2
SCHEDULE
to the
ISDA(R)
International Swaps and Derivatives Association, Inc.
MASTER AGREEMENT
dated as of {earlier of trade date or date of first trade}
between BEAR ▇▇▇▇▇▇▇ BANK PLC, a bank organized under the laws of the Republic
of Ireland ("Party A"), and PENN-AMERICA GROUP INC., a corporation organized
under the laws of Pennsylvania ("Party B").
Part 1
Termination Provisions
----------------------
(a) "Specified Entity" means in relation to Party A for the purpose of:
Section 5(a)(v), Affiliates of Party A Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable Section 5(b)(iv), Not Applicable
And in relation to Party B for the purpose of:
Section 5(a)(v), Affiliates of Party B
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
(b) The "Default under Specified Transactions" provision of Section
5(a)(v), as modified in Part 5 below, will apply to Party A and to
Party B.
To the extent such provisions apply:
"Specified Transaction" will have the meaning set forth in Part 5
below.
(c) The "Cross Default" provisions of Section 5(a)(vi) will apply to Party
A and to Party B.
To the extent such provisions apply:
"Specified Indebtedness" will have the meaning specified in Section 14
of this Agreement unless otherwise defined herein.
"Threshold Amount" means USD10,000,000, or the equivalent thereof, as
reasonably determined by the other party, if the applicable Specified
Indebtedness is stated in any currency other than USD.
(d) The "Credit Event Upon Merger" provision of Section 5(b)(iv) will
apply to Party A and to Party B; provided that, if upon the occurrence
of any event contemplated by Section 5(b)(iv) the resulting, surviving
or transferee entity has both (i) a ratings classification set by A.M.
Best equal to or above B++ , and (ii) if such entity has been given a
ratings classification for its long-term, senior, unsecured and
otherwise unsupported obligations set by either or both of Standard
19
and Poor's Ratings Group, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc., ("S&P") or ▇▇▇▇▇'▇ Investors Service Inc. ("Moody's"), a rating
classification (the lower of, if applicable,) which is equal to or
above BBB- by S&P and Baa3 by Moody's, then for the purposes of
Section 5(b)(iv) such entity shall not be deemed to be "materially
weaker".
(e) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A or to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement the Second Method and Market Quotation will apply.
(g) "Termination Currency" means United States Dollars, unless the parties
otherwise agree.
(h) Section 5(b)(v) Additional Termination Event will apply. Each of the
following shall constitute an Additional Termination Event:
(i) Ratings Downgrade. If, at any time, a Relevant Rating with respect
to a party declines below the Termination Level or is withdrawn or if a
party has no Relevant Rating, such party shall be the Affected Party,
and the non-Affected Party shall, at its option, designate an Early
Termination Date, and all Transactions hereunder will be Affected
Transactions.
(A) With respect to Party A, the ratings classification set by S&P and
Moody's for any long-term, senior, unsecured and otherwise unsupported
obligations of The Bear ▇▇▇▇▇▇▇ Companies Inc. ("BSC") shall each be a
"Relevant Rating"; and
(B) With respect to Party B, the rating set by A.M. Best with respect
to Penn-America Insurance Company or Penn-Star Insurance Company shall
be a Relevant Rating.
(C) The Termination Level for Party A is, with respect to S&P and
Moody's, respectively, BB+ and Ba1. The Termination Level for Party B
is, with respect to A.M. Best, B++.
(ii) Change in Ownership; Maintenance of Control. If, at any time, (I)
Penn-Independent Corporation fails to own or control, directly or
indirectly, 20 percent of the common stock or other equity interest of
Party B and (II) another person or entity (the "New Controlling
Entity") owns or controls, directly or indirectly, a percentage of the
common stock or other equity interest of Party B that is greater than
Penn-Independent Corporation, and (III) such New Controlling Entity
does not have both (A) a ratings classification set by A.M. Best of B++
or higher and (B) if the New Controlling Entity has been given a
ratings classification for its long-term, senior, unsecured and
otherwise unsupported obligations set by either or both ofS&P and
Moody's, a ratings classification (the lower of, if applicable,) which
is equal to or above BBB- S&P and Baa3, respectively, then Party B will
be the sole Affected Party and all Transactions hereunder will be
Affected Transactions.
(iii) Disposal of Material Subsidiary. If, at any time, Party B fails
to own or control, directly or indirectly, 100 percent of the common
stock or other equity interest of Penn-America Insurance Company or
Penn-Star Insurance Company, Party B will be the sole Affected Party
and all Transactions hereunder will be Affected Transactions.
Part 2
Tax Representations
-------------------
(a) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, Party A and Party B each make the following representation:
20
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement of the other party contained
in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement; and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement, provided that it shall not
be a breach of this representation where reliance is placed on
clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) of this Agreement by reason
of material prejudice to its legal or commercial position.
(b) Payee Tax Representation. The following representations will
apply to Party A and Party B:
For the purpose of Section 3(f), Party A represents that (i) it is a
"foreign financial institution" and a "non-US branch (or office) of a
foreign person" in each case within the meaning, respectively, of
Sections 1.165-12(c)(1)(iv) and 1.1441-4(a)(3)(ii) of the United States
Treasury Regulations and (ii) it is a "foreign person" within the
meaning of Section 1.6041-4(a)(4) of the United States Treasury
Regulations.
For the purpose of Section 3(f), Party B makes no representations.
Part 3
Agreement to Deliver Documents
------------------------------
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered by Party A are: Form
W-8BEN, if applicable.
(b) Other documents to be delivered are:
PARTY REQUIRED TO DATE BY WHICH TO BE COVERED BY
DELIVER FORM/DOCUMENT/CERTIFICATE DELIVERED SECTION 3(d)
================== ====================================================== ======================== =================
Party A Certified copies of all documents evidencing Upon execution of this Yes
and necessary authorizations and approvals, obtained Agreement, any Credit
Party B pursuant to the relevant constitutive documents, with Support Document and
respect to the execution, delivery and performance by promptly at the
the party and any Credit Support Provider of this request of the other
Agreement, any Credit Support Document and any party upon execution
Confirmation, including, where applicable, certified of a Confirmation.
copies of the resolutions of its Board of Directors
or its governing body authorizing the execution and
delivery of this Agreement, the relevant Credit
Support Document or any Confirmation.
21
PARTY REQUIRED TO DATE BY WHICH TO BE COVERED BY
DELIVER FORM/DOCUMENT/CERTIFICATE DELIVERED SECTION 3(d)
================== ====================================================== ======================== =================
Party A A certificate of an authorized officer of the party
Upon execution of this Yes and and any Credit Support
Provider as to the incumbency Agreement, any Credit
Party B and authority of the officers of the party and any Support Document and
Credit Support Provider signing this Agreement, any promptly at the
Credit Support Document or any Confirmation. request of the other
party upon execution
of a Confirmation.
Party A Guaranty of The Bear ▇▇▇▇▇▇▇ Companies Inc. ("BSC") As soon as No
in the form of Exhibit I attached hereto. practicable, but no
later than upon
execution of this
Agreement.
Party A With respect to Party A, a copy of the audited Promptly
after request Yes and consolidated financial statements of
BSC with respect by the other party.
Party B to its most recent fiscal year, and with respect to Party
B, the audited consolidated financial statements of Party B
and of Party B's Credit Support Provider, if any, for the
most recent fiscal year, in all cases prepared in accordance
with generally accepted accounting principles in the country
in which such party is organized.
Party A With respect to Party A, a copy of the unaudited Promptly
after request Yes and consolidated financial statements of
BSC, and with by the other party.
Party B respect to Party B, a copy of the unaudited
consolidated financial statements of Party B and its
Credit Support Provider (if any), in each case either
for each fiscal quarter or for each six month period,
if not prepared on a quarterly basis, as applicable,
prepared in accordance with generally accepted
accounting principles in the country in which such
party is organized.
Party A A copy of each regular financial or business Promptly after
request Yes and reporting document that is (i)
distributed or made by the other party.
Party B generally available by, with respect to Party A, BSC,
and with respect to Party B, Party B and its Credit
Support Provider (if any), to its respective
shareholders or investors or (ii) filed by, with
respect to Party A, BSC, and with respect to Party B,
Party B and its Credit Support Provider (if any) in
accordance with the disclosure requirements of any
applicable statute, rule, regulation or judicial
decree and made available for public inspection.
Party B An opinion of counsel of Party B in connection with Promptly upon No
this Agreement in form and substance reasonably execution of this
satisfactory to Party A. Agreement.
22
Part 4
Miscellaneous
--------------
(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇
Attention: Derivatives Operation - 7th Floor
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Address: Block ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇▇) ▇▇▇-▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Derivatives Middle Office - 4th Floor
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
For purposes of Sections 5 and 6, a copy to:
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Derivatives Documentation - 35th Floor
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for notices or communications to Party B:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary and
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Process Agent. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent - Not Applicable.
Party B appoints as its Process Agent - Not Applicable
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Neither Party A or Party B is a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A.
(f) Credit Support Document. Details of any Credit Support Document:
The Guaranty of BSC shall be a Credit Support Document with respect to
Party A.
The Credit Support Annex dated as of even date herewith shall be a
Credit Support Document in relation to Party A and Party B and is
incorporated herein by reference.
23
(g) Credit Support Provider. "Credit Support Provider" means, in relation
to Party A, BSC and, in relation to Party B, Not Applicable.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
choice of law doctrine).
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to all Transactions from the date hereof,
other than as specified in a Confirmation.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
Part 5
Other Provisions
----------------
(a) Inconsistency. In the event of any inconsistency between the
provisions contained in this Agreement and those contained in any of
the definitions published by ISDA (the "ISDA Definitions"), the
provisions contained in this Agreement will prevail. In the event of
any inconsistency between the provisions contained in a Confirmation
and those contained in ISDA Definitions or the Agreement, the
provisions contained in such Confirmation shall prevail unless
otherwise specified in a Confirmation or other writing signed by the
parties.
(b) Modifications to Termination Provisions.
(i) Default under Specified Transactions
(A) Section 5(a)(v) is hereby amended by (1) deleting
the phrase "for at least three Local Business
Days" in the seventh line thereof and replacing it
with the phrase "for at least one Local Business
Day".
(B) "Specified Transaction," as defined in Section 14
of this Agreement, is hereby amended (a) by
inserting between "(b)" and the word "any" in the
ninth line thereof the following clause: "all
financial transactions and agreements entered into
between Party A (or any Credit Support Provider of
such party or any applicable Specified Entity of
such Party) and Party B (or any Credit Support
Provider of such party or any applicable Specified
Entity of such party), including, without
limitation, futures, stock lending agreements,
repurchase agreements and reverse repurchase
agreements, loans of any kind, purchases and sales
of equity and debt securities of any kind,
including mortgages, whether or not on margin,
(c)" and (b) by replacing the words "and (c)" in
the ninth line thereof with "and (d)".
(c) Procedures for Entering into Transaction; Recording.
(i) For each Transaction which Party A and Party B enter into
hereunder, Party A shall transmit to Party B a Confirmation.
(ii) Each party hereto consents to the monitoring or recording, at any
time and from time to time, by the other party of any and all
communications between officers or employees of the parties, waives any
further notice of such monitoring or recording, and agrees to notify
its officers and employees of such monitoring or recording.
(d) Transfer. Section 7 of this Agreement is hereby amended by
inserting the following at the end
thereof:
"Notwithstanding the foregoing, Party A may transfer this
Agreement and all of its interests or obligations in or under
this Agreement to BSC or any of BSC's
24
Affiliates, provided that if such transfer is to an entity
other than BSC, Party B is furnished with a Guaranty of BSC of
such transferee's obligation in substantially the form of the
Guaranty of BSC delivered in connection with this Agreement.
Upon such assignment Party A shall be fully released from any
and all obligations and liabilities related to the interests
assigned."
(e) Additional Representations. Section 3 is hereby amended by adding the
following subsections (g), (h), (i) and (j) at the end of such Section:
"(g) Non-Reliance. In connection with the negotiation of, the
entering into, and the confirming of the execution of, this
Agreement, any Credit Support Document, each Transaction and
any other documentation relating to this Agreement to which it
is a party or that it is required by this Agreement to
deliver: (1) the other party hereto or thereto is not acting
as a fiduciary or financial or investment advisor for it; (2)
it is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the other party
hereto or thereto other than the representations expressly set
forth in this Agreement, in such Credit Support Document and
in any Confirmation; (3) the other party hereto or thereto has
not given to it (directly or indirectly through any other
person) any assurance, guaranty or representation whatsoever
as to the expected or projected success, profitability,
return, performance, result, effect, consequence, or benefit
(legal, regulatory, tax, financial, accounting or otherwise)
of this Agreement, such Credit Support Document, such
Transaction or such other documentation; (4) it has consulted
with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has deemed
necessary, and it has made its own investment, hedging and
trading decisions (including decisions regarding the
suitability of any Transaction) based upon its own judgment
and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party;
(5) it has determined that the rates, prices or amounts and
other terms of each Transaction and the indicative quotations
(if any) provided by the other party hereto or thereto reflect
those in the relevant market for similar transactions, and all
trading decisions have been the result of arm's length
negotiations between the parties; (6) it is entering into this
Agreement and each Transaction with a full understanding of
all the terms, conditions and risks hereof and thereof
(economic and otherwise) and it is capable of assuming and
willing to assume (financially and otherwise) those risks; and
(7) it is a sophisticated institutional investor.
(h) Line of Business. It has entered into this Agreement
(including each Transaction governed hereby) in conjunction
with its line of business (including financial intermediation
services) or the financing of its business.
(i) No Agency. It is entering into this Agreement, any Credit
Support Document to which it is a party, each Transaction and
any other documentation relating to this Agreement or any
Transaction as principal (and not as agent or in any other
capacity, fiduciary or otherwise) and it has individually
negotiated each Transaction.
(j) Eligible Contract Participant. It constitutes an "eligible
contract participant" as such term is defined in Section
1a(12) of the Commodity Exchange Act, as amended."
25
(f) Payments.
(i) If the parties are each required to make payments pursuant
to Section 2(a) on the same day in respect of a Transaction
but the payments are to be made in different currencies, the
party that receives the payment due to it first shall hold an
amount equal to the payment it received in trust (with the
right to commingle that amount with its general funds) for the
benefit of the other party until that other party receives the
corresponding payment due to it.
(ii) If by reason of the time difference between the cities in
which payments are to be made, it is not possible for
simultaneous payments to be made on any date on which both
parties are required to make payments hereunder, either party
may at its option and in its sole discretion notify the other
party that payments on that date are to be made in escrow. In
this case deposit of the payment due earlier on that day shall
be made by 2:00 P.M. (local time at the place for the earlier
payment) on that date with an escrow agent selected by the
party giving the notice, accompanied by irrevocable payment
instructions (A) to release the deposited payment to the
intended recipient upon receipt by the escrow agent of the
required deposit of the corresponding payment from the other
party on the same date accompanied by irrevocable payment
instructions to the same effect or (B) if the required deposit
of the corresponding payment is not made on that same date, to
return the payment deposited to the party that paid it into
escrow. The party that elects to have payments made in escrow
shall pay the costs of the escrow arrangements and shall cause
those arrangements to provide that the intended recipient of
the payment due to be deposited first shall be entitled to
interest on that deposited payment for each day in the period
of its deposit at the rate offered by the escrow agent for
that day for overnight deposits in the relevant currency in
the office where it holds the deposited payment (at 11:00 A.M.
local time on that day) if that payment is not released by
5:00 P.M. local time on the date it is deposited for any
reason other than the intended recipient's failure to make the
escrow deposit it is required to make hereunder in a timely
fashion.
(g) Set-off. Section 6 of this Agreement is hereby amended by adding the
following Subsection (f) at the end thereof:
"(f) Set-Off. (i) In addition to any rights of set-off,
combination of accounts, lien or other similar rights to which
a party hereto is at any time otherwise entitled (whether by
operation of law, contract or otherwise), upon the occurrence
of (a) an Event of Default (in which case the Defaulting Party
will be referred to herein as "X"), (b) a Credit Event Upon
Merger or an Illegality (in which case the Affected Party will
be referred to herein as "X") or (c) an Additional Termination
Event (in which case the party with respect to which the
Additional Termination Event has occurred, or been deemed to
have occurred, will be referred to herein as "X"), the party
hereto that is not X (such party being referred to herein as
"Y") shall have the right (but not the obligation), without
prior notice to X or any other person, to set-off any
obligation of X owing to Y (and, if Y elects, any Affiliates
of Y) (whether or not arising under the Agreement, whether or
not matured, whether or not contingent and regardless of the
currency, place of payment or booking office of the
obligation). The parties agree and acknowledge that the
obligations referred to by this provision shall be deemed
satisfied and discharged to the extent they are so set-off. Y
will give notice to X of any set-off effected pursuant to this
Section 6(f) promptly after such set-off has been effected.
(ii) In order to set-off obligations that are denominated in
different currencies, Y may convert any obligation denominated
in one currency (the "Original Currency") to another currency
(the "Set-off Currency") at the market rate, determined by Y
in good faith, at which Y would be able, acting in a
commercially reasonable manner, to purchase the Set-off
Currency for the relevant amount of the Original Currency.
26
(iii) If an obligation is unascertained, Y may in good faith
estimate that obligation and set-off in respect of such
estimate, subject to the relevant party accounting to the
other when such obligation is ascertained.
(iv) Nothing in this Section 6(f) will be deemed to create a
charge or other security interest."
(h) Waiver of Jury Trial. Each party irrevocably waives any and all right
to trial by jury in any legal proceeding in connection with this
Agreement.
(i) Multibranch Party. Without limiting the generality of Section 10, each
Multibranch Party represents to the other party and agrees that the
obligations of such Multibranch Party are unconditional, irrespective
of the validity or enforceability of this Agreement against any of its
Offices, whether or not such Office has undergone a change in its
status, function, control or ownership.
(j) Incorporation of EMU Protocol. Party A and Party B agree that the
definitions and provisions contained in Annexes 1 to 5, inclusive, and
Section 6 of the EMU Protocol, as published by the ISDA on May 6, 1998,
are incorporated into and apply to this Agreement. References in those
definitions and provisions to an "ISDA Master Agreement" will be deemed
to be references to this Agreement.
27
IN WITNESS WHEREOF, the parties have executed and delivered this document as of
the date specified on the first page of this document.
BEAR ▇▇▇▇▇▇▇ BANK PLC PENN-AMERICA GROUP INC.
By: ___________________________________ By: ___________________________
Name: Name:
Title: Title:
28
EXHIBIT 1
---------
GUARANTY
--------
GUARANTY. dated as of December 16, 2OO2 by THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC., A
Delaware corporation (the "Guarantor"), in favor of PENN-ANIERICA GROUP INC., a
corporation organized under the laws of Pennsylvania (the "Beneficiary").
(a) Guaranty.
(i) To induce the Beneficiary to enter into an ISDA Master Agreement as of
even date herewith and one or more Transactions as of various dates
(together, the "Agreement"; terms capitalized but not otherwise
defined herein being used herein as therein defined) with BEAR ▇▇▇▇▇▇▇
BANK PLC ("Bear ▇▇▇▇▇▇▇"), subject to the terms and conditions set
forth herein, the Guarantor irrevocably and unconditionally guarantees
to the Beneficiary, its successors and permitted assigns, the prompt
payment by Bear ▇▇▇▇▇▇▇ on demand, of any amount due and payable to
the Beneficiary under the Agreement, subject to any applicable grace
period thereunder (the "Obligations').
(ii) The Guarantor hereby waives acceptance of this Guaranty, diligence,
promptness, presentment, demand on Bear ▇▇▇▇▇▇▇ for payment, protest
of nonpayment and all notices of any kind. In addition, the
Guarantor's obligations hereunder shall not be affected by the
existence, validity, enforceability, perfection, or extent of any
collateral therefor. The Beneficiary shall not be obligated to proceed
against Bear ▇▇▇▇▇▇▇ before claiming under the Guaranty nor to file
any claim relating to the Obligations in the event that Bear ▇▇▇▇▇▇▇
becomes subject to a bankruptcy, reorganization or similar proceeding,
and the failure of the Beneficiary so to file shall not affect the
Guarantor's obligations hereunder. The Guarantor agrees that its
obligations under this Guaranty constitute a guaranty of payment and
not of collection.
(b) Consents, Waivers and Renewals. The Guarantor agrees that the Beneficiary,
may at any time and from time to time, either before or after the maturity
thereof, without notice to or further consent of the Guarantor, extend the
time of payment of, exchange or surrender any collateral for, or renew any
of the Obligations, and may also make any agreement with Bear ▇▇▇▇▇▇▇ or
with any other party to or person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in party, or for any modification
of the terms thereof or of any agreement between the Beneficiary and Bear
▇▇▇▇▇▇▇ or any such other party or person, without in any way impairing or
affecting this Guaranty. The Guarantor agrees that the Beneficiary may
resort to the Guarantor for payment of any of the Obligations, whether or
not the Beneficiary shall have resorted to any collateral security, or
shall have proceeded against any other obligor principally or secondarily
obligated with respect to any of the Obligations.
(c) Expenses. The Guarantor agrees to pay on demand all out-of-pocket expenses
(including without limitation the reasonable fees and disbursements of
Beneficiary's counsel) incurred in the enforcement or protection of the
rights of the Beneficiary hereunder; provided that the Guarantor shall not
be liable for any expenses of the Beneficiary if not payment under this
Guaranty is due.
(d) Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation until all Obligations to the Beneficiary
shall have been paid in full. If any amount shall he paid to the Guarantor
in violation of the preceding sentence, such amount shall be held for the
benefit of the Beneficiary and shall forthwith be paid to the Beneficiary
to be credited and applied to the Obligations, whether matured or
unmatured. Subject to the foregoing, upon payment of all the Obligations,
the Guarantor shall be subrogated to the rights of the Beneficiary against
PENN-AMERICA GROUP, INC.
Page 2 of 2
Bear ▇▇▇▇▇▇▇ and the Beneficiary agrees to take at the Guarantor's expense
such steps as the Guarantor may reasonably request to implement such
subrogation.
(e) Cumulative Rights. No failure on the party of the Beneficiary to exercise,
and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by
the Beneficiary of any right, remedy or power hereunder preclude any other
or future exercise of any right, remedy or power. Each and every right,
remedy and power hereby granted to the Beneficiary or allowed it by law or
other agreement shall be cumulative and not exclusive of any other, and may
be exercised by the Beneficiary from time to time.
(f) Representations and Warranties.
(i) The Guarantor is a corporation duly existing under the laws of the
State of Delaware.
(ii) The execution, delivery and performance oft his Guaranty have been
duly authorized by all necessary corporate action and do not conflict
with any provision of law or any regulation or of the Guarantor's
charter or by-laws or of any agreement binding upon it.
(iii)No consent, approvals and authorizations of and registrations with or
declarations to any governmental authority are required in connection
with the execution, delivery and performance of this Guaranty.
(iv) This Guaranty constitutes the legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(g) Continuing Guaranty. The Guaranty shall remain in full force and effect and
he binding upon the Guarantor and its successors and permitted assigns, and
inure to the benefit of the Beneficiary and its successors and permitted
assigns, until all of the Obligations have been satisfied in full. In the
event that any payment by Bear ▇▇▇▇▇▇▇ in respect of any Obligations is
rescinded or must otherwise be returned for any reason whatsoever, the
Guarantor shall remain liable hereunder in respect of such Obligations as
if such payment had not been made.
(h) Notices. All notices in connection with this Guaranty shall he deemed
effective, if in writing and delivered in person or by courier, on the date
delivered to the following address (or such other address which the
Guarantor shall notify the Beneficiary of in writing):
THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Derivatives Department, 35th Floor
With a copy to: Legal Department, 10d Floor
(i) Governing Law. The Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to
choice of law doctrine.
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by the
Guarantor to the Beneficiary as of the date first above written.
THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC.
By:
Name:
Title: