Proposal No. 2
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Amendment to the Corporations
Articles of Incorporation to Increase the Authorized Number of Shares of
Common Stock
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The
corporations Articles of Incorporation currently authorizes seventy-five
million (75,000,000) shares of common stock, par value $1.00 per share and eight
million (8,000,000) shares of series preferred stock, par value $1.00 per share.
As of March 10, 2009, there were 42,982,463 shares of common stock issued and
outstanding and no shares of series preferred stock issued and outstanding. Of
the remaining 32,017,537 authorized but unissued shares of common stock,
2,277,385 shares were reserved for issuance upon the exercise of outstanding
stock options under the corporations stock option plans and in connection with
the corporations Dividend Reinvestment and Stock Purchase Plan, as well. In the
future, the corporation may need additional authorized but unissued shares
available for issuance, from time to time, as may be necessary in connection
with future financings, capital enhancement, investment opportunities,
acquisitions of other companies, the declaration of stock dividends, stock
splits or other distributions, or for other corporate purposes.
The Board of
Directors approved and adopted resolutions to amend Article 5 of the
corporations Articles of Incorporation to increase the number of authorized
shares of common stock from 75,000,000 shares to 200,000,000 shares. This
increase in the number of authorized shares of common stock requires that
shareholders adopt the amendment to the corporations Articles of Incorporation.
A true and correct copy of the amended and restated articles of incorporation is
set forth in Annex A to this proxy statement.
The
corporation is currently evaluating certain capital raising alternatives
including participation in the United States Treasury Departments Capital
Purchase Program and/or the Capital Assistance Program. However, the corporation
has no definitive present plans, undertakings, arrangements or agreements for
issuing additional shares of common stock or preferred stock as of the date of
this proxy statement. However, the board of directors believes that it is
advisable to have the ability to issue additional shares of common stock to
enable corporation, as the need may arise, to take prompt advantage of market
conditions and favorable opportunities in connection with capital raising
options and/or participation in the United States Treasury Departments programs
without the delay and expense of holding a special meeting of shareholders. The
future issuance of shares of stock may dilute the present equity ownership
position of current holders. However, since the corporation has not developed
plans as of this time the corporation cannot determine the impact of any future
issuances as of this date. The proposed amendment is not intended to have an
anti-takeover effect. The issuance, however, of any of the shares may
potentially have an anti-takeover effect by making it more difficult to obtain
shareholder approval of actions, such as certain business combinations or
removal of management.
Unissued
shares of common stock and series preferred stock are available for issuance at
the discretion of the board of directors, from time to time, for any proper
corporate purpose, generally without further action of the shareholders, upon
the affirmative vote of a majority of the members of the board of directors.
However, if the proposed amendment is adopted by the shareholders, the board of
directors is not likely to solicit shareholder approval to issue the additional
authorized shares, except to the extent that approval may be required by law,
regulation or any agreement governing the trading of the corporations
stock.
To provide
sufficient shares for the future needs, the board of directors believes that it
is in the best interest of the corporation for the shareholders to approve and
adopt the amendment to Article 5 of the Articles of Incorporation. The board of
directors believes that the increase in the number of authorized shares of
common stock is necessary to provide the corporation with as much flexibility as
possible to issue additional shares for proper purposes, including financing,
capital enhancement, participation in United States Treasury Department
programs, acquisitions, stock splits, stock dividends, employee incentive plans,
and other similar purposes.
As a result,
the board of directors proposes that the corporations Articles of Incorporation
be amended and restated to revise Article 5(a) of the Articles of Incorporation
to read as follows:
5. (a) The
aggregate number of shares that the corporation shall have authority to issue is
two hundred million (200,000,000) shares of Common Stock of the par value of one
dollar ($1.00) per share (the Common Stock), and eight million (8,000,000)
shares of shares of series preferred stock of the par value of one dollar
($1.00) per share (the Preferred Stock).
38
The
affirmative vote of a majority of the votes cast by all of the corporations
shareholders entitled to vote thereon is required to approve and adopt this
amendment.
The
corporations board of directors recommends a vote FOR the proposal to amend the
corporations Articles of Incorporation.
REPORT OF THE AUDIT
COMMITTEE
The Audit
Committee (Committee) oversees the corporations financial reporting process
on behalf of the Board of Directors. In that connection, the Committee, along
with the Board of Directors, has formally adopted an audit committee charter
setting forth its responsibilities. In addition, appropriate policies have been
established to further strengthen disclosure procedures required under
Sarbanes-Oxley Act of 2002.
Management
has the primary responsibility for the financial statements and the reporting
process including the systems of internal control. In fulfilling its oversight
responsibilities, the Committee reviewed the audited financial statements in the
Annual Report with management including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial
statements.
The
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the corporations accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the committee has received
the written disclosures and letter from the independent accountant required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with the audit committee
concerning independence, and the Committee has discussed with the independent
auditors the auditors independence from management and the corporation
including the matters in the written disclosures required by the Independence
Standards Board and considered the compatibility of non-audit services with the
auditors independence.
The
Committee discussed with the corporations internal and independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of the
corporations internal controls and the overall quality of the corporations
financial reporting. During fiscal year 2008, the Committee held 10 meetings
which included 4 conference calls to review earnings prior to their public
release.
In reliance
on the reviews and discussions referred to above, the Committee recommended to
the Board of Directors (and the Board has approved) that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
December 31, 2008 for filing with the Securities and Exchange
Commission.
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AUDIT
COMMITTEE
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James A.
Wimmer, Chairman
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LeeAnn B.
Bergey
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Michael L.
Browne
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Thomas C.
Leamer
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Independent Registered Public
Accounting Firm
Grant
Thornton LLP, Certified Public Accountants, a registered public accounting firm,
of Philadelphia, Pennsylvania, served as Harleysville National Corporations
independent Registered Public Accounting Firm for the 2008 fiscal year. Grant
Thornton LLP assisted the corporation and its subsidiaries with:
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preparation of federal and state tax returns,
and
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assistance in connection with regulatory
matters,
charging the banking subsidiaries for such
service at its customary hourly billing rates. Aggregate fees billed to
Harleysville National Corporation and subsidiaries by the independent
accountants for services rendered during the fiscal year ending December 31,
2008, were as follows:
Types of
Fees
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2008
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2007
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Audit Fees: (1)
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$
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766,412
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$
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452,841
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Audit Related Fees: (2)
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$
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55,624
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$
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51,488
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Tax Fees: (3)
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$
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173,805
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$
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184,640
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All Other Fees: (4)
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-0-
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-0-
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TOTAL
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$
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995,841
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$
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688,969
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____________________
(1)
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Audit fees consisted
of audit work performed in the preparation of financial statements,
Sarbanes-Oxley Sec. 404 certification work, as well as work generally only
the independent registered public accounting firm can reasonably be
expected to provide, such as statutory audit and registration
statements.
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(2)
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Audit related fees
consisted principally of audits of employee benefit plans.
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(3)
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Tax fees consisted
principally of assistance with matters related to tax compliance and
reporting.
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(4)
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No other fees in
2008.
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The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent certified public accountants. These services may include audit
services, audit related services, tax services, and other services. The Audit
Committee has adopted a policy for the pre-approval of services provided by the
independent certified public accountants. Under the policy, pre-approval is
generally provided for up to one year and any pre-approval is detailed as to the
particular service or category of particular services on a case-by-case basis.
The Audit Committee approved all services provided by Grant Thornton during 2008
and 2007.
Proposal No.
3
- Ratification of Selection of
Independent Auditors
The Audit
Committee has approved and appointed Grant Thornton LLP, Certified Public
Accountants, a registered public accounting firm, as the corporations auditors
for the fiscal year ended December 31, 2009, subject to shareholder
ratification. The Board of Directors of Harleysville National Corporation has
ratified this appointment. Grant Thornton has advised the corporation that none
of its members has any financial interests in Harleysville National Corporation.
Representatives of Grant Thornton will be present at the annual meeting.
They will be given the opportunity to make a statement, if they desire to do so,
and will be available to respond to appropriate questions after the meeting.
The Board of Directors recommends
that the shareholders vote
FOR
ratification of the selection of Grant Thornton LLP as the
corporations auditors for the fiscal year ended, December 31, 2009.
40
SHAREHOLDER PROPOSALS
Proposal No.
4
Gerald R.
Armstrong, a shareholder of Harleysville who owns 799 shares of Common Stock,
has notified Harleysville of his intention to propose a resolution at the Annual
Meeting of Shareholders. Mr. Armstrongs address is 910 Sixteenth Street, No.
412, Denver, Colorado 80202-2917. The resolution and statement provided by Mr.
Armstrong are set forth below.
RESOLUTION
That the shareholders of HARLEYSVILLE
NATIONAL CORPORATION request its Board of Directors to take the steps necessary
to eliminate classification of terms of the Board of Directors to require that
all Directors stand for election annually. The Board declassification shall be
completed in a manner that does not affect the unexpired terms of the
previously-elected Directors.
STATEMENT
The proponent believes the election of
directors is the strongest way that shareholders influence the directors of any
corporation. Currently, our board of directors is divided into four classes with
each class serving four-year terms. Because of this structure, shareholders may
only vote for one-fourth of the directors each year. This is not in the best
interest of shareholders because it reduces accountability.
Xcel Energy Inc., Devon Energy
Corporation, ConocoPhillips, ONEOK, Inc., CenterPoint Energy, Inc., Hess
Corporation have adopted this practice and it has been approved by shareholders
at CH Energy Group, Inc., Central Vermont Public Service Corporation, Black
Hills Corporation, Spectra Energy Corp., and several others, upon presentation
of a similar resolution by the proponent during 2008. The proponent is a
professional investor who has studied this issue carefully.
The performance of our management and
our Board of Directors is now being more strongly tested due to economic
conditions and the accountability for performance must be given to the
shareholders whose capital has been entrusted in the form of share
investments.
A study by researchers at Harvard
Business School and the University of Pennsylvania's Wharton School titled
"Corporate Governance and Equity Prices" (Quarterly Journal of Economics,
February, 2003), looked at the relationship between corporate governance
practices (including classified boards) and firm performance. The study found a
significant positive link between governance practices favoring shareholders
(such as annual director's election) and firm value.
While management may argue that
directors need and deserve continuity, management should become aware that
continuity and tenure may be best assured when their performance as directors is
exemplary and is deemed beneficial to the best interests of the corporation and
its shareholders.
The proponent regards as unfounded the
concern expressed by some that annual election of all directors could leave
companies without experienced directors in the event that all incumbents are
voted out by shareholders. In the unlikely event that shareholders do vote to
replace all directors, such a decision would express dissatisfaction with the
incumbent directors and reflect the need for change.
If you agree that shareholders may
benefit from greater accountability afforded by annual election of
all
directors, please vote "FOR" this proposal.
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HARLEYSVILLE NATIONAL CORPORATION
RESPONSE TO THE GERALD R. ARMSTRONG
SHAREHOLDER PROPOSAL
The Board recommends a vote AGAINST
this proposal.
The Board has carefully
considered the proposal and the arguments in favor and against a classified
board. Our review included consideration of the present state of financial
services industry, the history of the classified board system, and current
regional and national corporate governance best practices relating to classified
boards. After our review, we concluded that the present classified board system
remains in the best interests of the corporation and its shareholders.
Since 1982, Harleysville National
Corporations Board has been divided into four classes with members of each
class serving four-year terms. The classified board system was designed to and
continues to balance: (1) the need for shareholders to express their opinion on
a directors performance and (2) the need for Harleysville National
Corporations directors to focus on long-term business performance and long-term
strategy. Harleysville National Corporations long-term success and long-term
strategy is achieved by having stability, continuity, accountability and
independence of its Board.
Stability and Continuity.
We believe that a classified board system
enhances the stability and continuity of the Board. Our Board puts great
emphasis on strategic long-term planning. By electing approximately one-fourth
of the directors each year, it ensures that approximately three-fourths of the
directors remaining have the requisite experience and knowledge of the companys
ongoing business and affairs to implement and focus on strategic long-term
planning, goals, and performance. Also, as a result of the acquisition of Willow
Financial Corporation, the Board has two new directors who served as directors
of Willow Financial Corporation and who will make a valuable contribution
towards the execution of our combined business strategy. Consequently, a sudden
change in the board structure could jeopardize our long-term plans as well as
the execution of our combined business strategy.
Accountability.
While our directors hold four-year terms on a classified
board, they have the same fiduciary and legal duties to the shareholders of
Harleysville National Corporation as directors elected on a yearly basis. It is
the manner in which directors conduct themselves on the board that drives
corporate governance and not the frequency to which they are elected.
Furthermore, the Boards effectiveness depends in large part on how well its
members work together to identify and address issues important to its
shareholders and Harleysville National Corporations future. Finally, as engaged
community members and business leaders, directors are available to be contacted
by any shareholder to discuss issues throughout the year.
Independence.
We believe that a classified board enhances director
independence. By electing approximately one-fourth of the Board each year, our
directors are insulated from pressure by management and special interest groups
that may have interests which are contrary to the best interests of all
shareholders.
Value Protection.
A classified board also protects your company against
unfriendly or unfavorable takeover proposals. If persons or entities of
questionable intent or hostile to the long-term shareholder interests took a
position in the company which permitted them to determine the outcome of an
election of directors in a yearly election regime, they could abruptly change
the composition of the Board in a single year and thereby diminish shareholder
value protections. However, a classified board would slow any change in board
composition over the span of a couple of years. This would encourage any
influences of questionable intent to negotiate with the Board and permit the
Board to consider various alternatives, if available, and maximize shareholder
value.
Vote Required and Board
Recommendation.
Assuming a quorum is present: the
affirmative vote of a majority of the votes cast on the proposal at the annual
meeting, whether in person or by proxy, is required for the approval of the
proposal presented above. However, because this proposal is only a request,
approval of the proposal will not automatically repeal the classified board.
Eliminating the classified board would require further action by the Board.
The Board recommends a vote AGAINST
this proposal. Proxies solicited by the Board will be voted AGAINST this
proposal unless otherwise instructed on the proxy card.
42
Proposal No.
5
CalPERS, whose official address is P.O.
Box 942708, Sacramento, California 94229-2708, is the owner of approximately
53,000 shares of Harleysville Common Stock. The resolution and statement
provided by CalPERS are set forth below.
RESOLUTION
RESOLVED, that the shareowners of
Harleysville National Corporation (Company) hereby request that the Board of
Directors initiate the appropriate process to amend the Companys articles of
incorporation and/or bylaws to provide that director nominees shall be elected
by the affirmative vote of the majority of votes cast at an annual meeting of
shareholders, with a plurality vote standard retained for contested director
elections, that is, when the number of director nominees exceeds the number of
board seats.
STATEMENT
Is accountability by the Board of
Directors important to you? As a long-term shareowner of the Company, CalPERS
thinks accountability is of paramount importance. This is why we are sponsoring
this proposal which would remove a plurality vote standard for uncontested
elections that effectively disenfranchises shareowners and eliminates a
meaningful shareowner role in uncontested director elections.
Under the Companys current voting
system, a director nominee may be elected with as little as his or her own
affirmative vote because withheld votes have no legal effect. This scheme
deprives shareowners of a powerful tool to hold directors accountable, because
it makes it impossible to defeat director nominees who run unopposed.
Conversely, a majority voting standard allows shareowners to actually vote
against candidates and to defeat
reelection of a management nominee unsatisfactory to the majority of shareowner
votes cast.
For these reasons, a substantial number
of companies already have adopted this form of majority voting. In fact, more
than 66% of the companies in the S&P 500 have adopted majority voting for
uncontested director elections. We believe the Company should join the growing
number of companies that have adopted a majority voting standard requiring
incumbent directors who do not receive a favorable majority vote to submit a
letter of resignation and not continue to serve unless the Board declines the
resignation and publicly discloses its reasons for doing so.
Majority voting in director elections
empowers shareowners to clearly say no to unopposed directors who are viewed
as unsatisfactory by a majority of votes cast. Incumbent board members serving
in a majority vote system are aware the shareowners have the ability to
determine whether the director remains in office. The power of majority voting,
therefore, is not just the power to effectively remove poor directors, but to
heighten director accountability by raising the threat of a loss of majority
support. That is what accountability is all about.
CalPERS believes that corporate
governance procedures and practices, and the level of accountability they
impose, are closely related to financial performance. It is intuitive that, when
directors are accountable for their actions, they perform better. We, therefore,
ask you to join us in requesting that the Board of Directors promptly adopt the
majority voting standard. We believe the Companys shareowners will
substantially benefit from the increased accountability of incumbent directors
and the power to reject directors shareowners believe are not acting in their
best interests.
Please vote FOR this
proposal.
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HARLEYSVILLE NATIONAL CORPORATION
RESPONSE TO THE CalPERS SHAREHOLDER PROPOSAL
The Board recommends a vote AGAINST
this proposal.
The Board has carefully
considered the proposal and the arguments in favor and against instituting a
majority voting standard for the election of our directors. Our analysis
included a thorough review of the research and trends associated with majority
voting, the history of majority voting, consideration of the present state of
the financial services industry, appropriate state and national laws, and
current regional and national corporate governance best practices concerning
majority voting.
Until recently, virtually all directors of
the largest U.S. public companies were elected under a plurality vote
standard. Furthermore, plurality voting remains the default voting standard for
corporations under Pennsylvania law. Under a plurality standard, the nominees
with the largest number of votes are elected as directors, up to the maximum
number of directors to be chosen at the election, without regard to votes cast
as withheld or against. While the trend among the largest U.S. public
companies appears to be moving in support of majority voting, there is little
research, data or guidance available to determine the impact of majority voting
on long-term shareholder value for institutions, such as Harleysville National
Corporation, that are significantly smaller than the largest U.S. public
companies. Thus, it is premature to conclude that majority voting will have a
positive impact on the short-term or long-term performance of Harleysville
National Corporation. However, we will continue to monitor developments in
corporate governance practices, including majority voting, with a focus towards
building shareholder value.
Commitment.
We believe maintaining a plurality voting standard is prudent given the
current economic environment and firmly believe that this position does not
imply a lower standard of corporate governance. In fact, we have recently
established our Corporate Governance Guidelines which address director
performance, qualifications, and competencies and provide for an annual Board
self-evaluation. These guidelines demonstrate our belief that sound corporate
governance is a strategic process. We believe that our corporate governance
practices protect the interests of all investors even individual investors who
stand at a relative disadvantage to larger institutional shareholders in the
voting process. Harleysville National Corporation and its Board are vigilant and
proactive in seeking to balance short-term initiatives with long-term growth and
value, navigating procedural and compliance requirements, and critically
evaluating all shareholder concerns to determine what will further the best
interests of Harleysville National Corporation and its shareholders. We believe
that these guidelines will serve to impact the long-term performance of
Harleysville National Corporation. We invite you to review these Corporate
Governance Guidelines on our website.
Accountability.
Accountability of directors and the Board is of paramount
importance to Harleysville National Corporation. It is because of this reason
that we established our Corporate Governance Guidelines focusing on the
performance of directors individually and the Board as a whole. We believe these
guidelines will be a more effective method of ensuring director and Board
accountability because, in a majority vote system, a campaign to withhold votes
for the election of a director could be based on factors other than performance.
Accordingly, we believe the plurality vote system, as specified by state
statute, remains in the best interests of Harleysville National Corporation and
its shareholders.
Vote Required and Board Recommendation.
Assuming a quorum is present: the
affirmative vote of a majority of the votes cast on the proposal at the annual
meeting, whether in person or by proxy, is required for the approval of the
proposal presented above. However, because this proposal is only a request,
approval of the proposal will not automatically repeal the plurality vote
standard. Eliminating the plurality vote standard would require further action
by the Board.
The Board recommends a vote AGAINST
this proposal. Proxies solicited by the Board will be voted AGAINST this
proposal unless otherwise instructed on the proxy card.
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Electronic Distribution
You
may choose to receive future distributions of Harleysvilles material (quarterly
reports, proxy statements, annual reports, etc.) via e-mail. Please follow your
broker instructions to receive Harleysvilles material electronically or you may
go to
www.hncbank.com
and subscribe to our E-Mail Alert service. After
appropriately completing and submitting the form, you will be notified each time
new information is released and becomes available on this website. You will be
able to view the documents by clicking on Documents and following
instructions, as prompted. If you need help with this, please call us at (215)
256-8851 and ask for Shareholder Services.
Annual Report
A copy of
the corporations annual report for the fiscal year ended December 31, 2008,
accompanies this proxy statement. We furnish the annual report for your
information only. We have not incorporated the annual report, or any part of the
annual report, in this proxy statement.
Householding
We have
adopted a procedure approved by the SEC called householding. Under this
procedure, multiple shareholders who share the same last name and address and do
not participate in electronic delivery will receive only one copy of the proxy
materials, unless they notify us that they wish to continue receiving multiple
copies. We have undertaken householding to reduce our printing costs and postage
fees.
If
you wish to continue to receive multiple copies of the proxy materials at the
same address, additional copies will be provided promptly to you upon request.
You may request multiple copies by notifying us in writing or by telephone at:
Harleysville National
Corporation
ATTN: Shareholder
Services
483 Main
Street
P. O. Box
195
Harleysville, PA
19438-0195
Telephone (215) 256-8851 or toll-free @ (800) 423-3955
You may opt-out of householding at
any time prior to thirty days before the mailing of proxy materials in March of
each year by notifying us at the address above.
If you
share an address with another shareholder and currently are receiving multiple
copies of the proxy
materials, you may request householding by notifying us at the
above-referenced address or telephone number.
Discretionary Voting Authority
In connection with Harleysvilles
2009 annual meeting and pursuant to SEC Rule 14a-4 under the Securities Exchange
Act of 1934, if the shareholders notice is not received by Harleysville on or
before February 6, 2009, the corporation (through management proxy holders) may
exercise discretionary voting authority when the proposal is raised at the
annual meeting without any reference to the matter in the proxy statement.
Additional Information
Any
shareholder may obtain a copy of Harleysville National Corporations Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, including the
financial statements and the schedules thereto, required to be filed with the
Securities and Exchange Commission, without charge, by submitting a written
request to Liz Chemnitz, Senior Vice President and Assistant Secretary of the
corporation, Harleysville National Corporation, 483 Main Street, P.O. Box 195,
Harleysville, Pennsylvania 19438-0195, telephone (800) 423-3955. You may also
view these documents on our website at
www.hncbank.com
under the heading,
Financial Information & Filings.
45
Other Matters
The Board of
Directors does not know of any matters to be presented for consideration other
than the matters described in the accompanying Notice of Annual Meeting of
Shareholders, but, if any matters are properly presented, persons named in the
accompanying proxy intend to vote on such matters in accordance with their best
judgment.
By Order of the
Board of Directors,
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Walter E. Daller, Jr.
Chairman of the Board
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Date: March 24, 2009
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ANNEX A
Harleysville National Corporation
Amended and Restated Articles of Incorporation
1.
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The name of the corporation is:
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Harleysville
National Corporation
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2.
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The location
and post office address of the registered office of the corporation in
this Commonwealth is:
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483 Main Street
Harleysville, Pennsylvania 19438
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3.
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The
corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or
purposes:
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To have
unlimited power to engage in and do any lawful act concerning any or all
lawful business for which corporations may be incorporate under the
provisions of the Business Corporation Law of the Commonwealth of
Pennsylvania. The corporation is incorporated under the provisions of the
Business Corporation Law of the Commonwealth of Pennsylvania (Act of May
5, 1933, P. L. 364) (15 P.S. Section 1204, as amended).
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4.
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The term for
which the corporation is to exist is: Perpetual
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5.
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(a)
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The aggregate
number of shares that the corporation shall have authority to issue is two
hundred million (200,000,000) shares of Common Stock of the par value of
one dollar ($1.00) per share (the "Common Stock"), and eight million
(8,000,000) shares of shares of series preferred stock of the par value of
one dollar ($1.00) per share (the "Preferred Stock").
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(b)
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The Preferred
Stock may be issued from time to time by the Board of Directors as herein
provided in one or more series. The designations, relative rights,
preferences and limitations of the Preferred Stock, and particularly of
the shares of each series thereof, may, to the extent permitted by law, be
similar to or may differ from those of any other series. The Board of
Directors of the Corporation is hereby expressly granted authority,
subject to the provisions of this Article 5, to issue from time to time
Preferred Stock in one or more series and to fix from time to time before
issuance thereof, by filing a certificate pursuant to the Business
Corporation Law, the number of shares in each such series of such class
and all designations, relative rights (including the right, to the extent
permitted by law, to convert into shares of any class or into shares of
any series of any class), preferences and limitations of the shares in
each such series, including, but without limiting the generality of the
foregoing, the following:
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(i)
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The number of shares to
constitute such series (which number may at any time, or from time to
time, be increased or decreased by the Board of Directors, notwithstanding
that shares of the series may be outstanding at the time of such increase
or decrease, unless the Board of Directors shall have otherwise provided
in creating such series) and the distinctive designation
thereof;
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(ii)
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The dividend
rate on the shares of such series, whether or not dividends on the shares
of such series shall be cumulative, and the date or dates, if any, from
which dividends thereon shall be cumulative;
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(iii)
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Whether or not the
shares of such series shall be redeemable, and, if redeemable, the date or
dates upon or after which they shall be redeemable and the amount or
amounts per share (which shall be, in the case of each share, not less
than its preference upon involuntary liquidation, plus an amount equal to
all dividends thereon accrued and unpaid, whether or not earned or
declared) payable thereon in the case of the redemption thereof, which
amount may vary at different redemption dates or otherwise as permitted by
law;
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(iv)
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The right,
if any, of holders of shares of such series to convert the same into, or
exchange the same for, Common Stock or other stock as permitted by law,
and the terms and conditions of such conversion or exchange, as well as
provisions for adjustment of the conversion rate in such events as the
Board of Directors shall determine;
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(v)
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The amount per share
payable on the shares of such series upon the voluntary and involuntary
liquidation, dissolution or winding up of the Corporation;
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(vi)
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Whether the holders of
shares of such series shall have voting power, full or limited, in
addition to the voting powers provided by law, and, in case additional
voting powers are accorded, to fix the extent thereof; and
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(vii)
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Generally to fix the
other rights and privileges and any qualifications, limitations or
restrictions of such rights and privileges of such series, provided,
however, that no such rights, privileges, qualifications, limitations or
restrictions shall be in conflict with the Articles of Incorporation of
the Corporation or with the resolution or resolutions adopted by the Board
of Directors providing for the issue of any series of which there are
shares then outstanding.
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(c)
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All shares of
Preferred Stock of the same series shall be identical in all respects,
except that shares of any one series issued at different times may differ
as to dates, if any, from which dividends thereon may accumulate. All
shares of Preferred Stock of all series shall be of equal rank and shall
be identical in all respects, except that to the extent not otherwise
limited in this Article 5 any series may differ from any other series with
respect to any one or more of the designations, relative rights,
preferences and limitations described or referred to in subparagraphs
(b)(i) to (vii) inclusive of this Article 5.
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(d)
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Dividends on
the outstanding Preferred Stock of each series shall be declared and paid
or set apart for payment before any dividends shall be declared and paid
or set apart for payment on the Common Stock with respect to the same
quarterly dividend period.
Dividends on any shares of
Preferred Stock shall be cumulative only if and to the extent set forth in
a certificate filed pursuant to law. After dividends on all shares of
Preferred Stock (including cumulative dividends if and to the extent any
such shares shall be entitled thereto) shall have been declared and paid
or set apart for payment with respect to any quarterly dividend period,
then and not otherwise as long as any shares of Preferred Stock shall
remain outstanding, dividends may be declared and paid or set apart for
payment with respect to the same quarterly dividend period on the Common
Stock out of the assets or funds of the Corporation legally available
therefor.
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(e)
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All shares of Preferred
Stock of all series shall be of equal rank, preference and priority as to
dividends irrespective of whether or not the rates of dividends to which
the particular series of Preferred Stock shall be entitled shall be the
same and when the stated dividends are not paid in full, the shares of all
series of Preferred Stock shall share ratably in the payment thereof in
accordance with the sums which would be payable on such shares if all
dividends were paid in full, provided, however, that any two or more
series of Preferred Stock may differ from each other as to the existence
and extent of the right to cumulative dividends, as
aforesaid.
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(f)
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Except as otherwise
specifically provided in the certificate filed pursuant to law with
respect to any series of Preferred Stock or as otherwise provided by law,
the Preferred Stock shall not have any right to vote for the election of
directors or for any other purpose and the Common Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes. Each holder of Common Stock shall be entitled to one vote for
each share thereof held. In all instances in which voting rights are
granted to the Preferred Stock or any series thereof, such Preferred Stock
or series shall vote with the Common Stock as a single class, except with
respect to any vote for the approval of any merger, consolidation,
liquidation or dissolution of the Corporation and except as otherwise
provided in the certificate filed pursuant to law with respect to any
series of the Preferred Stock or as otherwise provided by
law.
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(g)
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In the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, each series of Preferred Stock shall have
preference and priority over the Common Stock for payment of the amount to
which each outstanding series of Preferred Stock shall be entitled in
accordance with the provisions thereof and each holder of Preferred Stock
shall be entitled to be paid in full such amount, or have a sum sufficient
for the payment in full set aside, before any payments shall be made to
the holders of Common Stock. If, upon liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation or the proceeds
thereof, distributable among the holders of the shares of all series of
Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the respective
amounts which would be payable if all amounts payable thereon were paid in
full. After the holders of the Preferred Stock of each series shall have
been paid in full the amounts to which they respectively shall be
entitled, or a sum sufficient for the payment in full set aside, the
remaining net assets of the Corporation shall be distributed pro rata to
the holders of the Common Stock in accordance with their respective rights
and interests, to the exclusion of the holders of the Preferred Stock. A
Consolidation or merger of the Corporation with or into another
corporation or corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation, shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this
Article 5.
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(h)
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In the event that
Preferred Stock of any series shall be made redeemable as provided in
subparagraph (b)(iii) of this Article 5, the Corporation, at the option of
the Board of Directors, may redeem at any time or times, from time to
time, all or any part of any one or more series of Preferred Stock
outstanding by paying for each share the then applicable redemption price
fixed by the Board of Directors as provided herein, plus an amount equal
to accrued and unpaid dividends to the date fixed for redemption, upon
such notice and terms as may be specifically provided in the certificate
filed pursuant to law with respect to such series of Preferred
Stock.
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(i)
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No holder of
Preferred Stock of the Corporation shall be entitled, as such, as a matter
of right, to subscribe for or purchase any part of any new or additional
issue of stock of any class or series whatsoever, any rights or options to
purchase stock of any class or series whatsoever or any securities
convertible into, exchangeable for or carrying rights or options to
purchase stock of any class or series whatsoever, whether now or hereafter
authorized, and whether issued for cash or other consideration or by way
of dividend.
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6.
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Intentionally
Omitted.
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7.
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No merger,
consolidation, liquidation or dissolution of the Corporation, nor any
action that would result in the sale or other disposition of all or
substantially all of the assets of the Corporation shall be valid unless
first approved by the affirmative vote of:
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(a)
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the holders
of at least eighty percent (80%) of the outstanding shares of the voting
stock of the Corporation; or
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(b)
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the holders
of at least a majority of the outstanding shares of voting stock of the
Corporation, provided that such transaction has received the prior
approval of at least seventy-five percent (75%) of all of the members of
the Board of Directors.
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8.
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Cumulative
voting rights shall not exist with respect to the election of
directors.
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9.
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(a)
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The Board of
Directors may, if it deems it advisable, oppose a tender or other offer
for the corporation's securities, whether the offer is in cash or in the
securities of a corporation or otherwise. When considering whether to
oppose an offer, the Board of Directors may, but is not legally obligated
to, consider any pertinent issue; by way of illustration, but not of
limitation, the Board of Directors may, but shall not be legally obligated
to, consider any or all of the following:
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(i)
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Whether the offer price
is acceptable based on the historical and present operating results or
financial condition of the corporation;
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(ii)
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Whether a more
favorable price could be obtained for the corporation's securities in the
future;
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(iii)
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The impact which an
acquisition of the corporation would have on the employees, depositors and
customers of the corporation and its subsidiaries and the communities
which they serve;
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(iv)
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The reputation and
business practices of the offeror and its management and affiliates as
they would affect the employees, depositors and customers of the
corporation and its subsidiaries and the future value of the corporation's
stock;
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50
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(v)
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The value of
the securities (if any) which the offeror is offering in exchange for the
corporation's securities based on an analysis of the worth of the
corporation as compared to the corporation or other entity whose
securities are being offered; and
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(vi)
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any antitrust or other
legal and regulatory issues that are raised by the offer.
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(b)
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If the Board
of Directors determines that an offer should be rejected, it may take any
lawful action to accomplish its purpose, including, but not limited to,
any or all of the following: advising shareholders not to accept the
offer; litigation against the offeror; filing complaints with all
governmental and regulatory authorities; acquiring the corporation's
securities; selling or otherwise issuing authorized but unissued
securities or treasury stock or granting options with respect thereto;
acquiring a company to create an antitrust or other regulatory problem for
the offeror and obtaining a more favorable offer from another individual
or entity.
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51
HARLEYSVILLE NATIONAL CORPORATION
483
MAIN STREET
HARLEYSVILLE, PA
19438
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ANNUAL MEETING OF SHAREHOLDERS
OF
HARLEYSVILLE NATIONAL CORPORATION
Tuesday, April 28, 2009
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the costs
incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in hand when
you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK
AS FOLLOWS:
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HNCOR1 KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION
ONLY
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THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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HARLEYSVILLE NATIONAL CORPORATION
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For
All
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Withhold
All
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For
All
Except
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To withhold authority to vote for any
individual nominee(s), mark For All Except and write the number(s) of
the nominee(s) on the line below.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE ELECTION OF THE CLASS C NOMINEES LISTED BELOW AND
FOR
PROPOSAL NOS. 2 AND 3
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o
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o
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o
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1.
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The following persons are
nominated for election as Class C directors of Harleysville National
Corporation to serve for four-year
terms:
NOMINEES:
01) Michael L.
Browne
02) Paul D.
Geraghty
03) James A. Wimmer
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For
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Against
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Abstain
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2.
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Proposal to amend Article 5 of
Harleysville's Articles of Incorporation to increase the number of
authorized shares of Harleysville common stock, par value $1.00 per share,
from 75,000,000 to 200,000,000;
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o
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o
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o
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3.
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Ratification of Grant Thornton
LLP as the corporation's independent auditors for the fiscal year ended
December 31, 2009.
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o
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o
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o
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SHAREHOLDER PROPOSALS - THE BOARD
OF DIRECTORS RECOMMENDS A VOTE
AGAINST
PROPOSAL NOS. 4 AND
5
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4.
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Proposal requesting that the
board of directors take action to declassify the terms of the board of
directors.
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o
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o
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o
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5.
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Proposal requesting that the
board of directors take action to institute a majority voting standard for
the election of directors.
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o
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o
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o
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In their discretion, the proxies
are authorized to vote upon such other business as may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
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For address changes and/or
comments, please check this box and write them on the back where
indicated.
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o
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THIS PROXY, WHEN PROPERLY
SIGNED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES AND PROPOSALS 2 AND 3, AND AGAINST PROPOSALS 4
AND 5.
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Yes
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No
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Please indicate if you plan to
attend this meeting.
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o
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o
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Note:
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Please sign exactly as your name
or names appear(s) on this Proxy. When shares are held jointly, each
shareholder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly
authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
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PLEASE SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
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Signature [PLEASE SIGN WITHIN
BOX]
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Date
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Signature (Joint
Owners)
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Date
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Harleysville National
Corporation
Annual Meeting - 9:30 a.m.
Breakfast - 8:30 a.m.
April 28, 2009
FOR YOUR CONVENIENCE - RETAIN FOR
YOUR REFERENCE
H
arleysville National
Corporation will conduct its Annual Meeting of Shareholders on Tuesday, April
28, 2009, at 9:30 a.m. at Presidential Caterers, 2910 DeKalb Pike, Norristown,
Pennsylvania 19401.
Breakfast will
be served prior to the Annual Meeting, beginning at 8:30 a.m. The meeting will
convene promptly at 9:30 a.m.
Please
return your proxy vote if you have not already done so.
If you find that your plans have
changed and you will be unable to join us for the annual meeting and breakfast,
kindly call Harleysville National Corporation's Shareholder Services Department
at 215-513-2305 and help us eliminate unnecessary charges. Thank
you.
Directions to Presidential Caterers
2910 DeKalb Pike · Norristown, PA
19401
610-275-7300
NOTE TO
ALL DRIVERS:
There is a traffic island in the
middle of the road on Route 202 just in front of Presidential's driveway so you
CANNOT make a left turn off Route 202 into the driveway. You MUST enter the
driveway with a right turn.
******
From King
of Prussia -
Take Route 202 North through
Norristown to East Norriton. After crossing the intersection at Germantown Pike,
the driveway to Presidential will be on your right.
From
Montgomeryville & Lansdale -
Take Route
202 South to East Norriton. Turn right at Township Line Road (CVS Pharmacy on
corner). Go one block and turn left at Swede Road. Proceed to Germantown Pike
and turn left. Second light, Route 202 (DeKalb Pike) turn left. Driveway to
Presidential will be on your right.
From
Philadelphia -
Take Schuylkill Expressway to
Plymouth Meeting. Exit Route 476 North to Germantown Pike-West Exit. Follow
Germantown Pike-West to Route 202 North (DeKalb Pike). Make a right onto Route
202; driveway to Presidential will be on your right.
From Main
Line -
Take 476 North (Blue Route) to
Germantown Pike-West Exit. Follow Germantown Pike-West to Route 202 North
(DeKalb Pike). Make a right onto Route 202; driveway to Presidential will be on
your right.
From
Willow Grove -
Take PA-Turnpike (Route 276)
to Norristown Exit. Follow Germantown Pike-West to Route 202 North (DeKalb
Pike). Make a right onto Route 202; driveway to Presidential will be on your
right.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and
Proxy Statement, Form 10-K and Folder are available at
www.proxyvote.com.
HARLEYSVILLE NATIONAL
CORPORATION
REVOCABLE PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON APRIL 28, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The
undersigned hereby constitutes and appoints Tracie A. Young, Senior Vice
President, and Louis P. Spinelli, Executive Vice President and each or any of
them, proxies of the undersigned, with full power of substitution, to vote all
of the shares of Harleysville National Corporation (the "Corporation") which the
undersigned may be entitled to vote at the Annual Meeting of Shareholders of the
Corporation to be held at Presidential Caterers, 2910 DeKalb Pike, Norristown,
PA 19401, on Tuesday, April 28, 2009, at 9:30 a.m., prevailing time, and at any
adjournment or postponement thereof.
Address
Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark
corresponding box on the reverse side.)
(Continued and to be signed on the reverse
side)
Breakfast Invitation
Response
Harleysville National Corporation
will conduct its Annual Meeting of Shareholders on Tuesday, April 28, 2009, at
9:30 a.m. at Presidential Caterers, 2910 DeKalb Pike, Norristown, Pennsylvania
19401.
You are cordially invited to
join us for breakfast prior to the Annual Meeting, beginning at 8:30 a.m. The
meeting will convene promptly at 9:30 a.m.
Please be kind enough to help us make appropriate arrangements by filling
out and returning this self-addressed, stamped response
card.
For your convenience, enclosed
are directions to Presidential Caterers.
Name
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(Please Print)
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Name
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(Please Print)
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o
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Yes, I will join you for breakfast and the Annual
Meeting at Presidential Caterers, Tuesday, April 28,
2009.
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ATTN: ASSISTANT CORPORATE
SECRETARY
HARLEYSVILLE NATIONAL CORP
PO
BOX 195
HARLEYSVILLE PA
19438-9987
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