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
Exhibit
10.35
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
| ARTICLE I | INTERPRETATION AND DEFINITIONS............................................................................................................................2 |
| SECTION 1.1 | Interpretation...........................................................................................................................................................................2 |
| SECTION 1.2 | Definitions................................................................................................................................................................................2 |
| ARTICLE II | REPORTS...............................................................................................................................................................................6 |
| SECTION 2.1 | List of Holders.........................................................................................................................................................................6 |
| SECTION 2.2 | Periodic Reports to the Guarantee Trustee................................................................................................................................6 |
| SECTION 2.3 | Event of Default; Waiver..........................................................................................................................................................6 |
| SECTION 2.4 | Event of Default; Notice...........................................................................................................................................................7 |
| ARTICLE III | POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE................................................................................7 |
| SECTION 3.1 | Powers and Duties of the Guarantee Trustee.............................................................................................................................7 |
| SECTION 3.2 | Certain Rights of the Guarantee Trustee....................................................................................................................................8 |
| SECTION 3.3 | Compensation........................................................................................................................................................................10 |
| SECTION 3.4 | Indemnity...............................................................................................................................................................................10 |
| SECTION 3.5 | Securities...............................................................................................................................................................................11 |
| ARTICLE IV | GUARANTEE TRUSTEE.....................................................................................................................................................11 |
| SECTION 4.1 | Guarantee Trustee; Eligibility...................................................................................................................................................11 |
| SECTION 4.2 | Appointment, Removal and Resignation of the Guarantee Trustee............................................................................................12 |
| ARTICLE V | GUARANTEE.......................................................................................................................................................................12 |
| SECTION 5.1 | Guarantee...............................................................................................................................................................................12 |
| SECTION 5.2 | Waiver of Notice and Demand................................................................................................................................................13 |
| SECTION 5.3 | Obligations Not Affected........................................................................................................................................................13 |
| SECTION 5.4 | Rights of Holders....................................................................................................................................................................14 |
| SECTION 5.5 | Guarantee of Payment.............................................................................................................................................................14 |
| SECTION 5.6 | Subrogation............................................................................................................................................................................14 |
| SECTION 5.7 | Independent Obligations..........................................................................................................................................................15 |
| SECTION 5.8 | Enforcement............................................................................................................................................................................15 |
| ARTICLE VI | COVENANTS AND SUBORDINATION.............................................................................................................................15 |
| SECTION 6.1 | Dividends, Distributions and Payments......................................................................................................................................15 |
| SECTION 6.2 | Subordination...........................................................................................................................................................................16 |
| SECTION 6.3 | Pari Passu Guarantees..............................................................................................................................................................16 |
| ARTICLE VII | TERMINATION.....................................................................................................................................................................17 |
| SECTION 7.1 | Termination..............................................................................................................................................................................17 |
| ARTICLE VIII | MISCELLANEOUS...............................................................................................................................................................17 |
| SECTION 8.1 | Successors and Assigns............................................................................................................................................................17 |
| SECTION 8.2 | Amendments............................................................................................................................................................................17 |
i
| SECTION 8.3 | Notices.....................................................................................................................................................................................17 |
| SECTION 8.4 | Benefit......................................................................................................................................................................................18 |
| SECTION 8.5 | Governing Law.........................................................................................................................................................................19 |
| SECTION 8.6 | Submission to Jurisdiction..........................................................................................................................................................19 |
| SECTION 8.7 | Counterparts; Facsimile.............................................................................................................................................................19 |
ii
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 ▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
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.
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“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
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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;
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(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.
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“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 performance or observance of any
of
the terms or provisions or any of the conditions of this Guarantee Agreement
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Guarantor shall be in default thereof, specifying all
such defaults and the nature and status thereof of which they have
knowledge.
SECTION
2.3 Event
of Default; Waiver.
The
Holders of a Majority in Liquidation Amount of the Preferred Securities may,
on
behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent therefrom.
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SECTION
2.4 Event
of Default; Notice.
(a) The
Guarantee Trustee shall, within ninety (90) days after the occurrence of a
default, transmit to the Holders notices of all defaults actually known to
the
Guarantee Trustee, unless such defaults have been cured or waived before the
giving of such notice, provided, that, except in the case of a default
in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected
in withholding such notice if and so long as the Board of Directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders. For the purpose of
this Section 2.4, the term “default” means any event that is, or
after notice or lapse of time or both would become, an Event of
Default.
(b) The
Guarantee Trustee shall not be deemed to have knowledge of any default or Event
of Default unless the Guarantee Trustee shall have received written notice,
or a
Responsible Officer charged with the administration of this Guarantee Agreement
shall have received written notice, of such default or Event of Default from
the
Guarantor or a Holder.
ARTICLE
III
Powers,
Duties And Rights Of The Guarantee Trustee
SECTION
3.1 Powers
and Duties of the Guarantee Trustee.
(a) This
Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of
the Holders, and the Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder exercising its rights pursuant to
Section 5.4(d) or to a Successor Guarantee Trustee upon 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, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, 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) The
rights, immunities, duties and responsibilities of the Guarantee Trustee shall
be as provided by this Guarantee Agreement and there shall be no other duties
or
obligations, express or implied, of the Guarantee
Trustee. Notwithstanding the foregoing, no provisions of this
Guarantee Agreement shall require the Guarantee Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder, or in the exercise of any of its rights or powers,
if
it shall have reasonable grounds for believing that repayment of such funds
or
adequate indemnity against such risk or liability is not reasonably assured
to
it. Whether or not herein expressly so
-7-
provided,
every provision of this Guarantee Agreement relating to the conduct or affecting
the liability of or affording protection to the Guarantee Trustee shall be
subject to the provisions of this Section 3.1. To the extent
that, at law or in equity, the Guarantee Trustee has duties and liabilities
relating to the Guarantor or the Holders, the Guarantee Trustee shall not
be
liable to any Holder for the Guarantee Trustee’s good faith reliance on the
provisions of this Guarantee Agreement. The provisions of this
Guarantee Agreement, to the extent that they restrict the duties and liabilities
of the Guarantee Trustee otherwise existing at law or in equity, are agreed
by
the Guarantor and the Holders to replace such other duties and liabilities
of
the Guarantee Trustee.
(c) No
provision of this Guarantee Agreement shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, negligent failure
to act or own willful misconduct, except that:
(i) 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 the Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made; and
(ii) 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 direction of
the
Holders of not less than a Majority in Liquidation Amount of the Preferred
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any trust
or
power conferred upon the Guarantee Trustee under this Guarantee
Agreement.
SECTION
3.2 Certain
Rights of the Guarantee Trustee.
(a) Subject
to the provisions of Section 3.1:
(i) the
Guarantee Trustee may conclusively rely and shall be fully protected in acting
or refraining from acting in good faith and in accordance with the terms hereof
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 reasonably 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 Agreement
shall
be sufficiently evidenced by an Officers’ Certificate unless otherwise
prescribed herein;
(iii) the
Guarantee Trustee may consult with counsel, and the advice of such counsel
shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken
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by
it
hereunder in good faith and in reliance thereon and in accordance with such
advice. Such counsel may be counsel to the Guarantee Trustee, the
Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to
seek instructions concerning the administration of this Guarantee Agreement
from
any court of competent jurisdiction;
(iv) the
Guarantee Trustee shall be under no obligation to exercise any of the rights
or
powers vested in it by this Guarantee Agreement at the request or direction
of
any Holder, unless such Holder shall have provided to the Guarantee Trustee
reasonable security or indemnity against the costs, expenses (including
reasonable attorneys’ fees and expenses) 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, that,
nothing contained in this Section 3.2(a)(iv) shall be taken to 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
Agreement;
(v) 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, and if the Guarantee Trustee shall determine
to make such inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Guarantor, personally or by agent or
attorney;
(vi) the
Guarantee Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through its agents, attorneys,
custodians or nominees and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney, custodian
or nominee appointed with due care by it hereunder;
(vii) whenever
in the administration of this Guarantee Agreement the Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy
or right hereunder, the Guarantee Trustee (A) may request instructions from
the
Holders of a Majority in Liquidation Amount of the Preferred Securities, (B)
may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received and (C) shall be protected in acting in
accordance with such instructions;
(viii) except
as
otherwise expressly provided by this Guarantee Agreement, the Guarantee Trustee
shall not be under any obligation to
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take
any
action that is discretionary under the provisions of this Guarantee
Agreement;
(ix) whenever,
in the administration of this Guarantee Agreement, the Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting to take 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 rely upon an Officers’ Certificate which,
upon receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor; and
(x) the
Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument or other writing (or any rerecording, refiling
or
reregistration thereof).
(b) No
provision of this Guarantee Agreement 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 to act in accordance with
such
power and authority.
SECTION
3.3 Compensation.
The
Guarantor agrees to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall
not be limited by any provisions of law in regard to the compensation of a
trustee of an express trust) and to reimburse the Guarantee Trustee upon request
for all reasonable expenses, disbursements and advances (including the
reasonable fees and expenses of its attorneys and agents) incurred or made
by
the Guarantee Trustee in accordance with any provisions of this Guarantee
Agreement.
SECTION
3.4 Indemnity.
The
Guarantor agrees to indemnify and hold harmless the Guarantee Trustee (including
in its individual capacity) and any of its Affiliates and any of their officers,
directors, shareholders, employees, representatives or agents from and against
any loss, damage, liability, tax (other than income, franchise or other taxes
imposed on amounts paid pursuant to Section 3.3), penalty, expense or
claim of any kind or nature whatsoever incurred without negligence, bad faith
or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its rights, powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or
charge on any
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Guarantee
Payments as a result of any amount due to it under this Guarantee
Agreement. This indemnity shall survive the termination of this
Agreement or the resignation or removal of the Guarantee Trustee.
In
no
event shall the Guarantee Trustee be liable for any indirect, special, punitive
or consequential loss or damage of any kind whatsoever, including, but not
limited to, lost profits, even if the Guarantee Trustee has been advised of
the
likelihood of such loss or damage and regardless of the form of
action.
In
no
event shall the Guarantee Trustee be liable for any failure or delay in the
performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (declared or
undeclared), terrorism, fire, riot, embargo or government action, including
any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Guarantee Agreement.
SECTION
3.5 Securities.
The
Guarantee Trustee or any other agent of the Guarantee Trustee, in its individual
or any other capacity, may become the owner or pledgee of Common or Preferred
Securities.
ARTICLE
IV
Guarantee
Trustee
SECTION
4.1 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
or
of any State thereof, authorized to exercise corporate trust powers, having
a
combined capital and surplus of at least fifty million dollars ($50,000,000),
subject to supervision or examination by Federal or State authority and having
an office within the United States. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of such
supervising or examining authority, then, for the purposes of this Section
4.1, 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.
(b) If
at any
time the Guarantee Trustee shall cease to be eligible to so act under Section
4.1(a), the Guarantee Trustee shall immediately resign in the manner and
with the effect set out in Section 4.2(c).
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(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 in the manner and with the effect
set out in Section 4.2(c).
SECTION
4.2 Appointment,
Removal and Resignation of the Guarantee Trustee.
(a) Subject
to Section 4.2(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 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 hereunder 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 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 4.2 within thirty (30) days after delivery to
the Guarantor of an instrument of resignation, the resigning Guarantee Trustee
may petition, at the expense of the Guarantor, 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.
ARTICLE
V
Guarantee
SECTION
5.1 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
or on
behalf of the Issuer), as and when due, regardless of any defense (except for
the defense of payment by the Issuer), right of set-off or counterclaim which
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
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amounts
to the Holders. The Guarantor shall give prompt written notice to the
Guarantee Trustee in the event it makes any direct payment to the Holders
hereunder.
(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 Beneficiaries who have received notice hereof.
SECTION
5.2 Waiver
of Notice and Demand.
The
Guarantor hereby waives notice of acceptance of the Guarantee Agreement and
of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Guarantee Trustee, 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
5.3 Obligations
Not Affected.
The
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement 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 Preferred 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 (other than an extension of time for payment of Distributions
that
results from the extension of any interest payment period on the Notes as
provided in the Indenture), Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of,
or in
connection with, the Preferred Securities;
(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 Preferred 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 Preferred
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
5.3 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 the consent
of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION
5.4 Rights
of Holders.
The
Guarantor expressly acknowledges that: (a) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(b) the Guarantee Trustee has the right to enforce this Guarantee Agreement
on
behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount
of
the Preferred 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 Agreement or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and (d) any Holder
may institute a legal proceeding directly against the Guarantor to enforce
its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Issuer or any other
Person.
SECTION
5.5 Guarantee
of Payment.
This
Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer) or upon distribution of Notes to Holders as
provided in the Trust Agreement.
SECTION
5.6 Subrogation.
The
Guarantor shall be subrogated to all (if any) rights of the Holders against
the
Issuer in respect of any amounts paid to the Holders by the Guarantor under
this
Guarantee Agreement and shall have the right to waive payment by the Issuer
pursuant to Section 5.1; provided, that, the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled
to
enforce or exercise any rights 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 Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee Agreement. 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.
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SECTION
5.7 Independent
Obligations.
The
Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Preferred 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 Agreement notwithstanding
the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.3.
SECTION
5.8 Enforcement.
A
Beneficiary may enforce the Obligations of the Guarantor contained in Section
5.1(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 before proceeding against the Guarantor.
ARTICLE
VI
Covenants
and Subordination
SECTION
6.1 Dividends,
Distributions and Payments.
So
long
as any Preferred Securities remain outstanding, if there shall have occurred
and
be continuing an Event of Default or the Guarantor shall have entered into
an
Extension Period as provided for in the Indenture and such period, or any
extension thereof, shall have commenced and be continuing, then the Guarantor
may not (a) 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 Equity Interests (as defined in the Indenture), (b) vote in favor of
or permit or otherwise allow any of its Subsidiaries (as defined in the
Indenture) to declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to or otherwise
retire, any of such Subsidiary’s Equity Interests entitling the holders thereof
to a stated rate of return other than dividends or distributions on Equity
Interests payable to the Guarantor or any Subsidiary thereof (for the avoidance
of doubt, whether such Equity Interests are perpetual or otherwise), or (c)
make
any payment of principal of or any interest or premium on or repay, repurchase
or redeem any debt securities of the Guarantor that rank pari passu in
all respects with or junior in interest to the junior subordinated notes issued
by the Guarantor pursuant to the Indenture (other than (i) repurchases,
redemptions or other acquisitions of Equity Interests of the Guarantor in
connection with (1) any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, (2) a dividend reinvestment or stockholder stock
purchase or similar plan with respect to any Equity Interests or (3) the
issuance of Equity Interests of the Guarantor (or securities convertible into
or
exercisable for such Equity Interests) as consideration in an acquisition
transaction entered into prior to the occurrence of such Event of Default or
the
applicable Extension Period, (ii) as a result of an exchange or conversion
of
any class or series of the Guarantor’s Equity Interests (or any Equity Interests
of a Subsidiary of the Guarantor) for any class or series of the Guarantor’s
Equity Interests or any class or series of the
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SECTION
6.2 Subordination.
The
obligations of the Guarantor under this Guarantee Agreement will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior
in
right of payment to all Senior Debt of the Guarantor.
SECTION
6.3 Pari
Passu Guarantees.
(a) The
obligations of the Guarantor under this Guarantee Agreement shall rank pari
passu with the obligations of the Guarantor under any similar guarantee
agreements issued by the Guarantor with respect to preferred securities (if
any)
similar to the Preferred Securities, issued by trusts other than the Issuer
established or to be established by the Guarantor (if any), in each case similar
to the Issuer, including, without limitation, the guarantee agreements issued
by
the Guarantor with respect to the preferred securities issued by Harleysville
Statutory Trust I, HNC Statutory Trust II, and HNC Statutory Trust
III.
(b) 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 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 Debt of the Guarantor, under any indenture or
agreement that the Guarantor may enter into in the future or
otherwise.
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ARTICLE
VII
Termination
SECTION
7.1 Termination.
This
Guarantee Agreement shall terminate and be of no further force and effect upon
(a) full payment of the Redemption Price of all Preferred Securities, (b) the
distribution of Notes to the Holders in exchange for all of the Preferred
Securities or (c) full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Issuer. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to Preferred Securities or this Guarantee
Agreement. The obligations of the Guarantor under Sections 3.3
and 3.4 shall survive any such termination or the resignation and removal
of the Guarantee Trustee.
ARTICLE
VIII
Miscellaneous
SECTION
8.1 Successors
and Assigns.
All
guarantees and agreements contained in this Guarantee Agreement shall bind
the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or
sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing
to
perform the Guarantor’s obligations hereunder, the Guarantor shall not assign
its rights or delegate its obligations hereunder without the prior approval
of
the Holders of a Majority in Liquidation Amount of the Preferred
Securities.
SECTION
8.2 Amendments.
Except
with respect to any changes that do not adversely affect the rights of the
Holders in any material respect (in which case no consent of the Holders will
be
required), this Guarantee Agreement may only be amended with the prior approval
of the Guarantor, the Guarantee Trustee and the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings or consents
of the Holders shall apply to the giving of such approval.
SECTION
8.3 Notices.
Any
notice, request or other communication required or permitted to be given
hereunder shall be in writing, duly signed by the party giving such notice,
and
delivered, telecopied or mailed by first class mail as follows:
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(a) if
given
to the Guarantor, at the address or facsimile number set forth below or such
other address, facsimile number or to the attention of such other Person as
the
Guarantor may give by notice to the Guarantee Trustee and the
Holders:
Harleysville
National Corporation
▇▇▇
▇▇▇▇
▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Vice President and Treasurer
(b) if
given
to the Issuer, at the Issuer’s address or facsimile number set forth below or
such other address, facsimile number or to the attention of such other Person
as
the Issuer may give by notice to the Guarantee Trustee and the
Holders:
HNC
Statutory Trust IV
c/o
Harleysville National Corporation
▇▇▇
▇▇▇▇
▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Administrative Trustee
(c) if
given
to the Guarantee Trustee, at the address or facsimile number set forth below
or
such other address, facsimile number or to the attention of such other Person
as
the Guarantee Trustee may give by notice to the Guarantor and the
Holders:
Wilmington
Trust Company
▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Corporate Capital Markets
(d) if
given
to any Holder, at the address set forth on the books and records of the
Issuer.
All
notices hereunder 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.
SECTION
8.4 Benefit.
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This
Guarantee Agreement is solely for the benefit of the Holders and is not
separately transferable from the Preferred Securities.
SECTION
8.5 Governing
Law.
This
Guarantee Agreement and the rights and obligations of each party hereto shall
be
construed and enforced in accordance with and governed by the laws of the State
of New York without reference to its conflict of laws provisions (other than
Section 5-1401 of the General Obligations Law).
SECTION
8.6 Submission
to Jurisdiction.
ANY
LEGAL
ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR
ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE
COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS
GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT
OF OR
IN CONNECTION WITH THIS GUARANTEE AGREEMENT.
SECTION
8.7 Counterparts;
Facsimile.
This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument. Delivery of an
executed signature page of this Guarantee Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart
hereof.
[THE
NEXT
PAGE IS THE SIGNATURE PAGE]
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In
Witness Whereof, the undersigned have executed this Guarantee Agreement as
of
the date first above written.
HARLEYSVILLE
NATIONAL CORPORATION
By: /s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇
▇.
▇▇▇▇▇▇▇▇
Title: Chief
Executive Officer and
President
WILMINGTON
TRUST COMPANY, not
in
its
individual capacity, but solely as Guarantee Trustee
By: /s/
▇. ▇. ▇▇▇▇▇▇, ▇▇
Name: W.
▇▇▇▇▇▇ ▇▇▇▇▇▇,
II
Title: Assistant
Vice President
[SIGNATURE
PAGE – GUARANTEE AGREEMENT]