Document:

Prepared by R.R. Donnelley Financial -- Form of Preferred Securities

 EXHIBIT 4.10 
  
  
 PREFERRED SECURITIES GUARANTEE AGREEMENT 
  
 Between 
  
 AMERICAN SAFETY INSURANCE GROUP, LTD. 
 (as Guarantor) 
  
 and 
  
 DEUTSCHE BANK TRUST COMPANY AMERICAS 
 (as
Guarantee Trustee) 
  
 dated as of 
  
             , 2002 

 AMERICAN SAFETY CAPITAL TRUST I 
  
 Certain Sections of this Guarantee Agreement relating to 
 Sections 310 through 318 of the

 Trust Indenture Act of 1939: 
  
 
	 Trust Indenture Act Section
 
	  	  	  	 Guarantee Agreement Section
 

	 Section 310
 	  	 (a) (1)
 	  	 4.1 (a)
 
	  	  	 (a) (2)
 	  	 4.1 (a)
 
	  	  	 (a) (3)
 	  	 Not Applicable
 
	  	  	 (a) (4)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 2.8, 4.1 (c)
 
	 Section 311
 	  	 (a)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 Not Applicable
 
	 Section 312
 	  	 (a)
 	  	 2.2 (a)
 
	  	  	 (b)
 	  	 2.2 (b)
 
	  	  	 (c)
 	  	 Not Applicable
 
	 Section 313
 	  	 (a)
 	  	 2.3
 
	  	  	 (a) (4)
 	  	 2.3
 
	  	  	 (b)
 	  	 2.3
 
	  	  	 (c)
 	  	 2.3
 
	  	  	 (d)
 	  	 2.3
 
	 Section 314
 	  	 (a)
 	  	 2.4
 
	  	  	 (b)
 	  	 2.4
 
	  	  	 (c) (1)
 	  	 2.5
 
	  	  	 (c) (2)
 	  	 2.5
 
	  	  	 (c) (3)
 	  	 2.5
 
	  	  	 (e)
 	  	 1.1,2.5,3.2
 
	 Section 315
 	  	 (a)
 	  	 3.1 (d)
 
	  	  	 (b)
 	  	 2.7
 
	  	  	 (c)
 	  	 3.1 (c)
 
	  	  	 (d)
 	  	 3.1 (d)
 
	  	  	 (e)
 	  	 Not Applicable
 
	 Section 316
 	  	 (a)
 	  	 1.1,2.6,5.4
 
	  	  	 (a) (1) (A)
 	  	 5.4
 
	  	  	 (a) (1) (B)
 	  	 5.4
 
	  	  	 (a) (2)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 5.3
 
	  	  	 (c)
 	  	 Not Applicable
 
	 Section 317
 	  	 (a) (1)
 	  	 Not Applicable
 
	  	  	 (a) (2)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 Not Applicable
 
	 Section 318
 	  	 (a)
 	  	 2.1
 

 
  

	Note:
	 
	This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Guarantee Agreement. 
 

  
 TABLE OF CONTENTS 
  
 
	 ARTICLE I.    DEFINITIONS
 	  	  
	  	 	 Section 1.1.
 	  	 Definitions
 	  	 2
 
	 
	 ARTICLE II.    TRUST INDENTURE ACT
 	  	  
	  	 	 Section 2.1.
 	  	 Trust Indenture Act; Application
 	  	 6
 
	  	 	 Section 2.2.
 	  	 List of Holders
 	  	 6
 
	  	 	 Section 2.3.
 	  	 Reports by the Guarantee Trustee
 	  	 6
 
	  	 	 Section 2.4.
 	  	 Periodic Reports to the Guarantee Trustee
 	  	 6
 
	  	 	 Section 2.5.
 	  	 Evidence of Compliance with Conditions Precedent
 	  	 7
 
	  	 	 Section 2.6.
 	  	 Events of Default; Waiver
 	  	 7
 
	  	 	 Section 2.7.
 	  	 Event of Default; Notice
 	  	 7
 
	  	 	 Section 2.8.
 	  	 Conflicting Interests
 	  	 7
 
	 
	 ARTICLE III.    POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

	  	  
	  	 	 Section 3.1.
 	  	 Powers and Duties of the Guarantee Trustee
 	  	 8
 
	  	 	 Section 3.2.
 	  	 Certain Rights of Guarantee Trustee
 	  	 9
 
	  	 	 Section 3.3.
 	  	 Compensation; Fees; Indemnity
 	  	 11
 
	 
	 ARTICLE IV.    GUARANTEE TRUSTEE
 	  	  
	  	 	 Section 4.1.
 	  	 Guarantee Trustee; Eligibility
 	  	 11
 
	  	 	 Section 4.2.
 	  	 Appointment, Removal and Resignation of the Guarantee Trustee
 	  	 12
 
	 
	 ARTICLE V.    GUARANTEE
 	  	  
	  	 	 Section 5.1.
 	  	 Guarantee
 	  	 13
 
	  	 	 Section 5.2.
 	  	 Waiver of Notice and Demand
 	  	 13
 
	  	 	 Section 5.3.
 	  	 Obligations Not Affected
 	  	 14
 
	  	 	 Section 5.4.
 	  	 Rights of Holders
 	  	 14
 
	  	 	 Section 5.5.
 	  	 Guarantee of Payment
 	  	 15
 
	  	 	 Section 5.6.
 	  	 Subrogation
 	  	 15
 
	  	 	 Section 5.7.
 	  	 Independent Obligations
 	  	 15
 
	 
	 ARTICLE VI.    COVENANTS AND SUBORDINATION
 	  	  
	  	 	 Section 6.1.
 	  	 Subordination
 	  	 15
 
	  	 	 Section 6.2.
 	  	 Pari Passu Guarantees
 	  	 16
 
	 
	 ARTICLE VII.    TERMINATION
 	  	  
	  	 	 Section 7.1
 	  	 Termination
 	  	 16
 

 
 

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	 ARTICLE VIII.    MISCELLANEOUS
 	  	  
	  	 	 Section 8.1.
 	  	 Successors and Assigns
 	  	 16
 
	  	 	 Section 8.2.
 	  	 Amendments
 	  	 17
 
	  	 	 Section 8.3.
 	  	 Notices
 	  	 17
 
	  	 	 Section 8.4.
 	  	 Benefit
 	  	 18
 
	  	 	 Section 8.5.
 	  	 Interpretation
 	  	 18
 
	  	 	 Section 8.6.
 	  	 Governing Law
 	  	 19
 
	  	 	 Section 8.7.
 	  	 Counterparts
 	  	 19
 

 
 

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 PREFERRED SECURITIES GUARANTEE AGREEMENT 
  
 THIS PREFERRED SECURITIES GUARANTEE AGREEMENT, dated as of             , 2002
(this “Guarantee Agreement”), is executed and delivered by AMERICAN SAFETY INSURANCE GROUP, LTD., a Bermuda company (the “Guarantor”), having its principal office at 44 Church Street, P.O. Box HM2064, Hamilton HM
HX, Bermuda and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, having its principal office at 31 West 52nd Street, New York, New York 10019, as trustee, for the benefit of the Holders (as defined herein) from time to time of
the Preferred Securities (as defined herein) of American Safety Capital Trust I, a Delaware statutory trust (the “Issuer Trust”). 
  
 RECITALS 
  
 WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
“Trust Agreement”), dated as of                , 2002, among American Safety Holdings Corp., as Depositor (the “Depositor”), Deutsche
Bank Trust Company Americas, as Property Trustee (the “Property Trustee”), Deutsche Bank Trust Company Delaware, as Delaware Trustee (the “Delaware Trustee”) (collectively, the “Issuer Trustees”),
Fred J. Pinckney and Steven B. Mathis, as Administrators, and the Holders from time to time of preferred undivided beneficial ownership interests in the assets of the Issuer Trust, the Issuer Trust is issuing up to
$                 aggregate Liquidation Amount (as defined herein) (or $                
if the Underwriters exercise their over-allotment option) of its         % Preferred Securities, Liquidation Amount $10 per preferred security (the “Preferred Securities”), representing
preferred undivided beneficial ownership interests in the assets of the Issuer Trust and having the terms set forth in the Trust Agreement; 
  
 WHEREAS, the Preferred Securities will be issued by the Issuer Trust and the proceeds thereof, together with the proceeds from the issuance of the Issuer Trust’s Common Securities (as defined
herein), will be used to purchase the Junior Subordinated Debentures due             , 2032 (as defined in the Trust Agreement) (the “Junior Subordinated Debentures”) of
the Depositor which will be deposited with Deutsche Bank Trust Company Americas, as Property Trustee under the Trust Agreement, as trust assets; and 
  
 WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the purchase of the Preferred Securities by each Holder, which purchase the Guarantor hereby acknowledges shall benefit the Guarantor, and intending to be legally
bound hereby, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Preferred Securities. 

  
 ARTICLE I 
  
 DEFINITIONS 
  
 SECTION 1.1.  Definitions. 
  
 As used in this Guarantee Agreement,
the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the
date hereof. 
  
 “Additional Amount” has the meaning specified in the Trust Agreement. 

 
 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 

 
 “Common Securities” means the securities representing common undivided beneficial interests in the assets of
the Issuer Trust. 
  
 “Delaware Trustee” shall have the meaning specified in the first recital of
this Guarantee Agreement. 
  
  “Depositor” shall have the meaning specified in the first recital of
this Guarantee Agreement. 
  
 “Distributions” means preferential cumulative cash distributions
accumulating from             , 2002 and payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing December 31, 2002 at the annual rate of
            % of the Liquidation Amount. 
  
 “Event of Default” means (a) a default by the Guarantor in any of its payment obligations under this Guarantee Agreement, or (b) a default by the Guarantor in any other obligation hereunder that remains unremedied
for 30 days. 
  
 “Guarantee Agreement” means this Guarantee Agreement, as modified, amended or
supplemented from time to time. 
  
 “Guarantee Payments” means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Issuer Trust: (a) any accrued and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand available therefor at such time, (b) the Redemption Price, with respect to the 
 

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 Preferred Securities called for redemption by the Issuer Trust to the extent that the Issuer Trust shall
have funds on hand available therefor at such time, and (c) upon a voluntary or involuntary termination, winding-up or liquidation of the Issuer Trust, unless the Junior Subordinated Debentures are distributed to the Holders, the lesser of (i) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions to the date of payment to the extent the Issuer Trust shall have funds on hand available to make such payment at such time and (ii) the amount of assets of the Issuer
Trust remaining available for distribution to Holders in liquidation of the Issuer Trust (in either case, the “Liquidation Distribution”). 
  
 “Guarantor Senior Indebtedness” means, whether recourse is to all or a portion of the assets of the Guarantor and whether or not contingent, (a) every obligation of the Guarantor for
money borrowed; (b) every obligation of the Guarantor evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (c) every reimbursement
obligation of the Guarantor with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of the Guarantor; (d) every obligation of the Guarantor issued or assumed as the deferred purchase price of
property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of the Guarantor; (f) every obligation of the Guarantor for claims (as defined in
Section 101(4) of the United States Bankruptcy Code of 1978, as amended) in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; and (g) every obligation of the type
referred to in clauses (a) through (f) of another person and all dividends of another person the payment of which, in either case, the Guarantor has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. Senior
Indebtedness shall not include (a) any obligations which, by their terms, are expressly stated to rank pari passu in right of payment with, or to not be superior in right of payment to the Preferred Securities, (b) any Guarantor Senior
Indebtedness which when incurred and without respect to any election under Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Guarantor, (c) any indebtedness of the Guarantor to any of its
subsidiaries or Affiliates, (d) indebtedness to any executive officer or director of the Guarantor, or (e) any indebtedness in respect of debt securities issued to any trust, or a trustee of such trust, partnership or other entity affiliated with
the Guarantor that is a financing entity of the Guarantor in connection with the issuance of such financing entity of securities that are similar to the Preferred Securities. 
  
  “Guarantee Trustee” means Deutsche Bank Trust Company Americas, until a Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. 
  
 “Guarantor” shall have the meaning specified in the preamble of this Guarantee Agreement. 
  
 “Holder” means any holder, as registered on the books and records of the Issuer Trust, of any Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee. 
 

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 “Indenture” means the Junior Subordinated Indenture dated as of
            , 2002, between Depositor, Guarantor and Deutsche Bank Trust Company Americas, as trustee, as may be modified, amended or supplemented from time to time. 

 
 “Issuer Trust” shall have the meaning specified in the preamble of this Guarantee Agreement. 

 
 “Issuer Trustees” shall have the meaning specified in the first recital of this Guarantee Agreement.

  
 “Junior Subordinated Debentures” shall have the meaning specified in the second recital of this
Guarantee Agreement. 
  
 “Like Amount” means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the principal amount of Junior Subordinated Debentures to be contemporaneously redeemed in accordance with the Indenture, the proceeds of which will be used to pay the Redemption
Price of such Preferred Securities, (b) with respect to a distribution of Junior Subordinated Debentures to Holders of Preferred Securities in connection with a dissolution or liquidation of the Issuer Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities of the Holder to whom such Junior Subordinated Debentures are distributed, and (c) with respect to any distribution of an Additional Amount to Holders of Preferred
Securities, Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities in respect of which such distribution is made. 
  
 “Liquidation Amount” means the stated amount of $10 per Preferred Security. 
  
 “Majority in Liquidation Amount of the Preferred Securities” means, except as provided by the Trust Indenture Act, Preferred Securities representing more
than 50% of the aggregate Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer Trust. 
  
 “Officers’ Certificate” means, with respect to any Person, a certificate signed by the Chairman of the Board, Chief Executive Officer, President or a Vice President, and by the Chief Financial Officer,
Treasurer, an Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include: 
  
 (a)  a statement by
each officer signing the Officers’ Certificate that such officer 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 such officer in rendering the Officers’ Certificate; 
 

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 (c)  a statement that such officer has made such
examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
  
 (d)  a statement as to whether, in the opinion of such officer, such condition or covenant has been complied
with. 
  
 “Person” means a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. 
  
 “Preferred Securities” shall have the meaning specified in the first recital of this Guarantee Agreement. 

 
 “Property Trustee” shall have the meaning specified in the first recital of this Guarantee Agreement.

  
 “Redemption Date” means, with respect to any Preferred Security to be redeemed, the date fixed
for such redemption by or pursuant to the Trust Agreement; provided that each Junior Subordinated Debenture Redemption Date (as such term is defined in the Indenture) and the stated maturity of the Junior Subordinated Debentures shall be a
Redemption Date for a Like Amount of Preferred Securities. 
  
 “Redemption Price” shall have the
meaning specified in the Trust Agreement. 
  
 “Responsible Officer” means, when used with respect to
the Guarantee Trustee, any officer assigned to the Corporate Trust Office, including any managing director, principal, vice president, assistant vice president, assistant treasurer, 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 having direct responsibility for the administration of this Guarantee Agreement, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. 
  
 “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. 
  
 “Trust Agreement” shall have the meaning specified in the Recitals to this Guarantee Agreement. 
  
 “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, or any successor statute, in each case
as amended from time to time. 
 

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 ARTICLE II 
  
 TRUST INDENTURE ACT 
  
 SECTION 2.1.    Trust Indenture Act; Application. 
  
 If
any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required to be a part of and govern this Guarantee Agreement, the provision of the Trust Indenture Act shall control. If any provision of this
Guarantee Agreement modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Guarantee Agreement as so modified or excluded, as the case may be.

  
 SECTION 2.2.    List of Holders. 

 
 (a)  The Guarantor will furnish or cause to be furnished to the Guarantee Trustee: 
  
 (i)  quarterly, not more than 15 days after March 15, June 15, September 15 and December 15 in each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders (the “List of Holders”) as of such date; and 
  
 (ii)  at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request,
a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; 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 Guarantee Trustee by the Guarantor upon written notification to the Guarantee Trustee that no such changes in the List of Holders has occurred or at any time the Guarantee Trustee is the Securities
Register under the Trust Agreement. 
  
 (b)  The Guarantee Trustee shall comply with the requirements of
Section 312(b) of the Trust Indenture Act. 
  
 SECTION
2.3.    Reports by the Guarantee Trustee. 
  
 Within 60 days of January 31 of each year
commencing January 31, 2003, the Guarantee Trustee shall provide to the Holders such reports, if any, as are required by Section 313 of the Trust Indenture Act in the form and in the manner provided by Section 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 
  
 SECTION 2.4.    Periodic Reports to the Guarantee Trustee. 
  
 The Guarantor shall provide to the Guarantee Trustee and the Holders such documents, reports and information, if any, relating to Guarantor and Depositor as required by Section 314 
 

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 of the Trust Indenture Act (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. 
  
 SECTION 2.5.    Evidence of Compliance with Conditions Precedent. 
  
 The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers’ Certificate. 
  
 SECTION 2.6.    Events of Default; Waiver. 
  
 The Holders of a Majority in Liquidation Amount of the Preferred Securities may, by vote, on behalf of the Holders, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent therefrom. 
  
 SECTION 2.7.    Event 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, notices of all Events of Default known to the Guarantee Trustee,
unless such Events of Default have been cured before the giving of such notice; provided that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and
so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

  
 (b)  The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless (i) a
Responsible Officer charged with the administration of this Guarantee Agreement shall have received written notice of such Event of Default, or (ii) a Responsible Officer of the Guarantee Trustee charged with administration of the Trust Agreement
shall have obtained actual knowledge thereof. 
  
 SECTION
2.8.    Conflicting Interests. 
  
 The Trust Agreement shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 
 

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 ARTICLE III 
  
 POWERS, DUTIES AND RIGHTS OF THE 
 GUARANTEE TRUSTEE 
  
 SECTION 3.1.    Powers and Duties of the Guarantee Trustee. 

 
 (a)  This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the
Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except to a Holder exercising his or her rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee hereunder. The right, title and interest of the Guarantee Trustee, as such, hereunder shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee
of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. 
  
 (b)  If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders. 
  
 (c)  The Guarantee Trustee, before the occurrence of any Event of Default and
after the curing of all Events of Default that may have occurred, shall be obligated to perform only such duties as are specifically set forth in this Guarantee Agreement (including pursuant to Section 2.1), and no implied covenants shall be read
into this Guarantee Agreement against the Guarantee Trustee. If an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 
  

(d)  No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own bad faith or 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 Agreement
(including pursuant to Section 2.1), 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 Agreement (including pursuant to Section 2.1); 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 
 

 8 

 furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or of the Trust Indenture Act 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 Agreement; 
  
 (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 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 direction of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and 
  
 (iv)  no provision of this Guarantee Agreement 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 or liability is not assured to it
under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. 
  
 SECTION 3.2.  Certain Rights of Guarantee Trustee. 
  
 (a)  Subject to the provisions of Section 3.1: 
  
 (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 reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; 
  
 (ii)  any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers’ Certificate unless otherwise prescribed herein; 
  
 (iii)  whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take 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 Officers’ Certificate which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor; 
  

	

 

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 (iv)  the Guarantee Trustee may consult with legal counsel, and the written
advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such
advice or opinion. Such legal counsel may be legal counsel to the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this
Guarantee Agreement from any court of competent jurisdiction; 
  
 (v)  the Guarantee
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and
indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses) 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 herein shall relieve the Guarantee Trustee of its obligations upon the occurrence of an Event of Default that has not been
cured or waived to exercise the rights and powers vested in the Guarantee Trustee by this Guarantee, and to use the same degree of care and skill in exercising such rights and powers as a reasonably prudent person would use under the circumstances
in the conduct of his own affairs; 
  
 (vi)  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; 
  
 (vii)  the Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible for any negligence or willful misconduct on the part of any such agent or attorney appointed with due care by it hereunder. Nothing herein shall be construed as limiting or
restricting the right of the Guarantor to bring any action directly against any agent or attorney appointed by the Guarantee Trustee for any negligence or willful misconduct on the part of such agent or attorney; and 
  
 (viii)  whenever in the administration of this Guarantee Agreement 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 (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received and (C) shall be fully protected in acting in accordance with such instructions. 

	

  

	

 

 10 

  
 (b)  No provision of this Guarantee Agreement 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 to act in accordance with such power and authority. 
  
 SECTION
3.3.  Compensation; Fees; Indemnity. 
  
 The Guarantor agrees: 
  
 (a)  to pay to the Guarantee Trustee from time to time reasonable compensation for all services rendered by the
Guarantee Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 
  
 (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 the Guarantee Trustee in accordance with any provision of this Guarantee Agreement (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 bad faith; 
  
 (c)  to
indemnify the Guarantee Trustee (which for purposes of this Section 3.3 shall include its directors, officers, employees and agents) for, and to hold the Guarantee Trustee harmless against, any and all loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties hereunder; 
  
 (d)  in no event shall the Guarantee Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Guarantee Trustee
has been advised of the likelihood of such loss or damage and regardless of the form of action; and 
  
 (e)  in no event shall the Guarantee Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood,
war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by
this Guarantee Agreement. 
  
 The provisions of this Section 3.3 shall survive the payment in full of the Preferred Securities, the
termination of this Agreement or the resignation or removal of the Guarantee Trustee for a period equal to the statute of limitations applicable to a claim based hereon. 
 

 11 

  
 ARTICLE IV 
  
 GUARANTEE TRUSTEE 
  
 SECTION 4.1.  Guarantee Trustee; Eligibility. 
  
 (a)  There shall at all times be a Guarantee Trustee which shall: 
  
 (i)  not be an Affiliate of the Guarantor or the Depositor; and 
  
 (ii)  be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of
the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, 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 Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(b). 
  
 (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 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 the
Guarantee Trustee. 
  
 (a)  No resignation or removal of the Guarantee Trustee and no appointment of a
Successor Guarantee Trustee pursuant to this Article IV shall become effective until the acceptance of appointment by the Successor Guarantee Trustee by written instrument executed by the Successor Guarantee Trustee and delivered to the Holders and
the Guarantee Trustee. 
  
 (b)  Subject to Section 4.2(a), a Guarantee Trustee may resign at any time by
giving written notice thereof to the Holders. The Guarantor shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements such Person’s expenses and charges to serve as the Guarantee Trustee, and
selecting the Person who agrees to the lowest expenses and charges. If the instrument of acceptance by the Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 60 days after the giving of such notice of
resignation, the Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
 

 12 

  
 (c)  The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, delivered to the Guarantee Trustee. 
  
 (d)  If the Guarantor shall fail to appoint a Successor Guarantee Trustee, or if a Guarantee Trustee shall be removed or become incapable of acting as Guarantee
Trustee, or if any vacancy shall occur in the office of any Guarantee Trustee for any cause, the Holders of the Preferred Securities, by Act of the Holders of record of not less than 25% in aggregate Liquidation Amount of the Preferred Securities
then outstanding delivered to such Guarantee Trustee, shall promptly appoint a successor Guarantee Trustee. If no Successor Guarantee Trustee shall have been so appointed by the Holders of the Preferred Securities and such appointment accepted by
the Successor Guarantee Trustee, any Holder, on behalf of himself and all others similarly situated, may petition any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
  
  
 ARTICLE V 
  
 GUARANTEE 
  
 SECTION
5.1.  Guarantee. 
  
 The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis as set forth in Section 6.1 hereof to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer Trust may have or assert, except the defense of payment. 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 Trust to pay such amounts to the Holders. The Guarantor shall give prompt written notice to the Guarantee Trustee in the event it makes any direct payment hereunder. 
  
 SECTION 5.2.  Waiver of Notice and Demand. 
  
 The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against the Guarantee Trustee, Depositor, the Issuer Trust 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. 
 

 13 

  
 SECTION 5.3.  Obligations Not
Affected. 
  
 The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement
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 Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Issuer Trust; 
  
 (b)  the extension of time for the payment
by the Issuer Trust of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Junior Subordinated Debentures as so provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the
Preferred Securities; 
  
 (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 Preferred Securities, or any action on the part of the Issuer Trust 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 Trust or any of the assets of the
Issuer Trust; 
  
 (e)  any invalidity of, or defect or deficiency in, the Preferred
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 (other than payment of the underlying obligation), it being the intent of this Section 5.3 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 the consent
of, the Guarantor with respect to the happening of any of the foregoing. 
  
 SECTION
5.4.  Rights of Holders. 
  
 The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct 
 

 14 

 the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement
or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any Holder may institute a legal proceeding directly against, or request or direct that action be taken by, the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust, Depositor or any other Person. 
  
 SECTION 5.5.  Guarantee of Payment. 
  
 This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication
of amounts theretofore paid by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures to Holders as provided in the Trust Agreement. 
  
 SECTION 5.6.  Subrogation. 
  
 The Guarantor shall be subrogated to all rights (if any) of the Holders against the Issuer Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement;
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 which 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 Agreement, if at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. 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 Trust with respect to the Preferred 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 Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. 
  

 
 ARTICLE VI 
  
 COVENANTS AND SUBORDINATION 
  
 SECTION
6.1.  Subordination. 
  
 This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to Guarantor Senior Indebtedness, it being understood that the terms of Article 13 of the Indenture shall apply to the obligations of the Guarantor under this Guarantee Agreement
as if (w) such Article 13 were set forth herein in full, (x) such guarantee obligations provided were substituted for the term “Securities” appearing in such Article 13 (y) Guarantor Senior Indebtedness were substituted for the term
“Senior 
 

 15 

 Indebtedness” appearing in such Article 13 and (z) the Guarantor were substituted for the term “Company” appearing in such
Article 13, (ii) pari passu in right of payments made pursuant to the “Guarantee” (as defined in the Indenture) and (iii) senior to the Guarantor’s common shares. 
  
 SECTION 6.2.  Pari Passu Guarantees. 
  
 The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with any similar guarantee agreements issued by the Guarantor on behalf of the
holders of preferred or capital securities issued by the Issuer Trust and with any other security, guarantee or other obligation that is expressly stated to rank pari passu with the obligations of the Guarantor under this Guarantee Agreement.

  
  
 ARTICLE VII 
  
 TERMINATION 
  
 SECTION 7.1.  Termination. 
  
 This Guarantee Agreement shall
terminate and be of no further force and effect upon (a) full payment of the Redemption Price of all Preferred Securities, (b) the distribution of Junior Subordinated Debentures to the Holders in exchange for all of the Preferred Securities or (c)
full payment of the amounts payable in accordance with Article IX of the Trust Agreement upon liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder is required to repay any sums paid with respect to the Preferred Securities or this Guarantee Agreement. 
  
  
 ARTICLE VIII 
  
 MISCELLANEOUS

  
 SECTION 8.1.  Successors and Assigns. 

 
 All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger, conveyance, transfer or sale involving the Guarantor that is permitted
under Article VIII of the Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor’s obligations hereunder, the Guarantor shall not assign its obligations hereunder, and any purported assignment that is not in
accordance with these provisions shall be void. 
  
 SECTION
8.2.  Amendments. 
  
 Except with respect to any changes that do not materially adversely affect the
rights of the Holders (in which case no consent of the Holders will be required), this Guarantee 
 

 16 

 Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of the Preferred
Securities. The provisions of Article VI of the Trust Agreement concerning meetings of the Holders shall apply to the giving of such approval. 
  
 SECTION 8.3.  Notices. 
  
 Any
notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied (confirmed by delivery of the original) or mailed by first class mail as
follows: 
  
 (a)  if given to the Guarantor, to the address or telecopy number set forth
below or such other address or telecopy number or to the attention of such other Person as the Guarantor may give notice to the Holders: 
  
 American Safety Insurance Group, Ltd. 
 44 Church Street 
 P.O. Box HM2064 
 Hamilton HM HX, Bermuda

  
 with a copy to: 
  
 American Safety Holdings Corp. 
 1845 The
Exchange 
 Atlanta, Georgia 30339 
 Facsimile No.: (770) 485-4346 
 Attention: Fred J. Pinckney 
  
 (b)  if given to the Issuer Trust, in care of the Guarantee Trustee, at the Issuer Trust’s (and the Guarantee Trustee’s) address set
forth below or such other address or telecopy number or to the attention of such other Person as the Guarantee Trustee on behalf of the Issuer Trust may give notice to the Holders: 
  
 American Safety Capital Trust I 
 c/o American
Safety Holdings Corp. 
 1845 The Exchange 
 Atlanta, Georgia 30339 
 Facsimile No.: (770) 485-4346 
 Attention: Fred J. Pinckney 
 

 17 

  
 with a copy to: 
  
 Deutsche Bank Trust Company Americas 
 Corporate Trust and Agency Services 
 c/o Deutsche Bank Services New Jersey, Inc.

 100 Plaza One—MSJCY 03-0603 
 Jersey City, NJ 07311 
 Facsimile No.: (201) 593-6527 
 Attention: Susan Johnson 
  
 (c)  if given
to the Guarantee Trustee: 
  
 Deutsche Bank Trust Company Americas 
 Corporate Trust and Agency Services 
 c/o
Deutsche Bank Services New Jersey, Inc. 
 100 Plaza One—MSJCY 03-0603 
 Jersey City, NJ 07311 
 Facsimile No.: (201) 593-6527 
 Attention: Susan Johnson 
  
 (d)  if given to any Holder, at the address set forth on the books and records of the Issuer Trust. 
  
 All notices hereunder 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 Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Securities. 
  
 SECTION 8.5.  Interpretation. 
  
 In this Guarantee Agreement, unless the context otherwise requires: 
  
 (a)  capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1; 
  
 (b)  a term defined anywhere in this Guarantee Agreement has the same meaning throughout; 

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

 18 

  
 (d)  all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; 
  
 (e)  a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; 

 
 (f)  a reference to the singular includes the plural and vice versa; and 
  
 (g)  the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter
genders. 
  
 SECTION 8.6.  Governing Law. 
  
 THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. 
  
 SECTION
8.7.  Counterparts. 
  
 This instrument may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 
  
 [SIGNATURES APPEAR ON THE FOLLOWING PAGE] 
 

 19 

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

  
 
	 AMERICAN SAFETY INSURANCE GROUP, LTD.,
 as Guarantor
 
	 
	 By:
 	 	 

	  	 	 Lloyd A. Fox
 President and
Chief Executive Officer
 

 
  
  
 
	 DEUTSCHE BANK TRUST COMPANY
AMERICAS
 as Guarantee Trustee and not in its individual capacity
 
	 
	 By:
 	 	 

	  	 	  

 
 

 20Prepared by R.R. Donnelley Financial -- Form of Jr Subordinated Debenture Securities Guar

 EXHIBIT 4.11 
  
 
 
  
  
 JUNIOR SUBORDINATED DEBENTURES GUARANTEE AGREEMENT

  
  
 Between 
  

 
 AMERICAN SAFETY INSURANCE GROUP, LTD. 
 (as Guarantor) 
  
  
 and 
  
  
 DEUTSCHE BANK TRUST COMPANY AMERICAS 
 (as Guarantee Trustee) 
  
  
 dated as of

  
  
                         , 2002 
  
 

 AMERICAN SAFETY CAPITAL TRUST I 
  
 Certain Sections of this Guarantee Agreement relating to 
 Sections 310 through 318 of the

 Trust Indenture Act of 1939: 
  
 
	 Trust Indenture
 Act
Section
 
	  	  	  	 Guarantee Agreement Section
 

	 Section 310
 	  	 (a) (1)
 	  	 4.1 (a)
 
	  	  	 (a) (2)
 	  	 4.1 (a)
 
	  	  	 (a) (3)
 	  	 Not Applicable
 
	  	  	 (a) (4)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 2.8, 4.1 (c)
 
	 Section 311
 	  	 (a)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 Not Applicable
 
	 Section 312
 	  	 (a)
 	  	 2.2 (a)
 
	  	  	 (b)
 	  	 2.2 (b)
 
	  	  	 (c)
 	  	 Not Applicable
 
	 Section 313
 	  	 (a)
 	  	 2.3
 
	  	  	 (a) (4)
 	  	 2.3
 
	  	  	 (b)
 	  	 2.3
 
	  	  	 (c)
 	  	 2.3
 
	  	  	 (d)
 	  	 2.3
 
	 Section 314
 	  	 (a)
 	  	 2.4
 
	  	  	 (b)
 	  	 2.4
 
	  	  	 (c) (1)
 	  	 2.5
 
	  	  	 (c) (2)
 	  	 2.5
 
	  	  	 (c) (3)
 	  	 2.5
 
	  	  	 (e)
 	  	 1.1, 2.5, 3.2
 
	 Section 315
 	  	 (a)
 	  	 3.1 (d)
 
	  	  	 (b)
 	  	 2.7
 
	  	  	 (c)
 	  	 3.1 (c)
 
	  	  	 (d)
 	  	 3.1 (d)
 
	  	  	 (e)
 	  	 Not Applicable
 
	 Section 316
 	  	 (a)
 	  	 1.1, 2.6, 5.4
 
	  	  	 (a) (1) (A)
 	  	 5.4
 
	  	  	 (a) (1) (B)
 	  	 5.4
 
	  	  	 (a) (2)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 5.3
 
	  	  	 (c)
 	  	 Not Applicable
 
	 Section 317
 	  	 (a) (1)
 	  	 Not Applicable
 
	  	  	 (a) (2)
 	  	 Not Applicable
 
	  	  	 (b)
 	  	 Not Applicable
 
	 Section 318
 	  	 (a)
 	  	 2.1
 

 
  

	Note:
	 
	This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Guarantee Agreement. 
 

 TABLE OF CONTENTS 
  
 
	  	  	  	  	 Page
 

	 ARTICLE I.    DEFINITIONS
 	  	  
	         Section 1.1.
 	  	 Definitions
 	  	 2
 
	 
	 ARTICLE II.    TRUST INDENTURE ACT
 	  	  
	         Section 2.1.
 	  	 Trust Indenture Act; Application
 	  	 4
 
	         Section 2.2.
 	  	 List of Holders
 	  	 4
 
	         Section 2.3.
 	  	 Reports by the Guarantee Trustee
 	  	 5
 
	         Section 2.4.
 	  	 Periodic Reports to the Guarantee Trustee
 	  	 5
 
	         Section 2.5.
 	  	 Evidence of Compliance with Conditions Precedent
 	  	 5
 
	         Section 2.6.
 	  	 Events of Default; Waiver
 	  	 5
 
	         Section 2.7.
 	  	 Event of Default; Notice
 	  	 6
 
	         Section 2.8.
 	  	 Conflicting Interests
 	  	 6
 
	 
	 ARTICLE III.    POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

	  	  
	         Section 3.1.
 	  	 Powers and Duties of the Guarantee Trustee
 	  	 6
 
	         Section 3.2.
 	  	 Certain Rights of Guarantee Trustee
 	  	 8
 
	         Section 3.3.
 	  	 Compensation; Fees; Indemnity
 	  	 9
 
	 
	 ARTICLE IV.    GUARANTEE TRUSTEE
 	  	  
	         Section 4.1.
 	  	 Guarantee Trustee; Eligibility
 	  	 10
 
	         Section 4.2.
 	  	 Appointment, Removal and Resignation of the Guarantee Trustee
 	  	 10
 
	 
	 ARTICLE V.    GUARANTEE
 	  	  
	         Section 5.1.
 	  	 Guarantee
 	  	 11
 
	         Section 5.2.
 	  	 Waiver of Notice and Demand
 	  	 12
 
	         Section 5.3.
 	  	 Obligations Not Affected
 	  	 12
 
	         Section 5.4.
 	  	 Rights of Holders
 	  	 13
 
	         Section 5.5.
 	  	 Guarantee of Payment
 	  	 13
 
	         Section 5.6.
 	  	 Subrogation
 	  	 13
 
	         Section 5.7.
 	  	 Independent Obligations
 	  	 13
 
	 
	 ARTICLE VI.    COVENANTS AND SUBORDINATION
 	  	  
	         Section 6.1.
 	  	 Subordination
 	  	 14
 
	         Section 6.2.
 	  	 Pari Passu Guarantees
 	  	 14
 
	 
	 ARTICLE VII.    TERMINATION
 	  	  
	         Section 7.1.
 	  	 Termination
 	  	 14
 

 
 

 i 

 
	 ARTICLE VIII.    MISCELLANEOUS
 	  	  
	         Section 8.1.
 	  	 Successors and Assigns
 	  	 15
 
	         Section 8.2.
 	  	 Amendments
 	  	 15
 
	         Section 8.3.
 	  	 Notices
 	  	 15
 
	         Section 8.4.
 	  	 Benefit
 	  	 16
 
	         Section 8.5.
 	  	 Interpretation
 	  	 17
 
	         Section 8.6.
 	  	 Governing Law
 	  	 17
 
	         Section 8.7.
 	  	 Counterparts
 	  	 17
 

 
 

 ii 

 JUNIOR SUBORDINATED DEBENTURES GUARANTEE AGREEMENT 
  
 THIS JUNIOR SUBORDINATED DEBENTURE GUARANTEE AGREEMENT, dated as of
                    , 2002 (this “Guarantee Agreement”), is executed and delivered by AMERICAN SAFETY INSURANCE GROUP, LTD., a
Bermuda company (the “Guarantor”), having its principal office at 44 Church Street, P.O. Box HM2064, Hamilton HM HX, Bermuda and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, having its principal office at 31
West 52nd St., New York, NY 10019, as trustee (the “Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Debentures (as defined herein) of American Safety Holding Corp., a Georgia
corporation (the “Issuer”). 
  
  
 RECITALS 

 
 WHEREAS, pursuant to a Junior Subordinated Indenture, dated as of
                    , 2002 (the “Indenture”), among the Issuer, Guarantor and Deutsche Bank Trust Company Americas, a New York
banking corporation, as trustee thereunder, the Issuer is issuing $             aggregate principal amount of its unsecured junior subordinated debentures (the
“Debentures”), which will be deposited with Deutsche Bank Trust Company Americas, as property trustee (the “Property Trustee”), as trust assets of American Safety Capital Trust I (the “Issuer
Trust”) pursuant to the terms of the Amended and Restated Trust Agreement dated as of                         , 2002
(the “Trust Agreement”) among the Issuer, as depositor, the Property Trustee, Deutsche Bank Trust Company Delaware, as Delaware trustee (the “Delaware Trustee”), and the Administrators therein named. 

 
 WHEREAS, as incentive for the Holders (as defined in the Indenture) to purchase such Debentures, the Guarantor desires
irrevocably and unconditionally, to guarantee the obligations of the Issuer under the Indenture. 
  
 NOW, THEREFORE,
in consideration of the purchase by the Property Trustee on behalf of the Trust of the Debentures, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit
of the Holders. 
  
  
 ARTICLE I 
  
 DEFINITIONS 
  
 SECTION 1.1.  Definitions. 
  
 As used in this Guarantee
Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Indenture as in effect on
the date hereof. 
  
 “Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified 

 Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 
  
 “Debentures” shall have the meaning specified in the first recital of this Guarantee Agreement. 
  
 “Delaware Trustee” shall have the meaning specified in the first recital of this Guarantee Agreement. 
  
 “Event of Default” means a default by the Guarantor in any of its payment or other obligations under this Guarantee Agreement; provided however,
that, except with respect to a payment default, the Guarantor shall have received notice of default and shall not have cured such default within 60 days after receipt of such notice. 
  
 “Guarantee Agreement” means this Guarantee Agreement, as modified, amended or supplemented from time to time. 
  
 “Guarantor Senior Indebtedness” means, whether recourse is to all or a portion of the assets of the Guarantor and whether
or not contingent, (a) every obligation of the Guarantor for money borrowed; (b) every obligation of the Guarantor evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses; (c) every reimbursement obligation of the Guarantor with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of the Guarantor; (d) every obligation of the Guarantor
issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of the Guarantor; (f) every
obligation of the Guarantor for claims (as defined in Section 101(4) of the United States Bankruptcy Code of 1978, as amended) in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar
arrangements; and (g) every obligation of the type referred to in clauses (a) through (f) of another person and all dividends of another person the payment of which, in either case, the Guarantor has guaranteed or is responsible or liable, directly
or indirectly, as obligor or otherwise. Senior Indebtedness shall not include (a) any obligations which, by their terms, are expressly stated to rank pari passu in right of payment with, or to not be superior in right of payment to the
Securities (as such term is defined in the Indenture), (b) any Guarantor Senior Indebtedness which when incurred and without respect to any election under Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse
to the Guarantor, (c) any indebtedness of the Guarantor to any of its subsidiaries or Affiliates, (d) indebtedness to any executive officer or director of the Guarantor, or (e) any indebtedness in respect of debt securities issued to any trust, or a
trustee of such trust, partnership or other entity affiliated with the Guarantor that is a financing entity of the Guarantor in connection with the issuance of such financing entity of securities that are similar to the Preferred Securities.

 

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 “Guarantee Trustee” means Deutsche Bank Trust Company Americas,
until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. 
  
 “Guarantor” shall have the meaning specified in the preamble of this Guarantee Agreement. 
  
 “Indenture” shall have the meaning specified in the first recital of this Guarantee Agreement. 
  
 “Issuer” shall have the meaning specified in the preamble of this Guarantee Agreement. 
  
 “Issuer Trust” shall have the meaning specified in the first recital of this Guarantee Agreement. 

 
 “Liquidation Amount” means the stated amount of $10 per Preferred Security. 
  
 “Majority in Liquidation Amount of the Preferred Securities” means, except as provided by the Trust Indenture Act,
Preferred Securities representing more than 50% of the aggregate Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer Trust. 
  
 “Officers’ Certificate” means, with respect to any Person, a certificate signed by the Chairman of the Board, Chief Executive Officer, President or a Vice President, and by the
Chief Financial Officer, Treasurer, an Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance
with a condition or covenant provided for in this Guarantee Agreement shall include: 
  
 (a)  a statement by each officer signing the Officers’ Certificate that such officer 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 such officer in rendering the Officers’
Certificate; 
  
 (c)  a statement that such officer has made such examination or
investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 
  

(d)  a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with. 
  
 “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association,
joint stock company, limited liability company, trust, unincorporated 
 

 3 

 association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. 
  
 “Property Trustee” shall have the meaning specified in the first recital of this Guarantee Agreement. 

 
 “Responsible Officer” means, when used with respect to the Guarantee Trustee, any officer assigned to the
Corporate Trust Office, including any managing director, principal, vice president, assistant vice president, assistant treasurer, 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 having direct responsibility for the administration of this Guarantee Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such
officer’s knowledge of and familiarity with the particular subject. 
  
 “Successor Guarantee
Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. 
  
 “Trust Agreement” shall have the meaning specified in the first recital to this Guarantee Agreement. 
  
 “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, or any successor statute, in each case as amended from time to time.

  
  
 ARTICLE II 
  
 TRUST INDENTURE ACT 
  
 SECTION 2.1.  Trust Indenture Act; Application. 
  
 If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required to be a part of and govern this Guarantee Agreement, the provision of the Trust Indenture Act shall control. If any provision of this Guarantee
Agreement modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Guarantee Agreement as so modified or excluded, as the case may be. 

 
 SECTION 2.2.  List of Holders. 
  
 (a)  The Guarantor will furnish or cause to be furnished to the Guarantee Trustee: 
  
 (i)  quarterly, not more than 15 days after March 15, June 15, September 15 and December 15 in each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders (the “List of Holders”) as of such date; and 
 

 4 

  
 (ii)  at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; 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 Guarantee Trustee upon written notification to the Guarantee Trustee that no such changes in the List of
Holders has occurred or at any time the Guarantee Trustee is the Securities Registrar under the Trust Agreement. 
  
 (b)  The Guarantee Trustee shall comply with the requirements of Section 312(b) of the Trust Indenture Act. 
  
 SECTION 2.3.  Reports by the Guarantee Trustee. 
  
 Within 60 days of January 31 of each year commencing January 31, 2003, the Guarantee Trustee shall provide to the Holders such reports, if any, as are required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 
  
 SECTION 2.4.  Periodic Reports to the Guarantee Trustee. 
  
 The Guarantor shall provide to the Guarantee Trustee and the Holders such documents, reports and information, if any, relating to Guarantor and Issuer as required by
Section 314 of the Trust Indenture Act (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. 

 
 SECTION 2.5.  Evidence of Compliance with Conditions Precedent. 

 
 The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any,
provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers’ Certificate. 
  
 SECTION 2.6.  Events of Default;
Waiver. 
  
 The Holders of a Majority in Liquidation Amount of the Preferred Securities may, by vote, on behalf
of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. 
 

 5 

  
 SECTION 2.7.  Event 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, notices of all Events of Default known to the Guarantee Trustee, unless such Events of Default have been cured before the giving of such notice; provided that, except in
the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. 
  
 (b)  The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless (i) a Responsible Officer charged with the administration of this Guarantee Agreement shall have received written
notice of such Event of Default, or (ii) a Responsible Officer of the Guarantee Trustee charged with administration of the Trust Agreement shall have obtained actual knowledge thereof. 
  
 SECTION 2.8.  Conflicting Interests. 
  
 The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act. 
  
  
 ARTICLE III 
  
 POWERS, DUTIES AND RIGHTS OF THE 
 GUARANTEE
TRUSTEE 
  
 SECTION 3.1.  Powers and Duties of the Guarantee
Trustee. 
  
 (a)  This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of
the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except to a Holder exercising his or her rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee hereunder. The right, title and interest of the Guarantee Trustee, as such, hereunder shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor
Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

  
 (b)  If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this
Guarantee Agreement for the benefit of the Holders. 
  
 (c)  The Guarantee Trustee, before the occurrence
of any Event of Default and after the curing of all Events of Default that may have occurred, shall be obligated to perform only such duties as are specifically set forth in this Guarantee Agreement (including pursuant to 
 

 6 

 Section 2.1), and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 
  
 (d)  No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own bad faith or 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 Agreement (including pursuant to Section 2.1), 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 Agreement (including pursuant to Section 2.1); and 
  
 (B)  in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act 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 Agreement; 
  
 (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 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 direction of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and 
  
 (iv)  no provision of this Guarantee Agreement 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 
 

 7 

 funds or liability is not assured to it under the terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it. 
  
 SECTION
3.2.  Certain Rights of Guarantee Trustee. 
  
 (a)  Subject to the provisions of Section
3.1: 
  
 (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 reasonably
believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; 
  
 (ii)  any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers’ Certificate unless otherwise prescribed herein; 
  
 (iii)  whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering or omitting to take 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 Officers’ Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor; 
  
 (iv)  the Guarantee Trustee may consult with legal counsel, and the written advice or opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the
Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction;

  
 (v)  the Guarantee Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses) 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 herein shall relieve the Guarantee Trustee of its obligations upon the occurrence of an Event of Default that has not been cured or waived to exercise the rights and powers vested in the Guarantee
Trustee by this Guarantee, and to use the same degree of care and skill in exercising such rights and powers as a reasonably prudent person would use under the circumstances in the conduct of his own affairs; 
 

 8 

 (vi)  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; 
  
 (vii)  the Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be responsible for
any negligence or willful misconduct on the part of any such agent or attorney appointed with due care by it hereunder. Nothing herein shall be construed as limiting or restricting the right of the Guarantor to bring any action directly against any
agent or attorney appointed by the Guarantee Trustee for any negligence or willful misconduct on the part of such agent or attorney; and 
  
 (viii)  whenever in the administration of this Guarantee Agreement 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 (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be fully
protected in acting in accordance with such instructions. 
  
 (b)  No provision of this Guarantee Agreement
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 to act in accordance with such power and authority. 
  
 SECTION 3.3.  Compensation; Fees; Indemnity. 
  
 The Guarantor
agrees: 
  
 (a)  to pay to the Guarantee Trustee from time to time reasonable compensation
for all services rendered by the Guarantee Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); 
  
 (b)  except as otherwise expressly provided herein, to reimburse the Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by the Guarantee Trustee in accordance with any provision of this Guarantee Agreement (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 bad faith; 
 

 9 

  
 (c)  to indemnify the Guarantee Trustee (which for
purposes of this Section 3.3 shall include its directors, officers, employees and agents) for, and to hold the Guarantee Trustee harmless against, any and all loss, damage, claims, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder; 
  
 (d)  in no event shall the Guarantee Trustee be
liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form
of action; and 
  
 (e)  in no event shall the Guarantee Trustee be liable for any failure
or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action,
including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Guarantee Agreement. 
  
 The provisions of this Section 3.3 shall survive the payment in full of the Debentures, the termination of this Guarantee Agreement or the resignation or removal of the
Guarantee Trustee for a period equal to the statute of limitations applicable to a claim based hereon. 
  
  
 ARTICLE IV 
  
 GUARANTEE TRUSTEE 
  

SECTION 4.1.  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 Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or
examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, 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 Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(b). 
 

 10 

  
 (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 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 the Guarantee Trustee.

  
 (a)  No resignation or removal of the Guarantee Trustee and no appointment of a Successor Guarantee
Trustee pursuant to this Article IV shall become effective until the acceptance of appointment by the Successor Guarantee Trustee by written instrument executed by the Successor Guarantee Trustee and delivered to the Holders and the Guarantee
Trustee. 
  
 (b)  Subject to Section 4.2(a), a Guarantee Trustee may resign at any time by giving written
notice thereof to the Holders. The Guarantee Trustee shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements such Person’s expenses and charges to serve as the Guarantee Trustee, and selecting
the Person who agrees to the lowest expenses and charges. If the instrument of acceptance by the Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 60 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
  
 (c)  The Guarantee Trustee may be removed for cause at any time by Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at least a Majority in Liquidation Amount
of the Preferred Securities, delivered to the Guarantee Trustee. 
  
 (d)  If a resigning Guarantee Trustee
shall fail to appoint a successor, or if a Guarantee Trustee shall be removed or become incapable of acting as Guarantee Trustee, or if any vacancy shall occur in the office of any Guarantee Trustee for any cause, the Holders of the Preferred
Securities, by Act of the Holders of record of not less than 25% in aggregate Liquidation Amount of the Preferred Securities then outstanding delivered to such Guarantee Trustee, shall promptly appoint a successor Guarantee Trustee. If no Successor
Guarantee Trustee shall have been so appointed by the Holders of the Preferred Securities and such appointment accepted by the Successor Guarantee Trustee, any Holder, on behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee. 
  
  
 ARTICLE V 
  
 GUARANTEE 
  
 SECTION 5.1.  Guarantee. 
  
 The Guarantor hereby irrevocably and unconditionally guarantees to each Holder the due and punctual payment of the principal of, any premium and interest (including any Additional Interest) and
Additional Sums on the Debentures when and as the same shall become due and payable, whether at maturity, by acceleration, redemption, repayment or otherwise, in 
 

 11 

 accordance with the terms of such Debenture and of the Indenture. The Guarantor further agrees that, as between the Guarantor, on the one hand,
and the Holders and the Guarantee Trustee, on the other hand, the maturity of the Debentures guaranteed hereby may be accelerated as provided in Article 5 of the Indenture for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Debentures guaranteed hereby. 
  
 SECTION 5.2.  Waiver of Notice and Demand. 
  
 The Guarantor hereby
waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, the Issuer Trust, 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 Guarantee Agreement shall be as if were a principal debtor, not merely a surety, and 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 Debentures to be performed or
observed by the Issuer; 
  
 (b)  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 Debentures, or any action on the part of the Issuer Trust granting indulgence or extension of any kind;

  
 (c)  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; 

 
 (d)  any invalidity of, or defect or deficiency in, the Debentures; 
  
 (e)  the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or 

 
 (f)  any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge
or defense of a guarantor (other than payment of the underlying obligation), it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. 

 12 

  
 There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing. 
  
 SECTION 5.4.  Rights of Holders. 
  
 The Guarantor hereby expressly
acknowledges that: (a) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (c) the
Holders of a Majority in Liquidation Amount of the Debentures 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 Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against, or requesting or directing that action be taken by, the Guarantee Trustee, the Issuer or any other Person. The Guarantor waives any right or remedy to require that any action on this Guarantee Agreement 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 Guarantee Agreement
creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment in full (without duplication of amounts theretofore paid by the Issuer) owed under the Debentures. 
  
 SECTION 5.6.  Subrogation. 
  
 The Guarantor shall be subrogated to all rights (if any) of the Holders against the Issuer Trust in respect of any amounts paid to the Holders by the Guarantor under this
Guarantee Agreement; 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 which 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 Agreement, if at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. 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 Debentures, and that the Guarantor shall be
liable as principal and as debtor hereunder to make all payments with respect to the Debentures pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (f), inclusive, of
Section 5.3 hereof. 
 

 13 

  
 ARTICLE VI 
  
 COVENANTS AND SUBORDINATION 
  
 SECTION 6.1.  Subordination. 
  
 This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to Guarantor Senior Indebtedness, it being understood that the terms of Article 13 of the Indenture shall apply to the obligations of
the Guarantor under this Guarantee Agreement as if (w) such Article 13 were set forth herein in full, (x) such guarantee obligations provided were substituted for the term “Securities” appearing in such Article 13 (y) Guarantor Senior
Indebtedness were substituted for the term “Senior Indebtedness” appearing in such Article 13 and (z) the Guarantor were substituted for the term “Company” appearing in such Article 13, (ii) pari passu in right of payments made
pursuant to the “Guarantee” (as defined in the Trust Agreement) and (iii) senior to the Guarantor’s common shares. 
  
 SECTION 6.2.  Pari Passu Guarantees. 
  
 This Guarantee Agreement shall rank pari passu with any similar guarantee agreements issued by the Guarantor on behalf of holders of junior subordinated debentures issued by any entity affiliated with the Guarantor in connection with
the issuance by such other entity of preferred securities or other securities which are similar to preferred securities, which junior subordinated debentures are guaranteed by the Guarantor pursuant to an instrument that ranks pari passu in right of
payment to this Guarantee Agreement. 
  
  
 ARTICLE VII 
  
 TERMINATION 
  
 SECTION 7.1.  Termination. 
  
 This Guarantee shall
terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Debentures and all other amounts then due and payable under the Indenture, or (ii) the full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with
respect to the Debentures or under this Guarantee Agreement. 
 

 14 

  
 ARTICLE VIII 
  
 MISCELLANEOUS 
  
 SECTION 8.1.  Successors and Assigns. 
  
 All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Debentures then outstanding. Except in the case of the
Guarantor in connection with a consolidation, merger, conveyance, transfer or sale involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the assignee agrees in writing to perform the Guarantor’s
obligations hereunder, the Guarantor shall not assign its obligations hereunder, and any purported assignment that is not in accordance with these provisions shall be void. 
  
 SECTION 8.2.  Amendments. 
  
 Except with respect to any changes that do not materially adversely affect the rights of the Holders (in which case no consent of the Holders will be required), this Guarantee Agreement may only be
amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities. 
  
 SECTION 8.3.  Notices. 
  
 Any
notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied (confirmed by delivery of the original) or mailed by first class mail as
follows: 
  
 (a)  if given to the Guarantor, to the address or telecopy number set forth
below or such other address or telecopy number or to the attention of such other Person as the Guarantor may give notice to the Holders: 
  
 American Safety Insurance Group, Ltd. 
 44 Church Street 
 P.O. Box HM2064 
 Hamilton HM HX, Bermuda

  
 with a copy to: 
  
 American Safety Holding Corp. 
 1845 The
Exchange 
 Atlanta, Georgia 30339 
 Facsimile No.: (770) 485-4346 
 Attention: Fred J. Pinckney 
 

 15 

  
 (b)  if given to the Issuer, in care of the Guarantee
Trustee, at the Issuer’s (and the Guarantee Trustee’s) address set forth below or such other address or telecopy number or to the attention of such other Person as the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders: 
  
 American Safety Capital Trust I 
 c/o American Safety Holdings Corp. 
 1845 The
Exchange 
 Atlanta, Georgia 30339 
 Facsimile No.: (770) 485-4346 
 Attention: Fred J. Pinckney 
  
 with a copy to: 
  
 Deutsche Bank Trust Company Americas 
 Corporate Trust and Agency Services 
 c/o Deutsche Bank Services New Jersey, Inc. 
 100 Plaza One—MSJCY 03-0603 
 Jersey City, NJ 07311 
 Facsimile No.: (201) 593-6527 
 Attention: Susan Johnson 
  
 (c)  if given to the Guarantee Trustee: 
  
 Deutsche Bank Trust Company Americas 
 Corporate Trust and Agency Services 
 c/o Deutsche Bank Services New Jersey, Inc. 
 100 Plaza One—MSJCY 03-0603 
 Jersey
City, NJ 07311 
 Facsimile No.: (201) 593-6527 
 Attention: Susan Johnson 
  
 (e)  if given to any Holder, at the
address set forth on the books and records of the Issuer Trust. 
  
 All notices hereunder 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 Agreement is solely for the benefit of the Holders and is not separately transferable from the Debentures. 
 

 16 

  
 SECTION 8.5.  Interpretation.

  
 In this Guarantee Agreement, unless the context otherwise requires: 
  
 (a)  capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the
respective meanings assigned to them in Section 1.1; 
  
 (b)  a term defined anywhere in
this Guarantee Agreement has the same meaning throughout; 
  
 (c)  all references to
“the Guarantee Agreement” or “this Guarantee Agreement” are to this Guarantee Agreement as modified, supplemented or amended from time to time; 
  
 (d)  all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise
specified; 
  
 (e)  a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; 
  
 (f)  a reference to the singular includes the plural and vice versa; and 
  
 (g)  the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. 
  
 SECTION 8.6.  Governing Law. 
  
 THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

  
 SECTION 8.7.  Counterparts. 
  
 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument. 
  
 [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 17 

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

  
 
	 AMERICAN SAFETY INSURANCE GROUP, LTD.,
 as Guarantor
 
	 
	 By:
 	 	 

	  	 	 Lloyd A. Fox
 President and
Chief Executive Officer
 

 
  
  
 
	 DEUTSCHE BANK TRUST COMPANY AMERICAS,
 as Guarantee Trustee and not in its individual capacity
 
	 
	 By:
 	 	 

	  	 	  

 
 

 18

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