Exhibit 4.2.6
FIFTH AMENDMENT TO THE CREDIT AGREEMENT
This Fifth Amendment ("Fifth Amendment"), dated as of March 31, 2000,
is among ENHANCE FINANCIAL SERVICES GROUP INC., a corporation duly organized and
validly existing under the laws of the State of New York (together with its
successors and assigns, the "COMPANY"); each of the lenders that is a signatory
hereto (together with its successors and assigns, individually, a "BANK", and,
collectively, the "BANKS"); and FLEET NATIONAL BANK, as Swingline Bank (in such
capacity, together with its successors and permitted assigns in such capacity,
the "SWINGLINE BANK") and as agent for the Banks (in such capacity, together
with its successors in such capacity, the "AGENT").
The Company, the Banks, the Swingline Bank and the Agent are parties to
a Credit Agreement dated as of June 30, 1998, which Credit Agreement was amended
and restated in its entirety by the Third Amendment to the Credit Agreement
dated as of June 29, 1999 and further amended by a Fourth Amendment to the
Credit Agreement dated as of September 29, 1999 (as so amended and restated and
in effect on the date hereof, the "CREDIT AGREEMENT"). The Company has requested
the Banks to amend the Credit Agreement to extend the Increased Commitment
Period (as originally defined in the Fourth Amendment) with respect to an
increased Commitment during such period and to provide an additional increased
commitment amount of $31,250,000 during such extended Increased Commitment
Period (as defined in the Fifth Amendment). The Banks are in agreement with such
request upon certain terms and conditions. Accordingly, the parties hereto
hereby agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined in this Fifth
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.
Section 2. AMENDMENTS. Subject to the satisfaction of the conditions
precedent specified in Section 3 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
(a) Section 1.01 (CERTAIN DEFINED TERMS) is amended as follows:
(i) by deleting the definition of "Applicable Margin" and
substituting therefor the following:
"APPLICABLE MARGIN" shall mean: (a) with respect to Increased
Commitment Loans, Revolving Credit Loans and Term Loans that
are Base Rate Loans, 0% per annum; and (b) with respect to (i)
Increased Commitment Loans, Revolving Credit Loans and Term
Loans that are Eurodollar Loans or (ii) with respect to
facility fees payable hereunder, the applicable percentage per
annum set forth below under the caption "Eurodollar Spread" or
"Facility Fee Rate", as the case may be, based upon the
ratings by S&P and Moody's applicable on such date to the
Index Debt:
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Eurodollar Spread
------------------------------
Index Debt Increased Term Loan Facility Fee
Rating: Commitment Loan Rate(2)
and Revolving
Credit Loan(1)
--------------------------------------------------------------
Xxxxx 0 0.430% 0.750% 0.120%
--------------------------------------------------------------
Xxxxx 0 0.500% 0.850% 0.150%
--------------------------------------------------------------
Xxxxx 0 0.570% 0.950% 0.180%
--------------------------------------------------------------
Xxxxx 0 0.620% 1.050% 0.230%
--------------------------------------------------------------
Xxxxx 0 0.670% 1.150% 0.280%
--------------------------------------------------------------
(1) During any period that the aggregate outstanding
principal amount of Increased Commitment Loans,
Revolving Credit Loans, Competitive Loans and
Swingline Loans exceeds 33% of the aggregate
Commitments of the Banks, the Eurodollar Spread for
Increased Commitment Loans and Revolving Credit Loans
shall be increased by .050% above the percentages set
forth in the above grid for each of the Index Debt
Rating Levels. During any period that the aggregate
outstanding principal amount of Increased Commitment
Loans, Revolving Credit Loans, Competitive Loans and
Swingline Loans exceeds 66% of the aggregate
Commitments of the Banks, the Eurodollar Spread for
Increased Commitment Loans and Revolving Credit Loans
shall be increased by .100% above the percentages set
forth in the above grid for each of the Index Debt
Rating Levels.
(2) The facility fee shall not be applicable to any Term
Loans.
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For purposes of determining the applicable Index Debt Rating
(except for split ratings of more than one equivalent level as
provided for below): (a) Xxxxx 0 xxxxx xx deemed to be
applicable if (i) no Event of Default shall have occurred and
be continuing and (ii) the Index Debt is rated AA or higher by
S&P OR Aa2 or higher by Moody's; (b) Level 2 shall be deemed
to be applicable if (i) no Event of Default shall have
occurred and be continuing, (ii) Level 1 is not applicable and
(iii) the Index Debt is rated A or higher by S&P OR A2 or
higher by Moody's; (c) Level 3 shall be deemed to be
applicable if (i) no Event of Default shall have occurred and
be continuing, (ii) neither Level 1 nor Level 2 is applicable
and (iii) the Index Debt is rated A- or higher by S&P OR A3 or
higher by Moody's; (d) Level 4 shall be deemed to be
applicable if (i) no Event of Default shall have occurred and
be continuing, (ii) neither Xxxxx 0, Xxxxx 0 nor Level 3 is
applicable and (iii) the Index Debt is rated BBB+ or higher by
S&P OR Baa1 or higher by Moody's; and (e) Level 5 shall be
deemed to be applicable if no other Level is applicable. If
S&P or Moody's shall not have in effect a rating for the Index
Debt (other than by reason of the circumstances referred to in
the last sentence of this definition), then S&P shall be
deemed to have established a rating in Level 5. If
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the rating for the Index Debt of S&P and Xxxxx'x is split by
more than one equivalent rating level, the Index Debt Rating
shall be deemed to be at that Level corresponding to the
rating that is one level higher than the lower of the two
ratings. If the rating established or deemed to have been
established by S&P or Moody's for the Index Debt shall be
changed (other than as a result of a change in the rating
system of S&P or Moody's), such change shall be effective as
of the date on which it is first announced by S&P or Moody's,
as the case may be. Each change in the Applicable Margin shall
apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system
of S&P or Moody's shall change, or if S&P or Moody's shall
cease to be in the business of rating corporate debt
obligations, the Company and the Banks shall negotiate in good
faith to amend this definition to reflect such changed rating
system or the unavailability of ratings from such rating
agency and, pending the effectiveness of any such amendment,
the Applicable Margin shall be determined by reference to the
rating most recently in effect prior to such change or
cessation.
(ii) by deleting the definition of "Commitment" and
substituting therefor the following:
"COMMITMENT" shall mean, as to each Bank, the obligation of
such Bank to make Loans in an aggregate amount not exceeding
the amounts and for the time periods set opposite such Bank's
name under the caption "Commitment" on the signature pages of
the Fifth Amendment (as the same may be reduced at any time or
from time to time pursuant to Section 2.03 hereof).
(iii) by deleting the definition of "Notes" and
substituting therefor the following:
"NOTES" shall mean the Revolving Credit Notes, the Competitive
Notes, the Term Loan Notes, the Swingline Note and the
Increased Commitment Notes.
(iv) by adding the following new definition:
"ASSET BASED BUSINESSES" shall mean non-insurance businesses
of the Company and its Subsidiaries.
(v) by adding the following new definition:
"FIFTH AMENDMENT" shall mean the Fifth Amendment to the Credit
Agreement dated as of March 31, 2000 among the Company, the
Banks signatory thereto, the Swingline Bank and the Agent.
(vi) by adding the following new definition:
"ORIGINAL COMMITMENT AMOUNT" shall mean, as to each Bank, the
obligation of such Bank to make Loans in an aggregate amount
not exceeding the amounts set
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opposite such Bank's name under the subcaption "Original
Commitment Amount" on the signature pages of the Fifth
Amendment (as the same may be reduced at any time or from time
to time pursuant to Section 2.03 hereof).
(vii) by adding the following new definition:
"INCREASED COMMITMENT AMOUNT" shall mean, as to each Bank, so
long as 100% of the Original Commitment Amount is outstanding,
the obligation of such Bank to make Loans in an aggregate
amount not exceeding the amounts set opposite such Bank's name
under the subcaption "Increased Commitment Amount" on the
signature pages of the Fifth Amendment (as the same may be
reduced at any time or from time to time pursuant to Section
2.03 hereof).
(viii) by adding the following new definition:
"INCREASED COMMITMENT LOANS" shall mean the loans provided for
by Section 2.01(f) hereof, which may be Base Rate Loans and/or
Eurodollar Loans.
(ix) by adding the following new definition:
"INCREASED COMMITMENT NOTES" shall mean the promissory notes
provided for by Section 2.06(g) hereof and all promissory
notes delivered in substitution or exchange therefor, in each
case as the same shall be modified and supplemented and in
effect from time to time.
(x) by deleting the definition of "Increased Commitment
Period" and substituting therefor the following:
"INCREASED COMMITMENT PERIOD" shall mean the period from the
Amendment Effective Date (as defined in the Fifth Amendment)
to the earlier of (a) May 30, 2000 or (b) the reduction of the
Increased Commitment Amount to $0.00 pursuant to Section 2.03
hereof.
(xi) by deleting the definition of "Borrowing" and
substituting therefor the following:
"BORROWINg" means (a) Increased Commitment Loans or Revolving
Credit Loans of the same Type, made, Converted or Continued on
the same date and, in the case of Eurodollar Loans, as to
which a single Interest Period is in effect, or (b) a
Competitive Loan or group of Competitive Loans of the same
Type made on the same date and as to which a single Interest
Period is in effect.
(xii) by deleting the definition of "Interest Period" and
substituting therefor the following:
"INTEREST PERIOD" shall mean (a) with respect to any Increased
Commitment Loan or Revolving Credit Loan that is a Eurodollar
Loan, each period commencing on the date such Eurodollar Loan
is made or Converted from a Base Rate Loan or (in
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the event of a Continuation) the last day of the next
preceding Interest Period and ending on the numerically
corresponding day in the first, second or third calendar month
thereafter, as the Company may select as provided in Section
4.05 hereof, (b) with respect to any Competitive Loan that is
a Eurodollar Loan, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in
the calendar month that is one, two or three months
thereafter, as specified in the applicable Competitive Bid
Request, (c) with respect to any Fixed Rate Borrowing, the
period (which shall not be fewer than 3 days or more than 180
days) commencing on the date of such Borrowing and ending on
the date specified in the applicable Competitive Bid Request,
(d) with respect to any Term Loan that is a Eurodollar Loan,
each period commencing on the date such Term Loan is made or
Converted from a Base Rate Loan or (in the event of a
Continuation) the last day of the next preceding Interest
Period and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as
the Company may select as provided in Section 4.05 hereof,
except that each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day
of the appropriate subsequent calendar month and (e) with
respect to any Swingline Loan, the period commencing on the
date such Swingline Loan is made and ending on the date three
Business Days thereafter. Notwithstanding the foregoing: (i)
the Company may not select any Interest Period for any
Increased Commitment Loan, Revolving Credit Loan or
Competitive Loan that ends after the Commitment Termination
Date or for any Swingline Loan that ends after the date which
is three Business Days prior to the Commitment Termination
Date; (ii) no Interest Period for any Term Loans may commence
before and end after any Principal Payment Date for such Term
Loans unless, after giving effect thereto, the aggregate
principal amount of such Term Loans having Interest Periods
that end after such Principal Payment Date shall be equal to
or less than the aggregate principal amount of such Term Loans
scheduled to be outstanding after giving effect to the
payments of principal required to be made on such Principal
Payment Date; and (iii) each Interest Period that would
otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or, with respect to
Eurodollar Loans, if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding
Business Day)."
(xiii) by deleting the definition of "Loans" and
substituting therefor the following:
"LOANS" shall mean the Increased Commitment Loans, Revolving
Credit Loans, Term Loans, Competitive Loans and Swingline
Loans.
(b) Section 1.03 of the Credit Agreement is deleted and replaced
with the following:
"1.03 CLASSES; SERIES; TYPE. Loans hereunder are distinguished
by "Class". The "Class" of a Loan refers to whether such Loan
is an Increased Commitment Loan, a Revolving Credit Loan, a
Competitive Loan, a Swingline Loan or a Term Loan,
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each of which constitutes, respectively, a "Class" of Loan.
Loans are also distinguished by "Series". The Loans of any one
Class made on the occasion of any Borrowing constitute a
"Series" of Loans. Loans hereunder are also distinguished by
"Type". The "Type" of a Loan refers to whether such Loan is a
Base Rate Loan, Eurodollar Loan or a Fixed Rate Loan, each of
which constitutes a Type. The Loans may be identified by both
Class and Type."
(c) Subsection (f) is hereby added to Section 2.01 of the Credit
Agreement as follows:
"(f) INCREASED COMMITMENT LOANS. In addition to the Loans
provided for in subsections (a), (b), (d) and (e) above of
this Section 2.01, each Bank committed to providing an
Increased Commitment Amount severally agrees, on the terms and
conditions of this Agreement, at the request of the Company,
to make Increased Commitment Loans to the Company in Dollars
during the Increased Commitment Period in an aggregate
principal amount at any one time outstanding up to but not
exceeding the amount of the Increased Commitment Amount of
such Bank as in effect from time to time (each such increased
commitment loan being herein called a "INCREASED COMMITMENT
LOAN" and collectively the "INCREASED COMMITMENT LOANS");
provided that, 100% of the Original Commitment Amount must be
outstanding prior to any Bank making an Increased Commitment
Loan; and provided further, upon the expiration of the
Increased Commitment Period, in no event shall there be any
outstanding Increased Commitment Loans. Subject to the terms
and conditions of this Agreement, during such period the
Company may borrow, repay and reborrow the amount of the
Increased Commitment Amounts by means of Base Rate Loans and
Eurodollar Loans, and the Company may Convert Loans of one
Type into Loans of another Type (as provided in Section 2.07
hereof) or Continue Loans of one Type as Loans of the same
Type (as provided in Section 2l07 hereof)."
(d) Subsection (e) is hereby added to Section 2.02 of the Credit
Agreement as follows:
"(e) INCREASED COMMITMENT LOANS. The Company shall give
the Administrative Agent notice with respect to any borrowings
of Increased Commitment Loans hereunder in accordance with the
terms and provisions of Subsection (a) of this Section 2.02.
All provisions of Section 2.02(a) shall also be applicable
with respect to Increased Commitment Loans.
(e) Section 2.03 (CHANGES IN AGGREGATE AMOUNT OF COMMITMENTS) is
deleted and replaced with the following:
"2.03 CHANGES IN AGGREGATE AMOUNT OF COMMITMENTS.
(a) The aggregate amount of the Commitments shall be
automatically reduced to zero on the Commitment Termination
Date.
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(b) The Company shall have the right at any time or from
time to time to terminate in whole, or to reduce in part, the
aggregate unused amount of the Commitments; PROVIDED that (x)
the Company shall give notice of each such termination or
reduction as provided in Section 4.05 hereof, (y) each partial
reduction shall be in an integral multiple of $1,000,000 and
(z) on or before the Commitment Termination Date, the
aggregate amount of the Commitments shall at no time be less
than the aggregate outstanding principal amount of all Loans
(including the Competitive Loans and the Swingline Loans).
(c) The Company shall have the right to terminate or
reduce the unused amount of the Swingline Commitment at any
time or from time to time on not less than three Business
Days' prior notice to the Administrative Agent (which shall
promptly notify the Swingline Bank and each Bank) of each such
termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction
(which shall be in integral multiples of $1,000,000) and shall
be irrevocable and effective only upon receipt by the
Administrative Agent.
(d) The Commitments and Swingline Commitment, once
terminated or reduced, may not be reinstated.
(e) On the date ten (10) days after the closing of each
Repayment Transaction described in Section 8.18 of the Credit
Agreement, the amount of the Increased Commitment Amount shall
be reduced proportionately among the Banks by any amount
required to be used to repay the Loans pursuant to Section
8.18 of the Credit Agreement.
(f) Notwithstanding anything to the contrary herein, any
payments received by or on behalf of the Company shall first
be applied to reduce the outstanding Increased Commitment
Loans, if any."
(f) Subsection (g) is added to Section 2.06 of the Credit
Agreement as follows:
"(g) The Increased Commitment Loans made by each Bank
shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-5 hereto, dated the
date of the Fifth Amendment, payable to such Bank in a
principal amount equal to the amount of its increased
commitment as originally in effect and otherwise duly
completed. The date, amount, Type, interest rate and duration
of Interest Period (if applicable) of each Increased
Commitment Loan made by each Bank providing such loan to the
Company, and each payment made on account of the principal
thereof, shall be recorded by such Bank on its books and,
prior to any transfer of the Increased Commitment Note
evidencing the Increased Commitment Loans held by it, endorsed
by such Bank on the schedule attached to such Increased
Commitment Note or any continuation thereof; PROVIDED that the
failure of such Bank to make any such recordation or
endorsement shall not affect the obligations of the Company to
make a payment when due of any amount owing hereunder or under
such Increased Commitment
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Note in respect of the Increased Commitment Loans evidenced by
such Increased Commitment Note."
(g) Section 2.07 (OPTIONAL PREPAYMENTS AND CONVERSIONS OR
CONTINUATIONS OF LOANS) of the Credit Agreement is deleted and replaced
with the following:
"2.07 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS
OF LOANS. Subject to Section 4.04 hereof, the Company shall
have the right to prepay Swingline Loans, the Increased
Commitment Loans or any Series of Revolving Credit Loans or
the Term Loans, in whole at any time or in part from time to
time or to Convert Loans of one Type into Loans of another
Type or Continue Loans of one Type as Loans of the same Type,
PROVIDED that:
(a) the Company shall give the Administrative Agent
notice of each such prepayment, Conversion or Continuation as
provided in Section 4.05 hereof (and, upon the prepayment date
specified in any such notice of prepayment, the amount to be
prepaid shall become due and payable hereunder);
(b) the Company shall simultaneously pay interest on any
principal so prepaid accrued to the date of such prepayment;
(c) if any Revolving Credit Loan or Increased Commitment
Loan that is a Eurodollar Loan is prepaid or Converted on any
day other than the last day of the Interest Period therefor,
the Company shall simultaneously pay any amounts required by
Section 5.05 hereof in respect of such prepayment;
(d) prepayments or Conversions of Term Loans that are
Eurodollar Loans may only be made on the last day of any
Interest Period therefor and shall be applied ratably to the
outstanding installments of such Term Loans;
(e) if any Swingline Loan is outstanding, the Increased
Commitment Loans and Revolving Credit Loans may not be prepaid
or Converted;
(f) Swingline Loans may not be Continued;
(g) Any payments received by or on behalf of the Company
shall first be applied to reduce the outstanding Increased
Commitment Loans, if any.
The Company shall not have the right to prepay any Competitive
Loan without the consent of the Bank making such Competitive
Loan.
Notwithstanding the foregoing, and without limiting the rights
and remedies of the Banks under Section 9 hereof, in the event
that any Event of Default shall have occurred and be
continuing, the Administrative Agent may (and at the request
of the Majority Banks shall) suspend (for so long as such
Event of Default shall be continuing) the right of the Company
to Convert any Loan into a Eurodollar Loan, or to Continue any
Loan as a Eurodollar Loan, in which event
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all Loans shall be Converted (on the last day(s) of the
respective Interest Periods therefor) or Continued, as the
case may be, as Base Rate Loans."
(h) Subsection (a) of Section 3.01 of the Credit Agreement is
deleted and replaced with the following:
"(a) The Company hereby promises to pay to the
Administrative Agent for account of each Bank providing any
such Loan (i) the outstanding principal amount of each of such
Bank's Increased Commitment Loans, and each Increased
Commitment Loan shall mature, upon the expiration of the
Increased Commitment Period, (ii) the outstanding principal
amount of each of such Bank's Revolving Credit Loans, and each
Revolving Credit Loan shall mature, on the Commitment
Termination Date and (iii) the outstanding principal amount of
each Competitive Loan, and each Competitive Loan shall mature,
on the last day of the Interest Period applicable to such
Loan."
(i) Subsection (a) of Section 3.02 of the Credit Agreement is
deleted and replaced with the following:
"(a) if such Loan is a Revolving Credit Loan or an
Increased Commitment Loan, (i) during such periods as such
Loan is a Base Rate Loan, the Base Rate (as in effect from
time to time) PLUS the Applicable Margin and (ii) during such
periods as such Loan is a Eurodollar Loan, for each Interest
Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period PLUS the Applicable Margin;"
(j) Section 4.02 of the Credit Agreement is deleted and replaced
with the following:
"4.02 PRO RATA TREATMENT. Except to the extent otherwise
provided herein:
(a) the making of Loans of a particular Class (other than
Competitive Loans and Swingline Loans) shall be made pro rata
among the Banks according to the amounts of their respective
Original Commitment Amounts or Increased Commitment Amounts,
as the case may be (without taking into account any
Competitive Loans or Swingline Loans) and the then current
Interest Period of Loans of a particular Class and Series
shall be coterminous;
(b) except as otherwise provided in Section 5.04 hereof,
Eurodollar Loans having the same Interest Period shall be
allocated pro rata among the Banks according to the amounts of
their respective Original Commitment Amounts or Increased
Commitment Amounts, as the case may be (in the case of the
making of Loans) or their respective Loans (in the case of
Conversions and Continuations of Loans);
(c) each payment or prepayment of principal of Loans of a
particular Class and Series shall be made for account of the
Banks pro rata in accordance with the respective unpaid
principal amounts of the Loans of such Class and Series held
by the Banks;
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(d) each payment of interest on Loans of a particular
Class and Series shall be made for account of the Banks pro
rata in accordance with the amounts of interest on Loans of
such Class and Series then due and payable to the respective
Banks;
(e) each termination or reduction of the amount of the
Original Commitment Amounts shall be applied to the Original
Commitment Amounts of the Banks, pro rata according to the
respective amounts of the Orignal Commitment Amounts of the
Banks;
(f) each termination or reduction of the amount of the
Increased Commitment Amounts shall be applied to the Increased
Commitment Amounts of the Banks, pro rata according to the
respective amounts of the Increased Commitment Amounts of the
Banks; and
(g) notwithstanding the foregoing, Borrowings, payments
and prepayments of Competitive Loans and Swingline Loans shall
be made without regard to the foregoing provisions of this
Section 4.02.
(k) Section 4.04 (MINIMUM AMOUNTS) of the Credit Agreement is
deleted and replaced with the following:
"4.04 MINIMUM AMOUNTS. Except for Conversions, or
prepayments made pursuant to Section 5.04 hereof, each
Borrowing, Conversion and partial prepayment of principal of
Revolving Credit Loans and Increased Commitment Loans shall be
in an aggregate amount equal to (i) if it is a Eurodollar
Loan, $10,000,000 or any integral multiple of $1,000,000 in
excess thereof or (ii) if it is a Base Rate Loan, $5,000,000
or integral multiple of $500,000 in excess thereof
(Borrowings, Conversions or prepayments of or into Loans of
different Types or, in the case of Eurodollar Loans, having
different Interest Periods at the same time hereunder to be
deemed separate Borrowings, Conversions and prepayments for
purposes of the foregoing, one for each Type or Interest
Period). Each Conversion of Term Loans shall be in an
aggregate amount equal to $3,000,000 or any integral multiple
of $200,000 in excess thereof, and each partial prepayment or
Conversion of the principal of Term Loans shall be in an
aggregate amount at least equal to $500,000 (Conversions or
prepayments of or into Loans of different Types or, in the
case of Eurodollar Loans, having different Interest Periods at
the same time hereunder to be deemed separate Conversions and
prepayments for purposes of the foregoing, one for each Type
or Interest Period). Each Borrowing or partial prepayment of
Swingline Loans shall be in an aggregate amount at least equal
to $1,000,000 or in multiples of $200,000 in excess thereof.
Each Borrowing or partial prepayment of Competitive Loans
shall be in an aggregate amount at least equal to $5,000,000
or in multiples of $1,000,000 in excess thereof."
(l) Subsection (d) of Section 8.05 of the Credit Agreement is
deleted and replaced with the following:
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"(d) Notwithstanding the foregoing paragraphs of this
Section 8.05:
(i) any Subsidiary of the Company may be merged
or consolidated with or into (x) the Company if the Company
shall be the continuing or surviving corporation or (y) any
other Subsidiary of the Company; PROVIDED that if any such
transaction shall be between a Subsidiary of the Company and a
Wholly Owned Subsidiary of the Company, such Wholly Owned
Subsidiary shall be the continuing or surviving corporation;
PROVIDED FURTHER, the Company shall provide the Agent notice
of such transaction within five (5) days of the closing of
such transaction;
(ii) the Company or any of its Subsidiaries may
purchase equipment, furniture and supplies to be used in the
ordinary course of business;
(iii) the Company or any of its Subsidiaries may
make Investments permitted by Section 8.08 hereof;
(iv) any Subsidiary of the Company may convey,
sell, lease, transfer or otherwise dispose of any or all of
its Property (upon voluntary liquidation or otherwise) to the
Company or a Wholly Owned Subsidiary of the Company; PROVIDED,
the Company shall provide the Agent notice of such transaction
within five (5) days of the closing of such transaction; and
(v) the Company or any of its Subsidiaries may
convey, sell, lease, transfer or otherwise dispose of (x)
equipment no longer used or useful in its business, (y) any
portfolio Investment sold or disposed of in the ordinary
course of business and (z) any other Investment (including any
Investment in the capital stock of Subsidiaries of the Company
other than ERC or Asset Guaranty) having a value, together
with the value (when sold, leased transferred or otherwise
disposed of), of all Investments sold, leased, transferred or
otherwise disposed of in reliance on this sub-clause (z), not
in excess of $3,000,000."
(m) Section 8.18 is hereby added to the Credit Agreement:
"Section 8.18 PROCEEDS OF CERTAIN TRANSACTIONS. The Company
shall apply 100% of the net proceeds to the Company (net of
reasonable costs incurred by the Company, including, but not
limited to, legal fees and disbursements, brokers' fees,
advisory fees, accountants' fees and disbursements) from any
of the transactions described below (the "REPAYMENT
Transactions") to repay the Loans. Such repayment shall be
made within ten (10) days of the closing of any such Repayment
Transaction. The Company shall provide the Agent with a
reasonably detailed breakdown (including back-up information,
if requested by the Agent or any Bank) of all fees and
expenses incurred in connection with such Repayment
Transaction within five (5) days of the closing of such
Repayment Transaction.
(a) The issuance by the Company of capital stock of any
class in the public or private market, including mandatory
convertible preferred equity or other capital markets product,
other than in connection with (1) the Company's employee or
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director incentive or stock option plans (including, without
limitation, the exercise of employee or director stock options
issued thereunder) or the Company's Director Stock Ownership
Plan or (2) any acquisition by the Company or any of its
Subsidiaries of any business otherwise permitted by this
Agreement, the consideration for which is, in whole or in
part, shares of the capital stock of such class.
(b) Subject to Section 8.05 hereof, the sale of any of
the Company's Subsidiaries or the sale, lease, transfer or
disposition of any part of its or its Subsidiaries' Asset
Based Businesses.
(c) Subject to Section 8.07 hereof, the issuance and sale
of any debt in the public or private market by the Company."
(n) Subsection (b) of Section 11.06 of the Credit Agreement is
hereby deleted and replaced with the following:
"(b) Each Bank may, at any time or from time to time,
assign to one or more other Persons all or any portion of its
Loans, its Notes, and its Commitment (but only with the
consent of the Company, the Administrative Agent and the
Swingline Bank, which consents shall not be unreasonably
withheld); PROVIDED that (i) no such consent by the Company,
the Administrative Agent or the Swingline Bank shall be
required in the case of any assignment to another Bank; (ii)
any such partial assignment shall be in an amount at least
equal to $5,000,000 or any integral multiple of $1,000,000 in
excess thereof; (iii) each such assignment by a Bank of its
Increased Commitment Loans, Increased Commitment Note,
Revolving Credit Loans, Revolving Credit Note, Term Loan, Term
Loan Note or Commitment shall be made in such manner so that
the same portion of its Increased Commitment Loans, Increased
Commitment Note Revolving Credit Loans, Revolving Credit Note,
Term Loan, Term Loan Note and Commitment is assigned to the
respective assignee; (iv) each such assignment shall be
effected by an Assignment and Acceptance in substantially the
form of Exhibit D hereto. Upon execution and delivery by the
assignee to the Company and the Administrative Agent of an
Assignment and Acceptance pursuant to which such assignee
agrees to become a "Bank" hereunder (if not already a Bank)
having the Commitment and Loans specified in such Assignment
and Acceptance, and upon consent thereto by the Company and
the Administrative Agent, to the extent required above, the
assignee shall have, to the extent of such assignment (unless
otherwise provided in such assignment with the consent of the
Company and the Administrative Agent), the obligations, rights
and benefits of a Bank hereunder holding the Commitment and
Loans (or portions thereof) assigned to it (in addition to the
Commitment and Loans, if any, theretofore held by such
assignee) and the assigning Bank shall, to the extent of such
assignment, be released from the Commitment (or portion
thereof) so assigned. Notwithstanding the foregoing, no
assignee or other transferee of any of the rights, obligations
or benefits of a Bank in respect of the Loans shall be
entitled to receive any greater payment under Sections 5.01,
5.05 and 5.06 than such Bank would have been
-12-
entitled to receive with respect to the Loans unless such
transfer is made with the Company's prior written consent
specifically detailing the nature of the greater payments to
be due, or at a time when the circumstances giving rise to
such greater payment did not exist or had not been announced.
Upon each such assignment the assigning Bank shall pay the
Administrative Agent an assignment fee of $3,500."
(o) Schedules I and II of the Credit Agreement are hereby deleted
and replaced in their entirety with Schedules I and II attached hereto,
respectively.
(p) Exhibit A-5 is hereby added to the Credit Agreement as set
forth in Exhibit A-5 hereto.
Section 3. CONDITIONS PRECEDENT. This Fifth Amendment shall take effect
from the first day (the "Amendment Effective Date") that the Agent shall have
received counterparts hereof signed by the Company, each of the Banks identified
on the signature pages of this Fifth Amendment, the Swingline Bank and the
Agent, and each of the conditions set forth in this Section 3 has been waived by
each Bank and the Agent or met:
(a) The Agent shall have received from the Company a certificate
of a senior officer to the Company, dated the Amendment Effective Date, stating
that:
(i) the representations and warranties contained in
Section 7 of the Credit Agreement are correct on and as of the
date of such certificate as though made on and as of such date
(or, if such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific
date); and
(ii) no Event of Default or Default has occurred and is
continuing or would result from the signing of the Fifth
Amendment or the transactions contemplated thereby, in each
case taking into account the effect of the amendments being
made by this Fifth Amendment.
(b) The Agent shall have received a certificate of the Secretary
or an Assistant Secretary of the Company, dated the Amendment Effective Date and
certifying that, except for the certificate of dissolution of Enhance Investment
Corporation, which was filed with the Secretary of State of Delaware on March
16, 2000, amendments, copies of which are attached to such Certificate, the
charters or similar organizational documents of the Company and the Material
Subsidiaries have not been amended since September 29, 1999.
(c) The Agent shall have received for the account of each Bank a
duly completed Increased Commitment Note, Revolving Credit Note and a
Competitive Note, each duly executed and delivered by the Company and made
payable to each Bank in the amount of its increased Commitment.
(d) The Agent shall have received an opinion, dated the Amendment
Effective Date, of Xxxxxx Xxxxxxx, Executive Vice President and General Counsel
of the Company, covering such matters as the Administrative Agent or any Bank
may reasonably request (and the Company hereby instructs such counsel to deliver
such opinion to the Banks and the Agent), in which
-13-
opinion such counsel may take into account the effect of the amendments being
made by this Fifth Amendment.
(e) The Agent shall have received all information, documents,
certificates and opinions of counsel relating to the Company and its
Subsidiaries, as any Bank or the Agent may reasonably request, all in form and
substance satisfactory to the Banks, the Agent and its special counsel.
(f) The Agent shall have received payment of a fee for the ratable
benefit of the applicable Banks providing the Increased Commitment Amount equal
to (i) 40 basis points ($75,000) on the extension of the Increased Commitment
Period (as originally defined in the Fourth Amendment) with respect to the
original $18,750,000 increased commitment and (ii) 1.0% ($312,500) on the
additional increased commitment of $31,250,000 during the extended Increased
Commitment Period (as defined herein) and the Agent shall have received payment
of any other fees the Company shall have agreed to pay to the Agent.
(g) Day, Xxxxx & Xxxxxx LLP, special counsel to the Agent, shall
have received payment of its legal fees and disbursements in connection with the
preparation, negotiation, execution and delivery of this Fifth Amendment.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants as follows:
(a) The execution, delivery and performance by the Company of this
Fifth Amendment have been duly authorized by all necessary corporate action and
do not and will not (i) require any consent or approval of its shareholders;
(ii) violate any provisions of its articles of incorporation or by-laws; (iii)
violate any provision of any law, rule, regulation (including without
limitation, Regulation U and X), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to and binding
upon the Company or any Subsidiary, it being understood that the Company may be
required to file a copy of this Fifth Amendment with the Securities and Exchange
Commission in connection with the Company's periodic filing requirements; (iv)
result in a breach of or constitute a default or require any consent under any
indenture or loan or credit agreement or any other material agreement, lease or
instrument to which the Company or any Subsidiary is a party or by which it or
its Properties may be bound; or (v) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the Properties now owned
or hereafter acquired by the Company.
(b) No authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution or delivery by the Company
of this Fifth Amendment or performance by the Company thereof or for the
legality, validity or enforceability of this Fifth Amendment.
(c) This Fifth Amendment constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
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.
-14-
(d) The information, reports, financial statements, exhibits and
schedules furnished in writing by or on behalf of the Company or any of its
Subsidiaries to the Agent or any Bank in connection with the negotiation,
preparation or delivery of this Fifth Amendment or delivered pursuant hereto,
when taken as a whole, do not, as of the Amendment Effective Date, contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. To the Company's knowledge, there is no
fact peculiar to the Company or any of its Subsidiaries (in contrast to
information of a general economic or industry nature) that could have a Material
Adverse Effect that has not been disclosed herein or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Banks for use in connection with the transactions contemplated hereby.
Section 5. EFFECT ON THE CREDIT AGREEMENT. The execution, delivery and
effectiveness of this Fifth Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of any of the Banks
under the Credit Agreement, nor constitute a waiver of any provision of the
Credit Agreement. On and after the Amendment Effective Date, the rights and
obligations of the parties hereto shall be governed by the Credit Agreement, as
amended hereby.
Section 6. COSTS, EXPENSES AND TAXES. The Company agrees to pay on
demand all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Fifth Amendment and
any other instruments and documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel to the Agent) in
accordance with the terms of Section 11.03 of the Credit Agreement.
Section 7. EXECUTION IN COUNTERPARTS. This Fifth Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
Section 8. GOVERNING LAW. This Fifth Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
Section 9. DEFINED TERMS. Until the Amendment Effective Date,
capitalized terms used herein which are not expressly defined herein shall have
the meanings ascribed to them in the Credit Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK --
SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed and delivered as of the day and year first above written.
ENHANCE FINANCIAL SERVICES GROUP INC.
By: Xxxxxxx Xxxxxxxx
------------------------------------
Title:
S-1
COMMITMENT
Increased Original
Commitment Commitment
Amount Amount
BANKS
-----
$20,000,000 $30,000,000 FLEET NATIONAL BANK
By: /s/ X.X. Xxxxxxx
-------------------------------------
Title: Vice President
$ 0 $25,000,000 THE BANK OF NEW YORK
By: /s/ Xxxxxx Pollensky
-------------------------------------
Title: VP
$18,750,000 $25,000,000 BANK ONE, NA (MAIN OFFICE CHICAGO)
(FORMERLY KNOWN AS THE FIRST NATIONAL
BANK OF CHICAGO)
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Title: XXXXXXX X. XXXXXXXXX
SENIOR VICE PRESIDENT
$11,250,000 $20,000,000 DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Title: Xxxx X. XxXxxx
Director
and
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Xxxxx X. Xxxxxxxxxx
Director
S-2
SWINGLINE BANK
--------------
FLEET NATIONAL BANK,
as Swingline Bank
By: /s/ X.X. Xxxxxxx
-------------------------------------
Title: Vice President
AGENT
-----
FLEET NATIONAL BANK,
as Agent
By: /s/ X.X. Xxxxxxx
-------------------------------------
Title: Vice President
S-3
EXHIBIT A-5
[Form of Increased Commitment Note]
PROMISSORY NOTE
$________________ ____________, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, ENHANCE FINANCIAL SERVICES GROUP INC., a New York
corporation (the "COMPANY"), hereby promises to pay to the order of
________________ (the "PAYEE"), for the account of its respective Applicable
Lending Offices provided for by the Credit Agreement referred to below, at the
principal office of Fleet National Bank at 000 Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, the principal sum of ________________ Dollars (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Increased
Commitment Loans made by the Payee to the Company under the Credit Agreement),
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of each such
Increased Commitment Loan, at such office, in like money and funds, for the
period commencing on the date of such Increased Commitment Loan until such
Increased Commitment Loan shall be paid in full, at the rates per annum and on
the dates provided in the Credit Agreement.
The date, amount, interest rate and duration of Interest Period of each
Increased Commitment Loan made by the Payee to the Company, and each payment
made on account of the principal thereof, shall be recorded by the Payee on its
books and, prior to any transfer of this Note, endorsed by the Payee on the
schedule attached hereto or any continuation thereof, PROVIDED that the failure
of the Payee to make any such recordation or endorsement shall not affect the
obligations of the Company to make a payment when due of any amount owing under
the Credit Agreement or hereunder in respect of the Increased Commitment Loans
made by the Payee.
This Note is one of the Increased Commitment Notes referred to in the
Credit Agreement dated as of June 30, 1998 (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT") among the Company, the banks
party thereto and Fleet National Bank, as Swingline Bank and Administrative
Agent, and evidences Increased Commitment Loans made by the Payee thereunder.
Terms used but not defined in this Note have the respective meanings assigned to
them in the Credit Agreement.
A-1
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified therein.
Except as permitted by Sections 11.06(b) and 11.06(d) of the Credit
Agreement, this Note may not be assigned by the Payee to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
ENHANCE FINANCIAL SERVICES GROUP INC.
By
--------------------------------------
Title:
A-2
SCHEDULE OF INCREASED COMMITMENT LOANS
This Note evidences Increased Commitment Loans made, Continued or
Converted under the within-described Credit Agreement to the Company, on the
dates, in the principal amounts, of the Types bearing interest at the rates and
having Interest Periods (if applicable) of the durations set forth below,
subject to the payments and prepayments, Continuations, and Conversions of
principal set forth below:
Amount
Date Paid,
Made, Principal Duration Prepaid,
Continued Type Amount of Continued Unpaid
or of of Interest Interest or Principal Notation
Converted Loan Loan Rate Period Converted Amount Made by
--------- ---- ---- ---- ------ --------- ------ -------
A-3
