GALLAGHER ARTHUR J & CO
SECOND AMENDMENT TO CREDIT AGREEMENT
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<TYPE>EX-10.8.2
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<FILENAME>dex1082.txt
<DESCRIPTION>SECOND AMENDMENT TO CREDIT AGREEMENT
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                                                                  Exhibit 10.8.2

           ARTHUR J. GALLAGHER & CO. AND AJG FINANCIAL SERVICES, INC.
                      SECOND AMENDMENT TO CREDIT AGREEMENT


Harris Trust and Savings Bank                  Citibank, N.A.
Chicago, Illinois                              New York, New York

Bank of America, N.A.                          LaSalle Bank National Association
Chicago, Illinois                              Chicago, Illinois

The Northern Trust Company
Chicago, Illinois


Ladies and Gentlemen:

     This Second Amendment to Credit Agreement dated as of May 31, 2001 (herein,
the "Amendment") is entered into by and between the undersigned, Arthur J.
Gallagher & Co, a Delaware corporation ("Gallagher"), AJG Financial Services,
Inc., a Delaware corporation ("AJG"; Gallagher and AJG being referred to herein
collectively as the "Borrowers" and individually as a "Borrower"), Citibank,
N.A., Bank of America, N.A., LaSalle Bank National Association, The Northern
Trust Company and Harris Trust and Savings Bank, individually and as Agent (the
"Agent"). Reference is hereby made to that certain Credit Agreement dated as of
September 11, 2000, as amended (the "Credit Agreement"), between the Borrowers,
the Banks and the Agent. All capitalized terms used herein without definition
shall have the same meanings herein as such terms have in the Credit Agreement.

     WHEREAS, the Borrowers desire to amend the Credit Agreement to increase the
letter of credit sublimit thereunder by $25,000,000; and

     NOW, THEREFORE, the Borrowers have requested that the Banks amend the
Credit Agreement to increase the letter of credit sublimit and make certain
other amendments thereto, and the Banks are willing to do so under the terms and
conditions set forth in this Amendment.


SECTION 1.  AMENDMENTS.

     Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

          1.1. Section 1.2 of the Credit Agreement shall be amended and restated
     in its entirety as follows:

               The Short-Term Revolving Credit Commitments. Subject to the terms
          and conditions hereof, each Bank, by its acceptance hereof, severally
          agrees to make a loan or loans (individually a "Short-Term Revolving
          Loan" and collectively "Short-Term Revolving Loans") to either
          Borrower from time to time on a

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          revolving basis in U.S. Dollars and Alternative Currencies in an
          aggregate outstanding Original Dollar Amount up to the amount of its
          short-term revolving credit commitment set forth on the applicable
          signature page hereof (its "Short-Term Revolving Credit Commitment"
          and, cumulatively for all the Banks, the "Short-Term Revolving Credit
          Commitments"), subject to any reductions thereof pursuant to the terms
          hereof, on or after the Effective Date and before the Short-Term
          Revolving Credit Termination Date; provided, however, that the
          Short-Term Revolving Credit Commitments may not be utilized by the
          Borrowers unless and until the Revolving Credit Commitments have been
          fully drawn upon and are outstanding as Revolving Loans and/or L/C
          Obligations. Neither the Original Dollar Amount nor the U.S. Dollar
          Equivalent of the aggregate principal amount of all Short-Term
          Revolving Loans, all Short-Term Swing Loans, the L/C Obligations
          outstanding as part of the Short-Term Revolving Credit and all Bid
          Loans shall exceed the Short-Term Revolving Credit Commitments in
          effect at such time. Each Borrowing of Short-Term Revolving Loans
          shall be made ratably from the Banks in proportion to their respective
          Percentages. As provided in Section 1.6(a) hereof, the relevant
          Borrower may elect that each Borrowing of Short-Term Revolving Loans
          denominated in U.S. Dollars be either Domestic Rate Loans or
          Eurocurrency Loans; provided that neither the Original Dollar Amount
          nor the U.S. Dollar Equivalent of the aggregate principal amount of
          all Eurocurrency Loans (whether Revolving Loans or Short-Term
          Revolving Loans) shall exceed $50,000,000. All Short-Term Revolving
          Loans denominated in an Alternative Currency shall be Eurocurrency
          Loans. Short-Term Revolving Loans may be repaid and the principal
          amount thereof reborrowed before the Short-Term Revolving Credit
          Termination Date, subject to all the terms and conditions hereof.

          1.2. Subsection (a) of Section 1.3 of the Credit Agreement shall be
     amended and restated in its entirety as follows:

               (a) General Terms. Subject to the terms and conditions hereof, as
          part of, the Revolving Credit and up to $25,000,000 of the Short-Term
          Revolving Credit, the Agent shall issue standby or commercial letters
          of credit (each a "Letter of Credit") for the account of either
          Borrower in U.S. Dollars or in an Alternate Currency; provided that
          (i) the aggregate Original Dollar Amount of the L/C Obligations at any
          time outstanding shall not exceed the L/C Commitment, (ii) the
          aggregate Original Dollar Amount of the L/C Obligations at any time
          outstanding under the Revolving Credit shall not exceed the difference
          between the Revolving


                                       -2-

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          Credit Commitments in effect at such time and the aggregate Original
          Dollar Amount of all Revolving Loans and all Revolving Swing Loans
          then outstanding, (iii) the aggregate Original Dollar Amount of the
          L/C Obligations at any time outstanding under the Short-Term Revolving
          Credit shall not exceed the difference between the Short-Term
          Revolving Credit Commitments in effect at such time and the sum of the
          aggregate Original Dollar Amount of all Short-Term Revolving Loans
          plus all Short-Term Swing Loans plus all Bid Loans, and (iv) the
          Letters of Credit shall be deemed first issued under the Revolving
          Credit up to the aggregate amount of the Revolving Credit Commitments
          then in effect, and then under the Short-Term Revolving Credit to the
          extent of availability under the remaining L/C Commitment.
          Notwithstanding anything herein to the contrary, the Existing L/Cs
          (all of which are listed and described on Schedule 1.3(a) hereto)
          shall each constitute a "Letter of Credit" herein for all purposes of
          the Agreement to the same extent, and with the same force and effect,
          as if such Existing L/Cs had been issued at the request of a Borrower
          under the Revolving Credit hereunder. Each Letter of Credit shall be
          issued by the Agent in the manner described above, but each Bank shall
          be obligated to reimburse the Agent for its Percentage of the amount
          of each drawing thereunder and, accordingly, the undrawn face amount
          of each Letter of Credit shall constitute usage of the Revolving
          Credit Commitment and the Short-Term Revolving Credit Commitment, as
          applicable, of each Bank pro rata in accordance with each Bank's
          Percentage.

          1.3. Section 4.7 of the Credit Agreement shall be amended and restated
     in its entirety as follows:

               Commitment Terminations. The Borrowers shall have the right at
          any time and from time to time, upon five Business Days' prior written
          notice to the Agent, to terminate the Revolving Credit Commitments and
          the Short-Term Revolving Credit Commitments without premium or
          penalty, in whole or in part, any partial termination to be (i) in an
          amount not less than $5,000,000, and (ii) allocated ratably among the
          Banks in proportion to their respective Percentages of the relevant
          Credit, provided that (v) the Revolving Credit Commitments may not be
          terminated in whole before the termination of the Short-Term Revolving
          Credit Commitments, (w) the Revolving Credit Commitments may not be
          reduced to an amount less than the sum of the Original Dollar Amount
          of all Revolving Loans, all Revolving Swing Loans and all L/C
          Obligations issued and outstanding as part of the Revolving Credit
          then outstanding, (x) any reduction of the Revolving Credit
          Commitments or the Short-Term Revolving Credit Commitments


                                      -3-

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          shall automatically reduce the L/C Commitment by a like amount, (y)
          any reduction of the Revolving Credit Commitments to an amount less
          than the Swing Line Commitment shall automatically reduce the Swing
          Line Commitment to such amount as well and (z) the Short-Term
          Revolving Credit Commitments may not be reduced to an amount less than
          the Original Dollar Amount of all Short-Term Revolving Loans, all
          Short-Term Swing Loans, all L/C Obligations issued and outstanding as
          part of the Short-Term Revolving Credit and all Bid Loans then
          outstanding. The Borrowers shall have the right at any time and from
          time to time, by notice to the Agent, to terminate the L/C Commitment
          without premium or penalty, in whole or in part. Any such termination
          of the L/C Commitment shall not reduce the Revolving Credit
          Commitments or the Short-Term Revolving Credit Commitments unless the
          Borrowers elect to do so in the manner provided in the preceding
          sentence. The Agent shall give prompt notice to each Bank of any such
          termination of Commitments. Any termination of Commitments pursuant to
          this Section 4.7 may not be reinstated.

          1.4. Subparagraphs (d) and (e) of Section 8.2 of the Credit Agreement
     shall be amended and restated in their entirety as follows:

               (d) After giving effect to such Credit Event, the aggregate
          Original Dollar Amount of Revolving Loans, Revolving Swing Loans and
          L/C Obligations outstanding as part of the Revolving Credit then
          outstanding shall not exceed the Revolving Credit Commitments;

               (e) After giving effect to such Credit Event, the aggregate
          Original Dollar Amount of Short-Term Revolving Loans, Short-Term Swing
          Loans, L/C Obligations outstanding as part of the Short-Term Revolving
          Credit and Bid Loans then outstanding shall not exceed the Short-Term
          Revolving Credit Commitments; and

          1.5. The definitions of "L/C Commitment" and "Percentage" appearing in
     Section 6.1 of the Credit Agreement shall be amended and restated in their
     entirety to read as follows:

          "L/C Commitment" means $75,000,000, as reduced pursuant to the terms
          hereof, of which (1) up to $50,000,000 may be issued under the
          Revolving Credit and (2) up to $25,000,000 may be issued under the
          Short-Term Revolving Credit, as applicable.

          "Percentage" means, for each Bank, (a) with respect to the Revolving
          Credit, the percentage of the Revolving Credit


                                      -4-

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          Commitments represented by such Bank's Revolving Credit Commitment or,
          if the Revolving Credit Commitments have been terminated, the
          percentage held by such Bank (including through participation
          interests in L/C Obligations outstanding under the Revolving Credit
          and Swing Loans) of the aggregate principal amount of all Revolving
          Loans, Swing Loans and L/C Obligations outstanding under the Revolving
          Credit then outstanding and (b) with respect to the Short-Term
          Revolving Credit, the percentage of the Short-Term Revolving Credit
          Commitments represented by such Bank's Short-Term Revolving Credit
          Commitment or, if the Short-Term Revolving Credit Commitments have
          been terminated, the percentage held by such Bank (including through
          participation interests in the L/C Obligations outstanding under the
          Short-Term Revolving Credit and Short-Term Swing Loans) of the
          aggregate principal amount of all Short-Term Revolving Loans,
          Short-Term Swing Loans outstanding under the Short-Term Revolving
          Credit and L/C Obligations then outstanding.


SECTION 2.  CONDITIONS PRECEDENT.

     The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:

          2.1. The Borrowers and the Banks shall have executed and delivered
     this Amendment.

          2.2. The Agent shall have received copies (executed or certified, as
     may be appropriate) of all legal documents or proceedings taken in
     connection with the execution and delivery of this Amendment to the extent
     the Agent or its counsel may reasonably request.

          2.3. Legal matters incident to the execution and delivery of this
     Amendment shall be satisfactory to the Agent and its counsel.


SECTION 3.  REPRESENTATIONS.

     In order to induce the Agent and the Banks to execute and deliver this
Amendment, the Borrowers hereby represent to the Agent and the Banks that as of
the date hereof the representations and warranties set forth in Section 7 of the
Credit Agreement are and shall be and remain true and correct (except that the
representations contained in Section 7.5 shall be deemed to refer to the most
recent financial statements of the Borrowers delivered to the Agent and the
Banks) and the Borrowers are in compliance with the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.


                                      -5-

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SECTION 4.  MISCELLANEOUS.

     4.1. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

     4.2. The Borrowers agree to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the fees and expenses of counsel for
the Agent.

     4.3. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


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     This Second Amendment to Credit Agreement is entered into as of the date
and year first above written.



                                        ARTHUR J. GALLAGHER & CO.


                                        By
                                           Name:  /s/ Jack H. Lazzaro
                                                  -----------------------------
                                           Title: Vice President/Treasurer
                                                  -----------------------------



                                        AJG FINANCIAL SERVICES, INC.


                                        By
                                           Name:  /s/ Jack H. Lazzaro
                                                  -----------------------------
                                           Title: Vice President
                                                  -----------------------------


                                      -7-

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Accepted and agreed to.

                                        HARRIS TRUST AND SAVINGS BANK,
                                          individually and as Agent


                                        By /s/ James Barry, III
                                           ------------------------------------
                                           Name:  James Barry III
                                                  -----------------------------
                                           Title: Vice President
                                                  -----------------------------



                                        CITIBANK, N.A.


                                        By /s/ David A. Dodge
                                           ------------------------------------
                                           Name:  David A. Dodge
                                                  -----------------------------
                                           Title: Managing Director
                                                  -----------------------------



                                        BANK OF AMERICA, N.A.


                                        By /s/ Gary R. Peet
                                           ------------------------------------
                                           Name:  Gary R. Peet
                                                  -----------------------------
                                           Title: Managing Director
                                                  -----------------------------



                                        LASALLE BANK NATIONAL ASSOCIATION


                                        By /s/ Kyle Freimuth
                                           ------------------------------------
                                           Name:  Kyle Freimuth
                                                  -----------------------------
                                           Title: Vice President
                                                  -----------------------------



                                        THE NORTHERN TRUST COMPANY


                                        By /s/ Nicole D. Boehm
                                           ------------------------------------
                                           Name:  Nicole D. Boehm
                                                  -----------------------------
                                           Title: Second Vice President
                                                  -----------------------------

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