FIRST AMENDMENT
THIS FIRST AMENDMENT dated as of April 29, 1997 (this "Amendment")
is among LIFE RE CORPORATION (the "Borrower"), various financial
institutions (the "Lenders"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent for the Lenders (in such
capacity, the "Administrative Agent").
W I T N E S E T H:
WHEREAS, the Borrower, the Lenders and the Administrative Agent
have entered into a Credit Agreement dated as of November 2, 1995 (the
"Agreement") which provides for the Lenders to make Loans to the Borrower
from time to time (terms defined in the Agreement and not otherwise
defined herein are used herein as defined in the Agreement); and
WHEREAS, the parties hereto desire to amend the Agreement in
certain respects as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the parties hereto agree as follows:
SECTION 1 AMENDMENTS. Effective on (and subject to the occurrence of)
the First Amendment Effective Date (as defined below), the Agreement shall
be amended in accordance with Sections 1.1 through 1.7 below.
1.1 Amendment of Certain Definitions. Section 1.1 of the
Agreement is amended by deleting the existing definitions of "Applicable
Margin", "EBT", "Non-Investment Grade", "Statutory Surplus", and "Total
Capital" in their entirety and substituting the following therefor,
respectively (it being understood that the existing definition of
"Applicable Margin" shall be applicable for all times prior to the First
Amendment Effective Date):
Applicable Margin at any time means (a) commencing on the
date of the effectiveness of the First Amendment to this Agreement
and until changed pursuant to clause (b), 0.3%, and (b) on and
after any date specified below on which the Applicable Margin is to
be adjusted, the rate per annum for the relevant time period set
forth below opposite the applicable Indebtedness to Capitalization
Ratio:
Indebtedness to
Capitalization Ratio Applicable Margin
Less than 25% 0.250%
25% or more but less than
or equal to 35% 0.300%
Greater than 35% 0.375%.
The Applicable Margin shall be adjusted 50 days (or, in the
case of the last Fiscal Quarter of any Fiscal Year, 95 days) after
the end of each Fiscal Quarter based on the Indebtedness to
Capitalization Ratio as of the last day of such Fiscal Quarter; it
being understood that (a) if the Borrower fails to deliver the
financial statements required by Section 8.1.1(a) by the 50th (or,
if applicable, the 95th) day after any Fiscal Quarter, the
Applicable Margin shall be 0.375% until such financial statements
are delivered; and (b) any adjustment in the Applicable Margin
shall result in an immediate change in the interest rate for all
outstanding Eurodollar Loans. Notwithstanding the foregoing, no
decrease in the Applicable Margin shall be effected on any date on
which an Event of Default exists (but shall be delayed until the
first date on which no Event of Default exists).
EBT means for any period the sum for such period of (i) the
consolidated Statutory EBT of the Insurance Subsidiaries (using
consolidating principles in accordance with GAAP, wherein
intercompany balances and transactions are eliminated) plus (ii)
any interest expense incurred by TexasRe plus (iii) any Investment
Income of the Borrower.
Non-Investment Grade means any debt instrument or preferred
stock other than a debt instrument or preferred stock which (a) is
rated Baa3 or better (or P-2 or better in the case of commercial
paper) by ▇▇▇▇▇'▇ Investors Service, Inc. or (b) is rated BBB- or
better (or A-2 or better in the case of commercial paper) by
Standard & Poor's Ratings Group or (c) is not rated by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Group but (i)
is rated "2" or better by the NAIC or (ii) if not rated by the
NAIC, is rated the equivalent of NAIC "2" or better by the Borrower
in good faith using generally accepted analytic practices of the
financial industry.
Statutory Surplus means, as of any date, with respect to any
Insurance Subsidiary, the sum of (x) the amount reported on page 3,
line 37, column 1 of its Annual Statement plus (y) the sum of AVR
plus IMR of such Insurance Subsidiary plus (z) the sum of AVR plus
IMR of every direct and indirect Insurance Subsidiary of such
Insurance Subsidiary; or an amount determined in a consistent
manner for any date other than one as of which an Annual Statement
is prepared, plus, in the case of TexasRe, the amount of surplus
classified as a liability in connection with an agreement with the
Texas Department of Insurance concurrent with an amendment to
TexasRe's surplus debentures which are reflected on page 3 in the
details to line 25 of its Annual Statement.
Total Capital shall mean the sum of (a) the Statutory Surplus
of Life Reassurance, plus (b) the Statutory Surplus of TexasRe
(excluding the Statutory Carrying Value of Life Reassurance) to the
extent such amount exceeds the minimum capital and surplus
requirements of its Department, plus (c) any cash, cash equivalents
and Invested Assets (excluding surplus debentures of TexasRe on the
books of the Borrower and the GAAP book value of TexasRe) of the
Borrower only.
1.2 Amendment to Section 2.8. The first clause of the first
sentence of Section 2.8 of the Agreement is amended to read as follows:
"On or before each of September 1, 1996, September 1, 1997 and September
1, 1998,".
1.3 Definition of "Facility Fee Rate". The second and third
paragraphs of Section 3.4.1 of the Agreement are amended in their
entirety to read as follows (it being understood that the existing
paragraphs shall be applicable for all times prior to the First Amendment
Effective Date):
For purposes of this Section 3.4.1, "Facility Fee Rate" means
the rate per annum set forth in the schedule below opposite the
applicable Indebtedness to Capitalization Ratio:
Indebtedness to Facility
Capitalization Ratio Fee Rate
Less than 25% 0.125%
25% or more but less than
or equal to 35% 0.150%
Greater than 35% 0.175%.
The Facility Fee Rate shall be 0.15% commencing on the date
of the effectiveness of the First Amendment to this Agreement and
thereafter shall be adjusted 50 days or, in the case of the last
Fiscal Quarter of any Fiscal Year, 95 days after the end of each
Fiscal Quarter based on the Indebtedness to Capitalization Ratio as
of the last day of such Fiscal Quarter; it being understood that
(a) if the Borrower fails to deliver the financial statements
required by Section 8.1.1(a) by the 50th (or, if applicable, the
95th) day after any Fiscal Quarter, the Facility Fee Rate shall be
0.175% until such statements are delivered; and (b) no decrease in
the Facility Fee Rate shall be effected on any date on which an
Event of Default exists (but shall be delayed until the first date
on which no Event of Default exists). Any change in the Facility
Fee Rate shall be immediately effective for computation of the
facility fee.
1.4 Amendment to Section 8.1.10. Clause (ii) of Section 8.1.10
of the Credit Agreement is amended in its entirety to read as follows:
(ii) The Borrower and its Subsidiaries shall not invest, in
the aggregate at any one time, more than an amount equal to the
lesser of (A) fifteen percent (15%) of the consolidated Invested
Assets of the Borrower and its Subsidiaries (using consolidating
principles in accordance with GAAP, wherein intercompany balances
are eliminated) or (B) 100% of the Statutory Surplus of Life
Reassurance, in the following types of investments valued at GAAP
carrying value, collectively, at any time:
(a) Non-Investment Grade securities;
(b) common stock and other equity securities (other
than (x) investments in Subsidiaries and (y)
preferred stock); and
(c) Investments in interests in real property,
including, without limitation, fee title, mortgage
loans and short and long-term leases (other than
mortgage backed securities that are otherwise in
compliance with this Section 8.1.10).
1.5 Amendments to Section 8.2.13. Clause (i) of Section 8.2.13
is amended by replacing the words "stockholder's equity" with the word
"Equity"; and clause (ii) of Section 8.2.13 is amended in its entirety to
read as follows:
(ii) the Borrower may make additional Restricted Payments if (a)
immediately before and after giving effect thereto no Event of
Default or Unmatured Event of Default exists, (b) Life Reassurance
has an A.M. Best rating of A or better and (c) immediately before
and after giving effect thereto Total Capital (including, without
duplication, the full amount of the surplus notes) is greater than
the consolidated Indebtedness of the Borrower and its Subsidiaries.
1.6 Amendment of Form of Compliance Certificate. Exhibit E to
the Agreement is deleted in its entirety and replaced by the Exhibit E
attached hereto.
1.7 Amendment to Schedule 2.1. Schedule 2.1 to the Agreement is
deleted in its entirety and replaced by the Schedule 2.1 attached hereto.
SECTION 2 WARRANTIES. To induce the Lenders to enter into this
Amendment, the Borrower warrants that:
2.1 Authorization. The Borrower is duly authorized to execute
and deliver this Amendment and to perform its obligations under the
Agreement, as amended hereby (the "Amended Agreement").
2.2 No Conflicts. The execution and delivery of this Amendment,
and the performance by the Borrower of its obligations under the Amended
Agreement, do not and will not conflict with any provision of law or of
the charter or by-laws of the Borrower or of any agreement binding upon
the Borrower.
2.3 Validity and Binding Effect. The Amended Agreement is a
legal, valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
SECTION 3 CONDITIONS PRECEDENT TO EFFECTIVENESS. The amendments
set forth in Section 1 hereof shall become effective, as of the day and
year first above written, on such date (herein called the "First
Amendment Effective Date") when each of the following conditions
precedent have been satisfied.
3.1 First Amendment. The Administrative Agent shall have received
counterparts of this Amendment executed by the Borrower and all Lenders.
3.2 No Default. No Event of Default or Unmatured Event of Default
shall have occurred and be continuing.
SECTION 4 DELETION OF LENDER; CHANGE IN PERCENTAGES.
(a) Concurrently with the effectiveness of this Amendment pursuant to
Section 3, Bank One Texas, N.A. ("Bank One") shall cease to be a "Lender"
under and for all purposes of the Agreement and shall no longer have any
rights or obligations thereunder, except for (i) rights to receive
payment of indemnities, reimbursements and other similar amounts from the
Borrower (including, without limitation, rights under Section 4.5 of the
Agreement) and (ii) obligations to indemnify, reimburse or make payment
to the Administrative Agent with respect to circumstances or events on or
prior to the date of such effectiveness. In furtherance of the
foregoing, on the First Amendment Effective Date the Borrower will pay to
the Administrative Agent for the account of Bank One all principal,
interest, fees and other amounts then owed to Bank One under the
Agreement. Bank One agrees that it will promptly return to the Borrower
the Note issued to Bank One under the Agreement, marked to show that such
Note has been cancelled.
(b) Concurrently with the effectiveness of this Amendment and the
deletion of Bank One as a Lender, the Percentages will be reallocated
among the Lenders so that each Lender will have a Percentage as set forth
on Schedule 2.1 hereto. In furtherance of the foregoing, on the First
Amendment Effective Date, each Lender which will have an increased
Percentage after giving effect hereto will make additional Loans to the
Borrower (which Loans shall have remaining Interest Periods and interest
rates corresponding to the currently outstanding Eurodollar Loans) in an
amount so that, after giving effect to such additional Loans, each Lender
will have a pro rata share (according to its Percentage) of all
Borrowings. The Borrower agrees that it will indemnify each Lender upon
demand for any loss or expense such Lender may sustain or incur as a
result of the making by such Lender of each additional Eurodollar Loan
pursuant to the foregoing sentence (based upon the difference, if any,
between the funding cost for such Lender for the remaining portion of the
applicable Interest Period and the funding cost such Lender would have
incurred for such portion of such Interest Period had such Lender funded
such Loan on the first day of such Interest Period); provided that the
Borrower shall only be obligated to pay the net loss or expense incurred
by such Lender after taking into account the corresponding benefit to
such Lender (if any) as a result of all additional Loans made pursuant to
the foregoing sentence (but no Lender shall be obligated to reimburse the
Borrower for any net benefit to such Lender resulting from such
additional Loans).
SECTION 5 GENERAL.
5.1 Expenses. The Borrower agrees to reimburse the Administrative
Agent upon demand for all reasonable expenses, including reasonable fees
of attorneys and paralegals for the Administrative Agent, incurred by the
Administrative Agent in connection with the preparation, negotiation and
execution of this Amendment and any document required to be furnished
herewith.
5.2 Governing Law. This Amendment shall be governed by the laws
of the State of New York applicable to contracts made and to be performed
entirely within such State.
5.3 Confirmation of the Agreement. Except as amended hereby, the
Agreement shall remain in full force and effect and is hereby ratified
and confirmed in all respects. After the First Amendment Effective Date,
all references in the Agreement and the other Loan Documents to "Credit
Agreement," "Agreement" or similar terms shall refer to the Amended
Agreement.
5.4 Execution in Counterparts. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but one and
the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized as
of the date first written above.
LIFE RE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President &
Chief Financial Officer
By: /s/W. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Secretary
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
FLEET NATIONAL BANK
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
MELLON BANK, N.A.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
BANK OF MONTREAL
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
Solely for purposes of Section 4 above:
BANK ONE TEXAS, N.A.
By:/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SCHEDULE 2.1
COMMITMENTS
Commitment
Lender Amount Percentage
Bank of America Illinois $30,000,000 18.75000%
Fleet National Bank $25,000,000 15.62500%
The Bank of New York $23,750,000 14.84375%
Mellon Bank N.A. $28,750,000 17.96875%
The Bank of Tokyo
Trust Company $28,750,000 17.▇▇▇▇▇%
Bank of Montreal $23,750,000 14.▇▇▇▇▇%
Totals $160,000,000 100%
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
Date: ___________, ____
TO: Bank of America National Trust and Savings
Association, as Administrative Agent, and the
Lenders under the Credit Agreement referred
to below
Re: Life Re Corporation
Please refer to that certain Amended and Restated Credit Agreement (as
heretofore amended, modified, supplemented, restated, refunded or renewed and
as currently in effect, herein called the "Agreement"), dated as of November
2, 1995, among Life Re Corporation (the "Borrower"), the Lenders and Co-Agents
referred to therein, and Bank of America National Trust and Savings
Association, as Administrative Agent.
Terms defined in the Agreement shall have the same meanings when used
herein.
In accordance with Section 8.1.1(e) of the Agreement, the Borrower
hereby certifies that the statements and calculations set forth below are
true and correct as of __________________, 19__ (the "Calculation Date"):
I. Section 8.1.10(ii) - Investments.
A. Consolidated Invested Assets of the Borrower
and its Subsidiaries $__________
B. 15% of Item A $__________
C. 100% of Statutory Surplus of Life Reassurance $__________
D. Maximum aggregate amount of investments
permitted pursuant to Section 8.1.10(ii)
(the lesser of Item B or Item C)
E. Restricted Investments
1. Non-Investment Grade Securities $__________
2. Common stock and other equity
securities (other than (x) investments
in Subsidiaries and (y) preferred stock) $__________
3. Investments in interests in real
property (excluding those described in
the parenthetical clause in
Section 8.1.10(ii)(c)) $__________
4. Sum of Items E.1 through E.3 $__________
[Item E.4 is not permitted to exceed Item D]
II. Section 8.1.10(iii) - Investments.
A. Admitted assets of Life Reassurance as of
the Calculation Date $__________
B. 4% of Item A $__________
C. Life Reassurance capital and surplus as of
the Calculation Date $__________
D. 20% of Item C
E. The lesser of Item B or Item D $__________
F. The value, as of the Calculation Date, of
the investments of the Borrower and its
Subsidiaries in one securities issuer which
exceed the amount of Item E __________
(excluding U.S. Government Securities, (name of issuer)
Canadian Government Securities and investments
of the Borrower and/or its Subsidiaries in $__________
the Borrower or any other Subsidiary) (value of investment)
[Item F is not permitted to exceed Item E]
III. Section 8.2.1 - EBT to Future Fixed Charges.
A. EBT for the calendar year ended on the
Calculation Date $__________
B. Future Fixed Charges of Borrower and its
Subsidiaries for the next calendar year: $__________
1. Future Interest Charges $__________
2. Mandatory principal payments with
respect to Consolidated Debt $__________
3. Sum of B.1 and B.2 $__________
C. Item A divided by Item B.3 $__________
[Item C is not permitted to be less than 1.25]
IV. Section 8.2.2 - EBT to Future Interest Charges.
A. EBT for the four Fiscal Quarters ended on
the Calculation Date $__________
B. Future Interest Charges of Borrower and
its Subsidiaries for the next four
Fiscal Quarters: $__________
1. Outstanding principal amount of Debt
at the Date of Calculation $__________
2. Annualized interest rate applicable
to Debt $__________
3. Item B.1 multiplied by Item B.2 $__________
4. Interest corresponding to mandatory
principal reductions scheduled for the
next four Fiscal Quarters $__________
5. Item B.3 less Item B.4 $__________
C. Item A divided by Item B.5)
D. EBT to Future Interest Charges for prior
Fiscal Quarter. __________
[Item C is not permitted to be less than 2.0
for any two consecutive Fiscal Quarters]
V. Section 8.2.3 Minimum Statutory Surplus
A. Total Adjusted Capital of Life Reassurance
as of the Calculation Date $__________
B. Company Action Level (as such term is
defined by NAIC risk-based capital level) $__________
[Item A is not permitted to be less than
150% of Item B]
VI. Section 8.2.4 Indebtedness to Capitalization
A. Consolidated Indebtedness of the Borrower and
its Subsidiaries as of the Calculation Date $__________
B. Consolidated Equity of the Borrower and its
Subsidiaries as of the Calculation Date $__________
C. Item A plus Item B $__________
D. Item A divided by Item C $__________
[Item D is not permitted to be greater
than 45%] $__________
VII. Section 8.2.13 - Restricted Payments.
A. Permitted Restricted Payments
1. Borrower's Equity as of the last day
of the Fiscal Year immediately preceding
the Calculation Date. $__________
2. 3% of Item A.1 $__________
3. Cumulative amount of Restricted Payments
during the applicable Fiscal Year as of
the Calculation Date $__________
B. A.M. Best rating of Life Reassurance as of
the Calculation Date __________
C. Total Capital
1. Statutory Surplus of Life Reassurance $__________
2. Statutory surplus of TexasRe (excluding
the Statutory Carrying Value of Life
Reassurance) to the extent such amount
exceeds minimum capital and surplus
requirements of its Department $__________
3. Any cash, cash equivalents and Invested
Assets (excluding surplus debentures of
TexasRe on books of Borrower and GAAP
book value of TexasRe) $__________
4. Sum of Items C.1 through C.3 $__________
D. Consolidated Indebtedness of Borrower and its
Subsidiaries as of the Calculation Date. $__________
[Item A.3 is not permitted to exceed Item A.2
unless (a) no Event of Default or Unmatured
Event of Default exists, (b) Item B is "A"
or better and (c) Item C.4 is greater than Item D]
VIII. Section 8.14 Capital Expenditures.
A. Cumulative amount of Capital Expenditures
during applicable Fiscal Year as of the
Calculation Date $__________
[Item A is not permitted to exceed $10,000,000]