Exhibit 4.2


 










 


 


GUARANTEE AGREEMENT


 


by and between


 


NSB HOLDINGS, INC.


 


and


 


WILMINGTON TRUST COMPANY


 


Dated as of March 30, 2005


 


 










 





















 


GUARANTEE AGREEMENT


 


This GUARANTEE AGREEMENT
(this “Guarantee”), dated as of March 30, 2005, is executed and delivered
by NSB Holdings, Inc., a Georgia corporation (the “Guarantor”), and Wilmington
Trust Company, a Delaware banking corporation, as trustee (the “Guarantee
Trustee”), for the benefit of the Holders (as defined herein) from time to time
of the Capital Securities (as defined herein) of New Southern Statutory
Trust I, a Delaware statutory trust (the “Issuer”).


 


WHEREAS, pursuant to an
Amended and Restated Declaration of Trust (the “Declaration”), dated as of the
date hereof among Wilmington Trust Company, not in its individual capacity but
solely as institutional trustee, the administrators of the Issuer named
therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is issuing
on the date hereof those undivided beneficial interests, having an aggregate
liquidation amount of $10,000,000.00 (the “Capital Securities”); and


 


WHEREAS, as incentive for
the Holders to purchase the Capital Securities, the Guarantor desires
irrevocably and unconditionally to agree, to the extent set forth in this
Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments
(as defined herein) and to make certain other payments on the terms and
conditions set forth herein;


 


NOW, THEREFORE, in
consideration of the purchase by each Holder of the Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor
executes and delivers this Guarantee for the benefit of the Holders.


 


ARTICLE
I


 


DEFINITIONS
AND INTERPRETATION


 


Section 1.1.                                Definitions and
Interpretation.  In this Guarantee, unless the context
otherwise requires:


 


(a)                                  capitalized terms used in this Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;


 


(b)                                 a term defined anywhere in this Guarantee
has the same meaning throughout;


 


(c)                                  all references to “the Guarantee” or
“this Guarantee” are to this Guarantee as modified, supplemented or amended
from time to time;


 


(d)                                 all references in this Guarantee to
“Articles” or “Sections” are to Articles or Sections of this Guarantee, unless
otherwise specified;


 


(e)                                  terms defined in the Declaration as at
the date of execution of this Guarantee have the same meanings when used in
this Guarantee, unless otherwise defined in this Guarantee or unless the
context otherwise requires; and


 


(f)                                    a reference to the singular includes the
plural and vice versa.


 


“Affiliate” has the
same meaning as given to that term in Rule 405 of the Securities Act of 1933,
as amended, or any successor rule thereunder.


 


“Beneficiaries” means
any Person to whom the Issuer is or hereafter becomes indebted or liable.


 





















 


“Capital Securities”
has the meaning set forth in the recitals to this Guarantee.


 


“Common Securities”
means the common securities issued by the Issuer to the Guarantor pursuant to
the Declaration.


 


“Corporate Trust Office”
means the office of the Guarantee Trustee at which the corporate trust business
of the Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Guarantee is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-1600, Attention:  Corporate Trust
Administration.


 


“Covered Person”
means any Holder of Capital Securities.


 


“Debentures” means
the debt securities of the Guarantor designated the Floating Rate Junior
Subordinated Deferrable Interest Debentures due 2035 held by the Institutional
Trustee (as defined in the Declaration) of the Issuer.


 


“Declaration Event of
Default” means an “Event of Default” as defined in the Declaration.


 


“Event of Default”
has the meaning set forth in Section 2.4(a).


 


“Guarantee Payments”
means the following payments or distributions, without duplication, with
respect to the Capital Securities, to the extent not paid or made by the
Issuer:  (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be
paid on such Capital Securities to the extent the Issuer shall have funds
available therefor, (ii) the Redemption Price to the extent the Issuer has
funds available therefor, with respect to any Capital Securities called for
redemption by the Issuer, (iii) the Special Redemption Price to the extent
the Issuer has funds available therefor, with respect to Capital Securities
redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary
or involuntary liquidation, dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the
Holders of the Capital Securities in exchange therefor as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Capital Securities to the date
of payment, to the extent the Issuer shall have funds available therefor, and
(b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
“Liquidation Distribution”).


 


“Guarantee Trustee”
means Wilmington Trust Company, until a Successor Guarantee Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee and thereafter means each such Successor Guarantee Trustee.


 


“Guarantor” means NSB
Holdings, Inc. and each of its successors and assigns.


 


“Holder” means any
holder, as registered on the books and records of the Issuer, of any Capital
Securities; provided, however, that, in determining whether the
Holders of the requisite percentage of Capital Securities have given any
request, notice, consent or waiver hereunder, “Holder” shall not include the
Guarantor or any Affiliate of the Guarantor.


 


“Indemnified Person”
means the Guarantee Trustee, any Affiliate of the Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Guarantee Trustee.


 


“Indenture” means the
Indenture dated as of the date hereof between the Guarantor and Wilmington
Trust Company, not in its individual capacity but solely as trustee, and any
indenture 


 


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supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.


 


“Issuer” has the
meaning set forth in the opening paragraph to this Guarantee.


 


“Liquidation Distribution”
has the meaning set forth in the definition of “Guarantee Payments” herein.


 


“Majority in liquidation
amount of the Capital Securities” means Holder(s) of outstanding Capital
Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Capital Securities then outstanding.


 


“Obligations” means
any costs, expenses or liabilities (but not including liabilities related to
taxes) of the Issuer other than obligations of the Issuer to pay to holders of
any Trust Securities the amounts due such holders pursuant to the terms of the
Trust Securities.


 


“Officer’s Certificate”
means, with respect to any Person, a certificate signed by one Authorized
Officer of such Person. Any Officer’s Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee shall
include:


 


(a)                                  a statement that the officer signing the
Officer’s Certificate has read the covenant or condition and the definitions
relating thereto;


 


(b)                                 a brief statement of the nature and scope of
the examination or investigation undertaken by the officer in rendering the
Officer’s Certificate;


 


(c)                                  a statement that the officer has made such
examination or investigation as, in such officer’s opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and


 


(d)                                 a statement as to whether, in the opinion of
the officer, such condition or covenant has been complied with.


 


“Person” means a
legal person, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.


 


“Redemption Price”
has the meaning set forth in the Indenture.


 


“Responsible Officer”
means, with respect to the Guarantee Trustee, any officer within the Corporate
Trust Office of the Guarantee Trustee including any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer of the
Guarantee Trustee customarily performing functions similar to those performed
by any of the above designated officers and also, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer’s knowledge of and familiarity with the particular
subject.


 


“Special Event” has
the meaning set forth in the Indenture.


 


“Special Redemption Price”
has the meaning set forth in the Indenture.


 


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“Successor Guarantee
Trustee” means a successor Guarantee Trustee possessing the qualifications
to act as Guarantee Trustee under Section 3.1.


 


“Trust Securities”
means the Common Securities and the Capital Securities.


 


ARTICLE
II


 


POWERS,
DUTIES AND RIGHTS OF

GUARANTEE TRUSTEE


 


Section 2.1.                                Powers and Duties of the
Guarantee Trustee. 


 


(a)                                  This Guarantee shall be held by the Guarantee
Trustee for the benefit of the Holders of the Capital Securities, and the
Guarantee Trustee shall not transfer this Guarantee to any Person except a
Holder of Capital Securities exercising his or her rights pursuant to Section
4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee.  The right, title and interest
of the Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.


 


(b)                                 If an Event of Default actually known to
a Responsible Officer of the Guarantee Trustee has occurred and is continuing,
the Guarantee Trustee shall enforce this Guarantee for the benefit of the
Holders of the Capital Securities.


 


(c)                                  The Guarantee Trustee, before the
occurrence of any Event of Default and after curing all Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants shall be
read into this Guarantee against the Guarantee Trustee.  In case an Event of Default has occurred
(that has not been waived pursuant to Section 2.4) and is actually known
to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.


 


(d)                                 No provision of this Guarantee shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:


 


(i)                                     prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred:


 


(A)                              the duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this
Guarantee, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Guarantee, and no implied covenants or obligations shall be read into this
Guarantee against the Guarantee Trustee; and


 


(B)                                in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee; but in the 


 


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case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Guarantee;


 


(ii)                                  the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that such Responsible Officer of
the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;


 


(iii)                               the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or relating to the exercise of any trust or power conferred
upon the Guarantee Trustee under this Guarantee; and


 


(iv)                              no provision of this Guarantee shall
require the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee or security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk
or liability is not reasonably assured to it.


 


Section 2.2.                                Certain Rights of Guarantee
Trustee.


 


(a)                                  Subject to the provisions of Section 2.1:


 


(i)                                     The Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.


 


(ii)                                  Any direction or act of the Guarantor
contemplated by this Guarantee shall be sufficiently evidenced by an Officer’s
Certificate.


 


(iii)                               Whenever, in the administration of this
Guarantee, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officer’s Certificate of the Guarantor which, upon
receipt of such request, shall be promptly delivered by the Guarantor.


 


(iv)                              The Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any instrument (or any
re-recording, refiling or re-registration thereof).


 


(v)                                 The Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or opinion. Such counsel may
be counsel to the Guarantor or any 


 


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of its Affiliates and may
include any of its employees.  The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of competent
jurisdiction.


 


(vi)                              The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee at the request or direction of any Holder, unless such Holder shall
have provided to the Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s
agents, nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable advances as
may be requested by the Guarantee Trustee; provided, however,
that nothing contained in this Section 2.2(a)(vi) shall relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Guarantee.


 


(vii)                           The Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.


 


(viii)                        The Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder.


 


(ix)                                Any action taken by the Guarantee Trustee
or its agents hereunder shall bind the Holders of the Capital Securities, and
the signature of the Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. 
No third party shall be required to inquire as to the authority of the
Guarantee Trustee to so act or as to its compliance with any of the terms and
provisions of this Guarantee, both of which shall be conclusively evidenced by
the Guarantee Trustee’s or its agent’s taking such action.


 


(x)                                   Whenever in the administration of this
Guarantee the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.


 


(xi)                                The Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Guarantee.


 


(b)                                 No provision of this Guarantee shall be
deemed to impose any duty or obligation on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law to perform any such act or acts or to exercise any such right,
power, duty or obligation.  No permissive
power or authority available to the Guarantee Trustee shall be construed to be
a duty.


 


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Section 2.3.                                Not Responsible for
Recitals or Issuance of Guarantee.   The
recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness.  The Guarantee Trustee
makes no representation as to the validity or sufficiency of this Guarantee.


 


Section 2.4.                                Events of Default;
Waiver. 


 


(a)                                  An
Event of Default under this Guarantee will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder.


 


(b)                                 The Holders of a Majority in liquidation
amount of the Capital Securities may, voting or consenting as a class, on
behalf of the Holders of all of the Capital Securities, waive any past Event of
Default and its consequences.  Upon such
waiver, any such Event of Default shall cease to exist, and shall be deemed to
have been cured, for every purpose of this Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.


 


Section 2.5.                                Events of Default; Notice.


 


(a)                                  The Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities and the Guarantor,
notices of all Events of Default actually known to a Responsible Officer of the
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, however, that the Guarantee Trustee shall
be protected in withholding such notice if and so long as a Responsible Officer
of the Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Capital Securities.


 


(b)                                 The Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Guarantee Trustee shall
have received written notice from the Guarantor or a Holder of the Capital
Securities (except in the case of a payment default), or a Responsible Officer
of the Guarantee Trustee charged with the administration of this Guarantee
shall have obtained actual knowledge thereof.


 


ARTICLE
III


 


GUARANTEE
TRUSTEE


 


Section 3.1.                                Guarantee Trustee; Eligibility.


 


(a)                                  There shall at all times be a Guarantee
Trustee which shall:


 


(i)                                     not be an Affiliate of the Guarantor, and


 


(ii)                                  be a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or Person authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority.  If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above, then,
for the purposes of this Section 3.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.


 


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(b)                                 If at any time the Guarantee Trustee
shall cease to be eligible to so act under Section 3.1(a), the Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 3.2(c).


 


(c)                                  If the Guarantee Trustee has or shall
acquire any “conflicting interest” within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest
or resign to the extent and in the manner provided by, and subject to this
Guarantee.


 


Section 3.2.                                Appointment, Removal and
Resignation of Guarantee Trustee.


 


(a)                                  Subject to Section 3.2(b), the Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.


 


(b)                                 The Guarantee Trustee shall not be
removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Guarantee Trustee and delivered to the Guarantor.


 


(c)                                  The Guarantee Trustee appointed to office
shall hold office until a Successor Guarantee Trustee shall have been appointed
or until its removal or resignation.  The
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by an instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.


 


(d)                                 If no Successor Guarantee Trustee shall
have been appointed and accepted appointment as provided in this
Section 3.2 within 60 days after delivery of an instrument of removal
or resignation, the Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for appointment of a Successor Guarantee
Trustee.  Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.


 


(e)                                  No Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Guarantee Trustee.


 


(f)                                    Upon termination of this Guarantee or
removal or resignation of the Guarantee Trustee pursuant to this Section 3.2,
the Guarantor shall pay to the Guarantee Trustee all amounts owing to the
Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such
termination, removal or resignation.


 


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ARTICLE
IV


 


GUARANTEE


 


Section 4.1.                                Guarantee.  


 


(a)                                  The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as and when due,
regardless of any defense (except the defense of payment by the Issuer), right
of set-off or counterclaim that the Issuer may have or assert.  The Guarantor’s obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to
the Holders.


 


(b)                                 The Guarantor hereby also agrees to
assume any and all Obligations of the Issuer and in the event any such
Obligation is not so assumed, subject to the terms and conditions hereof, the
Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary
the full payment, when and as due, of any and all Obligations to such
Beneficiaries.  This Guarantee is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.


 


Section 4.2.                                Waiver of Notice and Demand.   The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.


 


Section 4.3.                                Obligations Not
Affected.   The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:


 


(a)                                  the release or waiver, by operation of
law or otherwise, of the performance or observance by the Issuer of any express
or implied agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer;


 


(b)                                 the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of or in connection with, the Capital
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Special Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures
permitted by the Indenture);


 


(c)                                  any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the terms of
the Capital Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;


 


(d)                                 the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;


 


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(e)                                  any invalidity of, or defect or
deficiency in, the Capital Securities;


 


(f)                                    the settlement or compromise of any
obligation guaranteed hereby or hereby incurred; or


 


(g)                                 any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 4.3 that the obligations of
the Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.


 


There shall be no obligation
of the Holders to give notice to, or obtain consent of, the Guarantor with
respect to the happening of any of the foregoing.


 


Section 4.4.                                Rights of Holders.


 


(a)                                  The Holders of a Majority in liquidation
amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under this Guarantee; provided,
however, that (subject to Section 2.1) the Guarantee Trustee shall
have the right to decline to follow any such direction if the Guarantee Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Guarantee Trustee in good faith by its
board of directors or trustees, executive committees or a trust committee of
directors or trustees and/or Responsible Officers shall determine that the
action or proceedings so directed would involve the Guarantee Trustee in
personal liability.


 


(b)                                 Any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee’s rights under this Guarantee, without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other
Person.  The Guarantor waives any right
or remedy to require that any such action be brought first against the Issuer,
the Guarantee Trustee or any other Person before so proceeding directly against
the Guarantor.


 


Section 4.5.                                Guarantee of Payment.   This Guarantee creates a guarantee of payment and not of collection.


 


Section 4.6.                                Subrogation.   The Guarantor shall be subrogated to all (if any) rights of the Holders
of Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee.  If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees
to hold such amount in trust for the Holders and to pay over such amount to the
Holders.


 


Section 4.7.                                Independent
Obligations.   The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 4.3
hereof.


 


Section 4.8.                                Enforcement by a
Beneficiary.   A Beneficiary may
enforce the obligations of the Guarantor contained in Section 4.1(b) directly
against the Guarantor and the Guarantor waives any right or remedy to require
that any action be brought against the Issuer or any other person or entity 


 


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before proceeding against the Guarantor.  The Guarantor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer in respect of any amounts
paid to the Beneficiaries by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if at the
time of any such payment, and after giving effect to such payment, any amounts
are due and unpaid under this Guarantee.


 


ARTICLE
V


 


LIMITATION
OF TRANSACTIONS; SUBORDINATION


 


Section 5.1.                                Limitation of
Transactions.   So long as any
Capital Securities remain outstanding, if (a) there shall have occurred
and be continuing an Event of Default or a Declaration Event of Default or
(b) the Guarantor shall have selected an Extension Period as provided in
the Declaration and such period, or any extension thereof, shall have commenced
and be continuing, then the Guarantor shall not and shall not permit any
Affiliate to (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor’s or such Affiliate’s capital stock (other than payments of
dividends or distributions to the Guarantor) or make any guarantee payments
with respect to the foregoing or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor or any Affiliate that rank pari passu in all respects with or junior
in interest to the Debentures (other than, with respect to clauses (x) and (y)
above, (i) repurchases, redemptions or other acquisitions of shares of
capital stock of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default,
Declaration Event of Default or Extension Period, as applicable, (ii) as a
result of any exchange or conversion of any class or series of the Guarantor’s
capital stock (or any capital stock of a subsidiary of the Guarantor) for any
class or series of the Guarantor’s capital stock or of any class or series of
the Guarantor’s indebtedness for any class or series of the Guarantor’s capital
stock, (iii) the purchase of fractional interests in shares of the Guarantor’s
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) any declaration
of a dividend in connection with any stockholders’ rights plan, or the issuance
of rights, stock or other property under any stockholders’ rights plan, or the
redemption or repurchase of rights pursuant thereto, (v) any dividend in
the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights
is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock
and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).


 


Section 5.2.                                Ranking.   This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined in the Indenture) of the Guarantor.  By their acceptance thereof, each Holder of
Capital Securities agrees to the foregoing provisions of this Guarantee and the
other terms set forth herein.


 


The right of the Guarantor
to participate in any distribution of assets of any of its subsidiaries upon
any such subsidiary’s liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the
Guarantor may itself be recognized as a creditor of that subsidiary.  Accordingly, the Guarantor’s obligations
under this Guarantee will be effectively 


 


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subordinated to all existing
and future liabilities of the Guarantor’s subsidiaries, and claimants should
look only to the assets of the Guarantor for payments hereunder.  This Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Guarantor, including
Senior Indebtedness of the Guarantor, under any indenture that the Guarantor
may enter into in the future or otherwise.


 


ARTICLE VI


 


TERMINATION


 


Section 6.1.                                Termination.   This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the Redemption Price or Special Redemption Price
of all Capital Securities then outstanding, (ii) upon the distribution of
all of the Debentures to the Holders of all of the Capital Securities or
(iii) upon full payment of the amounts payable in accordance with the
Declaration upon dissolution of the Issuer. 
This Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Guarantee.


 


ARTICLE VII



INDEMNIFICATION


 


Section
7.1.                                Exculpation.


 


(a)                                  No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Person’s negligence or willful misconduct with respect to such
acts or omissions.


 


(b)                                 An Indemnified Person shall be fully
protected in relying in good faith upon the records of the Issuer or the
Guarantor and upon such information, opinions, reports or statements presented
to the Issuer or the Guarantor by any Person as to matters the Indemnified
Person reasonably believes are within such other Person’s professional or
expert competence and who, if selected by such Indemnified Person, has been
selected with reasonable care by such Indemnified Person, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Capital
Securities might properly be paid.


 


Section 7.2.                                Indemnification.


 


(a)                                  The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense incurred without
negligence or willful misconduct on the part of the Indemnified Person, arising
out of or in connection with the acceptance or administration of the trust or trusts
hereunder, including, but not limited to, the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person’s powers or duties
hereunder.  The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal
of the Guarantee Trustee and the termination of this Guarantee.


 


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(b)                                 Promptly after receipt by an Indemnified
Person under this Section 7.2 of notice of the commencement of any action,
such Indemnified Person will, if a claim in respect thereof is to be made
against the Guarantor under this Section 7.2, notify the Guarantor in
writing of the commencement thereof; but the failure so to notify the Guarantor
(i) will not relieve the Guarantor from liability under paragraph (a)
above unless and to the extent that the Guarantor did not otherwise learn of
such action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve
the Guarantor from any obligations to any Indemnified Person other than the
indemnification obligation provided in paragraph (a) above.  The Guarantor shall be entitled to appoint
counsel of the Guarantor’s choice at the Guarantor’s expense to represent the
Indemnified Person in any action for which indemnification is sought (in which
case the Guarantor shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the Indemnified Person or Persons
except as set forth below); provided, however, that such counsel
shall be reasonably satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to
appoint counsel to represent the Guarantor in an action, the Indemnified Person
shall have the right to employ separate counsel (including local counsel), and
the Guarantor shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the Guarantor to
represent the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any
such action include both the Indemnified Person and the Guarantor and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Person(s) which are different
from or additional to those available to the Guarantor, (iii) the
Guarantor shall not have employed counsel satisfactory to the Indemnified
Person to represent the Indemnified Person within a reasonable time after
notice of the institution of such action or (iv) the Guarantor shall authorize
the Indemnified Person to employ separate counsel at the expense of the
Guarantor.  The Guarantor will not,
without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim,
action, suit or proceeding.


 


Section 7.3.                                Compensation;
Reimbursement of Expenses.   The
Guarantor agrees:


 


(a)                                  to pay to the Guarantee Trustee from time
to time such compensation for all services rendered by it hereunder as the
parties shall agree to from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust); and


 


(b)                                 except as otherwise expressly provided
herein, to reimburse the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by it in accordance with
any provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct.


 


For purposes of
clarification, this Section 7.3 does not contemplate the payment by the
Guarantor of acceptance or annual administration fees owing to the Guarantee
Trustee for services to be provided by the Guarantee Trustee under this
Guarantee or the fees and expenses of the Guarantee Trustee’s counsel in connection
with the closing of the transactions contemplated by this Guarantee.  The provisions of this Section 7.3 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.


 


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ARTICLE VIII



MISCELLANEOUS


 


Section 8.1.                                Successors
and Assigns.   All guarantees and agreements contained in
this Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding. 
Except in connection with any merger or consolidation of the Guarantor
with or into another entity or any sale, transfer or lease of the Guarantor’s
assets to another entity, in each case, to the extent permitted under the
Indenture, the Guarantor may not assign its rights or delegate its obligations
under this Guarantee without the prior approval of the Holders of at least a
Majority in liquidation amount of the Capital Securities.


 


Section 8.2.                                Amendments.   Except
with respect to any changes that do not adversely affect the rights of Holders
of the Capital Securities in any material respect (in which case no consent of
Holders will be required), this Guarantee may be amended only with the prior
approval of the Holders of not less than a Majority in liquidation amount of
the Capital Securities.  The provisions
of the Declaration with respect to amendments thereof apply to the giving of
such approval.


 


Section 8.3.                                Notices.   All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:


 


(a)                                  If given to the Guarantee Trustee, at the
Guarantee Trustee’s mailing address set forth below (or such other address as
the Guarantee Trustee may give notice of to the Holders of the Capital
Securities and the Guarantor):


 


Wilmington Trust Company


Rodney Square North


1100 North Market Street


Wilmington, Delaware
19890-1600


Attention:  Corporate Trust Administration


Telecopy:  302-636-4140


 


(b)                                 If given to the Guarantor, at the
Guarantor’s mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Capital Securities and to
the Guarantee Trustee):


 


NSB Holdings, Inc.


4077 Forsyth Road


Macon, Georgia 31210


Attention:  Carol W. Soto


Telecopy:  478-405-9157


 


(c)                                  If given to any Holder of the Capital
Securities, at the address set forth on the books and records of the Issuer.


 


All such notices shall be
deemed to have been given when received in person, telecopied with receipt
confirmed, or mailed by first class mail, postage prepaid, except that if a
notice or other document is refused delivery or cannot be delivered because of
a changed address of which no notice was given, such notice or other document
shall be deemed to have been delivered on the date of such refusal or inability
to deliver.


 


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Section 8.4.                                Benefit.   This Guarantee is solely for the benefit of the Beneficiaries and,
subject to Section 2.1(a), is not separately transferable from the Capital
Securities.


 


Section 8.5.                                Governing
Law.   THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).


 


Section 8.6.                                Counterparts.   This
Guarantee may be executed in one or more counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
instrument.


 


Section 8.7                                   Separability.   In
case one or more of the provisions contained in this Guarantee shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Guarantee, but this Guarantee shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.


 


Signatures appear on the following page


 


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THIS GUARANTEE is executed
as of the day and year first above written.


 


 


	
   

  	
  NSB HOLDINGS, INC., as
  Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark A. Stevens

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Mark A. Stevens

  
	
   

  	
   

  	
   

  	
  Title:    President & Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,
  as Guarantee

  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Heather L. Williamson

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Heather L. Williamson

  	
   

  
	
   

  	
   

  	
   

  	
  Title:    Financial Services Officer

  



 


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