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Exhibit 10.01
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GUARANTEE AGREEMENT
by and between
TOWER GROUP, INC.
and
WILMINGTON TRUST COMPANY
Dated as of January 25, 2007
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TABLE OF CONTENTS
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Page
ARTICLE I DEFINITIONS AND
INTERPRETATION.................................................................1
Section 1.1 Definitions and
Interpretation..............................................................1
ARTICLE II POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE.............................................5
Section 2.1 Powers and Duties of the Guarantee
Trustee..................................................5
Section 2.2 Certain Rights of the Guarantee
Trustee.....................................................6
Section 2.3 Not Responsible for Recitals or Issuance of
Guarantee.......................................8
Section 2.4 Events of Default;
Waiver...................................................................8
Section 2.5 Events of Default;
Notice...................................................................8
ARTICLE III GUARANTEE
TRUSTEE..............................................................................9
Section 3.1 Guarantee Trustee;
Eligibility..............................................................9
Section 3.2 Appointment, Removal and Resignation of the
Guarantee Trustee...............................9
ARTICLE IV
GUARANTEE.....................................................................................10
Section 4.1
Guarantee..................................................................................10
Section 4.2 Waiver of Notice and
Demand................................................................10
Section 4.3 Obligations Not
Affected...................................................................10
Section 4.4 Rights of
Holders..........................................................................11
Section 4.5 Guarantee of
Payment.......................................................................12
Section 4.6
Subrogation................................................................................12
Section 4.7 Independent
Obligations....................................................................12
Section 4.8 Enforcement by a
Beneficiary...............................................................12
ARTICLE V LIMITATION OF TRANSACTIONS;
SUBORDINATION.....................................................13
Section 5.1 Limitation of
Transactions.................................................................13
Section 5.2
Ranking....................................................................................14
ARTICLE VI
TERMINATION...................................................................................14
Section 6.1
Termination................................................................................14
ARTICLE VII
INDEMNIFICATION...............................................................................15
Section 7.1
Exculpation................................................................................15
Section 7.2
Indemnification............................................................................15
Section 7.3 Compensation; Reimbursement of
Expenses....................................................16
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ARTICLE VIII
MISCELLANEOUS.................................................................................17
Section 8.1 Successors and
Assigns.....................................................................17
Section 8.2
Amendments.................................................................................17
Section 8.3
Notices....................................................................................17
Section 8.4
Benefit....................................................................................18
Section 8.5 Governing
Law..............................................................................18
Section 8.6
Counterparts...............................................................................18
Section 8.7
Separability...............................................................................18
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (this "Guarantee"), dated as of January
25, 2007,
is executed and delivered by Tower Group, Inc., a Delaware
corporation (the
"Guarantor"), and Wilmington Trust Company, a Delaware banking
corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the
Holders (as defined
herein) from time to time of the Capital Securities (as defined
herein) of Tower
Group Statutory Trust VI, a Delaware statutory trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the
"Declaration"), dated as of the date hereof among Wilmington
Trust Company, not
in its individual capacity but solely as institutional trustee,
the
administrators of the Issuer named therein, the Guarantor, as
sponsor, and the
holders from time to time of undivided beneficial interests in
the assets of the
Issuer, the Issuer is issuing on the date hereof those undivided
beneficial
interests, having an aggregate liquidation amount of $20,000,000
(the "Capital
Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital
Securities,
the Guarantor desires irrevocably and unconditionally to agree,
to the extent
set forth in this Guarantee, to pay to the Holders of Capital
Securities the
Guarantee Payments (as defined herein) and to make certain other
payments on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder
of the
Capital Securities, which purchase the Guarantor hereby agrees
shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee
for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions and Interpretation.
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In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in
the preamble
above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee
as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to "Articles" or "Sections"
are to
Articles or Sections of this Guarantee, unless otherwise
specified;
(e) terms defined in the Declaration as at the date of execution
of this
Guarantee have the same meanings when used in this Guarantee,
unless
otherwise defined in this Guarantee or unless the context
otherwise
requires; and
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(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the
Securities Act of 1933, as amended, or any successor rule
thereunder.
"Beneficiaries" means any Person to whom the Issuer is or
hereafter becomes
indebted or liable.
"Capital Securities" has the meaning set forth in the recitals
to this
Guarantee.
"Common Securities" means the common securities issued by the
Issuer to the
Guarantor pursuant to the Declaration.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which
the corporate trust business of the Guarantee Trustee shall, at
any particular
time, be principally administered, which office at the date of
execution of this
Guarantee is located at 1100 North Market Street, Wilmington,
Delaware
19890-1600, Attention: Corporate Trust Administration.
"Covered Person" means any Holder of Capital Securities.
"Debentures" means the debt securities of the Guarantor
designated the
Fixed/Floating Rate Junior Subordinated Deferrable Interest
Debentures due 2037
held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Declaration Event of Default" means an "Event of Default" as
defined in
the Declaration.
"Event of Default" has the meaning set forth in Section
2.4(a).
"Guarantee Payments" means the following payments or
distributions, without
duplication, with respect to the Capital Securities, to the
extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the
Declaration) which are required to be paid on such Capital
Securities to the
extent the Issuer shall have funds available therefor, (ii) the
Optional
Redemption Price to the extent the Issuer has funds available
therefor, with
respect to any Capital Securities called for redemption by the
Issuer, (iii) the
Special Redemption Price to the extent the Issuer has funds
available therefor,
with respect to Capital Securities redeemed upon the occurrence
of a Special
Event, and (iv) upon a voluntary or involuntary liquidation,
dissolution,
winding-up or termination of the Issuer (other than in
connection with the
distribution of Debentures to the Holders of the Capital
Securities in exchange
therefor as provided in the Declaration), the lesser of (a) the
aggregate of the
liquidation amount and all accrued and unpaid Distributions on
the Capital
Securities to the date of payment, to the extent the Issuer
shall have funds
available therefor, and (b) the amount of assets of the Issuer
remaining
available for distribution to Holders in liquidation of the
Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a
Successor
Guarantee Trustee has been appointed and has accepted such
appointment pursuant
to the terms of this Guarantee and thereafter means each such
Successor
Guarantee Trustee.
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"Guarantor" means Tower Group, Inc. and each of its successors
and assigns.
"Holder" means any holder, as registered on the books and
records of the
Issuer, of any Capital Securities; provided, however, that, in
determining
whether the Holders of the requisite percentage of Capital
Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall
not include the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate
of the
Guarantee Trustee, or any officers, directors, shareholders,
members, partners,
employees, representatives, nominees, custodians or agents of
the Guarantee
Trustee.
"Indenture" means the Indenture dated as of the date hereof
between the
Guarantor and Wilmington Trust Company, not in its individual
capacity but
solely as trustee, and any indenture supplemental thereto
pursuant to which the
Debentures are to be issued to the institutional trustee of the
Issuer.
"Independent Director" means a director of the Company who is
not
interested in the specified transaction and meets the
requirements of an
independent director as determined under the applicable
provisions of the
Exchange Act and the rules and regulations of the NASDAQ stock
exchange (or its
successor) or any other stock exchange in which the Company may
later be listed,
provided that such stock exchange has substantially similar
requirements of an
independent director as those required by the NASDAQ stock
exchange.
"Issuer" has the meaning set forth in the opening paragraph to
this
Guarantee.
"Liquidation Distribution" has the meaning set forth in the
definition of
"Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities" means
Holder(s)
of outstanding Capital Securities, voting together as a class,
but separately
from the holders of Common Securities, of more than 50% of the
aggregate
liquidation amount (including the stated amount that would be
paid on
redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to
the date upon which the voting percentages are determined) of
all Capital
Securities then outstanding.
"Obligations" means any costs, expenses or liabilities (but not
including
liabilities related to taxes) of the Issuer other than
obligations of the Issuer
to pay to holders of any Trust Securities the amounts due such
holders pursuant
to the terms of the Trust Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate
signed by one Authorized Officer of such Person. Any Officer's
Certificate
delivered with respect to compliance with a condition or
covenant provided for
in this Guarantee shall include:
(a) a statement that the officer signing the Officer's
Certificate has
read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination
or
investigation undertaken by the officer in rendering the
Officer's
Certificate;
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(c) a statement that the officer has made such examination
or
investigation as, in such officer's opinion, is necessary to
enable
such officer to express an informed opinion as to whether or not
such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of the officer,
such
condition or covenant has been complied with.
"Optional Redemption Price" has the meaning set forth in the
Indenture.
"Person" means a legal person, including any individual,
corporation,
estate, partnership, joint venture, association, joint stock
company, limited
liability company, trust, unincorporated association, or
government or any
agency or political subdivision thereof, or any other entity of
whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any
officer within the Corporate Trust Office of the Guarantee
Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any
other officer of the Guarantee Trustee customarily performing
functions similar
to those performed by any of the above designated officers and
also, with
respect to a particular corporate trust matter, any other
officer to whom such
matter is referred because of that officer's knowledge of and
familiarity with
the particular subject.
"Special Event" has the meaning set forth in the Indenture.
"Special Redemption Price" has the meaning set forth in the
Indenture.
"Subsidiary" means with respect to any Person, (i) any
corporation at least
a majority of the outstanding voting stock of which is owned,
directly or
indirectly, by such Person or by one or more of its
subsidiaries, or by such
Person and one or more of its subsidiaries, (ii) any general
partnership, joint
venture or similar entity, at least a majority of the
outstanding partnership or
similar interests of which shall at the time be owned by such
Person, or by one
or more of its subsidiaries, or by such Person and one or more
of its
subsidiaries and (iii) any limited partnership of which such
Person or any of
its subsidiaries is a general partner. For the purposes of this
definition,
"voting stock" means shares, interests, participations or other
equivalents in
the equity interest (however designated) in such Person having
ordinary voting
power for the election of a majority of the directors (or the
equivalent) of
such Person, other than shares, interests, participations or
other equivalents
having such power only by reason of the occurrence of a
contingency.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee
possessing the qualifications to act as Guarantee Trustee under
Section 3.1.
"Trust Securities" means the Common Securities and the Capital
Securities.
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ARTICLE II
POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
Section 2.1 Powers and Duties of the Guarantee Trustee.
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(a) This Guarantee shall be held by the Guarantee Trustee for
the benefit of
the Holders of the Capital Securities, and the Guarantee Trustee
shall not
transfer this Guarantee to any Person except a Holder of Capital
Securities
exercising his or her rights pursuant to Section 4.4(b) or to a
Successor
Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its
appointment to act as Successor Guarantee Trustee. The right,
title and
interest of the Guarantee Trustee shall automatically vest in
any Successor
Guarantee Trustee, and such vesting and cessation of title shall
be
effective whether or not conveyancing documents have been
executed and
delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the
Guarantee Trustee has occurred and is continuing, the Guarantee
Trustee
shall enforce this Guarantee for the benefit of the Holders of
the Capital
Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and
after the curing or waiving of all Events of Default that may
have
occurred, shall undertake to perform only such duties as are
specifically
set forth in this Guarantee, and no implied covenants shall be
read into
this Guarantee against the Guarantee Trustee. In case an Event
of Default
has occurred (that has not been cured or waived pursuant to
Section 2.4)
and is actually known to a Responsible Officer of the Guarantee
Trustee,
the Guarantee Trustee shall exercise such of the rights and
powers vested
in it by this Guarantee, and use the same degree of care and
skill in its
exercise thereof, as a prudent person would exercise or use
under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve
the Guarantee
Trustee from liability for its own negligent action, its own
negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing
or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee shall
be
determined solely by the express provisions of this
Guarantee,
and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically
set forth in this Guarantee, and no implied covenants or
obligations shall be read into this Guarantee against the
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee,
the Guarantee Trustee may conclusively rely, as to the truth
of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Guarantee Trustee and conforming to the requirements of this
Guarantee; but in the case of any such certificates or
opinions
that by any provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee
shall
be under a duty to examine the same to determine whether or
not
they conform to the requirements of this Guarantee;
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(ii) the Guarantee Trustee shall not be liable for any error of
judgment
made in good faith by a Responsible Officer of the Guarantee
Trustee,
unless it shall be proved that such Responsible Officer of
the
Guarantee Trustee or the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action
taken or omitted to be taken by it in good faith in accordance
with
the written direction of the Holders of not less than a Majority
in
liquidation amount of the Capital Securities relating to the
time,
method and place of conducting any proceeding for any remedy
available
to the Guarantee Trustee, or relating to the exercise of any
trust or
power conferred upon the Guarantee Trustee under this Guarantee;
and
(iv) no provision of this Guarantee shall require the Guarantee
Trustee to
expend or risk its own funds or otherwise incur personal
financial
liability in the performance of any of its duties or in the
exercise
of any of its rights or powers, if the Guarantee Trustee shall
have
reasonable grounds for believing that the repayment of such
funds is
not reasonably assured to it under the terms of this Guarantee
or
security and indemnity, reasonably satisfactory to the
Guarantee
Trustee, against such risk or liability is not reasonably
assured to
it.
Section 2.2 Certain Rights of the Guarantee Trustee.
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(a) Subject to the provisions of Section 2.1:
(i) The Guarantee Trustee may conclusively rely, and shall be
fully
protected in acting or refraining from acting upon, any
resolution,
certificate, statement, instrument, opinion, report, notice,
request,
direction, consent, order, bond, debenture, note, other evidence
of
indebtedness or other paper or document believed by it to be
genuine
and to have been signed, sent or presented by the proper party
or
parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee
shall be sufficiently evidenced by an Officer's Certificate.
(iii) Whenever, in the administration of this Guarantee, the
Guarantee
Trustee shall deem it desirable that a matter be proved or
established
before taking, suffering or omitting any action hereunder,
the
Guarantee Trustee (unless other evidence is herein
specifically
prescribed) may, in the absence of bad faith on its part,
request and
conclusively rely upon an Officer's Certificate of the
Guarantor
which, upon receipt of such request, shall be promptly delivered
by
the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording,
filing or registration of any instrument (or any
re-recording,
refiling or re-registration thereof).
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(v) The Guarantee Trustee may consult with counsel of its
selection, and
the advice or opinion of such counsel with respect to legal
matters
shall be full and complete authorization and protection in
respect of
any action taken, suffered or omitted by it hereunder in good
faith
and in accordance with such advice or opinion. Such counsel may
be
counsel to the Guarantor or any of its Affiliates and may
include any
of its employees. The Guarantee Trustee shall have the right at
any
time to seek instructions concerning the administration of
this
Guarantee from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of
the rights or powers vested in it by this Guarantee at the
request or
direction of any Holder, unless such Holder shall have provided
to the
Guarantee Trustee such security and indemnity, reasonably
satisfactory
to the Guarantee Trustee, against the costs, expenses
(including
attorneys' fees and expenses and the expenses of the
Guarantee
Trustee's agents, nominees or custodians) and liabilities that
might
be incurred by it in complying with such request or
direction,
including such reasonable
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