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CAPITAL SECURITIES GUARANTEE AGREEMENT
ORION CAPITAL CORPORATION
DATED AS OF FEBRUARY 5, 1998
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation....................1
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application................. 5
SECTION 2.2. List of Holders of Securities.................... 5
SECTION 2.3. Reports by the Capital Securities
Guarantee Trustee...............................6
SECTION 2.4. Periodic Reports to Capital
Securities Guarantee Trustee................... 6
SECTION 2.5. Evidence of Compliance with
Conditions Precedent............................6
SECTION 2.6. Events of Default; Waiver........................ 6
SECTION 2.7. Event of Default; Notice......................... 7
SECTION 2.8. Conflicting Interests............................ 8
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE CAPITAL
SECURITIES GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Capital
Securities Guarantee Trustee................... 7
SECTION 3.2. Certain Rights of Capital
Securities Guarantee Trustee....................9
SECTION 3.3. Not Responsible for Recitals or Issuance
of Capital Securities Guarantee................11
ARTICLE IV. CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1. Capital Securities Guarantee Trustee;
Eligibility....................................11
SECTION 4.2. Appointment, Removal and Resignation
of Capital Securities Guarantee Trustee........12
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee........................................13
SECTION 5.2. Waiver of Notice and Demand......................13
SECTION 5.3. Obligations Not Affected.........................13
SECTION 5.4. Rights of Holders................................14
SECTION 5.5. Guarantee of Payment.............................15
SECTION 5.6. Subrogation......................................15
SECTION 5.7. Independent Obligations..........................15
ARTICLE VI. LIMITATION OF TRANSACTION; SUBORDINATION
SECTION 6.1. Limitation of Transactions.......................15
SECTION 6.2. Ranking..........................................16
ARTICLE VII. TERMINATION
SECTION 7.1. Termination......................................16
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1. Exculpation......................................17
SECTION 8.2. Indemnification..................................17
ARTICLE IX. MISCELLANEOUS
SECTION 9.1. Successors and Assigns...........................18
SECTION 9.2. Amendments.......................................18
SECTION 9.3. Notices..........................................18
SECTION 9.4. Exchange Offer...................................20
SECTION 9.5. Benefit..........................................20
SECTION 9.6. Governing Law....................................20
CAPITAL SECURITIES GUARANTEE AGREEMENT
This CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Capital
Securities Guarantee"), dated as of February 5, 1998, delivered by Orion Capital
Corporation, a Delaware corporation (the "Guarantor"), and The Bank of New York,
a New York banking corporation, as trustee (the "Capital Securities Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Capital Securities (as defined herein) of Orion Capital Trust II, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of February 5, 1998, 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 125,000 capital securities,
having an aggregate liquidation amount of $125,000,000, such capital securities
being designated as the 7.701% Capital Securities (collectively the "Capital
Securities");
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 Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined below). The
Guarantor agrees to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Capital Securities Guarantee, for the benefit of the holders of
the Common Securities (as defined herein), except that if an Event of Default
(as defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinate to the rights of holders of Capital
Securities to receive Guaranty Payments under this Capital Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder,
which purchase the Guarantor hereby acknowledges shall benefit the Guarantor,
the Guarantor executes and delivers this Capital Securities Guarantee for the
benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution
of this Capital Securities Guarantee have the same meaning when used in
this Capital Securities Guarantee unless otherwise defined in this
Capital Securities Guarantee;
(c) a term defined anywhere in this Capital Securities Guarantee
has the same meaning throughout;
(d) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities Guarantee
as modified, supplemented or amended from time to time;
(e) all references in this Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Capital
Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Capital Securities Guarantee, unless otherwise
defined in this Capital Securities Guarantee or unless the context
otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"AFFILIATE" shall mean, with respect to a specified Person, (a)
any Person directly or indirectly owning, controlling or holding the power to
vote 20% or more of the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 20% or more of whose
outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified Person,
(c) any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, and (d) a partnership in which the
specified Person is a general partner; provided, however, that Intercargo
Corporation shall not be deemed to be an Affiliate of the Company or Orion
Capital Trust II.
"BUSINESS DAY" means any day other than a Saturday or a Sunday,
or a day on which banking institutions in The City of New York are authorized or
required by law or executive order to close.
"CAPITAL SECURITIES GUARANTEE TRUSTEE" means The Bank of New
York, a New York banking corporation, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Capital Securities Guarantee and thereafter means each such
Successor Capital Securities Guarantee Trustee.
"COMMON SECURITIES" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"CORPORATE TRUST OFFICE" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at The Bank of New York, 101 Barclay Street, Floor 21W, New
York, New York 10286.
"COVERED PERSON" means any Holder or beneficial owner of Capital
Securities.
"DEBENTURES" means the series of subordinated debt securities of
the Guarantor designated the 7.701% Junior Subordinated Deferrable Interest
Debentures due April 15, 2028 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payments or other obligations under this Capital Securities Guarantee.
"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 accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Capital Securities to the extent the Issuer has funds on hand legally
available therefor at such time, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price") to the extent the Issuer has funds on hand legally available therefor at
such time, with respect to any Capital Securities called for redemption by the
Issuer, and (iii) upon a voluntary or involuntary dissolution or liquidation of
the Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Capital Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accumulated and
unpaid Distributions on the Capital Securities to the date of payment, to the
extent the Issuer has funds on hand legally available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer. If an Event of Default (as defined in the
Indenture) has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities shall be made
until the Holders of Capital Securities shall be paid in full the Guarantee
Payments to which they are entitled under this Capital Securities Guarantee.
"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 Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"INDENTURE" means the Indenture, dated as of February 5, 1998,
between the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee.
"MAJORITY IN LIQUIDATION AMOUNT OF THE CAPITAL SECURITIES" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting separately as a class, of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all Capital
Securities.
"OFFICERS' CERTIFICATE" means, with respect to any person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President (however designated), the Secretary or
an Assistant Secretary of the Guarantor. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Capital Securities Guarantee 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
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"OTHER DEBENTURES" means only those junior subordinated
debentures issued by the Guarantor from time to time and sold to trusts to be
established by the Guarantor (if any), which are in each case similar to the
Issuer.
"OTHER GUARANTEES" means any guarantee now or hereafter to be
entered into by the Guarantor in respect to any capital securities or common
securities of any other trust similar to the Issuer, or of any trustee of such
trust, or of a partnership or other entity affiliated with the Guarantor that is
a financing vehicle of the Guarantor.
"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.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of February 5, 1998, by and among the Guarantor, the Issuer
and the Initial Purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"RESPONSIBLE OFFICER" when used with respect to the Capital
Securities Guarantee Trustee, means the chairman or any vice chairman of the
board of directors, the chairman or any vice chairman of the executive committee
of the board of directors, the chairman of the trust committee, the president,
any vice president, any assistant vice president, the cashier, any assistant
cashier, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer or assistant officer of the Capital
Securities 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 his knowledge of and familiarity with the particular
subject.
"SUCCESSOR CAPITAL SECURITIES GUARANTEE TRUSTEE" means a
successor Capital Securities Guarantee Trustee possessing the qualifications to
act as Capital Securities Guarantee Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION
This Capital Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Capital Securities
Guarantee and shall, to the extent applicable, be governed by such provisions;
and if and to the extent that any provision of this Capital Securities Guarantee
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 LIST OF HOLDERS OF SECURITIES
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addressees
of the Holders of the Capital Securities ("List of Holders") as of such date,
(i) within one Business Day after each record date, and (ii) at any other time
within 30 days of receipt by the Guarantor of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Capital Securities Guarantee Trustee; provided, that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Capital
Securities Guarantee Trustee by the Guarantor. The Capital Securities Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE CAPITAL SECURITIES GUARANTEE TRUSTEE
On or before February 4 of each year, commencing February 4,
1999, the Capital Securities Guarantee Trustee shall provide to the Holders of
the Capital Securities 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 Capital Securities Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) 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. Delivery of such reports, information and
documents to the Capital Securities Guarantee Trustee is for informational
purposes only and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Capital Securities Guarantee 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 Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, 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
Capital Securities Guarantee, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders of the Capital
Securities, notices of all defaults actually known to a Responsible Officer of
the Capital Securities Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of default
in the payment of any Guarantee Payment, the Capital Securities 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 Capital Securities Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
holders of the Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice, or a Responsible Officer
of the Capital Securities Guarantee Trustee charged with the administration of
the Declaration shall have obtained actual knowledge, of such Event of Default.
SECTION 2.8 CONFLICTING INTERESTS
The Declaration shall be deemed to be specifically described in
this Capital Securities Guarantee 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 THE
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE CAPITAL SECURITIES GUARANTEE TRUSTEE
(a) This Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Capital Securities
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Capital Securities Guarantee Trustee upon
acceptance by such Successor Capital Securities Guarantee Trustee of its
appointment to act as Successor Capital Securities Guarantee Trustee. The right,
title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not documents
have been executed and delivered pursuant to the appointment of such Successor
Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders.
(c) The Capital Securities 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 Capital Securities Guarantee, and no implied
covenants shall be read into this Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Capital Securities Guarantee Trustee, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Capital Securities 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 Capital Securities Guarantee shall be
construed to relieve the Capital Securities 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 Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Capital Securities Guarantee, and the
Capital Securities Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Capital Securities Guarantee, and
no implied covenants or obligations shall be read into this
Capital Securities Guarantee against the Capital Securities
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Capital Securities Guarantee Trustee, the Capital Securities
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 Capital
Securities Guarantee Trustee and conforming to the requirements
of this Capital Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Capital Securities
Guarantee Trustee, the Capital Securities Guarantee Trustee shall
be under a duty to examine the same to determine whether or not
they conform to the requirements of this Capital Securities
Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible Officer of
the Capital Securities Guarantee Trustee, unless it shall be proved that the
Capital Securities Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Capital Securities 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 Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee, or exercising any trust or power conferred
upon the Capital Securities Guarantee Trustee under this Capital Securities
Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall
require the Capital Securities 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 Capital
Securities 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 Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF CAPITAL SECURITIES GUARANTEE TRUSTEE
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities 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 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 Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request
evidence as to such matter from the Guarantor, which evidence shall be
promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have
no duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration thereof).
(v) The Capital Securities 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 Capital Securities Guarantee
Trustee shall have the right at any time to seek instructions concerning
the administration of this Capital Securities Guarantee from any court
of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in it
by this Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital Securities
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Capital Securities Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Capital
Securities Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Capital Securities Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Capital Securities Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Capital Securities Guarantee in the case of an Event of
Default.
(vii) The Capital Securities 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 Capital
Securities Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees, custodians
or attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Capital Securities
Guarantee, both of which shall be conclusively evidenced by the Capital
Securities Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall deem
it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in Liquidation Amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in
good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Capital
Securities Guarantee.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obligation on the Capital Securities 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 Capital Securities 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 Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CAPITAL SECURITIES
GUARANTEE
The recitals contained in this Capital Securities Guarantee shall
be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 CAPITAL SECURITIES GUARANTEE TRUSTEE; ELIGIBILITY
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, 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 4.1(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.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Securities
Guarantee Trust shall immediately resign in the manner and with the effect set
out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities 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 CAPITAL SECURITIES
GUARANTEE TRUSTEE
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event or Default.
(b) The Capital Securities Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Guarantee Trustee and delivered to
the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without the need for prior or subsequent accounting) by
an instrument in writing executed by the Capital Securities Guarantee Trustee
and delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Capital Securities
Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Capital
Securities Guarantee 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 all other
notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED
(a) The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(i) 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
Capital Securities to be performed or observed by the Issuer;
(ii) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of
the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Capital Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(iii) 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 Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(vi) 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;
(v) any invalidity of, or defect or deficiency in,
the Capital Securities;
(vi) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred;
(vii) the consummation of the Exchange Offer; or
(viii) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the obligations
ofthe Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.
(b) 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 5.4 RIGHTS OF HOLDERS
(a) The Holders of a Majority in Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Capital Securities Guarantee or exercising
any trust or power conferred upon the Capital Securities Guarantee Trustee under
this Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce
such Capital Securities Guarantee, any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Capital Securities Guarantee Trustee's rights under this Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. 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 5.5 GUARANTEE OF PAYMENT
This Capital Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.6 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Capital Securities Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Capital Securities Guarantee, if, at the time of
any such payment, any amounts are due and unpaid under this Capital Securities
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a)(i) through (viii), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTION; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS
So long as any Capital Securities remain outstanding, if at any
time (i) there shall have occurred any event of which the Guarantor has actual
knowledge that (x) with the giving of notice or the lapse of time, or both,
would constitute an Event of Default and (y) in respect of which the Guarantor
shall not have taken reasonable steps to cure, (ii) the Guarantor shall be in
default with respect to its payment of any obligations under this Capital
Securities Guarantee and the Debentures held by the Property Trustee, or (iii)
the Guarantor shall have given notice of its election of the exercise of its
right to defer payment of interest pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing, then the Guarantor shall not
(1) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to any of
the Guarantor's capital stock (which includes common and preferred
stock);
(2) make any payment of principal, premium, if any, or interest
on or repay or repurchase or redeem any debt securities of the Guarantor
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Debentures; or
(3) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Debentures
other than (a) dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of common stock of the Guarantor, (b)
any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, (d) as a direct result of, and
only to the extent necessary to avoid the issuance of fractional shares of the
Guarantor's capital stock following, a reclassification of the Guarantor's
capital stock or the exchange or the conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock, (e) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f) purchases of common
stock related to the issuance of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans.
SECTION 6.2 RANKING
This Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor (other than obligations in
respect of Other Guarantees), (ii) pari passu with (A) the most senior preferred
or preference stock now or hereafter issued by the Guarantor, and (B) with any
Other Guarantee and the Common Securities Guarantee, and (iii) senior to the
Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION
This Capital Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price (as defined in the Declaration) of all Capital
Securities, or (ii) upon liquidation of the Issuer, the full payment of the
amounts payable in accordance with the Declaration or the distribution of the
Debentures to the Holders of all of the Capital Securities. Notwithstanding the
foregoing, this Capital Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 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 inured by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Capital Securities might
properly be paid.
SECTION 8.2 INDEMNIFICATION
(a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Capital Securities Guarantee.
(b) Each Indemnified Person shall give prompt notice to the
Guarantor of any action threatened or commenced against it in respect of which
any indemnity is sought hereunder, enclosing a copy of all papers served on, and
notices and demands delivered to, such Indemnified Person, if any, but failure
to so notify the Guarantor shall not relieve the Guarantor from any liability
which it may have under this Section 8.2, except to the extent that it is
materially prejudiced by such failure. The Guarantor shall be entitled to assume
the defense of any such action or proceeding with counsel reasonably
satisfactory to the Indemnified Person who shall not, except with the consent of
the Indemnified Person, be counsel to the Guarantor. Upon assumption by the
Guarantor of the defense of any such action or proceeding, the Indemnified
Person shall have the right to participate in such action or proceeding and to
retain its own counsel, but the Guarantor shall not be liable for any legal fees
or expenses subsequently incurred by such Indemnified Person in connection with
the defense thereof unless (i) the Guarantor has agreed to pay such fees and
expenses, (ii) the Guarantor shall have failed to employ counsel reasonably
satisfactory to the Indemnified Person in a timely manner, or (iii) the
Indemnified Person shall have been advised by counsel (who shall not be employed
by such Indemnified Person and who shall be reasonably satisfactory to the
Guarantor) that such representation would constitute an actual or potential
conflict of interests for counsel selected by the Guarantor. The Guarantor shall
not consent to the terms of any compromise or settlement of any action defended
by the Guarantor in accordance with the foregoing without the prior consent of
the Indemnified Person, and the Indemnified Person shall not consent to the
terms of any compromise or settlement of any action being defended by the
Guarantor in accordance with the foregoing without the prior consent of the
Guarantor. Notwithstanding the immediately preceding sentence, if at any time an
Indemnified Person shall have requested the Guarantor to reimburse the
Indemnified Person for fees and expenses of counsel as contemplated above, the
Guarantor agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more
than 30 business days after receipt by the Guarantor of the aforesaid request
and (ii) the Guarantor shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 AMENDMENTS
Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Capital Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in Liquidation Amount of the Capital
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Capital Securities apply to the giving of such
approval.
SECTION 9.3 NOTICES
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustees at the Issuer's mailing address set forth below (or such other
address as the Issuer may give notice to the Holders of the Capital
Securities):
Orion Capital Trust II
9 Farm Springs Road
Farmington, CT 06032
Attention: Michael P. Maloney, Esq.
Administrative Trustee
Telecopy: (860) 674-6890
with a copy to
Donovan Leisure Newton & Irvine LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: John J. McCann, Esq.
Fax: (212) 632-3315
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below
(or such other addresses the Capital Securities Guarantee Trustee may
give notice of to the Holders of the Capital Securities);
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
(c) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities):
Orion Capital Corporation
9 Farm Springs Road
Farmington, CT 06032
Attention: Michael P. Maloney, Esq.
Senior Vice President, General
Counsel and Secretary
Telecopy: (860) 674-6890
(d) If given to any Holder of Capital Securities, at the address
set forth on the books and records of the Issuer.
All such notices 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,
such notice or other document shall be deemed to have been delivered on the date
of such refusal.
SECTION 9.4 EXCHANGE OFFER
In the event an Exchange Offer Registration Statement (as defined
in the Registration Rights Agreement) becomes effective and the Issuer issues
any capital securities in the Exchange Offer, the Guarantor will enter into a
new capital securities guarantee agreement, in substantially the same form as
this Capital Securities Guarantee, with respect to such capital securities.
SECTION 9.5 BENEFIT
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.6 GOVERNING LAW
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and
year first above written.
ORION CAPITAL CORPORATION,
as Guarantor
By: /s/ Michael P. Maloney
Michael P. Maloney, Esq.
Senior Vice President, General
Counsel and Secretary
THE BANK OF NEW YORK, as
Capital Securities Guarantee Trustee
By:/s/ Walter N. Gitlin
Walter N. Gitlin
Vice President