-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3bHX6XvRTmxZpZ2XJ/AOQycD9rybJyas2uv43WmWAcCzh6EEeBQwZSSKU5y/du4 9nSaElxX4lToquM55xq9fg== 0000950131-02-000167.txt : 20020413 0000950131-02-000167.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950131-02-000167 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020115 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUTUAL RISK MANAGEMENT LTD CENTRAL INDEX KEY: 0000826918 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10760 FILM NUMBER: 2511766 BUSINESS ADDRESS: STREET 1: 44 CHURCH ST STREET 2: BERMUDA CITY: HAMILTON HM 12 BERMU STATE: D0 BUSINESS PHONE: 4412955688 MAIL ADDRESS: STREET 1: PO BOX 2064 STREET 2: BERMUDA CITY: HAMILTON HM HX STATE: D0 ZIP: 1000000000 8-K 1 d8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 15, 2002 Mutual Risk Management Ltd. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Bermuda 1-10760 Not Applicable ------------------------ -------------- ----------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 44 Church Street Hamilton HM 12 Bermuda (Address, including zip code, of Registrant's Principal Executive Offices) Registrant's telephone number, including area code: 441-295-5688 Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. Effective January 15, 2002, the Registrant entered into: . a Waiver and Amendment of its Convertible Exchangeable Debenture Due 2006 (the "Debenture") with Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., and XL Insurance (Bermuda) Ltd, which governs all of the holders of the Registrant's Debentures; . a Waiver and Amendment to Credit Agreement with Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under the Registrant's $180 million bank facility and Bank of America, N.A., as the Administrative Agent for the Lenders; and . a Waiver with Mutual Finance Ltd., Mutual Indemnity Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda) Ltd., Mutual Indemnity (Dublin) Ltd., Mutual Indemnity (Barbados) Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under the Registrant's Letter of Credit and Reimbursement Agreement and Bank of America, N.A., as the Administrative Agent for the Lenders, each with regard to the Registrant's default as of December 31, 2001 of a covenant regarding required minimum statutory combined ratio, among other matters. In conjunction with the waivers, two of the waivers also amended their respective underlying, governing agreements, including an amendment to increase the required minimum shareholders' equity and an amendment to increase the minimum required risk based capital ratio, both effective April 30, 2002. This description is a summary of the waivers and amendments. For the complete text of the waivers and amendments, see Exhibits 10.1, 10.2 and 10.3. On January 15, 2002, the Registrant also announced that it has appointed Mr. James C. Kelly as interim Chief Financial Officer of the Registrant. As previously announced, the Registrant's former CFO, Mr. Andrew Cook, has accepted a position as CFO of AXIS Specialty Limited, a recently formed Bermuda insurer. Mr. Kelly served as the Registrant's CFO for ten years until the end of 2000. The Registrant is in the process of recruiting a permanent Chief Financial Officer. Mr. Angus H. Ayliffe, the Registrant's Controller, was designated as the Registrant's Principal Accounting Officer. Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Document Description - ----------- -------------------- 3.1 Certificate of Designations of the Registrant's Series A Preferred Shares 10.1 Waiver and Amendment, dated as of January 11, 2002, to Registrant's Convertible Exchangeable Debenture Due 2006 among the Registrant, Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., and XL Insurance (Bermuda) Ltd. 10.2 Waiver and Amendment to Credit Agreement, dated as of January 14, 2002, among the Registrant, Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under its $180 million bank facility and Bank of America, N.A., as the Administrative Agent for the Lenders 10.3 Waiver, dated as of January 14, 2002, among the Registrant, Mutual Finance Ltd., Mutual Indemnity Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda) Ltd., Mutual Indemnity (Dublin) Ltd., Mutual Indemnity (Barbados) Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under its Letter of Credit and Reimbursement Agreement and Bank of America, N.A., as the Administrative Agent for the Lenders SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: January 17, 2002 By: /s/ Angus H. Ayliffe --------------------------------------- Name: Angus H. Ayliffe Title: Controller (principal accounting officer) EXHIBIT INDEX Exhibit No. Document Description - ----------- -------------------- 3.1 Certificate of Designations of the Registrant's Series A Preferred Shares 10.1 Waiver and Amendment, dated as of January 11, 2002, to Registrant's Convertible Exchangeable Debenture Due 2006 among the Registrant, Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., and XL Insurance (Bermuda) Ltd. 10.2 Waiver and Amendment to Credit Agreement, dated as of January 14, 2002, among the Registrant, Mutual Group, Ltd., MGL Investments Ltd., Legion Financial Corporation, Mutual Risk Management (Holdings) Ltd., MRM Securities Ltd., Mutual Finance Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under its $180 million bank facility and Bank of America, N.A., as the Administrative Agent for the Lenders 10.3 Waiver, dated as of January 14, 2002, among the Registrant, Mutual Finance Ltd., Mutual Indemnity Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda) Ltd., Mutual Indemnity (Dublin) Ltd., Mutual Indemnity (Barbados) Ltd., MRM Services Ltd., MSL (US) Ltd., MRM Services (Barbados) Ltd., the Lenders under its Letter of Credit and Reimbursement Agreement and Bank of America, N.A., as the Administrative Agent for the Lenders EX-3.1 3 dex31.txt CERTIFICATE OF DESIGNATIONS Exhibit 3.1 MUTUAL RISK MANAGEMENT LTD. Certificate of Designations of Series A Preferred Shares due 2006 Mutual Risk Management Ltd., a company organized under the laws of Bermuda (the "Company"), certifies that pursuant to the authority contained in ------- its Memorandum of Association and its Bye-Laws, and in accordance with Bermuda law, the Board of Directors of the Company at meetings duly called and held on April 26, 2001, duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof: RESOLVED, that pursuant to the authority vested in the Board of Directors by the Company's Memorandum of Association and Bye-Laws, the Board of Directors does hereby designate, create, authorize and provide for the issue of a series of preferred shares having the following designation, voting rights, preferences, qualifications, privileges, limitations, options, conversion rights, redemption features, restrictions and other special or relative rights: 1. Number and Description. (a) (i) The Company shall have a class of ---------------------- preferred shares, which shall be designated as its Series A Preferred Shares due 2006 (the "Series A Preferred Shares"), par value U.S.$.01 per share, with ------------------------- 21,000,000 shares initially authorized and such number of additional shares as are authorized from time to time by resolution of the Board of Directors of the Company and as set forth in the Bye-Laws of the Company. (ii) All Series A Preferred Shares redeemed, purchased, exchanged, converted or otherwise acquired by the Company shall be retired and canceled and, upon the taking of any action required by applicable law, shall be restored to the status of authorized but unissued preferred shares of the Company, without designation as to series, and may thereafter be reissued. (b) All Series A Preferred Shares shall be denominated in United States currency, and all payments and distribution thereon or with respect thereof shall be made in United States currency. All references herein to "$" or "dollars" refer to United States currency. 2. Issuance. The Company may issue Series A Preferred Shares from -------- time to time as may be determined by the Board of Directors (or any committee thereof) of the Company; provided, however, that Series A Preferred Shares may -------- ------- only be issued as part of a -2- unit consisting of Series A Preferred Shares and 9 3/8% Convertible Exchangeable Debentures due 2006 of the Company (the "Convertible Exchangeable Debentures"). ----------------------------------- 3. Registered Form; Liquidation Preference. Certificates of Series A --------------------------------------- Preferred Shares shall be issuable only in registered form and only with a liquidation preference of U.S. $.01 per share. 4. Dividend Provisions. The Company is not required to pay any ------------------- dividends on the Series A Preferred Shares. 5. Voting Rights. (a) Subject to Sections 5(b), 5(c) and 6 below, at ------------- all meetings of the shareholders of the Company and in the case of any actions of shareholders in lieu of a meeting, each holder of Series A Preferred Shares shall have that number of votes on all matters submitted to the shareholders that is equal to the number of whole shares of the Company's common shares (the "Common Shares") into which such holder's Convertible Exchangeable Debentures to ------------- which the Series A Preferred Shares is attached are then convertible, as provided in Section 4 of the Debentures, at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of such shareholders is effected. The holders of the Series A Preferred Shares shall be entitled to notice of any shareholders' meeting in accordance with the Bye-Laws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights shall be rounded to the nearest whole number (with one-half being rounded upward). Except as may be otherwise provided in this Certificate of Designations or by agreement, the holders of the Common Shares and the holders of the Series A Preferred Shares shall vote together as a single class on all actions to be taken by the shareholders of the Company. (b) Until such time as the Form A approvals relating to the Transactions shall have been received by the Company, the total voting rights of the Series A Preferred Shares held by any holder shall be limited to the Maximum Form A Approval Voting Rights Percentage. (c) Until such time as the approval of the shareholders of the Company relating to the Transactions shall have been received by the Company, the total voting rights of the Series A Preferred Shares held by any holder shall be limited to the Maximum Shareholders Approval Voting Rights Percentage. "Maximum Form A Approval Voting Rights Percentage" means, with respect ------------------------------------------------ to any holder, a percentage of the total voting power of the Company equal to (A) the product of (i) 9.9% and (ii) a fraction, the numerator of which is the number of Series A Preferred Shares held by such holder and the denominator of which is the sum of (x) the aggregate number of issued and outstanding Series A Preferred Shares held by such holder, (y) the number of -3- Common Shares of the Company issued to such holder as a result of conversion of the Convertible Exchangeable Debentures and (z) in the case of Series A Preferred Shares held by a holder that holds Warrants, the number of Common Shares of the Company issued or issuable to such holder upon exercise of such Warrants minus (B) the percentage of the total voting power of the Company ----- represented by the securities of the Company (other than the Transaction Securities) then held by such holder. "Maximum Shareholders Approval Voting Rights Percentage" means, with ------------------------------------------------------ respect to any holder, a percentage of the total voting power of the Company equal to the product of (i) 19.9% and (ii) a fraction, the numerator of which is the number of Series A Preferred Shares held by such holder and the denominator of which is the sum of (x) the aggregate number of issued and outstanding Series A Preferred Shares, (y) the number of Common Shares of the Company issued as a result of conversion of the Convertible Exchangeable Debentures and (z) the number of Common Shares of the Company issued or issuable upon exercise of the Warrants. "Transaction Securities" means, collectively, the Convertible ---------------------- Exchangeable Debentures, the Series A Preferred Shares, the Common Shares of the Company issued or issuable upon conversion of the Convertible Exchangeable Debentures, the Warrants and the Common Shares of the Company issued or issuable upon exercise of the Warrants. "Warrants" means the warrants issued by the Company in connection with -------- the issuance of Convertible Exchangeable Debentures. (d) So long as Series A Preferred Shares are outstanding, the Company shall not without first obtaining the approval of the holders of at least a majority of the then outstanding Series A Preferred Shares alter or change the rights, preferences or privileges of the Series A Preferred Shares so as to affect adversely the holders thereof. (e) Any holder of Series A Preferred Shares may irrevocably appoint a proxy and in such case (i) such proxy shall be irrevocable in accordance with the terms of the instrument of appointment, (ii) the holder of such proxy shall be the only person entitled to vote the relevant shares at any meeting at which such holder is present and (iii) the Company shall be obliged to recognize the holder of such proxy until such time as such holder shall notify the Company in writing that such proxy is no longer in force. 6. Redemption. (a) Immediately upon the conversion, exchange, ---------- redemption or other repayment or retirement of Debentures to which Series A Preferred Shares are attached, such Series A Preferred Shares (but only such shares) shall automatically be redeemed and shall lose all rights as to voting, liquidation preference or otherwise without any further action by the holders of such shares and whether or not the certificates representing -4- such shares are surrendered to the Company or its transfer agent, and thereafter such Series A Preferred Shares (but only such shares) shall have no attributes whatsoever. (b) Upon the conversion, exchange, redemption or other repayment or retirement of Debentures to which Series A Preferred Shares are attached, the holders of such Series A Preferred Shares shall, concurrently with the surrender of Debentures, surrender the certificates representing such Series A Preferred Shares at the office of the Company or of its transfer agent. (c) The Series A Preferred Shares shall not be redeemable at the option of the Company at any time. 7. No Impairment. The Company will not, by amendment of this ------------- Certificate of Designations or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company. Transfer Restrictions. (a) The Series A Preferred Shares shall only be --------------------- transferred or assigned as part of a unit and may not be transferred or assigned separate from an amount of Convertible Exchangeable Debentures representing the same percentage of the total principal amount of outstanding Convertible Exchangeable Debentures that the number of Series A Preferred Shares proposed to be transferred or assigned represents of the total number of outstanding Series A Preferred Shares. (b) The Series A Preferred Shares shall bear the following legends: "THE PREFERRED SHARES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS, CONSISTING OF CONVERTIBLE EXCHANGEABLE DEBENTURES DUE 2006 (THE "DEBENTURES") OF MUTUAL RISK MANAGEMENT LTD. ("MRM") AND SERIES A PREFERRED SHARES OF MRM. THE SERIES A PREFERRED SHARES OF MRM EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, AND MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, DEBENTURES REPRESENTING THE SAME PERCENTAGE OF THE TOTAL PRINCIPAL AMOUNT OF OUTSTANDING DEBENTURES THAT THE NUMBER OF SERIES A PREFERRED SHARES PROPOSED TO BE TRANSFERRED OR ASSIGNED REPRESENTS OF THE -5- TOTAL NUMBER OF OUTSTANDING SERIES A PREFERRED SHARES. THE PREFERRED SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS." 8. Bye-Laws. This Certificate of Designations shall be attached to -------- the Bye-Laws of the Company and shall become incorporated in such Bye-Laws. EX-10.1 4 dex101.txt WAIVER AND AMENDMENT DATED 1/11/2002 Exhibit 10.1 WAIVER AND AMENDMENT TO MUTUAL RISK MANAGEMENT LTD. CONVERTIBLE EXCHANGEABLE DEBENTURE DUE 2006 THIS WAIVER AND AMENDMENT TO MUTUAL RISK MANAGEMENT LTD. CONVERTIBLE EXCHANGEABLE DEBENTURE DUE 2006 (this "Waiver and Amendment") is entered into as of January 11, 2002, among MUTUAL RISK MANAGEMENT LTD., a company incorporated under the laws of Bermuda (the "Issuer" or "Mutual Risk"), MUTUAL GROUP, LTD., a Delaware corporation ("Mutual Group"), MGL INVESTMENTS LTD., a Delaware corporation ("MGL Investments"), LEGION FINANCIAL CORPORATION, a Missouri corporation ("Legion"), MUTUAL RISK MANAGEMENT (HOLDINGS) LTD., a company incorporated under the laws of Bermuda ("MRM Holdings"), MRM SECURITIES LTD., a company incorporated under the laws of Bermuda ("MRM Securities"), MUTUAL FINANCE LTD., a company incorporated under the laws of Bermuda ("MRM Finance" and, together with Mutual Group, MGL Investments, Legion, MRM Holdings and MRM Securities, the "Guarantors"), and XL INSURANCE (Bermuda) LTD or its permitted assigns, transferees and successors (each, a "Holder") as provided in the Mutual Risk Management Ltd. Convertible Exchangeable Debenture Due 2006 (as heretofore modified, amended or supplemented, the "Debenture"). RECITALS A. Unless otherwise defined herein, defined terms used herein shall have the meanings given such terms in the Debenture. B. The Issuer has advised the Holder that an Event of Default (the "Subject Event of Default") has occurred as a result of the failure of Issuer to observe and comply with Section 7(l) of the Debenture as of and for the twelve month period ended December 31, 2001, and the Issuer has requested that the Holder waive the Subject Event of Default. Mutual Risk has also advised the Holder that an Event of Default (the "Possible Event of Default") may occur as a result of the possible failure of Issuer to observe and comply with Section 7(r) of the Debenture as of December 31, 2001, and the Issuer has requested that the Holder waive the Possible Event of Default if it occurs. The Issuer and the Guarantors have also requested that the Debenture be amended in certain respects. C. The Holder has agreed to waive the Subject Event of Default pursuant to Section 8(b) of the Debenture and the Possible Event of Default and to amend the Debenture in certain respects, in each case upon and subject to the terms and conditions set forth herein. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Issuer and the Holder agree as follows: 1. Waivers. The Holder hereby waives the Subject Event of Default solely ------- as of and for the twelve-month period ended December 31, 2001 and agrees not to exercise any rights or remedies solely as the result of the occurrence of the Subject Event of Default. Provided that the ratio of Consolidated Debt to Consolidated Total Capital does not exceed 0.55 to 1 as of December 31, 2001, the Holder hereby waives the Possible Event of Default solely as of December 31, 2001 if it occurs and agrees not to exercise any rights or remedies solely as a result of the occurrence of the Possible Event of Default. 2. Amendments. The Debenture is hereby amended as follows: ---------- 1 (a) Section 7(r) of the Debenture is amended to read in its entirety as follows: "(r) Consolidated Debt to Consolidated Total Capital Ratio. It shall ----------------------------------------------------- not permit the ratio of Consolidated Debt to Consolidated Total Capital to exceed (a) 0.50 to 1 at any time from the date of this Agreement to April 30, 2002, or (b) 0.45 to 1 at any time on and after April 30, 2002." (b) Section 7(s) of the Debenture is amended to read in its entirety as follows: "(s) Shareholders' Equity. It shall maintain a Stockholders' Equity -------------------- which is not at any time (x) prior to April 30, 2002, less than the sum of (a) $350,000,000 (without giving effect to no more than $15,000,000 of adjustments required by FASB 115) plus (b) 50% of cumulative positive consolidated net income (without deduction for any net loss for any period) of the Issuer and its Subsidiaries after March 31, 2001, and (y) on or after April 30, 2002, less than the sum of (i) $425,000,000 (without giving effect to no more than $15,000,000 of adjustments required by FASB 115), plus (ii) 50% of cumulative positive consolidated net income (without deduction for any net loss for any period) of the Issuer and its Subsidiaries after March 31, 2001), plus (iii) 80% of the net cash proceeds of Capital Stock issued by Mutual Risk or any of its Subsidiaries (other than to Mutual Risk or any of its Subsidiaries) after April 30, 2002. For purposes of this Section 7(s), any Capital Stock into which the Debentures may be converted shall not be included in Stockholders' Equity, and any conversion of the Debentures shall not be deemed to be the issuance of Capital Stock." (c) Section 7(n) of the Debenture is amended to read in its entirety as follows: "(n) Limitation on Asset Sales. It will not, and will not permit any ------------------------- of its Subsidiaries to, consummate an Asset Sale unless (a) the Issuer or the applicable Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of, (b) the consideration received for the assets sold by Mutual Risk or such Subsidiary, as the case may be, in such Asset Sale are in the form of cash or Cash Equivalents, in each case received at the time of such Asset Sale, and (c) the Requisite Holders have given their prior written consent thereto if the Fair Market Value of the assets sold or otherwise disposed of equals or exceeds $5,000,000. The Issuer will not, and will not cause or permit any of its Subsidiaries to, in a single transaction or a series of related transactions, directly or indirectly, sell, lease or otherwise transfer, directly or indirectly, all or substantially all of the assets of the Issuer and its Subsidiaries to any Person other than the Issuer or any of its wholly owned Subsidiaries." (d) Section 7(l) of the Debenture is amended to read in its entirety as follows: "(l) Maximum Combined Ratio. So long as any of the Debentures are ---------------------- outstanding, Mutual Risk will not permit the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries, measured with respect to all business written by the U.S. Insurance Subsidiaries as the sum for such U.S. Insurance Subsidiaries of (a) the Loss Ratio and (b) the Expense Ratio, to exceed 125%. Such statutory "combined ratio" shall be calculated and tested for the fiscal quarter ending March 31, 2002, the two fiscal quarters ending June 30, 2002, the three fiscal quarters ending September 30, 2002, and each four fiscal quarter period ending on or after December 31, 2002. The calculation of the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries for any 2 period will be adjusted to exclude from the statutory income statement of the U.S. Insurance Subsidiaries an amount not in excess of $20,000,000 for losses related to the resolution of disputes in existence as of December 31, 2001 for which the Issuer established a GAAP reserve as of December 31, 2001. The Issuer will provide a detailed reconciliation of any such adjustment made during any period. In the event such statutory "combined ratio" exceeds 120%, Mutual Risk and the U.S. Insurance Subsidiaries will establish and implement a plan in order to lower such "combined ratio" below 115%." (e) Effective April 30, 2002, the "175%" appearing in the first sentence of Section 7(m) of the Debenture is amended to read "250%". 3. Conditions Precedent. This Waiver shall not become effective until the -------------------- Holder receives (a) counterparts of this Waiver executed by the Issuer and the Guarantors, (b) such other agreements, documents, instruments, and items as the Holder may reasonably request, including written evidence that the holders of the Credit Agreement dated as of September 21, 2000 have waived the Subject Event of Default and the Possible Event of Default under that agreement and have amended or waived the covenants governing that agreement to conform with the amendments and covenants contained in this Waiver and Amendment. 4. Covenants. The Issuer covenants and agrees that, on or before April --------- 30, 2002, (a) the Issuer shall (i) take such actions, including without limitation, the issuance of Capital Stock and the contribution of the proceeds thereof to Mutual Risk's U.S. Insurance Subsidiaries, as are necessary to cause A.M. Best Company to remove the financial strength rating of Mutual Risk's U.S. Insurance Subsidiaries from a status of being under review with negative implications and to confirm such financial strength rating as being not less than A- (Excellent), and (ii) deliver to the Holder written evidence satisfactory to the Holder of such actions by A.M. Best Company, (b) in accordance with the second sentence of Section 7(l) of the Debenture, establish and implement a plan satisfactory to the Administrative Agent in order to lower the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries below 115%, and (c) cause Capital Stock resulting in net cash proceeds of not less than $50,000,000 to be issued by Mutual Risk or any of its Subsidiaries (other than to Mutual Risk or any of its subsidiaries and other than from a conversion of the Debentures or Warrants). Further, the Issuer covenants and agrees that it will not permit the financial strength rating of Mutual Risk's U.S. Insurance Subsidiaries to be less than A- (Excellent) at any time. The failure by the Issuer to timely comply with its covenants set forth in this paragraph shall constitute an Event of Default. 5. Representations and Warranties. The Issuer and the Guarantors hereby ------------------------------ jointly and severally represent and warrant to the Holder that (a) immediately after the execution and delivery of this Waiver and Amendment and after giving effect hereto, no Default or Event of Default exists under the Debenture, (b) the lenders and administrative agent under the Credit Agreement as of September 21, 2000 have waived the Subject Event of Default and the Possible Event of Default under that agreement and have amended or waived the covenants governing that agreement to conform with the amendments and covenants contained in this Waiver and Amendment, and (c) no Default or Event of Default exists under the Debenture or under the Credit Agreement other than the Subject Event of Default and the Possible Event of Default. 6. Effect of Waiver and Amendment. The waiver of the Holder hereunder is ------------------------------ expressly limited to the Subject Event of Default and the Possible Event of Default and shall not constitute the consent or waiver by Holder to, of or with respect to any other matter now or hereafter requiring its consent or waiver under the Debenture. Except as expressly amended hereby, the Debenture is 3 unchanged and is hereby ratified and confirmed. The waiver and amendment contained in Sections 1 and 2 shall have corresponding effects under the other debentures. 7. Counterparts. This Waiver and Amendment may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 8. Governing Law. This Waiver and Amendment shall be governed by and ------------- construed in accordance with the laws of the State of New York. [Remainder of Page Intentionally Left Blank] 4 MUTUAL RISK MANAGEMENT LTD., as an Issuer MRM SECURITIES LTD., as a Guarantor By: /s/ Robert Mulderig By: /s/ Robert Mulderig ------------------------------- ------------------------------- Name: Robert Mulderig Name: Robert Mulderig ------------------------ ------------------------ Title: Chairman Title: Chairman ------------------------ ------------------------ MUTUAL GROUP, LTD., as a Guarantor MUTUAL FINANCE LTD., as a Guarantor By: /s/ Richard O'Brien By: /s/ Richard O'Brien ------------------------------- ------------------------------- Name: Richard O'Brien Name: Robert Mulderig ------------------------ ------------------------ Title: VP Title: Chairman ------------------------ ------------------------ MGL INVESTMENTS LTD., as a Guarantor By: /s/ Richard O'Brien ------------------------------- Name: Richard O'Brien ------------------------ Title: VP ------------------------ LEGION FINANCIAL CORPORATION, as a Guarantor By: /s/ Richard O'Brien ------------------------------- Name: Richard O'Brien ------------------------ Title: VP ------------------------ MUTUAL RISK MANAGEMENT (HOLDINGS) LTD., as a Guarantor By: /s/ Robert Mulderig ------------------------------- Name: Robert Mulderig ------------------------ Title: Chairman ------------------------ Signature Page to Waiver and Amendment to Credit Agreement XL INSURANCE (Bermuda) LTD, as a Holder By: /s/ Paul Giordano ------------------------------------ Name: Paul Giordano ----------------------------- Title: Executive Vice President, General Counsel and Secretary ----------------------------- Signature Page to Waiver and Amendment to Credit Agreement EX-10.2 5 dex102.txt WAIVER AND AMENDMENT DATED 1/14/2002 Exhibit 10.2 WAIVER AND AMENDMENT TO CREDIT AGREEMENT THIS WAIVER AND AMENDMENT TO CREDIT AGREEMENT (this "Waiver and Amendment") is entered into as of January 14, 2002, among MUTUAL RISK MANAGEMENT LTD., a company incorporated under the laws of Bermuda ("Mutual Risk"), MUTUAL GROUP, LTD., a Delaware corporation ("Mutual Group" and, together with Mutual Risk, the "Borrowers"), MGL INVESTMENTS LTD., a Delaware corporation ("MGL Investments"), LEGION FINANCIAL CORPORATION, a Missouri corporation ("Legion"), MUTUAL RISK MANAGEMENT (HOLDINGS) LTD., a company incorporated under the laws of Bermuda ("MRM Holdings"), MRM SECURITIES LTD., a company incorporated under the laws of Bermuda ("MRM Securities"), MUTUAL FINANCE LTD., a company incorporated under the laws of Bermuda ("MRM Finance"), MRM SERVICES LTD., a company incorporated under the laws of Bermuda ("MRM Services"), MSL (US) LTD., a Delaware corporation ("MSL"), and MRM SERVICES (BARBADOS) LTD., a company incorporated under the laws of Barbados ("MSBL" and, together with MGL Investments, Legion, MRM Holdings, MRM Securities, MRM Finance, MRM Services, MSL, MSBL, Mutual Risk, and Mutual Group, the "Guarantors"), the Lenders (hereinafter defined) and BANK OF AMERICA, N.A., a national banking association, as the Administrative Agent for the Lenders (the "Administrative Agent"). RECITALS A. The Borrowers, the Lenders (herein so called) party thereto and the Administrative Agent are party to that certain Credit Agreement dated as of September 21, 2000 (as heretofore modified, amended or supplemented, the "Credit Agreement"). Unless otherwise defined herein, defined terms used herein shall have the meanings given such terms in the Credit Agreement. B. Mutual Risk has advised the Administrative Agent and the Lenders that an Event of Default (the "Subject Event of Default") has occurred as a result of the failure of Mutual Risk to observe and comply with Section 6.18 of the Credit Agreement as of and for the twelve month period ended December 31, 2001, and the Borrowers and the Guarantors have requested that the Lenders waive the Subject Event of Default. Mutual Risk has also advised the Administrative Agent and the Lenders that an Event of Default (the "Possible Event of Default") may occur as a result of the possible failure of Mutual Risk to observe and comply with Section 6.1 of the Credit Agreement as of December 31, 2001, and the Borrowers and the Guarantors have requested that the Lenders waive the Possible Event of Default if it occurs. The Borrowers and the Guarantors have also requested that the Credit Agreement be amended in certain respects. C. The Lenders and the Administrative Agent have agreed to waive the Subject Event of Default and the Possible Event of Default and to amend the Credit Agreement in certain respects, in each case upon and subject to the terms and conditions set forth herein. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers, the Lenders and the Administrative Agent agree as follows: 1. Waivers. The Lenders hereby waive the Subject Event of Default solely as ------- of and for the twelve month period ended December 31, 2001 and agree not to exercise any rights or remedies solely as the result of the occurrence of the Subject Event of Default. Provided that the ratio of Consolidated Indebtedness to Consolidated Total Capital does not exceed 0.55 to 1 as of December 31, 2001, the Lenders hereby waive the Possible Event of Default solely as of December 31, 2001 if it occurs and agree not to exercise any rights or remedies solely as a result of the occurrence of the Possible Event of Default. Waiver and Amendment to Credit Agreement 1 2. Amendments. The Credit Agreement is hereby amended as follows: ---------- (a) Section 6.1 of the Credit Agreement is amended to read in its entirety as follows: "SECTION 6.1 Consolidated Indebtedness to Consolidated Total ----------------------------------------------- Capital Ratio. Mutual Risk shall not permit the ratio of Consolidated ------------- Indebtedness to Consolidated Total Capital to exceed (a) 0.50 to 1 at any time from the date of this Agreement to April 30, 2002, or (b) 0.45 to 1 at any time on and after April 30, 2002." (b) Section 6.2 of the Credit Agreement is amended to read in its entirety as follows: "SECTION 6.2 Shareholders' Equity. Mutual Risk shall maintain a -------------------- Stockholders' Equity which is not at any time (x) prior to April 30, 2002, less than the sum of (a) $350,000,000 (without giving effect to no more than $15,000,000 of adjustments required by FASB 115) plus (b) 50% of cumulative positive consolidated net income (without deduction for any net loss for any period) of Mutual Risk and its Subsidiaries after March 31, 2001, and (y) on or after April 30, 2002, less than the sum of (i) $425,000,000 (without giving effect to no more than $15,000,000 of adjustments required by FASB 115), plus (ii) 50% of cumulative positive consolidated net income (without deduction for any net loss for any period) of Mutual Risk and its Subsidiaries after March 31, 2001), plus (iii) 80% of the net cash proceeds of Capital Stock issued by Mutual Risk or any of its Subsidiaries (other than to Mutual Risk or any of its Subsidiaries) after April 30, 2002. For purposes of this Section 6.2, any Capital Stock into which the Debentures may be converted shall not be included in Stockholders' Equity, and any conversion of the Debentures shall not be deemed to be the issuance of Capital Stock." (c) Section 6.5 of the Credit Agreement is amended to read in its entirety as follows: "SECTION 6.5 Limitation on Asset Sales. Mutual Risk, will not, ------------------------- and will not permit any of its Subsidiaries to, consummate an Asset Sale unless (a) Mutual Risk or the applicable Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of, (b) the consideration received for the assets sold by Mutual Risk or such Subsidiary, as the case may be, in such Asset Sale are in the form of cash or Cash Equivalents, in each case received at the time of such Asset Sale, and (c) the Required Lenders have given their prior written consent thereto if the Fair Market Value of the assets sold or otherwise disposed of, together with the Fair Market Value of all other assets sold or otherwise disposed of from January 14, 2002 to the date of the proposed sale or other disposition, equals or exceeds $5,000,000. (d) Section 6.18 of the Credit Agreement is amended to read in its entirety as follows: "SECTION 6.18 Maximum Combined Ratio. So long as any of the ---------------------- Debentures are outstanding, Mutual Risk will not permit the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries, measured with respect to all business written by the U.S. Insurance Subsidiaries as the sum for such U.S. Insurance Subsidiaries of (a) the Loss Ratio and (b) the Expense Ratio, to exceed 125%. Such statutory "combined ratio" shall be calculated and tested for the fiscal quarter ending March 31, 2002, the two fiscal quarters ending June 30, 2002, the three fiscal quarters ending September 30, 2002, and 2 each four fiscal quarter period ending on or after December 31, 2002. The calculation of the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries for any period will be adjusted to exclude from the statutory income statement of Mutual Risk's U.S. Insurance Subsidiaries losses related to the resolution of disputes in existence as of December 31, 2001 for which Mutual Risk established a GAAP reserve as of December 31, 2001 in an amount not in excess of $20,000,000. Together with the written calculations delivered pursuant to Section 5.8(f) of the Credit Agreement, Mutual Risk will provide a detailed reconciliation of any such adjustment made during any period. In the event such statutory "combined ratio" exceeds 120%, Mutual Risk and its U.S. Insurance Subsidiaries will establish and implement a plan in order to lower such statutory "combined ratio" below 115%." (e) Effective April 30, 2002, the "225%" appearing in the second sentence of Section 6.19 of the Credit Agreement is amended to read "250%". 3. Conditions Precedent. This Waiver and Amendment shall not become -------------------- effective until the Administrative Agent receives (a) counterparts of this Waiver and Amendment executed by the Borrowers, the Guarantors, the Required Lenders, and the Administrative Agent, (b) written evidence satisfactory in form and substance to the Administrative Agent that the holders of the Debentures have waived the Subject Event of Default and the Possible Event of Default under the Debentures and have amended or waived the covenants governing the Debentures to conform with the amendments and covenants contained in this Waiver and Amendment, (c) a waiver and amendment fee in the amount of $100,000, and, if the Required Lenders execute and deliver counterparts of this Amendment and Waiver at or before 5:00 p.m. (Chicago time) on January 14, 2002, an incentive fee in the amount of $250,000 to be shared among the Lenders executing and delivering this Waiver and Amendment at or before such time in the proportion that each such Lender's Commitment bears to the aggregate amount of all such Lenders' Commitments, (d) payment of all expenses, including legal fees and expenses of counsel to the Administrative Agent and including travel and due diligence expenses, incurred by the Administrative Agent in connection with this Waiver and Amendment, and (e) such other agreements, documents, instruments, and items as the Administrative Agent or any Lender may reasonably request. 4. Covenants. The Borrowers covenant and agree that, on or before April --------- 30, 2002, (a) the Borrowers shall (i) take such actions, including without limitation, the issuance of Capital Stock and the contribution of the proceeds thereof to Mutual Risk's U.S. Insurance Subsidiaries, as are necessary to cause A.M. Best Company to remove the financial strength rating of Mutual Risk's U.S. Insurance Subsidiaries from a status of being under review with negative implications and to confirm such financial strength rating as being not less than A- (Excellent), and (ii) deliver to the Administrative Agent written evidence satisfactory to the Administrative Agent of such actions by A.M. Best Company, (b) in accordance with the second sentence of Section 6.18 of the Credit Agreement, establish and implement a plan satisfactory to the Administrative Agent in order to lower the statutory "combined ratio" for Mutual Risk's U.S. Insurance Subsidiaries below 115%, and (c) cause Capital Stock resulting in net cash proceeds of not less than $50,000,000 to be issued by Mutual Risk or any of its Subsidiaries (other than to Mutual Risk or any of its subsidiaries and other than from a conversion of the Debentures). Further, the Borrowers covenant and agree that they will not permit the financial strength rating by A.M. Best Company of Mutual Risk's U.S. Insurance Subsidiaries to be less than A- (Excellent) at any time. The failure by the Borrowers to timely comply with their covenants set forth in this paragraph shall constitute an Event of Default. (a) Representations and Warranties. The Borrowers and the Guarantors ------------------------------ hereby jointly and severally represent and warrant to the Lenders and the Administrative Agent that (a) immediately after the execution and delivery of this Waiver and Amendment and after giving effect hereto (and to the 3 substantially concurrent waiver of the Subject Event of Default and the Possible Event of Default under the Letter of Credit and Reimbursement Agreement dated as of July 11, 2001, as amended, among Mutual Risk, certain Subsidiaries of Mutual Risk, certain lenders party thereto, and Bank of America, N.A., as administrative agent for such lenders), no Default or Event of Default exists under the Credit Agreement or any of the other Loan Documents, and (b) all of the provisions of the Loan Documents, including the Guarantee of the Guarantors, are in full force and effect and are hereby ratified and confirmed. 6. Effect of Waiver and Amendment. This Waiver and Amendment is a Loan Document. ------------------------------ The waiver of the Lenders and the Administrative Agent hereunder is expressly limited to the Subject Event of Default and the Possible Event of Default and shall not constitute the consent or waiver by any Lender or the Administrative Agent to, of or with respect to any other matter now or hereafter requiring its consent or waiver under the Loan Documents. Except as amended hereby, the Credit Agreement and the other Loan Documents are unchanged and are hereby ratified and confirmed. 7. Counterparts. This Waiver and Amendment may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 8. Governing Law. This Waiver and Amendment shall be governed by and construed ------------- in accordance with the laws of the State of New York. 9. ENTIRETY. THIS WAIVER AND AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN -------- DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERCEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF. THESE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. [Remainder of Page Intentionally Left Blank] 4 MUTUAL RISK MANAGEMENT LTD., as a Borrower and as a Guarantor MRM SECURITIES LTD., as a Guarantor By: /s/Robert A. Mulderig By: /s/ Robert A. Mulderig ------------------------------------------- ------------------------------------------- Name: Robert A. Mulderig Name: Robert A. Mulderig ------------------------------------ ------------------------------------ Title: Chairman and Chief Executive Officer Title: Director ------------------------------------ ------------------------------------ MUTUAL GROUP, LTD., as a Borrower and as a Guarantor MUTUAL FINANCE LTD., as a Guarantor By: /s/ Richard O'Brien By: /s/ Robert A. Mulderig ------------------------------------------- ------------------------------------------- Name: Richard O'Brien Name: Robert A. Mulderig ------------------------------------- ------------------------------------ Title: VP Title: Director ------------------------------------ --------------------------- MGL INVESTMENTS LTD., as a Guarantor By: /s/ Richard O'Brien MRM SERVICES LTD., as a Guarantor ------------------------------------------- Name: Richard O'Brien ------------------------------------- By: /s/ Robert A. Mulderig Title: VP -------------------------------------------- ------------------------------------ LEGION FINANCIAL CORPORATION, as a Guarantor Name: Robert A. Mulderig ------------------------------------- Title: Director By: /s/ Richard O'Brien ------------------------------------- ------------------------------------------- Name: Richard O'Brien ------------------------------------- Title: VP ------------------------------------ MSL (US) LTD., as a Guarantor MUTUAL RISK MANAGEMENT (HOLDINGS) LTD., as a Guarantor By: /s/ Richard O'Brien By: /s/ Robert A. Mulderig ------------------------------------------- ------------------------------------------- Name: Richard O'Brien Name: Robert A. Mulderig ------------------------------------- ------------------------------------ Title: VP Title: Director ------------------------------------ ------------------------------------ MRM SERVICES (BARBADOS) LTD., as a Guarantor By: /s/ Robert A. Mulderig ------------------------------------------- Name: Robert A. Mulderig ------------------------------------ Title: Director ------------------------------------
Signature Page to Waiver and Amendment to Credit Agreement BANK OF AMERICA, N.A., as Administrative Agent and a Lender By: /s/ Mehul Mehta -------------------------------- Name: MEHUL MEHTA ------------------------- Title: Vice President ------------------------- FLEET NATIONAL BANK, as a Lender By: /s/ George Viban -------------------------------- Name: George Viban ------------------------- Title: Portfolio Manager ------------------------- FIRST UNION NATIONAL BANK, as a Lender By: /s/ Gail M. Golightly -------------------------------- Name: Gail M. Golightly ------------------------- Title: Senior Vice President ------------------------- NATIONAL WESTMINSTER BANK PLC NEW YORK AND/OR NASSAU BRANCH, as a Lender By: /s/ R. Kershaw -------------------------------- Name: R. Kershaw ------------------------- Title: Corporate Manager ------------------------- Signature Page to Waiver and Amendment to Credit Agreement EX-10.3 6 dex103.txt WAIVER DATED 1/14/2002 Exhibit 10.3 WAIVER ------ THIS WAIVER (this "Waiver") is entered into as of January 14, 2002, among MUTUAL FINANCE LTD., a company existing under the laws of Bermuda (the "Applicant"); MUTUAL INDEMNITY LTD., a company existing under the laws of Bermuda, MUTUAL INDEMNITY (U.S.) LTD., a company existing under the laws of Bermuda, MUTUAL INDEMNITY (BERMUDA) LTD., a company existing under the laws of Bermuda, MUTUAL INDEMNITY (DUBLIN) LIMITED, a company existing under the laws of the Republic of Ireland, and MUTUAL INDEMNITY (BARBADOS) LTD., a company existing under the laws of Barbados (collectively, the "Co-Obligors" and individually, a "Co-Obligor"); MUTUAL RISK MANAGEMENT LTD., a company existing under the laws of Bermuda, MRM SERVICES LTD., a company existing under the laws of Bermuda, MSL (US) LTD., a Delaware corporation, and MRM SERVICES (BARBADOS) LTD., a company existing under the laws of Barbados (the "Guarantors" and, collectively with the Applicant and the Co-Obligors, the "Loan Parties"); the Lenders under the Letter of Credit and Reimbursement Agreement (hereinafter defined), and BANK OF AMERICA, N.A., a national banking association, in its capacity as the Administrative Agent for the Lenders under the Letter of Credit and Reimbursement Agreement (the "Administrative Agent"). Reference is made to the Letter of Credit and Reimbursement Agreement dated as of July 11, 2001 (as amended, modified, supplemented, or restated from time to time, the "Letter of Credit and Reimbursement Agreement"), among the Loan Parties, the Administrative Agent, and the Lenders party thereto. Unless otherwise defined in this Waiver, capitalized terms used herein shall have the meaning set forth in the Letter of Credit and Reimbursement Agreement. Unless otherwise indicated, all Section references herein are to Sections of the Letter of Credit and Reimbursement Agreement and all Paragraph references herein are to Paragraphs in this Waiver. R E C I T A L S --------------- A. The Loan Parties have advised the Administrative Agent and the Lenders that (i) an Event of Default (the "Subject Event of Default") has occurred under Section 7.1(r) of the Letter of Credit and Reimbursement Agreement due to the failure of the Parent to observe and comply with Section 6.18 of the Parent Credit Agreement as of and for the twelve month period ended December 31, 2001, and (ii) an Event of Default (the "Possible Event of Default") may occur under Section 7.1(r) of the Letter of Credit and Reimbursement Agreement due to the possible failure of the Parent to observe and comply with Section 6.1 of the Parent Credit Agreement as of December 31, 2001. B. The Loan Parties have requested that the Lenders waive the Subject Event of Default and the Possible Event of Default if it occurs. The Lenders are willing to waive the Subject Event of Default and the Possible Event of Default if it occurs, subject to the terms, conditions, and representations set forth herein. NOW, THEREFORE, in consideration of these premises and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: Paragraph 1. Waiver. On the Effective Date, the Lenders hereby waive the Subject ------ Event of Default as of and for the twelve month period ended December 31, 2001 and agree not to exercise any rights or remedies solely as a result of the occurrence of the Subject Event of Default. On the Effective Date and provided that the ratio of Consolidated Indebtedness to Consolidated Total Capital (as such terms are defined in the Parent Credit Agreement) does not exceed 0.55 to 1 as of December 31, 2001, the Lenders waive the Possible Event of Default as of December 31, 2001 if it occurs and agree not to exercise any rights of remedies solely as the result of the occurrence of the Possible Event of Default. 1 Paragraph 2. Waiver Fee. On the Effective Date, the Loan Parties, jointly and ---------- severally, shall pay to the Administrative Agent a waiver fee in an amount equal to $50,000, such waiver fee to be shared among the Lenders executing and delivering this Waiver at or before 5:00 p.m. (Chicago time) on January 14, 2002, in the proportion that each such Lender's Commitment bears to the aggregate amount of all such Lenders' Commitments. The failure of the Loan Parties to comply with the provisions of this Paragraph 2 shall constitute a payment Default entitling the Lenders to exercise their rights under the Loan Documents. Paragraph 3. Conditions. Notwithstanding any contrary provision, this Waiver is ---------- not effective until the date (the "Effective Date") upon which (a) the representations and warranties in this Waiver are true and correct; (b) the Administrative Agent receives counterparts of this Waiver executed by the Applicant, each Co-Obligor, each Guarantor, and the Required Lenders; (c) payment of the waiver fee required to be paid to the Administrative Agent on the Effective Date pursuant to Paragraph 2 has been made; (d) payment of the costs, fees, and expenses required to be paid on the Effective Date pursuant to Paragraph 6 has been made; and (e) the Administrative Agent receives such other documents, instruments, evidences, and opinions as it may reasonably request, including written evidence satisfactory to the Administrative Agent in form and substance that the holders of the Debentures (as defined in the Parent Credit Agreement) have waived the Subject Event of Default and the Possible Event of Default under the Debentures. Paragraph 4. Acknowledgment and Ratification. As a material inducement to the ------------------------------- Administrative Agent and the Lenders to execute and deliver this Waiver, the Loan Parties, jointly and severally, (a) consent to this Waiver and (b) agree and acknowledge that the execution, delivery, and performance of this Waiver shall in no way release, diminish, impair, reduce, or otherwise affect the respective obligations of the Loan Parties under the Loan Documents, which Loan Documents shall remain in full force and effect, and all Liens, guaranties, and rights thereunder are hereby ratified and confirmed. Paragraph 5. Representations. As a material inducement to the Administrative --------------- Agent and the Lenders to execute and deliver this Waiver, the Loan Parties, jointly and severally, represent and warrant to such parties (with the knowledge and intent that the Lenders and the Administrative Agent are relying upon the same in entering into this Waiver) that, as of the Effective Date and after giving effect to this Waiver, (a) all representations and warranties made by each of the Loan Parties in the Loan Documents are true and correct in all material respects, except to the extent that (i) any of them speak to a different specific date or (ii) the facts on which any of them were based have been changed by transactions permitted by the Loan Documents; (b) no Default or Event of Default exists after giving effect hereto (and to the substantially concurrent waiver of the Subject Event of Default and the Possible Event of Default under the Parent Credit Agreement); and (c) this Waiver has been duly authorized and approved by all necessary corporate action and requires the consent of no other Person. Paragraph 6. Expenses. On the Effective Date, the Loan Parties, jointly and -------- severally, agree to pay all costs, fees, and expenses paid or incurred by the Administrative Agent incident to this Waiver, including, without limitation, the reasonable fees and expenses of the Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of this Waiver and any related documents. 2 Paragraph 7. Miscellaneous. ------------- 7.1 This Waiver is a "Loan Document" referred to in the Letter of Credit and Reimbursement Agreement, and the provisions of Section 10 of the Letter of Credit and Reimbursement Agreement are incorporated herein by reference. Unless stated otherwise (a) the singular number includes the plural and vice versa and words of any gender include each other gender, in each case, as appropriate; (b) headings and captions shall not be construed in interpreting provisions; (c) this Waiver shall be construed, and its performance enforced, under New York law; and (d) this Waiver may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts shall be construed together to constitute the same document. 7.2 The Loan Documents shall remain unchanged and in full force and effect, except as provided in this Waiver, and are hereby ratified and confirmed. The execution, delivery, and effectiveness of this Waiver shall not, except as expressly provided herein, operate as a waiver of any Default or Event of Default or of any rights of the Lenders under any Loan Document. Paragraph 8. ENTIRETIES. THIS WAIVER REPRESENTS THE FINAL AGREEMENT BETWEEN THE ---------- PARTIES REGARDING THE SUBJECT MATTER OF THIS WAIVER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. Paragraph 9. Parties. This Waiver binds and inures to the benefit of each of ------- the Loan Parties, the Administrative Agent, the Lenders, and their respective successors and permitted assigns. The parties hereto have executed this Waiver in multiple counterparts as of the date first stated above, but effective as of the Effective Date. [REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.] 3 Signature Page to that certain Waiver dated as of the date first stated above, among Mutual Finance Ltd., as Applicant, Mutual Indemnity Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda) Ltd., Mutual Indemnity (Dublin) Limited, and Mutual Indemnity (Barbados) Ltd., as Co-Obligors; Mutual Risk Management Ltd., MRM Services Ltd., MSL (US) Ltd., and MRM Services (Barbados) Ltd., as Guarantors; Bank of America, N.A., as the Administrative Agent; and the Lenders MUTUAL FINANCE LTD., as Applicant MUTUAL INDEMNITY (BARBADOS) LTD., as a Co-Obligor By: /s/ David Alexander ---------------------------- By: /s/ David Alexander Name: David Alexander ---------------------------------- ---------------------- Name: David ALexander Title: V.P./Controller --------------------------- ---------------------- Title: President --------------------------- MUTUAL INDEMNITY LTD., as a Co-Obligor MUTUAL RISK MANAGEMENT LTD., as a Guarantor By: /s/ David Alexander ---------------------------- Name: By: /s/ Robert A. Mulderig David Alexander --------------------------------- --------------------- Name: Robert A. Mulderig Title: President -------------------------- --------------------- Title: Chief Executive Officer/ -------------------------- Director -------------------------- MUTUAL INDEMNITY (U.S.) LTD., as a Co-Obligor MRM SERVICES LTD., as a Guarantor By: /s/ David Alexander By: /s/ Robert A. Mulderig ---------------------------- ----------------------- Name: David ALexander Name: Robert A. Mulderig --------------------- -------------------------- Title: President Title: Director --------------------- -------------------------- MUTUAL INDEMNITY (BERMUDA) LTD., as a MSL (US) LTD., as a Guarantor Co-Obligor By: /s/ Richard O'Brien By: /s/ David Alexander ---------------------------------- ---------------------------- Name: Richard O'Brien Name: David ALexander --------------------------- --------------------- Title: Vice President Title: President --------------------------- --------------------- MRM SERVICES (BARBADOS) LTD., as a SIGNED, SEALED AND DELIVERED BY Guarantor MUTUAL INDEMNITY (DUBLIN) LIMITED ACTING BY ITS LAWFUL ATTORNEY, as a By: /s/ Robert A. Mulderig Co-Obligor ---------------------------------- Name: Robert A. Mulderig --------------------------- By: /s/ David Alexander Title: Director ---------------------------------- --------------------------- Name: David Alexander --------------------------- Title: Director/Attorney-in Fact --------------------------- Signature Page to Waiver Signature Page to that certain Waiver dated as of the date first stated above, among Mutual Finance Ltd., as Applicant; Mutual Indemnity Ltd., Mutual Indemnity (U.S.) Ltd., Mutual Indemnity (Bermuda)Ltd., Mutual Indemnity (Dublin) Limited, and Mutual Indemnity (Barbados) Ltd., as Co-Obligors; Mutual Risk Management Ltd., MRM Services Ltd., MSL (US) Ltd., and MRM Services (Barbados) Ltd., as Guarantors; Bank of America, N.A., as the Administrative Agent; and the Lenders BANK OF AMERICA, N.A., as the COMERICA BANK, as a Lender Administrative Agent and a Lender By:/s/ Martin G. Ellis ------------------------------------ Name: Martin G. Ellis By: /s/ Mehul Mehta ------------------------------- ------------------------------ Title: Vice President Name: MEHUL MEHTA ------------------------------ ------------------------ Title: Vice President ----------------------- FLEET NATIONAL BANK, as a Lender NATIONAL WESTMINSTER BANK PLC NEW YORK AND/OR NASSAU BRANCH, as a lender By: /s/ George Urban ------------------------------ Name: George Urban ------------------------- By: /s/ Jon Bowring Title: Portfolio Manager ----------------------------------- ------------------------ Name: Jon Bowring ------------------------------ Title: Senior Corporate Manager ----------------------------- FIRSTAR BANK, NATIONAL ASSOCIATION, THE BANK OF N.T. BUTTERFIELD & SON as a Lender LIMITED, as a Lender By:/s/ Caroline V. Krider ------------------------------------ By: /s/ Jonathan Raynor Name: Caroline V. Krider ------------------------------ ------------------------------- Name: Jonathan Raynor Title: VP & SR. Lender ------------------------- ----------------------------- Title: Vice President ------------------------ Signature Page to Waiver -----END PRIVACY-ENHANCED MESSAGE-----