Document:

exv4w4

 

Exhibit 4.4

Execution Copy

GUARANTEE AGREEMENT

by and between

FIRST MERCURY FINANCIAL CORPORATION

and

WILMINGTON TRUST COMPANY

Dated as of December 14, 2006

 

 

 

Execution Copy

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS AND INTERPRETATION	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 1.1	 	Definitions and Interpretation	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 2.1	 	Powers and Duties of the Guarantee Trustee	 	 	5	 
	 
	 	Section 2.2	 	Certain Rights of the Guarantee Trustee	 	 	6	 
	 
	 	Section 2.3	 	Not Responsible for Recitals or Issuance of Guarantee	 	 	8	 
	 
	 	Section 2.4	 	Events of Default; Waiver	 	 	8	 
	 
	 	Section 2.5	 	Events of Default; Notice	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III GUARANTEE TRUSTEE	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 3.1	 	Guarantee Trustee; Eligibility	 	 	9	 
	 
	 	Section 3.2	 	Appointment, Removal and Resignation of the Guarantee Trustee	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV GUARANTEE	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.1	 	Guarantee	 	 	10	 
	 
	 	Section 4.2	 	Waiver of Notice and Demand	 	 	10	 
	 
	 	Section 4.3	 	Obligations Not Affected	 	 	10	 
	 
	 	Section 4.4	 	Rights of Holders	 	 	11	 
	 
	 	Section 4.5	 	Guarantee of Payment	 	 	12	 
	 
	 	Section 4.6	 	Subrogation	 	 	12	 
	 
	 	Section 4.7	 	Independent Obligations	 	 	12	 
	 
	 	Section 4.8	 	Enforcement by a Beneficiary	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V LIMITATION OF TRANSACTIONS; SUBORDINATION	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.1	 	Limitation of Transactions	 	 	13	 
	 
	 	Section 5.2	 	Ranking	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI TERMINATION	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 6.1	 	Termination	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII INDEMNIFICATION	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 7.1	 	Exculpation	 	 	14	 
	 
	 	Section 7.2	 	Indemnification	 	 	15	 
	 
	 	Section 7.3	 	Compensation; Reimbursement of Expenses	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 8.1	 	Successors and Assigns	 	 	16	 
	 
	 	Section 8.2	 	Amendments	 	 	16	 
	 
	 	Section 8.3	 	Notices	 	 	17	 
	 
	 	Section 8.4	 	Benefit	 	 	17	 
	 
	 	Section 8.5	 	Governing Law	 	 	17	 
	 
	 	Section 8.6	 	Counterparts	 	 	18	 
	 
	 	Section 8.7	 	Separability	 	 	18	 

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GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (this “Guarantee”), dated as of December 14, 2006, is executed and
delivered by First Mercury Financial Corporation, a Delaware corporation (the “Guarantor”), and
Wilmington Trust Company, a Delaware 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 First Mercury Capital Trust III, a Delaware statutory trust (the “Issuer”).

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”), dated
as of the date hereof among Wilmington Trust Company, not in its individual capacity but solely as
institutional trustee, the administrators of the Issuer named therein, the Guarantor, as sponsor,
and the holders from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate
liquidation amount of $25,000,000 (the “Capital Securities”); and

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

NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities,
which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions and Interpretation.

In this Guarantee, unless the context otherwise requires:

(a) capitalized terms used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Guarantee has the same meaning throughout;

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

(d) all references in this Guarantee to “Articles” or “Sections” are to Articles or Sections
of this Guarantee, unless otherwise specified;

(e) terms defined in the Declaration as at the date of execution of this Guarantee have the
same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the
context otherwise requires; and

 

 

 

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

“Affiliate” has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.

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

“Capital Securities” has the meaning set forth in the recitals to this Guarantee.

“Common Securities” means the common securities issued by the Issuer to the Guarantor
pursuant to the Declaration.

“Corporate Trust Office” means the office of the Guarantee Trustee at which the
corporate trust business of the Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Guarantee is located at 1100 North
Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.

“Covered Person” means any Holder of Capital Securities.

“Debentures” means the debt securities of the Guarantor designated the Floating Rate
Junior Subordinated Deferrable Interest Debentures due 2036 held by the Institutional Trustee (as
defined in the Declaration) of the Issuer.

“Declaration Event of Default” means an “Event of Default” as defined in the
Declaration.

“Event of Default” has the meaning set forth in Section 2.4(a).

“Guarantee Payments” means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be
paid on such Capital Securities to the extent the Issuer shall have funds available therefor, (ii)
the Optional Redemption Price to the extent the Issuer has funds available therefor, with respect
to any Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price
to the extent the Issuer has funds available therefor, with respect to Capital Securities redeemed
upon the occurrence of a Special Event, and (iv) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in either case, the
“Liquidation Distribution”).

“Guarantee Trustee” means Wilmington Trust Company, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the terms of this
Guarantee and thereafter means each such Successor Guarantee Trustee.

 

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“Guarantor” means First Mercury Financial Corporation and each of its successors and
assigns.

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

“Indemnified Person” means the Guarantee Trustee, any Affiliate of the Guarantee
Trustee, or any officers, directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.

“Indenture” means the Indenture dated as of the date hereof between the Guarantor and
Wilmington Trust Company, not in its individual capacity but solely as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the institutional trustee
of the Issuer.

“Issuer” has the meaning set forth in the opening paragraph to this Guarantee.

“Liquidation Distribution” has the meaning set forth in the definition of “Guarantee
Payments” herein.

“Majority in liquidation amount of the Capital Securities” means Holder(s) of
outstanding Capital Securities, voting together as a class, but separately from the holders of
Common Securities, of more than 50% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

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

“Officer’s Certificate” means, with respect to any Person, a certificate signed by one
Authorized Officer of such Person. Any Officer’s Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee shall include:

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

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

(c) a statement that the 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

 

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

“Optional Redemption Price” has the meaning set forth in the Indenture.

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

“Responsible Officer” means, with respect to the Guarantee Trustee, any officer within
the Corporate Trust Office of the Guarantee Trustee including any Vice President, Assistant Vice
President, Secretary, Assistant Secretary or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated officers and also,
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.

“Special Event” has the meaning set forth in the Indenture.

“Special Redemption Price” has the meaning set forth in the Indenture.

“Subsidiary” means with respect to any Person, (i) any corporation at least a
majority of the outstanding voting stock of which is owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii)
any general partnership, joint venture or similar entity, at least a majority of the outstanding
partnership or similar interests of which shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any
limited partnership of which such Person or any of its Subsidiaries is a general partner. For the
purposes of this definition, “voting stock” means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only by reason of the
occurrence of a contingency.

“Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 3.1.

“Trust Securities” means the Common Securities and the Capital Securities.

 

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ARTICLE II

POWERS, DUTIES AND RIGHTS OF THE

GUARANTEE TRUSTEE

Section 2.1 Powers and Duties of the Guarantee Trustee.

(a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of
the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person
except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to
a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment
to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of
title shall be effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee
has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit
of the Holders of the Capital Securities.

(c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing
or waiving of all Events of Default that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into
this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.4) and is actually known to a Responsible Officer of
the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in
it by this Guarantee, and use the same degree of care and skill in its exercise thereof, as a
prudent person would exercise or use under the circumstances in the conduct of his or her own
affairs.

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

(i) prior to the occurrence of any Event of Default and after the curing or waiving of
all 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, 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, and no implied covenants or obligations
shall be read into this Guarantee against the Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Guarantee Trustee, the
Guarantee Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the requirements of this

 

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Guarantee; but in the case of any such certificates or opinions that by any
provision hereof 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;

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

(iii) the Guarantee Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the written direction of the
Holders of not less than a Majority in liquidation amount of the Capital Securities relating
to the time, method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or relating to the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and

(iv) no provision of this Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such funds is not
reasonably assured to it under the terms of this Guarantee or security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not
reasonably assured to it.

Section 2.2 Certain Rights of the Guarantee Trustee.

(a) Subject to the provisions of Section 2.1:

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

(ii) Any direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate.

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

(iv) The Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument (or any re-recording, refiling or re-registration thereof).

 

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(v) The Guarantee Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek instructions concerning the
administration of this Guarantee from any court of competent jurisdiction.

(vi) The Guarantee Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including
attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s agents, nominees or
custodians) and liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the Guarantee Trustee;
provided, however, that nothing contained in this Section 2.2(a)(vi) shall
relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee.

(vii) The Guarantee Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may see fit.

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

(ix) Any action taken by the Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee, both of which shall be
conclusively evidenced by the Guarantee Trustee’s or its agent’s taking such action.

(x) Whenever in the administration of this Guarantee the Guarantee Trustee shall deem
it desirable to receive instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.

 

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(xi) The Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence, and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred upon it by this
Guarantee.

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

Section 2.3 Not Responsible for Recitals or Issuance of Guarantee.

The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Guarantee Trustee does not assume any responsibility for their correctness. The Guarantee
Trustee makes no representation as to the validity or sufficiency of this Guarantee.

Section 2.4 Events of Default; Waiver.

(a) An Event of Default under this Guarantee will occur upon the failure of the Guarantor to
perform any of its payment or other obligations hereunder.

(b) The Holders of a Majority in liquidation amount of the Capital Securities may, voting or
consenting as a class, on behalf of the Holders of all of the Capital Securities, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and shall be deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or impair any right
consequent thereon.

Section 2.5 Events of Default; Notice.

(a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Capital Securities and the
Guarantor, notices of all Events of Default actually known to a Responsible Officer of the
Guarantee Trustee, unless such defaults have been cured before the giving of such notice,
provided, however, that the Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the Capital
Securities.

(b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless
the Guarantee Trustee shall have received written notice from the Guarantor or a Holder of the
Capital Securities (except in the case of a payment default), or a Responsible Officer of the
Guarantee Trustee charged with the administration of this Guarantee shall have obtained actual
knowledge thereof.

 

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ARTICLE III

GUARANTEE TRUSTEE

Section 3.1 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 banking corporation or national association organized and doing business
under the laws of the United States of America or any State or Territory thereof or of the
District of Columbia, or Person authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least fifty million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation or national association publishes
reports of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes of this Section
3.1(a)(ii), the combined capital and surplus of such corporation or national association
shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.

(b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section
3.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set forth
in Section 3.2(c).

(c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate
such interest or resign to the extent and in the manner provided by, and subject to this Guarantee.

Section 3.2 Appointment, Removal and Resignation of the Guarantee Trustee.

(a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause
at any time by the Guarantor except during an Event of Default.

(b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a
Successor Guarantee Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.

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

 

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(d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as
provided in this Section 3.2 within 60 days after delivery of an instrument of removal or
resignation, the Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

(e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor
Guarantee Trustee.

(f) Upon termination of this Guarantee or removal or resignation of the Guarantee Trustee
pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to
the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal
or resignation.

ARTICLE IV

GUARANTEE

Section 4.1 Guarantee.

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

(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 benefit of, and to be enforceable by, all such Beneficiaries, whether or not such
Beneficiaries have received notice hereof.

Section 4.2 Waiver of Notice and Demand.

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

Section 4.3 Obligations Not Affected.

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

 

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(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, Optional Redemption Price, Special Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Capital Securities or the extension of time for the
performance of any other obligation under, arising out of or in connection with, the Capital
Securities (other than an extension of time for payment of Distributions, Optional Redemption
Price, Special Redemption Price, Liquidation Distribution or other sum payable that results from
the extension of any interest payment period on the Debentures or any extension of the maturity
date of the Debentures permitted by the Indenture);

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

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

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

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

(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 4.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

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

Section 4.4 Rights of Holders.

(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; provided, however, that
(subject to Section 2.1) the Guarantee Trustee shall have the right to decline to follow any such
direction if the Guarantee Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its
board of directors or trustees, executive committees or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.

 

11

 

(b) Any Holder of Capital Securities may institute a legal proceeding directly against the
Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee, without first instituting
a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first against the Issuer, the
Guarantee Trustee or any other Person before so proceeding directly against the Guarantor.

Section 4.5 Guarantee of Payment.

This Guarantee creates a guarantee of payment and not of collection.

Section 4.6 Subrogation.

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

Section 4.7 Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g),
inclusive, of Section 4.3 hereof.

Section 4.8 Enforcement by a Beneficiary.

A Beneficiary may enforce the obligations of the Guarantor contained in Section 4.1(b)
directly against the Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before proceeding against the
Guarantor. The Guarantor shall be subrogated to all rights (if any) of any Beneficiary against the
Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this Guarantee;
provided, however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights that it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if at the time of any such payment, and after giving effect to such
payment, any amounts are due and unpaid under this Guarantee.

 

12

 

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

Section 5.1 Limitation of Transactions.

So long as any Capital Securities remain outstanding, if (a) there shall have occurred and be
continuing an Event of Default or a Declaration Event of Default or (b) the Guarantor shall have
selected an Extension Period as provided in the Declaration and such period, or any extension
thereof, shall have commenced and be continuing, then the Guarantor shall not and shall not permit
any Affiliate of the Guarantor controlled by the Guarantor to (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor’s or such Affiliate’s capital stock (other than payments of dividends or
distributions to the Guarantor or a Subsidiary of the Guarantor) or make any guarantee payments
with respect to the foregoing; (y) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Guarantor or any Affiliate of the
Guarantor controlled by the Guarantor that rank pari passu in all respects with or junior in
interest to the Debentures; or (z) enter into, amend or modify any contracts with shareholders
holding more than 10% of the outstanding shares of common stock of the Guarantor (other than, with
respect to clauses (x) and (y) above, (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Guarantor or any Subsidiary of the Guarantor in connection with any
employment contract, benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital stock of the
Guarantor or of such Subsidiary (or securities convertible into or exercisable for such capital
stock) as consideration in an acquisition transaction entered into prior to the occurrence of the
Event of Default, Declaration Event of Default or Extension Period, as applicable, (ii) as a result
of any exchange or conversion of any class or series of the Guarantor’s capital stock (or any
capital stock of a Subsidiary of the Guarantor) for any class or series of the Guarantor’s capital
stock (or in the case of a Subsidiary of the Guarantor, any class or series of such Subsidiary’s
capital stock) or of any class or series of the Guarantor’s indebtedness for any class or series of
the Guarantor’s capital stock (or in the case of indebtedness of a Subsidiary of the Guarantor, of
any class or series of such Subsidiary’s indebtedness for any class or series of such Subsidiary’s
capital stock), (iii) the purchase of fractional interests in shares of the Guarantor’s capital
stock (or the capital stock of a Subsidiary of the Guarantor) pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged, (iv) any
declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of
rights, stock or other property under any stockholders’ rights plan, or the redemption or
repurchase of rights pursuant thereto, (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of such warrants, options
or other rights is the same stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (vi) payments under this Guarantee).

 

13

 

Section 5.2 Ranking.

This Guarantee will constitute an unsecured obligation of the Guarantor and will rank
subordinate and junior in right of payment to all present and future Senior Indebtedness (as
defined in the Indenture) of the Guarantor. The Guarantor’s obligations in respect of this
Guarantee shall rank pari passu with the Guarantor’s obligations under the Guarantee Agreement by
and between the Guarantor and Wilmington Trust Company, as Guarantee Trustee, dated as of April 29,
2004 and the Guarantor’s obligations under the Guarantee Agreement by and between the Guarantor and
Wilmington Trust Company, as Guarantee Trustee, dated as of May 26, 2004. By their acceptance
thereof, each Holder of Capital Securities agrees to the foregoing provisions of this Guarantee and
the other terms set forth herein.

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

ARTICLE VI

TERMINATION

Section 6.1 Termination.

This Guarantee shall terminate as to the Capital Securities (i) upon full payment of the
Optional Redemption Price or Special Redemption Price of all Capital Securities then outstanding,
(ii) upon the distribution of all of the Debentures to the Holders of all of the Capital Securities
or (iii) upon full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder of Capital Securities must restore payment of any sums
paid under the Capital Securities or under this Guarantee.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Exculpation.

(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person’s negligence or willful misconduct with
respect to such acts or omissions.

 

14

 

(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented
to the Issuer or the Guarantor by any Person as to matters the Indemnified Person reasonably
believes are within such other Person’s professional or expert competence and who, if selected by
such Indemnified Person, has been selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets
from which Distributions to Holders of Capital Securities might properly be paid.

Section 7.2 Indemnification.

(a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred
without negligence or willful misconduct on the part of the Indemnified Person, arising out of or
in connection with the acceptance or administration of the trust or trusts hereunder, including,
but not limited to, the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or liability in connection
with the exercise or performance of any of the Indemnified Person’s powers or duties hereunder.
The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

(b) Promptly after receipt by an Indemnified Person under this Section 7.2 of notice of the
commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be
made against the Guarantor under this Section 7.2, notify the Guarantor in writing of the
commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the Guarantor did not
otherwise learn of such action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any
obligations to any Indemnified Person other than the indemnification obligation provided in
paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor’s choice
at the Guarantor’s expense to represent the Indemnified Person in any action for which
indemnification is sought (in which case the Guarantor shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the Indemnified Person. Notwithstanding the Guarantor’s election to appoint
counsel to represent the Guarantor in an action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and the Guarantor shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Guarantor
to represent the Indemnified Person would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include both the Indemnified
Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may
be legal defenses available to it and/or other Indemnified Person(s) which are different from or

 

15

 

additional to those available to the Guarantor, (iii) the Guarantor shall not have employed
counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a
reasonable time after notice of the institution of such action or (iv) the Guarantor shall
authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor. The
Guarantor will not, without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional release of each
Indemnified Person from all liability arising out of such claim, action, suit or proceeding.

Section 7.3 Compensation; Reimbursement of Expenses.

The Guarantor agrees:

(a) to pay to the Guarantee Trustee from time to time such compensation for all services
rendered by it hereunder as the parties shall agree to from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an express
trust); and

(b) except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
request for all reasonable expenses, disbursements and advances incurred or made by it in
accordance with any provision of this Guarantee (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or willful misconduct.

The provisions of this Section 7.3 shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Successors and Assigns.

All guarantees and agreements contained in this Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Capital Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer or lease of the
Guarantor’s assets to another entity, in each case, to the extent permitted under the Indenture,
the Guarantor may not assign its rights or delegate its obligations under this Guarantee without
the prior approval of the Holders of at least a Majority in liquidation amount of the Capital
Securities.

Section 8.2 Amendments.

Except with respect to any changes that do not adversely affect the rights of Holders of the
Capital Securities in any material respect (in which case no consent of Holders will be
required), this Guarantee may be amended only with the prior approval of the Holders of not
less than a Majority in liquidation amount of the Capital Securities and the Guarantor. The
provisions of the Declaration with respect to amendments thereof apply to the giving of such
approval.

 

16

 

Section 8.3 Notices.

All notices provided for in this Guarantee shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

(a) If given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set forth
below (or such other address as the Guarantee Trustee may give notice of to the Holders of the
Capital Securities and the Guarantor):

Wilmington Trust Company

1100 North Market Street

Wilmington, Delaware 19890-1600

Attention: Corporate Trust Administration

Telecopy: 302-636-4140

(b) If given to the Guarantor, at the Guarantor’s mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders of the Capital Securities and to
the Guarantee Trustee):

First Mercury Financial Corporation

29621 Northwestern Hwy.

Southfield, MI 48034

Attention: John A. Marazza

Telecopy: (248) 353-5879

(c) If given to any Holder of the Capital Securities, at the address set forth on the books
and records of the Issuer.

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

Section 8.4 Benefit.

This Guarantee is solely for the benefit of the Beneficiaries and, subject to Section 2.1(a),
is not separately transferable from the Capital Securities.

Section 8.5 Governing Law.

PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS
GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

17

 

Section 8.6 Counterparts.

This Guarantee may be executed in one or more counterparts, each of which shall be an
original, but all of which taken together shall constitute one and the same instrument.

Section 8.7 Separability.

In case one or more of the provisions contained in this Guarantee shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Guarantee, but this Guarantee shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein.

Signatures appear on the following page

 

18

 

THIS GUARANTEE is executed as of the day and year first above written.

	 	 	 	 	 
	 	FIRST MERCURY FINANCIAL CORPORATION, as Guarantor

 	 
	 	By:  	/s/ John A. Marazza
 	 
	 	 	Name:  	John A. Marazza 	 
	 	 	Title:  	CFO, Treasurer, Secretary 	 
	 

	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, as 

Guarantee Trustee

 	 
	 	By:  	/s/ Christopher J. Slaybaugh
 	 
	 	 	Name:  	Christopher J. Slaybaugh 	 
	 	 	Title:  	Senior Financial Services Officer 	 
	 

 

19First Amendment to the Fourth Amended and Restated Partnership Agreement

     

    Exhibit
      10.1

     

    AMENDING
      AGREEMENT NO. 1

     

     

    

     

     

    THIS
      AGREEMENT made as of the 11th day
      of
October,
      2005,

     

     

    B
      E T W E
      E N:

     

    AVISCAR
      INC.,

    a
      corporation incorporated under the laws of Canada,

     

    (hereinafter
      called the "Avis
      General Partner"),

     

    -
      and
      -

     

    BUDGETCAR
      INC.,

    a
      corporation existing under the laws of Canada, 

     

    (hereinafter
      called the "Budget
      General Partner"),

     

    -
      and
      -

     

    BNY
      TRUST COMPANY OF CANADA,

    a
      trust
      company incorporated under the laws of Canada and registered to carry on the
      business of a trust company in each of the provinces of Canada, in its capacity
      as trustee of STARS
      TRUST,
      a trust
      established under the laws of the Province of Ontario,

     

    (hereinafter
      called the "STARS Limited
      Partner"),

     

    -
      and
      -

     

    MONTREAL
      TRUST COMPANY OF CANADA,
      a trust
      company incorporated under the laws of Canada and registered to carry on the
      business of a trust company in each of the provinces in Canada, in its capacity
      as trustee of BAY
      STREET FUNDING TRUST,
      a trust
      established under the laws of the Province of Ontario,

     

    (hereinafter
      called the "Bay
      Street Limited Partner").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WHEREAS
      the Avis General Partner, the Budget General Partner, the STARS Limited Partner
      and the Bay Street Limited Partner have entered into a fourth amended and
      restated limited partnership agreement made as of the 20th
      day of
      April, 2005 (collectively, the "Limited
      Partnership Agreement");

     

    AND
      WHEREAS the Avis General Partner, the Budget General Partner, the STARS Limited
      Partner and the Bay Street Limited Partner wish to amend the Limited Partnership
      Agreement;

     

    NOW
      THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and
      covenants and agreements of the parties herein contained and for other good
      and
      valuable consideration (the receipt and sufficiency of which are hereby
      acknowledged by each of the parties), the parties hereby covenant and agree
      as
      follows:

     

     

    
      	1.  	
              Interpretation

            

    

     

    (a)  All
      words
      and expressions defined in the Limited Partnership Agreement and not otherwise
      defined in this Agreement have the respective meanings specified in the Limited
      Partnership Agreement.

     

    (b)  Section
      headings
      are for
      convenience only.

     

     

    
      	2.  	
              Amendments
                to the Limited Partnership
                Agreement

            

    

     

    
      	2.1  	
              Section
                1.1 of the Limited Partnership Agreement is hereby amended
                by:

            

    

     

    (a)  deleting
      the words "(a) whose unsecured long-term debt is rated BBB or its equivalent
      or
      higher by two or more of the Rating Agency, S&P and Moody's" where such
      words appear in the defined term "Eligible Manufacturer" and substituting
      therefor the words "so long as Chrysler, Ford, GM or such additional
      Manufacturer (a) has an unsecured long-term debt rating of BB or higher by
      the
      Rating Agency";

     

    (b)  adding
      each of the following defined terms in the appropriate alphabetical
      order:

     

    
      	(i)  	
              “"Eligible
                Manufacturer Percentage"
                means, in respect of an Eligible Manufacturer at any time, if such
                Eligible Manufacturer's unsecured long-term debt rating by the Rating
                Agency at such time is (i) BBB or higher, a percentage equal to the
                Partnership Program Vehicle Base Percentage, (ii) BBB (low), a percentage
                equal to the sum of (A) the Partnership Program Vehicle Base Percentage
                plus (B) one-quarter of the Partnership Percentage Differential at
                such
                time, (iii) BB (high), a percentage equal to the sum of (C) the
                Partnership Program Vehicle Base Percentage, and (D) one-half of
                the
                Partnership Percentage Differential at such time, and (iii) BB, a
                percentage equal to the sum of (E) the Partnership Program Vehicle
                Base
                Percentage, and (F) three-quarters of the Partnership Percentage
                Differential at such time;”;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(ii)  	
              “"Partnership
                Non-program Vehicle Percentage"
                means 17.5%;”;

            

    

     

    
      	(iii)  	
              “"Partnership
                Percentage Differential"
                means, on any date, the positive difference between the Partnership
                Program Vehicle Base Percentage on such date and the Partnership
                Non-program Vehicle Percentage on such
                date;”;

            

    

     

    
      	(iv)  	
              “"Partnership
                Program Vehicle Base Percentage"
                means 9.3%;”;

            

    

     

    
      	(v)  	
              “"Partnership
                Program Vehicle Percentage"
                means, on any date, a percentage equal to the weighted average of
                the
                individual Eligible Manufacturer Percentages on such date, calculated
                based on the relevant percentage that the sum of the Current Book
                Values
                of the Partnership Program Vehicles and the Program Negotiation Vehicles
                manufactured by each such Eligible Manufacturer represents of the
                sum of
                the Current Book Values of all Partnership Program Vehicles and Program
                Negotiation Vehicles on such
                date;”.

            

    

     

    
      	2.2  	
              Section
                3.3(c) of the Limited Partnership Agreement is hereby amended by
                deleting
                the first sentence of section 3.3(c) in its entirety and substituting
                therefor the following:

            

    

     

    "With
      respect to any Capital Call made pursuant to section 3.3(a), either General
      Partner shall make, simultaneously with the payment from the Limited Partners,
      a
      capital contribution by way of immediately available funds deposited to the
      Vehicle Account, in such amount that, after giving effect to all such capital
      contributions and the use of proceeds thereof, the aggregate of the General
      Partners' Capital Accounts for the General Partners (calculated on the
      assumption that all Net Income of the Partnership up to the particular time
      has
      been allocated to the Partners at such time) less any capital contributed by
      the
      General Partners pursuant to Section 4.8 and Excluded Capital shall be at least
      equal to the General Partners' Capital Commitment.".

     

    
      	2.3  	
              Section
                3.3(e) of the Limited Partnership Agreement is hereby amended by
                deleting
                such section in its entirety and substituting therefor the
                following:

            

    

     

    “(e) Each
      General Partner covenants and agrees to contribute at all times up to and
      including the day of occurrence of a Trigger Event, but not after such day,
      sufficient capital to the Partnership from time to time by way of additional
      capital contribution so that the aggregate of the General Partners' Capital
      Accounts for the General Partners (calculated on the assumption that all Net
      Income of the Partnership up to the particular time has been allocated to the
      Partners at such time) less any capital contributed by the General Partners
      pursuant to Section 4.8 and Excluded Capital shall be equal to at least the
      product of (i) the sum of (A) the product of the Partnership Program Vehicle
      Percentage and the percentage of Partnership Vehicles that are Partnership
      Program Vehicles (other than Program Negotiation Vehicles), (B) the product
      of
      the Partnership Program Vehicle 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Percentage
      and the percentage of Partnership Vehicles that are Program Negotiation
      Vehicles, and (C) the product of the Partnership Non-program Vehicle Percentage
      and the percentage of Partnership Vehicles that are Partnership Non-program
      Vehicles times (ii) the total capital of the Partnership other than capital
      contributed by the Partners pursuant to Section 4.8 and Excluded Capital, such
      product being referred to in this Agreement as the "General
      Partners' Capital Commitment".”.

     

    
      	2.4  	
              Section
                3.4 of the Limited Partnership Agreement is hereby amended
                by:

            

    

     

    
      	(a)  	
              deleting
                the words "after giving effect to such Hedging Transactions," where
                such
                words appear in the first sentence of Section 3.4 and substituting
                therefor the words ", if it were assumed that such Hedging Transactions
                were entered into by the Limited Partners,";
                and

            

    

     

    
      	(b)  	
              inserting
                the words "(on the assumption that such Hedging Transactions were
                entered
                into by the Limited Partners)" immediately after the words "Hedging
                Transactions does not" where such words appear in the second sentence
                of
                Section 3.4.

            

    

     

    
      	2.5  	
              Section
                5.4(c) of the Limited Partnership Agreement is hereby amended by
                deleting
                such section in its entirety and substituting therefor the
                following:

            

    

     

    
      	 	
              "(c)

            	
              When
                and to the extent the General Partners make a Capital Call for the
                purpose
                of funding the purchase of Program Negotiation Vehicles, each of
                them
                shall ensure that after giving effect to such Capital Call, the aggregate
                of the General Partners' Capital Accounts for the General Partners
                (calculated on the assumption that all Net Income of the Partnership
                up to
                the particular time has been allocated to the Partners at such time)
                less
                any capital contributed by the General Partners pursuant to Section
                4.8
                and Excluded Capital shall be at least equal to the General Partners'
                Capital Commitment.".

            

    

     

    
      	2.6  	
              The
                form of Settlement Report attached to the Limited Partnership Agreement
                as
                "Schedule D" is hereby deleted and the form of Settlement Report
                attached
                to this Agreement as Schedule A is added to the Limited Partnership
                Agreement as Schedule D.

            

    

     

     

    
      	3.  	
              Other
                Documents

            

    

     

    Any
      reference to the Limited Partnership Agreement made in any documents delivered
      pursuant thereto or in connection therewith shall be deemed to refer to the
      Limited Partnership Agreement as amended or supplemented from time to
      time.

     

     

    
      	4.  	
              Miscellaneous

            

    

     

    (a)  With
      the
      exception of the foregoing amendments, the Limited Partnership Agreement shall
      continue in full force and effect, unamended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  This
      Agreement shall enure to the benefit of and be binding upon the parties, their
      successors and any permitted assigns.

     

    (c)  This
      Agreement may be executed in one or more counterparts each of which shall be
      deemed an original and all of which when taken together, shall constitute one
      and the same instrument.

     

    (d)  None
      of
      the rights or obligations hereunder shall be assignable or transferable by
      any
      party without the prior written consent of the other party.

     

    (e)  This
      Agreement shall be governed and construed in accordance with the laws of the
      Province of Ontario and the federal laws of Canada applicable
      therein.

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their authorized signatories thereunto duly authorized, as of the date first
      above written.

     

    
       

      
        
          	 	 	 	
                   AVISCAR
                    INC.

                   

                   

                	 
	 	 	
                  by:

                	
                  /s/
                    Gerald J. Monusky

                	 
	 	 	 	
                  
                    Name:
                      Gerald J. Monusky

                    Title:
                      Vice President

                  

                	 

        

        
 

      

      
        	 	 	
                by:

              	
                /s/
                  Mark E. Costello

              	 
	 	 	 	
                Name:
                  Mark E. Costello

                Title:
                  Assistant Secretary

              	 

      

      

       

      
        	 	 	 	
                BUDGETCAR
                  INC.

                 

              	 
	 	 	
                by:

              	
                /s/
                  William Boxberger

              	 
	 	 	 	
                Name:
                  William Boxberger

                Title:
                  Vice President

              	 

      

      

       

      
        	 	 	
                by:

              	
                /s/
                  Edward Peter Bertero

              	 
	 	 	 	
                Name:
                  Edward Peter Bertero

                Title:
                  Senior Vice President and Treasurer

              	 

      

      

       

       

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      
        	 	 	 	
                BNY
                  TRUST COMPANY OF CANADA,
                  as trustee of CANADIAN
                  MASTER TRUST
                  (with liability limited to the assets of the Trust) by its Securitization
                  Agent, BMO
                  NESBITT BURNS INC.

              	 
	 	 	
                by:

              	/s/Chris
                Romano	 
	 	 	 	
                Name:

                Title: 

              	 

      

      

       

      
        	 	 	
                by:

              	
                /s/
                  J D Marriott

              	 
	 	 	 	
                Name:
                  Jerry Marriott

                Title:
                  Vice President, Securitization and Structured Finance

              	 

      

      

       

      
        	 	 	 	
                MONTREAL
                  TRUST COMPANY OF CANADA, as
                  trustee of
                  BAY STREET FUNDING TRUST (with
                  liability limited to the assets of the trust) by its
                  administrator, SCOTIA
                  CAPITAL INC.

                 

              	 
	 	 	
                by:

              	 /s/
                Doug Noe	 
	 	 	 	
                Name:

                Title: 

              	 

      

      

       

      
        	 	 	
                by:

              	 	 
	 	 	 	
                Name:

                Title:

              	 

      

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      The
        undersigned hereby acknowledges notice of and consents to the foregoing
        amendments to the Limited Partnership Agreement.

       

      
        	 	 	 	
                CENDANT
                  CORPORATION

                 

              	 
	 	 	
                by:

              	
                /s/
                  Kevin Monaco

              	 
	 	 	 	
                Name:
                  Kevin Monaco

                Title:
                  Group Vice President and Assistant Treasurer 

              	 

      

      

       

      

       

      We
        hereby
        consent to the foregoing amendments to the Limited Partnership
        Agreement.

       

      DATED
        this 11th day
        of
        October, 2005.

       

      
        	 	 	 	
                DOMINION
                  BOND RATING SERVICE LIMITED

                 

              	 
	 	 	
                by:

              	
                /s/
                  Dino Galanis

              	 
	 	 	 	
                Name:
                  Dino Galanis

                Title:
                  Assistant Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]