1
EXHIBIT 4.4
================================================================================
GUARANTEE AGREEMENT
between
Superior National Insurance Group, Inc.
(as Guarantor)
and
Wilmington Trust Company
(as Trustee)
dated as of
December 3, 1997
================================================================================
2
CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as Amended Agreement
------------------- ----------
310(a)................................................................ 4.1(a)
310(b).....................................................4.1(c), 2.B
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)
316(a)................................................................ 1.1, 2.6, 5.4
316(b)................................................................ 5.3
316(c)................................................................ 8.2
317(a)................................................................ Inapplicable
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.
3
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS............................................ 1
SECTION 1.1. Definitions................................................... 1
ARTICLE II. TRUST INDENTURE ACT................................... 4
SECTION 2.1. Trust Indenture Act; Application.............................. 4
SECTION 2.2. List of Holders............................................... 4
SECTION 2.3. Reports by the Guarantee Trustee.............................. 4
SECTION 2.4. Periodic Reports to the Guarantee Trustee..................... 4
SECTION 2.5. Evidence of Compliance with Condition Precedent............... 5
SECTION 2.6. Events of Default; Waiver..................................... 5
SECTION 2.7. Event of Default; Notice...................................... 5
SECTION 2.8. Conflicting Interests......................................... 5
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE................................... 6
SECTION 3.1. Powers and Duties of the Guarantee Trustee.................... 6
SECTION 3.2. Certain Rights of Guarantee Trustee........................... 7
SECTION 3.3. Indemnity..................................................... 9
ARTICLE IV. GUARANTEE TRUSTEE..................................... 9
SECTION 4.1. Guarantee Trustee; Eligibility................................ 9
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee....................................................... 10
ARTICLE V. GUARANTEE............................................. 10
SECTION 5.1. Guarantee..................................................... 10
SECTION 5.2. Waiver of Notice and Demand................................... 10
SECTION 5.3. Obligations Not Affected...................................... 11
SECTION 5.4. Rights of Holders............................................. 11
SECTION 5.5. Guarantee of Payment.......................................... 12
SECTION 5.6. Subrogation................................................... 12
SECTION 5.7. Independent Obligations....................................... 12
ARTICLE VI. SUBORDINATION........................................ 12
SECTION 6.1. Subordination................................................. 12
ARTICLE VII. TERMINATION......................................... 14
SECTION 7.1 Termination................................................... 14
ARTICLE VIII. MISCELLANEOUS...................................... 14
i
4
Page
SECTION 8.1. Successors and Assigns........................................ 14
SECTION 8.2. Amendments.................................................... 14
SECTION 8.3. Notices....................................................... 15
SECTION 8.4. Benefit....................................................... 16
SECTION 8.5. Interpretation................................................ 16
SECTION 8.6. Governing Law................................................. 16
ii
5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of December 3, 1997, is
executed and delivered by Superior National Insurance Group, Inc., a corporation
organized under the laws of the State of Delaware ("Guarantor"), having its
principal office at 00000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, and
Wilmington Trust Company, a Delaware banking corporation duly organized and
existing under the laws of the State of Delaware, 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 Superior National Capital
Trust I, a Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to the terms of an Amended and Restated
Declaration of Trust dated as of December 3, 1997 (the "Declaration"), the Trust
is issuing up to $105,000,000 aggregate liquidation amount of its 10 3/4% Trust
Preferred Securities, liquidation amount $1,000 per preferred security (the
"Preferred Securities") representing undivided beneficial ownership interests in
the assets of the Trust and having the terms set forth in the Declaration;
WHEREAS, the Preferred Securities will be issued by the Trust and
the proceeds thereof, together with the proceeds from the issuance of the
Trust's Common Securities (as defined below), will be used to purchase the Notes
(as defined in the Declaration) of the Guarantor which will be held by
Wilmington Trust Company, as Preferred Trustee under the Declaration, as trust
assets;
WHEREAS, the Guarantor has agreed to separately guarantee the
obligations of the Trust with respect to the Common Securities (as herein
defined) (Exhibit A); and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities the Guarantor desires irrevocably and unconditionally to guarantee,
to the extent set forth herein, payment to the Holders of the Preferred
Securities of the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder
of Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE I. 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 Declaration as in effect
on the date hereof.
6
2
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct common
control with such specified Person; provided that an Affiliate of the Guarantor
shall not be deemed to include the Trust. 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.
"Common Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount (as defined in the Declaration)
of $1,000 and having the rights provided therefor in the Declaration, including
the right to receive Distributions and a Liquidation Distribution as provided
therein.
"Event of Default" means a default by the Guarantor on any of its
payment obligations under this Guarantee Agreement.
"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 Trust: (i) any accumulated
and unpaid Distributions required to be paid on the Preferred Securities, to the
extent the Trust has funds legally available therefor, (ii) the Redemption Price
with respect to the Preferred Securities called for redemption, to the extent
the Trust has funds legally available therefor and (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (unless the
Senior Subordinated Notes are distributed to the Holders of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds legally available therefor and (b)
the amount of cash assets of the Trust remaining legally available for
distribution to Holders of the Preferred Securities upon liquidation of the
Trust.
"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 Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records
of the Trust, of any Preferred Securities; provided that in determining whether
the holders of the requisite percentage of Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, any Trustee, or any Affiliate of the
Guarantor or of any Trustee.
"Indenture" means the Senior Subordinated Indenture dated as of
December 3, 1997, among the Guarantor and Wilmington Trust Company, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
7
3
"Majority in Liquidation Amount 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 amount of all
then outstanding Preferred Securities issued by the Trust.
"Officers' Certificate" means a certificate signed by (a) the
Chairman of the Board, Chief Executive Officer, President or Vice President, and
by the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, or (b) any two members of the Board of Directors of the
Company, and delivered to the appropriate 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 individual 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 individual in rendering the Officers'
Certificate;
(c) a statement that each individual 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 such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each officer,
such condition or covenant has been complied with.
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization, or government or any agency, instrumentality
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 Trust Officer or Assistant Trust Officer or any other officer of
the Corporate Trust Department of the Guarantee Trustee 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 Indebtedness" has the meaning specified in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
8
4
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided that in the
event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
ARTICLE II. 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 Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before June 1 and December 1 of each
year, a list, in such form as the Guarantee Trustee may reasonably require, of
the names and addresses of the Holders ("List of Holders") as of a date not more
than 15 days prior to the delivery thereof, and (b) at such other times as the
Guarantee Trustee may request in writing, within 30 days after the receipt by
the Guarantor of any such request, a List of Holders as of a date not more than
15 days prior to the time such list is furnished, in each case to the extent
such information is in the possession or control of the Guarantor and is not
identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than April 30 of each year, commencing April 30, 1998,
the Guarantee Trustee shall provide to the Holders such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
9
5
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 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 Condition
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) may be given in the form of an
Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of all 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 by mail, first class postage
prepaid, to the Holders, notices of all Events of Default 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 not be deemed to have knowledge
of any Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the
Declaration shall have obtained written notice, of such Event of Default.
SECTION 2.8. Conflicting Interests.
The Declaration 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.
10
6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising his
or her rights pursuant to Section 5.4(iv) 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 conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6), 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
circumstance 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:
(A) 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
(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
11
7
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 they conform to the requirements of this Guarantee
Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in Liquidation Amount of the 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
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of
this Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party
or parties.
(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
12
8
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.
(iv) 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.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such adequate security and
indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee; provided that
nothing contained in this Section 3.2(a)(v) shall be taken to relieve
the Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its reasonable discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or take any
other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (C) shall be protected in acting in accordance with such
instructions.
13
9
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty
or obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Guarantee Trustee, arising out of or
in connection with the acceptance or administration of this Guarantee Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder (including the fees of counsel, provided that the selection of
such counsel will be subject to the consent of the Guarantor, which consent
shall not be unreasonably withheld); provided that the Guarantee Trustee shall
notify the Guarantor with reasonable promptness of any claim for which it may
seek indemnity. Failure by the Guarantee Trustee to so notify the Guarantor
shall not relieve the Guarantor of its obligations hereunder except to the
extent such failure has materially prejudiced the Guarantor's defense. The
Guarantor shall defend the claim and the Guarantee Trustee shall provide
reasonable assistance. The Guarantee Trustee may retain separate counsel and the
Guarantor shall pay the reasonable fees and expenses of such counsel. The
Guarantee Trustee shall not claim or exact any lien or charge on any Guarantee
Payments as a result of any amount due to it under this Guarantee Agreement.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. 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 Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority,
then, for the purposes of this Section 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.
14
10
(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.
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.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full on a senior subordinated basis, to the extent set forth herein, to the
Holders the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Trust may have or
15
11
assert, other than the defense of payment. 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 Trust to pay such amounts to the
Holders.
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, Trust 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 Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust 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;
(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 Trust 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 Trust or any of the
assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the
16
12
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances. There shall be no obligation of the Holders to give
notice to, or obtain the consent of, the Guarantor with respect to the happening
of any of the foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (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 Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) upon the occurrence of an Event of Default, any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not
of collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Trust out of funds legally available therefor) or upon the
termination of this Guarantee Agreement as provided in Section 7.1.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Trust pursuant to Section 5.1; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, 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 Trust 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
17
13
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsection (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. SUBORDINATION
SECTION 6.1. Subordination.
(a) This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Guarantor.
(b) The Guarantor may not make a Guarantee Payment to the Holders
if (i) any Senior Indebtedness of the Guarantor having an outstanding principal
amount at the time of determination in excess of $10,000,000 (the "Specified
Senior Indebtedness") is not paid when due or (ii) any other default on
Specified Senior Indebtedness of the Guarantor occurs and the maturity of such
Specified Senior Indebtedness is accelerated in accordance with its terms,
unless, in either case, the default has been cured or waived and any such
acceleration has been rescinded or such Specified Senior Indebtedness has been
paid in full. However, the Guarantor may make a Guarantee Payment without regard
to the foregoing if the Guarantor and the Guarantee Trustee receive written
notice approving such payment from a representative of the holders of Specified
Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Specified Senior Indebtedness of the Guarantor pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the Guarantor may not make a Guarantee Payment to
the holders of Preferred Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Guarantee Trustee (with a copy to the
Guarantor) of written notice (a "Blockage Notice") of such default from the
representative of the holders of such Specified Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Guarantee Trustee and the Guarantor from the representative of the
holders of such Specified Senior Indebtedness, (ii) because the default giving
rise to such Blockage Notice is no longer continuing or (iii) because such
Specified Senior Indebtedness has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence, unless the holders
of such Specified Senior Indebtedness or the representative of such holders have
accelerated the maturity of such Specified Senior Indebtedness, the Guarantor
may resume Guarantee Payments after the end of such Payment Blockage Period. The
Guarantee Agreement shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Specified Senior Indebtedness during such period.
18
14
(c) Upon any payment or distribution of the assets of the
Guarantor upon a total or partial liquidation or dissolution or reorganization
of or similar proceeding relating to the Guarantor or its property, the holders
of Senior Indebtedness of the Guarantor will be entitled to receive payment in
full, and until the Senior Indebtedness of the Guarantor is paid in full, any
payment or Distribution to which the Holders would be entitled but for this
Section 6.1 will be made to holders of such Senior Indebtedness as their
interests may appear. If a Distribution is made to the Holders, that, due to
this Section 6.1, should not have been made to them, such Holders are required
to hold it in trust for the holders of Senior Indebtedness of the Guarantor and
pay it over to them as their interests may appear.
(d) If a Guarantee Payment is to be made by the Guarantor to the
Holders, the Guarantor or the Guarantee Trustee shall promptly notify the
holders of Senior Indebtedness of the Guarantor or the representative of such
holders of such Guarantee Payment. If any Senior Indebtedness of the Guarantor
is outstanding, the Guarantor may not pay such Guarantee Payment until five
Business Days after the representatives of all the issues of Senior Indebtedness
of the Guarantor receive notice of such Guarantee Payment and, thereafter, may
pay such Guarantee Payment only if the Guarantee Agreement otherwise permits
payment at that time.
ARTICLE VII. 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 the Preferred
Securities, (ii) the distribution of the Notes to the Holders in exchange for
all of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon dissolution of the Trust. 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 VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article
19
15
Eight of 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 8.2. Amendments.
Except with respect to any changes that do not adversely affect
the rights of the Holders in any material respect (in which case no consent of
the Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of not less than a Majority in Liquidation
Amount of the Preferred Securities. The provisions of Article VI of the
Declaration concerning meetings of the Holders shall apply to the giving of such
approval. This Guarantee Agreement shall not be amended without the prior
receipt by the Guarantor of an opinion of independent tax counsel to the effect
that such amendment of this Guarantee Agreement will not result in the
recognition of income, gain or loss by the Holders.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted
to be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail or sent by
overnight courier as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other Person as
the Guarantor may give notice to the Holders:
Superior National Insurance Group, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: President
(b) If given to the Trust, in care of the Guarantee Trustee, at
the Trust's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Trust may given notice to the
Holders:
Superior National Capital Trust I
c/o Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.:
20
16
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books
and records of the Trust.
All such notices and communications 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 with first-class prepaid
postage, if mailed; when receipt is acknowledged, if sent by facsimile; and the
Business Day on which a courier delivers such notice, if sent by courier,
provided that if delivery by courier is not made on a Business Day, the next
succeeding Business Day; provided 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 Agreement is solely for the benefit of the Holders
and is not separately transferable from the Preferred Securities.
SECTION 8.5. 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 defined in this Guarantee Agreement or unless the context otherwise
requires;
(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
21
17
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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 instruments.
22
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
Superior National Insurance Group, Inc.
By: /s/ [SIGNATURE]
------------------------------------
Name:
Title:
By: /s/ [SIGNATURE]
------------------------------------
Name:
Title:
Wilmington Trust Company,
as Guarantee Trustee and not in its
individual capacity
By: /s/ [SIGNATURE]
------------------------------------
Name:
Title:
23
EXHIBIT A
Exhibit A is included in this Registration Statement as Exhibit 4.5
