Document:

ex_10-1.htm

 

OMNIBUS AMENDMENT TO LOAN DOCUMENTS

 

THIS OMNIBUS AMENDMENT TO LOAN DOCUMENTS (the “Amendment”) is made and entered into effective as of September 1, 2010, by and among: [i] NTS/VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation having a mailing address of 10172 Linn Station Road, Louisville, Jefferson County, Kentucky 40223, and NTS/LAKE FOREST II RESIDENTIAL CORPORATION, a Kentucky corporation having an address of 10172 Linn Station Road, Louisville, Jefferson County, Kentucky 40223 (each a “Borrower”, and collectively, the “Borrowers”); [ii] ORLANDO LAKE FOREST JOINT VENTURE, a Florida general partnership having a mailing address at 10172 Linn Station Road, Louisville, Jefferson County, Kentucky 40223 (“Orlando Lake Forest”), and [iii] NTS MORTGAGE INCOME FUND, a Delaware corporation having a mailing address of 10172 Linn Station Road, Louisville, Jefferson County, Kentucky 40223, and NTS GUARANTY CORPORATION, a Kentucky corporation having an address at 10172 Linn Station Road, Louisville, Jefferson County, Kentucky 40223 (each a “Guarantor”, and collectively, the “Guarantors”), and [iv] PNC BANK, NATIONAL ASSOCIATION, a national banking association, having an address of 500 West Jefferson Street, Fourth Floor, Louisville, Jefferson County, Kentucky 40202 (“Bank”).

 

 

RECITALS

 

1.   Borrowers and Bank are parties to that certain loan transaction, pursuant to which Bank agreed to provide funds to Borrowers as evidenced by those certain Loan Documents (as defined in that certain Eighth Mortgage Loan Modification Agreement dated December 23, 2009 (the “Modification”) and as amended thereby, collectively, the “Loan Documents”), which include that certain Seventh Amended and Restated Promissory Note dated as of August 18, 2009 (as amended, the “Note”), in the face principal amount of SIX MILLION SEVEN HUNDRED NINETY-NINE THOUSAND FOUR HUNDRED SIXTY-EIGHT AND NO/100 DOLLARS ($6,799,468.00), made by Borrowers payable to the order of Bank on or before September 1, 2010 (the “Maturity Date”), all subject to the terms and conditions contained in the Loan Documents (as amended, the “Loan”).  Certain terms defined in the Modification when used and initially capitalized herein shall have the meanings ascribed to them in the Modification unless expressly otherwise defined herein.

 

2.   The parties hereto also previously entered into a promissory note in the original face principal amount of $1,385,544.00 dated August 18, 2009 (referred to in the Modification as the “Section 21A Note”), but this loan currently has a $0.00 balance and $0.00 of remaining available loan proceeds.

 

3.   The Note has a current principal balance of Three Million Fifty Seven Thousand Two Hundred Fifty Four Dollars and 3/00 ($3,057,254.03), which, together with any and all interest, charges and fees arising under the terms of the Note and the other Loan Documents is collectively referred to herein as the “Indebtedness”.

 

  

  

  

4.   The Indebtedness remains unpaid and Borrowers have requested and Bank has agreed to the modification of the Loan Documents to extend the maturity date of the Note from September 1, 2010 to April 1, 2011, to eliminate the six percent (6%) interest rate floor, to amend the release price for the sale of real estate, and to make such other modifications as are set forth herein, subject to Borrowers’ compliance with the provisions set forth herein.

 

NOW THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto and intending to be legally bound, Borrowers, Orlando Lake Forest, Guarantors and Bank hereby agree that the Indebtedness shall remain outstanding and the terms of such Indebtedness and the Loan Documents shall be amended as follows:

 

ARTICLE 1.

 

AMENDMENT TO NOTE

 

The Note is, effective as of the date hereof and subject to the conditions precedent set forth in Article 3 hereof, hereby amended as follows:

 

1.           Each reference to the “Maturity Date” as the term is defined therein shall be amended to mean April 1, 2011.  Each reference to “September 1, 2010” as the maturity date of the Note shall be replaced by “April 1, 2011”.

 

2.           Effective December 1, 2010, the last paragraph on page 3 of the Note (defining the interest rate) and the definitions of “Libor Based Rate”, “Banking Day”, and “One Month Libor” contained on pages 3 and 4 of the Note are  hereby amended and restated to read as follows:

 

Amounts outstanding under this Note will bear interest at a rate per annum which is at all times equal to (A) the Daily LIBOR Rate plus (B) four hundred (400) basis points (4.00%) (the “Interest Rate”).  Interest hereunder will be calculated based on the actual number of days that principal is outstanding over a year of 360 days. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

If the Bank determines (which determination shall be final and conclusive) that, by reason of circumstances affecting the eurodollar market generally, deposits in dollars (in the applicable amounts) are not being offered to banks in the eurodollar market for the selected term, or adequate means do not exist for ascertaining the Daily LIBOR Rate, then the Bank shall give notice thereof to the Borrower.  Thereafter, until the Bank notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the Interest Rate for all amounts outstanding under this Note shall be equal to (A) the Base Rate plus (B) three hundred (300) basis points (3.00%) (the “Alternate Rate”).

In addition, if, after the date of this Note, the Bank shall determine (which determination shall be final and conclusive) that any enactment, promulgation or adoption of or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the

 

  

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Bank to make or maintain or fund loans based on the Daily LIBOR Rate, the Bank shall notify the Borrower.  Upon receipt of such notice, until the Bank notifies the Borrower that the circumstances giving rise to such determination no longer apply, the interest rate on all amounts outstanding under this Note shall be the Alternate Rate.

For purposes hereof, the following terms shall have the following meanings:

“Base Rate” shall mean the higher of (A) the Prime Rate, and (B) the sum of the Federal Funds Open Rate plus fifty (50) basis points (0.50%).  If and when the Base Rate (or any component thereof) changes, the rate of interest with respect to any amounts hereunder to which the Base Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.

“Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in Louisville, Kentucky.

“Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by the Bank by dividing (A) the Published Rate by (B) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any eurocurrency fundings by banks on such day.  The rate of interest will be adjusted automatically as of each Business Day based on changes in the Daily LIBOR Rate without notice to the Borrower.

“Federal Funds Open Rate” shall mean, for any day, the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Bank (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Bank at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day.  The rate of interest charged shall be adjusted as of each Business Day based on changes in the Federal Funds Open Rate without notice to the Borrower.

“Prime Rate” shall mean the rate publicly announced by the Bank from time to time as its prime rate.  The Prime Rate is determined from time to time by the Bank as a means of pricing some loans to its borrowers.  The Prime Rate is not tied to any external rate of interest or index, and does not necessarily reflect the lowest rate of interest actually charged by the Bank to any particular class or category of customers.

“Published Rate” shall mean the rate of interest published each Business Day in the Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication selected by the Bank).

 

  

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    3.           The second paragraph on page 4 of the Note is hereby amended and restated to read as follows:

 

“In addition to the other charges and the interest to be paid under this Amended and Restated Note, Borrowers shall pay to Bank, at the time of sale of an individual parcel from the lien and operation of the Deed of Trust and/or Mortgage securing this Amended and Restated Note, an amount equal to the greater of (i) one hundred percent (100%) of the net proceeds resulting from the sale, or (ii) $100,000.”

 

4.           The third paragraph on page 4 of the Note is hereby amended and restated to read as follows:

 

“Principal and interest payments shall be made in lawful money of the United States of America to Bank at 500 W. Jefferson Street, 4th Floor, Louisville, Kentucky 40202, or such other address as Bank may give to Borrowers, in immediately available funds to Bank.”

 

5.           The last sentence of Section 1(a) on page 4 of the Note is hereby amended and restated to read as follows:

 

“The entire unpaid principal balance of the indebtedness evidenced hereby, together with all accrued but unpaid interest and all other sums payable to the Bank pursuant to this Amended and Restated Note or any other Loan Document, shall be due and payable in a single payment on April 1, 2011.”

 

6.           Section 4 of the Note entitled “Availability” is hereby amended to reflect that there is no longer any availability remaining under the Loan, and the Borrowers no longer have the right to borrow any additional sums under the Note other than those amounts that have already been advanced and funded to Borrowers prior to the date hereof.

 

7.           The first sentence of Section 9 of the Note entitled “Sale or Encumbrance of the Real Estate” is hereby amended and restated to read as follows:

 

“Except for sales of individual residential lot parcels contained in sections 21A and 21B (as defined in the Loan Documents) upon payment of the release price to Bank in the amount equal to the greater of (i) one hundred percent (100%) of the net proceeds resulting from the sale, or (ii) $100,000, or at a release price to be negotiated between Bank and Borrower at the time of sale for any other parcels, Borrowers agree not to sell or transfer real estate described in the Loan Documents without the prior written consent of Bank, nor to further encumber or mortgage such real estate without the prior written consent of Bank except as expressly permitted by the Loan Agreement, and in the event of a violation of this provision, Bank may, at its option, declare the entire remaining unpaid balance of the Amended and Restated Note immediately due and payable and institute foreclosure proceedings.”

 

8.           Each reference in the Note to the term “Amended and Restated Note” is hereby amended to mean the Note as further amended by this Amendment.

 

  

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This amendment shall not constitute a novation, repayment or satisfaction of the Indebtedness evidenced by the Note.

 

 

ARTICLE 2.

 

AMENDMENT TO DEED OF TRUST AND OTHER LOAN DOCUMENTS

 

The Deed of Trust (as defined in the Modification) and each of the other Loan Documents are, effective as of the date hereof and subject to the conditions precedent set forth in Article 3 hereof, hereby amended as follows:

 

1.           Each reference to the maturity date of the Note of September 1, 2010 contained in the Loan Documents is hereby amended to mean “April 1, 2011”.

 

2.           Any reference in the Loan Documents to any additional availability under the Note is hereby deleted, and the parties agree that there is no longer any availability remaining under the Loan, and the Borrowers no longer have the right to borrow any additional sums under the Note other than those amounts that have already been advanced and funded to Borrowers prior to the date hereof.

 

3.           Borrowers and Bank agree that any prior release prices set forth in the Loan Documents shall be deleted in their entirety and Bank agrees to release (a) such individual parcels contained in sections 21A or 21B (as defined in the Loan Documents) of the property subject to the lien of the Deed of Trust upon payment of a release price to Bank in the amount equal to the greater of (i) one hundred percent (100%) of the net sales proceeds resulting from the sale, or (ii) $100,000; and (b) such other parcels or acreage from each section of the property subject to the lien of the Deed of Trust upon payment of a release price to Bank an amount to be negotiated between the parties on a case by case basis at the time of the sale of each parcel.”

 

Each reference to the Note or any of the other Loan Documents contained in the Loan Documents is hereby deemed to refer to said Loan Documents as the same have been amended by this Amendment.

 

ARTICLE 3.

 

CONDITIONS TO EFFECTIVENESS

 

This Amendment shall become effective when, and only when, Bank shall have received this Amendment duly executed by Borrowers, Orlando Lake Forest and Guarantors, together with each of the additional required items set forth below, in form and substance satisfactory in all respects to Bank in its sole discretion and when Borrowers have satisfied each of the other conditions set forth in this Article to the complete satisfaction of Bank:

 

3.1   Bank shall have received copies, certified by representatives of Borrowers acceptable to Bank as being accurate and complete, of resolutions of the members of the Borrowers authorizing the execution, delivery and performance of this Amendment.

 

  

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3.2   Bank shall have received all evidence of paid real estate taxes and insurance due and payable as of the date hereof as Bank so requires.

 

3.3   Bank shall have received such other documents, instruments and certificates as Bank may reasonably request to insure the binding effect in accordance with the terms hereof and of the Loan Documents and to establish the security for the benefit of Bank contemplated thereby.

 

ARTICLE 4.

 

RESTATEMENT OF REPRESENTATIONS,

WARRANTIES AND COVENANTS

 

Except as expressly modified by the terms of this Amendment, Borrowers, Orlando Lake Forest and each of the Guarantors hereby restates reaffirms and confirms as of the date of this Amendment each of the representations, warranties and covenants contained in the Loan Documents, as modified by this Amendment.  Orlando Lake Forest and the Guarantors hereby join in the execution of this Amendment for purposes of consenting to and ratifying the same.

 

ARTICLE 5.

 

NO NOVATION

 

This Amendment is not intended to, and shall not, affect a novation of the obligations expressed in the Loan Documents, nor is the Deed of Trust (as defined in the Modification) or any of the other Loan Documents intended to be released, altered or changed in any manner except as expressly provided herein, and the lien of such documents shall continue to be in full force and effect from and after the date of this Amendment as it was prior to the date hereof.

 

ARTICLE 6.

 

CONFIRMATION OF NO SET-OFFS, DEFENSES OR CLAIMS

 

Each of the Borrowers, Orlando Lake Forest and the Guarantors hereby acknowledge and agree that neither it nor any other party has any defenses or offsets to the payment of any amount due to Bank under the Note or under any of the other Loan Documents and, further, that neither it nor any other party has any defenses to the performance of any of the obligations arising under or in connection with the Note or under or in connection with any of the other Loan Documents.

 

ARTICLE 7.

 

EXPENSES OF AMENDMENT

 

Borrowers agree to reimburse Bank for all expenses incurred by Bank in connection with the preparation, execution, delivery, recordation and performance of this Amendment, including, without limitation, reasonable fees of legal counsel to Bank.

 

  

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ARTICLE 8.

 

INCORPORATION BY REFERENCE

 

Except as expressly modified by this Amendment, all terms and conditions of the Loan Documents shall remain in full force and effect as they were immediately prior to execution and delivery of this Amendment, and those terms and conditions as modified are incorporated herein by this reference and shall govern in all respects this Amendment.  Upon the effectiveness of this Amendment, each reference in the Loan Documents to the terms “hereunder,” “hereof,” “herein,” or words of like import, shall mean and shall be a reference to the Loan Documents as amended by all prior amendments and by this Amendment.

                                

ARTICLE 9.

 

GOVERNING LAW

 

This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky.

 

ARTICLE 10.

 

COUNTERPARTS

 

This Amendment may be executed in multiple counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same agreement.

 

 

  

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IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto effective as of the date first set forth above.

 

 

BORROWERS:

 

 

NTS/VIRGINIA DEVELOPMENT COMPANY,

a Virginia corporation

 

 

By:     /s/ Neil A. Mitchell         

                      Neil A. Mitchell, Senior Vice President

 

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Neil A. Mitchell, who acknowledged himself to be the Senior Vice President of NTS/VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

 /s/ Susan M. Howard      

Notary Public

My commission expires:     April 27, 2014   

 

                                [SEAL]

 

  

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BORROWERS:

 

 

NTS/LAKE FOREST II

RESIDENTIAL CORPORATION,

a Kentucky corporation

 

 

By:      /s/ Neil A. Mitchell         

    Neil A. Mitchell, Senior Vice President

 

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Neil A. Mitchell, who acknowledged himself to be the Senior Vice President of NTS/LAKE FOREST II RESIDENTIAL CORPORATION, a Kentucky corporation, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

/s/ Susan M. Howard      

Notary Public

 

My commission expires:     April 27, 2014   

 

                                [SEAL]

 

  

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ORLANDO LAKE FOREST:

 

 

ORLANDO LAKE FOREST JOINT

VENTURE, a Florida general partnership

 

 

By:         Orlando Lake Forest, Inc., a Florida

corporation, Managing General Partner

 

 

By:  /s/ Neil A. Mitchell         

       Neil A. Mitchell, Senior Vice President

 

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Neil A. Mitchell, who acknowledged himself to be the Senior Vice President of Orlando Lake Forest, Inc., a Florida corporation, Managing General Partner of Orlando Lake Forest Joint Venture, a Florida general partnership, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said general partnership.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

/s/ Susan M. Howard      

Notary Public

 

My commission expires:     April 27, 2014   

 

                                [SEAL]

 

 

  

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GUARANTORS:

 

 

NTS MORTGAGE INCOME FUND,

a Delaware corporation

 

 

By: /s/ Brian F. Lavin       

 

Print Name: Brian F. Lavin                      

 

Title: President                                         

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Brian F. Lavin, who acknowledged himself to be the President of NTS MORTGAGE INCOME FUND, a Delaware corporation, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

 

/s/ Susan M. Howard      

Notary Public

My commission expires:     April 27, 2014   

 

                                [SEAL]

 

  

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GUARANTORS:

 

 

NTS GUARANTY CORPORATION,

a Kentucky corporation

 

 

By: /s/ Brian F. Lavin       

 

Print Name: Brian F. Lavin                      

 

Title: President                                         

 

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Brian F. Lavin, who acknowledged himself to be the President of NTS GUARANTY CORPORATION, a Kentucky corporation, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

/s/ Susan M. Howard      

Notary Public

My commission expires:     April 27, 2014   

 

                                [SEAL]

 

  

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BANK:

 

 

PNC BANK, NATIONAL ASSOCIATION,

a national banking association

 

By: /s/ Henry R. Snyder, IV         

      Henry R. Snyder, IV, Senior Vice President

 

 

 

 

COMMONWEALTH OF KENTUCKY              )

) SS:

COUNTY OF JEFFERSON                                  )

 

On this, the 28th day of December, 2010, before me, a Notary Public, the undersigned officer, personally appeared Henry R. Snyder, IV, who acknowledged himself to be the Senior Vice President of PNC Bank, National Association, a national banking association, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said banking association.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

/s/ Cheryl Adams      

Notary Public

My commission expires:     October 21, 2013   

 

                                [SEAL]

  

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THIS INSTRUMENT PREPARED BY:

 

/s/ Michael B. Vincenti      

Michael B. Vincenti, Esq.

WYATT, TARRANT & COMBS, LLP

500 West Jefferson Street, Suite 2700

Louisville, Kentucky  40202

(502) 562-7518

 

 

- 14 -exhibit401-primusrightsagmta.htm - Generated by SEC Publisher for SEC Filing

Exhibit 4.01

Amendment No. 1 to Rights Agreement

This Amendment No. 1 to the Rights Agreement (this “Amendment”), dated as of December 30, 2010, by and between Primus Guaranty, Ltd., a Bermuda company (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (the “Rights Agent”), amends that certain Rights Agreement, dated as of May 29, 2009.  Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Rights Agreement.

WHEREAS, the Company and the Rights Agent have executed and entered into the Rights Agreement;

Whereas, pursuant to Section 27 of the Rights Agreement, the Company and the Rights Agent may from time to time supplement or amend the Rights Agreement in accordance with the provisions thereof at the direction of the Company and as the Company deems necessary or desirable;

Whereas, the Company expects that, immediately following execution of this Amendment, XL Insurance (Bermuda) Ltd, a Bermuda exempted company (the “Seller”), Merced Partners Limited Partnership, a Delaware limited partnership (“First MP”), and Merced Partners III (Cayman), L.P., a Cayman exempted limited partnership (“Second MP” and together with First MP, the “Purchasers”) shall enter into a Share Purchase Agreement (as it may be amended from time to time, the “Purchase Agreement”) pursuant to which the Purchasers will acquire certain common shares of the Company; 

Whereas, the Board of Directors of the Company has determined and resolved that it is in the best interest of the Company and its shareholders to amend the Rights Agreement as set forth below so that Purchasers and their Affiliates and Associates do not become Acquiring Persons (as such terms are defined in the Rights Agreement) thereunder solely as a result of the execution, delivery and performance of the Purchase Agreement and the consummation of the transactions contemplated thereby;

Now, therefore, in consideration of the Rights Agreement and the premises and mutual agreements set forth herein, the parties hereby agree as follows:

1.                  The definition of “Acquiring Person” in Section 1(a) of the Rights Agreement is hereby amended and supplemented by adding the following sentence to the end of the last sentence thereof:

“Notwithstanding anything herein to the contrary, no Person shall be deemed to be an Acquiring Person solely by virtue of the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.”   

 

 

2.                  The definition of “Grandfathered Percentage” in Section 1(i) of the Rights Agreement is hereby replaced in its entirety with the following:  

 

“Grandfathered Percentage” shall mean, with respect to any Grandfathered Person, the percentage of the outstanding Common Shares of the Company that such Grandfathered Person, together with all Affiliates and Associates of such Grandfathered Person, Beneficially Owns as of the Grandfathered Time applicable to such Person, plus an additional 1/2%; provided, however, that, in the event any Grandfathered Person shall sell, transfer, or otherwise dispose of any outstanding Common Shares of the Company after the Grandfathered Time applicable to such Person, the Grandfathered Percentage shall, subsequent to such sale, transfer or disposition, mean, with respect to such Grandfathered Person, the lesser of (i) the Grandfathered Percentage as in effect immediately prior to such sale, transfer or disposition or (ii) the percentage of outstanding Common Shares of the Company that such Grandfathered Person Beneficially Owns immediately following such sale, transfer or disposition, plus an additional 1/2%.

 

3.                  The definition of “Grandfathered Person” in Section 1(j) of the Rights Agreement is hereby replaced in its entirety with the following:  

 

“Grandfathered Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, is, as of the Grandfathered Time applicable to such Person, the Beneficial Owner of 20% or more of the Common Shares of the Company then outstanding. Notwithstanding anything to the contrary provided in this Agreement, any Grandfathered Person who after the Grandfathered Time applicable to such Person Beneficially Owns less than 20% of the Common Shares of the Company then outstanding shall cease to be a Grandfathered Person and shall be subject to all of the provisions of this Agreement in the same manner as any Person who is not and was not a Grandfathered Person.”

 

4.                  The definition of “Grandfathered Time” in Section 1(k) of the Rights Agreement is hereby replaced in its entirety with the following:  

 

“Grandfathered Time” shall mean (i) with respect to each Investor and its Affiliates  and  Associates, immediately following consummation of the transaction contemplated by the Purchase Agreement, and (ii) with respect to all other Persons, May 29, 2009, 5:00 P.M. New York City time.  

 

5.                  The definition of “Shares Acquisition Date” in Section 1(o) of the Rights Agreement is hereby amended and supplemented by adding the following sentence to the end of the last sentence thereof:

“Notwithstanding anything herein to the contrary, a “Shares Acquisition Date” shall not be deemed to have occurred solely as the result of the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated 

thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.”

NY01/KERSD/1449353.2 

	
2

 

 

6.                  Section 1 of the Rights Agreement is hereby further amended and supplemented to add a new subsection 1(q) that reads as follows:  

““Acquired Shares” shall mean the Common Shares acquired pursuant to the Purchase Agreement.”

7.                  Section 1 of the Rights Agreement is hereby further amended and supplemented to add a new subsection 1(r) that reads as follows:

 

““Investors” shall mean Merced Partners Limited Partnership, a Delaware limited partnership, and Merced Partners III (Cayman), L.P., a Cayman exempted limited partnership.”

 

8.                  Section 1 of the Rights Agreement is hereby further amended and supplemented to add a new subsection 1(s) that reads as follows:  

““Purchase Agreement” shall mean that certain Share Purchase Agreement, by and among XL Insurance (Bermuda) Ltd, a Bermuda exempted company, Merced Partners Limited Partnership, a Delaware limited partnership, and Merced Partners III (Cayman), L.P., a Cayman exempted limited partnership.”

9.                  Section 3(a) of the Rights Agreement is hereby amended and supplemented to add the following sentence at the end of the first paragraph:

“Notwithstanding anything in this Agreement to the contrary, a Distribution Date shall not be deemed to have occurred solely as the result of the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.”

10.              Section 3 of the Rights Agreement is hereby further amended and supplemented to add the following sentence at the end thereof as a new Section 3(e):

“Nothing herein shall be construed to give any holder of Rights or any other Person any legal or equitable rights, remedies or claims under this Agreement by virtue of the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.” 

NY01/KERSD/1449353.2 

	
3

 

 

11.              Section 11(a)(ii) of the Rights Agreement is hereby amended and supplemented to add the following sentence as a new paragraph at the end of that section:

“Notwithstanding anything contained herein to the contrary, no event requiring an adjustment under this Section 11(a)(ii) shall be deemed to have occurred by reason of the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.”

12.              Section 29 of the Rights Agreement is hereby amended and supplemented to add the following sentence at the end of that section:

“Nothing herein shall be construed to give any registered holder of Rights Certificates or any other Person any legal or equitable rights, remedies or claims whatsoever hereunder as a result of or in connection with the approval, execution or delivery of the Purchase Agreement or the consummation of the transactions contemplated thereby or the public announcement of any of the foregoing or by virtue of the Beneficial Ownership of any Acquired Shares by any Investor or any Affiliate or Associate of any Investor.”   

13.              This Amendment may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same instrument.

14.              This Amendment shall be effective immediately prior to the execution of the Purchase Agreement by all parties thereto, and the Company shall notify the Rights Agent in writing of such execution promptly upon receipt of notice of the same; provided, however, that the Rights Agent shall not be deemed to have any knowledge of such effectiveness unless and until it receives written notice from the Company.  Except as amended hereby, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby.

15.              If for any reason the Purchase Agreement is terminated pursuant to its terms, then this Amendment shall be of no further force and effect and the Rights Agreement shall remain the same as it existed immediately prior to execution of this Amendment, and the Company shall notify the Rights Agent in writing of such termination promptly upon receipt of notice of the same; provided, however, that this Section 15 shall not retroactively eliminate the effect of this Amendment to the extent applicable to the period prior to such termination; provided further, however, that the Rights Agent shall not be deemed to have any knowledge of such termination unless and until it receives written notice from the Company.  

16.              This Amendment shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State (without regard to any principles of conflicts of law of such State), except to the extent that mandatory provisions of the laws of Bermuda are applicable; provided, however, that provisions 

NY01/KERSD/1449353.2 

	
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regarding the rights, obligations, duties and immunities of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York.  If any provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, illegal or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be effected, impaired or invalidated; provided, however, that if such excluded provision shall affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign upon five (5) Business Day’s notice to the Company.

17.              For purposes of clarification, nothing in this Amendment shall be deemed to permit any acquisition of common shares of the Company by the Purchasers or any of their respective affiliates other than upon the consummation of the transactions contemplated in the Purchase Agreement.

[Signature Page Follows]

NY01/KERSD/1449353.2 

	
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In witness whereof, this Amendment has been duly executed by the Company and the Rights Agent as of the day and year first written above.

                                           

                                              Primus Guaranty, Ltd.

 

		By: /s/ Richard Claiden______

Name: Richard Claiden

Title: Chief Executive Officer

	
		 
		

 

 

 

 

Mellon Investor Services LLC,

as Rights Agent

 

 

 

By: _/s/ Vincent C. Graffeo__________

Name: Vincent C. Graffeo

Title: VP, Relationship Manager 

 

 

 

 

 

[Signature Page to Amendment No. 1 to Rights Agreement]

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