Exhibit 10.33


 


EXECUTION
COPY


 




 





GUARANTEE AGREEMENT


 


by and between


 


CASTLEPOINT MANAGEMENT CORP.


 


and


 


WILMINGTON TRUST COMPANY


 


Dated as of December 1, 2006




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions and Interpretation

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Powers and Duties of the Guarantee Trustee

  	
  5

  
	
  Section 2.2

  	
  Certain Rights of the Guarantee Trustee

  	
  6

  
	
  Section 2.3

  	
  Not Responsible for Recitals or Issuance of
  Guarantee

  	
  8

  
	
  Section 2.4

  	
  Events of Default; Waiver

  	
  8

  
	
  Section 2.5

  	
  Events of Default; Notice

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  GUARANTEE TRUSTEE

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Guarantee Trustee; Eligibility

  	
  9

  
	
  Section 3.2

  	
  Appointment, Removal and Resignation of the
  Guarantee Trustee

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  GUARANTEE

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Guarantee

  	
  10

  
	
  Section 4.2

  	
  Waiver of Notice and Demand

  	
  10

  
	
  Section 4.3

  	
  Obligations Not Affected

  	
  10

  
	
  Section 4.4

  	
  Rights of Holders

  	
  11

  
	
  Section 4.5

  	
  Guarantee of Payment

  	
  12

  
	
  Section 4.6

  	
  Subrogation

  	
  12

  
	
  Section 4.7

  	
  Independent Obligations

  	
  12

  
	
  Section 4.8

  	
  Enforcement by a Beneficiary

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  LIMITATION OF TRANSACTIONS; SUBORDINATION

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Limitation of Transactions

  	
  13

  
	
  Section 5.2

  	
  Ranking

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  TERMINATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Termination

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  INDEMNIFICATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Exculpation

  	
  14

  
	
  Section 7.2

  	
  Indemnification

  	
  15

  
	
  Section 7.3

  	
  Compensation; Reimbursement of Expenses

  	
  16

  



 


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  ARTICLE VIII

  	
  MISCELLANEOUS

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Successors and Assigns

  	
  16

  
	
  Section 8.2

  	
  Amendments

  	
  16

  
	
  Section 8.3

  	
  Notices

  	
  17

  
	
  Section 8.4

  	
  Benefit

  	
  17

  
	
  Section 8.5

  	
  Governing Law

  	
  17

  
	
  Section 8.6

  	
  Counterparts

  	
  18

  
	
  Section 8.7

  	
  Separability

  	
  18

  



 


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GUARANTEE AGREEMENT


 


This GUARANTEE AGREEMENT (this “Guarantee”), dated as of December 1,
2006, is executed and delivered by CastlePoint Management Corp., a Delaware
corporation (the “Guarantor”), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the “Guarantee Trustee”), for the benefit of the
Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of CastlePoint Management Trust I, a Delaware statutory trust
(the “Issuer”).


 


WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”),
dated as of the date hereof among Wilmington Trust Company, not in its
individual capacity but solely as institutional trustee, the administrators of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof those undivided beneficial interests,
having an aggregate liquidation amount of $100,000,000 (the “Capital Securities”);
and


 


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


 


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


 


ARTICLE I



DEFINITIONS AND INTERPRETATION


 


Section
1.1            Definitions and
Interpretation.


 


In this Guarantee, unless the context otherwise requires:


 


(a)           capitalized terms
used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;


 


(b)           a term defined
anywhere in this Guarantee has the same meaning throughout;


 


(c)           all references to “the
Guarantee” or “this Guarantee” are to this Guarantee as modified, supplemented
or amended from time to time;


 


(d)           all references in
this Guarantee to “Articles” or “Sections” are to Articles or Sections of this
Guarantee, unless otherwise specified;


 


(e)           terms defined in the
Declaration as at the date of execution of this Guarantee have the same
meanings when used in this Guarantee, unless otherwise defined in this
Guarantee or unless the context otherwise requires; and


 


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(f)            a reference to the
singular includes the plural and vice versa.


 


“Affiliate” has the same meaning as given to that term in
Rule 405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.


 


“Beneficiaries” means any Person to whom the Issuer is or
hereafter becomes indebted or liable.


 


“Capital Securities” has the meaning set forth in the recitals
to this Guarantee.


 


“Common Securities” means the common securities issued by the
Issuer to the Guarantor pursuant to the Declaration.


 


“Corporate Trust Office” means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall,
at any particular time, be principally administered, which office at the date
of execution of this Guarantee is located at 1100 North Market Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.


 


“Covered Person” means any Holder of Capital Securities.


 


“Debentures” means the debt securities of the Guarantor designated
the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036
held by the Institutional Trustee (as defined in the Declaration) of the
Issuer.


 


“Declaration Event of Default” means an “Event of Default” as
defined in the Declaration.


 


“Event of Default” has the meaning set forth in Section 2.4(a).


 


“Guarantee Payments” means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: 
(i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the
Optional Redemption Price to the extent the Issuer has funds available
therefor, with respect to any Capital Securities called for redemption by the
Issuer, (iii) the Special Redemption Price to the extent the Issuer has
funds available therefor, with respect to Capital Securities redeemed upon the
occurrence of a Special Event, and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than
in connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer (in either case, the “Liquidation Distribution”).


 


“Guarantee Trustee” means Wilmington Trust Company, until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee and thereafter means each
such Successor Guarantee Trustee.


 


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“Guarantor” means CastlePoint Management Corp. and each of its
successors and assigns.


 


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


 


“Indemnified Person” means the Guarantee Trustee, any Affiliate
of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.


 


“Indenture” means the Indenture dated as of the date hereof
between the Guarantor and Wilmington Trust Company, not in its individual
capacity but solely as trustee, and any indenture supplemental thereto pursuant
to which the Debentures are to be issued to the institutional trustee of the
Issuer.


 


“Issuer” has the meaning set forth in the opening paragraph to
this Guarantee.


 


“Liquidation Distribution” has the meaning set forth in the
definition of “Guarantee Payments” herein.


 


“Majority in liquidation amount of the Capital Securities” means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.


 


“Obligations” means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.


 


“Officer’s Certificate” means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer’s
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:


 


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


 


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


 


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


 


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


 


“Optional Redemption Price” has the meaning set forth in the
Indenture.


 


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


 


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


 


“Special Event” has the meaning set forth in the Indenture.


 


“Special Redemption Price” has the meaning set forth in the
Indenture.


 


“Subsidiary”  means with
respect to any Person, (i) any corporation at least a majority of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries, (ii) any general partnership, joint venture or similar
entity, at least a majority of the outstanding partnership or similar interests
of which shall at the time be owned by such Person, or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii)
any limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, “voting stock” means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of the occurrence of a contingency.


 


“Successor Guarantee Trustee” means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under
Section 3.1.


 


“Trust Securities” means the Common Securities and the Capital
Securities.


 


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ARTICLE II



POWERS, DUTIES AND RIGHTS OF THE

GUARANTEE TRUSTEE


 


Section
2.1            Powers and Duties of the
Guarantee Trustee.


 


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


 


(b)           If an Event of Default actually known
to a Responsible Officer of the Guarantee Trustee has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit
of the Holders of the Capital Securities.


 


(c)           The Guarantee Trustee, before the
occurrence of any Event of Default and after the curing or waiving of all
Events of Default that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Guarantee, and no implied
covenants shall be read into this Guarantee against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.4) and is actually known to a Responsible Officer of
the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.


 


(d)           No provision of this Guarantee shall
be construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:


 


(i)            prior to the
occurrence of any Event of Default and after the curing or waiving of all such
Events of Default that may have occurred:


 


(A)          the duties and
obligations of the Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Guarantee, and no implied covenants or obligations shall be
read into this Guarantee against the Guarantee Trustee; and


 


(B)           in the absence of
bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Guarantee Trustee and conforming to the requirements of this


 


5

















 


Guarantee; but
in the case of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Guarantee;


 


(ii)           the Guarantee
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless it shall be proved that
such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;


 


(iii)          the Guarantee
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the written direction of the
Holders of not less than a Majority in liquidation amount of the Capital
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or relating to the exercise
of any trust or power conferred upon the Guarantee Trustee under this
Guarantee; and


 


(iv)          no provision of this
Guarantee shall require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment of such
funds is not reasonably assured to it under the terms of this Guarantee or
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against such risk or liability is not reasonably assured to it.


 


Section
2.2            Certain Rights of the
Guarantee Trustee.


 


(a)           Subject to the provisions of Section
2.1:


 


(i)            The Guarantee
Trustee may conclusively rely, and shall be fully protected in acting or
refraining from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.


 


(ii)           Any direction or
act of the Guarantor contemplated by this Guarantee shall be sufficiently
evidenced by an Officer’s Certificate.


 


(iii)          Whenever, in the
administration of this Guarantee, the Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officer’s Certificate of the Guarantor which,
upon receipt of such request, shall be promptly delivered by the Guarantor.


 


(iv)          The Guarantee
Trustee shall have no duty to see to any recording, filing or registration of
any instrument (or any re-recording, refiling or re-registration thereof).


 


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(v)           The Guarantee
Trustee may consult with counsel of its selection, and the advice or opinion of
such counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Guarantee from
any court of competent jurisdiction.


 


(vi)          The Guarantee
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Guarantee Trustee such security
and indemnity, reasonably satisfactory to the Guarantee Trustee, against the
costs, expenses (including attorneys’ fees and expenses and the expenses of the
Guarantee Trustee’s agents, nominees or custodians) and liabilities that might
be incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided,
however, that nothing contained in this Section 2.2(a)(vi) shall relieve
the Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Guarantee.


 


(vii)         The 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 Guarantee Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.


 


(viii)        The 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 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 Guarantee Trustee or its agents hereunder shall bind the Holders of the
Capital Securities, and the signature of the 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 Guarantee Trustee
to so act or as to its compliance with any of the terms and provisions of this
Guarantee, both of which shall be conclusively evidenced by the Guarantee
Trustee’s or its agent’s taking such action.


 


(x)            Whenever in the
administration of this Guarantee the Guarantee Trustee shall deem it desirable
to receive instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the 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.


 


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(xi)           The 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 Guarantee.


 


(b)           No provision of this Guarantee shall
be deemed to impose any duty or obligation on the 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
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
Guarantee Trustee shall be construed to be a duty.


 


Section
2.3            Not Responsible for
Recitals or Issuance of Guarantee.


 


The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.


 


Section
2.4            Events of Default;
Waiver.


 


(a)           An Event of Default under this
Guarantee will occur upon the failure of the Guarantor to perform any of its
payment or other obligations hereunder.


 


(b)           The Holders of a Majority in
liquidation amount of the Capital Securities may, voting or consenting as a
class, 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 shall be deemed to have been cured, for every
purpose of this Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.


 


Section
2.5            Events of Default;
Notice.


 


(a)           The Guarantee Trustee shall, within
90 days after the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Capital Securities and the
Guarantor, notices of all Events of Default actually known to a Responsible
Officer of the Guarantee Trustee, unless such defaults have been cured before
the giving of such notice, provided, however, that the Guarantee
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the 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 Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Guarantee Trustee
shall have received written notice from the Guarantor or a Holder of the
Capital Securities (except in the case of a payment default), or a Responsible
Officer of the Guarantee Trustee charged with the administration of this
Guarantee shall have obtained actual knowledge thereof.


 


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ARTICLE III



GUARANTEE TRUSTEE


 


Section
3.1            Guarantee Trustee;
Eligibility.


 


(a)           There shall at all times be a
Guarantee Trustee which shall:


 


(i)            not be an Affiliate
of the Guarantor, and


 


(ii)           be a banking
corporation or national association 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 Person authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least fifty
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 or national association 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
3.1(a)(ii), the combined capital and surplus of such corporation or national
association 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 Guarantee Trustee
shall cease to be eligible to so act under Section 3.1(a), the Guarantee
Trustee shall immediately resign in the manner and with the effect set forth in
Section 3.2(c).


 


(c)           If the Guarantee Trustee has or shall
acquire any “conflicting interest” within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest
or resign to the extent and in the manner provided by, and subject to this
Guarantee.


 


Section
3.2            Appointment, Removal and
Resignation of the Guarantee Trustee.


 


(a)           Subject to Section 3.2(b), the
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.


 


(b)           The Guarantee Trustee shall not be
removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Guarantee Trustee and delivered to the Guarantor.


 


(c)           The Guarantee Trustee appointed to
office shall hold office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor and
the resigning Guarantee Trustee.


 


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(d)           If no Successor Guarantee Trustee
shall have been appointed and accepted appointment as provided in this
Section 3.2 within 60 days after delivery of an instrument of removal
or resignation, the Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Guarantee Trustee.


 


(e)           No Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Guarantee Trustee.


 


(f)            Upon termination of this Guarantee
or removal or resignation of the Guarantee Trustee pursuant to this Section
3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the
Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such
termination, removal or resignation.


 


ARTICLE IV



GUARANTEE


 


Section
4.1            Guarantee.


 


(a)           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 (except the defense of payment by the Issuer),
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.


 


(b)           The Guarantor hereby also agrees to
assume any and all Obligations of the Issuer and in the event any such
Obligation is not so assumed, subject to the terms and conditions hereof, the
Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary
the full payment, when and as due, of any and all Obligations to such
Beneficiaries. This Guarantee is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.


 


Section
4.2            Waiver of Notice and
Demand.


 


The Guarantor hereby waives notice of acceptance of this 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
4.3            Obligations Not
Affected.


 


The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:


 


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(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
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, Optional Redemption
Price, Special 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, Optional Redemption Price, Special Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures or any extension of the maturity date
of 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 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 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 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 4.3 that the obligations of
the Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.


 


There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.


 


Section
4.4            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
Guarantee Trustee in respect of this Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under this Guarantee; provided,
however, that (subject to Section 2.1) the Guarantee Trustee shall
have the right to decline to follow any such direction if the Guarantee Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Guarantee Trustee in good faith by its
board of directors or trustees, executive committees or a trust committee of
directors or trustees and/or Responsible Officers shall determine that the
action or proceedings so directed would involve the Guarantee Trustee in
personal liability.


 


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(b)           Any Holder of Capital Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee’s rights under this Guarantee, without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other Person.
The Guarantor waives any right or remedy to require that any such action be
brought first against the Issuer, the Guarantee Trustee or any other Person
before so proceeding directly against the Guarantor.


 


Section
4.5            Guarantee of Payment.


 


This Guarantee creates a guarantee of payment and not of collection.


 


Section
4.6            Subrogation.


 


The Guarantor shall be subrogated to all (if any) rights of the Holders
of Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by applicable
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 Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
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
4.7            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 Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.


 


Section
4.8            Enforcement by a
Beneficiary.


 


A Beneficiary may enforce the obligations of the Guarantor contained in
Section 4.1(b) directly against the Guarantor and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor. The Guarantor
shall be subrogated to all rights (if any) of any Beneficiary against the
Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor
under this 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 rights 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 Guarantee, if at the time of any such payment, and after
giving effect to such payment, any amounts are due and unpaid under this
Guarantee.


 


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ARTICLE V



LIMITATION OF TRANSACTIONS; SUBORDINATION


 


Section
5.1            Limitation of
Transactions.


 


So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or a Declaration
Event of Default or (b) the Guarantor shall have selected an Extension
Period as provided in the Declaration and such period, or any extension
thereof, shall have commenced and be continuing, then the Guarantor shall not
and shall not permit any Affiliate of the Guarantor controlled by the Guarantor
to (x) 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 or such Affiliate’s capital stock (other than payments of dividends
or distributions to the Guarantor or a Subsidiary of the Guarantor) (the “Restricted
Payments”) or make any payments with respect to the Restricted Payments;
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Guarantor or any
Affiliate of the Guarantor controlled by the Guarantor that rank pari passu in all respects with or junior
in interest to the Debentures; or (z) enter into, amend or modify any contracts
with shareholders holding more than 10% of the outstanding shares of common
stock of the Guarantor, except with Tower Group, Inc. or its wholly owned
subsidiaries, that could require cash payments by the Company to such
shareholder (other than, with respect to clauses (x) and (y) above,
(i) repurchases, redemptions or other acquisitions of shares of capital
stock of the Guarantor or any Subsidiary of the Guarantor in connection with
any employment contract, benefit plan or other similar arrangement with or for
the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Guarantor or of such
Subsidiary (or securities convertible into or exercisable for such capital
stock) as consideration in an acquisition transaction entered into prior to the
occurrence of the Event of Default, Declaration Event of Default or Extension Period,
as applicable, (ii) as a result of any exchange or conversion of any class
or series of the Guarantor’s capital stock (or any capital stock of a
Subsidiary of the Guarantor) for any class or series of the Guarantor’s capital
stock (or in the case of a Subsidiary of the Guarantor, any class or series of
such Subsidiary’s capital stock) or of any class or series of the Guarantor’s
indebtedness for any class or series of the Guarantor’s capital stock (or in
the case of indebtedness of a Subsidiary of the Guarantor, of any class or
series of such Subsidiary’s indebtedness for any class or series of such
Subsidiary’s capital stock), (iii) the purchase of fractional interests in
shares of the Guarantor’s capital stock (or the capital stock of a Subsidiary
of the Guarantor) pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, (iv) any
declaration of a dividend in connection with any stockholders’ rights plan, or
the issuance of rights, stock or other property under any stockholders’ rights
plan, or the redemption or repurchase of rights pursuant thereto, (v) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior
to such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (vi) payments under this Guarantee).


 


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Section
5.2            Ranking.


 


This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined in the Indenture) of the Guarantor. By
their acceptance thereof, each Holder of Capital Securities agrees to the
foregoing provisions of this Guarantee and the other terms set forth herein.


 


The right of the Guarantor to participate in any distribution of assets
of any of its Subsidiaries upon any such Subsidiary’s liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
Subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that Subsidiary. Accordingly, the Guarantor’s obligations under
this Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor’s Subsidiaries, and claimants should look only to
the assets of the Guarantor for payments hereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
that the Guarantor may enter into in the future or otherwise.


 


ARTICLE VI



TERMINATION


 


Section
6.1            Termination.


 


This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the Optional Redemption Price or Special
Redemption Price of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance
with the Declaration upon dissolution of the Issuer. This 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 Guarantee.


 


ARTICLE VII



INDEMNIFICATION


 


Section
7.1            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 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 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.


 


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(b)           An Indemnified Person shall be fully
protected in relying in good faith upon the records of the Issuer or the
Guarantor and upon such information, opinions, reports or statements presented
to the Issuer or 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, if selected by such Indemnified Person, has been
selected with reasonable care by such Indemnified Person, 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
7.2            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 willful misconduct on the part of the Indemnified Person, arising
out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including, but not limited to, the costs and expenses
(including reasonable legal fees and expenses) of the Indemnified Person
defending itself against, or investigating, any claim or liability in
connection with the exercise or performance of any of the Indemnified Person’s
powers or duties hereunder. The obligation to indemnify as set forth in this
Section 7.2 shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee.


 


(b)           Promptly after receipt by an
Indemnified Person under this Section 7.2 of notice of the commencement of
any action, such Indemnified Person will, if a claim in respect thereof is to
be made against the Guarantor under this Section 7.2, notify the Guarantor
in writing of the commencement thereof; but the failure so to notify the
Guarantor (i) will not relieve the Guarantor from liability under
paragraph (a) above unless and to the extent that the Guarantor did not otherwise
learn of such action and such failure results in the forfeiture by the
Guarantor of substantial rights and defenses and (ii) will not, in any
event, relieve the Guarantor from any obligations to any Indemnified Person
other than the indemnification obligation provided in paragraph (a) above.
The Guarantor shall be entitled to appoint counsel of the Guarantor’s choice at
the Guarantor’s expense to represent the Indemnified Person in any action for
which indemnification is sought (in which case the Guarantor shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to
the Indemnified Person. Notwithstanding the Guarantor’s election to appoint
counsel to represent the Guarantor in an action, the Indemnified Person shall
have the right to employ separate counsel (including local counsel), and the
Guarantor shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the Guarantor to represent the
Indemnified Person would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the Indemnified Person and the Guarantor and the Indemnified
Person shall have reasonably concluded that there may be legal defenses
available to it and/or other Indemnified Person(s) which are different from or
additional to those available to the Guarantor, (iii) the Guarantor shall
not have employed counsel satisfactory to the Indemnified Person to represent
the Indemnified Person within a reasonable time after notice of the institution
of such action or (iv) the Guarantor shall authorize


 


15

















 


the Indemnified Person to employ separate
counsel at the expense of the Guarantor. The Guarantor will not, without the
prior written consent of the Indemnified Persons, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified Persons
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Person from all liability arising out of such claim, action, suit
or proceeding.


 


Section
7.3            Compensation;
Reimbursement of Expenses.


 


The Guarantor agrees:


 


(a)           to pay to the Guarantee Trustee from
time to time such compensation for all services rendered by it hereunder as the
parties shall agree to from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust); and


 


(b)           except as otherwise expressly
provided herein, to reimburse the Guarantee Trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by it in
accordance with any provision of this Guarantee (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or willful misconduct.


 


The provisions of this Section 7.3 shall survive the resignation
or removal of the Guarantee Trustee and the termination of this Guarantee.


 


ARTICLE VIII



MISCELLANEOUS


 


Section
8.1            Successors and Assigns.


 


All guarantees and agreements contained in this 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. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale,
transfer or lease of the Guarantor’s assets to another entity, in each case, to
the extent permitted under the Indenture, the Guarantor may not assign its
rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the
Capital Securities.


 


Section
8.2            Amendments.


 


Except with respect to any changes that do not adversely affect the
rights of Holders of the Capital Securities in any material respect (in which
case no consent of Holders will be required), this Guarantee may be amended
only with the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities and the Guarantor. The


 


16

















 


provisions of the Declaration with respect to amendments thereof apply
to the giving of such approval.


 


Section
8.3            Notices.


 


All notices provided for in this 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 Guarantee Trustee, at
the Guarantee Trustee’s mailing address set forth below (or such other address
as the Guarantee Trustee may give notice of to the Holders of the Capital
Securities and the Guarantor):


 


Wilmington Trust Company

1100 North Market Street


Wilmington, Delaware 19890-1600


Attention: Corporate Trust Administration

Telecopy:  302-636-4140


 


(b)           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 and to
the Guarantee Trustee):


 


CastlePoint Management Corp.

120 Broadway

New York, New York  10271

Attention:  Joel Weiner

Telecopy:  212-847-9549


 


(c)           If given to any Holder of the 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
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
8.4            Benefit.


 


This Guarantee is solely for the benefit of the Beneficiaries and,
subject to Section 2.1(a), is not separately transferable from the Capital
Securities.


 


Section
8.5            Governing Law.


 


PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK, THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


17

















 


Section
8.6            Counterparts.


 


This Guarantee may be executed in one or more counterparts, each of
which shall be an original, but all of which taken together shall constitute
one and the same instrument.


 


Section
8.7            Separability.


 


In case one or more of the provisions contained in this Guarantee shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Guarantee, but this Guarantee shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.


 


Signatures appear on the following page


 


18

















 


THIS GUARANTEE is executed as of the day and year first above written.


 


 


	
   

  	
  CASTLEPOINT MANAGEMENT CORP.,
  as

  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROGER A. BROWN

  
	
   

  	
   

  	
  Name: Roger A. Brown

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,
  as

  Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER J. SLAYBAUGH

  
	
   

  	
   

  	
  Name: Christopher J. Slaybaugh

  
	
   

  	
   

  	
  Title: Senior Financial Services Officer

  



 


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