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Exhibit 4.1
AMENDMENT NO. 1 TO
CREDIT AGREEMENT AND WAIVER
This Amendment and Waiver
(this “Amendment”) is entered into as of May 25,
2007 by and among Argonaut Group, Inc., a Delaware corporation (the
“Borrower”), JPMorgan Chase Bank, N. A., individually
and as administrative agent (the “Administrative
Agent”), and the other financial institutions signatory
hereto.
RECITALS
A. The Borrower, the
Administrative Agent and the Lenders are party to that certain
credit agreement dated as of March 6, 2006 (the “Credit
Agreement”). Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to
them by the Credit Agreement.
B. It is contemplated that
(i) the Borrower will merge (the “Merger”) with
PXMS Inc., a newly formed wholly-owned Delaware subsidiary of PXRE
Group Ltd. (“PXRE”), (ii) the Borrower will be the
surviving entity of the Merger, (iii) as a result of the
Merger the Borrower will become a wholly-owned subsidiary of PXRE
and the shareholders of the Borrower immediately prior to the
Merger will become entitled to receive common shares in PXRE and
will own approximately 70% of the aggregate common shares of PXRE,
and (iv) prior to the Merger the Borrower will pay a cash
dividend to its shareholders in the aggregate amount of $60,000,000
(the “Dividend”), which Dividend will be funded out of
a drawing under the revolving credit facility established by the
Credit Agreement.
C. The Borrower, the
Administrative Agent and the undersigned Lenders wish to amend the
Credit Agreement and waive certain provisions thereof on the terms
and conditions set forth below in connection with the Merger and
the Dividend.
Now, therefore, in
consideration of the mutual execution hereof and other good and
valuable consideration, the parties hereto agree as
follows:
1. Amendment to Credit
Agreement . Upon the “Effective Date” (as defined
below), the Credit Agreement shall be amended as
follows:
(a) The
definitions of “Borrower”, “Change of
Control” and “Material Indebtedness” in Article I
are amended in their entirety to read as follows:
“
Borrower ” means Argonaut Group, Inc., a Delaware
corporation and its successors and assigns.
“
Change in Control ” means (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission
thereunder as in effect on the date hereof) of Equity Interests
representing more than 30%
of the aggregate ordinary
voting power represented by the issued and outstanding Equity
Interests of the Parent; (b) occupation of a majority of the
seats (other than vacant seats) on the board of directors of the
Parent by Persons who were neither (i) nominated by the board
of directors of the Parent nor (ii) appointed by directors so
nominated; (c) the acquisition of direct or indirect Control
of the Parent by any Person or group; (d) except as otherwise
expressly permitted under the terms of this Agreement (including a
disposition permitted under Section 6.03(b)), the Borrower
shall cease to own and control, directly or indirectly, free and
clear of all Liens and other encumbrances all of the economic and
voting rights associated with all of the outstanding capital stock
of each of the Borrower’s Insurance Subsidiaries or shall
cease to have the power, directly or indirectly, to elect all of
the members of the board of directors of each of the
Borrower’s Insurance Subsidiaries; or (e) after the
Merger the Parent shall cease to own and control, directly or
indirectly, free and clear of all Liens and other encumbrances all
of the economic and voting rights associated with all of the
outstanding capital stock of the Borrower or shall cease to have
the power, directly or indirectly, to elect all of the members of
the board of directors of the Borrower.
“
Material Indebtedness ” means Indebtedness (other than
the Loans and Letters of Credit), or obligations in respect of one
or more Swap Agreements, of any one or more of the Borrower, any
Subsidiary or the Parent or any of its subsidiaries, in an
aggregate principal amount exceeding $5,000,000. For purposes of
determining Material Indebtedness, the “principal
amount” of the obligations of any of the parties listed above
in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that
such party would be required to pay if such Swap Agreement were
terminated at such time.
(b) The
definitions of “Amendment No. 1”,
“Merger” and “Parent” are added to Article
I in appropriate alphabetical order reading as follows:
“
Amendment No. 1 ” means that certain Amendment
and Waiver to this Agreement, entered into as of May 25, 2007
by and among the Borrower, the Administrative Agent, and the other
financial institutions signatory thereto.
“
Merger ” has the meaning ascribed to such term in
Amendment No. 1.
“
Parent ” means PXRE Group Ltd., a Bermuda corporation
the name of which is expected to be changed to Argo Group
International Holdings, Ltd. immediately after the consummation of
the Merger, if it occurs; provided that solely for purposes of the
definition of Change in
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Control, “Parent”
shall mean (a) prior to the Merger, the Borrower and
(b) after the Merger, if it occurs, PXRE Group Ltd.
(c)
Section 2.09 is amended by (i) replacing the
phrase “Reduction/Increase” in the title thereof with
the word “Reductions” and (ii) deleting
Section 2.09(d) in its entirety.
(d)
Section 5.09 is amended by replacing the phrase
“BBB-” in the body thereof with the phrase
“BBB+”.
(e)
Section 6.01(h) is renumbered as
Section 6.01(i) and a replacement
Section 6.01(h) is added to read as follows:
(h)
Indebtedness in an aggregate principal amount not to exceed
$60,000,000, (i) the proceeds of which are used solely to
repay Revolving Loans and (ii) which has no scheduled
repayments until at least 180 days after the Maturity
Date.
(f)
Section 6.04(f ) is renumbered as
Section 6.04(g ) and a replacement
Section 6.04(f) is added to read as follows:
(f) an equity
investment of up to $40 million in Peleus Re (which investment
shall not result in Peleus Re becoming a Subsidiary). Such
investment shall be made and permitted notwithstanding any contrary
provisions of Section 6.07.
(g)
Section 6.06 is amended in its entirety to read as
follows:
SECTION 6.06.
Restricted Payments . The Borrower will not, and will not
permit any of its Subsidiaries to, declare, pay or make, or agree
to declare, pay or make, directly or indirectly, any Restricted
Payment, except:
(a) the
Borrower may pay publicly announced and regularly scheduled
dividends on its issued and outstanding common stock that is traded
publicly on a national securities exchange; provided, however, that
no dividend shall be permitted under this clause (a) upon the
occurrence and during the continuance of a Default;
(b) the
Borrower and any Subsidiary may make any scheduled payment required
in connection with the Trust Preferred Securities permitted under
Sections 6.01(c) and (d); provided, however, that no payment
or dividend shall be permitted under this clause (b) upon the
occurrence and during the continuance of a Default; and
(c) any
Subsidiary may declare and pay dividends or make distributions to
the Borrower or to a Wholly-Owned Subsidiary.
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(h)
Sections 7(d), (h), (i) and (j) are amended in
their entirety and a new Section 7(q) is added to read
as follows:
(d) the
Borrower shall fail to observe or perform any covenant, condition
or agreement contained in Section 5.02, 5.03 (with respect to
the Borrower’s existence), 5.08, 5.09 or 5.11 or in
Article VI;
(h) an
involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) li
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