held by such trust, which, together with our junior
subordinated debt securities, will constitute our unconditional
guarantee of the capital securities.
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This prospectus provides you with a general description of the
junior subordinated debt securities, capital securities, and the
guarantees. If there is any inconsistency between the
information in this prospectus and any prospectus supplement,
you should rely on the information in the prospectus supplement.
Unless the context requires otherwise, in this prospectus, we
use the terms we, us, our,
Gateway and the Company to refer to
Gateway Financial Holdings, Inc. and its subsidiaries. The term
trust refers to Gateway Capital Statutory
Trust V. The term bank refers to our principal
operating subsidiary, Gateway Bank & Trust Co.
(unless the context indicates another meaning).
Each time we offer securities, we will provide a prospectus
supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add,
update or change information contained in this prospectus. You
should read this prospectus, the applicable prospectus
supplement and the information incorporated by reference in this
prospectus before making an investment in our securities. See
Where You Can Find More Information for more
information.
Our SEC registration statement containing this prospectus,
including exhibits, provides additional information about us and
the securities offered under this prospectus. The registration
statement can be read at the SECs web site or at the
SECs offices. The SECs web site and street addresses
are provided under the heading Where You Can Find More
Information.
You should rely only on the information contained in or
incorporated by reference in this prospectus or a supplement to
this prospectus. We have not authorized anyone to provide you
with different information. This document may be used only in
jurisdictions where offers and sales of these securities are
permitted. You should not assume that information contained in
this prospectus, in any supplement to this prospectus, or in any
document incorporated by reference is accurate as of any date
other than the date on the front page of the document that
contains the information, regardless of when this prospectus is
delivered or when any sale of our securities occurs.
3
We may sell our securities to underwriters who will in turn sell
the securities to the public on terms fixed at the time of sale.
In addition, the securities may be sold by us directly or
through dealers or agents which we may designate from time to
time. If we, directly or through agents, solicit offers to
purchase the securities, we reserve the sole right to accept
and, together with our agents, to reject, in whole or in part,
any of those offers.
A prospectus supplement will contain the names of the
underwriters, dealers or agents, if any, together with the terms
of offering, the compensation of those underwriters and the net
proceeds to be received by Gateway. Any underwriters, dealers or
agents participating in the offering may be deemed
underwriters within the meaning of the Securities
Act of 1933.
Where You
Can Find More Information
This prospectus is a part of a registration statement on
Form S-3
that we filed with the SEC under the Securities Act. This
prospectus does not contain all the information set forth in the
registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For
further information with respect to us and the securities
offered by this prospectus, reference is made to the
registration statement, including the exhibits to the
registration statement and the documents incorporated by
reference.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our filings are available to
the public over the Internet at the SECs web site at
http://www.sec.gov.
You may also read and copy any document we file with the SEC at
its public reference facilities at 100 F Street, N.E.,
Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
facilities. Our SEC filings are also available on our web site
at
http://www.gatewaybankandtrust.com,
and at the office of the Nasdaq Global Select Market. Except for
those SEC filings, none of the other information on our web site
is part of this prospectus. For further information on obtaining
copies of our public filings at the Nasdaq Global Select Market,
you should call
(212) 656-5060
or visit the Nasdaq Global Select Market website
http://www.nasdaq.com.
Our commission file number is
000-33223.
No separate financial statements of the trust have been included
in this prospectus. We do not consider that these financial
statements would be material to holders of the capital
securities because:
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all of the voting securities of the trust will be owned by us, a
reporting company under the Securities Exchange Act;
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the trust has no independent operations other than issuing
securities representing undivided beneficial interests in the
assets of the trust and investing the proceeds thereof in junior
subordinated debt securities issued by us; and
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our obligations to provide certain indemnities in respect of and
be responsible for certain costs, expenses, debts and
liabilities of the trust under the indenture and pursuant to the
trust agreement, the guarantee, the junior subordinated debt
securities and the expense agreement, taken together, constitute
a full and unconditional guarantee of payments due on the
capital securities.
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The trust is not currently subject to the information reporting
requirements of the Securities Exchange Act and we do not expect
that the trust will file reports, proxy statements or other
information under the Securities Exchange Act with the
Securities and Exchange Commission.
Documents
Incorporated by Reference
We incorporate by reference into this prospectus the
information we file with the SEC, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus.
4
Some information contained in this prospectus updates and
supersedes the information incorporated by reference and some
information that we file subsequently with the SEC will
automatically update this prospectus. We incorporate by
reference the documents listed below (except Items 2.02 and
7.01 of any Current Report on
Form 8-K
listed below, unless otherwise indicated in the
Form 8-K):
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, filed on
March 14, 2008.
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2008, filed on May 12,
2008.
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our Current Reports on
Form 8-K
filed with the SEC since December 31, 2007.
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our Definitive Proxy on Schedule 14A filed on
March 16, 2008; and
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the description of our common stock contained in our
Registration Statements filed pursuant to Section 12 of the
Exchange Act, as amended from time to time.
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We also incorporate by reference any filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the initial filing of the
registration statement that contains this prospectus and before
the time that all of the securities offered by this prospectus
are sold; provided, however, that we are not incorporating by
reference any information furnished under Item 2.02 or 7.01
of any Current Report on
Form 8-K
(unless otherwise indicated). Any statement contained in a
document incorporated by reference in this prospectus shall be
deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this
prospectus, or in any other document filed later which is also
incorporated in this prospectus by reference, modifies or
supersedes the statement. Any statement so modified or
superseded shall not be deemed to constitute a part of this
prospectus except as so modified or superseded. The information
contained in this prospectus should be read together with the
information in the documents incorporated in this prospectus by
reference.
You may obtain any of these incorporated documents from us
without charge, excluding any exhibits to these documents unless
the exhibit is specifically incorporated by reference in such
document, by requesting them from us in writing or by telephone
at the following address:
Mr. Theodore L. Salter
Gateway Financial Holdings, Inc.
1580 Laskin Road
Virginia Beach, VA 23451
(757) 422-8004
These incorporated documents may also be available on our web
site at www.gatewaybankandtrust.com. Except for incorporated
documents, information contained on our web site is not a
prospectus and does not constitute part of this prospectus.
Note of
Caution Regarding Forward-Looking Statements
We make certain forward-looking statements in this prospectus,
any prospectus supplement, and in the documents incorporated by
reference into this prospectus that are based upon our current
expectations and projections about current events. You should
not rely on forward-looking statements in this prospectus, any
prospectus supplement, or the documents incorporated by
reference. We intend these forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995, and we are including this statement for purposes of
these safe harbor provisions. You can identify these statements
from our use of the words may, will,
should, could, would,
plan, potential, estimate,
project, believe, intend,
anticipate, expect, target
and similar expressions. Examples of forward-looking statements
include, but are not limited to, estimates with respect to the
financial condition, expected or anticipated revenue, results of
operations and business of the Company that are subject to
various factors which could cause actual results to differ
materially from these estimates. These factors include, but are
not limited to, general economic conditions, changes in interest
rates,
5
deposit flows, loan demand, real estate values, and competition;
changes in accounting principles, policies, or guidelines;
changes in legislation or regulations; and other economic,
competitive, governmental, regulatory, and technological factors
affecting the Companys operations, pricing, products and
services.
You should also consider carefully the statements under
Risk Factors and other sections of this prospectus,
any prospectus supplement, and the documents we incorporate by
reference, which address additional facts that could cause our
actual results to differ from those set forth in the
forward-looking statements. We caution investors not to place
significant reliance on the forward-looking statements contained
in this prospectus, any prospectus supplement, and the documents
we incorporate by reference.
Because of these and other uncertainties, our actual future
results, performance or achievements, or industry results, may
be materially different from the results contemplated by these
forward-looking statements. In addition, our past results of
operations do not necessarily indicate our future results. You
should not place undue reliance on any forward-looking
statement, which speak only as of the date they were made. We do
not intend to update these forward-looking statements, even
though our situation may change in the future, unless we are
obligated to do so under the federal securities laws. We qualify
all of our forward-looking statements by these cautionary
statements.
Risk
Factors
Before making an investment decision, you should carefully
consider the risks described under Risk Factors in
the applicable prospectus supplement and in our most recent
Annual Report on
Form 10-K,
and in our updates to those Risk Factors in our Quarterly
Reports on
Form 10-Q,
together with all of the other information appearing in this
prospectus or incorporated by reference into this prospectus and
any applicable prospectus supplement, in light of your
particular investment objectives and financial circumstances. In
addition to those risk factors, there may be additional risks
and uncertainties of which management is not aware or focused on
or that management deems immaterial. Our business, financial
condition or results of operations could be materially adversely
affected by any of these risks. The trading price of our
securities could decline due to any of these risks, and you may
lose all or part of your investment.
Gateway
Financial Holdings, Inc.
Our
Company
We are a financial holding company incorporated under the laws
of North Carolina to serve as the holding company for Gateway
Bank & Trust Co., a North Carolina chartered
commercial bank with banking and insurance agency offices in
North Carolina and Virginia. The bank began operations on
December 1, 1998, and, effective October 1, 2001,
became our wholly-owned subsidiary.
The Bank has four wholly-owned subsidiaries: Gateway Bank
Mortgage, Inc., which began operations during the second quarter
of 2006, whose principal activity is to engage in originating
and processing mortgage loans, Gateway Investment Services,
Inc., whose principal activity is to engage in brokerage
services as an agent for non-bank investment products and
services, Gateway Title Agency, Inc., acquired in January
2007, with offices in Newport News, Hampton and Virginia Beach,
Virginia, whose principal activity is to engage in title
services for real estate transactions and Gateway Insurance
Services, Inc., an independent insurance agency with offices in
Edenton, Hertford, Elizabeth City, Moyock, Plymouth and Kitty
Hawk, North Carolina and Chesapeake and Newport News, Virginia.
Since inception, we have aggressively pursued the primary
objective of building a full-service commercial banking
operation, while effectively supplementing our banking
activities with other financial services intended to generate
significant non-interest income. Accordingly, a key component of
our growth strategy has been expanding our franchise through a
combination of opening newly constructed financial centers and
strategic bank and branch acquisitions. We have grown into a
regional community bank with a total of thirty-six full-service
financial centers and four loan production offices in Virginia
and North Carolina.
6
Since inception, we have concentrated our efforts on building a
franchise and infrastructure that can deliver and sustain
long-term profitability. We have been profitable every quarter
since March 31, 2001, producing net income of
$3.9 million in 2005, $5.3 million in 2006,
$11.0 million during the year ended December 31, 2007,
and $5.1 million for the six months ended June 30,
2008. While we anticipate continued profitability, future
expansion activity can be expected to generate significant
additional costs that can negatively impact earnings as we
pursue our growth strategies.
Market
Area and Growth Strategy
Our current market area consists of the following five
geographic regions: (1) the Richmond, Virginia metropolitan
statistical area; (2) the Greater Metropolitan Hampton
Roads area of Virginia; (3) the Northeastern coastal region
of North Carolina (geographically contiguous to Hampton Roads),
including the Outer Banks; (4) the Research Triangle area
of North Carolina (includes Raleigh); and, most recently,
(5) the Southeastern coastal region of North Carolina
(includes Wilmington).
We emphasize personalized service, access to decision makers,
and a quick turn around time on lending decisions. Our slogan is
Real People . . . Real Solutions. We have a
management team with extensive experience in our local markets.
We intend to leverage the core relationships we build by
providing a variety of services to our customers. With that
focus, we target:
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Small-and medium-sized businesses;
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Professionals and middle managers of locally based companies;
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Residential real estate developers; and
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Individual consumers.
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We believe that these segments are the most under-served by
local financial centers of national and super-regional financial
institutions. We also intend to continue to diversify our
revenue in order to continue to generate significant
non-interest income. We presently offer investment brokerage and
insurance services, and we originate mortgage loans for sale in
the secondary market.
Use of
Proceeds
We expect to use the net proceeds from the sale of any
securities for general corporate purposes, which may include:
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possible acquisitions;
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reducing or refinancing existing debt;
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investments at the holding company level;
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investing in, or extending credit to, our operating subsidiaries;
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stock repurchases; and
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other purposes as described in any prospectus supplement.
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Pending such use, we may temporarily invest the net proceeds of
any offering. The precise amounts and timing of the application
of proceeds will depend upon our funding requirements and the
availability of other funds. Except as indicated in a prospectus
supplement, allocations of the proceeds to specific purposes
will not have been made at the date of that prospectus
supplement.
We continually evaluate possible business combination
opportunities. As a result, future business combinations
involving cash, debt or equity securities may occur. Any future
business combination or series of business combinations that we
might undertake may be material, in terms of assets acquired,
liabilities assumed or otherwise, to our financial condition.
7
Ratio of
Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
The following table shows our consolidated ratio of earnings to
fixed charges and our consolidated ratio of earnings to combined
fixed charges and preferred stock dividends for the periods
indicated:
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Three Months
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Ended
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Year Ended December 31
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March 31, 2008
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2007
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2006
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2005
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2004
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2003
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Ratio of earnings to fixed charges
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Including deposit interest
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1.26x
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1.28x
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1.22x
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1.35x
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1.39x
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1.22x
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Excluding deposit interest
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2.35x
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2.47x
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1.97x
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2.49x
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2.41x
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1.88x
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Ratio of earnings to combined fixed charges and preferred stock
dividends(1)
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Including deposit interest
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1.25x
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1.28x
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1.22x
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1.35x
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1.39x
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1.22x
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Excluding deposit interest
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2.17x
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2.47x
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1.97x
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2.49x
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2.41x
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1.88x
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(1)
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Preferred stock dividends relate to 23,266 shares of
Series A Preferred Stock of Gateway, liquidation value of
$1,000 per share, issued on December 19, 2007. We are
required to pay quarterly non-cumulative cash dividends on these
shares at an annual rate of 8.75%.
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We have computed the ratio of earnings to fixed charges set
forth above by dividing earnings by fixed charges. We have
computed the ratio of earnings to combined fixed charges and
preferred stock dividends set forth above by dividing earnings
by combined fixed charges and preferred stock dividends. For the
purpose of determining the ratios, earnings include pre-tax
income from continuing operations plus fixed charges (excluding
capitalized interest). Fixed charges consist of interest on all
indebtedness (including capitalized interest) plus that portion
of rent expense estimated to be representative of the interest
factor. Preferred stock dividends consist of dividends and
accretion on preferred stock.
Regulatory
Considerations
We are extensively regulated under both federal and state law.
We are a bank holding company, regulated under the Bank Holding
Company Act of 1956, that has elected to be treated as a
financial holding company. As such, the Federal Reserve Board
regulates, supervises and examines us. Our banking subsidiary
has deposit insurance provided by the Federal Deposit Insurance
Corporation through the Deposit Insurance Fund. For a discussion
of the material elements of the regulatory framework applicable
to financial holding companies, bank holding companies and their
subsidiaries and specific information relevant to us, please
refer to our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 and any
subsequent reports we file with the SEC, which are incorporated
by reference in this prospectus.
This regulatory framework is intended primarily for the
protection of depositors and the federal deposit insurance funds
and not for the protection of security holders. As a result of
this regulatory framework, our earnings are affected by actions
of the Federal Deposit Insurance Corporation, which insures the
deposits of our banking subsidiary within certain limits, the
state banking regulators in North Carolina and Virginia and the
Federal Reserve Board, which regulate us and our bank
subsidiaries, and the SEC.
Our earnings are also affected by general economic conditions,
our management policies and legislative action. In addition,
there are numerous governmental requirements and regulations
that affect our business activities. A change in applicable
statutes, regulations or regulatory policy may have a material
effect on our business.
Depository institutions, like our bank subsidiary, are also
affected by various federal and state laws, including those
relating to consumer protection and similar matters. We also
have other subsidiaries regulated, supervised and examined by
the Federal Reserve Board, as well as other relevant state and
federal regulatory agencies and
self-regulatory
organizations. Our non-bank subsidiaries may be subject to other
laws and regulations of the federal government or the various
states in which they do business.
8
About the
Trust
We have created a statutory trust under Delaware law under a
trust agreement established for the trust. A trust is a
fiduciary relationship where one person known as the trustee,
holds some property for the benefit of another person, in this
case, the purchasers of the securities. For the securities being
sold, the trustee and we will enter into an amended and restated
trust agreement that will be essentially in the form filed as an
exhibit to the registration statement, which will state the
terms and conditions for each trust to issue and sell the
specific capital securities and common securities.
The trust exists solely to:
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issue and sell capital securities and common securities;
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use the gross proceeds from the sale of the capital securities
and common securities to purchase a corresponding series of our
junior subordinated debt securities;
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maintain their status as grantor trusts for federal income tax
purposes; and
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engage in other activities that are necessary or incidental to
these purposes.
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We will purchase all of the common securities of the trust.
The common securities will have terms substantially identical
to, and will rank equal in priority of payment with, the capital
securities. If we default on the corresponding junior
subordinated debt securities, then distributions on the common
securities will be subordinate to the capital securities in
priority of payment.
For the trust, as the direct or indirect holder of the common
securities, we will appoint five trustees. One of the trustees
will be a U.S. banking institution serving as the property
trustee and one will be a U.S. banking institution which
will serve as the Delaware trustee. The other three trustees
will serve as administrative trustees (who are employees or
officers of or affiliated with Gateway) to conduct the
trusts business and affairs. As holder of the common
securities, we (except in some circumstances) have the power to:
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appoint the trustees;
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replace or remove the trustees; and
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increase or decrease the number of trustees.
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This means that if you are dissatisfied with a trustee you will
not be able to remove the trustee without our assistance.
Similarly, if we are dissatisfied with a trustee we can remove
the trustee even if you are satisfied with the trustee.
The property trustee will act as sole trustee under the trust
agreement for purposes of compliance with the
Trust Indenture Act and as trustee under the guarantees and
junior subordinated debentures. See Description of the
Guarantees and Description of Junior Subordinated
Debt Securities.
The capital securities will be fully and unconditionally
guaranteed by us as described under Description of the
Guarantee.
The principal executive office of the trust is
c/o Gateway
Financial Holdings, Inc., 1580 Laskin Road, Virginia Beach,
Virginia 23451.
Description
of Junior Subordinated Debt Securities
This section describes the general terms and provisions of the
junior subordinated debt securities that are offered by this
prospectus. The applicable prospectus supplement will describe
the specific terms of the series of the junior subordinated debt
securities offered under that prospectus supplement and any
general terms outlined in this section that will not apply to
those junior subordinated debt securities.
The junior subordinated debt securities will be issued under an
indenture, between us and an unaffiliated bank as trustee. The
indenture will be qualified under the Trust Indenture Act.
The junior subordinated
9
indenture will be filed as an exhibit to the registration
statement relating to this prospectus. Each series of junior
subordinated debt securities will be governed by the junior
subordinated indenture and a series supplement thereto.
This section summarizes the material terms and provisions of the
junior subordinated indenture and the junior subordinated debt
securities. Because this is a summary, it does not contain all
of the details found in the full text of the junior subordinated
indenture and the junior subordinated debt securities. If you
would like additional information, you should read the form of
junior subordinated indenture and the form of junior
subordinated debt securities to be filed with the SEC.
General
We can issue the junior subordinated debt securities in one or
more series. A series of junior subordinated debt securities
initially will be issued to the trust in connection with a
capital securities offering.
Unless otherwise described in the applicable prospectus
supplement regarding any offered junior subordinated debt
securities, the junior subordinated debt securities will rank
equally with all other series of junior subordinated debt
securities, will be unsecured and will be subordinate and junior
in priority of payment to all of our Senior Debt as described
below under Subordination.
The indenture does not limit the amount of junior subordinated
debt securities which we may issue, nor does it limit our
issuance of any other secured or unsecured Debt. Because we are
a holding company, our rights and the rights of our creditors,
including the holder of the junior subordinated debentures, to
participate in the assets of any of our subsidiaries upon the
subsidiarys liquidation or reorganization will be subject
to the prior claims of the subsidiarys creditors except to
the extent that we may ourselves be a creditor with recognized
claims against the subsidiary.
We can issue the junior subordinated debt securities under a
supplemental indenture, an officers certificate or a
resolution of our board of directors.
The applicable prospectus supplement will describe the following
terms of the junior subordinated debt securities:
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the title;
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any limit on the aggregate principal amount that may be issued;
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the date(s) on which the principal is payable or the method of
determining that date;
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the interest rate, if any, the interest payment dates, any
rights we may have to defer or extend an interest payment date,
and the regular record date for any interest payment or the
method by which any of the foregoing will be determined;
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the place(s) where payments shall be payable and where the
junior subordinated debt securities can be presented for
registration of transfer or exchange, and the place(s) where
notices and demands to or on us can be made;
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any period(s) within which or date(s) on which, price(s) at
which and the terms and conditions on which the junior
subordinated debt securities can be redeemed, in whole or in
part, at our option or at the option of a holder of the junior
subordinated debt securities;
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our or any holders obligation or right, if any, to redeem,
purchase or repay the junior subordinated debt securities and
other related terms and provisions;
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the minimum denominations in which any junior subordinated debt
securities will be issued;
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if other than in U.S. dollars, the currency in which the
principal, premium and interest, if any, that the junior
subordinated debt securities will be payable or denominated;
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any provisions that restrict us, directly or indirectly, from
redeeming or purchasing any of our outstanding securities,
making any payments of principal, interest or dividends thereon,
or making any payments pursuant to any guarantee of any
securities issued by a subsidiary;
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the circumstances constituting events of default or covenants,
and any additions, modifications or deletions in the events of
default or covenants specified in the indenture;
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the portion of the principal amount that will be payable at
declaration of acceleration of the maturity;
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any additions or changes to the indenture as will be necessary
to facilitate the issuance of a series of junior subordinated
debt securities in bearer form, registrable or not registrable
for the principal, and with or without interest coupons;
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the index or indices used to determine the amount of payments of
interest, principal, and premium (if any), on any junior
subordinated debt securities and how these amounts will be
determined;
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the terms and conditions under which temporary global securities
are exchanged for definitive junior subordinated debt securities
of the same series;
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whether the junior subordinated debt securities will be issued
in global form and, in that case, the terms and the depositary
for these global securities;
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the paying agent;
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the terms on which holders of the debt securities may convert or
exchange these securities into or for common or preferred stock
or other securities of ours, into or for common or preferred
stock or other securities of an entity affiliated with us or
debt or equity or other securities of an entity not affiliated
with us, or for the cash value of our stock or any of the above
securities, the terms on which conversion or exchange may occur,
including whether conversion or exchange is mandatory, at the
option of the holder or at our option, the period during which
conversion or exchange may occur, the initial conversion or
exchange price or rate and the circumstances or manner in which
the amount of common or preferred stock or other securities
issuable upon conversion or exchange may be adjusted;
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the form of trust agreement and guarantee agreement;
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the relative degree, if any, to which the junior subordinated
debt securities shall be senior or subordinated to other junior
subordinated debt securities or any of our other indebtedness in
right of payment; and
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any other terms of the junior subordinated debt securities
consistent with the provisions of the indenture.
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Junior subordinated debt securities may be sold at a substantial
discount below their stated principal amount, bearing no
interest or interest at a rate which at the time of issuance is
below market rates. Material U.S. federal income tax
consequences and special considerations applicable to the junior
subordinated debt securities will be described in the applicable
prospectus supplement.
The applicable prospectus supplement will describe the
restrictions, elections, material U.S. federal income tax
consequences, and specific terms and other information related
to the junior subordinated debt securities if the purchase
price, principal, premium, or interest of any of the junior
subordinated debt securities is payable or denominated in one or
more foreign currencies or currency units.
If any index is used to determine the amount of payments of
interest on any series of junior subordinated debt securities,
special U.S. federal income tax, accounting and other
considerations applicable to the junior subordinated debt
securities will be described in the applicable prospectus
supplement.
Option to
Extend Interest Payment Dates
To the extent specified in the applicable prospectus supplement
and if the junior subordinated debt securities are not in
default, we shall have the right at any time and from time to
time during the term of any
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series of junior subordinated debt securities to defer payment
of interest for up to five consecutive years or such longer
period as specified in the applicable prospectus supplement (an
extension period, which we also sometimes refer to
as a deferral period). No deferral period will
extend past the maturity date of the junior subordinated debt
securities.
During any such extension period, we will not declare or pay any
dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of our capital stock or make any guarantee payment with respect
thereto other than:
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repurchases, redemptions or other acquisitions of shares of our
capital stock in connection with any employment contract,
benefit plan or other similar arrangement with or for the
benefit of employees, officers, directors or consultants;
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repurchases of shares of Gateway common stock pursuant to a
contractually binding requirement to buy stock existing prior to
the commencement of the extension period, including under a
contractually binding stock repurchase plan;
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as a result of an exchange or conversion of any class or series
of Gateways capital stock for any other class or series of
our capital stock;
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the purchase of fractional interests in shares of Gateways
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged;
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purchase of Gateways capital stock in connection with the
distribution thereof;
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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
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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
equally with or junior to such stock.
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Except as described in any prospectus supplement, we will not
make any payment of interest, principal or premium on, or repay,
repurchase or redeem, any debt securities or guarantees issued
by Gateway that rank equally with or junior to the junior
subordinated debt securities.
The foregoing, however, will not apply to any stock dividends
paid by Gateway where the dividend stock is the same stock as
that on which the dividend is being paid. Gateway may pay
current interest at any time with cash from any source.
Some U.S. federal income tax consequences and
considerations applicable to any junior subordinated debt
securities that permit extension periods will be described in
the applicable prospectus supplement.
Redemption
Except as otherwise indicated in the applicable prospectus
supplement, junior subordinated debt securities will not be
subject to any sinking fund.
Unless the applicable prospectus supplement indicates otherwise,
we may, at our option and subject to the receipt of prior
approval by the Federal Reserve Board, if then required under
applicable capital guidelines or policies, redeem the junior
subordinated debt securities of any series:
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in whole at any time or in part from time to time; or
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upon the occurrence of a Tax Event, an Investment Company Event
or a Regulatory Capital Event in whole (but not in part) at any
time within 90 days of the occurrence of the Tax Event, the
Investment Company Event or Regulatory Capital Event.
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If the junior subordinated debt securities of any series are
redeemable only on or after a specified date or by the
satisfaction of additional conditions, the applicable prospectus
supplement will specify the date or describe these conditions.
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Junior subordinated debt securities shall be redeemable in the
denominations specified in the prospectus supplement. Unless the
prospectus supplement indicates otherwise, junior subordinated
debt securities will be redeemed at the redemption price.
A Tax Event means that either we or the trust will have received
an opinion of counsel (which may be our counsel or counsel of an
affiliate but not an employee and which must be reasonably
acceptable to the property trustee) experienced in tax matters
stating that, as a result of any:
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amendment to, or change (including any announced prospective
change) in, the laws (or any regulations under those laws) of
the United States or any political subdivision or taxing
authority affecting taxation; or
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interpretation or application of the laws enumerated in the
preceding bullet point or regulations, by any court,
governmental agency or regulatory authority;
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there is more than an insubstantial risk that:
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the trust is, or will be within 90 days of the date of the
opinion of counsel, subject to U.S. federal income tax on
interest received on the junior subordinated debt securities;
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interest payable by us to the trust on the junior subordinated
debt securities is not, or will not be within 90 days of
the date of the opinion of counsel, deductible, in whole or in
part, for U.S. federal income tax purposes; or
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the trust is, or will be within 90 days of the date of the
opinion of counsel, subject to more than a minimal amount of
other taxes, duties, assessments or other governmental charges.
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An Investment Company Event means the receipt by us and the
trust of an opinion of counsel experienced in matters relating
to investment companies to the effect that, as a result of any:
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change (including any announced prospective change) in law or
regulation; or
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change (including any announced prospective change) in
interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority,
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the trust is or will be considered an investment company that is
required to be registered under the Investment Company Act,
which change becomes effective on or after the original issuance
of the capital securities.
A Regulatory Capital Event means the reasonable determination by
us that, as a result of any:
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amendment to, or change (including any prospective change) in,
laws or any applicable regulation of the United States and any
political subdivision; or
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as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying the laws or
regulations, which amendment is effective or announced on or
after the date of issuance of the capital securities,
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there is more than an insubstantial risk of impairment of our
ability to treat the capital securities (or any substantial
portion) as Tier 1 capital (or its equivalent) for purposes
of the capital adequacy guidelines of the Federal Reserve Board,
in effect and applicable to us.
Notice of any redemption will be mailed at least 30 days
and not more than 60 days before the redemption date to
each holder of redeemable junior subordinated debt securities,
at its registered address. Unless we default in the payment of
the redemption price, on or after the redemption date, interest
will cease to accrue on the junior subordinated debt securities
or portions called for redemption.
Restrictions
on Some Payments
Each prospectus supplement will describe any restrictions
imposed by the junior subordinated debentures or the capital
securities on payments by us or our subsidiaries, including
dividends and distributions on, or redemptions and acquisitions
of, our securities.
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However, at any time, including during an extension period, we
will be permitted to:
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pay dividends or distributions in additional shares of capital
stock;
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make payments under the guarantee of the series of the capital
securities and the common securities;
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declare or pay a dividend in connection with the implementation
of a shareholders rights plan, or issue stock under such a
plan or repurchase such rights; and
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purchase common stock for issuance pursuant to any employee
benefit plans.
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Modification
of Indenture
We may and the trustee may change the indenture without your
consent for specified purposes, including:
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To evidence the succession of another person to Gateway;
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to convey, transfer, assign, mortgage or pledge any property to
or with the debenture trustee or surrender any right or power
conferred upon us in the junior subordinated indenture;
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to add to the covenants of Gateway for the benefit of other
holders of all or any series of securities;
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to add any additional events of default for the benefit of other
holders of all or any series of securities;
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to change or eliminate any of the provisions of the junior
subordinated indenture, provided that any such change or
elimination shall not apply to any outstanding securities, or
shall become effective only when there is no security
outstanding of any series created prior to the execution of the
supplemental indenture that is entitled to the benefit of such
provision;
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to fix any ambiguity, defect or inconsistency, provided that the
change does not materially adversely affect the interest of any
holder of any series of junior subordinated debt securities or,
in the case of corresponding junior subordinated debt
securities, the interest of a holder of any related capital
securities so long as they remain outstanding; and
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to qualify or maintain the qualification of the indenture under
the Trust Indenture Act.
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In addition, under the indenture, we and the trustee may modify
the indenture to affect the rights of the holders of the series
of the junior subordinated debt securities, with the consent of
the holders of a majority in principal amount of the outstanding
series of junior subordinated debt securities that are affected.
However, neither we nor the trustee may take the following
actions without the consent of each holder of the outstanding
junior subordinated debt securities affected:
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change the maturity date of any series of junior subordinated
debt securities (except as otherwise specified in the applicable
prospectus supplement), or reduce the principal amount, rate of
interest, or extend the time of payment of interest;
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reduce the percentage in principal amount of junior subordinated
debt securities of any series necessary to modify the indenture;
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modify some provisions of the indenture relating to modification
or waiver, except to increase the required percentage; or
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modify the provisions of the indenture relating to the
subordination of the junior subordinated debt securities of any
series in a manner adverse to the holders.
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In the case of corresponding junior subordinated debt
securities, as long as any of the related capital securities are
outstanding, no modification will be made that adversely affects
the holders of these capital securities in any material respect.
Also the indenture cannot be terminated, and a waiver of any
event of default or compliance with any covenant under the
indenture cannot be effective, without the prior consent of the
holders of a majority of the liquidation preference of the
related capital securities unless and until the principal of the
corresponding junior subordinated debt securities and all
accrued and unpaid interest have been paid in full and some
other conditions are satisfied.
14
In addition, we and the trustee may execute any supplemental
indenture to create any new series of junior subordinated debt
securities without the consent of any holders.
Events of
Default
Unless otherwise specified in the prospectus supplement, the
following are events of default as to any particular series of
junior subordinated debt securities under the indenture:
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default in the payment of the principal of or premium, if any,
on any junior subordinated debt securities;
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the default in the payment of interest on a junior subordinated
debt security of that series in full for a period of
30 days after the conclusion of a period consisting of up
to five consecutive years, or such longer period as specified in
the applicable prospectus supplement, commencing with the
earliest quarter for which interest (including deferred
payments) has not been paid in full;
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the trust shall have voluntarily or involuntarily dissolved,
wound-up
its
business or otherwise terminated its existence, except in
connection with (i) the distribution of the junior
subordinated debt securities of that series to holders of the
capital securities, (ii) the redemption of all of the
related outstanding capital securities or (iii) certain
mergers, consolidations or amalgamations;
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certain events in bankruptcy, insolvency or reorganization
regarding us or our principal banking subsidiary; or
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any other event of default that may be specified for the junior
subordinated debt securities of that series when that series is
created.
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The holders of a majority in aggregate outstanding principal
amount of any series of junior subordinated debt securities have
the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee. If an event
of default (other than certain events of bankruptcy) under the
indenture of any series occurs and is continuing, the junior
subordinated trustee or the holders of at least 25% in aggregate
principal amount of the outstanding junior subordinated debt
securities can declare the unpaid principal and accrued
interest, if any, to the date of acceleration on all the
outstanding junior subordinated debt securities of that series
to be due and payable immediately. Similarly, in the case of
corresponding junior subordinated debt securities, if the
trustee or holders of the corresponding junior subordinated debt
securities fail to make this declaration, the holders of at
least 25% in aggregate liquidation preference of the related
capital securities will have that right.
If an event of default consisting of certain events of
bankruptcy occurs under the indenture of any series, the
principal amount of all the outstanding junior subordinated debt
securities of that series will automatically, and without any
declaration or other action on the part of the trustee or any
holder, become immediately due and payable.
The holders of a majority in aggregate outstanding principal
amount of any series of junior subordinated debt securities can
rescind a declaration of acceleration and waive the default if
the default (other than the non-payment of principal which has
become due solely by acceleration) has been cured and a sum
sufficient to pay all principal and interest due (other than by
acceleration) has been deposited with the trustee. In the case
of corresponding junior subordinated debt securities, if the
holders of the corresponding junior subordinated debt securities
fail to rescind a declaration and waive the default, the holders
of a majority in aggregate Liquidation Amount of the related
capital securities will have that right.
The holders of a majority in aggregate outstanding principal
amount of the junior subordinated debt securities of any
affected series may, on behalf of holders of all of the junior
subordinated debt securities, waive any past default, except:
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a default in the payment of principal or interest (unless the
default has been cured or a sum sufficient to pay all matured
installments of principal and interest has been deposited with
the trustee); or
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a default in a covenant or provision of the indenture which
cannot be modified or amended without the consent of the holders
of each outstanding junior subordinated debt securities.
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In the case of corresponding junior subordinated debt
securities, if the holders of the corresponding junior
subordinated debt securities fail to rescind a declaration and
waive the default, the holders of a majority in liquidation
preference of the related capital securities will have that
right.
We are required to file annually, with the trustee, a
certificate stating whether or not we are in compliance with all
the conditions and covenants applicable to us under the junior
subordinated indenture.
If an event of default occurs and is continuing on a series of
corresponding junior subordinated debt securities, the property
trustee will have the right to declare the principal of, and the
interest on, the corresponding junior subordinated debt
securities, and any amounts payable under the indenture, to be
immediately due and payable, and to enforce its other rights as
a creditor for these corresponding junior subordinated debt
securities.
Enforcement
of Some Rights by Holders of Capital Securities
If an event of default under the indenture has occurred and is
continuing, and this event can be attributable to our failure to
pay interest or principal on the related junior subordinated
debt securities when due, you may institute a legal proceeding
directly against us to enforce the payment of the principal of
or interest on those subordinated debt securities having a
principal amount equal to the Liquidation Amount of your related
capital securities. We cannot amend the indenture to remove the
right to bring a direct action, without the written consent of
holders of all capital securities. If the right to bring a
direct action is removed, the applicable trust may become
subject to reporting obligations under the Securities Exchange
Act of 1934.
You would not be able to exercise directly any remedy other than
those stated in the preceding paragraph which are available to
the holders of the junior subordinated debt securities unless
there has been an event of default under the trust agreement.
See Description of Capital Securities Events
of Default.
Consolidation,
Merger, Sale of Assets and Other Transactions
We cannot consolidate with or merge into any other person or
convey, transfer or lease our properties and assets
substantially as an entirety to any person, and no person will
consolidate with or merge into us or convey, transfer or lease
its properties and assets substantially as an entirety to us,
unless:
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the successor is organized under the laws of the United States
or any state or the District of Columbia, and expressly assumes
all of our obligations under the indenture;
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immediately after the transaction, no event of default, and no
event which, after notice or lapse of time or both, would become
an event of default, shall have occurred and be continuing;
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this transaction is permitted under the related trust agreement
and the related guarantee and does not give rise to any breach
or violation of the related trust agreement or the related
guarantee; and
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other conditions prescribed in the indenture are met.
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The general provisions of the indenture do not afford protection
to the holders of the junior subordinated debt securities in the
event of a highly leveraged or other transaction involving us
that may adversely affect the holders.
Satisfaction
and Discharge
The indenture provides that when all junior subordinated debt
securities not previously delivered to the trustee for
cancellation:
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have become due and payable; or
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will become due and payable within one year, and
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we deposit with the trustee money sufficient to pay and
discharge the entire indebtedness on the junior subordinated
debt securities;
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we deliver to the trustee officers certificates and
opinions of counsel; and
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we comply with some other requirements under the indenture,
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then the indenture will cease to be of further effect and we
will be considered to have satisfied and discharged the
indenture.
Conversion
or Exchange
If indicated in the prospectus supplement, the junior
subordinated debt securities of any series may be convertible or
exchangeable into other securities, including shares of our
common or preferred stock. The prospectus supplement will
describe the specific terms on which holders of the junior
subordinated debt securities may convert or exchange these
securities into or for common or preferred stock or other
securities of ours, into or for common or preferred stock or
other securities of an entity affiliated with us or debt or
equity or other securities of an entity not affiliated with us,
or for the cash value of our stock or any of the above
securities, the terms on which conversion or exchange may occur,
including whether conversion or exchange is mandatory, at the
option of the holder or at our option, the period during which
conversion or exchange may occur, the initial conversion or
exchange price or rate and the circumstances or manner in which
the amount of common or preferred stock or other securities
issuable upon conversion or exchange may be adjusted.
Subordination
The indenture will provide that any junior subordinated debt
securities will be subordinate and junior in right of payment to
all Senior Debt, as described in any prospectus supplement.
Upon any payment or distribution of assets to creditors upon our
liquidation, dissolution, winding up, reorganization, whether
voluntary or involuntary, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency,
debt restructuring or similar proceedings, the holders of Senior
Debt will first be entitled to receive payment in full of the
principal, premium, or interest due before the holders of junior
subordinated debt securities or, in the case of corresponding
junior subordinated debt securities, the property trustee, on
behalf of the holders, will be entitled to receive any payment
or distribution.
In the event of the acceleration of the maturity of any junior
subordinated debt securities, the holders of all Senior Debt
outstanding at the time of the acceleration will first be
entitled to receive payment in full of all amounts due on the
Senior Debt (including any amounts due upon acceleration) before
the holders of junior subordinated debt securities.
No payment, by or on our behalf, of principal, premium, if any,
or interest, on the junior subordinated debt securities shall be
made if at the time of the payment, there exists:
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a default in any payment on any Senior Debt, or any other
default under which the maturity of any Senior Debt has been
accelerated; and
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any judicial proceeding relating to the defaults which shall be
pending.
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We are a bank holding company separate and distinct from our
banking and nonbanking subsidiaries. Almost all of our operating
assets are owned by our subsidiaries. We rely primarily on
dividends from our subsidiaries to meet our obligations to pay
the principal of and interest on our outstanding debt
obligations and corporate expenses. Our principal sources of
income are dividends, interest and fees from our banking and
nonbanking subsidiaries. Our principal bank subsidiary is
Gateway Bank & Trust Co. In addition, payment of
dividends by our subsidiaries to us are subject to ongoing
review by banking regulators and to various statutory
limitations and in some circumstances may require prior approval
by banking regulatory authorities.
Because we are a holding company, our right to participate in
any distribution of assets of any subsidiary upon the
liquidation or reorganization or otherwise of our subsidiary is
subject to the prior claims of creditors
17
of the subsidiary, unless we can be recognized as a creditor of
that subsidiary. Accordingly, the junior subordinated debt
securities will be effectively subordinated to all existing and
future liabilities of our subsidiaries, including depositors of
our depository institution subsidiaries, and holders of junior
subordinated debt securities should look only to Gateways
assets for payments on the junior subordinated debt securities.
The bank is subject to restrictions imposed by federal law on
any extensions of credit to, and some other transactions with,
us and our other affiliates, and on investments in stock or
other securities. These restrictions prevent us and our other
affiliates from borrowing from the bank unless the loans are
secured by various types of collateral. Further, these secured
loans, other transactions and investments by the bank are
generally limited in amount for us and each of our other
affiliates to 10% of the banks capital and surplus, and as
to us and all of our other affiliates to an aggregate of 20% of
the banks capital and surplus.
The indenture will place no limitation on the amount of Senior
Debt, or other debt, that we may incur. We expect to incur from
time to time additional indebtedness, including Senior Debt.
The indenture will provide that these subordination provisions,
as they relate to any particular issue of junior subordinated
debt securities, may be changed before the issuance. The
applicable prospectus supplement will describe any of these
changes.
Denominations,
Registration and Transfer
Unless the prospectus supplement specifies otherwise, we will
issue the junior subordinated debt securities in registered form
only, without coupons and in the denominations specified in the
prospectus supplement. Holders can exchange junior subordinated
debt securities of any series for other junior subordinated debt
securities:
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of the same issue and series;
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in any authorized denominations;
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in a like principal amount;
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of the same date of issuance and maturity; and
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bearing the same interest rate.
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Subject to the terms of the indenture and the limitations
applicable to global securities as may be stated in the
prospectus supplement, junior subordinated debt securities will
be presented for exchange or for registration of transfer (duly
endorsed or with the form of transfer duly endorsed, or a
satisfactory written instrument of transfer, duly executed) at
the office of the security registrar or at the office of any
transfer agent designated by us for that purpose.
Unless otherwise provided in the prospectus supplement, no
service charge will be made for any registration of transfer or
exchange, but we may require payment of any taxes or other
governmental charges. We have appointed the trustee as security
registrar for the junior subordinated debt securities. Any
transfer agent (in addition to the security registrar) initially
designated by us for any junior subordinated debt securities
will be named in the applicable prospectus supplement. We may at
any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the
location through which any transfer agent acts, except that we
will be required to maintain a transfer agent in each place of
payment for the junior subordinated debt securities of each
series.
If the junior subordinated debt securities of any series are to
be redeemed, neither the trustee nor us will be required to:
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issue, register the transfer of, or exchange any junior
subordinated debt securities of any series during a period
beginning on the business day that is 15 days before the
day of mailing of notice of redemption of any junior
subordinated debt securities that is selected for redemption and
ending at the close of business on the day of mailing of the
relevant notice; or
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transfer or exchange any junior subordinated debt securities
selected for redemption, except, the unredeemed portion of any
junior subordinated debt securities being redeemed in part.
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Global
Junior Subordinated Debt Securities
We may issue, in whole or in part, the junior subordinated debt
securities of a series in the form of one or more global junior
subordinated debt securities that will be deposited with, or on
behalf of, a depositary identified in the applicable prospectus
supplement relating to those series. The specific terms of the
depositary arrangements for a series of junior subordinated debt
securities will be described in the prospectus supplement. See
Book-Entry Issuance.
Payment
and Paying Agents
Payment of principal of and any premium and interest on junior
subordinated debt securities will be made at the office of the
trustee as specified in the prospectus supplement or at the
office of the paying agent(s) designated by us, from time to
time, in the prospectus supplement. However, we may make
interest payments by:
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check mailed to the address of the person entitled to it at the
address appearing in the securities register (except in the case
of global junior subordinated debt securities); or
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transfer to an account maintained by the person entitled to it
as specified in the securities register, so long as we receive
proper transfer instructions by the regular record date.
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Unless otherwise indicated in the prospectus supplement, payment
of the interest on junior subordinated debt securities on any
interest payment date will be made to the person in whose name
the junior subordinated debt securities are registered at the
close of business on the regular record date relating to the
interest payment date, except in the case of defaulted interest.
We may at any time designate additional paying agents or cancel
the designation of any paying agent. We will at all times be
required to maintain a paying agent in each place of payment for
each series of junior subordinated debt securities.
Any money deposited with the trustee or any paying agent, or
held by us in trust for the payment of the principal of and any
premium or interest on any junior subordinated debt securities
that remains unclaimed for two years after the principal, any
premium or interest has become due and payable will, at our
request, be repaid to us and the holder of the junior
subordinated debt securities can then only look to us for
payment.
Information
about the Trustee
The Trust Indenture Act describes the duties and
responsibilities of the trustee. Subject to the provisions under
the Trust Indenture Act, the trustee has no obligation to
exercise any of the powers vested in it by the indenture, at the
request of any holder of junior subordinated debt securities,
unless the holder offers reasonable indemnity against the costs,
expenses and liabilities that are incurred. The trustee is not
required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if
it reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Description
of Capital Securities
General
This section describes the general terms and provisions of the
capital securities that are offered by this prospectus. A
prospectus supplement will describe the specific terms of the
series of the capital securities offered under the prospectus
supplement and any general terms outlined in this section that
will not apply to those capital securities.
19
The capital securities will be issued under the trust agreement.
The trust agreement will be qualified as an indenture under the
Trust Indenture Act. The forms of trust agreement and
capital securities have been or will be filed as an exhibit to
the registration statement.
The capital securities will have the terms described in the
trust agreement or made part of the trust agreement by the
Trust Indenture Act or the Delaware Statutory
Trust Act. The terms of the capital securities will mirror
the terms of the junior subordinated debt securities held by the
trust.
This section summarizes the material terms and provisions of the
trust agreement and the capital securities. Because this is only
a summary, it does not contain all of the details found in the
full text of the trust agreement and the capital securities. If
you would like additional information you should read the form
of trust agreement and the form of capital securities.
The trust agreement authorizes the trust to issue on behalf of
the trust one series of capital securities and one series of
common securities containing the terms described in the
applicable prospectus supplement. The proceeds from the sale of
the capital securities and common securities will be used by the
trust to purchase a series of junior subordinated debt
securities from us. The junior subordinated debt securities will
be held in trust by the property trustee for your benefit and
the benefit of the holder of the common securities.
Under the guarantee, we will agree to make payments of
distributions and payments on redemption or liquidation of the
capital securities, to the extent that the related trust holds
funds available for this purpose and has not made such payments.
See Description of the Guarantees.
The assets of the trust available for distribution to you will
be limited to payments received from us under the junior
subordinated debt securities. If we fail to make a payment on
the junior subordinated debt securities, the property trustee
will not have sufficient funds to make related payments,
including distributions, on the capital securities.
Each guarantee, when taken together with our obligations under
the junior subordinated debt securities and the indenture, the
trust agreement and the expense agreement, will provide a full
and unconditional guarantee of amounts due on the capital
securities issued by the trust.
The trust will redeem an amount of capital securities equal to
the amount of the junior subordinated debt securities redeemed.
Specific terms relating to the capital securities will be
described in the prospectus supplement, including:
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the name of the capital securities;
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the dollar amount and number of capital securities issued;
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the annual distribution rate(s) (or method of determining this
rate(s)), the payment date(s) and the record dates used to
determine the holders who are to receive distributions;
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the date from which distributions shall be cumulative;
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the optional redemption provisions, if any, including the
prices, time periods and other terms and conditions for which
the capital securities shall be purchased or redeemed, in whole
or in part;
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the terms and conditions of any right to convert or exchange the
capital securities into or for common or preferred stock or
other securities of ours, into or for common or preferred stock
or other securities of an entity affiliated with us or debt or
equity or other securities of an entity not affiliated with us,
or for the cash value of our stock or any of the above
securities, the terms on which conversion or exchange may occur,
including whether conversion or exchange is mandatory, at the
option of the holder or at our option, the period during which
conversion or exchange may occur, the initial conversion or
exchange price or rate and the circumstances or manner in which
the amount of common or preferred stock or other securities
issuable upon conversion or exchange may be adjusted;
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the terms and conditions, if any, under which the junior
subordinated debt securities are distributed to you by the trust;
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any securities exchange on which the capital securities are
listed;
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whether the capital securities are to be issued in book-entry
form and represented by one or more global certificates, and if
so, the depositary for the global certificates and the specific
terms of the depositary arrangements; and
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any other relevant rights, preferences, privileges, limitations
or restrictions of the capital securities.
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The prospectus supplement will also describe some
U.S. federal income tax considerations applicable to any
offering of capital securities.
Corresponding
Junior Subordinated Debt Securities
The junior subordinated debt securities are issued in one or
more series of junior subordinated debt securities under the
indenture with terms corresponding to the terms of a series of
related capital securities. Concurrently with the issuance of
the trusts capital securities, the trust will invest the
proceeds and the consideration paid by us for the related common
securities in a series of junior subordinated debt securities.
Each series of junior subordinated debt securities will be in
the principal amount equal to the aggregate stated Liquidation
Amount of the related capital securities and the common
securities of the trust and will rank equally with all other
series of junior subordinated debt securities. As a holder of
the related capital securities for a series of corresponding
junior subordinated debt securities, you will have rights in
connection with modifications to the indenture or at the
occurrence of events of default under the indenture described
under Description of Junior Subordinated Debt
Securities Modification of Indenture and
Description of Junior Subordinated Debt
Securities Events of Default, unless provided
otherwise in the prospectus supplement for these related capital
securities.
Unless otherwise specified in the prospectus supplement, if a
Tax Event relating to a trust of related capital securities
occurs and is continuing, we have the option, and subject to
prior approval by the Federal Reserve Board (if required at the
time under applicable capital guidelines or policies), to redeem
the corresponding junior subordinated debt securities at any
time within 90 days of the occurrence of the Tax Event, in
whole but not in part, at the redemption price. As long as the
trust is the holder of all outstanding series of corresponding
junior subordinated debt securities, the trust will use the
proceeds of the redemption to redeem the capital securities and
common securities in accordance with their terms. We may not
redeem the junior subordinated debt securities in part, unless
all accrued and unpaid interest has been paid in full on all
outstanding corresponding junior subordinated debt securities of
the applicable series.
We will covenant in the indenture that if and as long as:
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the trust of the related series of capital securities and common
securities is the holder of all the junior subordinated debt
securities;
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a Tax Event related to the trust has occurred and is
continuing; and
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we have elected, and have not revoked our election to pay
Additional Sums for the capital securities and common securities,
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we will pay to the trust the Additional Sums.
We will also covenant in the indenture, as to the junior
subordinated debt securities:
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To maintain directly or indirectly 100% ownership of the common
securities of the trust to which the junior subordinated debt
securities have been issued, provided that some successors which
are permitted under the indenture, may succeed to our ownership
of the common securities;
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not to voluntarily terminate,
wind-up
or
liquidate any trust, except:
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with prior approval of the Federal Reserve Board if then so
required under applicable capital guidelines or policies of the
Federal Reserve Board; or
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in connection with a distribution of the junior subordinated
debt securities to the holders of the capital securities in
liquidation of a trust, or in connection with some mergers,
consolidations or amalgamations permitted by the related trust
agreement; and
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to use our reasonable efforts, consistent with the terms and
provisions of the related trust agreement, to cause the trust to
remain classified as a grantor trust and not as an association
taxable as a corporation for United States federal income
tax purposes.
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To the extent specified in the prospectus supplement and if the
junior subordinated debt securities are not in default, we shall
have the right at any time and from time to time during the term
of any series of junior subordinated debt securities to defer
payment of interest for up to five consecutive years or such
longer period as specified in the applicable prospectus
supplement (an extension period, which we also
sometimes refer to as a deferral period). No
deferral period will extend past the maturity date of the junior
subordinated debt securities.
During any such extension period, we will not declare or pay any
dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of our capital stock or make any guarantee payment with respect
thereto other than:
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repurchases, redemptions or other acquisitions of shares of our
capital stock in connection with any employment contract,
benefit plan or other similar arrangement with or for the
benefit of employees, officers, directors or consultants;
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repurchases of shares of Gateway common stock pursuant to a
contractually binding requirement to buy stock existing prior to
the commencement of the extension period, including under a
contractually binding stock repurchase plan;
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as a result of an exchange or conversion of any class or series
of Gateways capital stock for any other class or series of
our capital stock;
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the purchase of fractional interests in shares of Gateways
capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or
exchanged;
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purchase of Gateways capital stock in connection with the
distribution thereof;
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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
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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
equally with or junior to such stock.
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Except as described in any prospectus supplement, we will not
make any payment of interest, principal or premium on, or repay,
repurchase or redeem, any debt securities or guarantees issued
by Gateway that rank equally with or junior to the junior
subordinated debt securities.
The foregoing, however, will not apply to any stock dividends
paid by Gateway where the dividend stock is the same stock as
that on which the dividend is being paid. Gateway may pay
current interest at any time with cash from any source.
Some U.S. federal income tax consequences and
considerations applicable to any junior subordinated debt
securities that permit extension periods will be described in
the applicable prospectus supplement.
Redemption,
Exchange or Conversion
Mandatory Redemption.
If the junior
subordinated debt securities are repaid or redeemed in whole or
in part, whether at maturity or upon earlier redemption, the
property trustee will use the proceeds from this repayment or
redemption to redeem a Like Amount of the capital securities and
common securities. The property trustee will give you at least
30 days notice, but not more than 60 days
notice, before the date of redemption. The capital securities
and (unless there is a default under the junior subordinated
debt securities)
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the common securities will be redeemed at the redemption price
at the concurrent redemption of the corresponding junior
subordinated debt securities. See Description of Junior
Subordinated Debt Securities Redemption.
If less than all of any series of the junior subordinated debt
securities are to be repaid or redeemed on a date of redemption,
then the proceeds from the repayment or redemption shall be
allocated, pro rata, to the redemption of the related capital
securities and the common securities.
We may redeem any series of corresponding junior subordinated
debt securities:
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on or after the date as specified in the applicable prospectus
supplement, in whole at any time or in part, from time to time;
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at any time, in whole (but not in part), upon the occurrence of
a Tax Event, an Investment Company Event or a Capital
Treatment; or
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as is otherwise specified in the applicable prospectus
supplement.
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Tax Event, Investment Company Event Redemption or Regulatory
Capital Event.
If a Tax Event, Investment Company
Event or Regulatory Capital Event relating to a series of
capital securities and common securities shall occur and be
continuing, we may redeem the corresponding junior subordinated
debt securities in whole, but not in part. This will cause a
mandatory redemption of all of the related capital securities
and common securities at the redemption price within
90 days following the occurrence of the Tax Event,
Investment Company Event or Regulatory Capital Event.
If a Tax Event, Investment Company Event or Regulatory Capital
Event relating to a series of capital securities and common
securities occurs and is continuing and we elect not to redeem
the corresponding junior subordinated debt securities or to
dissolve the related trust and cause the corresponding junior
subordinated debt securities to be distributed to holders of the
capital securities and common securities as described above,
those capital securities and common securities will remain
outstanding and Additional Sums may be payable on the
corresponding junior subordinated debt securities.
Like Amount
means:
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for a redemption of any series of capital securities and common
securities, capital securities and common securities of the
series having a Liquidation Amount equal to that portion of the
principal amount of corresponding junior subordinated debt
securities to be contemporaneously redeemed. The Like Amount
will be allocated to the common securities and to the capital
securities based upon their relative Liquidation Amounts. The
proceeds will be used to pay the redemption price of the capital
securities and common securities; and
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for a distribution of corresponding junior subordinated debt
securities to holders of any series of capital securities and
common securities, corresponding junior subordinated debt
securities having a principal amount equal to the Liquidation
Amount of the related capital securities and common securities.
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Liquidation Amount
means:
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unless otherwise provided in the applicable prospectus
supplement, $1,000 per capital security and common security.
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Distribution of Corresponding Junior Subordinated Debt
Securities.
We may at any time dissolve any trust
and, after satisfaction of the liabilities of creditors of the
trust as provided by applicable law, cause the corresponding
junior subordinated debt securities relating to the capital
securities and common securities issued by the trust to be
distributed to you and the holders of the common securities in
liquidation of the trust.
Once the liquidation date is fixed for any distribution of
corresponding junior subordinated debt securities for any series
of capital securities:
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the series of capital securities will no longer be deemed to be
outstanding;
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DTC, or its nominee, as the record holder of the series of
capital securities, will receive a registered global certificate
or certificates representing the corresponding junior
subordinated debt securities to be delivered upon the
distribution; and
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certificates representing the series of capital securities not
held by DTC or its nominee will be deemed to represent the
corresponding junior subordinated debt securities. Those
certificates will bear accrued and unpaid interest in an amount
equal to the accrued and unpaid distributions on the series of
capital securities until the certificates are presented to the
administrative trustees of the applicable trust or their agent
for transfer or reissuance.
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We cannot assure you of the market prices for the capital
securities or the corresponding junior subordinated debt
securities. Accordingly, the capital securities that you may
purchase, or the corresponding junior subordinated debt
securities that you may receive on dissolution and liquidation
of the trust, may trade at a discount of the price that you paid
for the capital securities.
Conversion or Exchange.
The prospectus
supplement will describe the following terms of the capital
securities: the terms on which the holders of the capital
securities may convert or exchange these securities into or for
common or preferred stock or other securities of ours, into or
for common or preferred stock or other securities of an entity
affiliated with us or debt or equity or other securities of an
entity not affiliated with us, or for the cash value of our
stock or any of the above securities, the terms on which
conversion or exchange may occur, including whether conversion
or exchange is mandatory, at the option of the holder or at our
option, the period during which conversion or exchange may
occur, the initial conversion or exchange price or rate and the
circumstances or manner in which the amount of common or
preferred stock or other securities issuable upon conversion or
exchange may be adjusted.
Redemption Procedures
Capital securities redeemed on a date of redemption shall be:
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redeemed at the redemption price with the applicable proceeds
from the contemporaneous redemption of the corresponding junior
subordinated debt securities; and
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payable on each date of redemption only to the extent that the
related trust has funds on hand available for the payment of the
redemption price.
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If notice of redemption is given, then, by 12:00 noon, New York
City time, on the date of redemption, to the extent funds are
available, the property trustee will deposit irrevocably with
DTC funds sufficient to pay the applicable redemption price and
will give DTC irrevocable instructions and authority to pay the
redemption price to you. See Book-Entry Issuance. If
the capital securities are no longer in book-entry form, the
property trustee, to the extent funds are available, will
irrevocably deposit with the paying agent for the capital
securities, funds sufficient to pay the applicable redemption
price and will give the paying agent irrevocable instructions
and authority to pay the redemption price to you when you
surrender your certificates evidencing the capital securities.
Distributions payable on or before the date of redemption for
any capital securities called for redemption shall be payable to
the holders on the relevant record dates for the related
distribution dates.
If notice of redemption is given and funds deposited as
required, all of your rights will cease, except your right to
receive the redemption price, and the capital securities will
cease to be outstanding.
If a date of redemption is not a business day, then payment of
the redemption price payable on the date of redemption will be
made on the next succeeding day which is a business day (and
without any interest or other payment for any delay). However,
if the business day falls in the next calendar year, then
payment will be made on the immediately preceding business day.
If payment of the redemption price of the capital securities
called for redemption is improperly withheld or refused and not
paid either by the trust or by us under the guarantee, then
distributions on the capital securities will continue to accrue
at the then applicable rate from the date of redemption to the
date that the
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redemption price is actually paid. In this case the actual
payment date will be the date of redemption for purposes of
calculating the redemption price.
Subject to applicable law (including, without limitation,
federal securities law), our subsidiaries or us may at any time
and from time to time purchase outstanding capital securities by
tender offer, in the open market or by private agreement.
Payment of the redemption price on the capital securities and
any distribution of corresponding junior subordinated debt
securities to holders of capital securities shall be payable to
the holders on the relevant record date as they appear on the
register of capital securities. The record date shall be one
business day before the relevant date of redemption or
liquidation date as applicable. However, if the capital
securities are not in book-entry form, the relevant record date
for the capital securities shall be at least 15 days before
the date of redemption or liquidation date.
If less than all of the capital securities and common securities
issued by the trust are to be redeemed on a redemption date,
then the aggregate Liquidation Amount of the capital securities
and common securities to be redeemed shall be allocated pro rata
to the capital securities and the common securities based upon
the relative Liquidation Amounts of such classes. The property
trustee will select the capital securities to be redeemed on a
pro rata basis not more than 60 days before the date of
redemption, by a method deemed fair and appropriate by it. The
property trustee will promptly notify the registrar in writing
of the capital securities selected for redemption and, in the
case of any capital securities selected for partial redemption,
the Liquidation Amount to be redeemed.
You will receive notice of any redemption at least 30 days
but not more than 60 days before the date of redemption at
your registered address. Unless we default in the payment of the
redemption price on the corresponding junior subordinated debt
securities, on and after the date of redemption, interest will
cease to accrue on the junior subordinated debt securities or
portions of the junior subordinated debt securities (and
distributions will cease to accrue on the related capital
securities or portions of the capital securities) called for
redemption.
Subordination
of Common Securities
Payment of distributions on, and the redemption price of, the
trusts capital securities and common securities, will be
made pro rata based on the Liquidation Amount of the capital
securities and common securities. However, if an event of
default under the indenture shall have occurred and is
continuing, no payment may be made on any of the trusts
common securities, unless all unpaid amounts on each of the
trusts outstanding capital securities shall have been made
or provided for in full.
If an event of default under the indenture has occurred and is
continuing, we, as holder of the trusts common securities,
will be deemed to have waived any right to act on the event of
default under the applicable trust agreement until the effect of
all events of default relating to the capital securities have
been cured, waived or otherwise eliminated. Until the events of
default under the applicable trust agreement relating to the
capital securities have been so cured, waived or otherwise
eliminated, the property trustee will act solely on your behalf
and not on our behalf as holder of the trusts common
securities, and only you and the other holders of capital
securities will have the right to direct the property trustee to
act on your behalf.
Liquidation
Distribution Upon Dissolution
The trust agreement states that the trust shall be automatically
dissolved upon the expiration of the term of the trust and shall
also be dissolved upon the first to occur of:
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our bankruptcy, dissolution or liquidation;
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our decision to dissolve the trust and to cause the distribution
of a Like Amount of the junior subordinated debt securities
directly to the holders of the capital securities and common
securities. For this distribution, we must, if required, receive
the prior approval of the Federal Reserve Board and an
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opinion of independent counsel that the distribution of the
junior debt securities will not be taxable to the holders;
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the redemption of all of the capital securities and common
securities of a trust; and
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a court order for the dissolution of a trust is entered.
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If dissolution of the trust occurs as described in the first,
second and fourth bullets above, the trustee shall liquidate the
trust as quickly as possible. After paying all amounts owed to
creditors, the trustee will distribute to the holders of the
capital securities and the common securities either:
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a Like Amount of junior subordinated debt securities; or
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if the distribution of the junior subordinated debt securities
is determined by the property trustee not to be practical, cash
assets equal to the aggregate Liquidation Amount per capital
security and common security specified in an accompanying
prospectus supplement, plus accumulated and unpaid distributions
from that date to the date of payment.
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If the trust cannot pay the full amount due on its capital
securities and common securities because insufficient assets are
available for payment, then the amounts payable by the trust on
its capital securities and common securities shall be paid pro
rata. However, if an event of default under the indenture has
occurred and is continuing, the total amounts due on the capital
securities shall be paid before any distribution on the common
securities.
Trust Enforcement
Event
An event of default under the indenture constitutes an event of
default under the amended and restated trust agreement. We refer
to such an event as a Trust Enforcement Event.
For more information on events of default under the indenture,
see Description of the Junior Subordinated Debt
Securities Events of Default. Upon the
occurrence and continuance of a Trust Enforcement Event,
the property trustee, as the sole holder of the junior
subordinated debt securities, will have the right under the
indenture to declare the principal amount of the junior
subordinated debt securities due and payable. The amended and
restated trust agreement may provide for other events of default
as may be specified in the agreement.
If the property trustee fails to enforce its rights under the
junior subordinated debt securities, any holder of capital
securities may, to the extent permitted by applicable law,
institute a legal proceeding against us to enforce the property
trustees rights under the junior subordinated debt
securities and the indenture without first instituting legal
proceedings against the property trustee or any other person. In
addition, if a Trust Enforcement Event is due to our
failure to pay interest or principal on the junior subordinated
debt securities when due, then the registered holder of capital
securities may institute a direct action on or after the due
date directly against us for enforcement of payment to that
holder of the principal of or interest on the junior
subordinated debt securities having a principal amount equal to
the total Liquidation Amount of that holders capital
securities. In connection with such a direct action, we will
have the right under the indenture to set off any payment made
to that holder by us. The holders of capital securities will not
be able to exercise directly any other remedy available to the
holders of the junior subordinated debt securities.
Pursuant to the amended and restated trust agreement, the holder
of the common securities will be deemed to have waived any
Trust Enforcement Event regarding the common securities
until all Trust Enforcement Events regarding the capital
securities have been cured, waived or otherwise eliminated.
Until all Trust Enforcement Events regarding the capital
securities have been so cured, waived or otherwise eliminated,
the property trustee will act solely on behalf of the holders of
the capital securities and only the holders of the capital
securities will have the right to direct the enforcement actions
of the property trustee.
Removal
of Trustees
Unless an event of default under a trust agreement has occurred
and is continuing, we can remove and replace the trustee at any
time. If an event of default under a trust agreement has
occurred and is continuing, the property trustee and the
Delaware trustee may be removed or replaced by the holders of at
least a majority
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in Liquidation Amount of the outstanding capital securities. We
are the only one that has the right to remove or replace the
administrative trustees. No resignation or removal of any of the
trustees and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor
trustee as described in the applicable trust agreement.
Co-Trustees
and Separate Property Trustee
Unless an event of default under a trust agreement has occurred
and is continuing, we, as the holder of the common securities,
and the administrative trustees shall have the power:
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To appoint one or more persons approved by the property trustee
either to act as co-trustee, jointly with the property trustee,
of all or any part of the trust property, or to act as a
separate trustee of any trust property, in either case with the
powers as provided in the instrument of appointment; and
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To vest in the person(s) any property, title, right or power
deemed necessary or desirable, subject to the provisions of the
applicable trust agreement.
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If an event of default under a trust agreement has occurred and
is continuing, only the property trustee may appoint a
co-trustee or separate property trustee.
Merger or
Consolidation of Trustees
If any of the trustees merge, convert, or consolidate with or
into another entity or sells its trust operations to another
entity, the new entity shall be the successor of the trustee
under the trust agreement, provided that the corporation or
other entity shall be qualified and eligible to be a trustee.
Mergers,
Consolidations, Amalgamations or Replacements of the
Trust
The trust may not merge with or into, consolidate, amalgamate,
or be replaced by or transfer or lease all or substantially all
of its properties and assets to any other entity (a merger
event), except as described below or as described in
Liquidation Distribution Upon Dissolution above. The
trust may, at our request, with the consent of the
administrative trustees and without your consent, merge with or
into, consolidate, amalgamate or be replaced by another trust
provided that:
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the successor entity either:
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expressly assumes all of the obligations of the trust relating
to the capital securities; or
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substitutes for the capital securities other securities with
terms substantially similar to the capital securities (successor
securities) so long as the successor securities have the same
rank as the capital securities for distributions and payments
upon liquidation, redemption and otherwise;
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we expressly appoint a trustee of the successor entity who has
the same powers and duties as the property trustee of the trust
as it relates to the junior subordinated debt securities;
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the successor securities are listed or will be listed on the
same national securities exchange or other organization that the
capital securities are listed on;
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the merger event does not cause the capital securities or
successor securities to be downgraded by any national
statistical rating organization;
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the merger event does not adversely affect the rights,
preferences and privileges of the holders of the capital
securities or successor securities in any material way;
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the successor entity has a purpose substantially similar to that
of the trust; and
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before the merger event, we have received an opinion of counsel
stating that:
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the merger event does not adversely affect the rights of the
holders of the capital securities or any successor securities in
any material way;
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following the merger event, neither the trust nor the successor
entity will be required to register as an investment company
under the Investment Company Act; and
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we own all of the common securities of the successor entity and
guarantee the successor entitys obligations under the
successor securities in the same manner provided by the related
guarantee.
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The trust and any successor entity must always be classified as
grantor trusts for U.S. federal income tax purposes unless
all of the holders of the capital securities approve otherwise.
Voting
Rights; Amendment of the Trust Agreement
You have no voting rights except as discussed under
Description of the Capital Securities Mergers,
Consolidations, Amalgamations or Replacements of the Trust
and Description of the Guarantee Amendments
and Assignment, and as otherwise required by law and the
trust agreement. The property trustee, the administrative
trustees and us may amend the trust agreement without your
consent:
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to fix any ambiguity or inconsistency; or
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to modify, eliminate or add provisions to the trust agreement as
shall be necessary to ensure that each trust shall at all times
be classified as a grantor trust for U.S. federal income
tax purposes.
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The administrative trustees and us may amend the trust agreement
for any other reason as long as the holders of at least a
majority in aggregate Liquidation Amount of the capital
securities agree, and the trustees receive an opinion of counsel
which states that the amendment will not affect the trust status
as a grantor trust for U.S. federal income tax purposes, or
its exemption from regulation as an investment company under the
Investment Company Act, except to:
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change the amount
and/or
timing or otherwise adversely affect the method of payment of
any distribution or Liquidation Amount on the capital securities
or common securities;
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restrict your right or the right of the common security holder
to institute suit for enforcement of any distribution or
Liquidation Amount on the capital securities or common
securities.
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The changes described in the two bullet points above require the
approval of each holder of the capital securities affected.
So long as the corresponding junior subordinated debt securities
of the trust are held by the property trustee of the trust, the
trustees shall not, without obtaining the prior approval of the
holders of at least a majority in the aggregate Liquidation
Amount of all outstanding related capital securities:
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direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or executing any trust
or power conferred on the trustee relating to the corresponding
junior subordinated debt securities;
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waive any past default as provided in the indenture;
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cancel an acceleration of the principal of the corresponding
junior subordinated debt securities; or
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agree to any change in the indenture or the corresponding junior
subordinated debt securities.
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However, if the indenture requires the consent of each holder of
corresponding junior subordinated debt securities that are
affected, then the property trustee must get approval of all
holders of capital securities.
The trustees cannot change anything previously approved by you
without your approval to make the change. The property trustee
shall notify you of any notice of default relating to the
corresponding junior subordinated debt securities.
In addition, before taking any of the actions described above,
the trustees must obtain an opinion of counsel experienced in
these matters, stating that the trust will continue to be
classified as a grantor trust for U.S. federal income tax
purposes.
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As described in each trust agreement, the property trustee may
hold a meeting so that you may vote on a change or request that
you approve the change by written consent.
Your vote or consent is not required for the trust to redeem and
cancel its capital securities under the trust agreement.
If your vote is taken or a consent is obtained, any capital
securities that are owned by us, the trustees or any affiliate
of either of us shall, for purposes of the vote or consent, be
treated as if they were not outstanding.
Global
Capital Securities
The capital securities of a series may be issued in whole or in
part in the form of one or more global securities that will be
deposited with, or on behalf of, a depositary identified in the
prospectus supplement.
The specific terms of the depositary arrangements for a series
of capital securities will be described in the prospectus
supplement. See Book-Entry Issuance.
Payment
and Paying Agents
Payments regarding the capital securities shall be made to a
depositary, which shall credit the relevant accounts at the
depositary on the applicable distribution dates or, if any
trusts capital securities are not held by a depositary,
the payments shall be made by check mailed to the address of the
holder entitled to it at the address listed in the register.
Unless otherwise specified in the prospectus supplement, the
paying agent shall initially be the property trustee. The paying
agent shall be permitted to resign as paying agent with
30 days written notice to the property trustee and to
us. If the property trustee shall no longer be the paying agent,
the administrative trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the
administrative trustees and to us) to act as paying agent.
Registrar
and Transfer Agent
Unless otherwise specified in the prospectus supplement, the
property trustee will act as registrar and transfer agent for
the capital securities.
Registration of transfers of capital securities will be effected
without charge by or on behalf of each trust, after payment of
any tax or other governmental charges that are imposed in
connection with any transfer or exchange. No transfers of
capital securities called for redemption will be registered.
Information
about the Property Trustee
The property trustee will perform only those duties that are
specifically stated in the trust agreement. If an event of
default arises or certain defaults occur and continue under a
trust agreement, the property trustee must use the same degree
of care and skill in the exercise of its duties as a prudent
person would exercise or use in the conduct of his or her own
affairs. The property trustee is under no obligation to exercise
any of the powers given it by the trust agreement at your
request unless it is offered reasonable security or indemnity
against the costs, expenses and liabilities that it might incur.
If no event of default under the trust agreement has occurred
and is continuing, and the property trustee is required to
decide between alternative courses of action, construe ambiguous
provisions in the trust agreement or is unsure of the
application of any provisions of the trust agreement, and the
matter is not one on which you are entitled to vote, then the
property trustee shall:
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take some action as directed by us; and
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if not so directed, take whatever action the property trustee
deems advisable and in your best interests, and in the best
interests of the holders of the capital securities and common
securities of the applicable trust and will have no liability
except for its own bad faith, negligence or willful misconduct.
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Miscellaneous
The administrative trustees are authorized and directed to
conduct the affairs of and to operate the trust in the manner
that:
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the trust will not be deemed to be an investment company
required to be registered under the Investment Company Act or to
fail to be classified as a grantor trust for U.S. federal
income tax purposes;
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the corresponding junior subordinated debt securities will be
treated as our indebtedness for U.S. federal income tax
purposes.
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In this connection, the administrative trustees and we are
authorized to take any action, consistent with applicable law or
the certificate of trust of the trust or the trust agreement,
that we each determine in our discretion to be necessary or
desirable for these purposes.
You have no preemptive or similar rights. The trust may not
borrow money, issue Debt or mortgages, or pledge any of its
assets.
Description
of the Guarantees
General
We will execute a guarantee, for your benefit at the same time
that the trust issues the capital securities. An unaffiliated
bank will act as the guarantee trustee for the benefit of
holders of the capital securities. The guarantee will be
qualified as an indenture under the Trust Indenture Act.
The form of guarantee will be included in the exhibits to the
registration statement.
This section summarizes the material terms and provisions of the
guarantee. Because this is only a summary, it does not contain
all of the details found in the full text of the guarantee. If
you would like additional information you should read the form
of guarantee agreement.
We will irrevocably guarantee payment in full of amounts due
under the capital securities on a junior subordinated basis and
to the extent the issuer capital trust has funds available for
payment of those amounts. We refer to this obligation as the
guarantee. However, the guarantee does not cover
payments if the capital trust does not have sufficient funds to
make the distribution payments, including, for example, if we
have failed to pay to the issuer amounts due under the junior
subordinated debt securities.
The following payments, to the extent not paid by the trust,
will be subject to the guarantee:
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any accumulated and unpaid distributions required to be paid on
the capital securities, to the extent that the trust has
applicable funds available to make the payment;
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the redemption price and all accrued and unpaid distributions to
the date of redemption on the capital securities called for
redemption, to the extent that the trust has funds available to
make the payment; or
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in the event of a voluntary or involuntary dissolution, winding
up or liquidation of the trust (other than in connection with a
distribution of corresponding junior subordinated debt
securities to you or the redemption of all the related capital
securities), the lesser of:
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the aggregate of the Liquidation Amount specified in the
applicable prospectus supplement for each capital security plus
all accrued and unpaid distributions on the capital securities
to the date of payment; and
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the amount of assets of the trust remaining available for
distribution to you.
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We can satisfy our obligation to make a guarantee payment by
direct payment to you of the required amounts or by causing the
trust to pay those amounts to the holders.
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Each guarantee will be an irrevocable guarantee on a
subordinated basis of the trusts obligations under the
capital securities, but will apply only to the extent that the
trust has funds sufficient to make the payments, and is not a
guarantee of collection.
No single document executed by us that is related to the
issuance of the capital securities will provide for its full,
irrevocable and unconditional guarantee of the capital
securities. It is only the combined operation of the applicable
guarantee, the trust agreement, the indenture and the expense
agreement that has the effect of providing a full, irrevocable
and unconditional guarantee of the trusts obligations
under its capital securities.
As issuer of the junior subordinated debt securities, we are
also obligated to pay the expenses and other obligations of the
issuer, other than its obligations to make payments on the
capital securities.
Status of
Guarantees
The guarantee will constitute an unsecured obligation of ours
and will rank subordinate and junior in right of payment to all
of our Senior Debt to the same extent as each of the related
junior subordinated debt securities. The guarantee will
constitute a guarantee of payment and not of collection (in
other words you may sue us, or seek other remedies, to enforce
your rights under the guarantee without first suing any other
person or entity). The guarantee will be held for your benefit
and will not be discharged except by payment of the payments in
full to the extent not previously paid by the trust or upon
distribution to you of the corresponding series of junior
subordinated debt securities. The guarantee does not place a
limitation on the amount of additional indebtedness that we may
incur. We expect to incur from time to time additional
indebtedness, including indebtedness constituting Senior Debt.
Amendments
and Assignment
Except regarding any changes which do not adversely affect your
rights in any material respect (in which case your consent will
not be required), the guarantee may only be amended with the
prior approval of the holders of at least a majority in
aggregate Liquidation Amount of the outstanding capital
securities. A description of the manner in which approval may be
obtained is described under Description of the Capital
Securities Voting Rights; Amendment of the
Trust Agreement. All guarantees and agreements
contained in the guarantee will be binding on our successors,
assigns, receivers, trustees and representatives and shall inure
to the benefit of the holders of the related capital securities
then outstanding.
Events of
Default
An event of default under the guarantee occurs if we fail to
make any of our required payments or perform our obligations
under the guarantee. The holders of at least a majority in
aggregate Liquidation Amount of the capital securities will have
the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee
relating to the guarantee or to direct the exercise of any trust
or power given to the guarantee trustee under the guarantee.
You may institute a legal proceeding directly against us to
enforce your rights under the guarantee without first
instituting a legal proceeding against the trust, the guarantee
trustee or any other person or entity.
As guarantor, we are required to file annually with the
guarantee trustee a certificate stating whether or not we are in
compliance with all the conditions and covenants applicable to
us under the guarantee.
Information
about the Guarantee Trustee
The guarantee trustee, other than during the occurrence and
continuance of an event of default by us in the performance of
any guarantee, will only perform the duties that are
specifically described in the guarantee. After an event of
default on any guarantee, the guarantee trustee will exercise
the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs.
Subject to this provision, the guarantee trustee is under no
obligation to exercise any of its powers as described in the
guarantee at your request unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it
might incur.
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Termination
of Capital Securities Guarantees
The guarantee will terminate once the related capital securities
are paid in full or upon distribution of the corresponding
series of junior subordinated debt securities to you. Each
guarantee will continue to be effective or will be reinstated if
at any time you are required to restore payment of any sums paid
under the capital securities or the guarantee.
Relationship
among the Capital Securities,
the Corresponding Junior Subordinated Debt and the
Guarantees
Full and
Unconditional Guarantee
Payments of distributions and other amounts due on the capital
securities (to the extent the trust has funds available for the
payments that are received from payments by us on our junior
subordinated debt securities) will be irrevocably guaranteed by
us to the extent described under Description of the
Guarantee. No single document executed by us in connection
with the issuance of the capital securities will provide for its
full, irrevocable and unconditional guarantee of the capital
securities. It is only the combined operation of our obligations
under the guarantee, the trust agreement, the junior
subordinated debt securities and the indenture that has the
effect of providing a full, irrevocable and unconditional
guarantee of the trusts obligations under the related
series of capital securities.
If we do not make payments on any series of corresponding junior
subordinated debt securities, the related trust will not pay
distributions or other amounts on the related capital
securities. The guarantee does not cover payments of
distributions when the related trust does not have sufficient
funds to pay such distributions. If that occurs, your remedy is
to sue us or seek other remedies, to enforce your rights under
the guarantee without first instituting a legal proceeding
against the guarantee trustee.
Sufficiency
of Payments
As long as we make payments of interest and other payments when
due on the junior subordinated debt securities, the payments
will be sufficient to cover the payment of distributions and
other payments due on the related capital securities, primarily
because:
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the aggregate principal amount of each series of corresponding
junior subordinated debt securities will be equal to the sum of
the aggregate Liquidation Amount of the related capital
securities and common securities;
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the interest rate and interest and other payment dates on each
series of corresponding junior subordinated debt securities will
match the distribution rate and distribution and other payment
dates for the related capital securities;
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we shall pay for any and all costs, expenses and liabilities of
operating the trust except the trusts obligations to
holders of its capital securities under the capital
securities; and
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the trust agreement provides that the trust will not engage in
any activity that is inconsistent with the limited purposes of
the trust.
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We have the right to set-off any payment we are otherwise
required to make under the indenture with and to the extent we
have made, or are concurrently on the date of the payment
making, a payment under the related guarantee.
Enforcement
Rights of Holders of Capital Securities
You may institute a legal proceeding directly against us to
enforce your rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee,
the related trust or any other person or entity.
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A default or event of default under any of our Senior Debt would
not constitute a default or event of default under the trust
agreement. However, in the event of payment defaults under, or
acceleration of, any of our Senior Debt, the subordination
provisions of the indenture will provide that no payments will
be made regarding the corresponding junior subordinated debt
securities until the Senior Debt has been paid in full or any
payment default on it has been cured or waived. Failure to make
required payments on any series of corresponding junior
subordinated debt securities would constitute an event of
default under the trust agreement.
Limited
Purpose of the Trust
The trusts capital securities evidence a beneficial
interest in the trust, and the trust exists for the sole purpose
of issuing its capital securities and common securities and
investing the proceeds in corresponding junior subordinated debt
securities. A principal difference between the rights of a
holder of a capital security and a holder of a corresponding
junior subordinated debt security is that a holder of a
corresponding junior subordinated debt security is entitled to
receive from us the principal amount of and interest accrued on
corresponding junior subordinated debt securities held, while a
holder of capital securities is entitled to receive
distributions from the trust (or from us under the applicable
guarantee) if and to the extent the trust has funds available
for the payment of distributions.
Rights
upon Dissolution
In the event of any voluntary or involuntary dissolution of the
trust involving a liquidation of the corresponding junior
subordinated debt securities held by the trust, you will be
entitled to receive, out of assets held by that trust, the
liquidation distribution in cash. See Description of the
Capital Securities Liquidation Distribution upon
Dissolution. In the event of our voluntary or involuntary
liquidation or bankruptcy, the property trustee, as holder of
the corresponding junior subordinated debt securities, would be
a subordinated creditor of ours, subordinated in right of
payment to all senior debt, but entitled to receive payment in
full of principal, premium, if any, and interest, before any of
our common stockholders receive payments or distributions. Since
we are the guarantor under the guarantee and have agreed to pay
for all costs, expenses and liabilities of the trust (other than
the trusts obligations to you), your position and the
position of a holder of the corresponding junior subordinated
debt securities relative to other creditors and to our
stockholders in the event of our liquidation or bankruptcy are
expected to be substantially the same.
Book-Entry
Issuance
General
The Depository Trust Company, DTC, will act as securities
depository for all of the capital securities and the junior
subordinated debt securities, unless otherwise stated in the
prospectus supplement. We will issue the capital securities and
junior subordinated debt securities only as fully-registered
securities registered in the name of Cede & Co.
(DTCs nominee). We will issue and deposit with DTC one or
more fully-registered global certificates for the capital
securities of the trust and junior subordinated debt securities
representing in the aggregate, the total number of the
trusts capital securities or aggregate principal balance
of junior subordinated debt securities, respectively.
DTC, the worlds largest depository, is a limited-purpose
trust company organized under the New York Banking Law, a
banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve Board System,
a clearing corporation within the meaning of the New
York Uniform Commercial Code, and a clearing agency
registered pursuant to Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in participants accounts, thereby
eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations.
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DTC is a wholly-owned subsidiary of the Depository
Trust & Clearing Corporation, DTCC. DTCC, in turn, is
owned by a number of its direct participants and members of the
National Securities Clearing Corporation, Government Securities
Clearing Corporation, MBS Clearing Corporation and Emerging
Markets Clearing Corporation, as well as by the New York Stock
Exchange, the American Stock Exchange and the Financial Industry
Regulatory Authority.
Access to the DTC system is also available to indirect
participants, such as securities brokers and dealers, and banks
and trust companies that clear through or maintain custodial
relationships with direct participants, either directly or
indirectly. The rules applicable to DTC and its participants are
on file with the SEC.
Purchases of capital securities or junior subordinated debt
securities within the DTC system must be made by or through
direct participants, who will receive a credit for the capital
securities or junior subordinated debt securities on DTCs
records. The ownership interest of each actual purchaser of each
capital security and each junior subordinated debt securities is
in turn to be recorded on the direct and indirect
participants records. DTC will not send written
confirmation to beneficial owners of their purchases, but
beneficial owners are expected to receive written confirmations
providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect
participants through which the beneficial owners purchased
capital securities or junior subordinated debt securities.
Transfers of ownership interests in the capital securities or
junior subordinated debt securities are to be accomplished by
entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in capital
securities or junior subordinated debt securities, unless the
book-entry system for the capital securities of the trust or
junior subordinated debt securities is discontinued.
DTC has no knowledge of the actual beneficial owners of the
capital securities or junior subordinated debt securities.
DTCs records reflect only the identity of the direct
participants to whose accounts the capital securities or junior
subordinated debt securities are credited, which may or may not
be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of
their customers.
The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that we believe
to be reliable, but we assume no responsibility for the accuracy
thereof. We do not have any responsibility for the performance
by DTC or its participants of their respective obligations as
described in this prospectus or under the rules and procedures
governing their respective operations.
Notices
and Voting
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct participants and indirect participants to
beneficial owners and the voting rights of direct participants,
indirect participants and beneficial owners, subject to any
statutory or regulatory requirements as is in effect from time
to time, will be governed by arrangements among them.
We will send redemption notices to Cede & Co. as the
registered holder of the capital securities or junior
subordinated debt securities. If less than all of the
trusts capital securities or the junior subordinated debt
securities are redeemed, DTCs current practice is to
determine by lot the amount of the interest of each Direct
Participant to be redeemed.
Although voting on the capital securities or the junior
subordinated debt securities is limited to the holders of record
of the capital securities or junior subordinated debt
securities, in those instances in which a vote is required,
neither DTC nor Cede & Co. will itself consent or vote
on capital securities or junior subordinated debt securities.
Under its usual procedures, DTC would mail an Omnibus Proxy to
the relevant trustee as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.s consenting
or voting rights to direct participants for whose accounts the
capital securities or junior subordinated debt securities are
credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution
of Funds
The relevant trustee will make distribution payments on the
capital securities or on the junior subordinated debt securities
to DTC. DTCs practice is to credit direct
participants accounts on the relevant
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payment date in accordance with their respective holdings shown
on DTCs records unless DTC has reason to believe that it
will not receive payments on the payment date. Standing
instructions and customary practices will govern payments from
participants to beneficial owners. Subject to any statutory or
regulatory requirements, participants, and not DTC, the relevant
trustee, trust or us will be responsible for the payment.
The relevant trustee is responsible for payment of distributions
to DTC. Direct and indirect participants are responsible for the
disbursement of the payments to the Beneficial Owners.
Successor
Depositories and Termination of Book-Entry System
DTC may discontinue providing its services as securities
depositary on any of the capital securities or the junior
subordinated debt securities at any time by giving reasonable
notice to the relevant trustee and to us. If a successor
securities depositary is not obtained, final capital securities
or junior subordinated debt securities certificates must be
printed and delivered. We may at our option decide to
discontinue the use of the system of book-entry transfers
through DTC (or a successor depositary). After an event of
default, the holders of a majority in liquidation preference of
capital securities or aggregate principal amount of junior
subordinated debt securities may discontinue the system of
book-entry transfers through DTC. In this case, final
certificates for the capital securities or junior subordinated
debt securities will be printed and delivered.
Plan of
Distribution
General
We may sell the securities being offered hereby in one or more
of the following ways from time to time:
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through agents to the public or to investors;
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to underwriters for resale to the public or to investors;
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directly to investors; or
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through a combination of any of these methods of sale.
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We will set forth in a prospectus supplement the terms of that
particular offering of securities, including:
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the name or names of any agents or underwriters;
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the purchase price of the securities being offered and the
proceeds we will receive from the sale;
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any over-allotment options under which underwriters may purchase
additional securities from us;
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any agency fees or underwriting discounts and other items
constituting agents or underwriters compensation;
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any initial public offering price;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any securities exchanges or markets on which such securities may
be listed.
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Agents
We may designate agents who agree to use their reasonable
efforts to solicit purchases of our securities for a period of
their appointment or to sell our securities on a continuing
basis.
Underwriters
If we use underwriters for a sale of securities, the
underwriters will acquire the shares for their own account. The
underwriters may resell the securities in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The underwriters may sell the securities directly
or through underwriting syndicates by managing underwriters. The
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obligations of the underwriters to purchase the shares will be
subject to the conditions set forth in the applicable
underwriting agreement. The underwriters will be obligated to
purchase all the shares if they purchase any of the shares. The
underwriters may change from time to time any initial public
offering price and any discounts or concessions the underwriters
allow or reallow or pay to dealers. We may use underwriters with
whom we have a material relationship. We will describe the
nature of any such relationship in any prospectus supplement
naming any such underwriter.
Underwriters, dealers and agents that participate in the
distribution of the securities may be underwriters as defined in
the Securities Act, and any discounts or commissions they
receive may be treated as underwriting discounts and commissions
under the Securities Act. We will identify in the applicable
prospectus supplement any underwriters, dealers or agents and
will describe their compensation.
We may have agreements with the underwriters, dealers and agents
to indemnify them against various civil liabilities, including
liabilities under the Securities Act, or to contribute payments
that the agents, underwriters, dealers and remarketing firms may
be required to make as a result of those civil liabilities.
Underwriters, dealers and agents and their affiliates may be
customers of, engage in transactions with, or perform services
for us or our subsidiary companies in the ordinary course of
their businesses. In connection with the distribution of the
securities, we may enter into swap or other hedging transactions
with, or arranged by, underwriters or agents or their
affiliates. These underwriters or agents or their affiliates may
receive compensation, trading gain or other benefits from these
transactions.
Direct
Sales
We may also sell shares directly to one or more purchasers
without using underwriters or agents.
Stabilization
Activities
Any underwriter may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size,
which create a short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short
covering transactions involve purchases of the securities in the
open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a
selling concession from a dealer when the securities originally
sold by the dealer are purchased in a covering transaction to
cover short positions. Those activities may cause the price of
the securities to be higher than it would otherwise be. If
commenced, the underwriters may discontinue any of these
activities at any time.
Passive
Market Marking
Any underwriters who are qualified market markers on The Nasdaq
Global Select Market may engage in passive market making
transactions in the securities on The Nasdaq Global Select
Market in accordance with Rule 103 of Regulation M,
during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the securities.
Passive market makers must comply with applicable volume and
price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid
at a price not in excess of the highest independent bid for such
security. If all independent bids are lowered below the passive
market makers bid, however, the passive market
makers bid must then be lowered when certain purchase
limits are exceeded.
Trading
Markets and Listing of Securities
Unless otherwise specified in the applicable prospectus
supplement, each class or series of securities will be a new
issue with no established trading market, other than our common
stock, which is listed on The Nasdaq Global Select Market. We
may elect to list any other class or series of securities on any
additional exchange or market, but we are not obligated to do so
unless stated otherwise in a prospectus supplement. It is
possible that one or more underwriters may make a market in a
class or series of securities, but the
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underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot give any
assurance as to the liquidity of the trading market for any of
the securities.
General
Information
We may authorize underwriters, dealers and agents to solicit
offers by certain specified institutions to purchase securities
from us at the public offering price stated in the applicable
prospectus supplement on delayed delivery contracts providing
for payment and delivery on a specified date in the future.
These contracts will be subject only to the conditions included
in the applicable prospectus supplement, and the prospectus
supplement will specify the commission payable for solicitation
of such contracts.
We may determine the price or other terms of the securities
offered under this prospectus by use of an electronic auction.
We will describe in the applicable prospectus supplement how any
auction will be conducted to determine the price or any other
terms of the securities, how potential investors may participate
in the auction and, where applicable, the nature of the
underwriters obligations with respect to the auction.
The securities may also be offered and sold, if so indicated in
the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more remarketing firms, acting as principals for their own
accounts or as agents for us. Any remarking firm will be
identified and terms of its agreement, if any, with us, and its
compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters,
as that term is defined in the Securities Act, in connection
with the securities remarketed thereby.
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Glossary
Below are abbreviated definitions of capitalized terms used in
this prospectus and in a prospectus supplement. The prospectus
supplement may contain a more complete definition of some of the
terms defined here and reference should be made to the
prospectus supplement for a more complete definition of these
terms.
Additional Sums
refers to the additional
amounts required to be paid so that the amount of distributions
due and payable by the trust on outstanding capital securities
and common securities shall not be reduced because of any
additional taxes, duties and other governmental charges to which
a trustee is subject because of a Tax Event.
Debt
means, for any person, whether recourse
is to all or a portion of the assets of the person and whether
or not contingent:
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every obligation of the person for money borrowed;
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every obligation of the person evidenced by bonds, debt
securities, notes or other similar instruments, including
obligations incurred in connection with the acquisition of
property, assets or businesses;
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every reimbursement obligation of the person regarding letters
of credit, bankers acceptances or similar facilities
issued for the account of the person;
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every obligation of the person issued or assumed as the deferred
purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary
course of business);
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every capital lease obligation of the person;
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all indebtedness of the person whether incurred on, before, or
after the date of the indenture, for claims relating to
derivative products, including interest rate, foreign exchange
rate and commodity-forward contracts, options and swaps and
similar arrangements; and
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every obligation of the type referred to in the first through
the sixth bullet points above of another person and all
dividends of another person the payment of which, in either
case, the person has guaranteed or is responsible or liable,
directly or indirectly, as obligor or otherwise.
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Guarantee Payments
refers to the following
payments, to the extent not paid by the trust, which will be
subject to the guarantee:
|
|
|
|
|
any accumulated and unpaid distributions required to be paid on
the capital securities, to the extent that the trust has
applicable funds available to make the payment;
|
|
|
|
the redemption price and all accrued and unpaid distributions to
the date of redemption with respect to capital securities called
for redemption, to the extent that the trust has funds available
to make the payment; or
|
|
|
|
in the event of a voluntary or involuntary dissolution, winding
up or liquidation of the trust (other than in connection with a
distribution of corresponding junior subordinated debt
securities to you or the redemption of all the related capital
securities), the lesser of:
|
|
|
|
|
|
the aggregate of the Liquidation Amount specified in the
prospectus supplement for each capital security plus all accrued
and unpaid distributions on the capital securities to the date
of payment; and
|
|
|
|
the amount of assets of the trust remaining available for
distribution to you.
|
Omnibus Proxy
refers to the omnibus proxy
that DTC would mail under its usual procedures to the relevant
trustee as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.s consenting or voting
rights to Direct Participants for whose accounts the debt
securities are credited on the record date.
Senior Debt
means the principal of, premium,
if any, and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for
reorganization relating to us whether or not the claim for
post-petition interest is allowed in the proceeding) on, our
Debt whether incurred on, before or subsequent
38
to the date of the indenture, unless, in the instrument creating
or evidencing the Debt or under which the Debt is outstanding,
it is provided that the obligations are not superior in right of
payment to the junior subordinated debt securities.
Tier 1 Capital
refers to the sum of core
capital elements, less goodwill, other intangible assets,
interest-only strip receivables, deferred tax assets,
nonfinancial equity investments and certain other items. The
core capital elements include: common stockholders equity,
qualifying noncumulative perpetual preferred stock (including
related surplus), Class A minority interest and restricted
core capital elements. The restricted core capital elements may
not exceed 25% of the sum of all core capital elements and
include qualifying cumulative perpetual preferred stock
(including related surplus), Class B minority interest,
Class C minority interest and qualifying capital securities.
Validity
of Securities
Unless otherwise indicated in the applicable prospectus
supplement, some legal matters will be passed upon for us by
Williams Mullen, P.C., Raleigh, North Carolina, our
counsel, and for the underwriters, by their counsel, and special
Delaware counsel for the trust, will pass on some legal matters
for the trust. Williams Mullen, P.C., Raleigh, North
Carolina, will rely on the opinion of special Delaware counsel
as to matters of Delaware law regarding the trust.
Experts
Our consolidated financial statements as of December 31,
2007 and 2006, and for each of the three years in the period
ended December 31, 2007, included in our Annual Report
(Form 10-K)
for the year ended December 31, 2007, and the effectiveness
of our internal control over financial reporting as of
December 31, 2007 have been audited by Dixon Hughes, PLLC,
an independent registered public accounting firm, as stated in
their reports appearing therein and herein by reference. Such
consolidated financial statements have been so incorporated by
reference in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
39
Part II
Information
Not Required In Prospectus
|
|
Item 14.
|
Other
Expenses of Issuance and Distribution
|
The following table sets forth the estimated fees and expenses
(all but the SEC fees are estimates) payable by the registrant
in connection with the filing of this
Form S-3
Registration Statement:
|
|
|
|
|
SEC Registration Fee
|
|
$
|
1,965
|
|
Printing Costs
|
|
|
*
|
|
Listing Fee
|
|
|
*
|
|
Transfer & Disbursing Agent Fees
|
|
|
*
|
|
Legal Fees and Expenses
|
|
|
*
|
|
Accounting Fees and Expenses
|
|
|
*
|
|
Miscellaneous Expenses
|
|
|
*
|
|
|
|
|
|
|
Total
|
|
|
*
|
|
|
|
|
*
|
|
To be filed by amendment or in a current report on
Form 8-K
|
|
|
Item 15.
|
Indemnification
of Directors and Officers
|
The North Carolina Business Corporation Act permits, and in some
cases requires, corporations to indemnify officers, directors,
agents and employees who have been, or are threatened to be,
made a party to litigation. The indemnification applies to
judgments, fines, settlements and reasonable expenses under
certain circumstances. Under the North Carolina Business
Corporation Act, reasonable expenses incurred by a director or
officer may be paid or reimbursed by us before a final
conclusion of the proceeding, after we receive certain
assurances from the director or officer. Specifically, the
director or officer must provide to us a written statement of
his or her good faith belief that he or she has met the standard
of conduct necessary for indemnification. The other assurance we
must receive is a written undertaking, by or on behalf of the
director or officer, to repay the amount reimbursed if it is
ultimately determined that the director or officer is not
entitled to indemnification by us. If a director or officer is
wholly successful in defending the proceeding in which he or she
is a party, the North Carolina Business Corporation Act requires
us to indemnify him or her against reasonable expenses incurred
in connection with the proceeding if he or she is named as a
defendant as a result of being one of our directors or officers.
Our Articles of Incorporation provide that we shall indemnify
our directors and executive officers to the fullest extent
permitted by North Carolina Business Corporation Act.
The North Carolina Business Corporation Act allows a corporation
to provide that its directors shall not be personally liable for
monetary damages for breach of fiduciary duty as a director,
except for (i) acts or omissions not made in good faith
that the director at the time of breach knew or believed were in
conflict with the best interests of the Corporation;
(ii) any liability under
Section 55-8-33
of the Business Corporation Act (unlawful distributions); or
(iii) any transaction from which the director derived an
improper personal benefit (which does not include a
directors compensation or other incidental benefit for or
on account of his service as a director, officer, employee,
independent contractor, attorney, or consultant of the
Corporation). Our Articles of Incorporation include such a
provision.
The North Carolina Business Corporation Act provides that a
corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent
of the corporation against certain liabilities incurred by such
persons, whether or not the corporation is otherwise authorized
by the North Carolina Business Corporation Act to indemnify such
party. We have purchased director and officer liability
insurance that insures our directors and officers against
liabilities in connection with the performance of their duties.
II-1
Gateway Financial Holdings, Inc. has purchased a standard
directors and officers liability policy which will,
subject to certain limitations, indemnify Gateway Financial
Holdings, Inc. and its officers and directors for damages they
become legally obligated to pay as a result of any negligent
act, error, or omission committed by directors or officers while
acting in their capacity as such.
As permitted by North Carolina law, Article V of Gateway
Financial Holdings, Inc.s Articles of Incorporation limits
the personal liability of directors for monetary damages for
breaches of duty as a director arising out of any legal action
whether by or in the right of Gateway Financial Holdings, Inc.
or otherwise, provided that such limitation will not apply to
(i) acts or omissions that the director at the time of such
breach knew or believed were clearly in conflict with the best
interests of Gateway Financial Holdings, Inc., (ii) any
liability under
Section 55-8-33
of the General Statutes of North Carolina, or (iii) any
transaction from which the director derived an improper personal
benefit (which does not include a directors reasonable
compensation or other reasonable incidental benefit for or on
account of his service as a director, officer, employee,
independent contractor, attorney, or consultant of,).
|
|
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement of equity securities*
|
|
1
|
.2
|
|
Form of Underwriting Agreement for debt securities*
|
|
1
|
.3
|
|
Form of Underwriting Agreement for capital securities*
|
|
4
|
.1
|
|
Certificate of Trust of Gateway Capital Statutory Trust V
|
|
4
|
.2
|
|
Form of Amended and Restated Trust Agreement for Gateway
Capital Statutory Trust V*
|
|
4
|
.3
|
|
Form of Capital Security for Gateway Capital Statutory
Trust V*
|
|
4
|
.4
|
|
Form of Guarantee Agreement with respect to the Capital
Securities of Gateway Capital Statutory Trust V*
|
|
4
|
.5
|
|
Form of Senior Debt Securities Indenture*
|
|
4
|
.6
|
|
Form of Subordinated Debt Securities Indenture*
|
|
4
|
.7
|
|
Form of Senior Debt Security*
|
|
4
|
.8
|
|
Form of Subordinated Debt Security (included in
Exhibit 4.2)*
|
|
4
|
.9
|
|
Form of Depositary Agreement*
|
|
4
|
.10
|
|
Form of Purchase Contract Agreement*
|
|
4
|
.11
|
|
Form of Pledge Agreement*
|
|
4
|
.12
|
|
Form of Warrant Agreement*
|
|
4
|
.13
|
|
Form of Junior Subordinated Debt Indenture*
|
|
5
|
.1
|
|
Opinion of Williams Mullen
|
|
5
|
.3
|
|
Opinion of Delaware counsel*
|
|
5
|
.4
|
|
Opinion of counsel as to certain federal income tax matters*
|
|
12
|
.1
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
23
|
.1
|
|
Consent of Dixon Hughes PLLC
|
|
23
|
.2
|
|
Consent of Williams Mullen (contained in Exhibit 5.1 hereto)
|
|
23
|
.3
|
|
Consent of Delaware Counsel to the Trust*
|
|
24
|
.1
|
|
Power of Attorney (included on the signature page hereto)
|
|
25
|
.1
|
|
Statement of Eligibility on
Form T-1
of the trustee under the Indenture for the Debt Securities.*
|
|
25
|
.2
|
|
Form T-1
Statement of Eligibility of the trustee under the Junior
Subordinated Indenture.*
|
|
25
|
.3
|
|
Form T-1
Statement of Eligibility of the trustee under the Certificate of
Trust of Gateway Capital Statutory Trust V.*
|
|
25
|
.4
|
|
Form T-1
Statement of Eligibility of the trustee under the Guarantee
Agreement for the benefit of holders of the Capital Securities
of Gateway Capital Statutory Trust V.*
|
|
|
|
*
|
|
To be filed under a Current Report on
Form 8-K
and incorporated herein by reference.
|
II-2
(a) The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are
being made, a post- effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and
(a)(1)(iii) above do not apply if the registration statement is
on Form
S-3
or
Form F-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities 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.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the registration
statement as of the date the filed prospectus was deemed part of
and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) as part of a registration statement
in reliance on Rule 430B relating to an offering made
pursuant to Rule 415(a)(1)(i), (vii) or (x) for the
purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
effective date, supersede or
II-3
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, the undersigned
registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants 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 plans 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 that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of 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 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 of 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.
(d) The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus 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 file an
application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of Section 310
of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-4
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Virginia Beach, Commonwealth of Virginia on this
10th day of July 2008.
Gateway Financial Holdings, Inc.
D. Ben Berry
Chairman, President and
Chief Executive Officer
Power Of
Attorney
Each individual whose signature appears below hereby designates
and appoints D. Ben Berry and Theodore L. Salter, and
each of them, either one of whom may act without joinder of the
other, as his true and lawful attorney-in-fact and agent (the
Attorneys-in-Fact)
with full power of substitution and resubstitution, for such
person and in such persons name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement and to
sign any and all additional registration statements relating to
the same offering of securities as this registration statement
that are filed pursuant to Rule 462(b) of the Securities
Act of 1933, which amendments may make such changes in this
registration statement as either
Attorney-in-Fact
deems appropriate, and requests to accelerate the effectiveness
of this registration statement, and to file the same with all
exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
Attorneys-in-Fact
and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes
as such person might or could do in person, hereby ratifying and
confirming all that such
Attorneys-in-Fact
or either of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ D.
Ben Berry
D.
Ben Berry
|
|
Chairman, President and CEP
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Theodore
L. Salter
Theodore
L. Salter
|
|
Senior Executive Vice President and Chief Financial Officer
|
|
July 10, 2008
|
|
|
|
|
|
/s/ H.
Spencer Barrow
H.
Spencer Barrow
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ William
Brumsey, III
William
Brumsey III
|
|
Director
|
|
July 10, 2008
|
II-5
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Jimmie
Dixon, Jr.
Jimmie
Dixon, Jr.
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ James
H. Ferebee, Jr.
James
H. Ferebee, Jr.
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Robert
Y. Green, Jr.
Robert
Y. Green, Jr.
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ W.
Taylor Johnson, Jr.
W.
Taylor Johnson, Jr.
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Robert
Willard Luther, III
Robert
Willard Luther, III
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Frances
Morrisette Norrell
Frances
Morrisette Norrell
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ W.
C. Owens, Jr.
W.
C. Owens, Jr.
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ William
A. Paulette
William
A. Paulette
|
|
Director
|
|
July 14, 2008
|
|
|
|
|
|
/s/ Billy
G. Roughton
Billy
G. Roughton
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Olin
B. Sykes
Olin
B. Sykes
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Frank
T. Williams
Frank
T. Williams
|
|
Director
|
|
July 10, 2008
|
|
|
|
|
|
/s/ Jerry
T. Womack
Jerry
T. Womack
|
|
Director
|
|
July 10, 2008
|
II-6
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on
Form S-3,
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Virginia Beach, Commonwealth of Virginia, on the
10th day of July 2008.
Gateway Capital Statutory Trust V
D. Ben Berry, Trustee
|
|
|
|
By:
|
/s/ Theodore
L. Salter
|
Theodore L. Salter, Trustee
David Twiddy, Trustee
II-7
EXHIBIT
INDEX
|
|
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement of equity securities*
|
|
1
|
.2
|
|
Form of Underwriting Agreement for debt securities*
|
|
1
|
.3
|
|
Form of Underwriting Agreement for capital securities*
|
|
4
|
.1
|
|
Certificate of Trust of Gateway Capital Statutory Trust V
|
|
4
|
.2
|
|
Form of Amended and Restated Trust Agreement for Gateway
Capital Statutory Trust V*
|
|
4
|
.3
|
|
Form of Capital Security for Gateway Capital Statutory
Trust V*
|
|
4
|
.4
|
|
Form of Guarantee Agreement with respect to the Capital
Securities of Gateway Capital Statutory Trust V*
|
|
4
|
.5
|
|
Form of Senior Debt Securities Indenture*
|
|
4
|
.6
|
|
Form of Subordinated Debt Securities Indenture*
|
|
4
|
.7
|
|
Form of Senior Debt Security*
|
|
4
|
.8
|
|
Form of Subordinated Debt Security (included in
Exhibit 4.2)*
|
|
4
|
.9
|
|
Form of Depositary Agreement*
|
|
4
|
.10
|
|
Form of Purchase Contract Agreement*
|
|
4
|
.11
|
|
Form of Pledge Agreement*
|
|
4
|
.12
|
|
Form of Warrant Agreement*
|
|
4
|
.13
|
|
Form of Junior Subordinated Debt Indenture*
|
|
5
|
.1
|
|
Opinion of Williams Mullen
|
|
5
|
.3
|
|
Opinion of Delaware counsel*
|
|
5
|
.4
|
|
Opinion of counsel as to certain federal income tax matters*
|
|
12
|
.1
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
23
|
.1
|
|
Consent of Dixon Hughes PLLC
|
|
23
|
.2
|
|
Consent of Williams Mullen (contained in Exhibit 5.1 hereto)
|
|
23
|
.3
|
|
Consent of Delaware Counsel to the Trust*
|
|
24
|
.1
|
|
Power of Attorney (included on the signature page hereto)
|
|
25
|
.1
|
|
Statement of Eligibility on
Form T-1
of the trustee under the Indenture for the Debt Securities.*
|
|
25
|
.2
|
|
Form T-1
Statement of Eligibility of the trustee under the Junior
Subordinated Indenture.*
|
|
25
|
.3
|
|
Form T-1
Statement of Eligibility of the trustee under the Certificate of
Trust of Gateway Capital Statutory Trust V.*
|
|
25
|
.4
|
|
Form T-1
Statement of Eligibility of the trustee under the Guarantee
Agreement for the benefit of holders of the Capital Securities
of Gateway Capital Statutory Trust V.*
|
|
|
|
*
|
|
To be filed under a Current Report on
Form 8-K
and incorporated herein by reference.
|
II-8
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