Exhibit 99.7
SEVENTH AMENDMENT TO THE HOLDINGS GUARANTY
SEVENTH AMENDMENT TO THE HOLDINGS GUARANTY (the "Seventh
Amendment"), dated as of March 7, 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 :
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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. Amendments
1. Section 3.01 of the Holdings Guaranty is hereby amended by
inserting the following new clause (s) immediately following clause (r) thereof:
"(r) Expenditures. 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 February 28, 2003, a schedule of all "Specified
Expenditures" made in such fiscal month."
2. Section 3.13(b) of the Holdings Guaranty is hereby amended by
deleting the text "No later than 60 days" appearing therein and inserting the
text "As promptly as possible but no later than 90 days" in lieu thereof.
3. Section 3.14 of the Holdings Guaranty is hereby amended by
deleting the text "No later than 60 days" appearing therein and inserting the
text "As promptly as possible but no later than 90 days" in lieu thereof.
4. Section 3.15 of the Holdings Guaranty is hereby amended by
deleting the text "No later than 60 days" appearing therein and inserting the
text "As promptly as possible but no later than 90 days" in lieu thereof.
5. Section 3.16 of the Holdings Guaranty is hereby amended by
deleting the text "No later than 60 days" appearing therein and inserting the
text "As promptly as possible but no later than 90 days" in lieu thereof.
6. Section 3.18 of the Holdings Guaranty is hereby amended by
deleting the text "No later than 60 days" appearing therein and inserting the
text "As promptly as possible but no later than 90 days" in lieu thereof.
7. Section 4.01(b) of the Holdings Guaranty is hereby amended by
inserting the text ", other than errors and omissions coverage incidental to
policies issued to certain financial institutions in accordance with Holdings
and its Subsidiaries underwriting practices as in effect as of the Fourth
Amendment Effective Date" at the end of subclause (iii) thereof.
8. Section 4.04(d) of the Holdings Guaranty is hereby amended by
deleting the text "and" appearing immediately prior to the reference "(B)"
thereof and inserting the text "or" in lieu thereof.
9. Section 4.02(a) of the Holdings Guaranty is hereby amended by
inserting the text "(t) the Subsidiaries set forth on Annex IX to the Seventh
Amendment may be liquidated," immediately preceding clause (w) appearing in the
proviso thereof.
10. Section 4.15 of the Holdings Guaranty is hereby amended to read
in its entirety as follow:
4.15 Minimum Combined Statutory Surplus. Holdings will not permit
the Regulated Insurance Companies, collectively, on a Combined basis, to
have Statutory Surplus (i) at any time prior to the sale of Trenwick
International Limited, of less than $275,000,000 and (ii) at any time
after the sale of Trenwick International Limited, of less than
$250,000,000.
11. Section 4.16 of the Holdings Guaranty is hereby amended by
deleting the number "$350,000,000" appearing therein and inserting the number
"$250,000,000" in lieu thereof.
12. Section 4.23 of the Holdings Guaranty is hereby amended to read
its entirety as follows:
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"4.23 Salary Increases. Holdings will not, and will not permit any
of its Subsidiaries to, increase the salaries of, or grant bonuses, stock
options and other forms of compensation to, its employees, officers and/or
directors, except pursuant to (i) plans in existence on the Fourth
Amendment Effective Date and in the normal course of business, (ii) the
Specified Employment Agreements, (iii) the Tier II and Tier III Retention
Bonus Agreements and the (iv) Unallocated Additional Fee Agreements,
provided that the payments of any bonus or compensation other than salary
or monthly fees under the Specified Employment Agreements and the
Unallocated Additional Fee Agreements may only be made if (I) no Default
or Event of Default then exists at the time of such payment or would
result therefrom and (II) if any Default or Event of Default has occurred
the Required Banks have consented to permit such payments after such
Default or Event of Default has been cured or waived or (B) the Banks
consent to such payments notwithstanding that an Event of Default has
occurred and is continuing."
13. The definition of "Specified Expenditures" appearing in Schedule
I to the Holdings Guaranty is hereby amended by (i) deleting the text "Credit
Agreement" appearing therein and inserting the text "Credit Documents" in lieu
thereof and (ii) deleting the word "and" appearing immediately before clause
(xvi) thereof and inserting a comma in lieu thereof and inserting the following
new clauses (xvii), (xviii), (xix) and (xx) immediately after the end of clause
(xvi) thereof:
", (xvii) reasonable fees and expenses of the holders of the Trenwick
Senior Notes incurred in connection with the restructuring thereof,
(xviii) expenditures for reinsurance premium cessions, deposit premiums,
imprest account funding, commissions, bonus commissions and brokerage
fees, return premium, losses and loss adjustment expenses, commutation
payments, claim loss fund accounts, (xix) regulatory fees, 401(k)
contributions, pension contributions, payroll, CAT modeling license fees,
software licensing fees, financial printing costs, legal fees for
reinsurance recovery and claims, accounting, actuarial and tax services
not related to the restructuring of Holdings and its subsidiaries, systems
development and maintenance fees, insurance and reinsurance premiums,
disaster recovery fees, insurance dispute resolution requirements,
insurance premiums for director's and officer's policies and errors and
omissions policies and rating agency fees and (xx) other expenses incurred
in the ordinary course of business, so long as (A) Holdings has notified
each Bank in writing no later than 5 Business Days before Holdings or the
applicable Subsidiary makes such expenditure, which notice shall specify
(w) the entity that will make such payment, (x) the amount of the payment,
(y) a description of the expenditure and (z) the date such payment will be
made and (B) the Required Banks do not object to Holdings' or the
applicable Subsidiary's making such payment prior to the date specified in
the notice previously delivered pursuant to this clause (xix)."
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14. Schedule I to the Credit Agreement is hereby amended by
inserting the following defined terms in the appropriate alphabetical order:
"Binet Employment Agreement" shall mean the letter agreement between
Holdings and ▇▇▇▇▇▇▇ ▇▇▇▇▇, dated December 20, 2002, to be amended in
substantially the form of the draft delivered to the Banks on February 19,
2003; provided that such Amendment shall also include (i) a
non-solicitation clause on terms reasonably satisfactory to the
Administrative Agent and (ii) a provision for the payment of additional
compensation to ▇▇. ▇▇▇▇▇, in the amount set forth on the Senior Executive
Compensation Schedule, payable on substantially the same terms and
conditions set forth in the Senior Executive Compensation Schedule and in
the Executive Compensation Provisions.
"▇▇▇▇▇▇ Agreement" shall mean the letter agreement between Holdings
and ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated August 26, 2002, as amended by the First
Amendment thereto, dated as of December 31, 2002; provided that such
letter agreement shall be further amended to include (i) a
non-solicitation clause on terms reasonably satisfactory to the
Administrative Agent and (ii) a retention bonus and other additional
compensation payable to ▇▇. ▇▇▇▇▇▇ in the amounts set forth on the Senior
Executive Compensation Schedule, payable on substantially the same terms
and conditions set forth in the Senior Executive Compensation Schedule and
in the Executive Compensation Provisions.
"Executive Compensation Provisions" shall mean the Executive
Compensation Provisions, dated March 6, 2003 and delivered to the Banks on
March 6, 2003.
"▇▇▇▇▇▇▇▇▇▇▇ Agreement" shall mean the letter agreement to be
executed between Holdings and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ on terms and conditions
satisfactory to the Administrative Agent; provided that such letter
agreement shall include (i) a non-solicitation clause on terms reasonably
satisfactory to the Administrative Agent and (ii) a retention bonus and
other additional compensation payable to ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ in the amounts
set forth on the Senior Executive Compensation Schedule, payable on
substantially the same terms and conditions set forth in the Senior
Executive Compensation Schedule and in the Executive Compensation
Provisions.
"▇▇▇▇▇▇ Employment Agreement" shall mean the letter agreement
between Holdings and ▇▇▇▇▇▇ ▇▇▇▇▇▇, dated December 17, 2002.
"▇▇▇▇▇▇▇▇ Employment Agreement" shall mean (i) the expatriate
agreement between Holdings and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, (ii) the change of
control agreement between Holdings and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and (iii) the
cash incentive bonus agreement between Holdings and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in
each case, which agreements shall be substantially in the form of the
drafts delivered to the Banks on February 19, 2003, provided that such
agreements shall also include (i) a non-solicitation clause on terms
reasonably satisfactory to the Administrative Agent
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and (ii) a provision for the payment of addition compensation to ▇▇.
▇▇▇▇▇▇▇▇, in the amount set forth on the Senior Executive Compensation
Schedule, payable on substantially the same terms and conditions set forth
in the Senior Executive Compensation Schedule and in the Executive
Compensation Provisions.
"▇▇▇▇▇▇ Agreement" shall mean the letter agreement to be executed
between Holdings and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, on terms and conditions satisfactory
to the Administrative Agent; provided such letter agreement shall include
(i) a non-solicitation clause on terms reasonably satisfactory to the
Administrative Agent and (ii) the payment of additional compensation to
▇▇. ▇▇▇▇▇▇ in the amount set forth on the Senior Executive Compensation
Schedule, payable on substantially the same terms and conditions set forth
in Senior Executive Compensation Schedule and in the Executive
Compensation Provisions.
"▇▇▇▇▇ Employment Agreement" shall mean the letter agreement between
Holdings and ▇▇▇▇ ▇. ▇▇▇▇▇, dated December 12, 2002, to be amended,
substantially in the form of the draft delivered to the Banks on February
19, 2003; provided that such First Amendment shall also include (i) a
non-solicitation clause on terms reasonably satisfactory to the
Administrative Agent and (ii) the payment of additional compensation to
▇▇. ▇▇▇▇▇ in the amount set forth on the Senior Executive Compensation
Schedule, payable on substantially the same terms and conditions set forth
in the Senior Executive Compensation Schedule referred to herein and in
the Executive Compensation Provisions.
"▇▇▇▇▇▇▇▇ Agreement" shall mean the letter agreement to be executed
between Holdings and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, on terms and conditions satisfactory
to the Administrative Agent; provided that such letter agreement shall
include (i) a non-solicitation clause on terms reasonably satisfactory to
the Administrative Agent and (ii) the payment of additional compensation
to ▇▇. ▇▇▇▇▇▇▇▇ in the amount set forth on the Senior Executive
Compensation Schedule, payable on substantially the same terms and
conditions set forth in the Senior Executive Compensation Schedule and in
the Executive Compensation Provisions.
"Senior Executive Compensation Schedule" shall mean the schedule of
Senior Executive Compensation dated March 6, 2003 and delivered to the
Banks on March 6, 2003.
"Seventh Amendment" shall mean the Seventh Amendment to the Holdings
Guaranty, dated as of March 3, 2003.
"Seventh Amendment Effective Date" shall have the meaning provided
in the Seventh Amendment.
"Specified Employees" shall mean the employees or independent
contractors of Holdings or its subsidiaries party to the Specified
Employment Agreements.
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"Specified Employment Agreements" shall mean collectively, (i) the
▇▇▇▇▇▇ Agreement, (ii) the Binet Employment Agreement, (iii) the
▇▇▇▇▇▇▇▇▇▇▇ Agreement, (iv) the ▇▇▇▇▇▇ Employment Agreement, (v) the
▇▇▇▇▇▇▇▇ Employment Agreement, (vi) the ▇▇▇▇▇▇ Agreement (vii) the ▇▇▇▇▇
Employment Agreement, (viii) the ▇▇▇▇▇▇▇▇ Agreement and (ix) the ▇▇▇▇▇▇
Employment Agreement.
"Tier II and Tier III Retention Bonus Agreements" shall mean the
retention fee agreements executed by Holdings or any Subsidiary thereof
and any employee or independent contractor of Holdings and/or any
Subsidiary thereof (other than the Specified Employees) on substantially
the same terms and conditions as set forth in the Form of Stay Bonus &
Employment Termination Agreement delivered to the Banks on March 6, 2003
and in the amounts for each person as set forth on the schedule of
Executive Compensation dated March 6, 2003 and delivered to the Banks on
March 6, 2003
"Unallocated Additional Fee Agreements" shall mean the agreements
between Holdings and any employee or independent contractor of Holdings
and/or its Subsidiaries (other than the Specified Employees) to be
executed on terms and conditions satisfactory to the Administrative Agent;
provided that such agreements may include a provision for additional
compensation in an aggregate amount that does not exceed the "Unallocated
Pool Amount" on the Senior Executive Compensation Schedule.
"▇▇▇▇▇▇ Employment Agreement" shall mean (i) the amended and
restated service agreement between Trenwick Managing Services Limited,
Holdings and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and (ii) the cash incentive bonus agreement
between Holdings and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in each case, which agreements
will be substantially in the form of the drafts delivered to the Banks on
February 19, 2003, provided that such agreements will also include (i) a
non-solicitation clause on terms reasonably satisfactory to the
Administrative Agent and (ii) the payment of additional compensation to
▇▇. ▇▇▇▇▇▇ in the amount set forth on the Senior Executive Compensation
Schedule, payable on substantially the same terms and conditions set forth
in the Senior Executive Compensation Schedule and in the Executive
Compensation Provisions.
15. The Holdings Guaranty is hereby further amended by inserting new
Annex IX attached hereto.
B. 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 Seventh 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
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Agreement on the Seventh Amendment Effective Date (as defined below), in each
case after giving effect to this Seventh Amendment.
2. This Seventh 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 SEVENTH 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 Seventh Amendment shall become effective on the date (the
"Seventh 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 Seventh Amendment and Waiver to the Credit
Agreement, dated as of March 7, 2003.
5. From and after the Seventh 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 Seventh
Amendment to be duly executed and delivered as of the date first above written.
TRENWICK GROUP LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
[Bank Signature Pages Intentionally Omitted]
ANNEX IX
CERTAIN SUBSIDIARIES TO BE LIQUIDATED
1. Castle Members Agents Limited
2. Target Insurance Company (Guernsey) Limited
3. Castle Underwriting Holdings Limited
4. Surveyors Direct Limited
5. ▇▇▇▇▇▇ Dedicated Limited
6. Adit Holdings Limited
7. ▇▇▇▇▇▇ Group Services Ltd.
8. AKC Holdings Ltd.
9. ▇▇ ▇▇▇▇▇▇ & Co. Underwriting Agents Limited
10. Halford Motor Insurance Services Limited
11. Theorem Holdings Limited
12. Tower Underwriting Agents Limited
13. ▇▇▇▇▇▇ Loss Adjusters Ltd.
