Exhibit 4.19
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FORM OF
GUARANTEE AGREEMENT
OF
Fund American Trust I
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Dated as of [ ]
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TABLE OF CONTENTS
PAGE
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ARTICLE I
Definitions 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application 5
SECTION 2.02. Lists of Holders of Preferred
Securities 6
SECTION 2.03. Reports by the Guarantee Trustee 6
SECTION 2.04. Periodic Reports to Guarantee
Trustee 6
SECTION 2.05. Evidence of Compliance with
Conditions Precedent 6
SECTION 2.06. Events of Default; Waiver 6
SECTION 2.07. Disclosure of Information 7
SECTION 2.08. Conflicting Interest 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee
Trustee 7
SECTION 3.02. Certain Rights and Duties of the
Guarantee Trustee 8
SECTION 3.03. Not Responsible for Recitals or
Issuance of Guarantee 11
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Qualifications 11
SECTION 4.02. Appointment, Removal and Resignation
of Guarantee Trustee 12
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ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee 13
SECTION 5.02. Waiver of Notice 13
SECTION 5.03. Obligations Not Affected 14
SECTION 5.04. Enforcement of Guarantee 15
SECTION 5.05. Guarantee of Payment 15
SECTION 5.06. Subrogation 15
SECTION 5.07. Independent Obligations 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions 16
SECTION 6.02. Subordination 17
ARTICLE VII
Termination 17
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. Exculpation 18
SECTION 8.02. Indemnification 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Successors and Assigns 19
SECTION 9.02. Amendments 19
SECTION 9.03. Notices 19
SECTION 9.04. Genders 20
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SECTION 9.05. Benefit 20
SECTION 9.06. Governing Law 20
SECTION 9.07. Counterparts 20
SECTION 9.08. Exercise of Overallotment Option 20
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GUARANTEE AGREEMENT dated as of [ ], between [White
Mountains Insurance Group, Ltd./Fund American Companies,
Inc.], a company existing under the laws of [ ] (the
"Guarantor"), and Bank One, National Association, as the
initial Guarantee Trustee (as defined herein) for the benefit
of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Fund American
Trust I, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration") dated as of [ ], among the trustees named therein, Fund
American Companies, Inc., as Sponsor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer may issue
up to $[ ] aggregate liquidation amount of its [ ]% Trust Preferred Securities
(the "Preferred Securities") representing preferred undivided beneficial
interests in the assets of the Issuer and having the terms set forth in Exhibit
B to the Declaration, of which $[ ] aggregate liquidation amount of Preferred
Securities are being issued as of the date hereof by the Issuer pursuant to the
Underwriting Agreement (as defined in the Declaration); and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase by the initial
purchasers thereof 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.
ARTICLE I
DEFINITIONS
(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble above have the respective meanings assigned to them in
this Article I.
(b) A term defined anywhere in this Guarantee
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Agreement has the same meaning throughout.
(c) All references to "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.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer, having the terms set
forth in Exhibit C to the Declaration.
"Covered Person" means any Holder.
"Debentures" means the series of Junior Subordinated Debentures
issued by the Guarantor under the Indenture to the Property Trustee and entitled
the "[ ]% Junior Subordinated Debentures due [ ]".
"Distributions" has the meaning set forth in Exhibit B to the
Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under
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this Guarantee Agreement; PROVIDED, HOWEVER, that except with respect to such a
default resulting from a failure to pay any Guarantee Payment, such default
shall have continued for more than 30 days.
"Guarantee Payments" shall mean the following Distributions and
other payments, without duplication, with respect to the Preferred Securities,
to the extent not made or paid by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on the Preferred Securities, but only
if and to the extent that in each case the Guarantor has made a payment to the
Property Trustee of interest on the Debentures, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), with respect to any Preferred Securities called for
redemption by the Issuer, but only if and to the extent that in each case the
Guarantor has made a payment to the Property Trustee of interest or principal on
the Debentures, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to Holders or the redemption of all the Preferred
Securities upon the maturity or redemption of the Debentures as provided in the
Declaration), 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 Issuer has funds available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
upon liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means Bank One, National Association, until a
Successor Guarantee Trustee has been appointed and accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; PROVIDED, HOWEVER, that in
determining whether the holders of the requisite percentage of Preferred
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Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of
the Guarantee Trustee, and any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Junior Subordinated Debenture Indenture dated
as of [ ], between the Guarantor and Bank One, National Association, as
trustee, as amended and supplemented from time to time, pursuant to which the
Debentures are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Liquidation Distribution" has the meaning set forth in the
definition of Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class who are the
record owners of Preferred Securities whose aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) represents more than 50% of the aggregate
liquidation amount of all outstanding Preferred Securities.
"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.
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"Preferred Securities" has the meaning set forth in the first
WHEREAS clause above.
"Property Trustee" means the Person acting as Property Trustee under
the Declaration.
"Redemption Price" has the meaning set forth in the definition of
Guarantee Payments.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any officer of the Guarantee Trustee with responsibility for the administration
of this Guarantee Agreement 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.
"66-2/3% in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class who are the
record owners of Preferred Securities whose aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) represents 66-2/3% or more of the aggregate
liquidation amount of all outstanding Preferred Securities.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
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SECTION 2.01. TRUST INDENTURE ACT; APPLICATION. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(c) The application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing preferred undivided beneficial interests in the assets
of the Issuer.
SECTION 2.02. LISTS OF HOLDERS OF PREFERRED SECURITIES. (a) The
Guarantor shall provide the Guarantee Trustee with such information as is
required under Section 312(a) of the Trust Indenture Act at the times and in the
manner provided in Section 312(a).
(b) The Guarantee Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after
May 15 of each year, 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, in the manner and at the times provided by Section 313 of the Trust
Indenture Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.04. PERIODIC REPORTS TO THE GUARANTEE TRUSTEE. The
Guarantor shall provide to the Guarantee Trustee, the Commission and the
Holders, as applicable, such documents, reports and information as required by
Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by
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Section 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to
be provided in the form, in the manner and at the times required by Section
314(a)(4) and (c) of the Trust Indenture Act (PROVIDED that any certificate to
be provided pursuant to Section 314(a)(4) of the Trust Indenture Act shall be
provided within 120 days of the end of each fiscal year of the Issuer).
SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide the Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Guarantee Agreement which
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 pursuant to Section 314(c)
of the Trust Indenture Act shall comply with Section 314(e) of the Trust
Indenture Act.
SECTION 2.06. EVENTS OF DEFAULT; WAIVER. (a) Subject to Section
2.06(b), Holders may, by vote of at least a Majority in liquidation amount of
the Preferred Securities, (A) direct 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, or (B) on behalf of the
Holders of all Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
(b) The right of any Holder to receive payment of the Guarantee
Payments in accordance with this Guarantee Agreement, or to institute suit for
the enforcement of any such payment, shall not be impaired without the consent
of each such Holder.
SECTION 2.07. DISCLOSURE OF INFORMATION. The disclosure of
information as to the names and addresses of the Holders in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted
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which does not specifically refer to Section 312 of the Trust Indenture Act, nor
shall the Guarantee Trustee be held accountable by reason of mailing any
material pursuant to a request made under Section 312(b) of the Trust Indenture
Act.
SECTION 2.08. CONFLICTING INTEREST. 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.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders. The Guarantee Trustee shall not transfer its right,
title and interest in this Guarantee Agreement to any Person except a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Guarantee Trustee or to a Holder exercising his or her
rights pursuant to Section 5.04. The right, title and interest of the Guarantee
Trustee to this Guarantee Agreement shall vest automatically in each Person who
may hereafter be appointed as Guarantee Trustee in accordance with Article IV.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) This Guarantee Agreement and all moneys received by the Property
Trustee hereunder in respect of the Guarantee Payments will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of or
for the benefit of the Guarantee Trustee or its agents or
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their creditors.
(d) 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, as their names and addresses appear upon the register, notice of all
Events of Default known to the Guarantee Trustee, unless such Events of Default
shall have been cured before the giving of such notice; PROVIDED that, 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. The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default except any Event of Default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written notice.
(e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article IV.
SECTION 3.02. CERTAIN RIGHTS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) The Guarantee Trustee, before the occurrence of an 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 2.06(a)),
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 their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent
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action, its own negligent failure to act or its own wilful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all 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 no implied covenants or
obligations shall be read into this Guarantee Agreement against the
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to
be furnished to the Guarantee Trustee, the Guarantee Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Guarantee 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;
(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 as provided herein relating to the time,
method and place of conducting any proceeding for any remedy
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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 it shall have reasonable
ground 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.
(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part and, if the Trust
is excluded from the definition of Investment Company solely by reason of
Rule 3a-7 under the Investment Company Act ("Rule 3a-7"), subject to the
requirements of Rule 3a-7, request and rely upon a certificate, which
shall comply with the provisions of Section 314(e) of the Trust Indenture
Act, signed by any authorized officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees) selected by it in good faith and with due care and the
written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon and in accordance with such advice and opinion and (B)
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
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(iii) the Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed by it in good faith and with due care;
(iv) 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 Holders, unless such Holders shall have
offered to the Guarantee Trustee reasonable security and indemnity against
the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction; PROVIDED that nothing contained in this clause (iv) shall
relieve the Guarantee Trustee of the obligation, upon the occurrence of an
Event of Default (which has not been cured or waived) to exercise such of
the rights and powers vested in it by this Guarantee Agreement, and to use
the same degree of care and skill in such exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs; and
(v) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action; and 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's or its agent's
taking such action.
SECTION 3.03. 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
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makes no representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. QUALIFICATIONS. (a) There shall at all times be a
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor;
(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
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 $50,000,000, and subject to
supervision or examination by Federal, State, Territorial 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 4.01(a)(ii), 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; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by reason of Rule 3a-7 and to the extent Rule 3a-7 requires
a trustee having certain qualifications to hold title to the "eligible
assets" (as defined in Rule 3a-7) of the Trust, possess those
qualifications.
If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i),(ii) and (iii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and
the Guarantor shall
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in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE
TRUSTEE. (a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office
until its successor shall have been appointed and until its removal or
resignation.
(d) The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; PROVIDED, HOWEVER, that no such resignation of the Guarantee
Trustee shall be effective until: (i) a Successor Guarantee Trustee possessing
the qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee; or (ii) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders, if the Trust is
excluded from the definition of an Investment Company solely by reason of Rule
3a-7.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of a Resignation Request, the resigning Guarantee
Trustee
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may petition any court of competent jurisdiction for appointment of a Successor
Guarantee Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), 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.
SECTION 5.02. WAIVER OF NOTICE. The Guarantor hereby waives notice
of acceptance of this 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 Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and, to the extent permitted by law, all other notices and
demands.
SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the 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 (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment
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period on the Debentures), 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 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) any other circumstances whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. ENFORCEMENT OF GUARANTEE. The Guarantor and the
Guarantee Trustee expressly acknowledge 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
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Guarantee Agreement on behalf of the Holders; (iii) Holders representing not
less than 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 in respect of this Guarantee Agreement, including the giving of
directions to the Guarantee Trustee, or exercising any trust or other power
conferred upon the Guarantee Trustee under this Guarantee Agreement, and (iv) if
the Guarantee Trustee fails to enforce this Guarantee Agreement, 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 Issuer, the Guarantee Trustee or any other Person.
Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee
Payment, a Holder of Preferred Securities may directly institute a proceeding
against the Guarantor for enforcement of such Holder's right to receive payment
under the Guarantee. The Guarantor waives any right or remedy to require that
any action be brought first against the Issuer or any other person or entity
before proceeding directly against the Guarantor.
SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates
a guarantee of payment and not merely 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).
SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all
rights, if any, 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 rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in
22
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the Issuer
with respect to the 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 5.03.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. LIMITATION OF TRANSACTIONS. So long as any Preferred
Securities remain outstanding, the Guarantor will not declare or pay any
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto if at such time (i) the Guarantor shall
be in default with respect to its Guarantee Payments or other payment
obligations hereunder, (ii) there shall have occurred any Event of Default (as
defined in the Declaration) or (iii) the Guarantor shall have given notice of
its selection of an extension period (as defined in the Indenture) and such
period, or any extension thereof, is continuing; PROVIDED, HOWEVER, that the
foregoing restrictions will not apply to (i) dividends, redemptions, purchases,
acquisitions, distributions or payments made by the Guarantor by way of issuance
of shares of its capital stock, (ii) payments of accrued dividends by the
Guarantor upon the redemption, exchange or conversion of any preferred stock of
the Guarantor as may be outstanding from time to time in accordance with the
terms of such preferred stock or (iii) cash payments made by the Guarantor in
lieu of delivering fractional shares upon the redemption, exchange or conversion
of any preferred stock of the Guarantor as may be outstanding from time to time
in accordance with the terms of such preferred stock. In addition, so long as
any
23
Preferred Securities remain outstanding, the Guarantor (i) will remain the sole
direct or indirect owner of all the outstanding Common Securities and shall not
cause or permit the Common Securities to be transferred except to the extent
such transfer is permitted under Section 9.01(c) of the Declaration; PROVIDED
that any permitted successor of the Guarantor under the Indenture may succeed to
the Guarantor's ownership of the Common Securities; and (ii) will use reasonable
efforts to cause the Issuer to continue to be treated as a grantor trust for
United States Federal income tax purposes, except in connection with a
distribution of Debentures as provided in the Declaration.
SECTION 6.02. SUBORDINATION. 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 indebtedness,
liabilities and obligations of the Guarantor and any guarantees, endorsements or
other contingent obligations of the Guarantor in respect of such indebtedness,
liabilities or obligations, including the Debentures, except those made PARI
PASSU or subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Guarantor and to any guarantee now or hereafter entered
into by the Guarantor in respect of any of its capital stock. The Guarantor's
obligations under this Guarantee Agreement will rank PARI PASSU with respect to
obligations under other guarantee agreements which it may enter into from time
to time to the extent that such agreements shall be entered into in
substantially the form hereof and provide for comparable guarantees by the
Guarantor of payment on preferred securities issued by other business trusts of
which the Guarantor holds the common securities.
ARTICLE VII
TERMINATION
This Guarantee Agreement shall terminate and be of no further force
and effect upon full payment of the Redemption Price of all Preferred
Securities, or upon the
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distribution of Debentures to Holders in exchange for all the Preferred
Securities, or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
with respect to the Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. EXCULPATION. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith and in
a manner 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
wilful 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 assets,
liabilities, profits, losses or any other facts pertinent to the existence and
amounts of assets from which Distributions to Holders might properly be paid.
SECTION 8.02. 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
25
faith 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 negligence or wilful misconduct with respect to such acts or
omissions.
(b) To the fullest extent permitted by applicable law, 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
8.02(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assignees,
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 conveyance, transfer or lease of
assets involving the Guarantor that is permitted under Article Ten of the
Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 9.02. AMENDMENTS. Except with respect to any changes which
do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than 66-2/3% in liquidation amount of
the Preferred Securities. The provisions of Section 12.02 of the Declaration
concerning
26
meetings of Holders shall apply to the giving of such approval.
SECTION 9.03 NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address as the Guarantor may give notice of to the Holders:
[ ]
[ ]
[ ]
Facsimile No.: [( ) ]
Attention: [ ]
(b) if given to the Guarantee Trustee, to the address set forth
below or such other address as the Guarantee Trustee may give notice of to
the Holders:
[ ]
[ ]
[ ]
Facsimile No.: [( ) ]
Attention: [ ]
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
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SECTION 9.04. GENDERS. The masculine, feminine and neuter genders
used herein shall include the masculine, feminine and neuter genders.
SECTION 9.05. BENEFIT. This Guarantee Agreement is solely for the
benefit of the Holders and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.
SECTION 9.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 9.07. COUNTERPARTS. This Guarantee Agreement may be executed
in counterparts, each of which shall be an original; but such counterparts shall
together constitute one and the same instrument.
SECTION 9.08. EXERCISE OF OVERALLOTMENT OPTION. If and to the extent
that Preferred Securities are issued by the Issuer upon exercise of the
overallotment option referred to in the first WHEREAS clause, the Guarantor
agrees to give prompt notice thereof to the Guarantee Trustee, but the failure
to give such notice shall not relieve the Guarantor of any of its obligations
hereunder.
This Guarantee Agreement is executed as of the day and year first
above written.
[ ]
by
--------------------------------
Name:
Title:
BANK ONE NATIONAL ASSOCIATION,
as Guarantee Trustee
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by
--------------------------------
Name:
Title:
