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.


 

















 


(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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