GUARANTEE AGREEMENT

Exhibit 4.16

 

GUARANTEE AGREEMENT

 

Between

 

Radian Group Inc.

(as Guarantor)

 

And

 

Wilmington Trust Company

(as Guarantee Trustee)

 

dated as of                     

TABLE OF CONTENTS*

 

*	This Table of Contents does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.

 

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Table of Contents

(continued)

 

 

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GUARANTEE AGREEMENT

 

This GUARANTEE AGREEMENT (“Guarantee Agreement”), dated as of              , is executed and delivered by Radian Group Inc., a Delaware corporation (the “Guarantor”), and Wilmington Trust Company, as trustee (the “Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Radian Group Capital Trust      , a Delaware statutory trust (the “Issuer”).

 

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”), dated as of              among the Trustees named therein, the Guarantor, as Depositor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing          aggregate liquidation amount of its      % Preferred Securities, ( liquidation amount $      per preferred security) (the “Preferred Securities”) representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement;

 

WHEREAS, the Preferred Securities will be issued by the Issuer and the proceeds thereof, together with the proceeds from the issuance of the Issuer’s Common Securities (as defined below), will be used to purchase the Debentures (as defined in the Trust Agreement) of the Guarantor which will be deposited with Wilmington Trust Company, as Property Trustee under the Trust Agreement, as trust assets;

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS

 

SECTION 1.1 Definitions .

 

As used in this Guarantee Agreement, the terms set forth below shall have the meanings ascribed to them below. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, provided , however , that an Affiliate of the Guarantor shall not be deemed to include the Issuer. For the purposes of this definition, “ control ” when used with respect to any specified

 

Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “ controlling ” and “ controlled ” have meanings correlative to the foregoing.

 

“Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in New York, New York or Wilmington, Delaware are authorized by law, regulation or executive order to remain closed.

 

“Common Securities” means the securities representing common beneficial interests in the assets of the Issuer.

 

“Debt” means, with respect to any Person: (i) the principal of, and any premium, if any, and interest on, indebtedness of any such Person for money borrowed and indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which that such Person is responsible or liable; (ii) all Capital Lease Obligations (as defined in the Indenture) of such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business and deferred purchase price due and payable within 90 days); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, other than obligations with respect to letters of credit securing obligations entered into in the ordinary course of business; (v) all Hedging Obligations of such Person; (vi) all obligations of the type referred to above of other Persons and all dividends of other Persons for which (and to the extent that) such Person is responsible or liable as obligor, guarantor or otherwise; (vii) all obligations of the type referred to above of other Persons to the extent secured by any Lien on any property or asset of that Person; and (viii) any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described above.

 

“Event of Default” means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided , however , that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured such default within 60 days after receipt of such notice.

 

“Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Issuer: ( i ) any accrued and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Preferred Securities, to the extent the Issuer shall have funds on hand available therefor, ( ii ) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the “Redemption Price”), with respect to the Preferred Securities called for redemption by the Issuer to the extent the Issuer shall have funds on hand available therefor, and ( iii ) upon a voluntary or involuntary termination, winding-up or liquidation of the Issuer, unless the Preferred Securities are redeemed or Debentures are distributed to the Holders, the lesser of ( a ) the aggregate of the liquidation amount of $[      ] per Preferred Security plus all accrued and unpaid Distributions on the Preferred Securities to the date of payment to the extent the Issuer shall have funds on hand legally and immediately

 

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available to make such payment and ( b ) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the “Liquidation Distribution”).

 

“Guarantee Trustee” means Wilmington Trust Company 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.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other similar agreements or arrangements designed to protect such Person against fluctuations in interest rates.

 

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

 

“Indemnified Person” means the Guarantee Trustee, and any Affiliate, officer, director, shareholder, member, partner, employee, representative, nominee, custodian or agent thereof.

 

“Indenture” means the Subordinated Indenture dated as of              , between the Guarantor and                              , as Trustee, as supplemented or amended from time to time.

 

“List of Holders” has the meaning specified in Section 2.2(a).

 

“Majority in liquidation 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 Issuer.

 

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, Vice Chairman of the Board, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary, any Vice President or any Assistant Vice President of such Person.

 

“Officers’ Certificate” means, with respect to any Person, a certificate signed by two Officers of such Person, and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include:

 

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

 

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

 

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(c) a statement that each such Officer has made such examination or investigation as, in such Officer’s opinion, is necessary to enable such Officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

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

 

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

 

“Responsible Officer” means, with respect to the Guarantee Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Senior Trust Officer, Trust Officer or Assistant Trust Officer or any other officer of the Corporate Trust Trustee Administration of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

 

“Senior Debt” has the same meaning given to that term in the Indenture.

 

“Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

 

ARTICLE 2

 

TRUST INDENTURE ACT

 

SECTION 2.1 Trust Indenture Act; Application .

 

(a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions.

 

(b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

 

SECTION 2.2 List of Holders .

 

(a) The Guarantee Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders (“List of Holders”) and shall otherwise comply with Section 312(a) of the Trust Indenture Act. If the

 

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Guarantee Trustee is not the registrar, the Guarantor shall furnish to the Guarantee Trustee at least seven Business Days before each Interest Payment Date (as such term is defined in the Indenture) and at such other times as the Guarantee Trustee may reasonably request in writing a List of Holders as of such date as the Guarantee Trustee may reasonably require, in each case to the extent such information is not identical to a previously supplied List of Holders or has not otherwise been received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee may destroy any prior List of Holders previously given to it upon receipt of a new List of Holders.

 

(b) The Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.

 

SECTION 2.3 Reports by the Guarantee Trustee .

 

On or before      of each year, commencing              the Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act.

 

SECTION 2.4 Periodic Reports to Guarantee Trustee .

 

The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314(a)(4) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act.

 

SECTION 2.5 Evidence of Compliance with Conditions Precedent .

 

The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers’ Certificate.

 

SECTION 2.6 Events of Default; Waiver .

 

The Holders of a Majority in liquidation amount of the Preferred Securities may, by vote, on behalf of all of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom.

 

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SECTION 2.7 Event of Default; Notice .

 

(a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit to the Holders notices of such Event of Default (if the occurrence is known to the Guarantee Trustee), unless such default has 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 any other committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

 

(b) The Guarantee Trustee shall only be deemed to have knowledge of any Event of Default if the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Trust Agreement shall have obtained actual knowledge, of such Event of Default.

 

SECTION 2.8 Conflicting Interests .

 

The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.

 

ARTICLE 3

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

SECTION 3.1 Powers and Duties of the Guarantee Trustee .

 

(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(v) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

 

(b) If an Event of Default of which the Guarantee Trustee has knowledge as provided in Section 2.7(b) has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.

 

(c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. If an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) of which the Guarantee Trustee has knowledge as provided in Section 2.7(b), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

 

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(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) before the occurrence of any Event