EXHIBIT 99.2
FIFTH AMENDMENT AND CONSENT TO THE HOLDINGS GUARANTY
FIFTH AMENDMENT AND CONSENT TO THE HOLDINGS GUARANTY (the
"Amendment"), dated as of January 16, 2003, among TRENWICK GROUP LTD., a company
organized under the laws of Bermuda ("Holdings") and the Banks party to the
Credit Agreement referred to below. Unless otherwise defined herein, capitalized
terms used herein and defined in the Holdings Guaranty referred to below are
used herein as so defined.
W I T N E S S E T H :
WHEREAS, Trenwick America Corporation, a Delaware corporation (the
"Borrower"), Trenwick Holdings Ltd., a company organized under the laws of the
United Kingdom (the "Trenwick Holdings"), the lending institutions from time to
time party thereto (each a "Bank" and, collectively, the "Banks"), Wachovia
Bank, National Association (f/k/a 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"), 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, 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 Holdings Guaranty as provided herein;
NOW, THEREFORE, it is agreed;
A. Consent
1. Notwithstanding anything to the contrary contained in the
Holdings Guaranty or the Credit Agreement, Holdings may, or may permit any of
its Wholly-Owned Subsidiaries to, convey, sell or otherwise dispose of its
Investment in Florida Intracoastal Underwriters, Limited Company, for an amount
equal to the fair market value thereof (as determined in good faith by the
senior management of Holdings) but in any event no less than approximately
$8,000,000, so long as the Net Available Proceeds (if any) from such conveyance,
sale or disposition are applied in accordance with Section 4.02(i)(c) of the
Credit Agreement.
B. Amendments
1. Section 3.01 of the Holdings Guaranty is hereby amended by
inserting the following new Clauses (q) and (r) at the end thereof:
"(q) Intercompany Transfers. As soon as available and in any event
within 21 days after the end of each fiscal month of Holdings, commencing
with the fiscal month ending January 31, 2003, a schedule of all
intercompany transfers consummated during such fiscal month.
(r) Restructuring Fees. As soon as available and in any event within
21 days after the end of each fiscal month of Holdings, commencing with
the fiscal month ending January 31, 2003, a schedule of all fees paid to
the restructuring advisors and legal counsel retained by Holdings in
connection with the restructuring and/or reorganization of Holdings and
its Subsidiaries during such fiscal month."
2. Section 3.24 of the Holdings Guaranty is hereby amended by (i)
deleting the text "for the 2004 year of account or any subsequent year of
account" appearing in clause (a) of said Section and (ii) deleting the text "for
the 2004 or any subsequent year of account" appearing in clause (b) of said
Section.
3. Section 4.03(f) of the Holdings Guaranty is hereby amended to
read in its entirety as follows:
"(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security, (ii) to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts
performance and return-of-money bonds and other similar obligations
(exclusive of the obligations of the payout of borrowed money) and (iii)
to secure Reinsurance Agreements and Retrocession Agreements and other
similar obligations in existence on the Fourth Amendment Effective Date,
without giving effect to any extensions or renewals thereof, provided that
(I) the aggregate amount of Liens incurred and deposits made at any time
pursuant to clauses (i) and (ii) above shall not exceed $500,000 and (II)
notwithstanding anything to contrary contained in the Holdings Guaranty or
the Credit Agreement, Trenwick America Reinsurance Corporation ("TARCO")
shall be permitted to incur Liens pursuant to a reinsurance trust
agreement entered into by TARCO in favor of National Union Fire Insurance
Company of Pittsburgh, Pennsylvania, a subsidiary of American
International Group, Inc., so long as the Liens incurred pursuant to such
reinsurance trust agreement shall (a) not exceed approximately
$25,000,000, (b) be expressly approved by the Connecticut Department of
Insurance and (c) only secure reinsurance loss liabilities of TARCO
incurred on or prior to the Fifth Amendment Effective Date."
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4. Section 4.17(a) of the Holdings Guaranty is hereby amended by
inserting the text "Notwithstanding anything to the contrary contained in this
Agreement or the Credit Agreement (other than as set forth in clause (b)
below)," immediately preceding the word "Holdings" appearing at the beginning of
said Section.
5. The definition of "Specified Expenditures" appearing in Schedule
I to the Holdings Guaranty is hereby amended by (i) deleting the word "and"
appearing immediately before clause (xiv) thereof and inserting a comma in lieu
thereof and (ii) inserting the following new clauses (xv) and (xvi) immediately
after the end of clause (xiv) thereof:
", (xv) fees and expenses incurred for restructuring advisors and
legal counsel retained by Holdings in connection with the
restructuring and/or reorganization of Holdings and its
Subsidiaries, and (xvi) fees and expenses incurred for reserve
studies and actuarial services in connection with the evaluation of
loss reserves of any applicable Subsidiary of Holdings".
6. The definition of "Statutory Surplus" appearing in Schedule I to
the Holdings Guaranty is hereby amended by deleting the text "line 27,"
appearing in said definition and inserting the text "the line captioned "Surplus
As Regards Policyholders" appearing on" in lieu thereof.
7. The definition of "Surplus" appearing in Schedule I to the
Holdings Guaranty is hereby amended by deleting the text "line 32," appearing in
said definition and inserting the text "the line captioned "Surplus As Regards
Policyholders" appearing on" in lieu thereof.
8. Schedule I to the Holdings Guaranty is hereby further amended by
inserting the following defined terms in the appropriate alphabetical order:
"Fifth Amendment" shall mean the Fifth Amendment to the Credit
Agreement, dated as of January 16, 2003.
"Fifth Amendment Effective Date" shall have the meaning provided in
the Fifth Amendment.
"TARCO" shall have the meaning provided in Section 4.03(f) of the
Holdings Guaranty.
C. Miscellaneous Provisions
1. In order to induce the Banks to enter into this Amendment,
Holdings hereby represents and warrants that (i) the representations and
warranties of Holdings contained in the Holdings Guaranty are true and correct
in all material respects on and as of the Fifth 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 Fifth Amendment Effective
Date (other than with respect to Holdings' failure
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to comply with Section 4.04(g) of the Holdings Guaranty), 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
Holdings Guaranty 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) Holdings 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) the Borrower, the Account Party and the Required Banks have consented
to the Fifth Amendment to the Credit Agreement, dated as of January 16, 2003.
5. From and after the Fifth Amendment Effective Date, all references
in the Holdings Guaranty and in the other Credit Documents shall be deemed to be
referenced to the Holdings Guaranty 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 GROUP LTD.
By: /s/ Alan L. Hunte
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Name: Alan L. Hunte
Title: Executive Vice President
& Chief Financial Officer
[Bank Signature Pages Intentionally Omitted]