EX-4.3



 





Exhibit 4.3



 




GUARANTEE AGREEMENT




between




MIDDLEFIELD BANC CORP.,

As Guarantor,




and




WILMINGTON TRUST COMPANY,

As Guarantee Trustee




Dated as of December 21, 2006




MIDDLEFIELD STATUTORY TRUST I



 














 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	ARTICLE I
	 	INTERPRETATION AND DEFINITIONS	 	 	2	 
	SECTION 1.1
	 	Interpretation	 	 	2	 
	SECTION 1.2
	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II
	 	REPORTS	 	 	6	 
	SECTION 2.1
	 	List of Holders	 	 	6	 
	SECTION 2.2
	 	Periodic Reports to the Guarantee Trustee	 	 	6	 
	SECTION 2.3
	 	Event of Default; Waiver	 	 	6	 
	SECTION 2.4
	 	Event of Default; Notice	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III
	 	POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE	 	 	7	 
	SECTION 3.1
	 	Powers and Duties of the Guarantee Trustee	 	 	7	 
	SECTION 3.2
	 	Certain Rights of the Guarantee Trustee	 	 	8	 
	SECTION 3.3
	 	Compensation	 	 	10	 
	SECTION 3.4
	 	Indemnity	 	 	10	 
	SECTION 3.5
	 	Securities	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE IV
	 	GUARANTEE TRUSTEE	 	 	11	 
	SECTION 4.1
	 	Guarantee Trustee; Eligibility	 	 	11	 
	SECTION 4.2
	 	Appointment, Removal and Resignation of the Guarantee Trustee	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE V
	 	GUARANTEE	 	 	12	 
	SECTION 5.1
	 	Guarantee	 	 	12	 
	SECTION 5.2
	 	Waiver of Notice and Demand	 	 	13	 
	SECTION 5.3
	 	Obligations Not Affected	 	 	13	 
	SECTION 5.4
	 	Rights of Holders	 	 	14	 
	SECTION 5.5
	 	Guarantee of Payment	 	 	14	 
	SECTION 5.6
	 	Subrogation	 	 	14	 
	SECTION 5.7
	 	Independent Obligations	 	 	15	 
	SECTION 5.8
	 	Enforcement	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE VI
	 	COVENANTS AND SUBORDINATION	 	 	15	 
	SECTION 6.1
	 	Dividends, Distributions and Payments	 	 	15	 
	SECTION 6.2
	 	Subordination	 	 	16	 
	SECTION 6.3
	 	Pari Passu Guarantees	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VII
	 	TERMINATION	 	 	17	 
	SECTION 7.1
	 	Termination	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE VIII
	 	MISCELLANEOUS	 	 	17	 
	SECTION 8.1
	 	Successors and Assigns	 	 	17	 
	SECTION 8.2
	 	Amendments	 	 	17	 






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	SECTION 8.3
	 	Notices	 	 	17	 
	SECTION 8.4
	 	Benefit	 	 	19	 
	SECTION 8.5
	 	Governing Law	 	 	19	 
	SECTION 8.6
	 	Submission to Jurisdiction	 	 	19	 
	SECTION 8.7
	 	Counterparts; Facsimile	 	 	19	 






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     Guarantee Agreement, dated as of December 21, 2006, executed and delivered by
Middlefield Banc Corp., an Ohio corporation (the “Guarantor”) having its principal office
at 15985 East High Street, P. O. Box 35, Middlefield, Ohio 44062, and Wilmington Trust
Company, a Delaware banking corporation, as trustee (in such capacity, the “Guarantee
Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Middlefield Statutory Trust I, a Delaware statutory trust (the
“Issuer”).



Witnesseth:




     Whereas, pursuant to an Amended and Restated Trust Agreement, dated as of the date
hereof (the “Trust Agreement”), among the Guarantor, as Depositor, the Property Trustee, the
Delaware Trustee and the Administrative Trustees named therein and the holders from time to time of
the Preferred Securities (as hereinafter defined), the Issuer is issuing $8,000,000 aggregate
Liquidation Amount (as defined in the Trust Agreement) of its Preferred Securities (Liquidation
Amount $1,000 per preferred security) (the “Preferred Securities”) representing preferred undivided
beneficial interests in the assets of the Issuer and having the terms set forth in the Trust
Agreement;



     Whereas, the Preferred Securities will be issued by the Issuer and the proceeds
thereof, together with the proceeds from the issuance of the Issuer’s Common Securities (as defined
below), will be used to purchase the Notes (as defined in the Trust Agreement) of the Guarantor;
and



     Whereas, as incentive for the Holders to purchase Preferred Securities the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein.



     Now, Therefore, in consideration of the purchase by each Holder of Preferred
Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor
executes and delivers this Guarantee Agreement to provide as follows for the benefit of the Holders
from time to time of the Preferred Securities:













 





ARTICLE I




Interpretation and Definitions




     SECTION 1.1 Interpretation.



     In this Guarantee Agreement, unless the context otherwise requires:




     (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble
hereto have the respective meanings assigned to them in Section 1.2;




     (b) the words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”;




     (c) all references to “the Guarantee Agreement” or “this Guarantee Agreement” are to
this Guarantee Agreement as modified, supplemented or amended from time to time;




     (d) all references in this Guarantee Agreement to Articles and Sections are to
Articles and Sections of this Guarantee Agreement unless otherwise specified;




     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar
import refer to this Guarantee Agreement as a whole and not to any particular Article,
Section or other subdivision;




     (f) a reference to the singular includes the plural and vice versa; and




     (g) the masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.



     SECTION 1.2 Definitions.



     As used in this Guarantee Agreement, the terms set forth below shall, unless the context
otherwise requires, have the following meanings:




     “Affiliate” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified
Person; provided, that the Issuer shall not be deemed to be an Affiliate of the Guarantor.
For the purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the foregoing.




     “Beneficiaries” means any Person to whom the Issuer is or hereafter becomes indebted
or liable.



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     “Board of Directors” means either the board of directors of the Guarantor or any duly
authorized committee of that board.




     “Common Securities” means the securities representing common undivided beneficial
interests in the assets of the Issuer.




     “Debt” means with respect to any Person, whether recourse is to all or a portion of
the assets of such Person, whether currently existing or hereafter incurred, and whether or
not contingent and without duplication, (i) every obligation of such Person for money
borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement obligation of such
Person with respect to letters of credit, bankers’ acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or assumed as
the deferred purchase price of property or services (but excluding trade accounts payable
arising in the ordinary course of business); (v) every capital lease obligation of such
Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of
this Guarantee Agreement or thereafter incurred, for claims in respect of derivative
products, including interest rate, foreign exchange rate and commodity forward contracts,
options, swaps and similar arrangements; (vii) every obligation of the type referred to in
clauses (i) through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions,
refundings, amendments or modifications of any obligation of the type referred to in
clauses (i) through (vii).




     “Event of Default” means a default by the Guarantor on any of its payment or other
obligations under this Guarantee Agreement; provided, that except with respect to a default
in payment of any Guarantee Payments, the Guarantor shall have received notice of default
from the Guarantee Trustee and shall not have cured such default within thirty (30) days
after receipt of such notice.




     “Guarantee Payments” means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or made by or
on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the
Trust Agreement) required to be paid on the Preferred Securities, to the extent the Issuer
shall have funds on hand available therefor at such time, (ii) the Redemption Price (as
defined in the Trust Agreement) with respect to any Preferred Securities to the extent the
Issuer shall have funds on hand available therefor at such time, and (iii) upon a voluntary
or involuntary termination, winding up or liquidation of the Issuer, unless Notes are
distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of
$1,000 per Preferred Security plus accumulated and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent that



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the Issuer shall have funds available therefor at such time and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in liquidation of the
Issuer after satisfaction of liabilities to creditors of the Issuer in accordance with
applicable law (in either case, the “Liquidation Distribution”).




     “Guarantee Trustee” means Wilmington Trust Company in its capacity as trustee
hereunder, until a Successor Guarantee Trustee, as defined below, has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee Agreement, and
thereafter means each such Successor Guarantee Trustee.




     “Holder” means any holder, as registered on the books and records of the Issuer, of
any Preferred Securities; provided, that, in determining whether the holders of the
requisite percentage of Preferred Securities have given any request, notice, consent or
waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee or any
Affiliate of the Guarantor or the Guarantee Trustee.




     “Indenture” means the Junior Subordinated Indenture, dated as of the date hereof, as
supplemented and amended, between the Guarantor and Wilmington Trust Company, as trustee.




     “List of Holders” has the meaning specified in Section 2.1.




     “Majority in Liquidation Amount of the Preferred Securities” means a vote by the
Holder(s), voting separately as a class, of more than fifty percent (50%) of the aggregate
Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer.




     “Obligations” means any costs, expenses or liabilities (but not including liabilities
related to taxes) of the Issuer, other than obligations of the Issuer to pay to holders of
any Trust Securities the amounts due such holders pursuant to the terms of the Trust
Securities.




     “Officers’ Certificate” means, with respect to any Person, a certificate signed by the
Chief Executive Officer, Chief Financial Officer, President or a Vice President of such
Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers’
Certificate delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement (other than the certificate provided pursuant to Section 2.4)
shall include:




     (a) a statement that each officer signing the Officers’ Certificate has read the
covenant or condition and the definitions relating thereto;




     (b) a brief statement of the nature and scope of the examination or investigation
undertaken by each officer in rendering the Officers’ Certificate;



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     (c) a statement that each officer has made such examination or investigation as, in
such officer’s opinion, is necessary to enable such officer to express an informed opinion
as to whether or not such covenant or condition has been complied with; and




     (d) a statement as to whether, in the opinion of each officer, such condition or
covenant has been complied with.




     “Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company,
trust, unincorporated association, government or any agency or political subdivision
thereof or any other entity of whatever nature.




     “Responsible Officer” means, with respect to the Guarantee Trustee, any Senior Vice
President, any Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, any Financial Services Officer or
Assistant Financial Services Officer or any other officer in the Corporate Trust Office of
the Guarantee Trustee with direct responsibility for the administration of this Guarantee
Agreement and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of and
familiarity with the particular subject.




     “Senior Debt” means the principal of and any premium and interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Guarantor whether or not such claim for post-petition
interest is allowed in such proceeding) all Debt of the Guarantor, whether incurred on or
prior to the date of the Indenture or thereafter incurred, unless it is provided in the
instrument creating or evidencing the same or pursuant to which the same is outstanding,
that such obligations are not superior in right of payment to the Preferred Securities;
provided, however, that if the Guarantor is subject to the regulation and supervision of an
“appropriate Federal banking agency” within the meaning of 12 U.S.C. 1813(q), the Guarantor
shall have received the approval of such appropriate Federal banking agency prior to
issuing any such obligation if not otherwise generally approved; provided further, that
Senior Debt shall not include any other debt securities, and guarantees in respect of such
debt securities, issued to any trust other than the Issuer (or a trustee of such trust),
partnership or other entity affiliated with the Guarantor that is a financing vehicle of
the Guarantor (a “financing entity”), in connection with the issuance by such financing
entity of equity securities or other securities that are treated as equity capital for
regulatory capital purposes guaranteed by the Guarantor pursuant to an instrument that
ranks pari passu with or junior in right of payment to this Guarantee Agreement.




     “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1.



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     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in
effect on the date of this Guarantee Agreement.


Capitalized or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.




ARTICLE II




Reports




     SECTION 2.1 List of Holders.



     The Guarantor shall furnish or cause to be furnished to the Guarantee Trustee at such times as
the Guarantee Trustee may request in writing, within thirty (30) days after the receipt by the
Guarantor of any such request, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders (the “List of Holders”) as of a date not more
than fifteen (15) days prior to the time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and is not identical to a previously
supplied list of Holders or has not otherwise been received by the Guarantee Trustee in its
capacity as such. The Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.



     SECTION 2.2 Periodic Reports to the Guarantee Trustee.



     The Guarantor shall deliver to the Guarantee Trustee, within one hundred and twenty (120) days
after the end of each fiscal year of the Guarantor ending after the date of this Guarantee
Agreement, an Officers’ Certificate covering the preceding fiscal year, stating whether or not to
the knowledge of the signers thereof the Guarantor is in default in the performance or observance
of any of the terms or provisions or any of the conditions of this Guarantee Agreement (without
regard to any period of grace or requirement of notice provided hereunder) and, if the Guarantor
shall be in default thereof, specifying all such defaults and the nature and status thereof of
which they have knowledge.



     SECTION 2.3 Event of Default; Waiver.



     The Holders of a Majority in Liquidation Amount of the Preferred Securities may, on behalf of
the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right consequent therefrom.



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     SECTION 2.4 Event of Default; Notice.




     (a) The Guarantee Trustee shall, within ninety (90) days after the occurrence of a
default, transmit to the Holders notices of all defaults actually known to the Guarantee
Trustee, unless such defaults have been cured or waived before the giving of such notice,
provided, that, except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long as the Board
of Directors, the executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders. For the purpose of this Section 2.4,
the term “default” means any event that is, or after notice or lapse of time or both would
become, an Event of Default.




     (b) The Guarantee Trustee shall not be deemed to have knowledge of any default or
Event of Default unless the Guarantee Trustee shall have received written notice, or a
Responsible Officer charged with the administration of this Guarantee Agreement shall have
received written notice, of such default or Event of Default from the Guarantor or a
Holder.



ARTICLE III




Powers, Duties And Rights Of The Guarantee Trustee




     SECTION 3.1 Powers and Duties of the Guarantee Trustee.




     (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of
the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any
Person except a Holder exercising its rights pursuant to Section 5.4(d) or to a Successor
Guarantee Trustee upon acceptance by such Successor Guarantee Trustee of its appointment to
act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of
title shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.




     (b) The rights, immunities, duties and responsibilities of the Guarantee Trustee shall
be as provided by this Guarantee Agreement and there shall be no other duties or
obligations, express or implied, of the Guarantee Trustee. Notwithstanding the foregoing,
no provisions of this Guarantee Agreement shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not herein expressly so



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provided, every provision of this Guarantee Agreement relating to the conduct or
affecting the liability of or affording protection to the Guarantee Trustee shall be
subject to the provisions of this Section 3.1. To the extent that, at law or in
equity, the Guarantee Trustee has duties and liabilities relating to the Guarantor or the
Holders, the Guarantee Trustee shall not be liable to any Holder for the Guarantee
Trustee’s good faith reliance on the provisions of this Guarantee Agreement. The
provisions of this Guarantee Agreement, to the extent that they restrict the duties and
liabilities of the Guarantee Trustee otherwise existing at law or in equity, are agreed by
the Guarantor and the Holders to replace such other duties and liabilities of the Guarantee
Trustee.




     (c) No provision of this Guarantee Agreement shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, negligent failure to act or
own willful misconduct, except that:




     (i) the Guarantee Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be
proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts
upon which such judgment was made; and




     (ii) the Guarantee Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a Majority in Liquidation Amount of the Preferred
Securities relating to the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement.



     SECTION 3.2 Certain Rights of the Guarantee Trustee.




     (a) Subject to the provisions of Section 3.1:




     (i) the Guarantee Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting in good faith and in accordance with the terms
hereof upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties;




     (ii) any direction or act of the Guarantor contemplated by this Guarantee
Agreement shall be sufficiently evidenced by an Officers’ Certificate unless
otherwise prescribed herein;




     (iii) the Guarantee Trustee may consult with counsel, and the advice of such
counsel shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted to be taken



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by it hereunder in good faith and in reliance thereon and in accordance with
such advice. Such counsel may be counsel to the Guarantee Trustee, the Guarantor
or any of its Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the administration
of this Guarantee Agreement from any court of competent jurisdiction;




     (iv) the Guarantee Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Guarantee Agreement at the request or
direction of any Holder, unless such Holder shall have provided to the Guarantee
Trustee reasonable security or indemnity against the costs, expenses (including
reasonable attorneys’ fees and expenses) and liabilities that might be incurred by
it in complying with such request or direction, including such reasonable advances
as may be requested by the Guarantee Trustee; provided, that, nothing contained in
this Section 3.2(a)(iv) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee Agreement;




     (v) the Guarantee Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the Guarantee
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and if the Guarantee Trustee shall
determine to make such inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Guarantor, personally or by agent or
attorney;




     (vi) the Guarantee Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents,
attorneys, custodians or nominees and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney, custodian or nominee appointed with due care by it hereunder;




     (vii) whenever in the administration of this Guarantee Agreement the Guarantee
Trustee shall deem it desirable to receive instructions with respect to enforcing
any remedy or right hereunder, the Guarantee Trustee (A) may request instructions
from the Holders of a Majority in Liquidation Amount of the Preferred Securities,
(B) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received and (C) shall be protected in acting in
accordance with such instructions;




     (viii) except as otherwise expressly provided by this Guarantee Agreement, the
Guarantee Trustee shall not be under any obligation to



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take any action that is discretionary under the provisions of this Guarantee
Agreement;




     (ix) whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting to take any action hereunder, the Guarantee
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an Officers’ Certificate
which, upon receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor; and




     (x) the Guarantee Trustee shall have no duty to see to any recording, filing
or registration of any instrument or other writing (or any rerecording, refiling or
reregistration thereof).




     (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or
obligation on the Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with such power and
authority.



     SECTION 3.3 Compensation.



     The Guarantor agrees to pay to the Guarantee Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be limited by any
provisions of law in regard to the compensation of a trustee of an express trust) and to reimburse
the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances
(including the reasonable fees and expenses of its attorneys and agents) incurred or made by the
Guarantee Trustee in accordance with any provisions of this Guarantee Agreement.



     SECTION 3.4 Indemnity.



     The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee (including in its
individual capacity) and any of its Affiliates and any of their officers, directors, shareholders,
employees, representatives or agents from and against any loss, damage, liability, tax (other than
income, franchise or other taxes imposed on amounts paid pursuant to Section 3.3), penalty,
expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the acceptance or administration of
this Guarantee Agreement, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its rights, powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any



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Guarantee Payments as a result of any amount due to it under this Guarantee Agreement. This
indemnity shall survive the termination of this Agreement or the resignation or removal of the
Guarantee Trustee.



     In no event shall the Guarantee Trustee be liable for any indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits,
even if the Guarantee Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.



     In no event shall the Guarantee Trustee be liable for any failure or delay in the performance
of its obligations hereunder because of circumstances beyond its control, including, but not
limited to, acts of God, flood, war (declared or undeclared), terrorism, fire, riot, embargo or
government action, including any laws, ordinances, regulations, governmental action or the like
which delay, restrict or prohibit the providing of the services contemplated by this Guarantee
Agreement.



     SECTION 3.5 Securities.



     The Guarantee Trustee or any other agent of the Guarantee Trustee, in its individual or any
other capacity, may become the owner or pledgee of Common or Preferred Securities.



ARTICLE IV




Guarantee Trustee




     SECTION 4.1 Guarantee Trustee; Eligibility.




     (a) There shall at all times be a Guarantee Trustee which shall:




     (i) not be an Affiliate of the Guarantor; and




     (ii) be a corporation organized and doing business under the laws of the
United States or of any State thereof, authorized to exercise corporate trust
powers, having a combined capital and surplus of at least fifty million dollars
($50,000,000), subject to supervision or examination by Federal or State authority
and having an office within the United States. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements of
such supervising or examining authority, then, for the purposes of this Section
4.1, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.




     (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and
with the effect set out in Section 4.2(c).



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     (c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within
the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall
either eliminate such interest or resign in the manner and with the effect set out in
Section 4.2(c).



     SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee.




     (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor, except during an Event of Default.




     (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor.




     (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or resignation. The
Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.




     (d) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within thirty (30) days after delivery
to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may
petition, at the expense of the Guarantor, any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.



ARTICLE V




Guarantee




     SECTION 5.1 Guarantee.




     (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of
the Issuer), as and when due, regardless of any defense (except for the defense of payment
by the Issuer), right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such



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amounts to the Holders. The Guarantor shall give prompt written notice to the
Guarantee Trustee in the event it makes any direct payment to the Holders hereunder.




     (b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer,
and, in the event any such Obligation is not so assumed, subject to the terms and
conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each
Beneficiary the full payment, when and as due, of any and all Obligations to such
Beneficiaries. This Guarantee is intended to be for the Beneficiaries who have received
notice hereof.



     SECTION 5.2 Waiver of Notice and Demand.



     The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and
all other notices and demands.



     SECTION 5.3 Obligations Not Affected.



     The obligations, covenants, agreements and duties of the Guarantor under this Guarantee
Agreement shall in no way be affected or impaired by reason of the happening from time to time of
any of the following:




     (a) the release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or condition
relating to the Preferred Securities to be performed or observed by the Issuer;




     (b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions (other than an extension of time for payment of Distributions that results
from the extension of any interest payment period on the Notes as provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred Securities;




     (c) any failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;




     (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;



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     (e) any invalidity of, or defect or deficiency in, the Preferred Securities;




     (f) the settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or




     (g) any other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this Section
5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.



     There shall be no obligation of the Holders to give notice to, or obtain the consent of, the
Guarantor with respect to the happening of any of the foregoing.



     SECTION 5.4 Rights of Holders.



     The Guarantor expressly acknowledges that: (a) this Guarantee Agreement will be deposited with
the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority
in Liquidation Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and (d) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person.



     SECTION 5.5 Guarantee of Payment.



     This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee
Agreement will not be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of Notes to Holders as
provided in the Trust Agreement.



     SECTION 5.6 Subrogation.



     The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in
respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and
shall have the right to waive payment by the Issuer pursuant to Section 5.1; provided,
that, the Guarantor shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this Guarantee
Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to
the Holders.



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     SECTION 5.7 Independent Obligations.



     The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3.



     SECTION 5.8 Enforcement.



     A Beneficiary may enforce the Obligations of the Guarantor contained in Section 5.1(b)
directly against the Guarantor, and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before proceeding against the
Guarantor.



ARTICLE VI




Covenants and Subordination




     SECTION 6.1 Dividends, Distributions and Payments.



     So long as any Preferred Securities remain outstanding, if there shall have occurred and be
continuing an Event of Default or the Guarantor shall have entered into an Extension Period as
provided for in the Indenture and such period, or any extension thereof, shall have commenced and
be continuing, then the Guarantor may not (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of the Guarantor’s
Equity Interests (as defined in the Indenture), (b) vote in favor of or permit or otherwise allow
any of its Subsidiaries (as defined in the Indenture) to declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or
otherwise retire, any of such Subsidiary’s Equity Interests entitling the holders thereof to a
stated rate of return other than dividends or distributions on Equity Interests payable to the
Guarantor or any Subsidiary thereof (for the avoidance of doubt, whether such Equity Interests are
perpetual or otherwise), or (c) make any payment of principal of or any interest or premium on or
repay, repurchase or redeem any debt securities of the Guarantor that rank pari passu in all
respects with or junior in interest to the junior subordinated notes issued by the Guarantor
pursuant to the Indenture (other than (i) repurchases, redemptions or other acquisitions of Equity
Interests of the Guarantor in connection with (1) any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees, officers, directors or
consultants, (2) a dividend reinvestment or stockholder stock purchase or similar plan with respect
to any Equity Interests or (3) the issuance of Equity Interests of the Guarantor (or securities
convertible into or exercisable for such Equity Interests) as consideration in an acquisition
transaction entered into prior to the occurrence of such Event of Default or the applicable
Extension Period, (ii) as a result of an exchange or conversion of any class or series of the
Guarantor’s Equity Interests (or any Equity Interests of a Subsidiary of the Guarantor) for any
class or series of the Guarantor’s Equity Interests or any class of series of the



15









 







Guarantor’s indebtedness for any class or series of the Guarantor’s Equity Interests, (iii)
the purchase of fractional interests in Equity Interests of the Guarantor pursuant to the
conversion or exchange provisions of such Equity Interests or the security being converted or
exchanged, (iv) any declaration of a dividend in connection with any rights plan, the issuance of
rights, Equity Interests or other property under any rights plan or the redemption or repurchase of
rights pursuant thereto, or (v) any dividend in the form of Equity Interests, warrants, options or
other rights where the dividend Equity Interests or the Equity Interests issuable upon exercise of
such warrants, options or other rights are the same Equity Interests as those on which the dividend
is being paid or rank pari passu with or junior to such Equity Interests).



     SECTION 6.2 Subordination.



     The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured
obligations of the Guarantor and will rank subordinate and junior in right of payment to all Senior
Debt of the Guarantor.



     SECTION 6.3 Pari Passu Guarantees.




     (a) The obligations of the Guarantor under this Guarantee Agreement shall rank pari
passu with the obligations of the Guarantor under any similar guarantee agreements issued
by the Guarantor with respect to preferred securities (if any) similar to the Preferred
Securities, issued by trusts other than the Issuer established or to be established by the
Guarantor (if any), in each case similar to the Issuer.




     (b) The right of the Guarantor to participate in any distribution of assets of any of
its subsidiaries upon any such subsidiary’s liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except to the extent the
Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the
Guarantor’s obligations under this Guarantee will be effectively subordinated to all
existing and future liabilities of the Guarantor’s subsidiaries, and claimants should look
only to the assets of the Guarantor for payments hereunder. This Guarantee does not limit
the incurrence or issuance of other secured or unsecured debt of the Guarantor, including
Senior Debt of the Guarantor, under any indenture or agreement that the Guarantor may enter
into in the future or otherwise.



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ARTICLE VII




Termination




     SECTION 7.1 Termination.



     This Guarantee Agreement shall terminate and be of no further force and effect upon (a) full
payment of the Redemption Price of all Preferred Securities, (b) the distribution of Notes to the
Holders in exchange for all of the Preferred Securities or (c) full payment of the amounts payable
in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid with respect to
Preferred Securities or this Guarantee Agreement. The obligations of the Guarantor under
Sections 3.3 and 3.4 shall survive any such termination or the resignation and
removal of the Guarantee Trustee.



ARTICLE VIII




Miscellaneous




     SECTION 8.1 Successors and Assigns.



     All guarantees and agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Preferred Securities then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to perform the
Guarantor’s obligations hereunder, the Guarantor shall not assign its rights or delegate its
obligations hereunder without the prior approval of the Holders of a Majority in Liquidation Amount
of the Preferred Securities.



     SECTION 8.2 Amendments.



     Except with respect to any changes that do not adversely affect the rights of the Holders in
any material respect (in which case no consent of the Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Guarantor, the Guarantee Trustee and
the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings or consents of the Holders
shall apply to the giving of such approval.



     SECTION 8.3 Notices.



     Any notice, request or other communication required or permitted to be given hereunder shall
be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by
first class mail as follows:



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     (a) if given to the Guarantor, to the address or facsimile number set forth below or
such other address, facsimile number or to the attention of such other Person as the
Guarantor may give by notice to the Guarantee Trustee and the Holders:


Middlefield Banc Corp.

15985 East High Street

P. O. Box 35

Middlefield, Ohio 44062

Facsimile No.: (440) 632-1700

Attention: Executive Vice President and Chief Operating Officer





     (b) if given to the Issuer, at the Issuer’s address or facsimile number set forth
below or such other address, facsimile number or to the attention of such other Person as
the Issuer may give by notice to the Guarantee Trustee and the Holders:


Middlefield Statutory Trust I

c/o Middlefield Banc Corp.

15985 East High Street, P. O. Box 35

Middlefield, Ohio 44062

Facsimile No.: (440) 632-1700

Attention: Administrative Trustee





     (c) if given to the Guarantee Trustee, at the address or facsimile number set forth
below or such other address, facsimile number or to the attention of such other Person as
the Guarantee Trustee may give by notice to the Guarantor and the Holders:


Wilmington Trust Company

Rodney Square North, 1100 North Market Street

Wilmington, Delaware 19890-0001

Facsimile No.: (302) 636-4140

Attention: Corporate Capital Markets





     (d) if given to any Holder, at the address set forth on the books and records of the
Issuer.



     All notices hereunder shall be deemed to have been given when received in person, telecopied
with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or
other document is refused delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.



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     SECTION 8.4 Benefit.



     This Guarantee Agreement is solely for the benefit of the Holders and is not separately
transferable from the Preferred Securities.



     SECTION 8.5 Governing Law.



     This Guarantee Agreement and the rights and obligations of each party hereto, shall be
construed and enforced in accordance with and governed by the laws of the State of New York without
reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations
Law).



     SECTION 8.6 Submission to Jurisdiction.



     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING
OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW
YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY
OF THIS GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT.



     SECTION 8.7 Counterparts; Facsimile.



     This instrument may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute but one and the
same instrument. Delivery of an executed signature page of this Guarantee Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart hereof.



[THE NEXT PAGE IS THE SIGNATURE PAGE]




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     In Witness Whereof, the undersigned have executed this Guarantee Agreement as of the
date first above written.



	 	 	 	 	 
	 	MIDDLEFIELD BANC CORP.

 	 
	 	By:  	 	 
	 	 	      Name 	 
	 	 	      Title:  	 	 
	 



	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, not in its individual

capacity, but solely as Guarantee Trustee

 	 
	 	By:  	 	 
	 	 	      Name 	 
	 	 	      Title: