EXHIBIT 10.2
SECOND AMENDMENT TO RESTATED CREDIT AGREEMENT
This Second Amendment to Restated Credit Agreement (the "Amendment") is
entered into as of this 30th day of June, 2003, by and between COMERICA BANK, a
Michigan banking corporation ("Bank"), with offices at One Detroit Center, 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and MEADOWBROOK INSURANCE GROUP, INC.,
a Michigan corporation, with offices at 0000 Xxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 ("Borrower").
RECITALS:
A. Borrower and Bank entered into a certain Restated Credit Agreement
dated as of September 25, 2002 (as amended from time to time, the "Agreement")
pursuant to which Borrower incurred certain indebtedness and obligations and
granted the Bank certain security for such indebtedness and obligations; and
B. WHEREAS, Borrower and Bank desire to amend the Agreement upon the
following terms and conditions.
NOW THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. DEFINITIONS
1.1. Capitalized terms used herein and not defined to the
contrary have the meanings given them in the Agreement.
2. AMENDMENT TO AGREEMENT
2.1. Section 1 of the Credit Agreement is amended by inserting
the following definition of "Adjusted Statutory Surplus" in appropriate
alphabetical order:
" "Adjusted Statutory Surplus" of any Person shall mean
the Statutory Surplus of any such Person plus the change
in the Deferred Acquisition Costs from the most current
balance sheet date to the Deferred Acquisition Costs
balance reported in the December 31, 2002 Consolidating
financial statements."
2.2. Section 1 of the Credit Agreement is amended by inserting
the following definition of "Deferred Acquisition Costs" in appropriate
alphabetical order:
" "Deferred Acquisition Costs" shall be computed under
the provisions of SFAS No. 60, `Accounting and Reporting
by Insurance Enterprises' and included in the Company's
Consolidating GAAP financial statements."
2.3. The definition of "Gross Premiums Ratio" in Section 1 of
the Credit Agreement is hereby amended and restated in its entirety as
follows:
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EXHIBIT 10.2
" "Gross Premiums Ratio" shall mean for any Person as of
any date of determination a ratio the numerator of which
is gross premiums (excluding fronted business where an
Insurance Subsidiary retains 10% or less of the risk)
written of such Person for the four preceding fiscal
quarters ending on such date of determination and the
denominator of which is the Adjusted Statutory Surplus of
such Person as of such date."
2.4. The definition of "Net Premiums Ratio" in Section 1 of
the Credit Agreement is hereby amended and restated in its entirety as
follows:
" "Net Premium Ratio" shall mean for any Person as of any
date of determination a ratio the numerator of which is
Net Written Premiums of such Person for the four
preceding fiscal quarters ending on such date of
determination and the denominator of which is the
Adjusted Statutory Surplus of such Person as of such
date."
2.5. Section 8.12 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
"8.12 MINIMUM ADJUSTED STATUTORY SURPLUS. At all times
after the date hereof, cause Star and the Insurance
Subsidiaries to maintain an Adjusted Statutory Surplus of
at least:
(a) as of September 30, 2002, Eighty Five Million
Dollars ($85,000,000);
(b) as of December 31, 2002 and thereafter Ninety
Million Dollars ($90,000,000); plus, in each case, the
sum of (i) the aggregate capital contributions made to
such Insurance Subsidiary on the date of such purchase or
thereafter, plus (ii) the proceeds received by such
Insurance Subsidiary from the issuance of any equity
securities on the date of such purchase or thereafter
(net of reasonable and customary expenses of such
issuance), minus (iii) cash dividends paid by such
Insurance Subsidiary to the Company."
2.6. Paragraph 6 of Exhibit "A" (Covenant Compliance Report)
to the Credit Agreement is hereby amended and restated in its entirety
as follows:
"6. Minimum Adjusted Statutory Surplus. On the
Computation Date, Minimum Adjusted Statutory Surplus
which was required to be not less than $________ was
$________ as computed in the supporting documents
attached as Schedule 6."
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EXHIBIT 10.2
3. REPRESENTATIONS
Borrower hereby represents and warrants that:
3.1. Execution, delivery and performance of this Amendment and
any other documents and instruments required under this Amendment are
within Borrower's powers, have been duly authorized, are not in
contravention of law or the terms of Borrower's articles of
incorporation/charter, or bylaws, and do not require the consent or
approval of any governmental body, agency, or authority.
3.2. This Amendment and any other documents and instruments
required under this Amendment or the Agreement, when issued and
delivered under this Amendment or the Agreement, will be valid and
binding in accordance with their terms.
3.3. The continuing representations and warranties of Borrower
set forth in Sections 7.1 through 7.19 of the Agreement are true and
correct on and as of the date hereof with the same force and effect as
made on and as of the date hereof.
3.4. Except as previously disclosed to Bank in writing, no
default or event of default, or condition or event which, with the
giving of notice or the running of time, or both, would constitute a
default or event of default under that certain Line of Credit Note and
that certain Term Note, each dated as of September 25, 2002 (the
"Notes") or the Agreement, has occurred and is continuing as of the
date hereof.
4. MISCELLANEOUS
4.1. This Amendment may be executed in as many counterparts as
Bank and Borrower deem convenient, and shall become effective upon: (a)
delivery to Bank of all executed counterparts hereof; and (b) delivery
to Bank, in form and substance satisfactory to Bank of each of the
documents, instruments and fees listed on the Checklist attached as
Exhibit "A" hereto.
4.2. Borrower and Bank acknowledge and agree that except as
specifically amended hereby, all of the terms and conditions of the
Agreement and the Notes and loan documents related thereto
(collectively, the "Loan Documents") remain in full force and effect in
accordance with their original terms.
4.3. Borrower shall pay all of Bank's legal costs and expenses
(including attorneys' fees and expenses) incurred in the negotiation,
preparation and closing hereof, including, without limitation, costs of
all lien searches and financing statement filings.
4.4. Except as specifically set forth herein, nothing set
forth in this Amendment shall constitute, or be interpreted or
construed to constitute, a waiver of any right or remedy of Bank, or of
any default or event of default whether now existing or hereafter
arising and whether now known or hereafter discovered by or disclosed
to Bank.
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EXHIBIT 10.2
4.5. Bank expressly reserves the right to exercise any or all
rights and remedies provided under the Loan Documents and applicable
law except as modified herein. Bank's failure to immediately exercise
such rights and remedies shall not be construed as a waiver or
modification of those rights or an offer of forbearance.
4.6. Borrower, in every capacity, hereby waives, discharges
and forever releases Bank, Bank's employees, officers, directors,
attorneys, stockholders and successors and assigns, from and of any and
all claims, causes of action, defenses, counterclaims or offsets
Borrower may have or may have made which (in any case) could be based
on facts or circumstances known to Borrower as of the date of this
Amendment, against any or all of Bank, Bank's employees, officers,
directors, attorneys, stockholders and successors and assigns.
IN WITNESS WHEREOF, this Amendment has been executed as of the day
first stated above.
MEADOWBROOK INSURANCE GROUP, INC.,
a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Its: President
COMERICA BANK,
a Michigan banking corporation
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Its: Account Officer
