Exhibit 10.2
[CONFORMED COPY AS EXECUTED]
THIRD AMENDMENT
THIRD AMENDMENT (this "Amendment"), dated as of August 8, 2003,
among ENDURANCE SPECIALTY HOLDINGS LTD. (the "Parent Borrower"), a company
organized under the laws of Bermuda, the lending institutions listed from time
to time on Annex I to the Term Loan Agreement referred to below (each a "Lender"
and, collectively, the "Lenders"), and JPMORGAN CHASE BANK, as Administrative
Agent. All capitalized terms used herein and not otherwise defined herein shall
have the respective meanings provided such terms in the Term Loan Agreement
referred to below.
W I T N E S S E T H:
WHEREAS, the Parent Borrower, the Lenders and the Administrative
Agent are parties to a Term Loan Agreement, dated as of August 13, 2002 (as
amended, modified and supplemented to, but not including, the date hereof, the
"Term Loan Agreement"); and
WHEREAS, the parties hereto wish to amend the Term Loan Agreement on
the terms and subject to the conditions contained herein;
NOW, THEREFORE, it is agreed:
1. Section 5.10 of the Term Loan Agreement the text hereby amended
by (i) replacing the word "ESI" with the text "the Parent Borrower" in each
instance that such word appears in clause (a) thereof, (ii) deleting the text
"December 14, 2001" appearing in clause (a) thereof and inserting the text
"December 31, 2002" in lieu thereof, (iii) deleting the text "March 31, 2002"
appearing in clause (a) thereof and inserting the text "March 31, 2003" in lieu
thereof, (iv) inserting the text "in all material respects" immediately after
the text "fairly present" appearing in clause (a) thereof, (v) deleting the text
contained in clause (b) thereof, (vi) deleting the text "November 30, 2001"
appearing in clause (c) thereof and inserting the text "December 31, 2002" in
lieu thereof and (vii) redesignating the existing clause (c) thereof as clause
(b) thereof.
2. Section 5.12(b) of the Term Loan Agreement is hereby amended by
inserting the text "(any such excess a "value shortfall"), except for any such
value shortfalls which have not had, or would not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect" at the
end thereof.
3. Section 5.13 of the Term Loan Agreement is hereby amended by
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing therein.
4. Section 5.14 of the Term Loan Agreement is hereby deleted in its
entirety and the following new Section 5.14 is inserted in lieu thereof:
"5.14 Capitalization. As of the Third Amendment Effective Date, the
authorized capital stock of the Parent Borrower consists of (i)
120,000,000 shares, $1.00 par value per share, of which 63,663,185
Ordinary Shares and 138,815 Class A Shares are issued and outstanding. As
of the Third Amendment Effective Date, all such outstanding shares
of the Parent Borrower have been duly and validly issued and are fully
paid and nonassessable. As of the Third Amendment Effective Date, neither
the Parent Borrower nor any of its Subsidiaries has outstanding any
securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character
relating to, its capital stock except for options, warrants and grants
outstanding in the aggregate amounts set forth on Annex IV."
5. Section 5.15 of the Term Loan Agreement is hereby amended by (i)
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing therein and (ii) deleting the amount "$1,000,000" appearing
therein and inserting the amount "$5,000,000" in lieu thereof."
6. Section 5.17 of the Term Loan Agreement is hereby amended by (i)
deleting the first sentence thereof, (ii) deleting the text "other than those
listed on Annex VI," appearing therein and (iii) inserting the text "not validly
maintained by such Regulated Insurance Company" at the end thereof.
7. Section 5.18 of the Term Loan Agreement is hereby deleted in its
entirety and the following new Section 5.18 is inserted in lieu thereof:
"Section 5.18 [Intentionally Omitted]"
8. Section 5.19 of the Term Loan Agreement is hereby amended by
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing therein.
9. Section 6.01(d) of the Term Loan Agreement is herby amended by
inserting the text ", Event of Default" immediately after the text "aware of the
occurrence of any Default" appearing therein.
10. Section 6.01(g) of the Term Loan Agreement is hereby deleted in
its entirety and the following text is inserted in lieu thereof:
"(g) Insurance Reports and Filings. (i) Promptly after the filing
thereof, a copy of each Statutory Statement filed by each Regulated
Insurance Company.
(ii) Promptly following the delivery or receipt, as the case may be,
by any Regulated Insurance Company or any of their respective
Subsidiaries, copies of (a) each material examination and/or audit report
or other submitted to any Regulated Insurance Company by any Applicable
Insurance Regulatory Authority, (b) all material information which the
Lenders may from time to time request with respect to the nature or status
of any material deficiencies or violations reflected in any examination
report or other similar report, and (c) each material registration,
filing, submission, report, order, direction, instruction, approval,
authorization, license or other notice which any Borrower or any Regulated
Insurance Company may at any time make with, or receive from, any
Applicable Insurance Regulatory Authority.
-2-
(iii) Upon the written request of any Lender, a report by an
independent actuarial consulting firm of recognized national standing
reviewing the adequacy of loss and loss adjustment expense reserves as at
the end of the last fiscal year of each Regulated Insurance Company,
determined in accordance with SAP, and stating an estimated amount of
minimum reserves, it being agreed that in each case (i) such independent
firm will be provided access to or copies of all relevant valuations
relating to the insurance business of each such Regulated Insurance
Company in the possession of or available to the Parent Borrower or its
Subsidiaries and (ii) any Lender requesting a report pursuant to this
Section 6.01(g)(iii) shall have executed a confidentiality agreement with
such independent actuarial consulting firm.
(iv) Promptly following notification thereof from a Governmental
Authority, notification of the suspension, limitation, termination or
non-renewal of, or the taking of any other action in respect of, any
material Insurance License."
11. Section 6.05 of the Term Loan Agreement is hereby amended by (i)
inserting the text "Material" immediately prior to the word "Subsidiaries"
appearing in the first sentence thereof and (ii) inserting the following new
sentence at the end thereof:
"Notwithstanding anything to the contrary contained in this Section 6.05,
the Parent Borrower and its Subsidiaries may purchase and sell assets to
the extent permitted under Section 7.02."
12. Section 7 of the Term Loan Agreement is hereby amended by
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing in the first paragraph therein.
13. Section 7.01 of the Term Loan Agreement is hereby amended by
inserting the text "Third Amendment" immediately prior to the text "Effective
Date" appearing therein.
14. Section 7.03(a) of the Term Loan Agreement is hereby amended by
deleting the text "date hereof" appearing therein and inserting the text
"Effective Date" in lieu thereof.
15. Section 7.07 of the Term Loan Agreement is hereby amended by
deleting the text "or to issue or sell any Equity Interests therein" appearing
therein.
16. Section 7.10 of the Term Loan Agreement is hereby amended by
deleting the amount "$750,000,000" appearing therein and inserting the amount
"$1,000,000,000" in lieu thereof.
17. Section 7.11 of the Term Loan Agreement is hereby deleted in its
entirety and the following new Section 7.11 is inserted in lieu thereof:
"7.11 Unencumbered Liquid Assets. The Parent Borrower will not at
any time permit the sum of (i) cash held by the Parent Borrower and/or any
of its Subsidiaries plus (ii) Cash Equivalents held by the Parent Borrower
and/or any of its Subsidiaries plus (iii) Investment Grade Securities held
by the Parent Borrower and/or any of its Subsidiaries to
-3-
be reduced to an aggregate amount of less than the greater of (A)
$400,000,000 and (B) the sum of (x) the stated amount of all outstanding
letters of credit issued for the account of the Parent Borrower and/or any
of its Subsidiaries plus (y) the aggregate outstanding principal amount of
all other Indebtedness for borrowed money of the Parent Borrower and its
Subsidiaries that is either subject to a Lien and/or not subordinated in
right of payment to the Obligations."
18. Section 8.03 of the Term Loan Agreement is hereby amended by
deleting the text " 6.02(ii) 6.05, 6.08," appearing therein and inserting the
text "Section 6.02(ii), Section 6.05 (with respect to the first sentence of
Section 6.05 only), Section" in lieu thereof.
19. Section 8.04 of the Term Loan Agreement is hereby amended by
deleting the amount "$10,000,000" in each instance that such amount appears
therein and inserting the amount "$20,000,000", in each case, in lieu thereof.
20. Section 8.06 of the Term Loan Agreement is hereby deleted in its
entirety and the following new Section 8.06 is inserted in lieu thereof:
"8.06 ERISA. (a) An event or condition specified in Section 6.07
shall occur or exist with respect to any Plan or Multiemployer Plan or
Foreign Pension Plan, (b) the Parent Borrower, any of its Subsidiaries or
any of its ERISA Affiliates shall fail to pay when due any material amount
which they shall have become liable to pay to the PBGC or to a Plan or a
Multiemployer Plan under Title IV of ERISA, or (c) a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated, and, in any of the
foregoing cases, as a result of such event or condition, together with all
such other events or conditions, the Parent Borrower, any of its
Subsidiaries or any of its ERISA Affiliates shall be reasonably likely in
the opinion of the general counsel of the Parent Borrower to (i) in the
case of the foregoing clauses (a) and (b) of this Section 8.06, incur a
liability to a Plan, a Multiemployer Plan, a Foreign Pension Plan or PBGC
(or any combination of the foregoing) or (ii) in the case of the foregoing
clause (c) of this Section 8.06, incur a liability to a Plan,
Multiemployer Plan, a Foreign Pension Plan or PBGC (or any combination of
the foregoing) in excess of $20,000,000; or".
21. Section 8.07 of the Term Loan Agreement is hereby amended by
deleting the amount "$10,000,000" appearing therein and inserting the amount
"$20,000,000" in lieu thereof.
22. Section 9 of the Term Loan Agreement is hereby amended by (i)
deleting the definitions of "Aon", "Capital Z Partners", "Consolidated Fixed
Charge Coverage Ratio", "Consolidated Fixed Charges", "Documents", "Insurance
Licenses", "Perry Capital", "Test Period", "THLee", "TPG", "364-Day Credit
Agreement", "364-Day Credit Documents" and "Zurich" appearing therein and (ii)
inserting the following new definitions in the appropriate alphabetical order
therein:
"Documents" shall mean, collectively, (i) the Credit Documents and
(ii) the Three-Year Term Loan Documents.
-4-
"Insurance Licenses" shall mean, with respect to each Regulated
Insurance Company, licenses (including, without limitation, licenses or
certificates of authority from Applicable Insurance Regulatory
Authorities), permits or authorizations to transact insurance and
reinsurance business held by such Regulated Insurance Company.
"Investment Grade Securities" shall mean and include (i) U.S.
Government Obligations (other than Cash Equivalents), (ii) debt securities
or debt instruments with a rating of BBB- or higher by S&P, Baa3 or higher
by Xxxxx'x, Class (2) or higher by NAIC or the equivalent of such rating
by S&P, Xxxxx'x or NAIC, or if none of S&P, Xxxxx'x and NAIC shall then
exist, the equivalent of such rating by any other nationally recognized
securities rating agency, but excluding any debt securities or instruments
constituting loans or advances among the Parent Borrower and its
Wholly-Owned Subsidiaries, and (iii) any fund investing exclusively in
investments of the type described in clauses (i) and (ii) which funds may
also hold immaterial amounts of cash pending investment and/or
distribution.
"S&P Equivalent Rating" shall mean, with respect to any Investment
Grade Security, the rating given such security by S&P or the S&P
equivalent rating of the rating given such security by Xxxxx'x or NAIC, it
being understood that if any such security is rated by more than one of
S&P, Xxxxx'x and NAIC and any of such ratings (or the S&P equivalent of
such ratings) differ, then the S&P Equivalent Rating for such security
shall be the lower or lowest, as the case may be, of such ratings (or the
S&P equivalent of such ratings).
"Third Amendment" shall mean the Third Amendment to this Agreement,
dated as of August 8, 2003.
"Third Amendment Effective Date" shall have the meaning provided in
the Third Amendment.
"364-Day Credit Agreement" shall mean the Amended and Restated
Credit Agreement, dated as of August 13, 2002 and amended and restated as
of August 8, 2003, among the Parent Borrower, the designated subsidiary
borrowers party thereto, the lenders party thereto and JPMorgan Chase
Bank, as Administrative Agent, providing for up to a $500,000,000
commitment to provide revolving loans to the Parent Borrower and issue
letters of credit for the account of the various designated subsidiary
borrowers, as amended, restated, modified and/or supplemented from time to
time in accordance with the terms thereof.
"364-Day Credit Documents" shall mean the 364-Day Credit Agreement,
and all other documents, instruments and agreements entered into in
connection therewith, as each such document, instrument and agreement are
amended, restated, modified and/or supplemented from time to time in
accordance with the terms hereof and thereof
"U.S. Government Obligations" shall mean and include (A) securities
that are (x) direct obligations of the United States of America for the
timely payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and
-5-
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian
with respect to any such U.S. Government Obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository
receipt and (B) to the extent in each case having an S&P Equivalent Rating
of AAA, obligations issued or guaranteed by the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Government
National Mortgage Association, the Student Loan Marketing Association and
the Federal Home Loan Bank.
23. Section 10.03 of the Term Loan Agreement is hereby amended by
deleting the text "Subsidiary" appearing in clause (ii) of the first sentence
thereof and inserting the text "of its Subsidiaries" in lieu thereof.
24. Section 11.04(b) of the Term Loan Agreement is hereby amended by
deleting the first sentence thereof and inserting the following text in lieu
thereof:
"Notwithstanding the foregoing, any lender may assign all or a portion of
its rights and obligations hereunder to a bank or other financial
institution with the prior written consent of each of (i) the
Administrative Agent and (ii) so long as no Default or Event of Default
has occurred and is continuing, the Parent Borrower (such consent, in each
case, not to be unreasonably withheld or delayed)."
25. Section 11.14 of the Term Loan Agreement is hereby deleted in
its entirety and the following new Section 11.14 is inserted in lieu thereof:
"11.14 Confidentiality. (a) Each Lender shall (i) hold all
non-public information (including, without limitation, all financial
projections and analyses) furnished by the Parent Borrower in connection
with such Lender's evaluation of whether to become a Lender hereunder or
obtained by such Lender pursuant to the requirements of this Agreement
("Confidential Information") confidential, (ii) use Confidential
Information only for purposes related to this Agreement and its position
as a Lender hereunder and (iii) not disclose such Confidential Information
other than as provided herein; provided that any Lender and/or its
affiliates may disclose any such Confidential Information (A) as has
become generally available to the public other than as a result of
disclosure in violation of this Section 11.14, (B) as has become available
to such Lender or any such affiliate on a non-confidential basis from a
source other than the Parent Borrower and their respective affiliates,
provided that the source is not known by such Lender to be prohibited from
transmitting such information to such Lender by a contractual, legal or
fiduciary obligation, (C) as may be required or appropriate in any report,
statement or
-6-
testimony submitted to any municipal, state or Federal regulatory body
having or claiming to have jurisdiction over such Lender and/or its
affiliates, (D) as may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation or other judicial
process (it being understood that, to the extent reasonably practicable
under the circumstances, the Parent Borrower shall be given prior notice
and an opportunity to contest any proposed disclosure pursuant to this
clause (D)), (E) in order to comply with any law, order, regulation or
ruling applicable to such Lender and/or its affiliates, and (F) to any
permitted prospective or actual syndicate member or participant in any
Loans, provided that such prospective or actual syndicate member or
participant agrees with the respective assigning Lender to be bound by the
provisions of this Section 11.14. The provisions of this Section 11.14
shall survive any termination of this Agreement.
(b) Notwithstanding anything herein to the contrary, any Lender (and
any employee, representative or other agent of such Lender) may disclose
to any and all persons, without limitation of any kind, such Lender's U.S.
federal income tax treatment and the U.S. federal income tax structure of
the transactions contemplated hereby relating to such Lender and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure. However,
no disclosure of any information relating to such tax treatment or tax
structure may be made to the extent nondisclosure is reasonably necessary
in order to comply with applicable securities laws."
26. Annexes III and IV to the Term Loan Agreement are hereby deleted
in their entirety and Annexes III and IV attached hereto are inserted in lieu
thereof.
27. Annex VI to the Term Loan Agreement is hereby deleted in its
entirely and the text "[Intentionally Deleted]" is hereby inserted in lieu of
such Annex VI.
28. In order to induce the Lenders to enter into this Amendment, the
Parent Borrower hereby represents and warrants that (x) no Default or Event of
Default exists on the Third Amendment Effective Date (as defined below), both
before and after giving effect to this Amendment, and (y) all of the
representations and warranties contained in the Term Loan Agreement and in the
other Credit Documents are true and correct in all material respects on the
Third Amendment Effective Date, both before and after giving effect to this
Amendment, with the same effect as though such representations and warranties
had been made on and as of such date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
29. This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any other provision of the Term Loan
Agreement or any other Credit Document.
30. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same
-7-
instrument. A complete set of counterparts shall be lodged with the Parent
Borrower and the Administrative Agent.
31. 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.
32. This Amendment shall become effective on the date (the "Third
Amendment Effective Date") when (i) the Parent Borrower and the Required Lenders
shall have signed a counterpart hereof and shall have delivered (including by
way of telecopier) the same to the Administrative Agent at the Notice Office and
(ii) the Restatement Effective Date (as defined in the 364-Day Credit Agreement
(as defined after giving effect to the Third Amendment Effective Date)) shall
have occurred.
33. From and after the Third Amendment Effective Date, all
references in the Term Loan Agreement and each of the other Credit Documents to
the Term Loan Agreement shall be deemed to be references to the Term Loan
Agreement as modified hereby.
* * *
-8-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ENDURANCE SPECIALTY HOLDINGS LTD.
By: /s/ Xxxx X. Del Col
------------------------------------
Title: General Counsel & Secretary
JPMORGAN CHASE BANK, Individually and as
Administrative Agent
By: /s/ Xxxxxxxxx Xxxxxxx
------------------------------------
Title: Vice President
SIGNATURE PAGE TO THE THIRD AMENDMENT,
DATED AS OF AUGUST 8, 2003, TO THE TERM
LOAN AGREEMENT, DATED AS OF AUGUST 13,
2002, AMONG ENDURANCE SPECIALTY HOLDINGS
LTD., A COMPANY ORGANIZED UNDER THE LAWS
OF BERMUDA. THE VARIOUS LENDERS PARTY
THERETO, AND JPMORGAN CHASE BANK, AS
ADMINISTRATIVE AGENT
COMERICA BANK
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: Senior Vice President
FLEET NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Title: Portfolio Manager
THE BANK OF BERMUDA LIMITED
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Xxxxx Xxx
------------------------------------
Title: Vice President
THE BANK OF N.T. XXXXXXXXXXX & SON
LIMITED
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Title: Vice President
