UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ] Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss.240.14a-12
GREATER ATLANTIC CAPITAL TRUST I
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(Name of Registrant as Specified in its Charter)
GREATER ATLANTIC FINANCIAL CORP.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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PRELIMINARY COPY
October __, 2009
Dear TRUPS Holder:
Greater Atlantic Financial Corp. ("Greater Atlantic"), the sponsor for
Greater Atlantic Capital Trust I (the "Trust"), is soliciting consents to enter
into a Supplemental Indenture to the Indenture governing the terms of the 6.50%
Convertible Junior Subordinated Debentures Due 2031 (the "Debentures") that
relate to the 6.50% Cumulative Convertible Trust Preferred Securities,
liquidation amount $10 per security (the "TRUPS") issued by the Trust. This
action is subject to approval by the holders of record (as of September __,
2009) of (i) a majority in liquidation amount of TRUPS (the "Indenture Consent")
and (ii) a majority in aggregate liquidation amount of all Outstanding (as
defined in the attached Consent Solicitation Statement) TRUPS (the "Trust
Agreement Consent" and together with the Indenture Consent, the "Required
Consents").
We are asking for your approval of the Supplemental Indenture in order to
permit us to purchase not less than 505,040, and up to 649,151 of the TRUPS
(which is equivalent to not less than $5,050,400, and up to $6,491,510 in
aggregate liquidation amount) in a tender offer we commenced on September 15,
2009 (the "Tender Offer") in connection with our proposed merger with
MidAtlantic Bancorp, Inc. (the "Merger"). The Tender Offer is conditioned on the
success of this consent solicitation, and the Merger is conditioned on the
success of the Tender Offer. This consent solicitation applies only to the
adoption of the proposed Supplemental Indenture. You are not being asked, in
this solicitation, to consent to the Merger or to tender the TRUPS that you
hold. You should have received a separate offer to tender your TRUPS. Your
consent to the Supplemental Indenture does not constitute a tender of any TRUPS
that you hold. The holders of common stock of Greater Atlantic approved the
Merger at a special meeting of stockholders of Greater Atlantic on August 26,
2009.
If we obtain the Required Consents, Greater Atlantic and Wilmington Trust
Company, as Indenture Trustee, will be able to enter into the Supplemental
Indenture, the terms of which will allow us to complete the Tender Offer. The
Supplemental Indenture will not be executed unless the conditions to the Merger
and the Tender Offer are satisfied, or if we do not receive the Required
Consents.
This solicitation is being made on the terms and subject to the conditions
set forth in the accompanying Consent Solicitation Statement, which describes
the terms of the proposed Supplemental Indenture. This Consent Solicitation
Statement is being sent to all holders of the TRUPS on or about October __,
2009. Also enclosed you will find your Letter of Consent and return envelope.
Please complete and sign the Letter of Consent and return it in the enclosed
postage-paid envelope. Consents must be submitted to the Solicitation Agent by
5:00 p.m, Eastern time, on ______________, 2009.
Your response to this solicitation is important. Failure to return the
enclosed Letter of Consent will have the same effect as a vote against approval
of the proposed Supplemental Indenture. If we do not receive the Required
Consent, we will not be able to consummate the Tender Offer, and if we are not
able to consummate the Tender Offer, we will not be able to consummate the
merger.
Sincerely,
Carroll E. Amos
President and Chief Executive Officer
Greater Atlantic Financial Corp.
Definitive copies of this Consent Solicitation material are intended to be
released to TRUPS Holders on or about October 5, 2009.
CONSENT SOLICITATION STATEMENT
GREATER ATLANTIC CAPITAL TRUST I
Solicitation of Consents
Proposed Supplemental Indenture to the Indenture
Governing the 6.50% Convertible Junior Subordinated Debentures Due 2031
related to the 6.50% Cumulative Convertible Trust Preferred Securities,
liquidation amount $10 per security (CUSIP No. 39160Q205)
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THE CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
___________, 2009, UNLESS OTHERWISE EXTENDED (SUCH TIME AND DATE, AS
THEY MAY BE EXTENDED, THE "CONSENT DATE"). CONSENTS MAY BE REVOKED
ONLY ON THE TERMS AND CONDITIONS SET FORTH HEREIN.
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Subject to the terms and conditions set forth in this Consent Solicitation
Statement and the related Letter of Consent, Greater Atlantic Financial Corp.
("Greater Atlantic"), sponsor of Greater Atlantic Capital Trust I, a statutory
business trust and wholly owned subsidiary of Greater Atlantic (the "Trust"), is
hereby soliciting consents (such solicitation being referred to herein as the
"Consent Solicitation") of Holders (as defined below) as of the Record Date (as
defined below) of the Trust's 6.50% Cumulative Convertible Trust Preferred
Securities, liquidation amount $10 per security (the "TRUPS"), to a supplemental
indenture in substantially the form attached hereto as Appendix B (the
"Supplemental Indenture") to the Indenture, dated as of March 20, 2002, by and
between Greater Atlantic and Wilmington Trust Company, as Indenture Trustee (the
"Indenture"), governing the 6.50% Convertible Junior Subordinated Debentures Due
2031 (the "Debentures") related to the TRUPS. The Consent Solicitation is being
conducted pursuant to the terms of the Indenture and the Amended and Restated
Trust Agreement of Greater Atlantic Capital Trust I, dated as of March 20, 2002,
by and among Greater Atlantic, Wilmington Trust Company, as Property Trustee,
Wilmington Trust Company, as Delaware Trustee and the Administrative Trustees
named therein (the "Trust Agreement").
The purpose of the Consent Solicitation is to obtain your consent to the
Supplemental Indenture, the terms of which would permit us to purchase the TRUPS
in the tender offer that we recently commenced (the "Tender Offer") despite the
fact that we have exercised our right under the Indenture to defer interest
payments on the Debentures. The tender of at least 505,040 of the TRUPS (which
is equivalent to $5,050,400 in aggregate liquidation amount) is a condition to
the consummation of the Tender Offer. The successful completion of the Tender
Offer is a condition to the merger transaction (the "Merger") contemplated by
the Agreement and Plan of Merger, dated as of June 15, 2009, by and among
MidAtlantic Bancorp, Inc., GAF Merger Corp. and Greater Atlantic (the "Merger
Agreement"). The holders of common stock of Greater Atlantic approved the Merger
at a special meeting of stockholders of Greater Atlantic on August 26, 2009. For
a more detailed description of the Consent Solicitation, the Tender Offer, the
Merger and the Supplemental Indenture, see "Background of the Consent
Solicitation," "Concurrent Tender Offer" and "The Proposed Supplemental
Indenture" below.
Approval of the Supplemental Indenture requires the affirmative consent of
the holders of (i) a majority in liquidation amount of TRUPS (the "Indenture
Consent") and (ii) a majority in aggregate liquidation amount of all
"Outstanding" (as defined below) TRUPS (the "Trust Agreement Consent," and
together with the Indenture Consent, the "Required Consents"). For purposes of
the Trust Agreement Consent, TRUPS owned by Greater Atlantic, any Trustee, and
their Affiliates (as defined in the Trust Agreement) are not deemed to be
"Outstanding."
If the Required Consents are received prior to 5:00 p.m., Eastern time, on
____________, 2009 (as such date may be extended, the "Consent Date") and not
properly revoked, Greater Atlantic and Wilmington Trust Company, as Indenture
Trustee, will, as promptly as practicable after the Consent Date, enter into the
Supplemental Indenture; provided, however, that the Supplemental Indenture will
not be executed unless and until the conditions to the Tender Offer and the
Merger are satisfied. After the Supplemental Indenture is executed, the Tender
Offer and the Merger will be consummated. Any written notice of revocation must
be received prior to the Consent Date. Our entry into the Supplemental Indenture
is subject to satisfaction or waiver of certain other conditions described
below. See "The Consent Solicitation--Conditions to the Execution of the
Supplemental Indenture" below.
In this Consent Solicitation Statement, the term "Record Date" means 5:00
p.m., Eastern time, on ___________, 2009, and the term "Holder" means each
person shown on the records of the registrar for the TRUPS as a registered
holder on the Record Date.
The Solicitation Agent for the Consent Solicitation is:
Laurel Hill Advisory Group, LLC
October __, 2009
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If we receive the Required Consents which have not been revoked prior to
the Consent Date, we intend to enter into the Supplemental Indenture, which will
become effective with respect to the TRUPS immediately upon execution and
delivery thereof by Greater Atlantic and the Indenture Trustee. However, we will
not execute and enter into the Supplemental Indenture unless and until at least
505,040 TRUPS (which are equivalent to $5,050,400 in aggregate liquidation
amount) are tendered in the Tender Offer and the other conditions to the Tender
Offer and the Merger have been fulfilled. After effectiveness of the
Supplemental Indenture, all current Holders of TRUPS, including non-consenting
Holders, and all subsequent Holders will be bound by the Supplemental Indenture.
The officers and directors of Greater Atlantic and certain other holders of
the TRUPS collectively own $3,403,370 in aggregate liquidation amount of the
TRUPS. Pursuant to the Trust Agreement, such TRUPS are not deemed to be
"Outstanding" for purposes of calculating the Trust Agreement Consent, but are
included for purposes of calculating the Indenture Consent. Accordingly,
$6,204,010 in aggregate liquidation amount of TRUPS are deemed to be
"Outstanding" for the purpose of determining the Trust Agreement Consent, and
the Trust Agreement Consent shall require the consent of $3,102,006 in aggregate
liquidation amount of the TRUPS. The entire $9,607,380 in aggregate liquidation
amount of the TRUPS are outstanding for purposes of determining the Indenture
Consent, and the Indenture Consent shall require the consent of $4,803,691 in
aggregate liquidation amount of the TRUPS.
Holders are requested to read and consider carefully the information
contained in this Consent Solicitation Statement and the related Letter of
Consent and to give their consent to the Supplemental Indenture by properly
completing and executing the accompanying Letter of Consent in accordance with
the instructions set forth herein and therein.
Greater Atlantic expressly reserves the right, in its sole discretion and
regardless of whether any of the conditions described under "The Consent
Solicitation--Conditions to the Execution of the Supplemental Indenture" have
been satisfied, subject to applicable law, at any time prior to the
effectiveness of the Supplemental Indenture to (i) terminate the Consent
Solicitation for any reason, (ii) waive any of the conditions to the Consent
Solicitation, or (iii) extend the Consent Date. See "The Consent
Solicitation--Consent Date; Extensions; Amendment; Termination."
The transfer of TRUPS by a Holder after the Record Date will not have the
effect of revoking any consent theretofore validly given by the transferring
Holder, and each properly completed and executed Letter of Consent will be
counted notwithstanding any transfer of the TRUPS to which such Letter of
Consent relates, unless the procedure for revoking consents described herein and
in the Letter of Consent has been completed.
Recipients of this Consent Solicitation Statement and the accompanying
materials should not construe the contents hereof or thereof as legal, business
or tax advice. Each recipient should consult its own attorney, business advisor
and tax advisor as to legal, business, tax and related matters concerning the
Consent Solicitation.
IMPORTANT
Only record Holders are eligible to consent to the Supplemental Indenture.
If your TRUPS are held in "street name" by a broker, bank or other nominee, you
will receive instructions from your broker, bank or other nominee that you must
follow in order to provide your consent with respect to your TRUPS. If you wish
to provide consent yourself, you must obtain a legal proxy in your name from the
broker, bank or other nominee who holds your TRUPS.
If you do not consent or provide instructions to your broker, bank, or
other nominee, your TRUPS will not be counted as having consented to the
Supplemental Indenture. Because we require the consent of a majority in
liquidation amount of all TRUPS and a majority in liquidation amount of all
Outstanding TRUPS (excluding TRUPS owned by directors, officers and Affiliates
of Greater Atlantic) to enter into the Supplemental Indenture, a failure to
consent or to provide instructions as to your consent will count as a vote
against the Supplemental Indenture. Your consent will be counted for purposes of
determining the Indenture Consent and the Trust Agreement Consent.
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Holders who wish to consent should return their properly completed and
executed Letter of Consent in the enclosed postage-paid envelope, or provide
instructions to their broker, bank or other nominee. However, Greater Atlantic
reserves the right (but is not obligated) to accept any Letters of Consent
received by any other reasonable means or in any form that reasonably evidences
the giving of consent to the Supplemental Indenture.
No person has been authorized to give any information or make any
representations other than those contained or incorporated by reference herein
or in the accompanying Letter of Consent and other materials, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Trust, Greater Atlantic, the Indenture Trustee, the Trustees,
the Solicitation Agent or any other person. The statements made in this Consent
Solicitation Statement are made as of the date hereof, and the delivery of this
Consent Solicitation Statement and the accompanying materials shall not, under
any circumstances, create any implication that the information contained herein
is correct after the date hereof.
Questions concerning the terms of the Consent Solicitation should be
directed to the Solicitation Agent at the address or telephone numbers set forth
on the back cover hereof. Requests for assistance in completing and delivering
Letters of Consent or requests for additional copies of this Consent
Solicitation Statement, the Letter of Consent or other related documents should
be directed to the Solicitation Agent at the address or telephone numbers set
forth on the back cover hereof.
BACKGROUND OF THE CONSENT SOLICITATION
The Company
Greater Atlantic is the holding company for Greater Atlantic Bank, a
federal savings bank (the "Bank"). The Bank is Greater Atlantic's principal
operating subsidiary. Greater Atlantic's principal executive office is located
at 10700 Parkridge Boulevard, Suite P-50, Reston, Virginia, 20191.
Effective April 25, 2008, the Bank consented to the issuance of a
cease-and-desist order by the Office of Thrift Supervision (the "OTS"). On
February 10, 2009, the Bank received written notification from the OTS that the
Bank was "undercapitalized." Effective May 22, 2009, the Board of Directors of
the Bank entered into a Stipulation and Consent to Prompt Corrective Action
Directive with the OTS. By execution of the Stipulation and Consent, the Bank
consented to the appointment by the OTS of a conservator or receiver at any time
the Bank is significantly undercapitalized. As of March 31, 2009, the Bank was
significantly undercapitalized for purposes of the prompt corrective action
provisions of the Federal Deposit Insurance Act. The OTS has directed the Bank
to be recapitalized by a merger with or acquisition by another financial
institution or other entity, or by the sale of all or substantially all of the
Bank's assets and liabilities to another financial institution or other entity.
Proposed Merger
On June 15, 2009, Greater Atlantic, GAF Merger Corp. and MidAtlantic
Bancorp, Inc. ("MidAtlantic") entered into the Merger Agreement, pursuant to
which, upon consummation of the Merger, MidAtlantic will become the savings and
loan holding company of the Bank and will recapitalize the Bank.
The Merger is subject to customary conditions to closing, including but not
limited to receipt of regulatory approvals and the elimination or modification,
to the satisfaction of MidAtlantic, of the operating constraints that currently
apply to the Bank under the enforcement orders issued by the OTS. The Merger is
also specifically conditioned upon the successful completion of the Tender
Offer.
The Trust
The Trust is a Delaware statutory business trust and wholly owned
subsidiary of Greater Atlantic. Greater Atlantic is the sponsor of the Trust.
The sole assets and sources of funds to make payments on the TRUPS are the
Debentures that Greater Atlantic issued to the Trust. To the extent that the
Trust receives interest payments on the Debentures, it is obligated to
distribute those amounts to the holders of TRUPS, in the form of quarterly cash
distributions.
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Concurrent Tender Offer
Greater Atlantic, together with MidAtlantic and GAF Merger Corp., has
commenced the Tender Offer to purchase at least 505,040 but up to 649,151 TRUPS
(which is equivalent to at least $5,050,400 but up to $6,491,510 in aggregate
liquidation amount) on the terms and subject to the conditions described in the
offer to purchase included as Exhibit (a)(1)(i) to Greater Atlantic's Schedule
TO-I, as amended, filed with the Securities and Exchange Commission on September
15, 2009 (the "Offer to Purchase"). The Tender Offer cannot be completed unless
we receive the Required Consents pursuant to this solicitation and execute the
Supplemental Indenture.
THE PROPOSED SUPPLEMENTAL INDENTURE
The Indenture permits Greater Atlantic to defer the payment of interest on
the Debentures for up to 20 consecutive fiscal quarters, during which time
Greater Atlantic is not required to make interest payments on the Debentures.
Because the payment of cash distributions on the TRUPS is dependent on the
Trust's receipt of interest payments from Greater Atlantic on the Debentures,
any deferral of interest payments on the Debentures causes a deferral of cash
distribution payments on the TRUPS. Since December 19, 2006, Greater Atlantic
has exercised its right to defer the payment of interest on the Debentures,
after being advised by the OTS that the Bank would not be permitted to pay cash
dividends to Greater Atlantic. Since that date, the Trust has exercised its
right to defer the payment of cash distributions on the TRUPS. The Indenture
further provides that, if Greater Atlantic has elected to defer payment of
interest on the Debentures, then Greater Atlantic is prohibited from redeeming,
purchasing or acquiring any of the TRUPS.
As described above, Greater Atlantic has offered to purchase the TRUPS in
the Tender Offer as a condition to the Merger. Greater Atlantic, on behalf of
itself and the Trust, is seeking consent from the Holders to enter into the
Supplemental Indenture, in substantially the form attached hereto as Appendix B,
the terms of which would eliminate the prohibition against redeeming, purchasing
or acquiring any TRUPS during an interest deferral period, and thereby permit
Greater Atlantic to purchase the TRUPS tendered in the Tender Offer. If the
Required Consents are received prior to the Consent Date and not properly
revoked and the conditions to the Consent Solicitation are satisfied or waived,
then such Required Consents will authorize Greater Atlantic and Wilmington Trust
Company, as Indenture Trustee, to enter into the Supplemental Indenture.
If we do not receive the Required Consents prior to the Consent Date, the
Tender Offer will not be completed, the Merger will not be consummated and the
Bank will likely be placed into conservatorship or receivership. In such event,
it is unlikely that the Trust will have cash available for any future cash
distributions on the TRUPS and the TRUPS in all probability will be worthless.
THE CONSENT SOLICITATION
Overview
The Supplemental Indenture will become effective upon execution by Greater
Atlantic and Wilmington Trust Company, as Indenture Trustee. The Supplemental
Indenture will not be executed unless and until the conditions to the Merger and
the Tender Offer are satisfied, and we have received the Required Consents.
After effectiveness of the Supplemental Indenture, all current Holders of TRUPS,
including non-consenting Holders, and all subsequent Holders will be bound by
the Supplemental Indenture.
Failure to deliver a Letter of Consent will have the same effect as if a
Holder had chosen not to give its consent with respect to, or voted against, the
Supplemental Indenture. Greater Atlantic will provide notice to Holders of
receipt of the Required Consents (if the Required Consents have been received)
on or after the Consent Date.
The delivery of a Letter of Consent will not affect a Holder's right to
sell or transfer the TRUPS. However, any restrictions on transfer contained in
the Indenture, the Trust Agreement or the TRUPS will remain in full force and
effect. If a Holder delivers a consent and subsequently transfers its TRUPS
prior to the Consent Date, such Holder's consent will be counted toward the
Required Consents, unless the consent with respect to such TRUPS has been
validly revoked by such Holder prior to the Consent Date.
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Beneficial owners of the TRUPS whose TRUPS are held, as of the Record Date,
in the name of a broker, bank or other nominee should receive information from
that nominee regarding this Consent Solicitation. If any such beneficial owner
wishes to provide a consent, the beneficial owner must provide instructions to
the nominee to promptly execute and deliver a Letter of Consent on behalf of the
beneficial owner prior to the Consent Date or obtain a legal proxy in their name
from the broker, bank or other nominee who holds their TRUPS.
Voting materials, which include this Consent Solicitation Statement and a
Letter of Consent, are being mailed to all Holders on or about October __, 2009.
As of the Record Date, there were outstanding $9,607,380 in aggregate
liquidation amount of the TRUPS, held of record by one registered Holder, the
nominee for the Depository Trust Company. Pursuant to the Trust Agreement,
$3,403,370 in aggregate liquidation amount of the TRUPS owned by directors and
officers and certain other affiliates of Greater Atlantic and the Trustees are
not deemed to be "Outstanding." Therefore, only $6,204,010 in aggregate
liquidation amount of TRUPS are deemed to be "Outstanding" for purposes of
calculating the Trust Agreement Consent. Accordingly, we must receive the
consent of (i) at least $3,102,006 in aggregate liquidation amount of TRUPS
deemed "Outstanding" under the Trust Agreement and (ii) at least $4,803,691 in
aggregate liquidation amount of all TRUPS in order to enter into the
Supplemental Indenture. Consents delivered by record Holders will be counted in
the calculation of the Indenture Consent and the Trust Agreement Consent. Each
$10 in aggregate liquidation amount of the TRUPS entitles the Holder to one vote
on the Supplemental Indenture. Only record Holders are eligible to consent to
the Supplemental Indenture.
Effectiveness of Supplemental Indenture
If the Required Consents are received prior to the Consent Date and not
properly revoked, and if Holders have tendered at least 505,040 TRUPS (which is
equivalent to $5,050,400 in aggregate liquidation) in the Tender Offer, and if
the other conditions to the Tender Offer and the Merger have been fulfilled,
then Greater Atlantic and Wilmington Trust Company, as Indenture Trustee, will
enter into the Supplemental Indenture. The Supplemental Indenture will become
effective upon the execution and delivery of the Supplemental Indenture by
Greater Atlantic and the Indenture Trustee.
Record Date
The Record Date for the determination of Holders entitled to give consents
pursuant to the Consent Solicitation is 5:00 p.m., Eastern time, on __________,
2009. This Consent Solicitation Statement and the related Letter of Consent are
being sent to all Holders. Greater Atlantic reserves the right to establish from
time to time any new date as the Record Date and, thereupon, any such new date
will be deemed to be the "Record Date" for purposes of the Consent Solicitation.
Conditions to the Execution of the Supplemental Indenture
The execution of the Supplemental Indenture is subject to (i) Required
Consents having been received (and not revoked) prior to the Consent Date, (ii)
the absence of any law or regulation, and the absence of any injunction or
action or other proceeding (pending or threatened), that (in the case of any
action or proceeding if adversely determined) would make unlawful or invalid or
enjoin the implementation of the Supplemental Indenture or that would question
the legality or validity thereof, (iii) the receipt by Greater Atlantic of at
least 505,040 TRUPS (which is equivalent to $5,050,400 in aggregate liquidation
amount) in the Tender Offer, and (iv) the satisfaction of the other conditions
to the Tender Offer and the Merger.
Consent Date; Extensions; Amendment; Termination
The term "Consent Date" means 5:00 p.m., Eastern time, on _________, 2009,
unless Greater Atlantic, in its sole discretion, extends the period during which
the Consent Solicitation is open, in which case the term "Consent Date" means
the latest time and date to which the Consent Solicitation is extended. In order
to extend the Consent Date, Greater Atlantic will promptly disclose such
extension in an appropriate manner. Greater Atlantic may extend the Consent
Solicitation on a daily basis or for such specified period of time as it
determines in its sole discretion. Failure by any Holder or beneficial owner of
TRUPS to be so notified will not affect the extension of the Consent
Solicitation.
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Notwithstanding anything to the contrary set forth in this Consent
Solicitation Statement, Greater Atlantic expressly reserves the right, in its
sole discretion and whether or not the conditions described above under
"--Conditions to the Execution of the Supplemental Indenture" have been
satisfied, subject to applicable law, to (i) extend the Consent Date with
respect to the Consent Solicitation, (ii) waive any of the conditions to the
Consent Solicitation, (iii) allow the Consent Solicitation to lapse or abandon
the Consent Solicitation, or (iv) terminate the Consent Solicitation for any
reason. If the Consent Solicitation is abandoned, allowed to lapse or
terminated, any consents received will be voided.
Procedures for Consenting
All Letters of Consent that are properly executed and received by the
Solicitation Agent prior to the Consent Date and not timely revoked will be
given effect in accordance with the terms thereof.
Holders who desire to consent to the Supplemental Indenture should so
indicate by signing and dating a Letter of Consent and returning it in the
enclosed postage-paid envelope. Beneficial owners whose TRUPS are held in
"street name" by a broker, bank or other nominee will receive instructions from
your broker, bank or other nominee that you must follow in order to provide your
consent with respect to your TRUPS. Beneficial owners who wish to provide
consent to the Supplemental Indenture should instruct their broker, bank or
nominee accordingly. Beneficial owners who wish to provide consent themselves
must obtain a legal proxy in their name from the broker, bank or other nominee
who holds their TRUPS. Delivery of Letters of Consent should be made
sufficiently in advance of the Consent Date to assure that the Letter of Consent
is received prior to the Consent Date.
The Letter of Consent must be executed in exactly the same manner as the
name of the Holder appears on the TRUPS. An authorized Participant
("Participant") of The Depository Trust Company ("DTC") must execute the Letter
of Consent exactly as its name appears on the position listing of DTC as of the
Record Date. If the TRUPS are held of record by two or more joint Holders, any
one of such Holders may consent by signing the Letter of Consent. If a signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other Holder acting in a fiduciary or representative capacity,
such person should so indicate when signing. If the TRUPS are registered in
different names, separate Letters of Consent must be executed covering each form
of registration. For purposes of the Consent Solicitation, DTC has authorized
Participants set forth in the position listing of DTC as of the Record Date to
execute Letters of Consent as if they were Holders of the TRUPS held of record
in the name of DTC or the name of its nominee. Accordingly, for purposes of the
Consent Solicitation, the term "Holder" shall be deemed to include such
Participants.
If a consent relates to fewer than all the TRUPS held of record as of the
Record Date by the person providing such consent, such person must indicate on
the Letter of Consent the aggregate dollar amount (in integral multiples of $10)
of such TRUPS to which the consent relates. Otherwise, the consent will be
deemed to relate to all TRUPS held by such person.
Greater Atlantic reserves the right to receive Letters of Consent by any
other reasonable means or in any form that reasonably evidences the giving of
consent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of consents and revocations of consents will be resolved
by Greater Atlantic, whose determinations will be binding. Greater Atlantic
reserves the absolute right to reject any or all consents and revocations that
are not in proper form or the acceptance of which could, in the opinion of
Greater Atlantic's counsel, be unlawful. Greater Atlantic also reserves the
right to waive any defects, irregularities or conditions of consent as to the
TRUPS. Greater Atlantic's interpretations of the terms and conditions of the
Consent Solicitation, including the instructions in this Consent Solicitation
and the Letter of Consent, will be final and binding.
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Revocation of Consents
All properly completed and executed Letters of Consent received prior to
the Consent Date will be counted, notwithstanding any transfer of any TRUPS to
which such Letter of Consent relates, unless the Solicitation Agent receives
from a Holder a written notice of revocation at any time prior to the Consent
Date. Any notice of revocation received after the Consent Date will not be
effective. A consent to the Supplemental Indenture by a Holder will bind the
Holder and every subsequent holder of such TRUPS or portion of such TRUPS.
To be effective, a notice of revocation must be in writing, must contain
the name of the Holder and the aggregate liquidation amount of the TRUPS to
which it relates and must be signed in the same manner as the original Letter of
Consent. All revocations of consents must be sent to Greater Atlantic at its
address set forth herein. However, if your TRUPS are held in "street name," you
should follow the instructions of your bank, broker or other nominee regarding
the revocation of consents.
If a revocation is signed by a trustee, executor, administrator, or
guardian of the Holder, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must
indicate such fact when signing. Only a Holder is entitled to revoke a consent
previously given. A beneficial owner of the TRUPS must arrange with the Holder
to execute and deliver on its behalf a revocation of any consent already given
with respect to such TRUPS. In the event of a transfer of TRUPS after the Record
Date, the subsequent transferee will not have revocation rights.
No Dissenters' Rights
Holders of TRUPS do not have dissenters' rights with respect to the
Supplemental Indenture.
Not a Request for Consent to the Merger or an Offer to Purchase TRUPS
This consent solicitation applies only to the adoption of the proposed
Supplemental Indenture. You are not being asked, in this solicitation, to
consent to the Merger or to tender the TRUPS that you hold. You should have
received a separate offer to purchase your TRUPS. Your consent to the
Supplemental Indenture does not constitute a tender of any TRUPS that you hold.
The holders of common stock of Greater Atlantic approved the Merger at a special
meeting of stockholders on August 26, 2009.
Solicitation Agent
Greater Atlantic has retained Laurel Hill Advisory Group, LLC as
solicitation agent (the "Solicitation Agent") with respect to the Consent
Solicitation. The Solicitation Agent will solicit consents and may solicit such
consents personally, telephonically, electronically or by other customary means
of solicitation. The Solicitation Agent will receive a customary fee for such
services and reimbursement for reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel, incurred in connection with such
services. Greater Atlantic has agreed to indemnify the Solicitation Agent
against certain liabilities and expenses, including liabilities under securities
laws, in connection with the Consent Solicitation.
Directors, officers and employees of Greater Atlantic and employees and
Administrative Trustees of the Trust may also solicit consents.
Questions with respect to the terms of the Consent Solicitation and
requests for assistance in completing and delivering the Letter of Consent or
requests for additional copies of this Consent Solicitation Statement, the
Letter of Consent and other related documents should be directed to the
Solicitation Agent at its address and telephone numbers set forth on the back
cover hereof. Holders may also contact their broker, bank or other nominee for
assistance concerning the Consent Solicitation. The executed Letter of Consent
and any other documents required by the Letter of Consent should be sent to the
Solicitation Agent at the address set forth in the Letter of Consent, and not to
Greater Atlantic or the Trustees.
Fees and Expenses
Greater Atlantic will bear the costs of the Consent Solicitation. Greater
Atlantic will reimburse the Property Trustee, the Delaware Trustee and the
Indenture Trustee for the reasonable and customary expenses that they incur in
8
connection with the Consent Solicitation. Greater Atlantic will also reimburse
banks, trust companies, securities dealers, nominees, custodians and fiduciaries
for their reasonable and customary expenses in forwarding this Consent
Solicitation Statement, the accompanying Letter of Consent and other materials
to beneficial owners of the TRUPS. The total amount estimated to be spent for,
in furtherance of, or in connection with the Consent Solicitation is
approximately $___.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain U.S. federal income tax
considerations relating to the Consent Solicitation. This summary applies only
to TRUPS held as "capital assets" (generally, property held for investment) for
U.S. federal income tax purposes. It does not discuss any state, local or
foreign tax consequences, nor does it deal with beneficial owners of TRUPS that
may be subject to special treatment for U.S. federal income tax purposes. For
example, this summary does not address tax consequences to beneficial owners of
TRUPS who are dealers in securities or currencies, traders in securities that
elect to use the mark-to-market method of accounting for their securities,
financial institutions, regulated investment companies, real estate investment
trusts, tax-exempt entities or insurance companies, persons holding TRUPS as
part of a hedging, integrated, constructive sale or conversion transaction or a
straddle, persons liable for the alternative minimum tax or U.S. holders (as
defined below) whose "functional currency" is not the U.S. dollar.
If an entity classified as a partnership for U.S. federal income tax
purposes holds TRUPS, the tax treatment of a partner will generally depend upon
the status of the partner and the activities of the entity. A partner in such an
entity should consult its own tax advisor regarding the tax consequences
relating to the Consent Solicitation.
The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended, and regulations, rulings and judicial decisions, all
as of the date hereof. Those authorities may be changed, perhaps retroactively,
or subject to differing interpretations, so as to result in U.S. federal income
tax consequences different from those discussed below. There is no authority
directly addressing the U.S. federal income tax consequences of the adoption of
the Supplemental Indenture. In addition, no rulings have been requested from the
Internal Revenue Service (the "IRS") with respect to any of the U.S. federal
income tax consequences of the Consent Solicitation. As a result, there can be
no assurance that the IRS or a court will agree with the U.S. federal income tax
consequences described below.
Beneficial owners of TRUPS are urged to consult their own tax advisors
regarding the U.S. federal income tax consequences of the Consent Solicitation
to them in light of their particular situations, as well as any consequences
arising under the laws of any other taxing jurisdiction.
U.S. Holders
For purposes of the following discussion, a "U.S. holder" is a beneficial
owner of a TRUPS that is for U.S. federal income tax purposes:
o a citizen or resident of the United States,
o a corporation (or other entity treated as a corporation) created or
organized in or under the laws of the United States or any political
subdivision of the United States,
o an estate the income of which is subject to U.S. federal income taxation
regardless of its source, or
o a trust that (1) is subject to the primary supervision of a court within
the United States and one or more U.S. persons has authority to control
all substantial decisions of the trust or (2) has a valid election in
effect under applicable Treasury regulations to be treated as a U.S.
person.
Adoption of Supplemental Indenture. Based on the classification of the
Trust as one or more grantor trusts or agency arrangements for U.S. federal
income tax purposes, each holder of a TRUPS is treated as owning an undivided
beneficial ownership interest in the Debentures held by the Trust. The U.S.
federal income tax consequences to a U.S. holder of the adoption of the
Supplemental Indenture will depend upon whether the Supplemental Indenture
result in a deemed exchange for U.S. federal income tax purposes of the
Debentures.
9
A deemed exchange will occur if the Supplemental Indenture causes a
"significant modification" of the Debentures. In general, the modification of a
debt instrument is a "significant modification" if, based on all the facts and
circumstances (and, subject to certain exceptions, taking into account all
modifications of the debt instrument collectively), the legal rights or
obligations that are altered and the degree to which they are altered is
"economically significant." The Supplemental Indenture will not cause a
significant modification of the Debentures under this general rule.
Accordingly, the adoption of the Supplemental Indenture will not result in
a deemed exchange of the Debentures for U.S. federal income tax purposes.
Therefore, U.S. holders will not recognize any gain or loss as a result of the
adoption of the Supplemental Indenture. However, you should carefully review the
information under "Material Income Tax Consequences" in the Offer to Purchase
for a discussion of the tax consequences to Holders of TRUPS whose TRUPS may be
purchased by Greater Atlantic in the Tender Offer.
Non-U.S. Holders
For purposes of the following discussion, a non-U.S. holder is a beneficial
owner of a TRUPS that is not a U.S. holder and not a partnership (or other
entity classified as a partnership) for U.S. federal income tax purposes.
Each Non-U.S. Holder is urged to consult its own tax advisor regarding the
Consent Solicitation in general and, in particular, its eligibility (if any) for
an exemption from, or a reduction in the rate of, U.S. federal withholding tax
under an applicable income tax treaty or otherwise.
AVAILABLE INFORMATION
Greater Atlantic is currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and is required to file certain
reports and other information with the SEC. You may read and copy any document
that Greater Atlantic files at the SEC's public reference room at 100 F Street,
N.E., Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. In addition, Greater Atlantic's SEC
filings are available to the public from the SEC's web site at
http://www.sec.gov.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Trust does not have directors or named executive officers. Accordingly,
SEC rules with respect to disclosure of ownership by directors and named
executive officers of the registrant are generally inapplicable to the Trust.
The following table sets forth, as of the Record Date, the aggregate liquidation
amount of TRUPS beneficially owned by: (i) each of Greater Atlantic's directors;
(ii) each of Greater Atlantic's executive officers; (iii) all of Greater
Atlantic's directors and executive officers as a group; and (iv) each person
known by Greater Atlantic to beneficially own more than 5% of the TRUPS. Certain
of these individuals serve as Administrative Trustees of the Trust, as
indicated.
Amount and Nature
of Beneficial Percent
Name and Address of Beneficial Owner Ownership(1) of TRUPS
------------------------------------ ----------------- ----------
Charles W. Calomiris, Chairman of the
Board of the Company, Administrative Trustee of the Trust 80,365 8.36%
Carroll E. Amos, President and Chief
Executive Officer of the Company, Director, Administrative
Trustee of the Trust 4,500 0.47%
James B. Vito, Director 24,472 2.55%
All directors and executive officers as a group
(seven persons) 109,337 11.83%
More than 5% Holders
Robert I. Schattner, DDS
121 Congressional Lane
Rockville, MD 20852 231,000 24.04%
The Ochsman Children Trust
1650 Tysons Boulevard
McLean, VA 22102 87,138 9.07%
George W. Calomiris
4848 Upton Street, N.W.
Washington, DC 20016 60,010 6.25%
Jenifer Calomiris
4919 Upton Street, N.W.
Washington, D.C. 20016 55,806 5.81%
Katherine Calomiris Tompros
5100 Van Ness Street, N.W.
Washington, D.C. 20016 55,806 5.81%
- -----------------------------
(1) Ownership expressed in number of TRUPS held, each of which represents $10 in
aggregate liquidation amount of TRUPS.
11
SECURITYHOLDER PROPOSALS
Pursuant to the Trust Agreement no annual meeting of Holders is required to
be held. Accordingly, SEC rules with respect to shareholder proposals that may
be submitted at annual meetings are generally inapplicable to the Trust.
MISCELLANEOUS
The Consent Solicitation is not being made to, and Letters of Consent will
not be accepted from or on behalf of, Holders in any jurisdiction in which the
making of the Consent Solicitation or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, Greater Atlantic may in
its discretion take such action as it may deem necessary to make the Consent
Solicitation in any such jurisdiction and to extend the Consent Solicitation to
Holders in such jurisdiction.
Questions concerning the terms of the Consent Solicitation and requests for
assistance in completing and delivering the Letter of Consent or requests for
additional copies of this Consent Solicitation Statement, the accompanying
Letter of Consent and other related documents should be directed to the
Solicitation Agent:
Laurel Hill Advisory Group, LLC
100 Wall Street
22nd Floor
New York, NY 10005
(917) 338-3181
Toll free: (888) 742-1305
12
PRELIMINARY COPY
APPENDIX A
GREATER ATLANTIC CAPITAL TRUST I
LETTER OF CONSENT
LETTER OF CONSENT CONCERNING THE SOLICITATION OF CONSENTS
RELATING TO THE SUPPLEMENTAL INDENTURE
TO THE INDENTURE GOVERNING THE
6.50% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES
RELATED TO THE
6.50% CUMULATIVE CONVERTIBLE TRUST PREFERRED SECURITIES,
LIQUIDATION AMOUNT $10 PER SECURITY (CUSIP No. 39160Q205)
PURSUANT TO THE CONSENT SOLICITATION STATEMENT DATED
OCTOBER __, 2009
- --------------------------------------------------------------------------------
THE CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
OCTOBER __, 2009, UNLESS OTHERWISE EXTENDED (SUCH TIME AND DATE, AS
THEY MAY BE EXTENDED, THE "CONSENT DATE"). CONSENTS MAY BE REVOKED
ON THE TERMS AND CONDITIONS SET FORTH IN THE CONSENT SOLICITATION
STATEMENT REFERRED TO BELOW.
- --------------------------------------------------------------------------------
The Consent Solicitation is made by Greater Atlantic Financial Corp.
("Greater Atlantic"), sponsor of Greater Atlantic Capital Trust I, a Delaware
statutory trust (the "Trust"), only to Holders (as defined below) as of the
Record Date (as defined below) of the 6.50% Cumulative Convertible Trust
Preferred Securities, liquidation amount $10 per security (the "TRUPS") issued
and Outstanding pursuant to the Amended and Restated Trust Agreement of Greater
Atlantic Capital Trust I, dated as of March 20, 2002, by and among Greater
Atlantic, Wilmington Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee and the Administrative Trustees named therein
(collectively, the "Trustees") (the "Trust Agreement"), and the related
Indenture, dated as of March 20, 2002, by and between Greater Atlantic and
Wilmington Trust Company, as Indenture Trustee (the "Indenture"), each as more
fully described in the accompanying Consent Solicitation Statement dated October
__, 2009 (the "Consent Solicitation Statement") of Greater Atlantic.
The term "Record Date" as used herein means 5:00 p.m. Eastern time, on
__________, 2009, and the term "Holder" means each person shown on the records
of the registrar for the TRUPS as a registered holder on the Record Date. The
Depository Trust Company ("DTC") has authorized DTC Participants
("Participants") set forth in the position listing of DTC as of the Record Date
to execute Letters of Consent as if they were the Holders of the TRUPS held of
record in the name of DTC or the name of its nominee. Accordingly, for purposes
of the Consent Solicitation, the term "Holder" shall be deemed to include such
Participants. Capitalized terms used herein but not defined herein have the
meanings given to them in the Consent Solicitation Statement.
Holders of the TRUPS who wish to consent to the Supplemental Indenture in
substantially the form attached to the Consent Solicitation Statement as
Appendix B (the "Supplemental Indenture") should return their properly completed
and executed Letter of Consent in the enclosed postage-paid envelope. However,
Greater Atlantic reserves the right (but is not obligated) to accept any Letters
of Consent received by any other reasonable means or in any form that reasonably
evidences the giving of consent to the Supplemental Indenture.
A-1
Only Holders are eligible to consent to the Supplemental Indenture. If your
TRUPS are held in "street name" by a broker, bank or other nominee, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to provide your consent with respect to your TRUPS, or you must
obtain a legal proxy in your name from the broker, bank or other nominee who
holds your TRUPS.
If you do not consent or provide instructions to your broker, bank, or
other nominee, your TRUPS will not be counted as having consented to the
Supplemental Indenture. Because we require the consent of a majority of TRUPS
not held by officers and directors and certain other affiliates of Greater
Atlantic and a majority of all of the outstanding TRUPS to enter into the
Supplemental Indenture, a failure to consent or to provide instructions as to
your consent will count as a vote against the Supplemental Indenture.
If we do not receive the Required Consents, the Tender Offer will not be
completed, the Merger will not be consummated and the Bank will likely be placed
into conservatorship or receivership. In such event, it is unlikely that the
Trust will have cash available for any future cash distributions on the TRUPS
and the TRUPS in all probability will be worthless.
All Holders will be bound by the Supplemental Indenture if it becomes
effective. Subject to the terms and conditions of the Consent Solicitation
Statement and this Letter of Consent, Greater Atlantic will enter into the
Supplemental Indenture as promptly as practicable after the Consent Date.
CONSENT TO THE SUPPLEMENTAL INDENTURE
By execution hereof, the undersigned acknowledges receipt of the Consent
Solicitation Statement and hereby represents and warrants that the undersigned
is a Holder of the TRUPS indicated below and has full power and authority to
take the action indicated below in respect of such TRUPS.
The undersigned acknowledges that the undersigned must comply with the
provisions of this Letter of Consent and complete the information required
herein to consent validly to the Supplemental Indenture.
Upon the terms and subject to the conditions set forth in the Consent
Solicitation Statement, and in accordance with this Letter of Consent, the
undersigned hereby consents to the Supplemental Indenture (as defined in the
Consent Solicitation Statement), and to the execution thereof.
The undersigned acknowledges that, if we receive the Required Consents
which have not been revoked prior to the Consent Date, we intend to enter into
the Supplemental Indenture, which will become effective with respect to the
TRUPS immediately upon execution and delivery thereof by Greater Atlantic and
the Indenture Trustee. However, we will not execute and enter into the
Supplemental Indenture unless and until at least 505,040 TRUPS (which is
equivalent to $5,050,400 in aggregate liquidation amount) are tendered in the
Tender Offer, and the other conditions to the Tender Offer and the Merger have
been fulfilled.
Notwithstanding the foregoing, Greater Atlantic reserves the right to
withdraw the Consent Solicitation for any reason prior to the Consent Date.
Unless otherwise specified on the signature page, this Letter of Consent
relates to the total aggregate liquidation amount of TRUPS held of record by the
undersigned at the close of business on the Record Date. If this Letter of
Consent relates to less than the total aggregate liquidation amount of TRUPS so
held, the undersigned must list on the table below the liquidation amount (in
integral multiples of $10) of TRUPS for which consent is given. If the space
provided below is inadequate, list the aggregate liquidation amounts on a
separate signed schedule and affix the schedule to this Letter of Consent.
To ensure compliance with Treasury Department Circular 230, each Holder is
hereby notified that: (a) any discussion of U.S. federal tax issues in the
accompanying Consent Solicitation Statement is not intended or written to be
used, and cannot be used, by such Holder for the purpose of avoiding penalties
that may be imposed on such Holder under the Internal Revenue Code; (b) any such
discussion has been included by Greater Atlantic in connection with the
promotion or marketing (within the meaning of Circular 230) by Greater Atlantic
of the transaction or matters described herein, namely the Consent Solicitation;
and (c) each such Holder should seek advice based on its particular
circumstances from an independent tax advisor.
A-2
CONSENT INSTRUCTIONS
In order for a consent to be valid and effective, (a) the Letter of Consent
must be properly completed, executed and received by the Solicitation Agent
prior to the Consent Date and (b) the consent must not thereafter be properly
revoked as provided herein and in the Consent Solicitation Statement.
IMPORTANT--READ CAREFULLY
If this Letter of Consent is executed by the Holder, it must be executed in
exactly the same manner as the name of the Holder appears on the TRUPS. An
authorized Participant must execute this Letter of Consent exactly as its name
appears on DTC's position listing as of the Record Date. If the TRUPS are held
of record by two or more joint Holders, any one of such Holders may consent by
signing the Letter of Consent. If a signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
Holder acting in a fiduciary or representative capacity, such person must so
indicate when signing. If the TRUPS are registered in different names, separate
Letters of Consent must be executed covering each form of registration. If a
Letter of Consent is executed by a person other than the Holder, then such
person must have been authorized by proxy or in some other manner acceptable to
the Trust to deliver consents with respect to the applicable TRUPS on behalf of
the Holder.
The undersigned authorizes the Solicitation Agent to deliver this Letter of
Consent to the Trust and the Trustees as evidence of the undersigned's consent
with respect to the Supplemental Indenture and the execution thereof.
SIGN HERE
--------------------------------------------------
--------------------------------------------------
Signature(s)
Date: ______________________
PLEASE TYPE OR PRINT INFORMATION BELOW
Name(s):
----------------------------------------------------------------------
----------------------------------------------------------------------
Capacity (full title):
--------------------------------------------------------
Address (include zip code):
---------------------------------------------------
Aggregate Liquidation Liquidation Amount (Face Value)
Amount (Face Value) of TRUPS Held* With Respect to
Which Consents are Given*
- ----------------------------------------- -------------------------------------
*Unless otherwise indicated in the column labeled "Liquidation Amount (Face
Value) With Respect to Which Consents Are Given," consents will be deemed to
have been delivered in respect of the entire aggregate liquidation amount
indicated in the column labeled "Aggregate Liquidation Amount (Face Value) of
TRUPS Held."
All liquidation amounts must be in multiples of $10.
A-3
PRELIMINARY COPY
Appendix B
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE dated as of _________, 2009 (this "First
Supplemental Indenture") is by and between Wilmington Trust Company, a Delaware
banking corporation, as Trustee (herein, together with its successors in
interest, the "Trustee"), and Greater Atlantic Financial Corp., a Delaware
corporation (the "Company"), under the Indenture referred to below.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the Trustee, the Company and the Successor
Company hereby agree as follows:
PRELIMINARY STATEMENTS
The Trustee and the Company are parties to that certain Indenture dated as
of March 20, 2002 (the "Indenture"), pursuant to which the Company issued U.S.
$9,630,380 of its 6.5% Convertible Junior Subordinated Debentures due 2031 (the
"Debentures").
The Company has entered into an Agreement and Plan of Merger, dated as of
June 15, 2009 with MidAtlantic Bancorp, Inc. and GAF Merger Corp. (the "Merger
Agreement"), pursuant to which the Company would be acquired by MidAtlantic
Bancorp, Inc. In accordance with the terms of the Merger Agreement, the Company
has commenced a tender offer for the outstanding Preferred Securities (as
defined below). The parties to this First Supplemental Indenture wish to amend
the Indenture to delete, in its entirety, Section 5.3(c) and Section 6.6(c) of
the Indenture, to permit the Company to consummate the tender offer despite the
fact that the Company has exercised its right under the Indenture to defer
interest payments on the Debentures.
Pursuant to Section 12.2 of the Indenture and Section 6.01(b) of the
Amended and Restated Trust Agreement of the Trust, dated March 20, 2002 (the
"Trust Agreement"), the holders of (i) a majority in aggregate principal amount
of the outstanding Debentures, (ii) a majority in liquidation amount of the 6.5%
Cumulative Convertible Trust Preferred Securities (the "Preferred Securities"),
and (iii) a majority in liquidation amount of the Outstanding Preferred
Securities (as defined in the Trust agreement) have approved the amendment to
the Indenture set forth herein.
SECTION 1. Definitions. All capitalized terms used herein that are defined
in the Indenture, either directly or by reference therein, shall have the
respective meanings assigned them in the Indenture except as otherwise provided
herein or unless the context otherwise requires.
1
SECTION 2. Interpretation.
(a) In this First Supplemental Indenture, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any gender includes the other gender;
(iii) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this First Supplemental Indenture
as a whole and not to any particular Section or other
subdivision;
(iv) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and
assigns are permitted by this First Supplemental Indenture or
the Indenture, and reference to a Person in a particular
capacity excludes such Person in any other capacity or
individually provided that nothing in this clause (iv) is
intended to authorize any assignment not otherwise permitted
by this First Supplemental Indenture or the Indenture;
(v) reference to any agreement, document or instrument means such
agreement, document or instrument as amended, supplemented or
modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof, as
well as any substitution or replacement therefor and reference
to any note includes modifications thereof and any note issued
in extension or renewal thereof or in substitution or
replacement therefor;
(vi) reference to any Section means such Section of this First
Supplemental Indenture; and
(vii) the word "including" (and with correlative meaning "include")
means including without limiting the generality of any
description preceding such term.
(b) No provision in this First Supplemental Indenture shall be interpreted
or construed against any Person because that Person or its legal
representative drafted such provision.
SECTION 3. Amendment to the Indenture. Section 5.3(c) and Section
6.6(c) of the Indenture are hereby deleted in their entirety.
SECTION 4. Representations and Warranties. The Company represents and
warrants that (a) it has all necessary power and authority to execute and
2
deliver this First Supplemental Indenture and to perform the Indenture, (b) it
is a corporation organized and existing under the laws of Delaware (c) both
immediately before and after giving effect to the First Supplemental Indenture,
no Default or Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, has occurred and is continuing
and (d) that this First Supplemental Indenture is executed and delivered
pursuant to Article XII of the Indenture and does require the consent of the
holders of Preferred Securities as mentioned above in the Preliminary
Statements.
SECTION 5. Conditions of Effectiveness. This First Supplemental
Indenture shall become effective simultaneously with the execution hereof,
provided, however, that the First Supplemental Indenture will not be executed
unless and until the conditions to the proposed merger of the Company with
MidAtlantic Bancorp, Inc., and the tender offer by the Company for the Preferred
Securities, are satisfied, and provided further that:
(a) the Trustee shall have executed a counterpart of this First
Supplemental Indenture and shall have received one or more
counterparts of this First Supplemental Indenture executed by the
Company;
(b) the Trustee shall have received an Officers' Certificate stating that
(i) in the opinion of the signers, all conditions precedent, if any,
provided for in the Indenture relating to this First Supplemental
Indenture have been complied with, (ii) this First Supplemental
Indenture complies with Article XII of the Indenture and (iii) the
Trustee's execution of this First Supplemental Indenture is authorized
or permitted by the Indenture;
(c) the Trustee shall have received an Opinion of Counsel to the effect
that (i) all conditions precedent provided for in the Indenture
relating to this First Supplemental Indenture have been complied with;
(ii) this First Supplemental Indenture complies with the requirements
of Article XII of the Indenture and is authorized or permitted by, and
conforms to, the terms of Article XII of the Indenture; and (iii) it
is proper for the Trustee, under the provisions of Article XII of the
Indenture, to join in the execution of this First Supplemental
Indenture; and
(d) the Trustee shall have received copies of executed Consent Forms (as
defined in the Consent Solicitation Statement with respect to the
Preferred Securities, dated ___________, 2009) representing (i) a
majority in liquidation amount of the Preferred Securities and (ii) a
majority in liquidation amount of the Outstanding Preferred Securities
(as defined in the Trust Agreement), accompanied by the applicable
consent and direction to the Trustee executed by the Trust.
SECTION 6. Reference to the Indenture.
(a) Upon the effectiveness of this First Supplemental Indenture, each
reference in the Indenture to "this Indenture," "hereunder," "herein"
3
or words of like import shall mean and be a reference to the
Indenture, as affected, amended and supplemented hereby.
(b) Upon the effectiveness of this First Supplemental Indenture, each
reference in the Securities to the Indenture including each term
defined by reference to the Indenture shall mean and be a reference to
the Indenture or such term, as the case may be, as affected, amended
and supplemented hereby.
(c) The Indenture, as amended and supplemented hereby shall remain in full
force and effect and is hereby ratified and confirmed.
SECTION 7. Execution in Counterparts. This First Supplemental Indenture may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same instrument.
SECTION 8. Governing Law; Binding Effect. This First Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York and shall be binding upon the parties hereto and their respective
successors and assigns.
SECTION 9. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this First
Supplemental Indenture or the due execution thereof by the Company. The recitals
of fact contained herein shall be taken as the statements solely of the Company,
and the Trustee assumes no responsibility for the correctness thereof.
[Signatures on following page]
4
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first written above.
GREATER ATLANTIC FINANCIAL CORP.
By:
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Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Trustee
By:
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Name:
Title:
(Signature Page to First Supplemental Indenture)