EX-10.7 5 exhibit10_7.htm AMENDMENT NO. 5 TO REVOLVING CREDIT AGREEMENT

Exhibit 10.8

Execution Counterpart

AMENDMENT NO. 5

AMENDMENT NO. 5 (this "Amendment No. 5") dated as of November 10, 2008 among
LEGG MASON, INC. (the "Borrower"), the Lenders executing this Amendment No. 5 on
the signature pages hereto and Citibank, N.A., in its capacity as administrative
agent (the "Administrative Agent") under the Credit Agreement referred to below.

WHEREAS, the Borrower, the Lenders party thereto and the Administrative Agent
are parties to a 5-Year Revolving Credit Agreement dated as of October 14, 2005
(as amended by Amendments No. 1, No. 2, No. 3 and No. 4 thereto, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
revolving credit loans to the Borrower.

NOW THEREFORE, the parties hereto wish now to amend the Credit Agreement in
certain respects, and, accordingly, the parties hereto hereby agree as follows:

Section 1. Definitions. Except as otherwise defined in this Amendment No. 5,
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 4 below, but effective as of the date hereof, the Credit
Agreement shall be amended as follows:

2.01. References Generally. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to "this Agreement" (and
indirect references such as "hereunder", "hereby", "herein" and "hereof") shall
be deemed to be references to the Credit Agreement as amended hereby.

2.02. Certain Defined Terms. Section 1.01 of the Credit Agreement is hereby
amended by (i) deleting the definition of "AB Exposure", (ii) amending the
following definitions to read in their entirety as follows (to the extent
already included in said Section 1.01) and (iii) adding the following
definitions in the appropriate alphabetical location (to the extent not already
included in said Section 1.01):

"Additional Margin" means, as of any date on which (a) the aggregate principal
amount of Loans outstanding is less than 331/3% of the aggregate Commitments, 0%
per annum, (b) the aggregate principal amount of Loans outstanding is greater
than or equal to 331/3% but less than 662/3% of the aggregate Commitments, 0.50%
per annum or (c) the aggregate principal amount of Loans outstanding is greater
than or equal to 662/3% of the aggregate Commitments, 0.75% per annum.

"Applicable Facility Fee Rate" means, while any particular Rating Level applies,
the rate per annum set forth below opposite the reference to such Rating Level:

Rating Level

Applicable Facility Fee Rate

Rating Level 1

0.15%

Rating Level 2

0.175%

Rating Level 3

0.20%

Rating Level 4

0.225%

Rating Level 5

0.25%

provided

that if at any time the Debt Ratings of Moody's and S&P would lead to different
Rating Levels, the "Applicable Facility Fee Rate" will be determined based on

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the Rating Level one above the lower Rating Level (Rating Level 1 being the
highest and Rating Level 5 being the lowest). Each change in the Applicable
Facility Fee Rate resulting from a Rating Level Change shall be effective on the
date on which such Rating Level Change is first announced by Moody's or S&P, as
the case may be.

"Applicable Margin" means for any Loan of any Type and while any particular
Rating Level applies, the rate per annum set forth below opposite the reference
to the relevant Rating Level for Loans of such Type:

 

Applicable Margin

Rating Level

Base Rate Loan

Eurodollar Rate Loan

Rating Level 1

0.00%

0.85%

Rating Level 2

0.25%

1.075%

Rating Level 3

0.75%

1.55%

Rating Level 4

1.00%

1.775%

Rating Level 5

1.25%

2.00%

provided

that if at any time the Debt Ratings of Moody's and S&P would lead to different
Rating Levels, the "Applicable Margin" will be determined based on the Rating
Level one above the lower Rating Level (Rating Level 1 being the highest and
Rating Level 5 being the lowest). Each change in the Applicable Margin resulting
from a Rating Level Change shall be effective on the date on which such Rating
Level Change is first announced by Moody's or S&P, as the case may be.

"Consolidated EBITDA" means, for any period, for the Borrower and its
Consolidated Subsidiaries on a Consolidated basis, Consolidated net income for
such period plus, without duplication and to the extent reflected as a charge in
the statement of such Consolidated net income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or writeoff of debt
discount with respect to Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary expenses or
losses (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated net income for such period, losses on sales of
assets outside of the ordinary course of business), and (f) any other non-cash
charges, and minus, to the extent included in the statement of such Consolidated
net income for such period, the sum of (a) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated net income for such period, gains on the sales of
assets outside of the ordinary course of business) and (b) any other non-cash
income, all as determined without duplication on a Consolidated basis in
accordance with GAAP, in each case exclusive of the cumulative effect of foreign
currency gains or losses. For the purposes of calculating Consolidated EBITDA
for any period in connection with any determination of the Leverage Ratio, if
during such period the Borrower or any Subsidiary shall have made an acquisition
or incurred or assumed any Indebtedness (without duplication of any Indebtedness
incurred to refinance such assumed Indebtedness), Consolidated EBITDA for such
period shall be calculated after giving pro forma effect thereto as if such
acquisition occurred and such Indebtedness had been incurred or assumed or
refinanced on the first day of such period. Notwithstanding the foregoing,
"Consolidated EBITDA" shall exclude the effect of cash charges (a) arising from
purchases and sales by the Borrower or any of its Consolidated Subsidiaries of,
and/or (b) on account of total return swaps, letters of credit, Guarantees,
loans, equity contributions, capital support or any other support in connection
with, asset-backed commercial paper, medium term notes or other securities or
investments, in each case issued by any Person listed on Annex I or any
Affiliate of any such Person, or any other securities or investments into which
any such asset-backed commercial paper, medium term notes or other securities or
investments may be converted or resulting from the replacement, exchange or
restructuring in

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whatever form of any such asset-backed commercial paper, medium term notes or
other securities and investments, whether now or heretofore owned or hereafter
acquired (all such asset-backed commercial paper, medium term notes, securities,
investments and other securities or investments being referred to herein as
"Investments"), except that (i) upon such sale by the Company or any of its
Consolidated Subsidiaries of any such Investment and (ii) upon the incurrence of
any cash charges by the Company or any of its Consolidated Subsidiaries on
account of total return swaps, letters of credit, Guarantees, loans, equity
contributions, capital support or any other support in connection with any such
Investment, Consolidated EBITDA for such period shall be reduced (but not
increased) by an amount (the "Net AB Charge Amount") equal to the total amount
of cash charges, net of the total amount of cash gains, borne by the Company and
its Consolidated Subsidiaries from the purchase and sale of such Investment
and/or on account of total return swaps, letters of credit, Guarantees, loans,
equity contributions, capital support or any other support in connection with
any such Investment, to the extent that the aggregate (calculated without
duplication) Net AB Charge Amount for all such purchases and sales and/or on
account of total return swaps, letters of credit, Guarantees, loans, equity
contributions, capital support or any other support in connection with any such
Investment for such period and all prior periods exceeds $2,750,000,000.

2.03 Ordinary Interest. Section 2.06(a) is hereby amended to read as follows:

"(a)  Ordinary Interest. The Borrower agrees to pay interest on the unpaid
principal amount of each Loan, from the date of such Loan until such principal
amount shall be paid in full, at the following rates per annum:

(i)  Base Rate Loans. While such Loan is a Base Rate Loan, a rate per annum
equal to the Base Rate in effect from time to time plus the sum of (x) the
Applicable Margin for Base Rate Loans as in effect from time to time and (y) the
Additional Margin, if applicable, payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the date such
Base Rate Loan shall be Converted or paid in full.

(ii)  Eurodollar Rate Loans. While such Loan is a Eurodollar Rate Loan, a rate
per annum for each Interest Period for such Loan equal to the sum of the
Eurodollar Rate for such Interest Period plus the sum of (x) the Applicable
Margin for Eurodollar Rate Loans as in effect from time to time and (y) the
Additional Margin, if applicable, payable on the last day of such Interest
Period and, if such Interest Period has a duration of more than three months, on
each day prior to the last day of such Interest Period that occurs at intervals
of three months after the first day of such Interest Period, and on each date on
which such Eurodollar Rate Loan shall be Continued, Converted or paid in full."

2.04. Incurrence of Indebtedness. A new Section 5.02(d) is added to the Credit
Agreement reading as follows:

"(d) Incurrence of Indebtedness. It shall at all times comply with Section
5.7(a) of the Note Purchase Agreement dated as of January 14, 2008 between it,
KKR I-L Limited, Credit Suisse International, HSBC Bank USA, National
Association and Kohlberg Kravis Roberts & Co., L.P., as amended on January 30,
2008, as further modified, waived and supplemented on May 5, 2008, and as
further amended, modified, supplemented, waived and from time to time in
effect."

2.05. Maximum Leverage Ratio. Section 5.03(a) of the Credit Agreement is hereby
amended to read as follows:

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"(a) Maximum Leverage Ratio. The Borrower will not permit the Leverage Ratio, as
of the last day of any fiscal quarter of the Borrower, to exceed 3.0:1.0."

2.06. Annex I. The Credit Agreement is hereby amended by adding at the end
thereof an Annex I to read as Annex I hereof.

Section 3. Representations and Warranties. The Borrower represents and warrants
to the Lenders and the Administrative Agent, as to itself and each of its
subsidiaries, that (a) the representations and warranties set forth in Article
IV of the Credit Agreement (except (x) to the extent relating to the class
action litigations described in the Form 10-K of the Borrower for the fiscal
year ended March 31, 2008, Section 4.01(f)(i) thereof, and (y) to the extent
relating to the Transaction Agreement and the transactions contemplated thereby,
Section 4.01(f)(ii) thereof, and provided that for purposes of this Section 3,
the date referred to in the last sentence of Section 4.01(e) thereof shall be
deemed to be March 31, 2008 instead of March 31, 2005), and in each of the other
Loan Documents, are true and correct in all material respects on the date hereof
as if made on and as of the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, such
representation or warranty shall be true and correct in all material respects as
of such specific date) and as if each reference in said Article IV to "this
Agreement" included reference to this Amendment No. 5 and (b) no Default or
Event of Default has occurred and is continuing.

Section 4. Conditions Precedent. The amendments set forth in Section 2 hereof
shall become effective, as of the date hereof, upon satisfaction of the
following conditions:

4.01. Execution. The Administrative Agent shall have received counterparts of
this Amendment No. 5 executed by the Borrower and the Lenders party to the
Credit Agreement constituting the Majority Lenders.

4.02. Amendment Fee. The Administrative Agent shall have received for the
account of each Lender that, not later than 6:00 p.m. New York City time on
November 19, 2008, shall have executed a counterpart of this Amendment No. 5 and
delivered the same to the Administrative Agent, an amendment fee in such amount
as shall have been previously disclosed to the Lenders by the Borrower.

4.03 Fee and Expenses. The Borrower shall have paid in full the costs, expenses
and fees as set forth in Section 8.04(a) of the Credit Agreement and the Fee
Letter dated as of November 10, 2008 among Citigroup Global Markets Inc. and the
Borrower.

4.04. Opinion of Counsel to Borrower. The Administrative Agent shall have
received favorable opinions of counsel for the Borrower (which counsel shall be
reasonably satisfactory to the Administrative Agent), in form and substance
reasonably satisfactory to the Administrative Agent and covering such matters
(including as to the enforceability of this Amendment No. 5 and the Credit
Agreement as amended hereby, the valid organization, good standing and due
authorization of the Borrower, and the lack of any conflicts of the Borrower
(including with respect to any material agreements)) as the Administrative Agent
shall reasonably request.

4.05. Corporate Documents. The Administrative Agent shall have received
certified copies of the charter and by-laws of the Borrower and of all corporate
authority for the Borrower (including, without limitation, board of director
resolutions and evidence of the incumbency of officers for the Borrower) with
respect to the execution, delivery and performance of this Amendment No. 5 and
the Credit Agreement as amended hereby (and the Administrative Agent and each
Lender may conclusively rely on such certificate until it receives notice in
writing from the Borrower to the contrary).

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Section 5. Miscellaneous. Except as herein provided, the Credit Agreement shall
remain unchanged and in full force and effect. This Amendment No. 5 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this Amendment No. 5 by signing any such counterpart. Delivery of a
counterpart by electronic transmission shall be effective as delivery of a
manually executed counterpart hereof. This Amendment No. 5 shall be governed by,
and construed in accordance with, the law of the State of New York.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 5 to be
duly executed by their respective authorized officers as of the day and year
first above written.

 

 

                                          

                                         

LEGG MASON, INC.

 

 

 

 

   

By:

/s/ Charles J. Daley, Jr.

 

 

 

Name: Charles J. Daley, Jr.

 

 

 

Title: Senior Vice President, Chief

 

 

 

Financial Officer and Treasurer

     

                                          

                                         

CITIBANK, N.A.,

   

as Administrative Agent

 

 

 

 

   

By:

/s/ Kevin A. Ege

 

 

 

Name: Kevin A. Ege

 

 

 

Title: Vice President

 

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LENDERS

     

                                          

                                         

CITIBANK, N.A.,

 

 

 

 

   

By:

/s/ Kevin A. Ege

 

 

 

Name: Kevin A. Ege

 

 

 

Title: Vice President

               

BANK OF AMERICA, N.A..

 

 

 

 

   

By:

/s/ Hichem Kerma

 

 

 

Name: Hichem Kerma

 

 

 

Title: Assistant Vice President

               

THE BANK OF NEW YORK mellon

 

 

 

 

   

By:

/s/ Michael Pensari

 

 

 

Name: Michael Pensari

 

 

 

Title: Vice President

                   

DEUTSCHE BANK AG NEW YORK BRANCH

 

 

 

 

   

By:

/s/ Kathleen Bowers

 

 

 

Name: Kathleen Bowers

 

 

 

Title: Director

           

By:

/s/ Michael Campites

 

 

 

Name: Michael Campites

 

 

 

Title: Vice President

                   

JPMORGAN CHASE BANK, N.A.

 

 

 

 

   

By:

/s/ Sergey Sherman

 

 

 

Name: Sergey Sherman

 

 

 

Title: Vice President

                   

STATE STREET BANK AND TRUST COMPANY

 

 

 

 

   

By:

/s/ James H. Reichert

 

 

 

Name: James H. Reichert

 

 

 

Title: Vice President

         

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MERRILL LYNCH BANK USA

 

 

 

 

   

By:

/s/ Louis Alder

 

 

 

Name: Louis Alder

 

 

 

Title: First Vice President

               

SUMITOMO MITSUI BANKING CORPORATION

         

By:

 

 

 

 

Name:

 

 

 

Title:

                   

RBS CITIZENS, NATIONAL ASSOCIATION

         

By:

/s/ Darcy Salinger

 

 

 

Name: Darcy Salinger

 

 

 

Title: Vice President

                   

MANUFACTURERS & TRADERS TRUST CO.

         

By:

/s/ Lynn S. Manthy

 

 

 

Name: Lynn S. Manthy

 

 

 

Title: Assistant Vice President

                   

PNC BANK, NATIONAL ASSOCIATION

         

By:

/s/ Kirk Seagers

 

 

 

Name: Kirk Seagers

 

 

 

Title: Vice President

                   

WELLS FARGO BANK, NATIONAL ASSOCIATION

         

By:

/s/ David Bendel

 

 

 

Name: David Bendel

 

 

 

Title: Vice President

                   

HSBC BANK USA, NATIONAL
ASSOCIATION

         

By:

/s/ Jay Lipman

 

 

 

Name: Jay Lipman

 

 

 

Title: Vice President

               

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CREDIT SUISSE, CAYMAN ISLANDS BRANCH

         

By:

/s/ Jay Chall

 

 

 

Name: Jay Chall

 

 

 

Title: Director

           

By:

/s/ Markus Frenzen

 

 

 

Name: Markus Frenzen

 

 

 

Title: Assistant Vice President

                   

FIFTH THIRD BANK

         

By:

/s/ Randolph J. Stierer

 

 

 

Name: Randolph J. Stierer

 

 

 

Title: Vice President

                   

SOCIETE GENERALE

         

By:

/s/ Edith Hornick

 

 

 

Name: Edith Hornick

 

 

 

Title: Managing Director

               

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Annex I

Axon Financial Fund LTD

Atlantic East Funding LLC

Five Finance Inc.

K2 (USA) LLC

Issuer Entity LLC

Whistlejacket Capital Limited

White Pine Finance LLC

Orion Finance (USA) LLC

Cheyne Finance, LLC

Gryphon Funding Limited

Ironstone Trust

Rocket Trust

Aurora Trust

Comet Trust

Planet Trust

Slate Trust

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