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EXHIBIT 4.7
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Form of
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
EXECUTIVE RISK INC.
Dated as of , 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND INTERPRETATION....................................... 2
SECTION 1.1 Definitions and Interpretation..................... 2
ARTICLE II
TRUST INDENTURE ACT.................................................. 6
SECTION 2.1 Trust Indenture Act; Application................... 6
SECTION 2.2 Lists of Holders of Securities..................... 6
SECTION 2.3 Reports by the Capital Securities
Guarantee Trustee.................................. 7
SECTION 2.4 Periodic Reports to Capital
Securities Guarantee Trustee....................... 7
SECTION 2.5 Evidence of Compliance with
Conditions Precedent............................... 8
SECTION 2.6 Events of Default; Waiver.......................... 8
SECTION 2.7 Event of Default; Notice........................... 8
SECTION 2.8 Conflicting Interests.............................. 9
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE................................. 9
SECTION 3.1 Powers and Duties of the Capital
Securities Guarantee Trustee....................... 9
SECTION 3.2 Certain Rights of Capital
Securities Guarantee Trustee....................... 11
SECTION 3.3 Not Responsible for Recitals or
Issuance of Series B Capital
Securities Guarantee............................... 14
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE................................. 14
SECTION 4.1 Capital Securities Guarantee
Trustee; Eligibility............................... 14
SECTION 4.2 Appointment, Removal and
Resignation of Capital Securities
Guarantee Trustee.................................. 15
ARTICLE V
GUARANTEE............................................................ 16
SECTION 5.1 Guarantee.......................................... 16
SECTION 5.2 Waiver of Notice and Demand........................ 16
SECTION 5.3 Obligations Not Affected........................... 16
SECTION 5.4 Rights of Holders.................................. 17
SECTION 5.5 Guarantee of Payment............................... 18
SECTION 5.6 Subrogation.... ................................... 18
SECTION 5.7 Independent Obligations............................ 18
SECTION 5.8 Possibility of Advancement
of Maturity Date of Debentures..................... 19
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION............................ 19
SECTION 6.1 Limitation of Transactions......................... 19
SECTION 6.2 Ranking............................................ 20
ARTICLE VII
TERMINATION.......................................................... 20
SECTION 7.1 Termination........................................ 20
ARTICLE VIII
INDEMNIFICATION...................................................... 21
SECTION 8.1 Exculpation........................................ 21
SECTION 8.2 Indemnification.................................... 21
ARTICLE IX
MISCELLANEOUS........................................................ 22
SECTION 9.1 Successors and Assigns............................. 22
SECTION 9.2 Amendments......................................... 22
SECTION 9.3 Notices............................................ 22
SECTION 9.4 Benefit............................................ 24
SECTION 9.5 Governing Law...................................... 24
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SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Capital Securities
Guarantee"), dated as of , 1997, is executed and delivered by
Executive Risk Inc., a Delaware insurance holding corporation (the "Guarantor"),
and The Chase Manhattan Bank, a New York banking corporation, as indenture
trustee (the "Capital Securities Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Series B Capital Securities
(as defined herein) of Executive Risk Capital Trust, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration", which expression includes Annex I and Exhibits ▇-▇, ▇-▇, B
and C thereto), dated as of February 5, 1997, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer issued on February
5, 1997 125,000 capital securities, having an aggregate liquidation amount of
$1,000 such capital securities being designated the 8.675% Series A Capital
Securities (the "Series A Capital Securities") and, in connection with an
Exchange Offer (as defined in the Declaration) is executing and delivering on
the date hereof this Series B Capital Securities Guarantee (as defined in the
Declaration) for the benefit of holders of the Series B Capital Securities (as
defined in the Declaration).
WHEREAS, as incentive for the Holders to exchange their Series A
Capital Securities for an equal aggregate liquidation amount of the Series B
Capital Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Series B Capital Securities Guarantee, to
pay to the Holders the Guarantee Payments (as defined below). The Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor executed and delivered on February 5, 1997 a
guarantee agreement (the "Common Securities Guarantee"), with substantially
identical terms to this Series B 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 subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under the Series A Capital Securities Guarantee and this
Series B Capital Securities Guarantee, as the case may be.
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NOW, THEREFORE, in consideration of the exchange by each Holder of
its Series A Capital Securities for Series B Capital Securities, which exchange
the Guarantor hereby acknowledges shall benefit the Guarantor, the Guarantor
executes and delivers this Series B Capital Securities Guarantee for the benefit
of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Capital Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Series B 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 or the Indenture as at the
date of execution of this Series B Capital Securities
Guarantee have the same meaning when used in this Series B
Capital Securities Guarantee unless otherwise defined in this
Series B Capital Securities Guarantee;
(c) a term defined anywhere in this Series BA Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series B Capital Securities Guarantee"
or "this Series B Capital Securities Guarantee" are to this
Series B Capital Securities Guarantee as modified,
supplemented or amended from time to time;
(e) all references in this Series B Capital Securities Guarantee
to Articles and Sections are to Articles and Sections of this
Series B Capital Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Series B Capital Securities Guarantee,
unless otherwise defined in this Series B Capital Securities
Guarantee or unless the context otherwise requires; and
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(g) a reference to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"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 or Wilmington,
Delaware are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means The Chase Manhattan
Bank, 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 Series B 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 ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Global
Trust Services.
"Covered Person" means any Holder or beneficial owner of Series B
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the 8.675% Series B Junior Subordinated Deferrable Interest
Debentures due February 1, 2027 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
payment or other obligations under this Series B Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series B 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 Series B Capital Securities to the extent that the Issuer has funds on hand
legally available therefor at such time, (ii) the applicable redemption price,
including all accumulated and unpaid Distributions to the date of
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redemption (the "Redemption Price") to the extent the Issuer has funds on hand
legally available therefor at such time, with respect to any Series B Capital
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination and liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Series B
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 Series B 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 (in either case, the "Liquidation Distribution"). If
an Event of Default has occurred and is continuing, no Guarantee Payments under
the Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they are
entitled under this Series B Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Series B Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Series B
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, 1997, among
the Guarantor (the "Debenture Issuer") and The Chase Manhattan Bank, as trustee,
pursuant to which the Debentures are to be issued to the Property Trustee of the
Issuer.
"Majority in liquidation amount of the Series B Capital Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Series B 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 Series B Capital Securities.
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"Officers' Certificate" means, with respect to any person, a
certificate signed by two of the following: the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President, the Controller, the
Secretary, an Assistant Secretary, the Treasurer or Assistant Treasurer of the
Guarantor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Series B 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 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
(c) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" as set forth in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued
by the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees hereafter issued by the
Guarantor with respect to capital securities (if any) similar to the Series B
Capital Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Issuer.
"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, 1997, 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" means, with respect to the Capital Securities
Guarantee Trustee, any officer of the
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Capital Securities Guarantee Trustee, with responsibility for the administration
of this Series B Capital Securities Guarantee 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.
"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.
"Trust Securities" means the Common Securities and the Series A
Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series B Capital Securities Guarantee in order for the Declaration to be a
qualified indenture under the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Series B 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 Lists 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 addresses
of the Holders ("List of Holders") as of such date, (i) within five days after
the fifteenth day prior to each Distribution 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
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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
Within 60 days after January 31 of each year, commencing January 31,
1998, the Capital Securities 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 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 Series B 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
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The Holders of a Majority in liquidation amount of Series B Capital
Securities may, by vote, on behalf of the Holders of all of the Series B 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
Series B 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 known to a Responsible Officer of the Capital Securities Guarantee
Trustee, mail by first class postage prepaid, to all Holders, 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.
(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
Series B Capital Securities Guarantee and the Indenture for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series B 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 Series B Capital
Securities Guarantee to any Person except a Holder of Series B Capital
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Capital Securities Guarantee Trustee on 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 conveyancing 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 Series B 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 Series B Capital Securities Guarantee, and no implied
covenants shall be read into this Series B 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 Series B 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 Series B 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:
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(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 Series B 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 Series B Capital Securities Guarantee, and no
implied covenants or obligations shall be read into this Series B
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 Series
B 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 Series B 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 a Majority in
liquidation amount of the Series B 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 Series B Capital Securities Guarantee; and
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(iv) no provision of this Series B 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 Series B
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 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
Series B Capital Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Series B 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 and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, 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
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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
Series B 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
Series B 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 Series B
Capital Securities Guarantee.
(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
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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 Series B 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 Series B 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 Series B 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, without negligence, and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Series B Capital Securities Guarantee.
(b) No provision of this Series B 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 Series B Capital
Securities Guarantee
The recitals contained in this Series B 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
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as to the validity or sufficiency of this Series B 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 Trustee 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 of Default.
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(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 Securities 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 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 Series B 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
on a subordinated basis to the extent set forth in this Series B Capital
Securities Guarantee to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer), as and when due,
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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 Series B
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
The obligations, covenants, agreements and duties of the Guarantor
under this Series B 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:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series B Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Series B Capital Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Series B 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);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or
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readjustment of debt of, or other similar proceedings affecting, the Issuer or
any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series B
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Series B
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 Series B Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series B Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to enforce
such Series B Capital Securities Guarantee, any Holder of Series B Capital
Securities may institute a legal proceeding directly against the Guarantor to
enforce the Capital Securities Guarantee Trustee's rights under this Series B
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 Series B 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
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Series B 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 Series B Capital Securities Guarantee, if, at the
time of any such payment, any amounts are due and unpaid under this Series B
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 Series B
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 Series
B Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
SECTION 5.8 Possibility of Advancement of Maturity Date of Debentures
The parties hereto acknowledge that the Maturity Date (as defined in
the Indenture) of the Debentures may be advanced pursuant to the provisions of
Section 14.06 of the Indenture.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor
shall not (i) 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) or (ii)
make any payment of principal, interest or premium, if any, with respect to, 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 (iii) 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 with
or junior in right of payment to the Debentures (other than (a) dividends or
distributions in
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shares of, or options, warrants or 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 stockholders' 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 result of 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, (f) the issuance of Common
Stock upon exercise of the Aetna Option and (g) purchases or issuances of common
stock in connection with any of the Guarantor's stock option, stock purchase,
stock loan or other benefit plans for its directors, officers or employees or
any of the Guarantor's dividend reinvestment plans, in each case as now existing
or hereafter established or amended), if at such time (i) there shall have
occurred any event of which the Guarantor has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be an Event of
Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series B Capital Securities Guarantee or (iii) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing.
SECTION 6.2 Ranking
This Series B Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture (except as indicated below), it
being understood that the terms of Article XV of the Indenture shall apply to
the obligations of the Guarantor under this Series B Capital Securities
Guarantee as if (x) such Article XV were set forth herein in full and (y) such
obligations were substituted for the term "Securities" appearing in such Article
XV, except that with respect to Section 15.03 of the Indenture only, insofar as
such section relates to bankruptcy or insolvency proceedings only, the term
"Senior Indebtedness" shall mean all liabilities of the Guarantor, whether or
not for money borrowed (other than obligations in respect of Other Guarantees),
(ii) pari passu with any Other
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Guarantee (as defined herein) and any Other Common Securities Guarantee and
(iii) senior to any obligations in respect of any class of the Guarantor's
capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Capital Securities Guarantee shall terminate and be of
no further force and effect (i) upon full payment of the Redemption Price (as
defined in the Declaration) of all Series B 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
the Series B Capital Securities. Notwithstanding the foregoing, this Series B
Capital Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Series B Capital
Securities must restore payment of any sums paid under the Series B Capital
Securities or under this Series B 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 incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Series
B 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 Series B 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
24
pertinent to the existence and amount of assets from which Distributions to
Holders might properly be paid.
SECTION 8.2 Indemnification
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
Series B Capital Securities Guarantee or the earlier resignation or removal of
the Capital Securities Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series B Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Series B Capital Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Securities (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). The provisions of Section 12.2 of
the Declaration with respect to meetings of Holders apply to the giving of such
approval.
SECTION 9.3 Notices
All notices provided for in this Series B 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 Trustee at
the Issuer's mailing address set
25
forth below (or such other address as the Issuer may give notice of to the
holders of the Common Securities):
Executive Risk Capital Trust
c/o Executive Risk Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer and
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders):
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(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):
Executive Risk Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer and
Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If given to any Holder, at the address set forth on the books
and records of the Issuer.
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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 or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Series B Capital Securities Guarantee is solely for the benefit
of the Holders and, subject to Section 3.1(a), is not separately transferable
from the Series B Capital Securities.
SECTION 9.5 Governing Law
THIS SERIES B 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.
27
THIS SERIES B CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
EXECUTIVE RISK INC., as
Guarantor
By:____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Capital Securities Guarantee
Trustee
By:____________________________________
Name:
Title:
