GUARANTEE AGREEMENT
National Penn Bancshares, Inc.
Dated as of February 20, 2004
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation........................................................1
ARTICLE II
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1. Powers and Duties of the Guarantee Trustee............................................4
SECTION 2.2. Certain Rights of the Guarantee Trustee...............................................5
SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.................................7
SECTION 2.4. Events of Default; Waiver.............................................................7
SECTION 2.5. Events of Default; Notice.............................................................8
ARTICLE III
THE GUARANTEE TRUSTEE
SECTION 3.1. The Guarantee Trustee; Eligibility....................................................8
SECTION 3.2. Appointment, Removal and Resignation of the Guarantee Trustee.........................9
ARTICLE IV
GUARANTEE
SECTION 4.1. Guarantee.............................................................................9
SECTION 4.2. Waiver of Notice and Demand..........................................................10
SECTION 4.3. Obligations Not Affected.............................................................10
SECTION 4.4. Rights of Holders....................................................................11
SECTION 4.5. Guarantee of Payment.................................................................11
SECTION 4.6. Subrogation..........................................................................11
SECTION 4.7. Independent Obligations..............................................................12
SECTION 4.8. Enforcement..........................................................................12
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ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1. Limitation of Transactions...........................................................12
SECTION 5.2. Ranking..............................................................................13
ARTICLE VI
TERMINATION
SECTION 6.1. Termination..........................................................................13
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. Exculpation..........................................................................14
SECTION 7.2. Indemnification......................................................................14
SECTION 7.3. Compensation; Reimbursement of Expenses..............................................15
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns...............................................................16
SECTION 8.2. Amendments...........................................................................16
SECTION 8.3. Notices..............................................................................16
SECTION 8.4. Benefit..............................................................................17
SECTION 8.5. Governing Law........................................................................17
SECTION 8.6. Counterparts.........................................................................17
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GUARANTEE AGREEMENT
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This GUARANTEE AGREEMENT (the "Guarantee"), dated as of February 20, 2004,
is executed and delivered by National Penn Bancshares, Inc., incorporated in
Pennsylvania (the "Guarantor"), and JPMorgan Chase Bank, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of NPB Capital Trust
III, a Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of February 20, 2004, among the trustees named therein
of the Issuer, National Penn Bancshares, Inc., as sponsor, and the Holders from
time to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof securities, having an aggregate liquidation
amount of up to $20,000,000, designated the TP Securities (the "Capital
Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay to the Holders of Capital Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee, unless
otherwise specified;
(e) terms defined in the Declaration as of the date of execution
of this Guarantee have the same meanings when used in this
Guarantee, unless otherwise defined in this Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Beneficiaries" means any Person to whom the Issuer is or hereafter becomes
indebted or liable.
"Corporate Trust Office" means the office of the Guarantee Trustee at which
the corporate trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Guarantee is located at 919 Market Street, Suite 700, Wilmington, DE 19801.
"Covered Person" means any Holder of Capital Securities.
"Debentures" means the junior subordinated debentures of National Penn
Bancshares, Inc., designated the Junior Subordinated Debt Securities due 2034,
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
"Event of Default" has the meaning set forth in Section 2.4.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to the
extent the Issuer has funds available in the Property Account (as defined in the
Declaration) therefor at such time, (ii) the Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property Account
therefor at such time, with respect to any Capital Securities called for
redemption by the Issuer, (iii) the Special Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property Account
therefor at such time, with respect to Capital Securities called for redemption
upon the occurrence of a Special Event (as defined in the Indenture), and (iv)
upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer has funds available in the Property
Account 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 as required by
applicable law (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means JPMorgan Chase Bank, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee and thereafter means each such Successor Guarantee
Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Capital Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.
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"Indenture" means the Indenture, dated as of February 20, 2004, between the
Guarantor and JPMorgan Chase Bank, not in its individual capacity but solely as
trustee, and any indenture supplemental thereto pursuant to which the Debentures
are to be issued to the Institutional Trustee of the Issuer.
"Liquidation Distribution" has the meaning set forth in the definition of
"Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities" means Holder(s)
of outstanding Capital Securities, voting together as a class, but separately
from the holders of Common Securities, of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.
"Obligations" means any costs, expenses or liabilities (but not including
liabilities related to taxes) of the Issuer, other than obligations of the
Issuer to pay to holders of any Trust Securities the amounts due such holders
pursuant to the terms of the Trust Securities.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by one Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee shall include:
(a) a statement that each officer signing the Officer's
Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the
Officer's Certificate;
(c) a statement that each such 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 such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee with direct
responsibility for the administration of any matters relating to this Guarantee,
including any vice president, any assistant vice president, any secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or other officer of the Corporate Trust Office of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
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designated officers 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.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.
"Trust Securities" means the Common Securities and the Capital Securities.
ARTICLE II
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee shall be held by the Guarantee Trustee for
the benefit of the Holders of the Capital Securities, and
the Guarantee Trustee shall not transfer this Guarantee to
any Person except a Holder of Capital Securities exercising
his or her rights pursuant to Section 4.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment
of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is
continuing, the Guarantee Trustee shall enforce this
Guarantee for the benefit of the Holders of the Capital
Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of
Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this
Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived
pursuant to Section 2.4(b)) and is actually known to a
Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested
in it by this Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve
the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all Events of
Default that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined
solely by the express provisions of this
Guarantee, and the Guarantee Trustee
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shall not be liable except for the
performance of such duties and
obligations as are specifically set
forth in this Guarantee, and no implied
covenants or obligations shall be read
into this Guarantee against the
Guarantee Trustee; and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee
Trustee may conclusively rely, as to the
truth of the statements and the
correctness of the opinions expressed
therein, upon any certificates or
opinions furnished to the Guarantee
Trustee and conforming to the
requirements of this Guarantee; but in
the case of any such certificates or
opinions furnished to the Guarantee
Trustee, the Guarantee Trustee shall be
under a duty to examine the same to
determine whether or not on their face
they conform to the requirements of this
Guarantee;
(ii) the Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee,
unless it shall be proved that such Responsible
Officer of the Guarantee Trustee or the Guarantee
Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken
by it in good faith in accordance with the written
direction of the Holders of not less than a
Majority in liquidation amount of the Capital
Securities relating to the time, method and place
of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising
any trust or power conferred upon the Guarantee
Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in
the performance of any of its duties or in the
exercise of any of its rights or powers, if the
Guarantee Trustee shall have reasonable grounds
for believing that the repayment of such funds is
not reasonably assured to it under the terms of
this Guarantee, or security and indemnity,
reasonably satisfactory to the Guarantee Trustee,
against such risk or liability is not reasonably
assured to it.
SECTION 2.2. Certain Rights of the Guarantee Trustee.
---------------------------------------
(a) Subject to the provisions of Section 2.1:
(i) The Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining
from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice,
request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or
other paper or document believed by it to be
genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated
by this Guarantee shall be sufficiently evidenced
by an Officer's Certificate.
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(iii) Whenever, in the administration of this Guarantee,
the Guarantee Trustee shall deem it desirable that
a matter be proved or established before taking,
suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively
rely upon an Officer's Certificate of the
Guarantor which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any
instrument or other writing (or any rerecording,
refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such
counsel with respect to legal matters shall be
full and complete authorization and protection in
respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance
with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The
Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration
of this Guarantee from any court of competent
jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in
it by this Guarantee at the request or direction
of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security
and indemnity, reasonably satisfactory to the
Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents,
nominees or custodians) and liabilities that might
be incurred by it in complying with such request
or direction, including such reasonable advances
as may be requested by the Guarantee Trustee;
provided, however, that nothing contained in this
Section 2.2(a)(vi) shall 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.
(vii) The Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated
in any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may
see fit.
(viii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent
or attorney appointed with due care by it
hereunder.
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(ix) Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders of the
Capital Securities, and the signature of the
Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such
action. No third party shall be required to
inquire as to the authority of the Guarantee
Trustee to so act or as to its compliance with any
of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by
the Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Guarantee
the Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any
remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request
instructions from the Holders of a Majority in
liquidation amount of the Capital 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
conclusively relying on or acting in accordance
with such instructions.
(xi) The Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by
it in good faith and reasonably believed by it to
be authorized or within the discretion or rights
or powers conferred upon it by this Guarantee.
(b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it
shall be illegal or in which the Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law
to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Guarantee Trustee shall be
construed to be a duty.
SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.
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The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.
SECTION 2.4. Events of Default; Waiver.
--------------------------
(a) An Event of Default under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or
other obligations hereunder.
(b) The Holders of a Majority in liquidation amount of the
Capital Securities may, voting or consenting as a class, on
behalf of the Holders of all of the Capital Securities,
waive any past Event of Default and its consequences. Upon
such waiver, any such Event of Default shall cease to exist,
and shall be deemed to have been cured, for every purpose of
this Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair
any right consequent thereon.
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SECTION 2.5. Events of Default; Notice.
--------------------------
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Capital
Securities, notices of all Events of Default actually known
to a Responsible Officer of the Guarantee Trustee, unless
such defaults have been cured before the giving of such
notice, provided, however, that the Guarantee Trustee shall
be protected in withholding such notice if and so long as a
Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the
interests of the Holders of the Capital Securities.
(b) The Guarantee Trustee shall not be charged with knowledge of
any Event of Default unless the Guarantee Trustee shall have
received written notice thereof from the Guarantor or a
Holder of the Capital Securities, or a Responsible Officer
of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.
ARTICLE III
THE GUARANTEE TRUSTEE
SECTION 3.1. The 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 or national association organized
and doing business under the laws of the United
States of America or any state or territory
thereof or of the District of Columbia, or Person
authorized under such laws to exercise corporate
trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or
examination by federal, state, territorial or
District of Columbia authority. If such
corporation or national association publishes
reports of condition at least annually, pursuant
to law or to the requirements of the supervising
or examining authority referred to above, then,
for the purposes of this Section 3.1(a)(ii), the
combined capital and surplus of such corporation
or national association 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 3.1(a), the Guarantee
Trustee shall immediately resign in the manner and with the
effect set forth in Section 3.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest' within the meaning of Section 310(b)
of the Trust Indenture Act, the Guarantee Trustee shall
either eliminate such interest or resign to the extent and
in the manner provided by, and subject to, this Guarantee.
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SECTION 3.2. Appointment, Removal and Resignation of the Guarantee Trustee.
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(a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 3.2(a) until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee
Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed
by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor
Guarantee Trustee has been appointed and has accepted such
appointment by an instrument in writing executed by such
Successor Guarantee Trustee and delivered to the Guarantor
and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 3.2
within 60 days after delivery of an instrument of removal or
resignation, the Guarantee Trustee resigning or being
removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation
of the Guarantee Trustee pursuant to this Section 3.2, the
Guarantor shall pay to the Guarantee Trustee all amounts
owing to the Guarantee Trustee under Sections 7.2 and 7.3
accrued to the date of such termination, removal or
resignation.
ARTICLE IV
GUARANTEE
SECTION 4.1. Guarantee.
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(a) The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as
and when due, regardless of any defense (except as defense
of payment by the Issuer), right of set-off or counterclaim
that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to
the Holders.
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(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 4.2. Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 4.3. Obligations Not Affected.
-------------------------
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express
or implied agreement, covenant, term or condition relating
to the Capital Securities to be performed or observed by the
Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price,
Special Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for the
payment of the Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or other sums
payable that results from the extension of any interest
payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or
other similar proceedings affecting, the Issuer or any of
the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
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(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 4.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 4.4. Rights of Holders.
------------------
(a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee;
provided, however, that (subject to Sections 2.1 and 2.2)
the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee shall
determine that the actions so directed would be unjustly
prejudicial to the Holders not taking part in such direction
or if the Guarantee Trustee being advised by legal counsel
determines that the action or proceeding so directed may not
lawfully be taken or if the Guarantee Trustee in good faith
by its board of directors or trustees, executive committee
or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or
proceeding so directed would involve the Guarantee Trustee
in personal liability.
(b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the
Guarantee Trustee's rights under this Guarantee, without
first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other Person. The Guarantor waives
any right or remedy to require that any such action be
brought first against the Issuer, the Guarantee Trustee or
any other Person before so proceeding directly against the
Guarantor.
SECTION 4.5. Guarantee of Payment.
---------------------
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 4.6. Subrogation.
------------
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by applicable
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in violation of the
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preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 4.7. Independent Obligations.
------------------------
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Capital Securities and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 4.3 hereof.
SECTION 4.8. Enforcement.
-----------
A Beneficiary may enforce the Obligations of the Guarantor contained in
Section 4.1 (b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.
The Guarantor shall be subrogated to all rights (if any) of any Beneficiary
against the Issuer in respect of any amounts paid to the Beneficiaries by the
Guarantor under this Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by applicable provisions of law) be entitled to
enforce or exercise any rights that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, after giving effect to such payment, any amounts are
due and unpaid under this Guarantee.
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1. Limitation of Transactions.
---------------------------
So long as any Capital Securities remain outstanding, if (a) there shall
have occurred and be continuing an Event of Default or (b) the Guarantor shall
have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank pari passu in all respects with or junior
in interest to the Debentures (other than (i) payments under this Guarantee,
(ii) repurchases, redemptions or other acquisitions of shares of capital stock
of the Guarantor (A) in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors, or consultants, (B) in connection with a dividend
reinvestment or stockholder stock purchase plan or (C) in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange,
reclassification, combination or conversion of any class or series of the
Guarantor's capital stock (or any capital stock of a subsidiary of the
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Guarantor) for any class or series of the Guarantor's capital stock or of any
class or series of the Guarantor's indebtedness for any class or series of the
Guarantor's capital stock, (iv) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(v) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (vi)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock).
SECTION 5.2. Ranking.
-------
This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank subordinate and junior in right of payment to all present and future
Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their
acceptance thereof, each Holder of Capital Securities agrees to the foregoing
provisions of this Guarantee and the other terms set forth herein.
The right of the Guarantor to participate in any distribution of assets of
any of its subsidiaries upon any such subsidiary's liquidation or reorganization
or otherwise is subject to the prior claims of creditors of that subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor of
that subsidiary. Accordingly, the Guarantor's obligations under this Guarantee
will be effectively 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 thereunder. This Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Guarantor, including
Senior Indebtedness of the Guarantor, under any indenture or agreement that the
Guarantor may enter into in the future or otherwise.
ARTICLE VI
TERMINATION
SECTION 6.1. Termination.
------------
This Guarantee shall terminate as to the Capital Securities (i) upon full
payment of the Redemption Price or the Special Redemption Price, as the case may
be, of all Capital Securities then outstanding, (ii) upon the distribution of
all of the Debentures to the Holders of all of the Capital Securities or (iii)
upon full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.
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ARTICLE VII
INDEMNIFICATION
SECTION 7.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by
reason of any act or omission of such Indemnified Person in
good faith in accordance with this Guarantee and in a manner
that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such
Indemnified Person by this Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Issuer or the Guarantor
and upon such information, opinions, reports or statements
presented to the Issuer or the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence
and who, if selected by such Indemnified Person, has been
selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to
the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of
Capital Securities might properly be paid.
SECTION 7.2. Indemnification.
----------------
(a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense
incurred without negligence or willful misconduct on the
part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the
trust or trusts hereunder, including but not limited to the
costs and expenses (including reasonable legal fees and
expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in
connection with the exercise or performance of any of the
Indemnified Person's powers or duties hereunder. The
obligation to indemnify as set forth in this Section 7.2
shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee.
(b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action,
such Indemnified Person will, if a claim in respect thereof
is to be made against the Guarantor under this Section 7.2,
notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not
relieve the Guarantor from liability under paragraph (a)
above unless and to the extent that the Guarantor did not
otherwise learn of such action and such failure results in
the forfeiture by the Guarantor of substantial rights and
defenses and (ii) will not, in any event, relieve the
Guarantor from any obligations to any Indemnified Person
other than the indemnification obligation provided in
paragraph (a) above. The Guarantor shall be entitled to
appoint counsel of the Guarantor's choice at the Guarantor's
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expense to represent the Indemnified Person in any action
for which indemnification is sought (in which case the
Guarantor shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the
Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be satisfactory
to the Indemnified Person. Notwithstanding the Guarantor's
election to appoint counsel to represent the Indemnified
Person in any action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel),
and the Guarantor shall bear the reasonable fees, costs and
expenses of such separate counsel (and local counsel), if
(i) the use of counsel chosen by the Guarantor to represent
the Indemnified Person would present such counsel with a
conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both
the Indemnified Person and the Guarantor and the Indemnified
Person shall have reasonably concluded that there may be
legal defenses available to it and/or other Indemnified
Persons which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not
have employed counsel satisfactory to the Indemnified Person
to represent the Indemnified Person within a reasonable time
after notice of the institution of such action or (iv) the
Guarantor shall authorize the Indemnified Person to employ
separate counsel at the expense of the Guarantor. The
Guarantor will not, without the prior written consent of the
Indemnified Persons, settle or compromise or consent to the
entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Persons are actual
or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional
release of each Indemnified Person from all liability
arising out of such claim, action, suit or proceeding.
SECTION 7.3. Compensation; Reimbursement of Expenses.
---------------------------------------
Other than as provided in the Fee Agreement of even date herewith between
Cohen Bros. & Company, the Guarantee Trustee and Delaware Trustee (as defined in
the Declaration), the Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as
the parties shall agree to from time to time (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express
trust); and
(b) except as otherwise expressly provided herein, to reimburse
the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by it
in accordance with any provision of this Guarantee
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or willful misconduct.
The provisions of this Section 7.3 shall survive the resignation or removal
of the Guarantee Trustee and the termination of this Guarantee.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
-----------------------
All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Capital Securities then
outstanding. Except in connection with any merger or consolidation of the
Guarantor with or into another entity or any sale, transfer or lease of the
Guarantor's assets to another entity, in each case to the extent permitted under
the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of
not less than a Majority in liquidation amount of the Capital Securities.
SECTION 8.2. Amendments.
-----------
Except with respect to any changes that do not adversely affect the rights
of Holders of the Capital Securities in any material respect (in which case no
consent of Holders will be required), this Guarantee may be amended only with
the prior approval of the Holders of not less than a Majority in liquidation
amount of the Capital Securities. The provisions of the Declaration with respect
to amendments thereof shall apply equally with respect to amendments of the
Guarantee.
SECTION 8.3. Notices.
-------
All notices provided for in this Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by
first class mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other
address as the Guarantee Trustee may give notice of to the
Holders of the Capital Securities):
JPMorgan Chase Bank
600 Travis Street, 50th Floor
Houston, TX 77002
Attention: Corporate Trust Division
Telecopy: 713-216-5959
Telephone: 713-216-4648
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(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Capital
Securities and to the Guarantee Trustee):
National Penn Bancshares, Inc.
P.O. Box 547
Boyertown, PA 19512
Attention: Gary L. Rhoads
Telecopy: (610) 369-6349
Telephone: (610) 369-6341
(c) If given to any Holder of the Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
-------
This Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 2.1(a), is not separately transferable from
the Capital Securities.
SECTION 8.5. Governing Law.
--------------
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF.
SECTION 8.6. Counterparts.
-------------
This Guarantee may contain more than one counterpart of the signature page
and this Guarantee may be executed by the affixing of the signature of the
Guarantor and the Guarantee Trustee to any of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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THIS GUARANTEE is executed as of the day and year first above written.
National Penn Bancshares, Inc.,
as Guarantor
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
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JPMORGAN CHASE BANK, as Guarantee Trustee
By:
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Name:
--------------------------------------------
Title:
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