Exhibit 10.1
 
WAIVER AND AMENDMENT NO. 1
 
Dated as of June 30, 2011
 
to
 
CREDIT AGREEMENT
 
Dated as of January 28, 2011
 
THIS WAIVER AND AMENDMENT NO. 1 (“Amendment”) is made as of June 30, 2011 and
shall, upon satisfaction of the conditions precedent set forth in Section 3
below be effective as of the date hereof (the “Amendment No. 1 Effective Date”)
by and among AmTrust Financial Services, Inc., a Delaware corporation (the
“Borrower”), the financial institutions listed on the signature pages hereof and
JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”),
under that certain Credit Agreement dated as of January 28, 2011 by and among
the Borrower, the Lenders and the Administrative Agent (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit
Agreement”).  Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given to them in the Credit Agreement.
 
WHEREAS, the Borrower has requested that the requisite Lenders and the
Administrative Agent agree to make certain modifications to the Credit
Agreement;
 
WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent
have so agreed on the terms and conditions set forth herein;
 
NOW, THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders party hereto and the Administrative Agent hereby agree to enter into
this Amendment.
 
1.           Waiver.  The Borrower has informed the Lenders that an Event of
Default has occurred as a result of the Borrower’s failure to comply with
Section 6.15(d) of the Credit Agreement due to Wesco Insurance Company, a
Subsidiary of the Borrower, permitting its “total adjusted capital” to be less
than the amount required thereunder for the fiscal year of the Borrower ended on
December 31, 2010 (such specific failure, the “Specified Default”).  Subject to
the satisfaction of the conditions precedent set forth in Section 3 below, the
Lenders party hereto hereby waive (a) the Specified Default and (b) any other
Event of Default arising under clause (c) of Article VII of the Credit Agreement
solely as a result of the Specified Default.  Furthermore, and for the avoidance
of doubt, the Lenders party hereto agree that Wesco Insurance Company shall not
be required to comply with Section 6.15(d) of the Credit Agreement with respect
to the fiscal year of the Borrower ended on December 31, 2010 (it being
understood and agreed that the Borrower and its other Subsidiaries shall
continue to be required to comply with Section 6.15(d) of the Credit
Agreement).  This specific waiver applies only to the Specified Default and only
for the period and for the express circumstances described above.  This specific
waiver shall not be construed to constitute (i) a waiver of any other event,
circumstance or condition or of any other right or remedy available to the
Administrative Agent or any Lender pursuant to the Credit Agreement or any other
Loan Document or (ii) a course of dealing or a consent to any departure by the
Borrower from any other term or requirement of the Credit Agreement.
 
 
 

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2.           Amendments to Credit Agreement.  Effective as of the Amendment No.
1 Effective Date but subject to the satisfaction of the conditions precedent set
forth in Section 3 below, the Credit Agreement is hereby amended as follows:
 
(a)           Section 1.01 of the Credit Agreement is amended to insert the
following new definitions thereto in the appropriate alphabetical order as
follows:
 
“Majestic” means Majestic Insurance Company, a California corporation.

“Permitted Majestic Acquisition” means the acquisition by the Borrower of the
renewal rights to Majestic’s workers’ compensation insurance business in
consideration, in part, of the assumption by the Borrower of all of Majestic’s
liabilities under outstanding workers’ compensation insurance policies
(including federal longshore and harbor workers’ compensation act (“USL&H”)
policies) through a loss portfolio transfer and quota share reinsurance
agreement by which the Borrower will receive from Majestic cash and invested
assets in an amount equal to Majestic's reserves for such liabilities, as
adjusted in the agreement.  It is understood and agreed that, as required by
law, a significant portion of Majestic’s assets to be received by the Borrower
are on deposit with the State of California, other U.S. states and the U.S.
Department of Labor as security for its obligations to workers’ compensation and
USL&H policyholders and will continue to be on deposit following the
consummation of the Permitted Majestic Acquisition.

“Permitted Majestic Indebtedness” means the reimbursement obligations of the
Borrower under the letter of credit facility established by the Borrower as a
result of the Permitted Majestic Acquisition for the sole purpose of complying
with the deposit requirements of the State of California and the U.S. Department
of Labor as security for the Borrower’s obligations to workers’ compensation and
USL&H policyholders in connection with the business acquired by the Borrower
pursuant to the Permitted Majestic Acquisition.

“Permitted Majestic Liens” means the liens encumbering the cash or investment
assets of the Borrower that secure the Permitted Majestic Indebtedness (but
excluding, for the avoidance of doubt, any other Indebtedness or other
obligations other than customary margin requirements in respect of letter of
credit facilities similar to the Permitted Majestic Indebtedness).

(b)           Section 5.01 of the Credit Agreement is amended to delete the
reference to “Section 5.01(e)” in the first sentence of the last paragraph in
Section 5.01 and to replace it with a reference to “Section 5.01(d).”
 
(c)           Section 6.01 of the Credit Agreement is amended to (i) delete the
“and” appearing at the end of clause (q) thereof, (ii) delete the period
appearing at the end of clause (r) thereof and replace it with “; and” and (iii)
add the following as a new clause (s) thereof:
 
“(s) the Permitted Majestic Indebtedness.”
 
(d)           Section 6.02 of the Credit Agreement is amended to (i) delete the
“and” appearing at the end of clause (g) thereof, (ii) delete the period
appearing at the end of clause (h) thereof and replace it with “; and” and (iii)
add the following as a new clause (i) thereof:
 
“(i) the Permitted Majestic Liens.”
 
(e)           Section 6.04 of the Credit Agreement is amended to (i) delete the
“and” appearing at the end of clause (k) thereof, (ii) delete the period
appearing at the end of clause (l) thereof and replace it with “; and” and (iii)
add the following as a new clause (m) thereof:
 
 
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“(m) the Permitted Majestic Acquisition.”
 
(f)           Section 9.01(a)(ii) of the Credit Agreement is amended to delete
the reference to “with a copy to JPMorgan Chase Bank, N.A., 277 Park Avenue,
23rd Floor, New York, NY 10172, Attention of Eugene Kennedy III (Telecopy
No. (646) 534-3081)” appearing therein and to replace therefor a reference to
“with a copy to JPMorgan Chase Bank, N.A., 10 South Dearborn Street, 9th Floor,
Chicago, IL 6060, Attention of Svetlana Skopcenko (Telecopy No. (312)
386-7632)”.
 
3.           Conditions of Effectiveness.  The effectiveness of this Amendment
is subject to the conditions precedent that the Administrative Agent shall have
received (i) counterparts of this Amendment duly executed by the Borrower, the
Required Lenders and the Administrative Agent, (ii) for the account of each
Lender that delivers its executed signature page hereto by such time as is
requested by the Borrower and the Administrative Agent, an amendment fee equal
to 0.075% of such Lender’s Commitment and (iii) payment and/or reimbursement of
the Administrative Agent’s and its affiliates’ fees and expenses (including, to
the extent invoiced, the reasonable fees and expenses of counsel for the
Administrative Agent) in connection with this Amendment.
 
4.           Representations and Warranties of the Borrower.  The Borrower
hereby represents and warrants as follows:
 
(a)           This Amendment and the Credit Agreement as amended hereby
constitute legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
 
(b)           As of the date hereof and giving effect to the terms of this
Amendment, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the representations and warranties of the Borrower set forth
in the Credit Agreement, as amended hereby, are true and correct as of the date
hereof.
 
5.           Reference to and Effect on the Credit Agreement.
 
(a)           Upon the effectiveness hereof, each reference to the Credit
Agreement in the Credit Agreement or any other Loan Document shall mean and be a
reference to the Credit Agreement as amended hereby.
 
(b)           Each Loan Document and all other documents, instruments and
agreements executed and/or delivered in connection therewith shall remain in
full force and effect and are hereby ratified and confirmed.
 
(c)           Except with respect to the subject matter hereof and as set forth
herein, the execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Administrative Agent or
the Lenders, nor constitute a waiver of any provision of the Credit Agreement,
the Loan Documents or any other documents, instruments and agreements executed
and/or delivered in connection therewith.
 
6.           Governing Law.  This Amendment shall be construed in accordance
with and governed by the law of the State of New York.
 
 
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7.           Headings.  Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
 
8.           Counterparts.  This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
 
[Signature Pages Follow]
 
 
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.
 

 
AMTRUST FINANCIAL SERVICES, INC.,
as the Borrower
         
 
By:
/s/ Harry Schlachter     Name:  Harry Schlachter     Title: Treasurer          

 

 
JPMORGAN CHASE BANK, N.A.,
individually as a Lender, as Issuing Bank and as Administrative Agent
         
 
By:
/s/ Thomas A. Kiepura     Name:  Thomas A. Kiepura     Title: Vice President    
     

 

 
THE BANK OF NOVA SCOTIA,
as a Lender
         
 
By:
/s/ David Mahmood      Name:  David Mahmood     Title: Managing Director        
 

 

 
SUNTRUST BANK,
as a Lender
         
 
By:
/s/ K. Scott Bazemore     Name:  K. Scott Bazemore     Title: Vice President    
     

 

 
KEYBANK NATIONAL ASSOCIATION,
as a Lender
         
 
By:
/s/ Marcel Fournier      Name:  Marcel Fournier     Title: Vice President      
   

 
 
Signature Page to Waiver and Amendment No. 1 to
Credit Agreement dated as of January 28, 2011
AmTrust Financial Services, Inc.
 
 
 

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ASSOCIATED BANK, NATIONAL ASSOCIATION,
as a Lender
         
 
By:
/s/ Edward J. Chidiac     Name:  Edward J. Chidiac     Title: Senior Vice
President          

 

 
CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH, as a Lender
         
 
By:
/s/ Eric Y.S. Tsai      Name:  Eric Y.S. Tsai     Title: Vice President &
General Manager          

 
 
 
 
 
 
 
 
 
Signature Page to Waiver and Amendment No. 1 to
Credit Agreement dated as of January 28, 2011
AmTrust Financial Services, Inc.
 
 
 

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