GUARANTEE
AGREEMENT
between
HARLEYSVILLE
NATIONAL CORPORATION,
As
Guarantor,
and
WILMINGTON
TRUST COMPANY,
As
Guarantee Trustee
Dated
as of August 22, 2007
HNC
STATUTORY TRUST IV
TABLE
OF CONTENTS
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ARTICLE I |
INTERPRETATION AND
DEFINITIONS............................................................................................................................2 |
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SECTION 1.1 |
Interpretation...........................................................................................................................................................................2 |
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SECTION 1.2 |
Definitions................................................................................................................................................................................2 |
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ARTICLE II |
REPORTS...............................................................................................................................................................................6 |
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SECTION
2.1 |
List of
Holders.........................................................................................................................................................................6 |
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SECTION 2.2 |
Periodic Reports to the Guarantee
Trustee................................................................................................................................6 |
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SECTION 2.3 |
Event of Default;
Waiver..........................................................................................................................................................6 |
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SECTION 2.4 |
Event of Default;
Notice...........................................................................................................................................................7 |
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ARTICLE III |
POWERS,
DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE................................................................................7 |
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SECTION 3.1 |
Powers and Duties of the Guarantee
Trustee.............................................................................................................................7 |
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SECTION 3.2 |
Certain Rights of the Guarantee
Trustee....................................................................................................................................8 |
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SECTION
3.3 |
Compensation........................................................................................................................................................................10 |
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SECTION 3.4 |
Indemnity...............................................................................................................................................................................10 |
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SECTION
3.5 |
Securities...............................................................................................................................................................................11 |
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ARTICLE IV |
GUARANTEE
TRUSTEE.....................................................................................................................................................11 |
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SECTION 4.1 |
Guarantee Trustee;
Eligibility...................................................................................................................................................11 |
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SECTION 4.2 |
Appointment, Removal and Resignation of the Guarantee
Trustee............................................................................................12 |
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ARTICLE
V |
GUARANTEE.......................................................................................................................................................................12 |
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SECTION 5.1 |
Guarantee...............................................................................................................................................................................12 |
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SECTION
5.2 |
Waiver of Notice and
Demand................................................................................................................................................13 |
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SECTION
5.3 |
Obligations Not
Affected........................................................................................................................................................13 |
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SECTION
5.4 |
Rights of
Holders....................................................................................................................................................................14 |
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SECTION 5.5 |
Guarantee of
Payment.............................................................................................................................................................14 |
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SECTION 5.6 |
Subrogation............................................................................................................................................................................14 |
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SECTION 5.7 |
Independent
Obligations..........................................................................................................................................................15 |
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SECTION 5.8 |
Enforcement............................................................................................................................................................................15 |
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ARTICLE VI |
COVENANTS AND
SUBORDINATION.............................................................................................................................15 |
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SECTION 6.1 |
Dividends, Distributions and
Payments......................................................................................................................................15 |
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SECTION 6.2 |
Subordination...........................................................................................................................................................................16 |
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SECTION 6.3 |
Pari Passu
Guarantees..............................................................................................................................................................16 |
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ARTICLE
VII |
TERMINATION.....................................................................................................................................................................17 |
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SECTION 7.1 |
Termination..............................................................................................................................................................................17 |
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ARTICLE VIII |
MISCELLANEOUS...............................................................................................................................................................17 |
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SECTION 8.1 |
Successors and
Assigns............................................................................................................................................................17 |
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SECTION 8.2 |
Amendments............................................................................................................................................................................17 |
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SECTION 8.3 |
Notices.....................................................................................................................................................................................17 |
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SECTION 8.4 |
Benefit......................................................................................................................................................................................18 |
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SECTION 8.5 |
Governing
Law.........................................................................................................................................................................19 |
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SECTION 8.6 |
Submission to
Jurisdiction..........................................................................................................................................................19 |
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SECTION 8.7 |
Counterparts;
Facsimile.............................................................................................................................................................19 |
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Guarantee
Agreement, dated as of August 22, 2007, executed and delivered
by Harleysville National Corporation, a Pennsylvania
corporation (the “Guarantor” ) having its
principal office at 483 Main St., Harleysville,
PA 19438, and Wilmington Trust Company, a Delaware
banking corporation, as trustee (in such capacity, the
“Guarantee Trustee” ), for the benefit of
the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of HNC Statutory
Trust IV, a Delaware statutory trust (the
“Issuer” ).
W
i t n e s s e t h :
Whereas,
pursuant to an Amended and Restated Trust Agreement, dated as
of the date hereof (the “Trust Agreement”
), among the Guarantor, as Depositor, the Property Trustee,
the Delaware Trustee and the Administrative Trustees named
therein and the holders from time to time of the Preferred
Securities (as defined herein), the Issuer is issuing
$22,500,000 aggregate Liquidation Amount (as defined in the
Trust Agreement) of its Preferred Securities (Liquidation
Amount $1,000 per preferred security) (the
“Preferred Securities” ) representing
preferred undivided beneficial interests in the assets of the
Issuer and having the terms set forth in the Trust
Agreement;
Whereas,
the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance
of the Issuer’s Common Securities (as defined herein),
will be used to purchase the Notes (as defined in the Trust
Agreement) of the Guarantor; and
Whereas,
as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth herein, to pay to the Holders
of the Preferred 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
Preferred Securities, which purchase the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement to provide as follows for
the benefit of the Holders from time to time of the Preferred
Securities:
ARTICLE
I
Interpretation
and Definitions
SECTION
1.1
Interpretation.
In
this Guarantee Agreement, unless the context otherwise
requires:
(a)
capitalized
terms used in this Guarantee Agreement but not defined in the
preamble hereto have the respective meanings assigned to them in
Section 1.2 ;
(b)
the
words “include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”;
(c)
all
references to “the Guarantee Agreement” or “this
Guarantee Agreement” are to this Guarantee Agreement as
modified, supplemented or amended from time to time;
(d)
all
references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e)
the
words “hereby”, “herein”,
“hereof” and “hereunder” and other words of
similar import refer to this Guarantee Agreement as a whole and not
to any particular Article, Section or other
subdivision;
(f)
a
reference to the singular includes the plural and vice versa;
and
(g)
the
masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
SECTION
1.2
Definitions .
As
used in this Guarantee Agreement, the terms set forth below
shall, unless the context otherwise requires, have the
following meanings:
“Affiliate” of any specified Person means any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person;
provided , that the Issuer shall not be deemed to be an
Affiliate of the Guarantor. For the purposes of this
definition, “control” when used with respect
to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the
foregoing.
“Beneficiaries” means any Person to whom the
Issuer is or hereafter becomes indebted or liable.
“Board of Directors” means either the board of
directors of the Guarantor or any duly authorized committee of that
board.
“Common Securities” means the securities
representing common undivided beneficial interests in the assets of
the Issuer.
“Debt” means with respect to any Person, whether
recourse is to all or a portion of the assets of such Person,
whether currently existing or hereafter incurred, and whether or
not contingent and without duplication, (i) every obligation of
such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every
reimbursement obligation of such Person with respect to letters of
credit, bankers’ acceptances or similar facilities issued for
the account of such Person; (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable arising in the
ordinary course of business); (v) every capital lease obligation of
such Person; (vi) all indebtedness of such Person, whether incurred
on or prior to the date of this Guarantee Agreement or thereafter
incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward
contracts, options, swaps and similar arrangements; (vii) every
obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of
which, in either case, such Person has guaranteed or is responsible
or liable for, directly or indirectly, as obligor or otherwise; and
(viii) any renewals, extensions, refundings, amendments or
modifications of any obligation of the type referred to in clauses
(i) through (vii).
“Event of Default” means a default by the
Guarantor on any of its payment or other obligations under this
Guarantee Agreement; provided, that except with respect to a
default in payment of any Guarantee Payments, the Guarantor shall
have received notice of default from the Guarantee Trustee and
shall not have cured such default within thirty (30) days after
receipt of such notice.
“Guarantee Payments” means the following payments
or distributions, without duplication, with respect to the
Preferred Securities, to the extent not paid or made by or on
behalf of the Issuer: (i) any accumulated and unpaid Distributions
(as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on
hand available therefor at such time, (ii) the Redemption Price (as
defined in the Trust Agreement) with respect to any Preferred
Securities to the extent the Issuer shall have funds on hand
available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Issuer,
unless Notes are distributed to the Holders, the lesser of (a) the
aggregate of the Liquidation Amount of $1,000 per Preferred
Security plus accumulated and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent that
the
Issuer shall have funds available therefor at such time and
(b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer in
accordance with applicable law (in either case, the
“Liquidation Distribution”
).
“Guarantee Trustee” means Wilmington Trust Company
in its capacity as trustee hereunder, until a Successor Guarantee
Trustee, as defined below, has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement, and
thereafter means each such Successor Guarantee
Trustee.
“Holder” means any holder, as registered on the
books and records of the Issuer, of any Preferred Securities;
provided , that, in determining whether the holders of the
requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, “Holder”
shall not include the Guarantor, the Guarantee Trustee or any
Affiliate of the Guarantor or the Guarantee Trustee.
“Indenture” means the Junior Subordinated
Indenture, dated as of the date hereof, as supplemented and
amended, between the Guarantor and Wilmington Trust Company, as
trustee.
“List of Holders” has the meaning specified in
Section 2.1.
“Majority in Liquidation Amount of the Preferred
Securities” means a vote by the Holder(s), voting
separately as a class, of more than fifty percent (50%) of the
aggregate Liquidation Amount of all then outstanding Preferred
Securities issued by the Issuer.
“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.
“Officers’ Certificate” means, with respect
to any Person, a certificate signed by the Chief Executive Officer,
Chief Financial Officer, President or a Vice President of such
Person, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officers’ Certificate
delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement (other than the
certificate provided pursuant to Section 2.4 ) shall
include:
(a)
a
statement that each officer signing the Officers’ 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 each officer in rendering the
Officers’ Certificate;
(c)
a
statement that each officer has made such examination or
investigation as, in such officer’s opinion, is necessary to
enable such officer to express an informed opinion as to whether or
not such covenant or condition has been complied with;
and
(d)
a
statement as to whether, in the opinion of each 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, government or any agency or political
subdivision thereof or any other entity of whatever
nature.
“Responsible Officer” means, with respect to the
Guarantee Trustee, any Senior Vice President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, any Financial
Services Officer or Assistant Financial Services Officer or any
other officer in the Corporate Trust Office of the Guarantee
Trustee with direct responsibility for the administration of this
Guarantee Agreement and also means, 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.
“Senior Debt” means the principal of and any
premium and interest on (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization
relating to the Guarantor whether or not such claim for
post-petition interest is allowed in such proceeding) all Debt of
the Guarantor, whether incurred on or prior to the date of the
Indenture or thereafter incurred, unless it is provided in the
instrument creating or evidencing the same or pursuant to which the
same is outstanding, that such obligations are not superior in
right of payment to the Preferred Securities; provided,
however , that if the Guarantor is subject to the regulation
and supervision of an “appropriate Federal banking
agency” within the meaning of 12 U.S.C. 1813(q), the
Guarantor shall have received the approval of such appropriate
Federal banking agency prior to issuing any such obligation if not
otherwise generally approved; provided further , that
Senior Debt shall not include any other debt securities, and
guarantees in respect of such debt securities, issued to any trust
other than the Issuer (or a trustee of such trust), partnership or
other entity affiliated with the Guarantor that is a financing
vehicle of the Guarantor (a “financing entity”), in
connection with the issuance by such financing entity of equity
securities or other securities that are treated as equity capital
for regulatory capital purposes guaranteed by the Guarantor
pursuant to an instrument that ranks pari passu with or
junior in right of payment to this Guarantee Agreement, including,
without limitation, securities issued by Harleysville Statutory
Trust I, HNC Statutory Trust II, and HNC Statutory Trust
III.
“Successor Guarantee Trustee” means a successor
Guarantee Trustee possessing the qualifications to act as Guarantee
Trustee under Section 4.1.
“Trust Indenture Act” means the Trust Indenture
Act of 1939, as amended and as in effect on the date of this
Guarantee Agreement.
Capitalized
or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
ARTICLE
II
Reports
SECTION
2.1
List of Holders.
The
Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee at such times as the Guarantee Trustee may
request in writing, within thirty (30) days after the receipt
by the Guarantor of any such request, a list, in such form as
the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders (the “List of
Holders” ) as of a date not more than fifteen (15)
days prior to the time such list is furnished, in each case to
the extent such information is in the possession or control of
the Guarantor and is not identical to a previously supplied
list of Holders or has not otherwise been received by the
Guarantee Trustee in its capacity as such. The
Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
SECTION
2.2
Periodic Reports to the Guarantee Trustee.
The
Guarantor shall deliver to the Guarantee Trustee, within one
hundred and twenty (120) days after the end of each fiscal
year of the Guarantor ending after the date of this Guarantee
Agreement, an Officers’ Certificate covering the
preceding fiscal year, stating whether or not to the knowledge
of the signers thereof the Guarantor is in default in
the
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