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On December 9, 2008, National Financial Partners Corp. (the “Company”) entered into the Second Amendment (the “Second Amendment”) to its Credit Agreement, dated as of August 22, 2006 (as amended, the “Credit Agreement”), the financial institutions party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”). Capitalized terms used and not defined in this Item 1.01 have the meanings set forth in the Second Amendment.
Prior to the execution of the Second Amendment, the maximum Consolidated Leverage Ratio under the Credit Agreement on the last day of a rolling four-quarter period was 2.5 to 1.0. Under the terms of the Second Amendment, the maximum Consolidated Leverage Ratio has been amended to be 3.0 to 1.0 on the last day of the rolling four-quarter period ending December 31, 2008, 3.5 to 1.0 on the last day of the rolling four-quarter period ending March 31, 2009, 3.25 to 1.0 on the last day of the rolling four-quarter period ending June 30, 2009, 3.0 to 1.0 on the last day of the rolling four-quarter period ending September 30, 2009 and 2.5 to 1.0 on the last day of the rolling four-quarter period ending December 31, 2009 and each rolling four-quarter period thereafter.
The Second Amendment includes a new Consolidated Fixed Charge Coverage Ratio, defined as the ratio of (i) EBITDA less Capital Expenditures and taxes to (ii) Consolidated Fixed Charges. The Company will be obligated to maintain a minimum Consolidated Fixed Charge Coverage Ratio of 2.0 to 1.0 on a rolling four-quarter basis, to be first tested on the last day of the fiscal quarter during which Restricted Payments in respect of dividends and repurchases of stock are made.
The Credit Agreement’s negative covenant regarding Restricted Payments has been amended so that the Company will be permitted to make Restricted Payments in the form of
dividend payments and repurchases of its own stock so long as (i) both before and after giving effect to such payment, no Default or Event of Default shall have occurred and be continuing on a pro forma basis, and (ii) after giving effect to such payment, (A) the Consolidated Leverage Ratio shall not be more than 2.5 to 1.0, on a pro forma basis, (B) the Consolidated Fixed Charge Coverage Ratio shall not be less than 2.0 to 1.0, on a pro forma basis and (C) Minimum Liquidity shall not be less than $50,000,000.
The definition of Consolidated Total Debt has been amended to take into account the impact of SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141”). The definition of EBITDA been amended to take into
account the impact of SFAS 141 and SFAS No. 157, “Fair Value Measurement.” The definition of Indebtedness has been amended to include the Company’s earn-out obligations and contingent consideration obligations incurred in connection with acquisitions.
The Revolving Commitments shall be reduced to $225,000,000 and $200,000,000 on June 30, 2009 and December 31, 2009, respectively. The maturity date of the Credit Agreement remains August 22, 2011 and, subject to legal or regulatory requirements, is secured by the assets of the Company and its wholly-owned subsidiaries.
Under the terms of the Second Amendment, the Applicable Margin for Eurodollar Loans, the Applicable Margin for ABR Loans and the Letter of Credit Fee Rate increased by between 1.75% and 2.25%. The Commitment Fee increased by between 0.25% and 0.35%. The definition of Applicable Rate was amended to reflect the percentages set forth below:
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