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


 

















 


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


 


4

















 


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:


 


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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

















 


(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

















 


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

















 


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