Exhibit 10.3
SECOND AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT
SECOND AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT (the "Amendment"),
dated as of November 5, 2001, among TRENWICK AMERICA CORPORATION, a Delaware
corporation (the "Borrower"), TRENWICK HOLDINGS LIMITED., a company organized
under the laws of the United Kingdom (the "Account Party"), the lending
institutions from time to time party thereto (each a "Bank" and, collectively,
the "Banks"), FIRST UNION NATIONAL BANK, as Syndication Agent (the "Syndication
Agent"), FLEET NATIONAL BANK, as Documentation Agent (the "Documentation
Agent"), and JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank), as
Administrative Agent (the "Administrative Agent"). Unless otherwise defined
herein, capitalized terms used herein and defined in the Credit Agreement
referred to below are used herein as so defined
W I T N E S S E T H :
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WHEREAS, the Borrower, the Account Party, the Banks, the Syndication Agent,
the Documentation Agent and the Administrative Agent are party to a Credit
Agreement, dated as of November 24, 1999 and amended and restated as of
September 27, 2000 (as the same has been amended, modified or supplemented to,
but not including, the date hereof, the "Credit Agreement");
WHEREAS, the Trenwick Group Ltd., a company organized under the laws of
Bermuda ("Holdings") and the Administrative Agent entered into a Holdings
Guaranty, dated as of September 27, 2000 (as the same has been amended, modified
or supplemented to, but not including, the date hereof, the "Holdings Guaranty")
in order to induce the Banks to make Loans to the Borrower and issue Letters of
Credit for the account of the Account Party and Guaranteed Creditors (and
Lending Affiliates thereof) to enter into Interest Rate Protection Agreements
and Other Hedging Agreements with the Borrower and/or the Account Party; and
WHEREAS, subject to the terms and conditions set forth below, the parties
hereto wish to amend the Credit Agreement as provided herein;
NOW, THEREFORE, it is agreed;
A. Waivers
1. The Banks hereby waive any Event of Default that may have arisen under
the Credit Agreement solely as a result of Holdings' failure to comply with
Sections 4.13, 4.14(b) (solely with respect to Chartwell Insurance Company) and
4.16 of the Holdings Guaranty for the period from September 30, 2001 through the
Amendment Effective Date (as defined below).
B. Amendments
1. Section 4.02(i)(b) of the Credit Agreement is hereby amended by (i)
inserting the reference "(x)" immediately preceding the percentage "100%"
appearing in said Section and (ii) inserting the text "or (y) 50% of the cash
proceeds (net of underwriting discounts and commissions and other reasonable
fees and costs associated therewith) of such sale or issuance or cash capital
contributions with the written consent of the Required Banks prior to any such
sale or issuance or cash capital contributions" immediately following the second
parenthetical clause appearing therein.
2. The definition of the term "Applicable Commitment Fee Percentage"
contained in Schedule I to the Credit Agreement is hereby amended by (i)
inserting the phrase "Category F Period" immediately below the phrase "Category
E Period" in the column "Applicable Period" appearing therein and (ii) inserting
the percentage "0.500%" immediately below the percentage "0.500%" in the column
"Applicable Commitment Fee Percentage" appearing therein.
3. The definition of the term "Applicable Credit Rating" contained in
Schedule I to the Credit Agreement is hereby amended by deleting the text
"BBB-/Baa3" appearing therein and inserting the text "BB+/Ba1" in lieu thereof.
4. The definition of the term "Applicable Margin" contained in Schedule I
to the Credit Agreement is hereby amended to read in its entirety as follows:
"Applicable Margin" shall mean, for any day, the rate per annum set
forth below opposite the Applicable Period then in effect:
Applicable Margin
Applicable Period Eurodollar Loans Base Rate Loans
Category A Period 1.10% 0.00%
Category B Period 1.30% 0.05%
Category C Period 1.50% 0.25%
Category D Period 2.00% 0.75%
Category E Period 2.50% 1.25%
Category F Period 3.25% 2.00%
; provided that, solely for the purpose of the Term Loans, each Applicable
Margin shall be increased by the rate per annum set forth below during the
period set forth opposite such rate per annum:
Period Percentage
July 1, 2002 through September 30, 2002 0.50%
October 1, 2002 through December 31, 2002 1.00%
January 1, 2003 through March 31, 2003 1.50%
April 1, 2003 and thereafter 2.00%."
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5. The definition of the term "Applicable Period" contained in Schedule I
to the Credit Agreement is hereby amended to read in its entirety as follows:
"Applicable Period" shall mean, at any time, the period set forth
below then in effect:
Applicable Period Criteria
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Category A Period The Applicable Credit Rating is A-/A3 or above.
Category B Period The Applicable Credit Rating is BBB+/Baa1.
Category C Period The Applicable Credit Rating is BBB/Baa2.
Category D Period The Applicable Credit Rating is BBB-/Baa3.
Category E Period The Applicable Credit Rating is BB+/Ba1
Category F Period None of a Category A Period, a Category B
Period, a Category C Period, a Category D
Period nor a Category E Period is in effect
at such time.
Notwithstanding anything to the contrary set forth above, if neither
Rating Agency rates the unsecured senior debt of the Borrower, then the
Applicable Period shall be a Category F Period."
6. The definition of the term "Holdings Cash Flow" contained in Schedule I
to the Credit Agreement is hereby amended to read in its entirety as follows:
"Holdings Cash Flow" shall mean, for any period, the sum of (i) for
each Specified Regulated Insurance Company, the aggregate amount of
ordinary dividends which such Specified Regulated Insurance Company could
pay to its parent corporation under Legal Requirements as of the last day
of such period (determined as if (x) such Specified Regulated Insurance
Company had not paid any ordinary dividends during such period and (y) each
Subsidiary of such Specified Regulated Insurance Company which is a
Regulated Insurance Company had paid dividends to its parent corporation
during such period in an amount equal to the maximum amount of dividends
payable by such Subsidiary during such period under applicable Legal
Requirements) plus the aggregate amount of any extraordinary dividends
actually paid by such Specified Regulated Insurance Company to its parent
corporation during such period, (ii) for each Specified Foreign or
Non-Regulated Company, (x) the greater of (A) zero and (B) the EBITDA of
such Specified Foreign or Non-Regulated Company for such period, minus (y)
the amount of capital contributions and intercompany loans made by
Holdings, the Borrower or any Specified Regulated Insurance Company to such
Specified Foreign or Non-Regulated Company on or after October 1, 2001,
(iii) tax sharing payments made by Regulated Insurance Companies which are
Domestic Subsidiaries directly to Holdings or
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any Specified Non-Regulated Company during such period (less cash taxes
paid by Holdings during such period), and (iv) payments during such period
of principal and interest on surplus notes issued by Regulated Insurance
Companies which are Domestic Subsidiaries to Holdings or any Specified
Non-Regulated Company."
7. The definition of the term "Trust Preferred Securities Purchase"
contained in Schedule I to the Credit Agreement is hereby amended to read in its
entirety as follows:
"Trust Preferred Securities Purchase" shall mean the purchase by one
or more Subsidiaries of Holdings of approximately $23,700,000 of face value
Trust Preferred Securities for approximately $18,000,000 in cash during the
fiscal quarter ending December 31, 2000, and the fiscal quarter ending
March 31, 2001.
8. Schedule I to the Credit Agreement is hereby amended by inserting the
following definition in the appropriate alphabetical order:
"Quarterly Compliance Date" shall mean the earlier of (i) May 15, 2002
and (ii) the date on which Holdings delivers to each Bank the compliance
certificate for the fiscal quarter ending March 31, 2002, in accordance
with Section 3.01(d) of the Holdings Guaranty."
C. Miscellaneous Provisions
1. In order to induce the Banks to enter into this Amendment, each of the
Borrower and the Account Party hereby represent and warrant on behalf of
themselves and their respective Subsidiaries that (i) the representations and
warranties of contained in Section 2 of the Holdings Guaranty are true and
correct in all material respects on and as of the Amendment Effective Date (as
defined below) (except with respect to any representations and warranties
limited by their terms to a specific date, which shall be true and correct in
all material respects as of such date), and (ii) there exists no Default or
Event of Default under the Credit Agreement on the Amendment Effective Date, in
each case after giving effect to this Amendment.
2. This Amendment is limited as specified and shall not constitute an
amendment, modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
3. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
4. This Amendment shall become effective on the date (the "Amendment
Effective Date") when (i) the Borrower, the Account Party and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of telecopier) the same
to the Administrative Agent and (ii) Holdings and the Required Banks have
consented to the Second Amendment to the Holdings Guaranty dated November 5,
2001 (the "Holdings Guaranty Amendment").
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5. The Borrower hereby agrees to pay each Bank which delivers an executed
copy of this Amendment and the Holdings Guaranty Amendment (by hard copy or
facsimile) to the Administrative Agent by no later than 12:00 (Noon) (New York
time) on November 12, 2001, a fee (the "Amendment Fee") in an amount equal to
0.25% of the outstanding principal amount of Term Loans and L/C Commitment of
such Bank, which Amendment Fee shall be due and payable on the first Business
Day following the date on which the Required Banks shall have executed and
delivered this Amendment and the Holdings Guaranty Amendment.
6. From and after the Amendment Effective Date, all references in the
Credit Agreement and in the other Credit Documents shall be deemed to be
referenced to the Credit Agreement as modified hereby.
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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
duly executed and delivered as of the date first above written.
TRENWICK AMERICA CORPORATION
By: /s/ David M. Finkelstein
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Name: David M. Finkelstein
Title: Vice President & Treasurer
TRENWICK HOLDINGS LIMITED
By: /s/ Ginette Handfield
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Name: Ginette Handfield
Title: Finance Director
[Bank Signature Pages Omitted]