Exhibit
10.11


 


FIRST AMENDMENT TO CREDIT
AGREEMENT


 


FIRST AMENDMENT TO CREDIT
AGREEMENT (this “Amendment”), dated as of July 31, 1999, among BRW
ACQUISITION, INC., a Delaware corporation (the “Borrower”), the various lenders
from time to time party to the Credit Agreement referred to below (the
“Lenders”), THE CHASE MANHATTAN BANK, as Administrative Agent (the
“Administrative Agent”) and THE BANK OF NEW YORK, as Syndication Agent (the
“Syndication Agent”).  All capitalized
terms used herein and not otherwise defined shall have the respective meanings
assigned to such terms in the Credit Agreement.


 


W  I
T  N  E  S  S  E  T  H:


 


WHEREAS, the Borrower,
the Lenders, the Administrative Agent and the Syndication Agent are parties to
a Credit Agreement, dated as of July 10, 1998 (as amended, modified or
supplemented to the date hereof, the “Credit Agreement”);


 


WHEREAS, the Borrower has
requested that the Lenders agree to amend certain provisions of the Credit
Agreement as herein provided; and


 


WHEREAS, the Lenders have
agreed to the amendments to the Credit Agreement as herein provided, subject to
the terms and conditions set forth herein;


 


NOW, THEREFORE, the
parties hereto agree as follows:


 


I.                                         Amendments


 


1.                                       Section 1 of the Credit Agreement is
hereby amended by:


 


(i) deleting the
definition of “Cash Flow” in its entirety and inserting in lieu thereof the
following new definition of “Cash Flow”:


 


“Cash
Flow” shall mean, for any Test Period, the sum, without duplication, of (a)
the greater of (i) Combined Statutory Pre-Tax Earnings for all Regulated
Insurance Companies for such Test Period and (ii) the sum of 10% of Adjusted
Surplus as of the last day of the fiscal year most recently ended prior to the
end of such Test Period plus all tax sharing payments made by Regulated
Insurance Companies to the Borrower during such Test Period and (b) Adjusted
EBITDA for such Test Period.


 


(ii) deleting the
definition of “Statutory Pre-Tax Earnings” in its entirety and inserting in
lieu thereof the following new definition of “Statutory Pre-Tax Earnings”:


 


“Statutory
Pre-Tax Earnings” shall mean, for any period, for any Regulated Insurance
Company, net income determined in accordance with SAP plus (a) to the
extent deducted in determining such net income and without


 

















 


duplication, the sum of the amounts for such period of (i)
provision for taxes (including, without limitation, payments under tax sharing
agreements), adjusted to reflect on a pro forma basis termination of the
Acquired Companies’ existing quota share reinsurance on a cut-off basis, as if
such termination had occurred prior to such period, (ii) interest expense,
(iii) depreciation expense, (iv) amortization expense, including amortization
of deferred financing fees, (v) non-recurring charges, (vi) non-cash charges,
(vii) losses on asset sales, (viii) restructuring charges, (ix) Transaction
Expenses, (x) any expenses or charges incurred in connection with any issuance
of debt or equity securities, (xi) any fees and expenses related to Permitted
Acquisitions and (xii) any deduction for minority interest expense, less
(b) to the extent included in determining such net income and without
duplication, the sum of the amounts for such period of (i) non-recurring gains,
(ii) non-cash gains and (iii) gains on asset sales, all as determined on a
Combined basis for the Regulated Insurance Companies in accordance with SAP, provided
that (i) except as provided in clause (ii) below, there shall be excluded from
the amounts determined above for any period the earnings or net income of all Unrestricted
Subsidiaries for such period to the extent otherwise included in such amount,
except to the extent actually received in cash by the Borrower or its
Restricted Subsidiaries during such period through dividends or other
distributions, and (ii) there shall be included in determining Statutory
Pre-Tax Earnings for any period (x) the Acquired Cash Flow of any Person,
property, business or asset (other than an Unrestricted Subsidiary) acquired to
the extent not subsequently sold, transferred or otherwise disposed of (but not
including the Acquired Cash Flow of any related Person, property, business or
assets to the extent not so acquired) by the Borrower or any Restricted
Subsidiary during such period (each such Person, property, business or asset acquired
and not subsequently so disposed of, an “Acquired Entity or Business”),
and the Acquired Cash Flow of an Unrestricted Subsidiary that is converted into
a Restricted Subsidiary during such period (each a “Converted Restricted
Subsidiary”), in each case based on the actual Acquired Cash Flow of such
Acquired Entity or Business or Converted Restricted Subsidiary for such period
(including the portion thereof occurring prior to such acquisition or
conversion) and (y) an adjustment with respect of each Acquired Entity or
Business equal to the amount of the Pro Forma Adjustment with respect to such
Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition or conversion) as specified in the Pro
Forma Adjustment Certificate delivered to the Lenders and the Administrative
Agent.


 


(iii) inserting the
following new definitions in appropriate alphabetical order:


 


“Acquired Surplus”
shall mean, with respect to any Acquired Entity or Business or Converted
Restricted Subsidiary (any of the foregoing, a “Pro Forma Entity”), at
any time, the Surplus of such Pro Forma Entity at such time (determined as if
such Pro Forma Entity was a Regulated Insurance Company at such time).


 


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“Adjusted
EBITDA” shall mean, for any period, the consolidated net income from
continuing operations before income taxes and extraordinary items of the
Borrower and its Restricted Subsidiaries (excluding net income (or loss) before
taxes and extraordinary items of the Regulated Insurance Subsidiaries) for such
period, all determined in accordance with GAAP,  plus (a) to the extent deducted in determining such net
income, and without duplication, the sum of the amounts for such period of (i)
interest expense, (ii) depreciation expense, (iii) amortization expense,
including amortization of deferred financing fees, (iv) non-recurring charges,
(v) non-cash charges, (vi) losses on asset sales, (vii) restructuring charges,
(viii) Transaction Expenses, (ix) any expenses or charges incurred in
connection with any issuance of debt or equity securities, (x) any fees and
expenses related to Permitted Acquisitions and (xi) any deduction for minority
interest expense, less (b) to the extent included in determining such
net income and without duplication, the sum of the amounts for such period of
(i) non-recurring gains, (ii) non-cash gains and (iii) gains on asset sales,
all as determined on a consolidated basis for the Borrower and the Unregulated
Subsidiaries in accordance with GAAP, provided that (i) except as
provided in clause (ii) below, there shall be excluded from Adjusted EBITDA the
earnings or net income of all Unrestricted Subsidiaries for such period to the
extent otherwise included in such amount, except to the extent actually
received in cash by the Borrower or its Restricted Subsidiaries during such
period through dividends or other distributions and (ii) there shall be
included in determining Adjusted EBITDA for any period (x) the Acquired Cash Flow
of any Person, property, business or asset (other than an Unrestricted
Subsidiary) acquired to the extent not subsequently sold, transferred or
otherwise disposed of (but not including the Acquired Cash Flow of any related
Person, property, business or assets to the extent not so acquired) by the
Borrower or any Restricted Subsidiary during such period (each such Person,
property, business or asset acquired and not subsequently so disposed of, an “Acquired
Entity or Business”), and the Acquired Cash Flow of an Unrestricted
Subsidiary that is converted into a Restricted Subsidiary during such period
(each a “Converted Restricted Subsidiary”), in each case based on the actual
Acquired Cash Flow of such Acquired Entity or Business or Converted Restricted
Subsidiary for such period (including the portion thereof occurring prior to
such acquisition or conversion) and (y) an adjustment with respect of each
Acquired Entity or Business equal to the amount of the Pro Forma Adjustment
with respect to such Acquired Entity or Business for such period (including the
portion thereof occurring prior to such acquisition or conversion) as specified
in the Pro Forma Adjustment Certificate delivered to the Lenders and the
Administrative Agent.


 


“Adjusted
Surplus” shall mean, at any time, Surplus at such time, provided
that (i) except as provided in clause (ii) below, there shall be excluded from
Adjusted Surplus the Surplus of all Unrestricted Subsidiaries to the extent
otherwise included in such amount, and (ii) there shall be included in
determining Adjusted Surplus at any time the Acquired Surplus of any Person,
property,


 


3

















 


business or asset (other than an Unrestricted Subsidiary)
acquired to the extent not subsequently sold, transferred or otherwise disposed
of (but not including the Acquired Surplus of any related Person, property,
business or assets to the extent not so acquired) by the Borrower or any
Restricted Subsidiary during such period (each such Person, property, business
or asset acquired and not subsequently so disposed of, an “Acquired Entity
or Business”), and the Acquired Surplus of an Unrestricted Subsidiary that
is converted into a Restricted Subsidiary during such period (each a “Converted
Restricted Subsidiary”), in each case based on the actual Acquired Surplus of
such Acquired Entity or Business or Converted Restricted Subsidiary as of the
relevant date.


 


2.                                       Section 10.9 of the Credit Agreement is
hereby amended by deleting the table appearing therein in its entirety and
inserting in lieu thereof the following new table:


 


	
  Test Period Ending

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 30, 1998

  	
   

  	
  2.00:1.00

  	
   

  
	
  December 31, 1998

  	
   

  	
  2.00:1.00

  	
   

  
	
  March 31, 1999

  	
   

  	
  2.00:1.00

  	
   

  
	
  June 30, 1999

  	
   

  	
  2.00:1.00

  	
   

  
	
  September 30, 1999

  	
   

  	
  1.75:1.00

  	
   

  
	
  December 31, 1999

  	
   

  	
  1.75:1.00

  	
   

  
	
  March 31, 2000

  	
   

  	
  1.75:1.00

  	
   

  
	
  June 30, 2000

  	
   

  	
  1.75:1.00

  	
   

  
	
  September 30, 2000

  	
   

  	
  2.00:1.00

  	
   

  
	
  December 31, 2000

  	
   

  	
  2.00:1.00

  	
   

  
	
  March 31, 2001

  	
   

  	
  2.25:1.00

  	
   

  
	
  June 30, 2001

  	
   

  	
  2.25:1.00

  	
   

  
	
  September 30, 2001

  	
   

  	
  2.50:1.00

  	
   

  
	
  December 31, 2001

  	
   

  	
  2.75:1.00

  	
   

  
	
  March 31, 2002

  	
   

  	
  2.75:1.00

  	
   

  
	
  June 30, 2002

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2002

  	
   

  	
  3.00:1.00

  	
   

  
	
  December 31, 2002

  	
   

  	
  3.25:1.00

  	
   

  
	
  Thereafter

  	
   

  	
  3.75:1.00

  	
   

  



 


II.                               Miscellaneous


 


1.                                       In order to induce the Lenders to enter
into this Amendment, the Borrower hereby represents and warrants that (x) all
representations and warranties contained in Section 8 of the Credit Agreement
are true and correct in all material respects on and as of the First Amendment
Effective Date (as defined below) after giving effect to this Amendment (unless
such representations and warranties relate to a specific earlier date, in which
case such representations and warranties shall be true and correct as of such
earlier date) and (y) there exists no Default or Event of Default on the First
Amendment Effective Date, after giving effect to this Amendment.


 


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2.                                       This Amendment is limited as specified
and shall not constitute a modification, acceptance or waiver of any provision
of the Credit Agreement or any other Credit Document except as expressly set
forth herein.


 


3.                                       This Amendment may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument.  A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.


 


4.                                      THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.


 


5.                                       This Amendment shall become effective as
of the date hereof on the date (the “First Amendment Effective Date”) when each
of the Borrower and the Required Lenders shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered
(including by way of facsimile transmission) the same to the Administrative
Agent at its notice office.


 


6.                                       From and after the First Amendment
Effective Date, all references in the Credit Agreement and each of the Credit
Documents to the Credit Agreement shall be deemed to be references to the
Credit Agreement after giving effect to this Amendment.


 


*   *   *


 


5

















 


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


 


 


	
   

  	
  BRW ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Randy Sutton

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CHASE
  MANHATTAN BANK,

  individually and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Helen L. Newcomb

  	
   

  
	
   

  	
   

  	
  Name: Helen L. Newcomb

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW
  YORK,

  individually and as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Benjamin Ballard

  	
   

  
	
   

  	
   

  	
  Name: Benjamin Ballard

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  



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  BANKBOSTON, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT LYONNAIS NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  W.
  Michael George

  	
   

  
	
   

  	
   

  	
  Name:  W.
  Michael George

  
	
   

  	
   

  	
  Title:   
  First Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST UNION NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Thomas
  L. Stitchberry

  	
   

  
	
   

  	
   

  	
  Name:  Thomas
  L. Stitchberry

  
	
   

  	
   

  	
  Title:   
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMMERZBANK
  AKTIENGESELLSCHAFT

  NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Edward
  J. McDonnell III

  	
   

  
	
   

  	
   

  	
  Name:  
  Edward J. McDonnell III, C.F.A.

  
	
   

  	
   

  	
  Title:    
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  William
  M. Earley

  	
   

  
	
   

  	
   

  	
  Name: 
  William M. Earley

  
	
   

  	
   

  	
  Title:    
  Senior Vice President

  



 


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  THE FIRST
  NATIONAL BANK OF

  CHICAGO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Cynthia
  W. Priest

  	
   

  
	
   

  	
   

  	
  Name: 
  Cynthia W. Priest

  
	
   

  	
   

  	
  Title:   
  First Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST BOSTON

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Robert
  Hetu

  	
   

  
	
   

  	
   

  	
  Name:  Robert
  Hetu

  
	
   

  	
   

  	
  Title:   
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  Joe
  Glodowski

  	
   

  
	
   

  	
   

  	
  Name:  Joe
  Glodowski

  
	
   

  	
   

  	
  Title:   
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MELLON BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  A.M.
  Whitwood

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VAN KAMPEN
  AMERICAN CAPITAL

  PRIME INCOME TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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