EXHIBIT 10.21
FIRST MODIFICATION AGREEMENT
This MODIFICATION AGREEMENT ("Modification") is entered into this 30
day of September, 2002 by and among Federated Premium Finance, Inc. as seller
(the "Seller"), and FPF, Inc. ("FPF").
WITNESSETH;
WHEREAS, pursuant to that certain Sale and Assignment Agreement dated
as of September 30, 2001 by and among FPF and the Seller (the "Agreement"), FPF
agrees to purchase, and Seller agrees to sell Eligible Premium; and
WHEREAS, all capitalized terms used herein and not otherwise defined in
the Agreement shall have the meaning set forth herein; and
WHEREAS, Seller and FPF desire to modify and amend the Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained in the Agreement, the parties hereto intending to be
legally bound, hereby agree as follows:
1. Advance Rate. The term "Advance Rate" as defined in Schedule A
of the Agreement is hereby amended in its entirety to read as
follows:
"Advance Rate" means 95.0% reduced by the Reserve
Percentage.
2. Maximum Purchase Commitment. The term "Maximum Purchase
Commitment" as defined in Schedule A of the Agreement is
hereby amended in its entirety to read as follows:
"Maximum Purchase Commitment" means $4,000,000.
3. Commitment Fee. The term "Commitment Fee" as defined in
Schedule A of the Agreement is hereby amended in its entirety
to read as follows:
"Commitment Fee" means a commitment fee payable to
FPF in an amount equal to the product of (a) the
Unused Portion and (b) (i) if such Unused Portion is
equal to or less than 10% of the Maximum Purchase
Commitment, 0.50% per annum and (ii) if such Unused
Portion is greater than 10% of the Maximum Purchase
Commitment, 0.75% per annum.
4. Interest Rate. The term "Interest Rate" as defined in Schedule
A of the Agreement is hereby amended in its entirety to read
as follows:
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"Interest Rate" means a floating rate of interest
equal to the Prime Rate plus a spread ("Spread")
determined as follows:
Plus 0.50% when any
Low Rated Resulting Spread member of 21st
Insurance Company Ratio Over Prime Century is rated <"B"
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15.0% or less 1.25% 1.75%
Above 15.0% and Below 25.0% 1.50% 2.00%
Above 25.0% and Below 50.0% 1.75% 2.25%
Above 50.0% and Below 65.0% 2.00% 2.50%
Above 65.0% 2.75% 3.25%
The Low Rated Insurance Company Ratio shall be
calculated by FPF not later than three (3) business
days prior to the end of each calendar month, and the
applicable ratio shall apply for the next month
immediately following the date of calculation. The
Low Rated Insurance Company Ratio and resulting
spread over Prime shall be communicated to Seller by
notice via mail, overnight delivery, facsimile, or
other electronic means.
5. Insurance Company Concentration Limits. The concentration
limits described in Schedule B Section 2a of the Agreement is
hereby amended in its entirety to read as follows:
So long as Federated National Insurance Company
(FNIC) is approved as an exception by FPF, then FNIC
shall be allowed a net amount of Eligible Portfolio
Balance (using a Company Advance Rate of 75%) of up
to 60% of the Eligible Balance of the Portfolio. If
the financial condition of FNIC as determined by FPF
in its sole and absolute discretion suffers a
material adverse change from its position as of the
date of this Modification, then at such time of
determination (as designated in writing by FPF) the
applicable maximum concentration of 60% of the
Eligible Balance of the Portfolio will be decreased
by 10% per month for the following 6 months until a
0% level is achieved.
So long as American Vehicle Insurance Company (AVIC)
is rated "B+" by A.M. Best, then AVIC shall be
allowed a net amount of Eligible Portfolio Balance
(using a Company Advance Rate of 85%) of up to 60% of
the Eligible Balance of the Portfolio.
If the A.M. Best rating of AVIC falls below "B+", so
long as AVIC is approved as an exception by FPF, then
AVIC shall be allowed a net amount of Eligible
Portfolio Balance (using a Company Advance Rate of
75%) of up to 60% of the Eligible Balance of the
Portfolio. If the financial condition of AVIC as
determined by FPF in its sole and absolute
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discretion suffers a material adverse change from its
position as of the date of this Modification, then at
such time of determination (as designated in writing
by FPF) the applicable maximum concentration of 60%
of the Eligible Balance of the Portfolio will be
decreased by 10% per month for the following 6 months
until a 0% level is achieved.
6. Insurance Companies Not Eligible. The description of
ineligible insurance companies in Schedule B Section 2b of the
Agreement is hereby amended in its entirety to read as
follows:
Any company with (i) a "C" rating (without regard to
any "+" or "-"), (ii) any company declared insolvent
or in default by any regulatory basis, or (iii) any
company which fails to pay return premium due on a
valid cancellation within 150 days of a cancel date,
shall be deemed an ineligible. The following listing
of insurance companies shall also be deemed
ineligible:
American Colonial Insurance Company Inc.
American Skyhawk Insurance Company
Amstar Insurance Company
Ocean Harbor Casualty Insurance Company
Seminole Casualty Insurance Company
Southern Group Indemnity, Inc.
United Automobile Insurance Company
Universal Property & Casualty Insurance Company
7. Additional Covenants of Seller. The additional covenants of
Seller as described in Section 12 of the Agreement is hereby
amended to include the following:
So long as either Federated or American Vehicle is
rated "B" or lower (including any "NR" rating) by
A.M. Best, then Seller will provide state filing
information, loss ratio results, investment portfolio
detail and other information as requested by Flatiron
for Federated National Insurance Company and American
Vehicle Insurance Company by May 31st for the first
quarter; August 31st for the second quarter; November
30th for the third quarter; and March 15th for the
fiscal year end and will participate in conference
calls (as needed) to discuss the results.
8. Agreement Ratification. All terms, conditions and covenants of
the Agreement, not otherwise modified herein, are hereby
ratified and confirmed and this Modification, when executed by
the parties hereto, shall become a part of the Agreement and
shall have the same force and effect as if the terms and
conditions hereof were originally incorporated in the
Agreement prior to the execution thereof.
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IN WITNESS WHEREOF, this Modification Agreement is executed by the
undersigned parties as of the day and year first set forth above.
SELLER:
By /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
FPF, Inc.
By /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
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