Exhibit 4.4
GUARANTEE AGREEMENT
Between
Pennsylvania Manufacturers Corporation
(as Guarantor)
and
The Bank of New York
(as Guarantee Trustee)
dated as of
_______________, 1998
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Guarantee Agreement Section
--------------------------- ---------------------------
310(a) .............................. 4.01(a)
310(b) .............................. 4.01(c), 2.08
310(c) .............................. Inapplicable
311(a) .............................. 2.02(b)
311(b) .............................. 2.02(b)
311(c) .............................. Inapplicable
312(a) .............................. 2.02(a)
312(b) .............................. 2.02(b)
313 .............................. 2.03
314(a) .............................. 2.04
314(b) .............................. Inapplicable
314(c) .............................. 2.05
314(d) .............................. Inapplicable
314(e) .............................. 1.01, 2.05, 3.02
314(f) .............................. 2.01, 3.02
315(a) .............................. 3.01(d)
315(b) .............................. 2.07
315(c) .............................. 3.01
315(d) .............................. 3.01(d)
316(a) .............................. 5.04(a), 2.06
316(b) .............................. 5.03
316(c) .............................. 2.02
317(a) .............................. Inapplicable
317(b) .............................. Inapplicable
318(a) .............................. 2.01(b)
318(b) .............................. 2.01
318(c) .............................. 2.01(a)
_______________
* This Cross-Reference Table does not constitute part of the Guarentee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions ..................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application ................ 4
SECTION 2.02. Lists of Holders ................................ 4
SECTION 2.03. Reports by the Guarantee Trustee ................ 5
SECTION 2.04. Periodic Reports to Guarantee Trustee ........... 5
SECTION 2.05. Evidence of Compliance with Conditions Precedent 5
SECTION 2.06. Events of Default; Waiver ....................... 5
SECTION 2.07. Event of Default; Notice ........................ 5
SECTION 2.08. Conflicting Interests ........................... 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee ...... 6
SECTION 3.02. Certain Rights of Guarantee Trustee ............. 7
SECTION 3.03. Indemnity ....................................... 9
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Guarantee Trustee; Eligibility .................... 9
SECTION 4.02. Appointment, Removal and Resignation of
Guarantee Trustee ................................. 10
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee ...................................... 10
SECTION 5.02. Waiver of Notice and Demand .................... 10
SECTION 5.03. Obligations Not Affected ....................... 11
SECTION 5.04. Rights of Holders .............................. 11
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SECTION 5.05. Guarantee of Payment ........................... 12
SECTION 5.06. Subrogation .................................... 12
SECTION 5.07. Independent Obligations ........................ 12
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Covenants ...................................... 12
SECTION 6.02. Subordination .................................. 13
SECTION 6.03. Pari Passu Guarantees .......................... 13
ARTICLE VII
TERMINATION
SECTION 7.01. Termination .................................... 13
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns ......................... 13
SECTION 8.02. Amendments ..................................... 14
SECTION 8.03. Notices ........................................ 14
SECTION 8.04. Benefit ........................................ 15
SECTION 8.05. Interpretation ................................. 15
SECTION 8.06. Governing Law .................................. 16
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _______________, 1998, is executed
and delivered by Pennsylvania Manufacturers Corporation, a Pennsylvania
corporation (the "Guarantor"), and The Bank of New York, a New York banking
corporation, as trustee (the "Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of PMC Capital I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of _________________, 1998 among the Guarantor, as
Depositor, The Bank of New York (Delaware), as Trustee, The Bank of New York, as
Property Trustee, and the Administrative Trustees named therein, the Issuer is
issuing up to $100,000,000 aggregate liquidation amount of its ______% Capital
Securities, Series A (liquidation amount $1,000 per Capital Security) (the
"Capital Securities" and, together with the Common Securities, the "Trust
Securities") and up to $3,093,000 aggregate liquidation amount of its Common
Securities, each representing ownership interests in the assets of the Issuer
and having the terms set forth in the Trust Agreement;
WHEREAS, the Trust Securities will be issued by the Issuer and the proceeds
thereof will be used to purchase the Debentures (as defined in the Trust
Agreement) of the Guarantor which will be deposited with The Bank of New York,
as Property Trustee under the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Capital Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the Capital Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Guarantee Agreement, the terms
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set forth below shall, unless the context otherwise requires, have the following
meanings. 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 unless otherwise indicated.
"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, however that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. 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.
"Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer (liquidation amount $1,000 per
Common Security).
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (a) every
obligation of such Person for money borrowed; (b) 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; (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (d) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (e) every capital lease obligation of such Person and (f) every
obligation of the type referred to in clauses (a) through (e) 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.
"Event of Default" shall mean (a) a default by the Guarantor on any of its
payment obligations under this Guarantee Agreement or (b) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee" means this Guarantee Agreement, dated as of ____________, 1998,
between the Guarantor and the Guarantee Trustee.
"Guarantee Payments" shall mean the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by or on behalf of the Issuer: (a) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Capital Securities, to the extent the Issuer shall have funds available therefor
at such time, (b) the Redemption Price (as defined in the Trust Agreement) with
respect to the Capital Securities called for redemption by the Issuer, to the
extent the Issuer shall have funds available therefor at such time and (c) upon
a voluntary or involuntary dissolution, winding-up or termination of the Issuer,
unless the Debentures are distributed to the Holders, the lesser of (i) the
Liquidation Distribution (as defined in the Trust Agreement) to the extent the
Issuer shall have funds available therefor at such time and (ii) the amount of
assets of the Issuer remaining available for distribution to Holders, after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law, in liquidation of the Issuer.
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"Guarantee Trustee" means The Bank of New York, until a Successor Guarantee
Trustee 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" shall mean any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
___________________, 1998, among the Guarantor and The Bank of New York, as
trustee.
"Majority in liquidation amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, Capital Securities representing more than
50% of the liquidation amount of all then outstanding Capital Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, Chief Executive Officer, the President or a
Senior Vice President, and by the Chief Financial Officer, the Treasurer or the
Vice President of Finance 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 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;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, any financial services
officer or any other officer of the Corporate Trust Administration Department of
the Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to
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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 premium, if any) and interest, if
any (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), on Debt,
whether incurred on or prior to the date of this Guarantee or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Guarantee or to other Debt which is pari
passu with, or subordinated to, the Guarantee; provided, however, that Senior
Debt shall not be deemed to include (a) any Debt of the Guarantor which, when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Code, was without recourse to the Guarantor, (b) any Debt of the
Guarantor to any of its Subsidiaries (as defined in the Indenture), (c) Debt to
any employee of the Guarantor, (d) any trade accounts payable of the Guarantor,
(e) accrued liabilities arising in the ordinary course of business of the
Guarantor, (f) the Debentures and (g) the Guarantee.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, through operation of Section 318(c)
thereof, such imposed duties shall control. If any provision of this Guarantee
Agreement modifies or excludes any provision of the Trust Indenture Act which
may be so modified or excluded, the latter provision shall be deemed to apply to
this Guarantee Agreement as so modified or excluded, as the case may be.
SECTION 2.02. Lists of Holders.
----------------
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (i) semi-annually, not later than _________________ 15 and
________________ 15 in each year, a list, in such form as the Guarantee Trustee
may reasonably require, of the names and addresses of the Holders of the Capital
Securities ("List of Holders") as of a date not more than 15 days prior to the
delivery thereof and (ii) at such other times as the Guarantee Trustee
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may request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 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 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.
(b) The Guarantee Trustee shall comply with its obligations under Sections
311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trustee. Not later than July 15 of
--------------------------------
each year, commencing July 15, 1999, the Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Guarantee Trustee. The Guarantor shall
-------------------------------------
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information as are required by Section 314
(if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
------------------------------------------------
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a Majority in
-------------------------
liquidation amount of the Capital Securities may, by vote, on behalf of the
Holders of all of the Capital Securities, waive any past default or Event of
Default and its consequences. Upon such waiver, any such default or 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 thereon.
SECTION 2.07. Event of Default; Notice.
------------------------
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first-class postage prepaid, to the Holders
of the Capital Securities, notices of all Events of Default known to the
Guarantee Trustee, unless such Event of Default has been cured 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
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Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Capital Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
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 obtained actual knowledge of such Event of Default.
SECTION 2.08. Conflicting Interests. The Trust Agreement and the
---------------------
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee Agreement to any Person except a Holder of
Capital Securities exercising his or her rights pursuant to Section 5.04(d) or
to a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee. The right,
title and interest of the Guarantee Trustee shall auto matically 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) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders of
the Capital Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof as a prudent individual would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
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(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement,
(including pursuant to Section 2.01) and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee Trustee,
the Guarantee Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to the requirements
of this Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.02. Certain Rights of Guarantee Trustee.
-----------------------------------
(a) Subject to the provisions of Section 3.01:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
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(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) 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 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.
(iv) The Guarantee Trustee may (at the expense of the Guarantor)
consult with legal counsel, and the written advice or opinion of such legal
counsel with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such
legal counsel may be legal counsel to 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.
(v) 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 such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the costs,
expenses (including 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 3.02(a)(v) 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.
(vi) 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.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney appointed
with due care by it hereunder.
(viii) 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 or taking any other action hereunder,
the Guarantee Trustee (A) may request instructions from the Holders of the
Capital Securities, (B) may refrain from
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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.
(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 3.03. Indemnity. The Guarantor agrees to indemnify the Guarantee
---------
Trustee for, and to hold it harmless against, any loss, damage, claims,
liability, penalty or expense incurred without negligence or bad faith on the
part of the Guarantee Trustee, 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 powers or duties hereunder. The
Guarantee Trustee will not claim or exact any lien or charge on any Guarantee
Payments as a result of any amount due to it under this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. 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 Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and shall be a corporation meeting the requirements
of Section 310(a) of the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of a supervising or examining authority, then, for the purposes of this Section
4.01(a)(ii) and to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its com bined
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 4.01(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and the
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Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of Guarantee Trustee.
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(a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument exe cuted 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 4.02 within 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 5.01. Guarantee. 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 (other than the defense of payment), 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
amounts to the Holders.
SECTION 5.02. 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, the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
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SECTION 5.03. 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 Capital Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as so provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of or in connection with the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorgani zation, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(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 (other than payment of
the underlying obligation), it being the intent of this Section 5.03 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.04. 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 Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of this Guarantee Agreement
or exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement and (d) any Holder of Capital Securities may institute, to
the extent permissible under applicable law, a legal proceeding directly against
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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 5.05. Guarantee of Payment. This Guarantee Agreement creates a
--------------------
guarantee of payment and not a guarantee 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 the Debentures to the Holders as provided in the Trust
Agreement.
SECTION 5.06. 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 5.01; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
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.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that
-----------------------
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Covenants. So long as any Capital Securities remain
---------
outstanding, the Guarantor shall not, and shall cause its Subsidiaries (as
defined in the Indenture) not to, (a) declare or pay any dividends or
distributions on (other than dividends or distributions in Common Stock or Class
A Common Stock of the Guarantor), or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Guarantor's outstanding capital
stock or (b) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank pari passu with or
junior to the Debentures or make any guarantee payments with respect to the
foregoing, if at such time (i) the Guarantor shall be in default with respect to
its Guarantee Payments hereunder, (ii) there shall have occurred and be
continuing any Event of Default under the Indenture or (iii) the Guarantor shall
have given notice of its selection of an Extension Period (as defined in the
Indenture) and such period, or any extension thereof, is continuing.
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SECTION 6.02. 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 to the extent and in the manner set forth in the Indenture with
respect to the Debentures, and the provisions of Article Eleven of the Indenture
will apply, mutatis mutandis, to the obligations of the Guarantor hereunder.
The obligations of the Guarantor hereunder do not constitute Senior Debt (as
defined in the Indenture) of the Guarantor.
SECTION 6.03. Pari Passu Guarantees. The obligations of the Guarantor
---------------------
under this Guarantee Agreement shall rank pari passu with the obligations of the
Guarantor under (a) any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by a business
trust or similar entity whose common securities are owned, directly or
indirectly, by the Guarantor, (b) the Indenture and the Debentures issued
thereunder, (c) the Expense Agreement (as defined in the Trust Agreement) and
any similar expense agreements entered into by the Guarantor in connection with
the offering of the Capital Securities by the Trust and (d) any other security,
guarantee or other agreement or obligation that is expressly stated to rank pari
passu with the obligations of the Guarantor under this Guarantee Agreement or
with any obligation that ranks pari passu with the obligations of the Guarantor
under this Guarantee Agreement.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and
-----------
be of no further force and effect upon (a) full payment of the Redemption Price
of all Capital Securities, (b) the distribution of the Debentures to the Holders
of the Capital Securities in exchange for all of the Capital Securities or (c)
payment in full 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 the Capital Securities or this Guarantee Agreement. The Guarantor will
indemnify each Holder and hold it harmless from and against any loss it may
suffer in such circumstance.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. 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 Capital Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor or a
conveyance, transfer or lease of the Guarantor's properties that is permitted
under Article Eight of the Indenture and pursuant
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to which the successor or assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations hereunder,
and any purported assignment other than in accordance with this provision shall
be void.
SECTION 8.02. 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
be amended only with the prior approval of the Holders of not less than a
Majority in liquidation amount of the outstanding Capital Securities. The
provisions of Article VI of the Trust Agreement concerning meetings of the
Holders shall apply to the giving of such approval.
SECTION 8.03. 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:
(a) if given to the Guarantor, to the address or telecopy number set forth
below or such other address as the Guarantor may give notice of to the Guarantee
Trustee:
Pennsylvania Manufacturers Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: President
(b) if given to the Issuer, at the address or telecopy number set forth
below or such other address as the Issuer may give notice of to the Guarantee
Trustee:
PMC Capital I
c/o Pennsylvania Manufacturers Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Administrative Trustee
with copy to:
The Bank of New York
....................
....................
....................
Facsimile No:............
Attention:...............
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(c) if given to the Guarantee Trustee, at the Guarantee Trustee's address
or telecopy number set forth below:
The Bank of New York
....................
....................
....................
Facsimile No:.............
Attention:................
(d) if given to any Holder of the Capital Securities, at the address set
forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for the
-------
benefit of the Holders, and is not separately transferable from the Capital
Securities.
SECTION 8.05. 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
1.01 unless otherwise indicated;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(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) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
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(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 8.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
-------------
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
PENNSYLVANIA MANUFACTURERS
CORPORATION
By:..............................
Name: Xxxx X. Xxxxxxxx
Title:President and
Chief Executive Officer
THE BANK OF NEW YORK,
as Guarantee Trustee
By:..............................
Name:
Title:
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