Exhibit 10.2

 

AMENDED AND RESTATED LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT AMENDMENT NO. 4

 

This AMENDED AND RESTATED LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT AMENDMENT
NO. 4, dated and effective as of September 16, 2004 (this “Amendment”), is by
and among Arch Reinsurance Ltd., Arch Reinsurance Company and Arch Insurance
Company (the “Obligors”) and Fleet National Bank, as Agent and Issuing Lender
(“Fleet”), and Comerica Bank and Barclays Bank (collectively with Fleet, the
“Lenders”).

 

WHEREAS, the Obligors and the Lenders are parties to an Amended and Restated
Letter of Credit and Reimbursement Agreement dated as of April 17, 2002 and
amended and restated as of August 12, 2003, as further amended by the Amended
and Restated Letter of Credit and Reimbursement Agreement Amendment No. 1 dated
as of August 20, 2003, the Amended and Restated Letter of Credit and
Reimbursement Agreement Amendment No. 2 dated as of August 10, 2004, and the
Amended and Restated Letter of Credit and Reimbursement Agreement Amendment No.
3 dated as of September 9, 2004 (as so amended and restated, the “Reimbursement
Agreement”);

 

WHEREAS, contemporaneously herewith, the Obligors are entering into a Credit
Agreement, dated as of September 16, 2004 (the “JPMorgan Facility”), with Arch
Capital Group Ltd., Arch Capital Group (U.S.) Inc., various Designated
Subsidiary Borrowers party thereto, the Lenders party thereto, JPMorgan Chase
Bank, as Administrative Agent, Bank of America, N.A., as Syndication Agent and
Barclays Bank PLC, HSBC Bank USA, National Association, ING Bank N.V., London
Branch, The Bank of New York and Wachovia Bank, National Association, as
Documentation Agents; and

 

WHEREAS, in order to satisfy certain terms and conditions of the JPMorgan
Facility, the Reimbursement Agreement must be modified, as set forth below. 

 

NOW THEREFORE, the parties hereto agree as follows:

 

Section 1.               Defined Terms.  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Reimbursement
Agreement.

 

Section 2.               Amendment to the Reimbursement Agreement.  Effective as
of the effective date hereof and subject to the satisfaction of the conditions
precedent set forth in Section 4 hereof, the Reimbursement Agreement is hereby
amended as follows:

 

(a)         The definition of “Facility Termination Date” set forth in Section
1.1 of the Reimbursement Agreement is deleted in its entirety and the following
is substituted in lieu thereof:

 

“Facility Termination Date” means September 17, 2004.

 

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(b)         Section 5.1(c) of the Reimbursement Agreement is deleted in its
entirety and the following is substituted in lieu thereof:

 

(c)           Maintenance of Adjusted Collateral Value.  Such Obligor shall at
all times maintain Collateral in the Custodial Account maintained in its name in
an amount such that the Adjusted Collateral Value is not less than the sum of
all amounts then outstanding with respect to the sum of the Letter of Credit
Obligations and Reimbursement Obligations of such Obligor; provided that for
purposes of calculating the sum of all amounts then outstanding with respect to
the sum of the Letter of Credit Obligations and Reimbursement Obligations, such
total shall not include the amount of any outstanding Letter of Credit
Obligations and Reimbursement Obligations that are supported by one or more
back-to-back letters of credit the terms, conditions and issuer of which are
satisfactory to the Issuing Lender.  Each Obligor agrees that if the Adjusted
Collateral Value of the Collateral in the applicable Custodial Account is less
than the sum of the Letter of Credit Obligations and the Reimbursement
Obligations of such Obligor as calculated above, the Agent may, and upon
instruction from the Majority Lenders shall, require such Obligor to pay to the
Custodian the amount of any such deficiency, which amount shall be payable by no
later than 3:00 p.m. (Connecticut time) (i) on the date of notice by the Agent,
if such notice is received before 12:00 p.m. (Connecticut time) or (ii) on the
Business Day immediately following the date of notice by the Agent, if such
notice is received after 12:00 p.m. (Connecticut time), and which payment shall
be deposited by the Custodian into the applicable Custodial Account in the form
of cash or Investments.  At any time, other than after the occurrence and during
the continuation of a Default or an Event of Default, an Obligor may substitute
Collateral to the extent such substitution arises from normal trade activities
within the Custodial Account in accordance with the provisions of Section 1 of
the Security Agreement between the Obligor and the Agent.

 

Section 3.               Release of Collateral.  The Lenders hereby consent, and
direct the Agent, to release on or after the effective date of this Amendment
the security interest and lien under the Security Agreement on so much of the
Collateral granted by each Obligor, in favor of the Agent for the benefit of the
Agent and the ratable benefit of the Lenders, to secure such Obligor’s
obligations under the Reimbursement Agreement and other Fundamental Documents,
as equals the excess of the Adjusted Collateral Value over the sum of all
amounts then outstanding with respect to the Letter of Credit Obligations and
Reimbursement Obligations of such Obligor as calculated pursuant to Section
5.1(c) of the Reimbursement Agreement, as amended by this Amendment.  The Agent
and each Obligor agree to work together in good faith to determine the exact
Collateral to be released and the mechanisms for transferring such Collateral to
such Obligor or its appointed designee.

 

Section 4.               Conditions of Effectiveness.  This Amendment shall
become effective when, and only when (i) the Lenders shall have received a
counterpart of this Amendment executed by each of the parties hereto and (ii)
the JPMorgan Facility has become effective.  In addition, all corporate and
legal proceedings and all instruments and agreements in connection with the
transactions contemplated by this Amendment shall be satisfactory in form and
substance to the Lenders and the Lenders shall have received any and all other
information and documents with respect to each Obligor which they may reasonably
request.

 

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Section 5.               Representations and Warranties of the Obligors.  Each
Obligor for itself represents as follows:

 

(a)           The execution, delivery and performance by such Obligor of this
Amendment has been duly authorized by all necessary corporate action and does
not and will not (i) require any consent or approval of such Obligor’s
shareholders; (ii) violate any provisions of the Constituent Documents of such
Obligor; (iii) violate any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to and binding upon such Obligor, except where such violation or
failure to file would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) of such Obligor or the ability
of such Obligor to perform its obligations with respect to this Amendment or the
Reimbursement Agreement, as amended; or (iv) result in a breach of, cause a lien
to arise under, or constitute a default or require any consent under, any note,
indenture or loan or agreement or any other agreement of such Obligor except
where such breach, default or failure to obtain consent or approval would not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) of such Obligor or the ability of such Obligor to
perform its obligations with respect to this Amendment or the Reimbursement
Agreement, as amended.

 

(b)           This Amendment and the Reimbursement Agreement, as amended hereby,
constitute the legal, valid and binding obligations of such Obligor, enforceable
against such Obligor in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and by general
principles of equity.

 

(c)           The representations and warranties contained in Article IV of the
Reimbursement Agreement (as amended by this Amendment) are true, correct and
complete in all material respects on and as of the date hereof as though made on
and as of such date.

 

(d)           No Default or Event of Default as described in Article VI of the
Reimbursement Agreement has occurred and is continuing or will result from the
signing of this Amendment or the transactions contemplated hereby.

 

(e)           There has been no material adverse change in the condition
(financial or otherwise) of such Obligor or the ability of each Obligor to
perform its obligations with respect to the Reimbursement Agreement as amended
hereby since the date of the last financial statements furnished to the Lenders.

 

Section 6.               Reference to and Effect on the Reimbursement Agreement.

 

(a)           Upon the effectiveness of this Amendment, each reference in the
Reimbursement Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or
words of like import shall mean and be a reference to the Reimbursement
Agreement as amended hereby.

 

(b)           Except as specifically amended above, the Reimbursement Agreement
shall remain in full force and effect and is hereby ratified and confirmed.

 

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(c)           Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Lenders under the Reimbursement Agreement, nor constitute
a waiver of any provision of the Reimbursement Agreement.

 

Section 7.               Costs, Expenses and Taxes.  The Obligors agree, jointly
and severally, to pay on demand all reasonable costs and expenses of the Lenders
in connection with the preparation, execution and delivery of this Amendment and
any other instruments and documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lenders with respect thereto and with respect to advising the Lenders as
to its rights and responsibilities hereunder and thereunder. 

 

Section 8.               Execution in Counterparts.  This Amendment may be
executed in multiple counterparts, each of which shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same instrument.

 

Section 9.               Governing Law.  This Amendment, and the rights and
obligations of the parties hereunder, shall be governed by, and construed in
accordance with the laws of the State of Connecticut without giving effect to
the choice of law or conflicts of the law principles thereof.

 

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
and delivered by their respective officers, as an instrument under seal, as of
the date first above written.

 

 

ARCH REINSURANCE LTD.

 

 

 

 

 

By:

/s/ Janine Trench

 

 

 

Name:  Janine Trench

 

 

Title:  Controller

 

 

 

 

 

ARCH REINSURANCE COMPANY

 

 

 

 

 

By:

/s/ Michael J. O’Brien, Jr.

 

 

 

Name:  Michael J. O’Brien, Jr.

 

 

Title:  Assistant Controller

 

 

 

ARCH INSURANCE COMPANY

 

 

 

 

 

By:

/s/ Martin J. Nilsen

 

 

 

Name:  Martin J. Nilsen

 

 

Title:  Senior Vice President, Secretary & General Counsel

 

 

 

 

 

FLEET NATIONAL BANK, as Agent and Issuing Lender

 

 

 

 

 

By:

/s/ Debra Basler

 

 

 

Name:  Debra Basler

 

 

Title:  Principal

 

 

 

 

 

COMERICA BANK, as Lender

 

 

 

 

 

By:

/s/ Dru Steinly

 

 

 

Name:  Dru Steinly

 

 

Title:  Lender

 

 

 

 

 

BARCLAYS BANK, as Lender

 

 

 

 

 

By:

/s/ Richard Askey

 

 

 

Name:  Richard Askey

 

 

Title:  Director

 

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