Exhibit 10.1

 

AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This Amendment (this “Amendment”) is entered into as of November 10, 2003, by
and among The Navigators Group, Inc., a Delaware corporation (the “Borrower”),
Bank One, NA (formerly known as The First National Bank of Chicago),
individually and as Administrative Agent (“Agent”), Barclays Bank plc, as
Syndication Agent, LaSalle Bank N.A., individually and as Senior Managing Agent,
Credit Suisse First Boston, as Managing Agent, and Brown Brothers Harriman &
Co., as Co-Agent.

 

RECITALS

 

A.            The Borrower, the Agent and the Lenders are party to that certain
Amended and Restated Credit Agreement dated as of December 21, 1998, as amended
by Amendment No. 1 to Amended and Restated Credit Agreement dated as of
March 28, 2000, Amendment No. 2 to Amended and Restated Credit Agreement dated
as of September 20, 2000, Amendment No. 3 to Amended and Restated Credit
Agreement dated as of December 31, 2001 and Amendment No. 4 to Amended and
Restated Credit Agreement dated as of October 18, 2002 (as so amended, the
“Credit Agreement”).  Unless otherwise specified herein, capitalized terms used
in this amendment shall have the meanings ascribed to them by the Credit
Agreement.

 

B.            The Borrower, the Agent and the undersigned Lenders wish to amend
the Credit Agreement on the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the mutual execution hereof and other good
and valuable consideration, the parties hereto agree as follows:

 

1.             Amendment to Credit Agreement.  Upon the “Effective Date” (as
defined below), the Credit Agreement shall be amended as follows:

 

(a)           The definition of “Aggregate Revolving Credit Commitment” in
Article I of the Credit Agreement is hereby amended to state in its entirety as
follows:

 

“Aggregate Revolving Credit Commitment” means the aggregate of the Revolving
Credit Commitments of all the Lenders, as reduced from time to time pursuant to
the terms hereof.  The Aggregate Revolving Credit Commitment as of the date of
the Fifth Amendment hereto is $80,000,000.

 

(b)           The definition of “Applicable Commitment Fee Rate” is hereby
amended to state in its entirety as follows:

 

“Applicable Commitment Fee Rate” means, at any time, the percentage per annum at
which commitment fees are accruing on the unused portion of the Aggregate
Revolving Credit Commitment.

 

(c)           The definition of “Letter of Credit Commitment” in Article I of
the Credit Agreement is hereby amended to state in its entirety as follows:

 

“Letter of Credit Commitment” means the aggregate Letter of Credit Participation
Amounts of all the Lenders, as reduced from time to time pursuant

 

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to the terms hereof.  The Letter of Credit Commitment as of the date of the
Fifth Amendment hereto is $80,000,000.  The Letter of Credit Commitment shall at
all times equal the Aggregate Revolving Credit Commitment.

 

(d)           The definition of “Letter of Credit Termination Date” in Article I
of the Credit Agreement is hereby amended to state in its entirety as follows:

 

“Letter of Credit Termination Date” means November 10, 2005 or any later date as
may be specified as the Letter of Credit Termination Date in accordance with
Section 3.10 or any earlier date on which the Letter of Credit Commitment is
reduced to zero or otherwise terminated pursuant to the terms hereof.

 

(e)           The definition of Required Lenders in Article I of the Credit
Agreement shall be amended to state in its entirety as follows:

 

“Required Lenders” means Lenders in the aggregate having at least 66-2/3% of the
Aggregate Revolving Credit Commitment or, if the Aggregate Revolving Credit
Commitment has been terminated, the aggregate unpaid principal amount of the
outstanding Revolving Credit Loans plus the aggregate amount of the outstanding
Letter of Credit Obligations.

 

(f)            The definition of “Revolving Credit Termination Date” in
Article I of the Credit Agreement is hereby amended to state in its entirety as
follows:

 

“Revolving Credit Termination Date” means November 10, 2005 or any later date as
may be specified as the Revolving Credit Termination Date in accordance with
Section 3.10 or any earlier date on which the Aggregate Revolving Credit
Commitment is reduced to zero or otherwise terminated pursuant to the terms
hereof.

 

(g)           The definitions of “Year 2000 Issuer” and “Year 2000 Program” in
Article I of the Credit Agreement are hereby deleted.

 

(h)           The definition of “pro-rata” in Article I of the Credit Agreement
is amended to state in its entirety as follows:

 

“pro-rata” means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender’s pro-rata share or
portion, based on its percentage of the Aggregate Revolving Credit Commitment. 
Each Lenders pro-rata share of the Letter of Credit Commitment shall be the same
as its pro-rata share of the Aggregate Revolving Credit Commitment.

 

(i)            Article I of the Credit Agreement is hereby amended by the
addition of the following definition in proper alphabetical order:

 

“Lloyd’s Letters of Credit” is defined in Section 3.1.

 

(j)            Sections 2.1(a) and (b) of the Credit Agreement are hereby
amended to state in their entirety as follows:

 

“(a)         From and including the date hereof to but excluding the Revolving
Credit Termination Date, each Lender severally (and not jointly) agrees, on the
terms and

 

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conditions set forth in this Agreement, to make Revolving Credit Loans to the
Borrower from time to time in amounts not to exceed in the aggregate at any one
time outstanding the amount of its pro-rata share of the Aggregate Revolving
Credit Commitment existing at such time minus the Letter of Credit Obligations
outstanding at such time.  Subject to the terms of this Agreement, the Borrower
may borrow, repay and reborrow Revolving Credit Advances at any time prior to
the Revolving Credit Termination Date; provided, however, that the proceeds of
Revolving Credit Advances may only be applied to reimburse amounts paid by the
Issuer under Letters of Credit.  The Revolving Credit Commitments shall expire
on the Revolving Credit Termination Date.

 

(b)           The Borrower hereby agrees that, if at any time as a result of
reductions in the Aggregate Revolving Credit Commitment pursuant to
Section 2.4(b) or otherwise, the aggregate balance of the Revolving Credit Loans
plus the outstanding Letter of Credit Obligations exceeds the Aggregate
Revolving Credit Commitment, the Borrower shall repay immediately the lesser of
(i) such then amount of Revolving Credit Loans as may be necessary to eliminate
such excess and (ii) the then outstanding amount of Revolving Credit Loans.”

 

(k)           Section 2.4 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

“2.4         Commitment Fee; Reductions in Aggregate Revolving Credit
Commitment.  (a) The Borrower agrees to pay to the Agent for the account of each
Lender a commitment fee on its Revolving Credit Commitment less the sum of (i)
its Revolving Credit Loans plus (ii) its pro-rata share of the Letter of Credit
Obligations at a per annum rate equal to the Applicable Commitment Fee Rate from
the Closing Date to and including the Revolving Credit Termination Date, payable
on each Payment Date hereafter and on the Revolving Credit Termination Date. 
All accrued commitment fees shall be payable on the effective date of any
termination of the obligations of the Lenders to make Revolving Credit Loans
hereunder.

 

(b)           The Borrower may permanently reduce the Aggregate Revolving Credit
Commitment in whole, or in part ratably among the Lenders in integral multiples
of $5,000,000 upon at least five (5) Business Days’ written notice to the Agent,
which notice shall specify the amount of any such reduction; provided, however,
that the amount of the Aggregate Revolving Credit Commitment may not be reduced
below the aggregate principal amount of the outstanding Revolving Credit Loans
plus the outstanding Letter of Credit Obligations and provided further that the
Aggregate Revolving Credit Commitment shall at all times equal the Letter of
Credit Commitment.”

 

(l)            Section 2.5 of the Credit Agreement is hereby deleted and
intentionally left blank.

 

(m)          The heading to Section 2.7 is hereby changed to Mandatory
Prepayments.

 

(n)           Section 2.7(a) of the Credit Agreement is hereby deleted and
intentionally left blank.

 

(o)           Section 2.7(b) is hereby amended to state in its entirety as
follows:

 

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“(b)         Mandatory prepayments of Revolving Loans shall be required in the
amounts and at the times set forth below:

 

(i)            concurrently with the receipt thereof by the Borrower or any
Subsidiary, 75% of the aggregate Net Available Proceeds in excess of $1,000,000
realized upon all Asset Dispositions in any Fiscal Year; and

 

(ii)           concurrently with the receipt thereof by the Borrower or any
Subsidiary, 75% of the Net Available Proceeds in excess of $1,000,000 realized
upon the issuance or sale by the Borrower or such Subsidiary of any equity or
debt securities (other than an issuance or sale of common stock of a Subsidiary
to the Borrower);

 

provided that, if the outstanding Revolving Loans at the time of a mandatory
prepayment are less than the mandatory prepayment, the prepayment shall be
limited to the outstanding amount of such Revolving Loans.”

 

(p)           Sections 2.7(c), (d) and (e) of the Credit Agreement are hereby
deleted and intentionally left blank.

 

(q)           Section 2.8 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

“2.8.        Revolving Credit Advances.  Each Revolving Credit Advance shall be
made as an Alternate Base Rate Advance pursuant to Section 3.4(b).  Not later
than noon (Chicago time) on each Borrowing Date, each Lender shall make
available its Revolving Credit Loan or Loans in funds immediately available in
Chicago to the Agent at its address specified pursuant to Article XIV.”

 

(r)            Section 3.1 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

“3.1         Issuance of Letters of Credit.  (a)  From and after the date hereof
to but excluding the Letter of Credit Termination Date, the Issuer agrees, upon
the terms and conditions set forth in this Agreement, to issue at the request
and for the account of the Borrower, one or more Letters of Credit for the
account of the Borrower (x) to support the obligations of NCUL and MUL with
respect to specific syndicates at the Society of Lloyd’s (the Letters of Credit
issued under this clause (x) being called the “Lloyd’s Letters of Credit”) and
(y) to support other obligations, provided that the aggregate face amount of all
outstanding Letters of Credit Obligations with respect to this clause (y) does
not at any time exceed the lesser of (A) the Revolving Credit Commitment and (B)
$2,000,000; provided, however, that the Issuer shall not be under any obligation
to issue, and shall not issue, any Letter of Credit if: (i) any order, judgment
or decree of any governmental authority or other regulatory body with
jurisdiction over the Issuer shall purport by its terms to enjoin or restrain
such Issuer from issuing such Letter of Credit, or any law or governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) from any governmental authority or other regulatory body with jurisdiction
over the Issuer shall prohibit, or request that the Issuer refrain from, the
issuance of Letters of Credit in particular or shall impose upon the Issuer with
respect to any Letter of Credit any restriction or reserve or capital
requirement (for which the Issuer

 

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is not otherwise compensated) or any unreimbursed loss, cost or expense which
was not applicable, in effect and known to the Issuer as of the date of this
Agreement and which the Issuer in good faith deems material to it; (ii) one or
more of the conditions to such issuance contained in Section 5.2 is not then
satisfied; or (iii) after giving effect to such issuance, the aggregate
outstanding amount of the Letter of Credit Obligations plus the outstanding
Revolving Credit Loans would exceed the Revolving Credit Commitment.  Letters of
Credit shall be denominated, at the Borrower’s option, in either Dollars or
Pounds.

 

(b)           In no event shall:  (i) the aggregate amount of the Letter of
Credit Obligations plus the outstanding Revolving Credit Loans at any time
exceed the Letter of Credit Commitment; or (ii) the expiration date of any
Letter of Credit (other than the Letters of Credit identified on Schedule 3.1
hereto) or the date for payment of any draft presented thereunder and accepted
by the Issuer, be later than (x) the date one year after the effective date of
such Letter of Credit or (y) in the case of the Lloyd’s Letters of Credit, four
years after notice of expiry from the Issuer to the Borrower and the beneficiary
of the Letter of Credit; provided, that each Letter of Credit issued with an
automatic “evergreen” provision providing for renewal absent advance notice by
the Borrower or the Issuer shall be automatically renewed unless at least 30
days prior to each anniversary of the issuance of such Letter of Credit the
beneficiary thereof receives notice from the Issuer that such Letter of Credit
shall not be renewed.  The Issuer shall be under no obligation to permit the
renewal or extension of any Letter of Credit at any time (A) when a Default or
Unmatured Default has occurred and is continuing or (B) after the Letter of
Credit Termination Date.  The Issuer may (and, upon the request of the Required
Lenders, shall) give notice of termination of any Lloyd’s Letters of Credit with
an expiry date based upon notice at any time (A) when a Default has occurred and
is continuing or (B) after the Letter of Credit Termination Date.

 

(c)           The Borrower agrees that, if at any time as a result of reductions
in the Letter of Credit Commitment pursuant to Section 3.3 or otherwise and
after giving effect to any repayments of Revolving Credit Loans pursuant to
Section 2.1(b), the aggregate balance of the Letter of Credit Obligations
exceeds the Revolving Credit Commitment, the Borrower shall cash collateralize
the Letter of Credit Obligations by depositing into the Letter of Credit Cash
Collateral Account cash or Cash Collateral Investments in such amount as may be
necessary to eliminate such excess.

 

(d)           The Letters of Credit identified on Schedule 3.1 hereto which are
issued and outstanding under the Existing Credit Agreement shall, upon
satisfaction of the conditions set forth in Article V hereto, automatically and
without further action on the part of the Agent, the Issuer, the Lenders or the
Borrower be deemed Letters of Credit issued under this Agreement.

 

(e)           For purposes of determining usage and availability under this
Section 3.1, when a Letter of Credit is issued in Pounds, such Pounds will be
converted to Dollars upon issuance, upon the proposed issuance of any other
Letter of Credit and at the end of each calendar quarter, and at any time
thereafter as requested by the Agent or any Lender (including the Issuer) and
such determination shall be made by the Agent in its sole determination based
upon the spot exchange rate between Dollars and Pounds as quoted by the Agent’s
foreign exchange desk as of such date of determination.  Notwithstanding

 

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any other provisions of this Agreement, if at any time, after giving effect to
the conversion of Pounds into Dollars as set forth above, the aggregate face
amount of all outstanding Letters of Credit plus the outstanding Revolving
Credit Loans is greater than the Aggregate Revolving Credit Commitment
(“Conversion Differential”), then the Borrower shall prepay the Revolving Credit
Loans to the extent required so that the difference between the then effective
Aggregate Revolving Credit Commitment and the aggregate principal amount of all
outstanding Revolving Credit Loans is equal to or greater than the Conversion
Differential and, in the event the Conversion Differential exceeds the then
effective Aggregate Revolving Credit Commitment, then the Borrower shall cash
collateralize such Conversion Differential by depositing into the Letter of
Credit Cash Collateral Account cash or Cash Collateral Investments in an amount
equal to such difference.”

 

(s)           Section 3.3 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

“3.3         Reductions in Letter of Credit Commitment.  The Borrower may
permanently reduce the Letter of Credit Commitment in whole, or in part ratably
among the Lenders in integral multiples of $2,500,000, upon at least five (5)
Business Days’ written notice to the Agent, which notice shall specify the
amount of such reduction; provided, however, that the amount of the Letter of
Credit Commitment may not be reduced below the aggregate amount of the
outstanding Letter of Credit Obligations plus the outstanding Revolving Credit
Loans and provided further that the Letter of Credit Commitment shall at all
times equal the Aggregate Revolving Credit Commitment.”

 

(t)            Section 3.4(b) of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“(b)         Notwithstanding any provisions to the contrary in any Reimbursement
Agreement, the Borrower agrees to reimburse the Issuer for amounts which the
Issuer pays under such Letter of Credit no later than the time specified in this
Agreement.  If the Borrower does not pay any such Reimbursement Obligations when
due at any time prior to the Revolving Credit Termination Date, the Borrower
shall be deemed to have immediately requested that the Lenders make an Alternate
Base Rate Advance under this Agreement in a principal amount equal to such
unreimbursed Reimbursement Obligations.  The Agent shall promptly notify the
Lenders of such deemed request and, without the necessity of compliance with the
requirements of Sections 3.5 and 5.2, each Lender shall make available to the
Agent its Revolving Credit Loan in the manner prescribed for Alternate Base Rate
Advances.  All Revolving Credit Loans shall be in Dollars and, to the extent,
such Revolving Credit Loans are applied to a Reimbursement Obligation
denominated in Pounds, such Revolving Credit Loans shall be in the equivalent
amount of Dollars based upon the spot rate of exchange between Dollars and
Pounds as quoted by the Agent’s foreign exchange desk as of the date of
determination.  The proceeds of such Revolving Credit Loans shall be paid over
by the Agent to the Issuer for the account of the Borrower in satisfaction of
such unreimbursed Reimbursement Obligations, which shall thereupon be deemed
satisfied by the proceeds of, and replaced by, such Alternate Base Rate
Advance.”

 

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(u)           Section 3.5(c) of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“(c)  the date on which such requested Letter of Credit is to expire, which
shall be no later than four years from the date of issuance of such Letter of
Credit or in the case of a Lloyd’s Letter of Credit, four years from notice of
expiry from the Issuer to the Borrower and the beneficiary of such Letter of
Credit.”

 

(v)           Section 3.9(b) of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“Letter of Credit Fronting Fee.  The Borrower hereby agrees to pay to the Agent,
for the account of the Issuer, a letter of credit fronting fee with respect to
each Letter of Credit from and including the date of issuance thereof (or, with
respect to the Letters of Credit identified on Schedule 3.1, the date on which
such Letters of Credit are deemed issued under this Agreement pursuant to
Section 3.1(d)) until the date such Letter of Credit is fully drawn, canceled or
expired, in an amount equal to the rate provided in the Fee Letter of the
aggregate initial face amount of such Letter of Credit, calculated with respect
to actual days elapsed on the basis of a 360-day year and payable quarterly in
arrears on each Payment Date in each year and upon the expiration, cancellation
or utilization in full of such Letter of Credit.  In addition to the foregoing,
the Borrower agrees to pay the Issuer any other fees customarily charged by it
in respect of the issuance, amendment, cancellation, negotiation or transfer of
each Letter of Credit and each drawing made thereunder.  The letter of credit
fronting fee is in addition to (and not included in) the letter of credit
participation fee provided for in paragraph (c) below.”

 

(w)          Section 3.9(d) of the Credit Agreement is hereby deleted.

 

(x)            Section 3.10 of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“3.10       Extension of Letter of Credit Termination Date.  The Borrower may
request an extension of the Letter of Credit Termination Date and the Revolving
Credit Termination Date by submitting a request for an extension to the Agent
(an “Extension Request”) on any Business Day that is not less than 30 days prior
to the then Letter of Credit Termination Date and the Revolving Credit
Termination Date.  The Letter of Credit Termination Date and Revolving Credit
Termination Date shall in all events be the same date.  The Extension Request
must specify the new Letter of Credit Termination Date and Revolving Credit
Termination Date requested by the Borrower and the date as of which date (which
must be at least 30 days after the Extension Request is delivered to the Agent)
the Lenders (including the Issuer) must respond to the Extension Request (the
“Response Date”).  The new Letter of Credit Termination Date shall not be more
than two years after the Letter of Credit Termination Date and Revolving Credit
Termination Date in effect at the time the Extension Request is received,
including the Letter of Credit Termination Date and Revolving Credit Termination
Date as one of the days in the calculation of the days elapsed.  Promptly upon
receipt of an Extension Request, the Agent shall notify each Lender of the
contents thereof and shall request the Issuer and each Lender to approve the
Extension Request.  Each Lender approving the Extension

 

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Request shall deliver its written consent no later than the Response Date.  If
the consent of all of the Lenders in their sole discretion is received by the
Agent, the Letter of Credit Termination Date and Revolving Credit Termination
Date specified in the Extension Request shall become effective on the existing
Letter of Credit Termination Date and Revolving Credit Termination Date and the
Agent shall promptly notify the Borrower and each Lender (including the Issuer)
of the new Revolving Credit Termination Date and Letter of Credit Termination
Date.  Otherwise the Letter of Credit Termination Date and Revolving Credit
Termination Date shall be unchanged.”

 

(y)           Section 6.4(a) of the Credit Agreement is hereby amended by the
deletion of the dates “December 31, 1997” and “March 16, 1998” and the
substitution of the dates “December 31, 2002” and “March 12, 2003” respectively
therefor.

 

(z)            Sections 6.4(b) and (c) of the Credit Agreement are hereby
amended by the deletion of the date “June 30, 1998” wherever it appears and the
substitution of the date “June 30, 2003” therefor.

 

(aa)         Section 6.5(a) of the Credit Agreement is hereby amended by the
deletion of the phrase “1995, 1996 and 1997 Fiscal Years” and the date “June 30,
1998” and the substitution of the phrase “2000, 2001 and 2002 Fiscal Years” and
the date “June 30, 2003” respectively therefor.

 

(bb)         Section 6.5(b) of the Credit Agreement is hereby amended by the
deletion of the date “June 30, 1998” and the substitution of the date “June 30,
2003” therefor.

 

(cc)         Section 6.6 of the Credit Agreement is hereby amended by the
deletion of the date “June 30, 1998” and the substitution of the date “June 30,
2003” therefor.

 

(dd)         Section 6.26 of the Credit Agreement is hereby deleted and
intentionally left blank.

 

(ee)         Article VI of the Credit Agreement is hereby amended by the
addition of the following at the end:

 

““6.29  Reportable Transaction.  The Borrower does not intend to treat the
Revolving Credit Loans and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.60111-4).  In
the event the Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Agent thereof.  The Borrower acknowledges
that one or more of the Lenders may treat the Revolving Credit Loans as part of
a transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, and the Agent and such Lender or Lenders, as applicable, may
file such IRS forms or maintain such lists and other records as they may
determine is required by such Treasury Regulations.”

 

(ff)           The first sentence of Section 7.2 of the Credit Agreement is
hereby amended to state in its entirety as follows:

 

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“The proceeds of the Loans shall be used solely to reimburse drawings under
Letters of Credit.”

 

(gg)         Section 7.21 of the Credit Agreement is hereby deleted and
intentionally left blank.

 

(hh)         Section 7.24 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

“7.24       Financial Covenants.

 

7.24.1      Minimum Consolidated Tangible Net Worth.  The Borrower will at all
times maintain Consolidated Tangible Net Worth of not less than the sum of (a)
$135,000,000, plus (b) 75% of the cumulative positive Consolidated Net Income,
if any, earned from October 1, 2003 to the date of calculation, plus (c) 75% of
the Net Available Proceeds of any equity issuance in excess of $1,000,000
(including any capital contribution to surplus of the Borrower in respect of
which no additional shares are issued) by the Borrower, if any, made on or after
October 1, 2003.

 

7.24.2      Minimum Statutory Surplus.  The Borrower will cause the Significant
Insurance Subsidiaries to maintain an aggregate Statutory Surplus of not less
than (i) $111,000,000 in each Fiscal Quarter ending on or before December 31,
2003, and (ii) at all times thereafter, the sum of (a) $111,000,000, plus (b)
50% of the cumulative positive aggregate Statutory Net Income, if any, earned by
the Significant Insurance Subsidiaries from January 1, 2004 to the date of
calculation, plus (c) 75% of the Net Available Proceeds of any equity issuance
(including any capital contribution to surplus of any Significant Insurance
Subsidiary in respect of which no additional shares are issued) by any
Significant Insurance Subsidiary made on or after October 1, 2003.

 

7.24.3      Leverage Ratio.  The Borrower will not permit the Leverage Ratio to
exceed 0.20 to 1.0 at any time.

 

7.24.4      Minimum Risk-Based Capital.  The Borrower will cause each
Significant Insurance Subsidiary to maintain a ratio of (a) Total Adjusted
Capital (as defined in the Risk-Based Capital Act or in the rules and procedures
prescribed from time to time by the NAIC with respect thereto) to (b) the
Company Action Level RBC (as defined in the Risk-Based Capital Act or in the
rules and procedures prescribed from time to time by the NAIC with respect
thereto) of at least 150%.”

 

(ii)           Section 8.20 of the Credit Agreement is hereby deleted and
intentionally left blank.

 

(jj)           Section 10.4 of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“10.4       Entire Agreement.  The Facility Documents embody the entire
agreement and understanding among the Borrower, the Agent, the Co-Agent and the
Lenders and supersede all prior agreements and understandings among the
Borrower, the Agent, the Co-Agent and the Lenders relating to the subject matter
thereof other than the fee letter

 

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dated September 24, 2003 in favor of Bank One, NA, and Banc One Capital Markets,
Inc. (the “Fee Letter”).

 

(kk)         Section 10.11 of the Credit Agreement is hereby amended by the
addition of the following at the end:

 

“Notwithstanding anything herein to the contrary, confidential information shall
not include, and each party hereto (and each employee, representative or other
agent of any party hereto) may disclose to any and all Persons, without
limitation of any kind, the U.S. federal income tax treatment and U.S. federal
income tax structure of the transaction contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are or have been
provided to such party relating to such tax treatment or tax structure and it is
hereby confirmed that each party hereto has been authorized to make such
disclosures since the commencement of discussion regarding the transactions
contemplated hereby.”

 

(ll)           Section 11.8 of the Credit Agreement is hereby amended to state
in its entirety as follows:

 

“11.8       Agent’s Reimbursement and Indemnification.  The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Credit Commitments (or, if the Aggregate Revolving Credit Commitments
have been terminated, in proportion to their Revolving Credit Commitments
immediately prior to such termination) (a) for any amounts not reimbursed by the
Borrower for which the Agent is entitled to reimbursement by the Borrower under
the Facility Documents, (b) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Facility Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders)
and (c) for any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Facility Documents or any other
document delivered in connection therewith or the transactions contemplated
thereby (including, without limitation, for any such amounts incurred by or
asserted against the Agent in connection with any dispute between the Agent and
any Lender or between two or more of the Lenders), or the enforcement of any of
the terms of the Facility Documents or of any such other documents; provided
that (i) no Lender shall be liable for any of the foregoing to the extent any of
the foregoing is found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Agent and (ii) any indemnification required pursuant to
Section 4.5(g) shall, notwithstanding the provisions of this Section 11.8, be
paid by the relevant Lender in accordance with the provisions thereof.  The
obligations of the Lenders under this Section 11.8 shall survive payment of the
Obligations and termination of this Agreement.”

 

(mm)       Section 11.15 of the Credit Agreement is hereby amended to state in
its entirety as follows:

 

10

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“11.15 Syndication Agent.  The Syndication Agent, Senior Managing Agent,
Managing Agent and Co-Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such.  Without limiting the foregoing, the Syndication Agent, Senior
Managing Agent, Managing Agent and Co-Agent shall not have or be deemed to have
a fiduciary relationship with any Lender.  Each Lender hereby makes the same
acknowledgements with respect to the Syndication Agent, Senior Managing Agent,
Managing Agent and Co-Agent as it makes to the Agent in Section 11.10.”

 

(nn)         The Pricing Schedule shall be deleted in its entirety, and the
Pricing Schedule attached hereto and made apart hereof shall be substituted in
its place.

 

(oo)         Schedule 1 to the Credit Agreement shall be deleted in its
entirety, and Schedule 1 attached hereto and made a part hereof shall be
substituted in its place.

 

2.             Representations and Warranties of the Borrower.  The Borrower
represents and warrants that:

 

(a)           The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action and that
this Amendment is a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as the
enforcement thereof may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally;

 

(b)           Each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the date
hereof as if made on the date hereof, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on
and as of such earlier date;

 

(c)           After giving effect to this Amendment, no Default or Unmatured
Default has occurred and is continuing.

 

3.             Effective Date.  Section 1 of this Amendment shall not become
effective unless and until the Borrower has furnished the following to the Agent
with sufficient copies for the Lenders and the other conditions set forth below
have been satisfied.

 

(a)           Amendment.  A copy of this Amendment, executed by the Borrower,
the Agent and the Lenders.

 

(b)           Good Standing Certificate.  A certificate of good standing for the
Borrower, certified by the appropriate governmental officer in its jurisdiction
of incorporation.

 

(c)           Officer’s Certificate  A certificate of the Secretary or an
Assistant Secretary of the Borrower of its certificate of incorporation, bylaws
and its Board of Directors’ resolutions authorizing the execution and delivery
of this Amendment.

 

11

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(d)           Amendment Fee.  Receipt by the Agent for the benefit of the
Lenders of any amendment fee in the amount provided for under the Fee Letter,
which fee shall be deemed fully earned and non-refundable on the date hereof
(the “Amendment Fee”).

 

(e)           Other.  Such other documents as the Agent, any Lender or their
counsel may have reasonably requested.

 

As an additional condition to the effectiveness of this Amendment, the
outstanding Revolving Credit Loans shall have been paid in full.

 

The date on which the foregoing conditions have been satisfied is the “Effective
Date.”

 

4.             Reference to and Effect Upon the Credit Agreement.

 

(a)           Except as specifically amended above, the Credit Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.

 

(b)           The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document, except as specifically
set forth herein.  Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or
words of similar import shall mean and be a reference to the Credit Agreement as
amended hereby.

 

5.             Costs and Expenses.

 

(a)           The Borrower hereby affirms its obligation under Section 10.7 of
the Credit Agreement to reimburse the Agent for all reasonable costs, internal
charges and out-of-pocket expenses paid or incurred by the Agent in connection
with the preparation, negotiation, execution and delivery of this Amendment,
including but not limited to the reasonable attorneys’ fees and time charges of
attorneys for the Agent with respect thereto.

 

(b)           The Borrower hereby agrees that on the Effective Date, the
Borrower shall pay the Agent for the account of the Arranger, the Agent and the
Lenders the Amendment Fee, which Amendment Fee shall be deemed fully earned and
non-refundable on the date hereof.

 

6.             GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

 

7.             Headings.  Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

 

12

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8.             Counterparts.  This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.

 

[signature pages follow]

 

13

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year first above written.

 

 

 

THE NAVIGATORS GROUP, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

BANK ONE, NA (formerly known as The First
National Bank of Chicago), as Lead Arranger, and
as Administrative Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

BARCLAYS BANK plc, as a Lender and
Syndication Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

LASALLE BANK NATIONAL ASSOCIATION,
as a Lender and Senior Managing Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

Its:

 

 

S-1

--------------------------------------------------------------------------------

 

 

CREDIT SUISSE FIRST BOSTON, acting through
its Cayman Islands Branch, as a Lender and
Managing Agent

 

 

 

By:

 

 

 

 

Its:

 

 

 

 

By:

 

 

 

 

Its:

 

 

 

 

BROWN BROTHERS HARRIMAN & CO., as a
Lender and Co-Agent

 

 

 

 

 

By:

 

 

 

 

Its:

 

 

S-2

--------------------------------------------------------------------------------

 

PRICING SCHEDULE

 

Applicable Margin

 

Level I Status

 

Level II Status

 

Level III
Status

 

Level IV Status

 

Eurodollar Rate

 

1.00

%

1.125

%

1.25

%

1.50

%

 

 

Applicable Fee
Rate

 

Level I Status

 

Level II Status

 

Level III
Status

 

Level IV Status

 

Commitment Fee

 

0.125

%

0.15

%

0.25

%

0.30

%

 

 

 

 

 

 

 

 

 

 

Letter of Credit Participation Fee

 

1.00

%

1.125

%

1.25

%

1.50

%

 

For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:

 

“Level I Status” exists at any date if, on such date, the S&P Rating is A+ or
better.

 

“Level II Status” exists at any date if, on such date, (i) the Borrower has not
qualified for Level I Status and (ii) the S&P Rating is A or better.

 

“Level III Status” exists at any date if, on such date, (i) the Borrower has not
qualified for Level I Status or Level II Status and (ii) the S&P Rating is A- or
better.

 

“Level IV Status” exists at any date if, on such date, the Borrower has not
qualified for Level I Status, Level II Status or Level III Status.

 

“S&P Rating” means, at any time, the Financial Strength rating issued by
Standard and Poor’s Rating Services, a division of The McGraw Hill Companies,
Inc., and then in effect for the Borrower or, if the Borrower does not have a
Financial Strength rating, for each of Navigators and the other Significant
Insurance Subsidiaries.

 

“Status” means Level I Status, Level II Status, Level III Status or Level IV
Status.

 

The Applicable Margin and [Applicable Fee Rate] shall be determined in
accordance with the foregoing table based on the Borrower’s Status as determined
from its then-current S&P Ratings.  The financial strength rating in effect on
any date for the purposes of this Schedule is that in effect at the close of
business on such date.  If at any time the Borrower (or Navigators and the other
Significant Insurance Companies) has no S&P Rating, Level IV Status shall exist.

 

--------------------------------------------------------------------------------

 

SCHEDULE 1

 

COMMITMENTS

 

Lender

 

Revolving Credit Commitment

 

 

 

 

 

Bank One, NA

 

$

20,000,000.00

 

 

 

 

 

Barclays Bank PLC

 

$

20,000,000.00

 

 

 

 

 

LaSalle Bank, NA

 

$

17,500,000.00

 

 

 

 

 

Credit Suisse First Boston

 

$

12,500,000.00

 

 

 

 

 

Brown Brothers Harriman & Co.

 

$

10,000,000.00

 

 

 

 

 

TOTAL:

 

$

80,000,000.00

 

 

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