EXHIBIT 10.5

 

EXECUTION VERSION

 

SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as
of October 27, 2011 (this “Amendment”), between NEW MOUNTAIN FINANCE HOLDINGS,
L.L.C., a Delaware limited liability company (the “Borrower”), WELLS FARGO
SECURITIES, LLC, a Delaware limited liability company (the “Administrative
Agent”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as a lender (the “Lender”).

 

WHEREAS, the Borrower, the Administrative Agent, the Lender, the other lenders
party from time to time thereto and Wells Fargo Bank, National Association, as
collateral custodian, are party to the Amended and Restated Loan and Security
Agreement, dated as of May 19, 2011 (as amended by the Amendment to Amended and
Restated Loan and Security Agreement, dated as of September 23, 2011, and as may
be further amended, supplemented and otherwise modified from time to time, the
“Loan and Security Agreement”), providing, among other things, for the making
and the administration of the Advances by the lenders to the Borrower; and

 

WHEREAS, the Borrower, the Administrative Agent and the Lender desire to amend
the Loan and Security Agreement, in accordance with Section 12.1 of the Loan and
Security Agreement and subject to the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the foregoing premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.1.                                               Defined Terms.  Terms
used but not defined herein have the respective meanings given to such terms in
the Loan and Security Agreement.

 

ARTICLE II

 

Amendments to Loan and Security Agreement

 

SECTION 2.1.                                               Amendments.

 

(a)                                  Section 1.1 of the Loan and Security
Agreement shall be amended by deleting the definition of “Advance Rate” and
inserting in lieu thereof the following:

 

““Advance Rate”:  With respect to (a) any First Lien Loan, the First Lien Loan
Advance Rate for such Loan, (b) any Specified First Lien Loan, the Specified
First Lien Loan Advance Rate for such Loan, (c) any Non-First Lien Loan (other
than a Specified Non-First Lien Loan), the Non-First Lien Loan Advance Rate for
such Loan and (d) any Specified Non-First Lien Loan, the Specified Non-First
Lien Loan Advance Rate for such Loan.”

 

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(b)                                 Section 1.1 of the Loan and Security
Agreement shall be amended by inserting “(other than a Specified First Lien
Loan)” immediately following “a Loan” in the first line of the definition of
“First Lien Loan.”

 

(c)                                  Section 1.1 of the Loan and Security
Agreement shall be amended by inserting “or a Specified First Lien Loan”
immediately following “a First Lien Loan” in the definition of “Non-First Lien
Loan.”

 

(d)                                 Section 1.1 of the Loan and Security
Agreement shall be amended by (i) deleting “or” at the end of clause (b),
(ii) deleting “.” at the end of clause (c) and inserting “;” in lieu thereof and
(iii) inserting the following new clauses (d) and (e) in the definition of
“Material Modification” in the appropriate alphabetical order:

 

“(d)                           reduces or waives any or all of the principal
amount of such Loan; or

 

(e)                                  with respect to any Specified First Lien
Loan, amends, waives, forbears, supplements or otherwise modifies in any way the
definition of “Net Senior Leverage Ratio” or “Cash Interest Coverage Ratio” (or
any respective comparable definition in its Underlying Instruments) or the
definition of any component thereof in a manner that, in the sole discretion of
the Administrative Agent, is materially adverse to the Administrative Agent or
any Lender;”

 

(e)                                  Section 1.1 of the Loan and Security
Agreement shall be amended by inserting the following new defined terms in the
appropriate alphabetical order:

 

““Cash Interest Coverage Ratio”: With respect to any Specified First Lien Loan
for any Relevant Test Period, either (a) the meaning of “Cash Interest Coverage
Ratio” or comparable definition set forth in the Underlying Instruments for such
Specified First Lien Loan, or (b) in the case of any Specified First Lien Loan
with respect to which the related Underlying Instruments do not include a
definition of “Cash Interest Coverage Ratio” or comparable definition, the ratio
of (i) EBITDA to (ii) Cash Interest Expense of such Obligor with respect to the
applicable Relevant Test Period, as calculated by the Borrower and Collateral
Administrator in good faith.

 

“Cash Interest Expense”: With respect to any Obligor for any period, the amount
which, in conformity with GAAP, would be set forth opposite the caption
“interest expense” or any like caption reflected on the most recent financial
statements delivered by such Obligor to the Borrower for such period.

 

“Net Senior Leverage Ratio”: With respect to any Specified First Lien Loan for
any Relevant Test Period, either (a) the meaning of “Net Senior Leverage Ratio”
or comparable definition set forth in the Underlying Instruments for such
Specified First Lien Loan, or (b) in the case of any Specified First Lien Loan
with respect to which the related Underlying Instruments do not include a
definition of “Net Senior Leverage Ratio” or comparable definition, the ratio of
(i) the senior Indebtedness (including, without limitation, such Specified First
Lien Loan) of the applicable Obligor as of the date of determination minus the
Unrestricted Cash of such Obligor as of such date to (ii) EBITDA of such Obligor
with

 

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respect to the applicable Relevant Test Period, as calculated by the Borrower
and Collateral Administrator in good faith.

 

“Original Cash Interest Coverage Ratio”: With respect to any Specified First
Lien Loan, the Cash Interest Coverage Ratio for such Loan on the date such
Specified First Lien Loan was approved as an Eligible Loan by the Administrative
Agent.

 

“Original Net Senior Leverage Ratio”: With respect to any Specified First Lien
Loan, the Net Senior Leverage Ratio for such Loan on the date such Specified
First Lien Loan was approved as an Eligible Loan by the Administrative Agent.

 

“Specified First Lien Loan”: A Loan (i) that is not (and cannot by its terms
become) subordinate in right of payment to any obligation of the Obligor in any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings, (ii) that is secured by a pledge of collateral, which security
interest is validly perfected and first priority under Applicable Law (subject
to liens permitted under the Underlying Instruments), (iii) the Collateral
Administrator determines in good faith that the value of the collateral securing
the loan on or about the time of origination equals or exceeds the outstanding
principal balance of the Loan plus the aggregate outstanding balances of all
other loans of equal or higher seniority secured by the same collateral and
(iv) that is designated by the Administrative Agent as a “Specified First Lien
Loan” on the related Approval Notice.

 

“Specified First Lien Loan Advance Rate”: 67%.

 

“Specified Non-First Lien Loan”: A Non-First Lien Loan that is designated by the
Administrative Agent as a “Specified Non-First Lien Loan” on the related
Approval Notice.

 

“Specified Non-First Lien Loan Advance Rate”: With respect to (a) any Specified
Non-First Lien Loan (other than a Specified Non-First Lien Loan in respect of
which a Prepayment Cure Event has occurred), the lesser of (i) 45% and (ii) the
minimum percentage necessary such that the amount of the initial Advance with
respect to such Specified Non-First Lien Loan results in the Adjusted Net
Non-First Lien Leverage Ratio of the related Obligor being less than the
threshold determined by the Administrative Agent in its sole discretion for such
Obligor at the time of the approval of such Specified Non-First Lien Loan; and
(b) any Specified Non-First Lien Loan in respect of which a Prepayment Cure
Event has occurred, the percentage necessary such that the amount of the Advance
made with respect to such Specified Non-First Lien Loan results in the Adjusted
Net Non-First Lien Leverage Ratio of the related Obligor being no greater than
0.75x (or such lesser number that is acceptable to the Administrative Agent)
less than the threshold determined by the Administrative Agent in its sole
discretion at the time of the approval of such Specified Non-First Lien Loan.”

 

(f)                                    Section 1.1 of the Loan and Security
Agreement shall be amended by deleting the defined term “Value Adjustment Event”
and inserting the following in lieu thereof:

 

““Value Adjustment Event”: With respect to any Loan, the occurrence of any one
or more of the following events after the related Funding Date:

 

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(a)                                  solely with respect to any First Lien Loan,
the Adjusted Net Senior Leverage Ratio for any Relevant Test Date of the related
Obligor with respect to such First Lien Loan is greater than 2.50 to 1.00 and
the Borrower either (i) did not deliver a Proposed Cure Notice to the
Administrative Agent in accordance with Section 5.1(x)(i), or (ii) delivers a
Proposed Cure Notice to the Administrative Agent in accordance with
Section 5.1(x)(i) but fails to comply with the terms of the Proposed Cure Notice
within fifteen (15) Business Days following the delivery of such Proposed Cure
Notice;

 

(b)                                 a payment default under such Loan (after
giving effect to any applicable grace or cure periods, but in any case not to
exceed five (5) Business Days, in accordance with the Underlying Instruments);

 

(c)                                  the occurrence of a Material Modification
with respect to such Loan;

 

(d)                                 an Insolvency Event with respect to the
related Obligor;

 

(e)                                  the failure to deliver (i) with respect to
quarterly reports, any financial statements (including unaudited financial
statements) to the Administrative Agent sufficient to calculate any applicable
Adjusted Net Leverage Ratio of the related Obligor by the date that is no later
than seventy (70) days after the end of the first, second or third quarter of
any fiscal year and (ii) with respect to annual reports, any audited financial
statements to the Administrative Agent sufficient to calculate any applicable
Adjusted Net Leverage Ratio of the related Obligor by the date that is no later
than one hundred and thirty (130) days after the end of any fiscal year;

 

(f)                                    solely with respect to any Non-First Lien
Loan, the Adjusted Net Non-First Lien Leverage Ratio of the related Obligor
being greater than the threshold determined by the Administrative Agent in its
sole discretion for such Obligor at the time of the approval of such Non-First
Lien Loan and the Borrower either (i) did not deliver a Proposed Cure Notice to
the Administrative Agent in accordance with Section 5.1(x)(ii), or (ii) delivers
a Proposed Cure Notice to the Administrative Agent in accordance with
Section 5.1(x)(ii) but fails to comply with the terms of the Proposed Cure
Notice within fifteen (15) Business Days following the delivery of such Proposed
Cure Notice;

 

(g)                                 solely with respect to any Specified First
Lien Loan, the Net Senior Leverage Ratio for any Relevant Test Period of the
related Obligor with respect to such Loan is (i) greater than 3.50 to 1.00 and
(ii) greater than 0.50 higher than the Original Net Senior Leverage Ratio;

 

(h)                                 solely with respect to any Specified First
Lien Loan, the Cash Interest Coverage Ratio for any Relevant Test Period of the
related Obligor with respect to such Loan is (i) less than 1.50 to 1.00 and
(ii) less than 85% of the Original Cash Interest Coverage Ratio; or

 

(i)                                     a default under such Loan, together with
the election by any Person or group of Persons authorized to exercise any rights
or remedies by the applicable Underlying Instruments (including, without
limitation, the Borrower) to enforce any of their respective

 

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rights or remedies (including, without limitation, acceleration of the Loan)
pursuant to the applicable Underlying Instruments.”

 

(g)                                 Section 5.1(x)(i) of the Loan and Security
Agreement shall be amended by inserting “(but not, for the avoidance of doubt,
any Specified First Lien Loan)” immediately following “with respect to a First
Lien Loan” in the second line thereof.

 

(h)                                 Exhibit A-5 to the Loan and Security
Agreement shall be deleted and the exhibits attached as Exhibit A hereto shall
be inserted in lieu thereof.

 

ARTICLE III

 

Representations and Warranties

 

SECTION 3.1.                                               The Borrower hereby
represents and warrants to the Administrative Agent and the Lender that, as of
the date first written above, (i) no Default or Event of Default has occurred
and is continuing and (ii) the representations and warranties of the Borrower
contained in the Loan and Security Agreement are true and correct in all
material respects on and as of such day (other than any representation and
warranty that is made as of a specific date).

 

ARTICLE IV

 

Conditions Precedent

 

SECTION 4.1.                                               This Amendment shall
become effective as of the date first written above upon the execution and
delivery of this Amendment by the Borrower, the Administrative Agent and the
Required Lenders.

 

ARTICLE V

 

Miscellaneous

 

SECTION 5.1.                                               Governing Law. THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

 

SECTION 5.2.                                               Severability Clause. 
In case any provision in this Amendment shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION 5.3.                                               Ratification.  Except
as expressly amended hereby, the Loan and Security Agreement is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect.  This Amendment shall form a part of the
Loan and Security Agreement for all purposes.

 

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SECTION 5.4.                                               Counterparts.  The
parties hereto may sign one or more copies of this Amendment in counterparts,
all of which together shall constitute one and the same agreement.  Delivery of
an executed signature page of this Amendment by facsimile or email transmission
shall be effective as delivery of a manually executed counterpart hereof.

 

SECTION 5.5.                                               Headings.  The
headings of the Articles and Sections in this Amendment are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

 

 

 

NEW MOUNTAIN FINANCE HOLDINGS, L.L.C., as the Borrower

 

 

 

 

 

 

 

By:

/s/ Adam Weinstein

 

Name: Adam Weinstein

 

Title: Chief Financial Officer and Treasurer

 

[Signature Page to Second Amendment to A&R Loan and Security Agreement]

 

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WELLS FARGO SECURITIES, LLC,

 

as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Allan Schmitt

 

 

Name: Allan Schmitt

 

 

Title: Vice President

 

 

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

representing 100% of the aggregate Commitments of the Lenders in effect as of
the date hereof

 

 

 

 

 

 

 

By:

/s/ Jason Powers

 

 

Name: Jason Powers

 

 

Title: Director

 

[Signature Page to Second Amendment to A&R Loan and Security Agreement]

 

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Exhibit A to
Second Amendment

 

EXHIBIT A-5-1

To Amended and Restated

Loan and Security Agreement

 

FORM OF APPROVAL NOTICE (FIRST LIEN LOANS)

 

DATE

 

 

 

ELIGIBLE LOAN INFORMATION

 

 

 

Obligor Name

 

Par Amount of Purchase

 

Adjusted Net Senior Leverage Ratio

 

Pricing

 

Remaining Term to Maturity

 

 

 

ASSIGNED VALUE

 

 

 

Assigned Value

 

Advance Rate

 

Purchase Price

 

 

 

WELLS FARGO SECURITIES, LLC APPROVAL

 

 

 

 

Specified First Lien Loan

Y              o

N              o

Commitment Termination

 

Approval Good Until

 

Approval Conditioned Upon

 

 

 

Reviewed by:

 

 

Name:

 

 

 

 

Telephone No.

 

 

 

[Exhibit A to Second Amendment to A&R Loan and Security Agreement]

 

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EXHIBIT A-5-2

To Loan and

Security Agreement

 

FORM OF APPROVAL NOTICE (NON-FIRST LIEN LOANS)

 

DATE

 

 

 

ELIGIBLE LOAN INFORMATION

 

 

 

Obligor Name

 

Par Amount of Purchase

 

Adjusted Net Non-First Lien Leverage Ratio

 

Pricing

 

Remaining Term to Maturity

 

 

 

ASSIGNED VALUE

 

 

 

Assigned Value

 

Advance Rate

 

Adjusted Net Non-First Lien Leverage Ratio Threshold

 

Purchase Price

 

 

 

WELLS FARGO SECURITIES, LLC APPROVAL

 

 

 

Specified Non-First Lien Loan

Y              o

N              o

Commitment Termination

 

Approval Good Until

 

Approval Conditioned Upon

 

 

 

Reviewed by:

 

 

Name:

 

 

Telephone No.

 

 

[Exhibit A to Second Amendment to A&R Loan and Security Agreement]

 

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