Exhibit 10.01
FIRST AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT
FIRST AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT (the "Amendment"), dated
as of June 13, 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 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. Waiver
1. The Banks hereby waive any Event of Default that may arise under the
Credit Agreement solely as a result of the Trust Preferred Securities Purchase.
B. Amendments
1. Section 2.05(c) of the Credit Agreement is hereby amended by deleting
the number "90" appearing therein and inserting the number "45" in lieu thereof.
2. The definition of the term "Consolidated Indebtedness" contained in
Schedule I to the Credit Agreement is hereby amended to read in its entirety as
follows:
"Consolidated Indebtedness" shall mean, at any time, the aggregate
outstanding principal amount of all Indebtedness of Holdings and its
Subsidiaries at such time determined on a consolidated basis in accordance
with GAAP, but excluding therefrom (i) the Contingent Interest Notes and
(ii) the Letters of Credit and all letters of credit issued under Section
4.04(d) of the Holdings Guaranty (so long as no drawing has occurred
thereunder)."
3. The definition of the term "Consolidated Total Capital" contained in
Schedule I to the Credit Agreement is hereby amended to read in its entirety as
follows:
"Consolidated Total Capital" shall mean, at any time, the sum of (i)
Consolidated Indebtedness (determined without giving effect to (x) the
enumerated exclusions set forth in clause (i) therein and (y) the
enumerated exclusion set forth in clause (ii) of the proviso of the
definition of Indebtedness (i.e., the enumerated exclusion for the then
issued and outstanding principal amount of Preferred Securities (including
Mandatorily Convertible Preferred Securities) to the extent the aggregate
principal amount of such Preferred Securities is less than 15% of
Consolidated Total Capital)) at such time and (ii) Consolidated Net Worth
of Holdings at such time, provided that there shall be excluded from
Consolidated Total Capital (to the extent otherwise included therein) the
face value of all Trust Preferred Securities purchased pursuant to the
Trust Preferred Securities Purchase."
4. The definition of the term "Consolidated Interest Expense" contained in
Schedule I to the Credit Agreement is hereby amended to read in its entirety as
follows:
"Consolidated Interest Expense" shall mean, for any period and as to
any Person, the sum, without duplication, of (i) total cash interest
expense (including interest paid in connection with the then issued and
outstanding Preferred Securities and the interest component in respect of
Capital Lease Obligations in accordance with GAAP) of such Person and its
Subsidiaries during such period determined on a consolidated basis in
accordance with GAAP, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing and net costs under Interest Rate
Agreements, but excluding however, any amortization of deferred financing
costs plus (ii) all dividends on preferred stock paid by such Person during
such period."
5. The definition of the term "Indebtedness" contained in Schedule I to the
Credit Agreement is hereby amended to read in its entirety as follows:
"Indebtedness" of any Person shall mean (without duplication) (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on
the liability side of the balance sheet of such Person, (iii) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder, (iv) all Indebtedness of
a second Person secured by any Lien on any property owned by such first
Person, whether or not such Indebtedness has been assumed, (v) the
principal portion of all Capitalized Lease Obligations of such Person, (vi)
all obligations of such Person to pay a specified purchase price for goods
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or services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, (vii) the net termination obligations of such Person
under Interest Rate Agreements and Other Hedging Agreements, calculated as
of any date as if such agreement were terminated as of such date, (viii)
all obligations of such Person under Financial Reinsurance Agreements and
(ix) all Contingent Obligations of such Person; provided that Indebtedness
shall not include (i) trade payables (including obligations under insurance
contracts and reinsurance payables) and accrued expenses, in each case
arising in the ordinary course of business and (ii) the then issued and
outstanding principal amount of Preferred Securities (including Mandatorily
Convertible Preferred Securities) to the extent the aggregate principal
amount of such Preferred Securities is less than 15% of Consolidated Total
Capital."
6. The definition of the term "Interest Coverage Ratio" is contained in
Schedule I to the Credit Agreement is hereby amended to read in its entirety as
follows:
"Interest Coverage Ratio" shall mean, for any Test Period, the ratio
of (a) Holdings Cash Flow for such Test Period to (b) Consolidated Interest
Expense of Holdings for such Test Period; provided that (i) for the Test
Period ending on or about December 31, 2000, Consolidated Interest Expense
and the portion of Holdings Cash Flow determined by reference to EBITDA
shall be the actual such amounts calculated for such Test Period multiplied
by 4.00 (other than the portion of Consolidated Interest Expense for such
Test Period incurred in connection with then issued and outstanding
Preferred Securities which shall be multiplied by 2.00), (ii) for the Test
Period ending on or about March 31, 2001, Consolidated Interest Expense and
the portion of Holdings Cash Flow determined by reference to EBITDA shall
be the actual such amounts calculated for such Test Period multiplied by
2.00 and (iii) for the Test Period ending on or about June 30, 2001,
Consolidated Interest Expense and the portion of Holdings Cash Flow
determined by reference to EBITDA shall be the actual such amounts
calculated for such Test Period multiplied by 1.33 (other than the portion
of Consolidated Interest Expense for such Test Period incurred in
connection with then issued and outstanding Preferred Securities which
shall be the actual such amounts for such Test Period)."
7. Schedule I of the Credit Agreement is hereby further amended by
inserting therein the following new defined terms in the appropriate
alphabetical order:
"Debentures" shall mean subordinated debt securities issued by
Holdings to a Special Purpose Trust in exchange for proceeds of Preferred
Securities and common securities of such Special Purpose Trust.
"Mandatorily Convertible Preferred Securities" shall mean units
comprised of (i) Preferred Securities or preferred shares of Holdings and
(ii) a contract for the sale of ordinary shares of Holdings (including any
hybrid capital securities).
"Preferred Securities" shall mean (i) preferred securities issued by a
Special Purpose Trust (including, without limitation, the Trust Preferred
Securities) which shall provide, among other things, that dividends shall
be payable only out of proceeds or interest payments on the Debentures, or
(ii) other instruments that may be treated in whole or in part as equity of
Holdings or one or more of its Subsidiaries by one or more of the rating
agencies while being treated as debt for United States federal income tax
purposes.
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"Qualified Preferred Stock" shall mean any preferred stock of Holdings
so long as (i) no part of such preferred stock is mandatorily redeemable
(whether on a scheduled basis or as a result of the occurrence of any event
or circumstance) and (ii) any dividends associated with such preferred
stock are solely payable in kind; provided that Holdings may issue
Qualified Preferred Stock that allows for cash dividends so long as the
aggregate principal amount of such Qualified Preferred Stock issued by
Holdings when added to the aggregate principal amount of Indebtedness
incurred by Holdings and its Subsidiaries pursuant to Section 4.04(h),
shall not exceed $200,000,000 at any time.
"Special Purpose Trust" shall mean a special purpose business trust
established by Holdings of which Holdings will hold all the common
securities, which will be the issuer of Preferred Securities, and which
will loan to Holdings (such loan being evidenced by the Debentures) the net
proceeds of the issuance and sale of the Preferred Securities and common
securities of such Special Purpose Trust.
"Trust Preferred Securities Purchase" shall mean the purchase by one
or more Subsidiaries of Holdings of (i) 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 and (ii) approximately $26,300,000 of face value
Trust Preferred Securities."
B. 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 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.
5. 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/ Xxxxx X. Xxxxxxxxxxx
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Title: Vice President & Treasurer
TRENWICK HOLDINGS LIMITED
By: /s/ Xxxxxxx Xxxxxxxxx
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Title: Finance Director
[Bank Signature Pages Omitted]
