**Exhibit 10-21**

 

**AMENDMENTNO. 4 TO AMENDED AND RESTATED CREDIT AGREEMENT**

 

This Amendment (this “Amendment”) is enteredinto as of October 18, 2002, by and among The Navigators Group, Inc., aDelaware corporation (the “Borrower”), Bank One, NA (formerly known asThe First National Bank of Chicago), individually and as agent (“Agent”),and the other financial institutions signatory hereto.

 

**RECITALS**

 

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

 

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

 

NOW, THEREFORE, inconsideration of the mutual execution hereof and other good and valuableconsideration, the parties hereto agree as follows:

 

# 1.             Amendmentsto Credit Agreement.  Upon the“Effective Date” (as defined below), the Credit Agreement shall be amended asfollows:

 

## (a)           ArticleI of the Credit Agreement shall be amended by deleting the definition of“Deferred Policy Acquisition Costs” in its entirety.

 

## (b)           Thedefinition of “Consolidated Total Intangible Assets” in Article I of the CreditAgreement shall be amended and restated in its entirety to read as follows:

 

“ConsolidatedTotal Intangible Assets” means, at any time, the total intangible assets of theBorrower and its Consolidated Subsidiaries calculated on a consolidated basisas of such time including, but not limited to, goodwill, patents, trademarks,tradenames, copyrights and franchises and excluding deferred policy acquisitioncosts.

 

## (c)           Thedefinition of “Consolidated Tangible Net Worth” in Article I of the CreditAgreement shall be amended and restated in its entirety to read as follows:

 

“ConsolidatedTangible Net Worth” means the excess of (a) Consolidated Total Tangible Assetsover (b) Consolidated Total Liabilities, excluding,

 

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however,for the purposes of Section 7.24.1, the effect of any unrealizedgain or loss reported under Statement of Financial Accounting Standards No.115.

 

## (d)           Thedefinition of “Letter of Credit Termination Date” in Article I of theCredit Agreement shall be amended and restated in its entirety to read asfollows:

 

“Letterof Credit Termination Date” means November 19, 2003 or any later date asmay be specified as the Letter of Credit Termination Date in accordance with Section 3.10or any earlier date on which the Letter of Credit Commitment is reduced to zeroor otherwise terminated pursuant to the terms thereof.

 

## (e)           Section2.7(a) of the Credit Agreement shall be amended and restated in its entirety toread as follows:

 

## (a) The Aggregate Revolving Credit Commitment shall beautomatically and permanently reduced by the following amounts on the followingdates (such reductions to take place regardless of any prior reductions of theAggregate Revolving Credit Commitment pursuant to Section 2.7(b)but to be reduced in order of maturity by the amount of any prior reductions ofthe Aggregate Revolving Credit Commitment pursuant to Section 2.4(b)):

 
| **Date**                           |   | **Reduction  Amount** |      |
|------------------------------------|--------|-----------------------|-----------|
| April 1, 2003                      |   | $                     | 1,750,000 |   |
| July 1, 2003                       |   | $                     | 1,750,000 |   |
| October 1, 2003                    |   | $                     | 2,000,000 |   |
| January 1, 2004                    |   | $                     | 2,000,000 |   |
| April 1, 2004                      |   | $                     | 2,250,000 |   |
| July 1, 2004                       |   | $                     | 2,250,000 |   |
| Revolving Credit  Termination Date |   | $                     | 2,500,000 |   |

 

## (f)            Section7.15 of the Credit Agreement shall be amended and restated in its entirety toread as follows:

 

7.15.        ContingentObligations.  The Borrower will not,nor will it permit any Subsidiary to, make or suffer to exist any ContingentObligation (including, without limitation, any Contingent Obligation withrespect to the obligations of a Subsidiary), except (a) by endorsement ofinstruments for deposit or collection in the ordinary course of business, (b)Contingent Obligations in respect of Letters of Credit; provided, however,that the Borrower may guarantee (i) the obligations of any Person that isits or its Subsidiary’s employee so long as the aggregate amount of all suchguaranteed obligations, taken together with the aggregate amount of any and allloans to such Persons by the Borrower in accordance with Section 7.14outstanding at any time do not in the aggregate exceed $250,000, (ii) theobligations of any Subsidiary over the initial contracted lease term underleases of Property entered into in the ordinary course of business in anaggregate

 

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amount not to exceed $5,000,000, (iii) theobligations of any Subsidiary under office space leases in existence on October18, 2002 and replacements thereof that are on substantially similar terms andconditions as the lease being replaced, and (iv) Contingent Obligations inrespect of letters of credit issued by Munichener RuckversicherungAktiengesellschaft (d/b/a Munich) in an aggregate amount not to exceed£10,625,000.

 

## (g)           Section7.24.1 of the Credit Agreement shall be amended and restated in its entirety toread as follows:

 

### 7.24.1      MinimumConsolidated Tangible Net Worth.  The Borrower will at all times maintainConsolidated Tangible Net Worth of not less than the sum of(a) $128,000,000, plus (b) 75% of the cumulative positiveConsolidated Net Income, if any, earned from October 1, 2002 to the date ofcalculation, plus (c) 75% of the Net Available Proceeds of anyequity issuance in excess of $1,000,000 (including any capital contribution tosurplus of the Borrower in respect of which no additional shares are issued),if any, made on or after October 1, 2002 by the Borrower after the ClosingDate.

 

## (h)           Section7.24.2 of the Credit Agreement shall be amended and restated in its entirety toread as follows:

 

### 7.24.2      MinimumStatutory Surplus. The Borrower will cause the Significant Insurance Subsidiaries tomaintain an aggregate Statutory Surplus of not less than (i) $110,272,875in each Fiscal Quarter ending on or before December 31, 2003, and(ii) at all times thereafter, the sum of (a) $110,272,875, plus(b) 50% of the cumulative positive aggregate Statutory Net Income, if any,earned by the Significant Insurance Subsidiaries from January 1, 2004 tothe date of calculation, plus (c) 75% of the Net Available Proceedsof any equity issuance (including any capital contribution to surplus of anySignificant Insurance Subsidiary in respect of which no additional shares areissued) by any Significant Insurance Subsidiary after the Closing Date.

 

## (i)            ThePricing Schedule shall be deleted in its entirety, and the Pricing Scheduleattached hereto and made a part hereof shall be substituted in its place.

 

## (j)            ScheduleI to the Credit Agreement shall be deleted in its entirety, and Schedule Iattached hereto and made a part hereof shall be substituted in its place.

 

# 2.             Representationsand Warranties of the Borrower.  TheBorrower represents and warrants that:

 

## (a)           The execution, deliveryand performance by the Borrower of this Amendment have been duly authorized byall necessary corporate action and that this Amendment is a legal, valid andbinding obligation of the Borrower enforceable against the Borrower inaccordance with its terms, except as the enforcement thereof may be subject to  the effect of any applicable

 

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bankruptcy, insolvency, reorganization, moratorium or similar lawaffecting creditors’ rights generally;

 

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

 

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

 

# 3.             Effective Date.  Section 1 of this Amendment shall notbecome effective unless and until the Borrower has furnished the following tothe Agent with sufficient copies for the Lenders and the other conditions setforth below have been satisfied:

 

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

 

## (b)           GoodStanding Certificate.  A certificateof good standing for the Borrower, certified by the appropriate governmentalofficer in its jurisdiction of incorporation.

 

## (c)           Officer’sCertificate.  A certificate, signedby an Authorized Officer of the Borrower, stating that:  (i) on the date hereof no Default orUnmatured Default has occurred and is continuing; and (ii) each of therepresentations and warranties set forth in Article VI of the CreditAgreement is true and correct on and as of the Effective Date and (iii) exceptas set forth therein, no amendments or modifications have been made to theBorrower’s articles of incorporation or by-laws since December 21, 1998.

 

## (d)           AmendmentFee.  Receipt by the Agent for thebenefit of the Lenders of an amendment fee in an amount equal to fifteen (15)basis points on each such Lender’s Revolving Credit Commitment and Letter ofCredit Participation Amount on the date hereof after giving effect to thisAmendment, which fee shall be deemed fully earned and non-refundable on the datehereof (the “Amendment Fee”).

 

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

 

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

 

# 4.             Referenceto and Effect Upon the Credit Agreement.

 

## (a)           Except as specificallyamended above, the Credit Agreement and the other Loan Documents shall remainin full force and effect and are hereby ratified and confirmed.

 

## (b)           The execution, deliveryand 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

 

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## or any Loan Document, nor constitute a waiver of anyprovision of the Credit Agreement or any Loan Document, except as specificallyset forth herein.  Upon theeffectiveness of this Amendment, each reference in the Credit Agreement to“this Agreement,” “hereunder,” “hereof,” “herein” or words of similar importshall mean and be a reference to the Credit Agreement as amended hereby.

 

# 5.             Costsand Expenses.

 

## (a)           The Borrower herebyaffirms its obligation under Section 10.7 of the Credit Agreement to reimbursethe Agent for all reasonable costs, internal charges and out-of-pocket expensespaid or incurred by the Agent in connection with the preparation, negotiation,execution and delivery of this Amendment, including but not limited to theattorneys’ fees and time charges of attorneys for the Agent with respectthereto.

 

## (b)           The Borrower herebyagrees that on the Effective Date, the Borrower shall pay the Arranger, theAgent and the Lenders the Amendment Fee, which Amendment Fee shall be deemedfully earned and non-refundable on the date hereof.

 

# 6.             GOVERNINGLAW.  THIS AMENDMENT SHALL BE GOVERNEDBY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTSOF LAWS PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWSAPPLICABLE TO NATIONAL BANKS.

 

# 7.             Headings.  Section headings in this Amendment areincluded herein for convenience of reference only and shall not constitute apart of this Amendment for any other purposes.

 

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

 

[signature pagesfollow]

 

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

 
|   | THE NAVIGATORS  GROUP, INC.                                                                     |
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|   | BANK ONE, NA  (formerly known as The First National Bank of Chicago), as a Lender and as  Agent |
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|   | BROWN BROTHERS  HARRIMAN & CO., as a Lender and as Co-Agent                                 |
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|   | CREDIT LYONNAIS  NEW YORK BRANCH, as a Lender                                                   |
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|   | Its:                                                                                            |   |

 

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|   | FLEET NATIONAL  BANK, as a Lender               |
|--------|-------------------------------------------------|
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|   | By:                                             |   |
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|   | Its:                                            |   |
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|   | BARCLAYS BANK  plc, as a Lender                 |
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|   | By:                                             |   |
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|   | Its:                                            |   |
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|   | LASALLE BANK  NATIONAL ASSOCIATION, as a Lender |
|   |                                            |
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|   | By:                                             |   |
|   |                                            |   |
|   | Its:                                            |   |

 

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PRICING SCHEDULE

 
| **APPLICABLE  MARGIN** |   | **LEVEL I  STATUS** |   | **LEVEL II  STATUS** |   | **LEVEL III  STATUS** |   | **LEVEL IV  STATUS** |   |
|------------------------|--------|---------------------|--------|----------------------|--------|-----------------------|--------|----------------------|--------|
| *Eurodollar Rate*      |   | *0.875*             | *%*    | *1.000*              | *%*    | *1.250*               | *%*    | *1.500*              | *%*    |

 
| **APPLICABLE FEE  RATE**             |   | **LEVEL I  STATUS** |   | **LEVEL II  STATUS** |   | **LEVEL III  STATUS** |   | **LEVEL IV  STATUS** |   |
|--------------------------------------|--------|---------------------|--------|----------------------|--------|-----------------------|--------|----------------------|--------|
| *Commitment Fee*                     |   | *0.125*             | *%*    | *0.150*              | *%*    | *0.250*               | *%*    | *0.300*              | *%*    |
| *Letter of Credit Participation Fee* |   | *0.875*             | *%*    | *1.000*              | *%*    | *1.250*               | *%*    | *1.500*              | *%*    |

 

For the purposes of thisSchedule, the following terms have the following meanings, subject to the finalparagraph of this Schedule:

 

“Level I Status” existsat any date if, on such date, the Borrower has an S&P Debt Rating of A- orbetter or, if the Borrower does not have an S&P Debt Rating, each ofNavigators and each other Significant Insurance Subsidiary of the Borrowershall have an S&P Financial Strength Rating of A+ or better.

 

“Level II Status” existsat any date if, on such date, the Borrower has not qualified for Level IStatus, and the Borrower has an S&P Debt Rating of BBB or better or, if theBorrower does not have an S&P Debt Rating, each of Navigators and eachother Significant Insurance Subsidiary of the Borrower shall have an S&PFinancial Strength Rating of A or better.

 

“Level III Status” existsat any date if, on such date, the Borrower has not qualified for Level IStatus or Level II Status, and the Borrower has an S&P Debt Rating ofBBB- or better or, if the Borrower does not have an S&P Debt Rating, eachof Navigators and each other Significant Insurance Subsidiary of the Borrowershall have an S&P Financial Strength Rating of A- or better.

 

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

 

“S&P” means Standardand Poor’s Rating Services, a division of The McGraw Hill Companies, Inc.

 

“S&P Debt Rating”means, at any time, the rating issued by S&P with respect to the Borrower’ssenior unsecured and unguaranteed long-term debt.

 

“S&P FinancialStrength Rating” means, at any time, the rating issued by S&P with respectto the financial strength of Navigators and each other Significant InsuranceSubsidiary of the Borrower.

 

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

 

The Applicable Margin,the Applicable Commitment Fee Rate and the Applicable Letter of CreditParticipation Fee Rate shall be determined in accordance with the foregoing tablebased on the Borrower’s Status as determined from its then-current S&P DebtRating or, if the Borrower does not have an S&P Debt Rating, thethen-current S&P Financial Strength Rating of Navigators and each otherSignificant Insurance Subsidiary of the Borrower.  The credit rating in effect on any date for the purposes of thisSchedule is that in effect at the close of business on such date.  If at any time the Borrower has no S&PDebt Rating and no Significant Insurance Subsidiary of the Borrower has anS&P Financial Strength Rating, Level IV Status shall exist.

 

Notwithstanding anythingto the contrary contained in this Pricing Schedule, until the later of(a) October 1, 2003 and (b) the date on which the aggregate StatutorySurplus of all Significant Insurance Subsidiaries, as reflected in the mostrecent annual or quarterly financial statements of the Borrower deliveredpursuant to Section 7.1(a) or (b), is equal to or greaterthan $120,000,000, Level III Status (or Level IV Status, if applicable) shallexist.

 

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Schedule I

 

COMMITMENTS

 
| **Lender**                        |   | **Revolving Credit  Commitment** |         | **Letter of Credit  Commitment** |   |
|-----------------------------------|--------|----------------------------------|--------------|----------------------------------|--------|
|                              |   |                             |         |                             |   |
| Bank One, NA                      |   | $                                | 3,326,470.66 |                             | $      | 15,117,647.06 |   |
| Brown Brothers Harriman & Co. |   | $                                | 1,705,882.33 |                             | $      | 6,470,588.24 |   |
| Credit Lyonnais New York Branch   |   | $                                | 3,070,588.21 |                             | $      | 0 |   |
| Fleet National Bank               |   | $                                | 3,070,588.21 |                             | $      | 6,647,058.82 |   |
| Barclays Bank plc                 |   | $                                | 3,326,470.59 |                             | $      | 15,117,647.06 |   |
| LaSalle Bank National Association |   | $                                | 0            |                             | $      | 11,647,058.82 |   |
|                              |   |                             |         |                             |   |
| Total Commitments:                |   | $                                | 14,500,000   |                             | $      | 55,000,000 |   |

 

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