EXHIBIT 10.3
THIRD AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT,
CONSENT AND WAIVER
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT,
CONSENT AND WAIVER, dated as of the 8th day of November, 2002 (this "Third
Amendment"), is made in respect of the First Amended and Restated Credit
Agreement dated August 31, 1999, as amended by a First Amendment dated March 29,
2000 and an Amended and Restated Second Amendment dated April 4, 2002 (together,
the "Existing Credit Agreement"), among PXRE CORPORATION, a Delaware corporation
with its principal offices in Edison, New Jersey (the "Borrower"), PXRE GROUP
LTD., a Bermuda corporation ("PXRE Group"), and PXRE REINSURANCE (BARBADOS)
LTD., a Barbados corporation ("PXRE Barbados"), the banks and financial
institutions listed on the signature pages thereof or that become parties
thereto after the date thereof (collectively the "Lenders"), and WACHOVIA BANK,
NATIONAL ASSOCIATION (formerly known as First Union National Bank), as agent for
the Lenders (in such capacity, the "Agent"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Existing
Credit Agreement.
RECITALS
The parties agree to amend the Existing Credit Agreement, and the
Lenders and Agent agree to grant the necessary consents, in connection with the
proposal by PXRE Group to develop the reinsurance business of its Bermuda
subsidiary, PXRE Reinsurance Ltd. ("PXRE Bermuda"), subject to the terms and
conditions set forth herein.
In addition, Borrower requests certain amendments to the Existing
Credit Agreement and a waiver with respect to its failure to comply with certain
provisions set forth in Section 7.7(b) of the Existing Credit Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, the Borrower, the Agent and the Lenders, for themselves
and their successors and assigns, agree as follows:
ARTICLE I
AMENDMENTS TO EXISTING CREDIT AGREEMENT
1.1 Amendments to Section 1.1. Section 1.1 of the Existing Credit
Agreement is hereby amended as follows:
(a) The following definitions are added to the defined terms
in Section 1.1 in the appropriate alphabetical order:
"PXRE Bermuda Credit Enhancement Policy" shall mean the Credit
Enhancement Policy in the form of Exhibit A to the Third Amendment
issued by PXRE Bermuda as of November 8, 2002 for the benefit of the
Lenders in which PXRE Bermuda absolutely, unconditionally and
irrevocably agreed to pay to the Lenders the full and complete amount
of any Obligations when and as the same shall become due (whether at
the stated maturity, by acceleration or otherwise) in each case subject
to the terms and conditions therein.
"Third Amendment" shall mean the Third Amendment, Consent and Waiver to
First Amended and Restated Credit Agreement and Consent, dated as of
November 8, 2002, by and between the Borrower, the Guarantors, the
Agent and the Lenders.
"Third Amendment Effective Date" shall mean the date upon which all of
the conditions of Article III of the Third Amendment are satisfied or
waived in writing by the Required Lenders.
(b) The definition of "Agreement" is amended by deleting and
replacing it in its entirety with the following:
"Agreement" shall mean the First Amended and Restated Credit Agreement
dated August 31, 1999, among the Borrower, PXRE Group, and PXRE
Barbados, the Lenders and the Agent, as amended by a First Amendment
among such parties dated March 29, 2000, by an Amended and Restated
Second Amendment among such parties dated April 4, 2002, and by the
Third Amendment among such parties dated November 8, 2002, and as
further amended, modified or supplemented from time to time.
(c) The definition of "Credit Documents" is amended by
deleting and replacing it in its entirety with the following:
"Credit Documents" shall mean this Agreement, the Notes, the Fee
Letter, the Amendment Fee Letter, the PXRE Bermuda Credit Enhancement
Policy, and all other agreements, instruments, documents and
certificates now or hereafter executed and delivered to the Agent or
any Lender by or on behalf of any Credit Party or any of their
respective Subsidiaries with respect to this Agreement and the
transactions contemplated hereby, in each case as amended, modified,
supplemented or restated from time to time.
(d) The definition of "Investment Policy" is amended by
deleting and replacing it in its entirety with the following:
"Investment Policy" shall mean the investment policy of PXRE Group and
its Subsidiaries as of the Third Amendment Effective Date, as set forth
in Schedule 7.5 to the Third Amendment, which shall not have been
materially amended, modified and supplemented, other than as approved
by the Agent and the Lenders.
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1.2 Amendment to Section 7.7(b)(i)(C). Section 7.7(b)(i)(C) of the
Existing Credit Agreement is hereby amended by deleting reference to
"$30,000,000" appearing in such Section 7.7(b)(i)(C) and inserting the text
"$80,000,000", in lieu thereof.
1.3 Amendment to Section 7.7(b)(iv)(B). Section 7.7(b)(iv)(B) of the
Existing Credit Agreement is hereby amended by deleting reference to
"$3,000,000" appearing in such Section 7.7(b)(iv)(B) and inserting the text
"$7,500,000", in lieu thereof.
1.4 Amendment to Section 8.1(c). Section 8.1(c) of the Existing Credit
Agreement is hereby amended by inserting the text "(other than the PXRE Bermuda
Credit Enhancement Policy")" immediately following each reference to "Credit
Documents" appearing therein.
1.5 Amendments to Section 8.1. Section 8.1 of the Existing Credit
Agreement is hereby amended by: (a) inserting the word "or" at the end of
subsection (l) thereof, and (b) inserting the following new subsection (m)
immediately following subsection (l) of such Section 8.1:
"(m) At any time after the execution and delivery thereof, the
PXRE Bermuda Credit Enhancement Policy or any provision thereof shall
cease to be in full force or effect, or PXRE Bermuda or any Person
acting by or on behalf of PXRE Bermuda shall deny or disaffirm its
obligations under the PXRE Bermuda Credit Enhancement Policy or PXRE
Bermuda shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant
to the PXRE Bermuda Credit Enhancement Policy."
1.6 Amendments to Section 8.1. Section 8.1 of the Existing Credit
Agreement is hereby amended by inserting the text "PXRE Bermuda," immediately
following each reference to "Borrower" appearing in subsections (e), (f), (g),
(h), (j) and (k) of such Section 8.1 therein.
1.7 Schedules 7.5(b) and 7.5(c). Schedules 7.5(b) and 7.5(c) of the
Existing Credit Agreement are amended by deleting and replacing them in their
entirety with Schedule 7.5 attached hereto.
ARTICLE II
CONSENT AND WAIVER
2.1 Consent to Deed Poll Guarantee. Notwithstanding anything to the
contrary contained in Sections 7.2 and 7.7 of the Existing Credit Agreement, but
subject to satisfaction of the conditions set forth in Article III, the Agent
and the Lenders do hereby consent to the issuance by PXRE Group of the Deed Poll
Guarantee (the "Group Guarantee") in the form of Exhibit B hereto in support of
the obligations of PXRE Bermuda in favor of the Cedents (as defined therein),
provided that (w) the provisions of each reinsurance agreement, binder and slip
entered into after the date hereof having the benefit of the Group Guarantee and
the performance of the parties thereunder shall not conflict with any condition,
covenant or agreement contained in the Existing Credit Agreement or any of the
other Credit Documents, (x) each such reinsurance agreement, binder and slip
having the benefit of the Group Guarantee shall be entered into in the ordinary
course of business of PXRE Bermuda as set forth in Section 7.8 of the Existing
Credit Agreement, (y) the obligations incurred by PXRE Group under the Group
Guarantee shall not constitute Indebtedness under the Existing Credit Agreement
and (z) PXRE Group shall not amend, modify or supplement the Group Guarantee,
other than as approved by the Agent and the Required Lenders.
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2.2 Waiver. The Borrower has informed the Agent that it has entered
into reinsurance agreements with a basis of reinsurance exceeding the thirty
percent (30%) quota share limitation set forth in Section 7.7(b)(i)(A) of the
Existing Credit Agreement and has failed to provide to the Agent and the Lenders
projections required under Section 7.7(b)(i)(B) of the Existing Credit
Agreement. The Borrower has requested that the Required Lenders waive such
noncompliance with Sections 7.7(b)(i)(A) and 7.7(b)(i)(B) and that the Agent
forbear the exercise of its rights pursuant to Sections 8.2 and 8.3 of the
Existing Credit Agreement, and the Required Lenders have agreed to provide such
waiver on the terms and conditions set forth herein. Accordingly, in
consideration of the premises and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Required Lenders
hereby agree to waive the Borrower's noncompliance with Sections 7.7(b)(i)(A)
and 7.7(b)(i)(B) of the Existing Credit Agreement subject to the delivery of the
projections required in Section 7.7(b)(i)(B) prior to the Third Amendment
Effective Date. The Borrower understands that as of the Third Amendment
Effective Date, all of the requirements of Sections 7.7(b)(i)(A) and
7.7(b)(i)(B) of the Existing Credit Agreement that have been waived as provided
herein shall, without any further action by or notice to or from the Agent or
any Lender, be in full force and effect, and unless such noncompliance shall
have been cured, the Agent shall have all of the rights and remedies provided to
it under the Existing Credit Agreement, the other Credit Documents, applicable
law or otherwise with respect to such noncompliance as though no waiver had been
granted hereunder. The waiver set forth herein is limited and specified, and
shall not constitute or be deemed to constitute an amendment, modification or
waiver of any provision of the Existing Credit Agreement or waiver of any
Default or Event of Default except as expressly set forth herein.
ARTICLE III
CONDITIONS OF EFFECTIVENESS
3.1 Conditions of Effectiveness. This Third Amendment and the
amendments and consent provided herein, are subject to the satisfaction of the
following conditions precedent:
(a) The Agent shall have received the following, each dated as
of the Third Amendment Effective Date and in sufficient executed
originals for each Lender:
(1) this Third Amendment, duly completed and executed
by the Borrower, each Guarantor, the Agent and each Required
Lender;
(2) the PXRE Bermuda Credit Enhancement Policy in the
form of Exhibit A attached hereto, duly completed and executed
by PXRE Bermuda;
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(3) the Group Guarantee in the form of Exhibit B
attached hereto, duly completed and executed by PXRE Group;
(4) the favorable opinion of Conyers Dill & Pearman,
counsel to PXRE Group and PXRE Bermuda, in form reasonably
satisfactory to the Agent and substantially covering such
opinion matters as the Agent may reasonably request.
(b) The Agent shall have received a certificate, signed by the
president or chief financial officer of each Credit Party, in form and
substance satisfactory to the Agent, certifying that (i) all
representations and warranties of such Credit Party contained in this
Third Amendment, the Existing Credit Agreement (subject to the updating
of the representations and warranties therein pursuant to this Third
Amendment) and the other Credit Documents are true and correct as of
the Third Amendment Effective Date, both immediately before and after
giving effect to the consummation of the transactions contemplated
hereby, (ii) no Default or Event of Default has occurred and is
continuing, both immediately before and after giving effect to the
consummation of the transactions contemplated hereby, (iii) both
immediately before and after giving effect to the consummation of the
transactions contemplated hereby, no Material Adverse Change has
occurred since December 31, 2001, and there exists no event, condition
or state of facts that could reasonably be expected to result in a
Material Adverse Change, (iv) that the articles or certificate of
incorporation of such Credit Party, as the case may be, have not been
amended, revised or restated since the date of the Second Amendment,
and (v) that the bylaws, operating agreement or memorandum and articles
of association, as applicable, of such Credit Party, as the case may
be, have not been amended, revised or restated since the date of the
Second Amendment.
(c) The Agent shall have received certificates of the
secretary, clerk or director, as applicable, or an assistant secretary,
clerk or director, as applicable, of each Credit Party, in form and
substance satisfactory to the Agent and dated as of the Third Amendment
Effective Date, certifying (i) that attached thereto is a true and
complete copy of resolutions adopted by the board of directors (or duly
authorized committee thereof) of such Credit Party authorizing the
execution, delivery and performance of this Third Amendment, and (ii)
as to the incumbency and genuineness of the signature of each officer
of such Credit Party executing this Third Amendment.
(d) The Agent shall have received a certificate of the
secretary, clerk or director, as applicable, or an assistant secretary,
clerk or director, as applicable, of PXRE Bermuda, in form and
substance satisfactory to the Agent and dated no earlier than thirty
(30) days prior to the Third Amendment Effective Date, certifying (i)
that attached thereto is a true and complete copy of the articles or
certificate of incorporation and all amendments thereto of PXRE
Bermuda, certified, to the extent applicable, as of a recent date by
the Secretary of State (or comparable Governmental Authority) of its
jurisdiction or organization, and that the same has not been amended
since the date of such certification, (ii) that attached thereto is a
true and complete copy of the bylaws, operating agreement or memorandum
and articles of association, as applicable, of PXRE Bermuda, as then in
effect and as in effect at all times from the date on which the
resolutions referred to in clause (iii) below were adopted to and
including the date of such certificate, (iii) that attached thereto is
a true and complete copy of resolutions adopted by the board of
directors (or duly authorized committee thereof) of PXRE Bermuda
authorizing the execution, delivery and performance of the PXRE Bermuda
Credit Enhancement Policy, and (iv) as to the incumbency and
genuineness of the signature of each officer of PXRE Bermuda executing
the PXRE Bermuda Credit Enhancement Policy.
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(e) PXRE Bermuda shall have duly complied with and performed
all of its agreements and conditions set forth in the PXRE Bermuda
Credit Enhancement Policy required to be complied with or performed by
it on or prior to the Third Amendment Effective Date and the Agent
shall have received evidence satisfactory to it that premium due
thereunder shall have been paid in full by PXRE Group.
(f) The Agent shall have received a Covenant Compliance
Worksheet, duly completed and certified by the chief financial officer
or treasurer of PXRE Group and the Borrower and in form and substance
satisfactory to the Agent, demonstrating PXRE Group's and Borrower's
compliance with the financial covenants set forth in Sections 6.1
through 6.4, determined on a pro forma basis as of September 30, 2002,
after giving effect to the consummation of the transaction contemplated
hereby.
(g) The Lenders shall have received a certificate as of a
recent date of the good standing or existence of PXRE Bermuda under the
law of its state or country of organization.
(h) All approvals, permits and consents of any Governmental
Authorities or other Person required in connection with the execution
and delivery of this Third Amendment, the PXRE Credit Enhancement
Policy and the consummation of the transactions contemplated hereby
shall have been obtained (without the imposition of conditions that are
not reasonably acceptable to the Agent and the Required Lenders), and
all related filings, if any, shall have been made, and all such
approvals, permits, consents and filings shall be in full force and
effect and the Agent shall have received such copies thereof as it
shall have requested; all applicable waiting periods shall have expired
without any adverse action being taken by any Governmental Authority
having jurisdiction; and no action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before, and no order, injunction or decree shall have been
entered by, any court or other Governmental Authority, in each case to
enjoin, restrain or prohibit, to obtain substantial damages in respect
of, or that is otherwise related to or arises out of, this Third
Amendment, the PXRE Credit Enhancement Policy or the consummation of
the transactions contemplated hereby, or that, in the opinion of the
Agent and the Required Lenders, would otherwise be reasonably likely to
have a Material Adverse Effect.
(i) The Borrower shall have paid the fee that is due and
payable under that certain letter between the Agent and Borrower dated
October 2, 2002 (the "Third Amendment Fee Letter"), together with all
other fees and expenses of the Agent and the Lenders required hereunder
or thereunder or under any other Credit Document to be paid on or prior
to the Third Amendment Effective Date (including the reasonable fees
and expenses of U.S. and Bermuda counsel to the Agent) in connection
with this Third Amendment and the transactions contemplated hereby.
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(j) Each of the representations and warranties contained in
the Existing Credit Agreement, this Third Amendment and the other
Credit Documents shall be true and correct on and as of the Third
Amendment Effective Date with the same effect as if made on and as of
such date, both immediately before and after giving effect to the
consummation of the transactions contemplated hereby, except to the
extent any such representation or warranty is expressly stated to have
been made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date.
(k) No Default or Event of Default shall have occurred and be
continuing, both immediately before and after giving effect to the
consummation of the transactions contemplated hereby.
(l) The Agent and each Lender shall have received such other
documents, certificates, opinions and instruments in connection with
the PXRE Bermuda Credit Enhancement Policy, the Group Guarantee and
this Third Amendment as it shall have reasonably requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and Lenders to enter into this Third Amendment, the
Credit Parties each represent and warrant to the Agent and each Lender, on the
Third Amendment Effective Date, both before and after giving effect to the
transactions contemplated hereby, as follows (PXRE Group making such
representations and warranties as to itself and PXRE Bermuda, the Borrower as to
itself only and PXRE Barbados as to itself only):
4.1 Corporate Power. Each of the Guarantors, the Borrower and PXRE
Bermuda has the full corporate power and authority to execute, deliver and
perform the Third Amendment, the Group Guarantee and the PXRE Bermuda Credit
Enhancement Policy to which it is or will be a party.
4.2 Authorization; Enforceability. Each of the Borrower, the Guarantors
and PXRE Bermuda has taken all necessary corporate action to execute, deliver
and perform the Third Amendment, the Group Guarantee and the PXRE Bermuda Credit
Enhancement Policy to which it is or will be a party, and has validly executed
and delivered the Third Amendment, the Group Guarantee and the PXRE Bermuda
Credit Enhancement Policy. The Third Amendment constitutes the legal, valid and
binding obligation of the Borrower and the Guarantors enforceable against each
of them in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, by general equitable
principles or by principles of good faith and fair dealing. The PXRE Bermuda
Credit Enhancement Policy constitutes the legal, valid and binding obligation of
PXRE Bermuda enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, by
general equitable principles or by principles of good faith and fair dealing
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4.3 No Violation. The execution, delivery and performance by each of
the Borrower the Guarantors, and PXRE Bermuda of this Third Amendment, the Group
Guarantee and the PXRE Bermuda Credit Enhancement Policy, and compliance by it
with the terms hereof and thereof, do not and will not (i) violate any provision
of its certificate of incorporation or bylaws or contravene any other material
Requirement of Law applicable to it, (ii) conflict with, result in a breach of
or constitute (with notice, lapse of time or both) a default under any
indenture, agreement or other instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject, or (iii) result in or
require the creation or imposition of any Lien upon any of its properties or
assets.
4.4 Governmental Authorization; Permits. No consent, approval,
authorization or other action by, notice to, or registration or filing with, any
Governmental Authority or other Person is or will be required as a condition to
or otherwise in connection with the due execution, delivery and performance by
the Borrower, the Guarantors and PXRE Bermuda of this Third Amendment, the Group
Guarantee and the PXRE Bermuda Credit Enhancement Policy or the legality,
validity or enforceability hereof or thereof.
ARTICLE V
GENERAL
5.1 Full Force and Effect. From and after the Third Amendment Effective
Date, all references to the Existing Credit Agreement set forth in any other
Credit Document or other agreement or instrument shall, unless otherwise
specifically provided, be references to the Credit Agreement as amended by this
Third Amendment and as may be further amended, modified, restated or
supplemented from time to time. This Third Amendment is limited as specified and
shall not constitute or be deemed to constitute an amendment, modification or
waiver of, or consent to departure from, any provision of the Existing Credit
Agreement except as expressly set forth herein. Except as expressly amended
hereby, the Existing Credit Agreement shall remain in full force and effect in
accordance with its terms.
5.2 Applicable Law. This Third Amendment shall be governed by and
construed in accordance with the laws of the state of New York, without regard
to principles of conflict of laws (excluding New York General Obligations Law
ss.5-1401).
5.3 Counterparts. This Third Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
5.4 Headings. The headings of this Third Amendment are for the purposes
of reference only and shall not affect the construction of this Third Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed by their duly authorized officers all as of the day and year
first above written.
PXRE CORPORATION
By: /s/ John M. Modin
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Name: John M. Modin
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Title: Chief Financial Officer
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PXRE GROUP LTD.
By: /s/ Jeffrey L. Radke
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Name: Jeffrey L. Radke
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Title: President
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PXRE REINSURANCE (BARBADOS) LTD.
By: /s/ Jeffrey L. Radke
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Name: Jeffrey L. Radke
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Title: Vice President
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(signatures continued)
WACHOVIA BANK, NATIONAL ASSOCIATION, f/k/a
FIRST UNION NATIONAL BANK, as Agent
and as a Lender
By: /s/ Daniel J. Norton
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Name: Daniel J. Norton
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Title: Director
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BANK ONE, NA (f/k/a THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Gretchen Roetzer
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Name: Gretchen Roetzer
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Title: Director
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FLEET NATIONAL BANK
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
CREDIT LYONNAIS NEW YORK BRANCH
By: ____________________________________
Name: ____________________________________
Title: ____________________________________