dex1035.htm


    AMENDMENT
AGREEMENT

     

    THIS
AMENDMENT AGREEMENT, dated as of January 26, 2009 (this “Amendment”), among
MERCURY CASUALTY COMPANY (the “Borrower”), MERCURY
GENERAL CORPORATION (the “Guarantor”), the
various financial institutions parties thereto (collectively, the “Lenders”) and BANK OF
AMERICA, N.A., as administrative agent (the “Administrative
Agent”).  Terms defined in the Credit Agreement (as defined
below) are, unless otherwise defined herein or the context otherwise requires,
used herein as defined therein.

     

    WHEREAS,
the Borrower, the Guarantor, the Lenders and the Administrative Agent are
parties to that certain Credit Agreement dated as January 2, 2009 (the "Credit
Agreement");

     

    WHEREAS,
in connection therewith, the Borrower and the Administrative Agent entered into
that certain Security Agreement dated as of January 2, 2009 (the "Security Agreement");
and

     

    WHEREAS,
the Borrower and Bank of America, N.A. are entering into a certain Swap Contract
and in the future may enter into additional Swap Contracts with respect to
interest under the Credit Agreement and in connection therewith the Borrower has
agreed that the obligations under such Swap Contracts shall be secured pursuant
to the Security Agreement and the Guarantor has agreed that the Borrower's
obligations under such Swap Contracts shall be guaranteed pursuant to Article X
of the Credit Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto agree as follows:

     

    SECTION
1. AMENDMENTS
TO LOAN DOCUMENTS.  Effective as of the Amendment Effective Date (as
hereinafter defined):

     

    1.1 Amendment to Section
1.01.  Section 1.01 of the Credit Agreement is amended as
follows:

     

    (a)  The
definition of “Investments” is amended by adding the following at the end
thereof:

     

    “Investment as used in this Agreement
does not include Swap Contracts.”

     

    (b)  The
following definitions are added in proper alphabetical order:

     

    "Credit
Agreement Swap Contract" means (i) the Swap Agreement and the Confirmation
relating to a trade in connection with this Agreement between the Borrower and
Bank of America to be dated on or around January 26, 2009, and (ii) any
other Swap Contract entered into between the Borrower and any Person who at the
time such Swap Contract was entered into was a Lender (or an Affiliate of any
Lender) with respect to this Agreement and designated by the Borrower as a
Credit Agreement Swap Contact.

     

    "Existing
Loan Agreement Swap Contract" means (i) the ISDA Master Agreement dated as
of February 15, 2008 (the "Master Agreement"), the ISDA Schedule to the Master
Agreement dated as of February 15, 2008 (the "Schedule"), the Amendment to the
ISDA Master Agreement dated as of January 26, 2009 amending the Master Agreement
and the Schedule (the "ISDA Amendment and, together with the Master Agreement
and the Schedule, the "Swap Agreement") and the Confirmation dated as of
February 29, 2008, each between the Borrower and Bank of America, and
(ii) any other Swap Contract entered into between the Borrower and Bank of
America (or an Affiliate of Bank of America) with respect to the Existing Term
Loan Agreement and designated by the Borrower as a Loan Agreement Swap
Contact.

     

    1.2 Amendment to Section
7.01(b).  Section 7.01(b) of the Credit Agreement is amended in
its entirety to read as follows:

     

    "Liens
securing the Existing Term Loan Agreement provided that the outstanding
principal amount thereof does not exceed $18,000,000 or any additional amount
permitted pursuant to Section 7.03(b) and
Liens securing any Existing Loan Agreement Swap Contract;"

     

    1.3 Amendment to Section
7.01.  Section 7.01 of the Credit Agreement is amended by
(i) deleting the and at the end of clause (h) thereof; (ii) deleting
the “.” appearing at the end of clause (i) thereof and replacing it with “;
and”; and (iii) inserting the following new clause (j) at the end
thereof:

     

    "(j)           Liens
on assets other than the Collateral and any Equity Interest in any Subsidiary of
the Borrower securing the Indebtedness permitted pursuant to Section
7.03(c)."

     

    1.4 Amendment to Section
7.09.  Section 7.09 of the Credit Agreement is amended by
adding the following at the end of the parenthetical "or any Credit Agreement
Swap Contract or any Existing Loan Agreement Swap Contract".

     

    1.5 Amendment to Section
8.03.  Paragraphs "Fourth" and "Last" of Section 8.03 of the
Credit Agreement are amended in their entirety to read as follows

     

    Fourth, to payment of
that portion of the Obligations constituting unpaid principal of the Loans and
amounts due under the Credit Agreement Swap Contracts, ratably among the Lenders
and the swap counterparties under the Credit Agreement Swap Contracts, in
proportion to the respective amounts described in this clause Fourth held by
them;

     

    Last, the balance, if
any, after all of the Obligations (other than Unmatured Surviving Obligations)
and all amounts due under the Credit Agreement Swap Contracts have been
indefeasibly paid in full, to the Borrower or as otherwise required by
Law.

     

    1.6 Amendment to Section
10.01.  The first sentence of Section 10.01 of the Credit
Agreement is amended in its entirety to read as follows:

     

    For
valuable consideration, receipt whereof is hereby acknowledged, and to induce
each Lender to make Loans to the Borrower and to induce the Administrative Agent
to act hereunder, the Parent hereby unconditionally and irrevocably guarantees
to each Lender and the Administrative Agent the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of (i) all Obligations
of the Borrower and (ii) all liability of the Borrower under the Credit
Agreement Swap Contracts, in each case whether for principal, interest, fees,
expenses, indemnification or otherwise, whether direct or indirect, absolute or
contingent or now existing or hereafter arising (collectively the "Guaranteed
Obligations").  For purposes of this Article X, (i) the
term "Lender" means the Lenders and the counterparty to the Credit Agreement
Swap Contracts, (ii) the term "Agreement" means this Agreement and the 2009
Credit Agreement Swap Contracts, and (iii) the term "Loan Documents" means the
Loan Documents and the Credit Agreement Swap Contracts.

     

    1.7 Amendment to Security
Agreement.  The following definitions in Section 1 of the
Security Agreement are amended in their entirety as follows:

     

    “Lender” means each
Lender under the Credit Agreement and the Lenders or Affiliates of the Lenders
that are counterparties to the Credit Agreement Swap Contracts.

     

    "Liabilities" means
all Obligations (monetary or otherwise) of the Pledgor and all liabilities and
obligations of the Pledgor arising under the Credit Agreement Swap Contracts,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, fees and other amounts
that accrue after the commencement by or against the Pledgor or the Guarantor of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such amounts are allowed claims in such
proceeding.

     

    SECTION
2. CONDITIONS
PRECEDENT.  This Amendment shall become effective on the date (the
“Amendment Effective
Date”) when the Administrative Agent shall have received this Amendment,
duly executed by the Borrower, the Guarantor, the Administrative Agent and the
Required Lenders.

     

    SECTION
3. REPRESENTATIONS
AND WARRANTIES.  To induce the Lenders and the Administrative Agent to
enter into this Amendment, each of the Borrower and the Guarantor hereby
represents and warrants to the Administrative Agent and each Lender as
follows:

     

    3.1           Due Authorization,
Non-Contravention, etc.  The execution, delivery and
performance by each of the Borrower and the Guarantor of this Amendment have
been duly authorized by all necessary corporate or other organizational action,
and do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien (other than as contemplated
herein)  under, or require any payment to be made under (i) any
Contractual Obligation to which such Person is a party or affecting such Person
or the properties of such Person or any of its Subsidiaries, which could
reasonably be expected to have a Material Adverse Effect, or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (c) violate any
Law.

     

    3.2           Government Approval,
Regulation, etc.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Borrower or the Guarantor of this Amendment; except for approvals,
consents, exemptions, authorizations, actions, notices or filings (i) which have
already been obtained or made or (ii) for which the failure to obtain or make
could not reasonably be expected to have a Material Adverse Effect and such
failure could be cured without unreasonable delay or cost.

     

    3.3           Validity,
etc.  This Amendment has been duly executed and delivered by
the Borrower and the Guarantor.  This Amendment constitutes a legal,
valid and binding obligation of such Person, enforceable against each Person in
accordance with its terms.

     

    SECTION
4. MISCELLANEOUS.

     

    4.1 Continuing Effectiveness,
etc.  This Amendment shall be deemed to be an amendment to the
Credit Agreement and the Security Agreement, and each of the Credit Agreement
and Security Agreement, as amended hereby, shall remain in full force and effect
and each is hereby ratified, approved and confirmed in each and every
respect.  After the effectiveness of this Amendment in accordance with
its terms, all references to the Credit Agreement or the Security Agreement in
the Loan Documents or in any other document, instrument, agreement or writing
shall be deemed to refer to the Credit Agreement or the Security Agreement, as
the case may be, as amended hereby.

     

    4.2 Payment of Costs and
Expenses.  The Borrower agrees to pay on demand all reasonable
out-of-pocket expenses of the Administrative Agent (including the reasonable
fees and out-of-pocket expenses of counsel to the Administrative Agent) in
connection with the negotiation, preparation, execution and delivery of this
Amendment.

     

    4.3 Severability.  Any
provision of this Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Amendment or affecting the validity or
enforceability of such provision in any other jurisdiction.

     

    4.4 Headings.  The
various headings of this Amendment are inserted for convenience only and shall
not affect the meaning or interpretation of this Amendment or any provisions
hereof.

     

    4.5 Execution in
Counterparts.  This Amendment may be executed by the parties
hereto in several counterparts (and by different parties hereto in different
counterparts), each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.

     

    4.6 Governing
Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

     

    4.7 Successors and
Assigns.  Subject to any restrictions on assignment contained
in the Credit Agreement, this Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.

     

    IN
WITNESS WHEREOF, the undersigned have duly executed this Amendment Agreement as
of the date first set forth above.

     

    MERCURY
CASUALTY COMPANY

    


    


    


    


    
      	
              By:
        /s/ THEODORE
      STALICK                         

            
	
              Name:  Theodore R.
      Stalick                                 

            
	
              Title:
      Vice President and Chief Financial
Officer

            


    

    


    


    MERCURY
GENERAL CORPORATION

    


    


    


    


    
      	
              By:
        /s/ THEODORE
      STALICK                         

            
	
              Name:  Theodore
      R.
      Stalick                                 

            
	
              Title:
      Vice President and Chief
      Financial Officer

            


    

    


    


    BANK OF
AMERICA, N.A., individually as Administrative Agent and Lender