EXHIBIT 4.11
GUARANTEE AGREEMENT
BETWEEN
RLI CORP.
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS GUARANTEE TRUSTEE)
DATED AS OF ________________
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS.................................................................................1
Section 1.1 Definitions............................................................................1
ARTICLE 2 TRUST INDENTURE ACT.........................................................................3
Section 2.1 Trust Indenture Act; Application.......................................................3
Section 2.2 List of Holders........................................................................3
Section 2.3 Reports by the Guarantee Trustee.......................................................4
Section 2.4 Periodic Reports to Guarantee Trustee..................................................4
Section 2.5 Evidence of Compliance with Conditions Precedent.......................................4
Section 2.6 Events of Default; Waiver..............................................................4
Section 2.7 Event of Default; Notice...............................................................4
Section 2.8 Conflicting Interests..................................................................5
ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE..........................................5
Section 3.1 Powers and Duties of the Guarantee Trustee.............................................5
Section 3.2 Certain Rights of Guarantee Trustee....................................................6
Section 3.3 Not Responsible for Recitals or Issuance of Guarantee..................................8
ARTICLE 4 GUARANTEE TRUSTEE...........................................................................8
Section 4.1 Guarantee Trustee; Eligibility.........................................................8
Section 4.2 Appointment, Removal and Resignation of the Guarantee Trustee..........................9
ARTICLE 5 GUARANTEE...................................................................................9
Section 5.1 Guarantee..............................................................................9
Section 5.2 Waiver of Notice and Demand...........................................................10
Section 5.3 Obligations Not Affected..............................................................10
Section 5.4 Rights of Holders.....................................................................11
Section 5.5 Guarantee of Payment..................................................................11
Section 5.6 Subrogation...........................................................................11
Section 5.7 Independent Obligations...............................................................11
ARTICLE 6 LIMITATION OF TRANSACTIONS AND RANKING.....................................................12
Section 6.1 Limitation of Transactions............................................................12
Section 6.2 Ranking...............................................................................12
ARTICLE 7 TERMINATION................................................................................13
Section 7.1 Termination...........................................................................13
ARTICLE 8 INDEMNIFICATION............................................................................13
Section 8.1 Exculpation...........................................................................13
Section 8.2 Indemnification.......................................................................13
ARTICLE 9 MISCELLANEOUS..............................................................................14
Section 9.1 Successors and Assigns................................................................14
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Section 9.2 Amendments............................................................................14
Section 9.3 Notices...............................................................................14
Section 9.4 Benefit...............................................................................15
Section 9.5 Interpretation........................................................................16
Section 9.6 GOVERNING LAW.........................................................................16
Section 9.7 Counterparts..........................................................................16
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GUARANTEE AGREEMENT
THIS
GUARANTEE AGREEMENT ("
Guarantee Agreement"), dated as of
_______________, is executed and delivered by
RLI Corp., an
Illinois corporation
(the "Guarantor"), and Wilmington Trust Company, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of RLI Capital Trust I, a
Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of _____________ among the Trustees named therein, the
Guarantor, as Depositor, and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing ____ of
its ____% Preferred Securities, (liquidation preference $___ per preferred
security) (the "Preferred Securities") representing preferred undivided
beneficial interests in the assets of the Issuer and having the terms set forth
in the Trust Agreement;
[WHEREAS, pursuant to the Trust Agreement, the Trust and the Guarantor, as
Depositor, have granted an Over-Allotment Option (as defined in the Trust
Agreement) to certain underwriters or initial purchasers, as the case may be,
and such Over-Allotment Option may be exercised on or within [30] days after the
initial Closing Date (as defined in the Trust Agreement) such that an additional
$_____ aggregate liquidation amount of Preferred Securities (the "Option
Preferred Securities") and an additional $_____ aggregate liquidation amount of
common securities (together with the Common Securities, the Preferred Securities
and the Option Preferred Securities, the "Securities") may be issued and sold
pursuant to the Trust Agreement on such initial or second Closing Date, as the
case may be; PROVIDED that if the Over-Allotment Option is not exercised by the
underwriters or the initial purchasers, as the case may be, then the defined
term the "Securities" shall mean only the Common Securities and the Preferred
Securities;]
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as
trust assets;
WHEREAS, as incentive for the Holders to purchase Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this
Guarantee Agreement, the terms
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.
"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.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York, New York or Wilmington, Delaware are
authorized by law, regulation or executive order to remain closed.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) 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, directly or indirectly, as
obligor or otherwise.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this
Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Preferred Securities,
to the extent the Issuer shall have funds on hand available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), with respect to the Preferred Securities
called for redemption by the Issuer to the extent the Issuer shall have funds on
hand available therefor, and
(iii) upon a voluntary or involuntary termination, winding-up or liquidation of
the Issuer, unless the Preferred Securities are redeemed or Debentures are
distributed to the Holders, the lesser of (a) the aggregate of the liquidation
preference of $[ ] per Preferred Security plus all accrued and unpaid
Distributions on the Preferred Securities to the date of payment to the extent
the Issuer shall have funds on hand legally and immediately available to make
such payment 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, not in its individual
capacity, but solely as a trustee 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" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
"Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), or any Affiliate, officer, director, shareholder,
member, partner, employee, representative, nominee, custodian or agent
thereof.
"Indenture" means the Subordinated Indenture dated as of ____________,
between the Guarantor and Bank One, N.A., as Trustee, as supplemented or amended
from time to time.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in liquidation preference of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the liquidation preference of all
then outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman and Chief Executive Officer, President or a Vice
President, and by the Treasurer, an Associate Treasurer, an Assistant Treasurer,
the Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement 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.
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"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
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Senior Trust Officer, Trust Officer or Assistant Trust Officer or any other
officer of the Corporate Trust Trustee Administration 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 whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Senior Debt" has the same meaning given to that term in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 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, such imposed duties shall control.
SECTION 2.2 LIST OF HOLDERS.
(a) The Guarantee Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders ("List of Holders") and shall otherwise comply with
Section 312(a) of the Trust Indenture Act. If the Guarantee Trustee is not the
registrar, the Guarantor shall furnish to the Guarantee Trustee at least seven
Business Days before each Interest Payment Date (as such term is defined in the
Indenture) and at such other times as the Guarantee Trustee may request in
writing a List of Holders as of such date as the Guarantee Trustee may
reasonably require, in each case to the extent such information is not identical
to a previously supplied List of Holders or has not otherwise been received by
the Guarantee Trustee in its capacity as such. The Guarantee Trustee may destroy
any List of Holders previously given to it upon receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE.
On or before ___ of each year, commencing ___________, 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 other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 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, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a)(4) 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 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such 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) of the Trust Indenture
Act may be given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation preference of the Preferred
Securities may, by vote, on behalf of all of the Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit to the Holders, notices of all Events of Default
actually known to the Guarantee Trustee, unless such defaults have 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 Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall only be deemed to have knowledge of any
Event of Default if the Guarantee Trustee shall have received written notice, or
a Responsible Officer charged with the administration of the Trust Agreement
shall have obtained actual notice, of such Event of Default.
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SECTION 2.8 CONFLICTING INTERESTS.
The Trust Agreement 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 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(v) 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, 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 of which the Guarantee Trustee has knowledge as
provided in Section 2.7(b) has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(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 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 2.6) of
which the Guarantee Trustee has knowledge as provided in Section 2.7(b), 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 person 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:
(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:
(ii) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement,
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
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(iii) 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;
(iv) 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;
(v) 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 preference of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(vi) 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 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee conclusively 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 believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein;
(iii) whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor;
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(iv) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof);
(v) the Guarantee Trustee may 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 to be taken 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;
(vi) 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 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, that nothing contained in
this Section 3.2(a)(vi) 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;
(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 its agents, nominees, custodians 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;
(ix) any action by the Guarantee Trustee or its agents hereunder
shall bind the Holders of the Preferred 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 Agreement, both of
which shall be conclusively evidenced by the Guarantee Trustee or its agent
taking such action; and
(x) 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 a Majority in liquidation preference of the Preferred
Securities, (B) may refrain from enforcing such remedy or right or taking
such
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other action until such instructions are received, and (C) shall be
protected in conclusively relying on or 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 or
authority.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee Agreement 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 Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territory or District of Columbia authority. If such
corporation 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 4.1(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 combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(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 Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
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SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor (except during an Event of
Default, in which case the Guarantee Trustee may only be removed by a Majority
in liquidation preference of the Preferred Securities).
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee, whereupon the resigning Guarantee Trustee shall be released and
discharged of the trusts and other duties imposed on such trustee in connection
herewith.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery of an instrument of resignation or removal, the resigning or removed
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.
(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 Agreement or removal or resignation
of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay
to the Guarantee Trustee all amounts accrued and owing to such Guarantee Trustee
to the date of such termination, removal or resignation.
ARTICLE 5
GUARANTEE
SECTION 5.1 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 or upon distribution of Debentures to Holders in
exchange for all of the Preferred Securities as provided in the Trust
Agreement), as and when due, regardless of any defense, 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.
9
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures as so provided in 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 Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) to the extent permitted by law, any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4 RIGHTS OF HOLDERS.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation preference of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce the Holder's rights under this Guarantee
Agreement, without first instituting a legal proceeding against, or requesting
or directing that action be taken by, the Guarantee Trustee, the Issuer or any
other Person; (v) if the Guarantee Trustee fails to enforce its rights under
this Guarantee Agreement, any Holder may directly institute a legal proceeding
against the Guarantor to enforce the Guarantee Trustee's rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer, the Guarantee Trustee or any other person or entity; and (vi) the
Holders have those rights set forth in Section 316(b) of the Trust Indenture
Act.
SECTION 5.5 GUARANTEE OF PAYMENT.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer or upon distribution of Debentures to Holders in exchange for all
of the Preferred Securities as provided in the Trust Agreement).
SECTION 5.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory 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 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 5.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
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ARTICLE 6
LIMITATION OF TRANSACTIONS AND RANKING
SECTION 6.1 LIMITATION OF TRANSACTIONS.
So long as any Preferred Securities remain outstanding, if (a) there shall
have occurred an Event of Default hereunder, (b) there shall have occurred an
Event of Default (as defined under the Indenture) or (c) the Guarantor has
exercised its option to defer interest payments on the Debentures by extending
the interest payment period as provided in the Indenture or any supplemental
indenture to the Indenture, and such period or extension thereof shall be
continuing, then (i) the Guarantor shall not declare or pay any dividend on,
make any distribution with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock, other than (A)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, the Guarantor's common stock; (B) any
declaration of a dividend in connection with any stockholders' rights plan that
Guarantor may adopt, or the issuance of stock under any such plan in the future,
or the redemption or repurchase of any such rights pursuant thereto; (C) as a
result of a reclassification of the Guarantor's capital stock or the exchange or
conversion of one class or series of the Guarantor's capital stock for another
class or series of the Guarantor's capital stock; (D) the purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, and (E) purchases or acquisitions of shares of Guarantor's common
stock in connection with the satisfaction by the Guarantor of its obligations
under any benefit plans for the Guarantor's directors, officers, employees or
producers or dividend reinvestment plans or any other contractual obligation of
the Guarantor (other than a contractual obligation ranking equally with or
junior to the Debentures), (ii) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor that rank equally with or junior to the
Debentures and (iii) the Guarantor shall not make any guarantee payments with
respect to any guarantee by the Guarantor of any securities of any of its
subsidiaries if such guarantee ranks junior to the Debentures in right of
payment.
SECTION 6.2 RANKING.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including the Debentures, except those
obligations or liabilities made equal or subordinate by their terms, (ii)
equally with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common stock.
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ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Debentures to the Holders in exchange for
all of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to Preferred Securities or
this Guarantee Agreement.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Holder or beneficial owner of
Preferred Securities 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 Agreement 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 Agreement 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.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to 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 has been selected with reasonable care
by or on behalf of the Guarantor, 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 might properly be paid.
SECTION 8.2 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Guarantor shall
indemnify and hold harmless each Indemnified Person from and against any loss,
damage or claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
13
(b) To the fullest extent permitted by applicable law, reasonable expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in
Section 8.2(a).
(c) The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of the this Guarantee Agreement.
(d) The Guarantor agrees to pay to the Guarantee Trustee compensation for
its services as shall be mutually agreed upon by the Guarantor and the Guarantee
Trustee. The Guarantor shall reimburse the Guarantee Trustee upon request for
all reasonable out-of-pocket expenses incurred by it, including the reasonable
compensation and expenses of the Guarantee Trustee's agents and counsel, except
any expense as may be attributable to the negligence of the Guarantee Trustee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger,
conveyance, transfer or sale or lease involving the Guarantor that is permitted
under the Indenture and pursuant to which the assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes that do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in liquidation preference of
the Preferred Securities. The provisions of Article 6 of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
No amendment hereof that affects materially and adversely the Guarantee
Trustee's rights, duties or immunities hereunder shall be effective unless such
amendment is executed by the Guarantee Trustee in its reasonable discretion.
SECTION 9.3 NOTICES.
Any notice, request or other communication required or permitted to be
given to the Guarantor, Issuer or Guarantee Trustee hereunder shall be in
writing, duly signed by the party giving such notice, and delivered in person,
telecopied, mailed by first class mail (registered or certified, return receipt
requested) or overnight air courier guaranteeing next day delivery as follows:
14
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Guarantee Trustee and
Holders:
RLI Corp.
0000 X. Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
(b) if given to the Issuer, in care of the Guarantee Trustee, to the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice of to
the Holders:
RLI Capital Trust I
c/o
RLI Corp.
0000 X. Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
(c) if given to the Guarantee Trustee, to the Guarantee Trustee's address
set forth below or such other address as the Guarantee Trustee may give notice
of to the Guarantor and the Holders:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged or confirmed, if telecopied;
and the next Business Day after timely delivery to the courier, if sent by
overnight courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class mail
or by overnight carrier guaranteeing next day delivery to the address set forth
on the books and records of the Issuer and shall be deemed to have been duly
given: five Business Days after being deposited in the mail, postage prepaid, if
mailed; and the next Business Day after timely delivery to the courier, if sent
by overnight courier guaranteeing next day delivery.
If a notice or communication is sent in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
SECTION 9.4 BENEFIT.
This Guarantee Agreement is solely for the benefit of the Holders and,
subject to Section 3.1(a), is not separately transferable from the Preferred
Securities.
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SECTION 9.5 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 1.1;
(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
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 9.6 GOVERNING LAW.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.7 COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
RLI CORP., as Guarantor
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
WILMINGTON TRUST COMPANY, as Guarantee
Trustee
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
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CROSS-REFERENCE TABLE*
SECTION OF TRUST INDENTURE ACT SECTION OF GUARANTEE
OF 1939, AS AMENDED AGREEMENT
310(a)................................................ 4.1(a)
310(b)................................................ 2.8, 4.1(c)
310(c)................................................ Inapplicable
311(a)................................................ 2.2(b)
311(b)................................................ 2.2(b)
311(c)................................................ Inapplicable
312(a)................................................ 2.2(a)
312(b)................................................ 2.2(b)
313................................................... 2.3
314(a)................................................ 2.4
314(b)................................................ Inapplicable
314(c)................................................ 2.5
314(d)................................................ Inapplicable
314(e)................................................ 1.1, 2.5, 3.2
314(f)................................................ 2.1, 3.2
315(a)................................................ 3.1(d)
315(b)................................................ 2.7
315(c)................................................ 3.1
315(d)................................................ 3.1(d)
315(e)................................................ Inapplicable
316(a)................................................ 1.1, 2.6, 5.4(iii)
316(b)................................................ 5.4
316(c)................................................ Inapplicable
317(a)................................................ 5.4
317(b)................................................ Inapplicable
318(a)................................................ 2.1(b)
318(b)................................................ 2.1
318(c)................................................ 2.1(a)
* This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not affect the interpretation of any of its terms or provisions.
