exv10w68






Exhibit 10.68




	 	 	 	 	 
	BORROWER NAME AND ADDRESS	 	LENDER NAME AND ADDRESS	 	LOAN DESCRIPTION
	 
	Patriot Risk Management, Inc.

	 	Ullico Inc.
	 	Amount $5,450,000
	PRS Group, Inc.

	 	1625 Eye Street, NW	 	 
	Guarantee Insurance Group, Inc.

	 	Washington, DC 20006	 	 
	Patriot Risk Services, Inc.
	 	 	 	 
	Patriot Risk Management of Florida, Inc.
	 	 	 	 
	SunCoast Capital, Inc.
	 	 	 	 
	401 East Las Olas Blvd., Suite 1540
	 	 	 	 
	Ft. Lauderdale, FL 33301
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Date: 12-31-2008






o Refer to the attached Signature Addendum, incorporated herein, for additional Borrowers and
their signatures.



COMMERCIAL LOAN AGREEMENT




LOAN STRUCTURE. This Commercial Loan Agreement (Agreement) contemplates þ a single advance
term Loan o a multiple advance draw Loan o a revolving multiple advance draw Loan. The
principal balance will not exceed $5,450,000.00. Borrower will pay down a revolving draw Loan’s
outstanding Principal in $                     (Pay Down Balance)                      (Time Period).



This Loan is for o agricultural þ business purposes.



o Borrower may not voluntarily prepay the Loan in full at any time. þ Borrower may
prepay the Loan under the following terms and conditions (Any partial prepayment will not excuse
any later scheduled payments until the Loan is paid in full) at any time subject to the payment of
the prepayment premium hereinafter described.



þ LATE CHARGES. If a payment is made more than 5 days after it is due, Borrower will pay a
late charge of 5.000% of the payment amount.



FEES. Borrower agrees to pay the following fees in connection with this Loan at closing or as
otherwise requested by Lender:



Lender Expenses: up to $75,000 (which shall be payable to Lender upon demand)




Fees of Freeman & Co Securities LLC and certain other expenses: $450,000




REQUESTS FOR ADVANCES. Borrower authorizes Lender to honor a request for an advance from Borrower
or any person authorized by Borrower. The requests for an advance must be in writing, by telephone,
or any other manner agreed upon by Borrower and Lender, and must specify the requested amount and
date and be accompanied with any agreements, document, and instruments that Lender requires for the
Loan. Lender will make same day advances, on any day that Lender is open for business, when the
request is received before                      (Advance Cut-Off Time). Lender will disburse the advance into
Borrower’s demand deposit account (if any), account number                      or in any other agreed upon
manner. All advances will be made




 









 








in United States dollars.




	o 	 	 These requests must be made by at least                      (Number Required To Draw) persons, acting together, of those
persons authorized to act on Borrower’s behalf.
	 
	o 	 	Advances will be made in the amount of at least $                     (Minimum Amount Of Advance).
	 
	o 	 	Advances will be made no more frequently than                      (Minimum Frequency Of Advance).
	 
	o 	 	Discretionary Advances. Lender will make all loan advances at Lender’s sole discretion.
	 
	o 	 	Obligatory Advances. Lender will make all Loan advances subject to this Agreement’s terms and conditions.





FINANCIAL INFORMATION. Borrower will prepare and maintain Borrower’s financial records using
consistently applied generally accepted accounting principles then in effect. Borrower will provide
Lender with financial information in a form acceptable to Lender and under the following terms.




	 	A.	 	Frequency. Annually, Borrower will provide to Lender Borrower’s financial
statements, tax returns, annual internal audit reports or those prepared by independent
accountants within 120 days after the close of each fiscal year. Any annual financial
statements that Borrower provides will be þ audited statements, o reviewed
statements, o compiled statements.
	 
	 	 	 	þ Borrower will provide Lender with interim financial reports on a Quarterly
(Monthly, Quarterly) basis, and within 45 days after the close of this business period.
Interim financial statements will be o audited þ reviewed o compiled
statements.
	 
	 	B.	 	Requested Information. Borrower will provide Lender with any other Information
about Borrower’s operations, financial affairs and conditions within 15 days after
Lender’s request.
	 
	o 	C.	 	Leverage Ratio. Borrower will maintain at all times a ratio of total liabilities to
tangible net worth, determined under consistently applied generally accepted accounting
principles, of                      (Total Liabilities to Tangible Net Worth Ratio) or less.
	 
	o 	D.	 	Minimum Tangible Net Worth. Borrower will maintain at all times a total tangible net
worth, determined under consistently applied generally accepted accounting principles, of
$                     (Minimum Tangible Net Worth) or more. Tangible net worth is the amount by which
total assets exceed total liabilities. For determining tangible net worth, total assets will
exclude all intangible assets, including without limitation goodwill, patents, trademarks,
trade names, copyrights, and franchises, and will also exclude any accounts receivable that do
not provide for a repayment schedule.










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	o 	E.	 	Minimum Current Ratio. Borrower will maintain at all times a ratio of current
assets to current liabilities, determined under consistently applied generally accepted
accounting principles of                      (Minimum Current Ratio) or more.
	 
	o 	F.	 	Minimum Working-Capital. Borrower will maintain at all times a working capital,
determined under consistently applied generally accepted accounting principles by subtracting
current liabilities from current assets, of $                     (Minimum Working Capital) or more.
For this determination, current assets exclude                      (Excluded Current Assets).
Likewise, current liabilities include (1) all obligations payable on demand or within one year
after the date on which the determination is made, and (2) final maturities and sinking fund
payments required to be made within one year after the date on which the determination is
made, but exclude all liabilities or obligations that Borrower may renew or extend to a date
more than one year from the date of this determination.





ATTACHMENTS. The following documents are incorporated by reference into this Agreement: o
Asset Based Financing Agreement addendum dated                      o Commercial Security Agreement
addendum dated                      þ Other Addendum hereto dated as of the date hereof.



ADDITIONAL TERMS:




	o  	 	ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF
THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY
RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND
US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO
MODIFY IT. BY SIGNING THIS AGREEMENT, THE PARTIES AFFIRM THAT NO
UNDERWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM.





SIGNATURES. By signing under seal, I agree to all the term and condition set forth in this





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Agreement and the Addendum and attachments thereto. Borrower also acknowledges receipt of a copy of
this Agreement and the Addendum and attachments thereto.



	 	 	 	 	 
	BORROWER:



PATRIOT RISK MANAGEMENT, INC.,

a Delaware corporation

 	 	 
	By:  	/s/ Steven M. Mariano
 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	President and Chief Executive Officer 	 	 
	 
	PRS GROUP, INC.,

a Delaware corporation

 	 	 
	By:  	/s/ Eric S. Dawson
 	 	 
	 	Name:  	Eric S. Dawson 	 	 
	 	Title:  	Secretary 	 	 
	 
	GUARANTEE INSURANCE GROUP, INC.,

a Delaware corporation

 	 	 
	By:  	/s/ Steven M. Mariano
 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
	PATRIOT RISK SERVICES, INC,.

a Delaware corporation

 	 	 
	By:  	/s/ Eric S. Dawson
 	 	 
	 	Name:  	Eric S. Dawson 	 	 
	 	Title:  	Secretary 	 	 
	 
	PATRIOT RISK MANAGEMENT OF FLORIDA, INC,

 a Delaware corporation

 	 	 
	By:  	/s/ Steven M. Mariano
 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	Chairman 	 	 
	 




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	SUNCOAST CAPITAL, INC.,

a Delaware corporation

 	 	 
	By:  	/s/ Steven M. Mariano
 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
	LENDER:



ULLICO INC.,

a Maryland corporation

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 



[Signature Page to Commercial Loan Agreement (Continued)]





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	SUNCOAST CAPITAL, INC.,

a Delaware corporation

 	 	 
	By:  	 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	President and Chief Executive Officer

LENDER: 	 	 
	 
	ULLICO INC.,

a Maryland corporation

 	 	 
	By:  	/s/ James M. Paul
 	 	 
	 	Name:  	James M. Paul 	 	 
	 	Title:  	Senior V.P., Chief Operating Officer 	 	 
	 



[Signature Page to Commercial Loan Agreement (Continued)]





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COMMERCIAL LOAN AGREEMENT (CONTINUED)





DEFINITIONS. In this Agreement, the following terms have the following meanings:



Accounting Terms. Accounting terms that are not specifically defined will have their customary
meanings under consistently applied generally accepted accounting principles.



Loan. Loan refers in all advances made under the terms of this Agreement.



Loan Documents. Loan Documents include this Agreement and all documents prepared pursuant to the
terms of this Agreement including all present and future promissory notes (Notes), security
instruments, guaranties, and supporting documentation as modified, amended or supplemented.



Property. Property is any collateral, real, personal or intangible, that secures Borrower’s
performance of the obligations of this Agreement.



ADVANCES. To the extent permitted by law, Borrower will indemnify Lender and hold Lender harmless
for reliance on any request for advance that Lender reasonably believes to be genuine. Lender’s
records are conclusive evidence as to the number and amount of advances and the Loan’s unpaid
principal and interest. If any advance results in an overadvance (when the total amount of the Loan
exceeds the principal balance) Borrower will pay the overadvance, as requested by Lender. Regarding
Borrower’s demand deposit account(s) with Lender, Lender may, at its option, consider presentation
for payment of a check or other charge exceeding available funds as a request for an advance under
this Agreement. Any such payment by Lender will constitute an advance on the Loan.



CONDITIONS. Borrower will satisfy all of the following conditions before Lender makes any advances
under this Agreement. If this Agreement provides for discretionary advances, satisfaction of these
conditions does not commit Lender to making advances.



No Default. There has not been a default under the Loan Documents nor would a default result from
making the advance.



Information. Borrower has provided all required documents, information, certifications and
warranties, all properly executed on forms acceptable to Lender.



Inspections. Borrower has accommodated, to Lender’s satisfaction, all inspections.



Conditions and Covenants. Borrower has performed and complied with all conditions required for an
advance and all covenants in the Loan Documents.



Warranties and Representations. The warranties and representations contained in this Agreement are
true and correct at the time of making the advance.



Financial Statements. Borrower’s most recently delivered financial statements and reports are
current, complete, true and accurate in all material respects and fairly represent Borrower’s
financial condition.




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Bankruptcy Proceedings. No proceeding under the United Suites Bankruptcy Code has been commenced by
or against Borrower or any of Borrower’s affiliates.



WARRANTIES AND REPRESENTATIONS. Borrower makes these warranties and representations which will
continue as long as this Agreement is in effect.



Power. Borrower is duly organized, validly existing and in good standing in all jurisdictions in
which Borrower operates. Borrower has the power and authority to enter into this transaction and to
carry on its business or activity as it is now being conducted. All persons who are required by
applicable law and the governing documents of Borrower have executed and delivered to Lender this
Agreement and other Loan Documents.



Authority. The execution, delivery and performance of this Agreement and the obligation evidenced
by the Loan Documents are within Borrower’s duly authorized powers, has received all necessary
governmental approval, will not violate any provision of law or order of court or governmental
agency, and will not violate any agreement to which Borrower is a party or to which Borrower or
Borrower’s property is subject.



Name and Place of Business. Other than previously disclosed in writing to Lender, Borrower has not
changed its name or principal place of business within the last ten years and has not used any
other trade or fictitious name. Without Lender’s prior written consent. Borrower will not use any
other name and will preserve Borrower’s existing name, trade names and franchises.



No Other Liens. Borrower owns or leases all property that is required for its business and except
as disclosed, the property is free and clear of all liens, security interests, encumbrances and
other adverse interests.



Compliance With Laws. Borrower is not violating any laws, regulations, rules, orders, judgments or
decrees applicable to Borrower or its property, except as disclosed to Lender.



Financial Statements. Borrower represents and warrants that all financial statements that Borrower
provides to Lender fairly represent Borrower’s financial condition for the stated periods, are
current, complete, true and accurate in all material respects, include all direct or contingent
liabilities, and that there has been no material adverse change in Borrower’s financial condition,
operations or business since the date the financial information was prepared.



COVENANTS. Until the Loan and all related debts, liabilities and obligations under the Loan
Documents are paid and discharged, Borrower will comply with the following terms, unless Lender
waives compliance in writing.



Inspection and Disclosure. Borrower will allow Leader or its agents to enter any of Borrower’s
premises during mutually agreed upon times, to do the following: (1) inspect, audit, review and
obtain copies from Borrower’s books, records, orders, receipts, and other business related data;
(2) discuss Borrower’s finances and business with anyone who claims to be Borrower’s creditor; (3)
inspect Borrower’s Property, audit for the use and disposition of the Property’s proceeds, or do
whatever Lender decides is necessary to preserve and protect the Property and Lender’s interest in
the Property. As long as this Agreement is in effect, Borrower will direct all of Borrower’s
accountants and auditors to permit Lender to examine and make copies of




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Borrower’s records in their possession, and to disclose to Lender any other information that they
know about Borrower’s financial condition and business operations. Lender may provide Lender’s
regulator with required information about Borrower’s financial condition, operation and business or
that of Borrower’s parent, subsidiaries or affiliates.



Business Requirements. Borrower will preserve and maintain its present existence and good standing
in jurisdictions where Borrower is organized and operates. Borrower will continue its business or
activities as presently conducted, by obtaining licenses, permits and bonds where needed. Borrower
will obtain Lender’s prior written consent before ceasing business or engaging in any line of
business that is materially different from its present business.



Compliance with Laws. Borrower will not violate any laws, regulations, rules, orders, judgments or
decrees applicable to Borrower or Borrower’s property, except for those which Borrower challenges
in good faith through proper proceedings after providing adequate reserves to fully pay the claim
and its appeal should Borrower lose. On request, Borrower will provide Lender with written evidence
that Borrower has fully and timely paid taxes, assessments and other governmental charges levied or
imposed on Borrower and its income, profits and property. Borrower will adequately provide for the
payment of taxes, assessments and other charges that may have accrued but are not yet due and
payable.



New Organizations. Borrower will obtain Lender’s written consent before organizing, merging into,
or consolidating with an entity; acquiring all or substantially all of the assets of another; or
materially changing legal structure, management, ownership or financial condition.



Other Liabilities. Borrower will not incur, assume or permit any debt evidenced by notes, bonds or
similar obligations except debt in existence on the date of this Agreement and fully disclosed to
Lender; debt subordinated in payment to Lender on terms acceptable to Lender; accounts payable
incurred in the ordinary course of business and paid under customary trade terms or contested in
good faith with reserves satisfactory to Lender; or as otherwise agreed to by Lender.



Notice. Borrower will promptly notify Lender of any material change in financial condition, a
default under the Loan Documents, or a default under any agreement with a third party which
materially and adversely affects Borrower’s property, operations or financial condition.



Dispose of No Assets. Without Lender’s prior written consent, Borrower will not sell, lease,
assign, or otherwise distribute all or substantially all of its assets.



Insurance. Borrower will obtain and maintain insurance with insurers in amounts and coverages that
are acceptable to Lender and customary with industry practice. This may include without limitation
credit insurance, insurance policies for public liability, fire, hazard and extended risk, workers
compensation, and, at Lender’s request, business interruption and/or rent loss insurance. Borrower
may obtain insurance from anyone Borrower wants that is acceptable to Lender. Borrower’s choice of
insurance provider will not affect the credit decision or Interest rate. At Lender’s request,
Borrower will deliver to Lender certified copies of all of these insurance policies, binders or
certificates. Borrower will obtain and maintain a mortgagee or loss payee endorsement for Lender
when these endorsements are available. Borrower will require all




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insurance policies to provide at least 10 days prior written notice to Lender of cancellation or
modification, Borrower consents to Lender using or disclosing information relative to any contract
of insurance required for the Loan for the purpose of replacing this insurance. Borrower also
authorizes its insurer and Lender to exchange all relevant information related to any contract of
insurance executed as required by any Loan Documents.



Property Maintenance. Borrower will keep property that is necessary or useful in its business in
good working condition by making all needed repairs, replacements and improvements and by making
payments due on the property.



DEFAULT. If the Loan is payable on demand, Lender may demand payment at any time whether or not any
of the following events have occurred. Borrower will be in default if any one or more of the
following occur: (1) Borrower fails to make a payment in full when due. (2) Borrower makes an
assignment for the benefit of creditors or becomes insolvent, either because Borrower’s liabilities
exceed its assets or Borrower is unable to pay debts as they become due; or Borrower petitions for
protection under any bankruptcy, insolvency or debtor relief laws, or is the subject of such a
petition or action and fails to have the petition or action dismissed within a reasonable period of
time. (3) Borrower fails to perform any condition or to keep any promise or covenant on this
Agreement or any debt or agreement Borrower has with Lender. (4) A default occurs under the terms
of any instrument evidencing or pertaining to this Agreement. (5) If Borrower is a producer of
crops, Borrower fails to plant, cultivate and harvest crops in due season. (6) Any loan proceeds
are used for a purpose that will contribute to excessive erosion of highly credible land or to the
conversion of wetlands to produce an agricultural commodity, as further explained by federal law.
(7) Anything else happens that either significantly impairs the value of the Property or, unless
controlled by the New Jersey Banking Law, causes Lender to reasonably believe that Lender will have
difficulty collecting the Loan.



REMEDIES. After Borrower defaults, and after Lender gives any legally required notice and
opportunity to cure, Lender may at its option use any and all remedies Lender has under state or
federal law or in any of the Loan Documents, including, but not limited to, terminating any
commitment or obligation to make additional advances or making all or any part of the amount owing
immediately due. Lender may set-off any amount due and payable under the terms of the Loan against
Borrower’s right to receive money from Lender, unless prohibited by applicable law. Except as
otherwise required by law, by choosing any one or more of these remedies Lender does not give up
Lender’s right to use any other remedy. Lender does not waive a default if Lender chooses not to
use a remedy; and may later use any remedies if the default continues or occurs again.



COLLECTION EXPENSES AND ATTORNEYS’ FEES. To the extent permitted by law, Borrower agrees to pay all
expenses of collection, enforcement and protection of Lender’s rights and remedies under this
Agreement and any of the other Loan Documents (including, without limitation, any fees and expenses
incurred in connection with or otherwise related to the Intercreditor Agreement with the Existing
Lenders). Expenses include, but are not limited to, reasonable attorneys’ fees including attorney
fees as permuted by the United States Bankruptcy Code, court costs and other legal expenses. These
expenses will bear interest from the date of payment until paid in full at the contract interest
rate then in effect for the Loan.




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GENERAL PROVISIONS. This Agreement is governed by the laws of the State of Delaware (without regard
to conflict of law principles) and to the extent required, by the laws of the jurisdiction where
the Property is located.



Joint And Individual Liability And Successors. Each Borrower, individually, has the duty of fully
performing the obligations on the Loan. Lender can sue all or any of the Borrowers upon breach of
performance. The duties and benefits of this Loan will bind and benefit the successors and assigns
of Borrower and Lender.



Amendment, Integration And Severability. The Loan Documents may not be amended or modified by oral
agreement. Borrower agrees that any party signing this Agreement as Borrower is authorized to
modify the terms of the Loan Documents, Borrower agrees that Lender may inform any party who
guarantees this Loan of any Loan accommodations, renewals, extensions, modification, substitutions,
or future advances. The Loan Documents are the complete and final expression of the understanding
between Borrower and Lender. If any provision of the Loan Documents is unenforceable, then the
unenforceable provision will be severed and the remaining provisions will be enforceable.



Waivers And Consent. Borrower, to the extent permitted by law, consents to certain actions Lender
may take, and generally waives defenses that may be available based on these actions or based on
the status of a party to the Loan. Lender may renew or extend payments on the Loan. Leader may
release any borrower, endorser, guarantor, surety, or any other co-signer. Lender may release,
substitute, or impair any Property securing the Loan. Lender’s course of dealing, or Lender’s
forbearance from, or delay in, the exercise of any of Lender’s rights, remedies, privileges, or
right to insist upon Borrower’s strict performance of any provisions contained in the Loan
Documents, will not be construed as a waiver by Lender, unless the waiver is in writing and signed
by Lender. Lender may participate or syndicate the Loan and share any information that Lender
decides is necessary about Borrower and the Loan with the other participants.



Interpretation. Whenever used, the singular includes the plural and the plural includes the
singular. The section headings are for convenience only and are not to be used to interpret or
define the terms of this Agreement. Unless otherwise indicated, the terms of this Agreement shall
be construed in accordance with the Uniform Commercial Code.



Notice. Unless otherwise required by law, any notice will be given by delivering it or mailing it
by first class mail to the appropriate party’s address listed in this Agreement, or to any other
address designated in writing. Notice to one party will be deemed to be notice to all parties. Time
is of the essence.




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ADDENDUM TO COMMERCIAL LOAN AGREEMENT




     This Addendum to Commercial Loan Agreement (this “Addendum”) is made to and a part of
the Commercial Loan Agreement, dated December 31, 2008 (the “Agreement”), by and among
Patriot Risk Management, Inc. (formerly known as SunCoast Holdings, Inc.), a Delaware corporation
(“PRM”), PRS Group, Inc. (formerly known as Patriot Risk Management, Inc.), a Delaware
corporation (“PRS Group”), Guarantee Insurance Group, Inc. (formerly known as Brandywine
Insurance Holdings, Inc.), a Delaware corporation (“GIGI”), Patriot Risk Services, Inc., a Delaware
corporation (“Patriot RS”), Patriot Risk Management of Florida, Inc., a Delaware
corporation (“PRMF”), and SunCoast Capital, Inc., a Delaware corporation
(“SunCoast”) (PRM, PRS Group, GIGI, Patriot RS, PRMF and SunCoast collectively and jointly
and severally referred to and obligated as “Borrower”), and Ullico Inc., a Maryland
corporation (“Lender”).



     All capitalized terms not otherwise defined in this Addendum shall have the meaning ascribed
thereto as set forth in the above-referenced Agreement to which this Addendum is an integral part
thereof, and all references in this Agreement and all other Loan Documents to the “Agreement” (as
hereinabove defined) shall refer to the Agreement as amended by this Addendum.



     For good and valuable consideration, the receipt and sufficiency of which are acknowledged, it
is agreed as follows:



     1. LOAN PROCEEDS. Borrower warrants, represents and agrees that the proceeds of the Loan shall
be used solely for the following specific purposes and for no other purpose: (i) to enable Borrower
to provide capital in the amount of at least $4,925,000 to Guarantee Insurance Company, a Florida
Insurance Company (“GIC”); (ii) $450,000 for the payment of services to Freeman & Co.
Securities LLC, (iii) for costs and expenses incurred in connection with this transaction, and (iv)
the remainder, if any, shall be disbursed to Borrower for general business purposes.



     2. NOTICE OF SALE OF COLLATERAL. Borrower shall not sell, transfer or otherwise convey any of
the Collateral (as hereinafter defined) other than in the ordinary course of business without
Lender’s prior written consent, which shall not be unreasonably withheld, delayed or conditioned.
In the event that Borrower desires to sell all or any portion of the Collateral, Borrower shall
provide to Lender ten (10) business days advance written notice of said sale with a copy of the
proposed sale contract and a written request for Lender’s approval of such transaction. Nothing set
forth in this paragraph shall be construed to restrict Borrower’s ability to sell tangible personal
property so long as such tangible personal property is replaced within a reasonable period of time
by similar tangible personal property of comparable value, or the sale of such tangible personal
property does not have a material adverse effect on the Borrower’s business operations or if said
sale is in the ordinary course of business.



     3. AGREEMENTS WITH INSURANCE ENTITIES. Borrower represents, warrants and agrees that so long
as the Loan is outstanding, Borrower, or any affiliate of Borrower, will not terminate (or
intentionally give/provide cause for any insurance entity to terminate) its Managing Agreements (as
defined hereinafter) with any Insurance Entity (as




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defined hereinafter) through which Borrower has received ten percent (10%) or more of its gross
revenues during the immediately preceding twelve (12) month trailing period (hereinafter,
“Material Agency Agreement”) if such termination would have a material adverse effect on
Borrower’s business. Borrower hereby represents and warrants to Lender that, as of the date of this
Agreement: (i) Borrower is in compliance in all material respects with all Material Agency
Agreements with such Insurance Entities; (ii) Borrower is not in default under any Material Agency
Agreement with any Insurance Entity; and (iii) there are no known defaults or unmatured events of
default or events which with the passage of time will become defaults under any Material Agency
Agreement with any of such Insurance Entities. Borrower further represents and warrants to Lender
that Borrower: (i) shall maintain compliance in all material respects with said Material Agency
Agreements; (ii) shall not cause or allow any default or event of default thereunder; (iii) shall
not, without Lender’s prior written consent (which consent shall not be unreasonably withheld),
terminate any of the Material Agency Agreements until all liabilities of Borrower to Lender are
paid in full; and (iv) shall not permit any condition to exist or engage in, or permit to exist or
occur, any condition or event or transaction in connection with said Material Agency Agreements
which might constitute grounds for any such Insurance Entity to terminate any Material Agency
Agreement. If a Material Agency Agreement is terminated for reasons beyond Borrower’s control,
Borrower shall notify Lender of such termination within ten (10) days of Borrower’s receipt of such
notice.




     4. FINANCIAL STATEMENTS; REVENUE INFORMATION; ETC.



          (a) Notwithstanding the terms set forth in the paragraph titled FINANCIAL INFORMATION set
forth on page one of this Agreement, from the date of this Agreement and thereafter until all
liabilities of Borrower to Lender are paid in full, within one hundred twenty (120) days of the
fiscal year end of Borrower and GIC (or within 15 business days after the date such filing is
required to be filed with the regulator), Borrower shall provide to Lender audited financial
statements for Borrower and GIC (including balance sheet, income statement, cash flow statement,
and changes in stockholder’s equity and such other information as Lender may from time to time
require in its sole and absolute discretion) for such fiscal year. In addition, Borrower shall
provide to Lender copies of Borrower’s and GIC’s tax returns within fifteen (15) days of Borrower’s
and GIC’s filing same and, notwithstanding the terms set forth in the paragraph titled FINANCIAL
INFORMATION set forth on page one of this Agreement, shall provide to Lender financial statements
for Borrower and GIC (including balance sheet, income statement, cash flow statement and changes in
stockholder’s equity and such other information as Lender may from time to time require in its sole
and absolute discretion) within forty-five (45) days of each fiscal quarter of such entities (or if
a Borrower or GIC is required to file a similar quarterly report with a regulator, within 15
business days after the date such filing is required to be filed with the regulator). With respect
to Borrower and GIC, Lender may require additional or more frequent reporting and financial
statements, all as Lender may from time to time reasonably, and all of such financial statements
and reporting shall be in such form and detail as Lender may reasonably require.




          (b) From the date of this Agreement and thereafter until all liabilities of Borrower to Lender
are paid in full, each calendar quarter, Borrower agrees to furnish to Lender a copy of Borrower’s
and GIC’s commission and other reports with respect to insurance policies produced by or through
Borrower or GIC and all commissions paid and to be paid by Insurance





12









 







Entities to Borrower or GIC with a certificate signed by an officer of Borrower or GIC, as
applicable, dated the date of such report, verifying, warranting and attesting to Lender the
accuracy and veracity of such report. In addition to such reports, each calendar quarter Lender may
ask for production reports, third party company commission statements, and other commission reports
or similar information, records or data indicating Borrower’s and GIC’s current or past commission
volume or revenues, and all of such information, reports and statements shall be provided by
Borrower to Lender within twenty-one (21) business days of Lender’s request.




          (c) From the date of this Agreement and thereafter until all liabilities of Borrower to Lender
are paid in full, upon Lender’s written request, Borrower shall promptly deliver to Lender all of
the information, reports and documentation as the same pertain to Borrower and GIC, all as set
forth on Exhibit I attached hereto and hereby made a part hereof by reference.




     5. LOAN PAYMENTS. Borrower hereby agrees with Lender that all payments for, with respect to,
or upon the indebtedness of Borrower to Lender shall be made by wire transfer (to an account
designated in writing by Lender to Borrower) each month, all at the sole cost of Borrower.



     6. CONSENT TO LOAN PARTICIPATIONS; ETC. Borrower agrees and consents to Lender’s sale or
transfer, whether now or later, of the Loan, including, without limitation: Lender’s sale or
transfer of one or more participation interests in the Loan to one or more purchasers, whether
related or unrelated to Lender; Lender’s sale or transfer, whether now or later, of Borrower’s Loan
to an issuer of notes or other securities in whole or in part collateralized by Borrower’s Loan; or
Lender’s issuance of notes or other securities which are in whole or in part collateralized by
Borrower’s Loan. Lender may provide, without any limitation whatsoever, to any one or more
purchasers, potential purchasers or issuers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan. Borrower additionally waives any and all
notices of sale of participation interests, all notices of any repurchase of such participation
interests and all notices of issuance of notes or securities which are in whole or in part
collateralized by Borrower’s Loan. Borrower also agrees that the issuers of notes or securities
and/or purchasers of any participation interests may or will be considered as the absolute owners
of such interests in the Loan and will have all the rights granted under the participation
agreement or agreements governing the sale of such participation interests. Borrower further waives
all rights of offset or counterclaim that it may have now or later against any issuer of notes or
securities, or against any purchaser of such a participation interest and unconditionally agrees
that such issuer or purchaser may enforce Borrower’s obligations under the Loan irrespective of the
failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the
issuer of such notes or securities or purchaser of any such participation interests may enforce its
interests irrespective of any personal claims or defenses that Borrower may have against Lender.



     7. COLLATERAL. As used in this Agreement, the term “Collateral” means all of
Borrower’s respective right, title and interest in, to and under all property and assets granted as
collateral security for the Loan, whether real, intangible or tangible personal property, whether
granted directly or indirectly, whether granted now or in the future, and whether granted in the




13









 







form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment
trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise. Collateral shall also include, but not be limited
to all of Borrower’s respective right, title and interest in, to and under the following, whether
now owned or at any time hereafter acquired:




          (a) All of Borrower’s personal property (except for the property of GIC), whether tangible or
intangible, and all of Borrower’s interest in property and fixtures (except for the property of
GIC), now owned or existing or hereafter acquired and wherever located, including without
limitation, the following: (i) all furniture, inventory, machinery, vehicles, equipment, goods and
supplies; (ii) all accounts (except for the property of GIC); (iii) all instruments, documents
(including, without limitation, the customer files), policies and certificates of insurance,
securities, negotiable instruments, money, chattel paper, investment property, deposits, warehouse
receipts and things in action; (iv) all general intangibles and rights to payment or proceeds of
any kind, including without limitation, rights to insurance premiums, dividends, distributions,
proceeds and letter of credit proceeds; (v) all documents and contract rights and interests of any
kind, including without limitation, the rights and interests set forth in any agency/producer
agreement and insurance policy, and the rights and interests set forth in all Material Agency
Agreements and in all Managing Agreements with any Insurance Entity; (vi) all intellectual property
rights and similar assets, including without limitation trademark rights, service mark rights,
rights to licenses and rights to names, customer lists, trade secrets, goodwill, trade names,
permits and franchises, payment intangibles, computer programs, etc.; (vii) the book of business;




          (b) All of PRM’s right, title and interest in PRS Group and GIGI whether evidenced by stock
certificates or otherwise, together with all dividends and other income, payments and distributions
of any kind payable to PRM in its capacity as the sole stockholder of GIGI and PRS Group;




          (c) All of GIGI’s right, title and interest in GIC whether evidenced by stock certificates or
otherwise, together with all dividends and other income, payments and distributions of any kind
payable to GIGI in its capacity as the sole stockholder of GIC. Lender acknowledges that regulatory
approval from the Florida Office of Insurance Regulations (“OIR”) would be required in the unlikely
event of collateral repossession, voting of shares or units, assertion of ownership of collateral,
and/or transfer of ownership of collateral. Although Lender is requiring a pledge of all of the
stock of GIC, in the event of collateral liquidation Lender is only entitled to liquidation
proceeds necessary to repay Borrower’s principal and interest outstanding to Lender and Lender
costs associated with collateral liquidation;




          (d) All telephone numbers, rights to the lease of office space, post office boxes or other
mailing addresses, rights to trademarks and use of trade names, rights to software licenses, and
rents received by Borrower for the lease of office space;




          (e) All deposit accounts, escrow accounts, disbursement accounts, accounts receivable,
commission receivables, economic interest of Borrower, all chattel paper, contract





14









 







rights, instruments, documents, general intangibles, inventory and goods in process of Borrower,
whether now in existence or owned or hereafter coming into existence or acquired, wherever located,
and all returned goods, and repossessions and replacements thereof;




          (f) All commissions, policy fees, service fees, underwriting fees, claims fees, administrative
and processing fees, fronting fees, risk management and loss/cost control fees, investment income,
management fees (including without limitation, case and captive management fees), premium finance
revenues, reinsurance brokerage commissions and all other revenue (collectively, “Revenue”)
payable to Borrower and any assignment thereof;




          (g) All “MGA Operations” being defined hereunder as Borrower’s policy
administration
agreements, related service fees, and any agency, producer, broker, and managing general agency
agreements or similar such contracts (collectively, “Managing Agreements”) with any
insurance company, reinsurance company, managing general agency, broker or other insurance supplier
(collectively, “Insurance Entities”), the policies Borrower has written or placed pursuant
to such agreements, the right to commissions and policy fees (new, renewal, additional or other)
for any of the foregoing, and Borrower’s customer list and policy information for said customers,
and with respect to all of the foregoing, whether now owned by Borrower or at any time hereafter
acquired;




          (h) Any property, tangible or intangible, in which Borrower grants Lender a security interest
in any other Loan Document;




          (i) All “Premium Finance Operations” being defined hereunder as Borrower’s or
their
affiliates’ existing or future premium finance business, all tangible and intangible property
associated therewith, and all Revenue (less amounts due Insurance Entities) derived directly or
indirectly therefrom; and




          (j) All additions, attachments, parts, repairs, accessories, accessions, replacements and
substitutions to or for any of the foregoing and any proceeds and products of the above-described
property.




     Borrower hereby grants Lender a lien on and first priority security interest in the Collateral
to secure the payment and performance of the Loan and all of Borrower’s other obligations,
liabilities and indebtedness to Lender, whether now incurred or at any time hereafter arising.



     8. DEFAULT. The paragraph titled “DEFAULT” on page 2 of this Agreement is amended and restated
in its entirety to read as follows:



     DEFAULT. Borrower will be in default if one or more of the following occur (each an “Event of
Default”):



          (a) (i) Borrower fails to make any payment due in accordance with the terms of any Promissory
Note which evidences the Loan within ten (10) calendar days after the due date thereof; (ii)
Borrower fails to fulfill or perform any material term, covenant, condition or obligation set forth
in this Agreement or any other “Loan Document” (which term, for all purposes of this
Agreement, shall include all documents and instruments (including, without





15









 







limitation, promissory notes, loan agreements, security agreements, guaranties and stock pledge
agreements) which pertains to this Agreement or evidence and/or secure any obligations of Borrower
or any of the Guarantors to Lender) within thirty (30) days after notice from Lender of such
failure; provided, however, no Event of Default shall be deemed to have occurred under this
sub-paragraph 8(a)(ii) if any such failure is reasonably capable of being cured, Borrower
diligently pursues a cure of same, Lender’s position is not materially adversely affected during
Borrower’s pursuit to cure, and same is in fact cured within 90 days after notice from Lender; or,
(iii) if any material representation or warranty set forth in this Agreement or any other Loan
Document is not as represented or warranted by Borrower;




          (b) If prior to payment in full of all obligations pursuant to the Loan Documents, (i)
Borrower and GIC do not at all times maintain an employment agreement with Steven M. Mariano in a
form reasonably acceptable to Lender which includes non-solicitation and non-competition language;
(ii) Borrower and GIC fail to provide a copy of same to Lender upon Lender’s request; or (iii) the
cash and non-cash compensation, including bonuses and other benefits, set forth in such employment
agreements are materially increased without Lender’s prior written consent, which consent shall not
be unreasonably withheld;




          (c) (i) Borrower or GIC makes an assignment for the benefit of creditors or becomes insolvent,
either because Borrower’s and/or GIC’s liabilities exceed its assets or Borrower or GIC is unable
to pay debts as they become due; Borrower or GIC petitions for protection under any bankruptcy,
insolvency, or debtor relief laws, or is the subject of such a petition or action and fails to have
the petition or action dismissed within a reasonable period of time;




          (d) If without Lender’s prior written consent, which shall not be unreasonably withheld,
delayed or conditioned, prior to payment in full of all obligations pursuant to the Loan Documents,
(i) Steven M. Mariano ceases to directly or indirectly hold an unencumbered 51% or more of the
ownership and/or profit interest in PRM or 51% or more of the voting control of PRM; or, (ii) PRM’s
direct or indirect ownership and/or profit interest in PRS Group, GIGI, Patriot RS, PRMF, GIC and
SunCoast is transferred, diluted or further encumbered in any manner, including but not limited to,
the issuance of new shares, certificates or interests, assignment or gift of shares or interests,
the substitution of shares or interests, or the hypothecation or pledge of shares or interests;




          (e) If (i) GIC’s certificate of authority is suspended or revoked by the Florida Department of
Insurance, (ii) GIC is subject to or comes under any regulatory supervision, control or
rehabilitation; (iii) GIC’s risk based capital ratio as calculated pursuant to guidelines
established by the National Association of Insurance Commissioners (“NAIC”) falls to 200 or
below, (iv) or GIC’s certificate of authority is suspended or revoked by any other regulatory body
having authority over GIC; provided, however, that GIC shall have 120 days within which to cure;




          (f) If anything happens that either materially impairs the value of the Collateral or causes
Lender to reasonably believe that Lender will have difficulty collecting the Loan; provided
however, no Event of Default shall be deemed to have occurred under this paragraph 8(f) if any such
impairment or difficulty is reasonably capable of being cured or





16









 







resolved. Borrower diligently pursues a cure or resolution of same, Lender’s position is not
materially adversely affected during Borrower’s pursuit to cure or resolve, and same is in fact
cured or resolved within 90 days after notice from Lender;




          (g) If without Lender’s prior written consent (which consent will not be unreasonably
withheld, delayed or conditioned), prior to payment in full of all obligations pursuant to the Loan
Documents, GIC amends or deviates in any material respect from the underwriting guidelines attached
hereto as Exhibit II within thirty (30) days after notice from the Lender of such amendment
or deviation; provided, however, no Event of Default shall be deemed to have occurred under this
paragraph 8(g) if any such amendment or deviation is reasonably capable of being cured and same is
in fact cured within 45 days after notice from Lender;




          (h) If without Lender’s prior written consent (which shall not be unreasonably withheld,
delayed or conditioned), prior to payment in full of all obligations pursuant to the Loan
Documents, Borrower and GIC enter into any contract, including employment contracts, consulting
contracts, policy servicing and processing contracts, underwriting contracts or claims processing
contracts, which would involve payment of expenses on an annual basis in excess of ten percent
(10%) of the combined annual revenues of Borrower and GIC, and, without Lender’s prior written
consent, which consent shall not be unreasonably withheld, delayed or conditioned, Borrower and GIC
amend any such contracts in any material manner;




          (i) If Borrower does not perform any of its obligations or duties associated with its business
when due, and such non-performance by Borrower relates to a material contract or is material to
Borrower’s business and persists for thirty (30) days following Lender’s notice to Borrower of such
failure; provided however, no Event of Default shall be deemed to have occurred under this
paragraph 8(i) if Borrower legitimately disputes the extent, amount or existence of the obligation
or duty and Lender’s position is not materially adversely affected by such dispute; and/or,




          (j) If Steven M. Mariano dies, is legally incapacitated, resigns or is removed as an executive
officer of Borrower, and Mr. Mariano is not replaced within 180 days of such resignation or removal
by individuals deemed capable and competent by a majority of the independent members of the board
of directors.




     A default by Borrower in performing under the terms of any other “Loan Document” or the
occurrence of any default, Default or Event of Default under any other Loan Document, in each case
after any applicable notice, grace and/or cure periods, shall constitute a default and Event of
Default under the terms of this Agreement and all other Loan Documents, and the occurrence of an
Event of Default under this Agreement shall constitute a default, Default and Event of Default
under all other Loan Documents.



     9. REMEDIES UPON AND EFFECT OF DEFAULT. Upon the occurrence of any Event of Default and
expiration of any applicable cure period, in addition to any remedy or right Lender has under any
Loan Document, the Uniform Commercial Code, at law or in equity, Lender, at its discretion, may
also enforce the following (and the following shall be applicable and in effect):



17









 





          (a) For a period of five (5) years after Borrower’s default and failure to cure, Borrower,
Steven M. Mariano and any entity directly or indirectly owned or controlled by Steven M. Mariano
(hereinafter collectively, “Borrower’s Affiliates”), shall not directly or indirectly
solicit, write, process, or service insurance policies for any of Borrower’s or GIC’s customers and
shall not directly or indirectly attempt to divert any of Borrower’s or GIC’s customers from
continuing to do business with Borrower’s successor to the assets or operations of Borrower.
Borrower and Borrower’s Affiliates agree that this prohibition is reasonable and necessary and that
the credit extended to Borrower is ample consideration for this restriction. Borrower and
Borrower’s Affiliates understand that Borrower and Borrower’s Affiliates are not prohibited from
working for any other company or in any particular line of work, but that this covenant not to
solicit or divert only restricts the Borrower and Borrower’s Affiliates from conducting business
similar to Borrower’s or contacting in person, by telephone, by mail, or by any other means, those
customers or potential customers that Borrower and/or Borrower’s Affiliates worked with while
employed by Borrower or GIC or operating the business of the Borrower comprising part of the
Collateral. For the purposes of this Agreement, “customer” shall mean retail customers as
well as any other Insurance Entities who produce or process policies through Borrower or GIC or who
obtain services through Borrower or GIC.




          (b) Borrower shall enforce, for the continued benefit of Lender, all non-solicitation
agreements or non-compete agreements currently in force between Borrower and Steve M. Mariano.




     10. PROTECTION OF COLLATERAL. If Lender confirms that the income from operations of Borrower
or GIC has materially declined (from conditions, circumstances or events other than adverse claims
activity) when compared with the income from operations of Borrower or GIC from prior quarters or
years and/or Lender confirms that GIC’s ratios mandated by the NAIC, Florida Department of
Insurance or other regulatory body have materially declined when compared with the ratios from
prior quarters or years and Lender reasonably believes that such decline indicates a material
negative trend, Lender may require Borrower to enter into an agreement with a consultant approved
by Lender pursuant to which management of Borrower and GIC agree to work with consultant to conduct
specified corrective activities each month and/or enter into an agreement pursuant to which a
consultant approved by Lender works with management of Borrower and GIC to analyze Borrower’s or
GIC’s operations. Furthermore, in the event Steven M. Mariano dies, becomes disabled, abandons the
business operations of Borrower or GIC or other materially adverse extenuating circumstance
pertaining to Borrower or GIC occurs, Lender may require Borrower to retain a consultant approved
by Lender to assist management in the operation of Borrower’s or GIC’s business until qualified
replacement management can be retained or, subject to any necessary regulatory approvals,
Borrower’s or GIC’s business can be sold to another person. Borrower acknowledges that if any such
agreement is required, neither Lender nor Lender’s approved consultant guarantees the efficacy of
such arrangement in preserving or increasing the value of Borrower’s or GIC’s assets. Furthermore,
any rights exercised by Lender pursuant to this paragraph shall not be construed as a waiver by
Lender of any other rights or remedies it may have pursuant to this Agreement or any other Loan
Document or under applicable law or in equity. The cost of such consultant shall be paid by
Borrower from Borrower’s revenues; provided, however, if Borrower’s revenues are insufficient to
pay for such consultant, the cost shall initially be paid by Lender and reimbursed by Borrower upon
demand.




18









 





     11. PREPAYMENT PREMIUM. Any promissory note(s) executed by Borrower which evidence the Loan
shall provide for a prepayment premium equal to the Prepayment Percentage (as defined herein) of
the principal loan balance Borrower prepays. The “Prepayment Percentage” shall be 10%
during the first twelve (12) months following Loan origination, 8% during the second twelve (12)
months following Loan origination (that is, months 13 through 24), and 6% during the third twelve
(12) months following Loan origination (that is, months 25 through 36). This prepayment premium
shall not apply after the thirty-sixth month following Loan origination.



     12. JOINT AND SEVERAL OBLIGATIONS. All obligations and liabilities of Borrower under this
Agreement and any other Loan Document to which PRM, PRS Group, GIGI, Patriot RS, PRMF and/or
SunCoast are a party shall be the joint and several obligations of each entity which constitutes
Borrower.



     13. FUTURE ADVANCES. Borrower and Lender acknowledge that the Loan is a single advance loan,
and that neither Lender nor Borrower contemplates future advances under the Loan Documents.



     14. LEGAL INTEREST LIMITATIONS. It is the intent of Borrower and Lender to conform strictly to
all applicable state and federal usury laws. All agreements between Borrower and Lender, whether
now existing or hereafter arising and whether written or oral, are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration of the maturity of the
Loan or otherwise, shall the amount contracted for, charged or received by Lender for the use,
forbearance, or detention of the money to be loaned under this Agreement or any other Loan Document
or otherwise, or for the payment or performance of any covenant or obligation contained herein or
in any other document evidencing, securing or pertaining to the indebtedness evidenced hereby which
may be legally deemed to be for the use, forbearance or detention of money, exceed the maximum
amount which Lender is legally entitled to contract for, charge or collect under applicable state
or federal law. If from any circumstance whatsoever fulfillment of any provision hereof or of such
other documents, at the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law, then the obligation to be fulfilled shall be automatically
reduced to the limit of such validity, and if from any such circumstance Lender shall ever receive
as interest or otherwise an amount in excess of the maximum that can be legally collected, then
such amount which would be excessive interest shall be applied to the reduction of the principal
indebtedness of the Loan and any other amounts due with respect to the Loan evidenced by the Loan
Documents, but not to the payment of interest; and if such amount which would be excessive interest
exceeds the unpaid balance of principal of the Loan and all other non-interest indebtedness
described above, then such additional amount shall be refunded to Borrower. All sums paid or agreed
to be paid by Borrower for the use, forbearance or detention of the indebtedness of Borrower to
Lender shall, to the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment in full so that the amount of
interest on account of such indebtedness does not exceed the maximum permitted by applicable law
throughout the term thereof. The terms and provisions of this paragraph shall control and supersede
every other provision of all agreements between Borrower and Lender.



19









 





     15. GOVERNING LAW AND VENUE. Notwithstanding any other provision of this Agreement or any
other Loan Document, this Agreement and all Loan Documents shall be construed and governed by the
laws of the State of Delaware except to the extent that the perfection of the interests in any of
the Collateral is governed by the laws of a jurisdiction other than the State of Delaware or except
to the extent that the laws of a jurisdiction other than the State of Delaware are required to
govern any enforcement or foreclosure action with respect to any of the Collateral. At Lender’s
option, jurisdiction and venue for any dispute arising under or in relation to this Agreement will
lie only in any applicable state court in Delaware or a U.S. District Court having jurisdiction in
Delaware. In the event that a lawsuit or administrative proceeding is brought with respect to this
Agreement or any other Loan Document, the prevailing party shall be entitled to be reimbursed for,
and/or have judgment entered with respect to, all of its costs and expenses, including reasonable
attorneys’ fees and legal expenses.



     16. INTERPRETATION. Provisions in the Loan Documents are intended to be cumulative. To the
extent that any of the provisions of this Agreement conflict with any other provisions of this
Agreement or those of any other Loan Document, the provision which provides Lender the most
protection and grants Lender the greatest rights shall control. Likewise, if the provisions of any
Loan Document conflict with those of any other Loan Document, the provision which provides Lender
the most protection and grants Lender the greatest rights shall control.



     17. AMENDMENTS. This Agreement may not be modified, revised, altered, added to or extended in
any manner, or superseded other than by an instrument in writing signed by all the parties hereto.
No waiver of any provision hereof shall be effective unless agreed to in writing by all parties
hereto. Any modification or waiver shall only be effective for the specific instance and for the
specific purpose for which given. Borrower agrees and acknowledges that Lender may also be required
to obtain the approval of other persons before entering into an amendment or granting a waiver.



     18. FAILURE TO ENFORCE NOT A WAIVER. The failure by Lender to enforce any provision of this
Agreement shall not be in any way construed as a waiver of any such provision nor prevent Lender
thereafter from enforcing each and every other provision of this Agreement.



     19. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and shall be binding upon any party executing the same and all of which
together shall constitute one and the same instrument which shall represent the agreement of the
parties hereto. This Agreement shall become effective when all parties hereto have executed a
counterpart hereof.



     20. INVALIDITY OR UNENFORCEABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall,
at the option of Lender (i) be construed in all respects as if such invalid or unenforceable
provisions were omitted; or (ii) not be stricken, but be reformed to the extent required to be
enforceable under and comply with applicable law and as reformed shall be fully enforceable.



20









 





     21. BINDING EFFECT; CONSTRUCTION OF PROVISIONS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, administrators, personal and legal
representatives, successors and assigns; provided, however, Borrower may not assign its rights,
duties or obligations under this Agreement (whether voluntarily, involuntarily or by operation of
law) without the prior written consent of Lender, which consent may be granted or withheld in the
sole and absolute discretion of Lender. As used in this Agreement, words of masculine, feminine or
neuter gender shall mean and include the correlative words of the other genders, and words
importing the singular number shall mean and include the plural number, and vice versa. As used in
this Agreement, the terms “person,” “Person” or “party” shall mean any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity or government (whether Federal, state,
county, city, municipal or otherwise, including, without limitation, an instrumentality, division,
agency, body or department thereof). No inference in favor of, or against, any party shall be drawn
from the fact that such party has drafted all or any portion of this Agreement or any other Loan
Document.



     22. SURVIVAL. This Agreement shall create and constitute the continuing obligation of the
parties hereto in accordance with its terms, and shall remain in full force and effect until the
Loan is paid in full. The provisions of paragraph 9(a) hereof shall be continuing and shall
survive any termination of this Agreement.



     23. INTEGRATION. This Agreement (including all exhibits and addenda hereto) together with the
other Loan Documents contains the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede and take precedence over any and all prior agreements,
arrangements or understandings between the parties relating to the subject matter hereof. No oral
understandings, oral statements, oral promises or oral inducements exist. No representations,
warranties, covenants or conditions, express or implied, whether by statute or otherwise, other
than as set forth herein, have been made by the parties hereto. By signing below, Borrower and
Lender affirm that no oral agreement between them exists.



     24. WAIVER OF JURY TRIAL. Borrower hereby expressly waives any right to a trial by jury in any
action or proceeding to enforce or defend any rights under this Agreement or any other Loan
Document, instrument or document delivered or which may in the future be delivered in connection
herewith.



     25. WAIVER OF MARSHALING OF ASSETS. Borrower waives all rights to require any marshaling of
Borrower’s assets.



     26. COMMERCIAL LOAN. Borrower and Lender agree that the credit extended hereunder represents a
commercial loan and is not a consumer loan subject to the UCCC.



     27. NOTICES. Notices which may be required to be sent by Lender or Borrower in accordance with
this Agreement or any other Loan Document shall be sent to the address set forth below or such
other address as may be designated by such party provided notice of such change in address has been
given to the other party. Notices shall be deemed effective if in writing, and shall be delivered
by hand or mailed by United States Mail, postage prepaid, mailed by certified mail, with return
receipt requested, or sent by express courier with date of receipt




21









 







confirmed. The effective date of notice shall be the day of delivery by hand; if mailed by regular
mail, four business days following the mailing thereof; and, if by certified mail or express
courier, the date of receipt thereof:




	 	 	 
	Lender’s Address:	 	Borrower’s Addresses:
	 
	 	 
	Ullico Inc.

	 	Patriot Risk Management, Inc.
	1625 Eye Street, NW

	 	PRS Group, Inc.
	Washington, DC 20006

	 	Guarantee Insurance Group, Inc.
	Attention: General Counsel

	 	Patriot Risk Services, Inc.
	 

	 	Patriot Risk Management of Florida, Inc.
	 

	 	SunCoast Capital, Inc.
	 
	 	 
	 

	 	401 East Las Olas Blvd.
	 

	 	Ft. Lauderdale, FL 33301
	 

	 	Attention: Steven M. Mariano






     28. TIMELINESS. Timeliness and punctuality are essential elements of this Agreement.



     29. ANTI-TERRORISM, ETC. Borrower represents and warrants to Lender that neither the Borrower,
nor any owner, member, affiliate, partner, director, officer or manager of Borrower, nor any
affiliate, parent, child or spouse of any individual Borrower (collectively for this paragraph,
“Borrower”) supports terrorism, provides money or financial services to terrorists, or is
engaged in terrorism, is on the current U.S. government list of organizations that support
terrorism, or has engaged in or been convicted of fraud, corruption, bribery, money laundering,
narcotics trafficking or other crimes, and all are eligible under applicable U.S. immigration laws
to be in the United States and perform the obligations set forth in this Agreement. Borrower
further warrants and represents that Borrower is not identified by a government or legal authority
as a person with whom Lender is prohibited from transacting business and that it will notify Lender
in writing immediately of the occurrence of any event that renders the foregoing representation and
warranties incorrect.



     30. ADDITIONAL LOAN SPECIFIC COVENANTS. So long as the Loan is outstanding and unpaid,
Borrower agrees with Lender as follows:



          (a) Prior to payment in full of all obligations under the Loan Documents, PRM shall maintain,
on a consolidated basis with all of its direct and indirect subsidiaries, stockholder’s equity
exceeding $5,500,000 in the aggregate on a GAAP basis;




          (b) Without Lender’s prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned, from the date hereof until the date upon which all payment obligations are
satisfied under the Loan Documents, GIC shall maintain policyholders’ surplus in excess of
$14,500,000 as computed and measured on a GAAP basis;




          (c) Prior to payment in full of all obligations under the Loan Documents, without Lender’s
prior written consent, which consent shall not be unreasonably withheld,





22









 







delayed or conditioned, Steven M. Mariano shall not (i) directly or indirectly hold an ownership
interest greater than twenty-five percent (25%) in, or (ii) be employed by or have any contracts or
agreements with, any other insurance-related business with the exception of Borrower, the entities
through which Mr. Mariano holds an ownership interest in PRM, GIC and The Tarheel Group, Inc., a
Delaware corporation and its direct and indirect subsidiaries (“Tarheel”). Without Lender’s
prior written consent, which shall not be unreasonably withheld, delayed or conditioned, Mr.
Mariano shall not devote more than 10% of his time in the aggregate to the Tarheel business, or the
business of InServe Corporation, prior to payment in full of all obligations under the Loan
Documents;




          (d) Without Lender’s prior written consent, which consent may be granted or withheld in the
sole and absolute discretion of Lender, prior to payment in full of all obligations pursuant to the
Loan Documents, Borrower shall not pay dividends on its outstanding capital stock;




          (e) Prior to payment in full of all obligations pursuant to the Loan Documents, Borrower shall
(i) provide Lender or Lender’s authorized designee with notices of all meetings of shareholders and
boards of directors of Borrower and GIC so that such notices are given to Lender concurrently with
the giving of such notices to such shareholders or directors; (ii) allow, and cause to be allowed,
Lender or at least two (2) Lender’s authorized designees to attend such meetings and (iii) promptly
provide to Lender or its authorized designee, upon demand, all minutes and other records of such
meetings as Lender may request;




          (f) Without Lender’s prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned, except in the ordinary course of business; Borrower shall not directly or
indirectly make any loans or advances (in cash or through payments in kind) to any person,
including Borrower’s Affiliates and persons affiliated with Borrower. For the purposes of this
paragraph, any loans or advances shall be deemed not in the ordinary course of business unless such
loans or advances are related to the financing of premiums payable to GIC by persons unaffiliated
with Borrower and/or trade receivables of persons unaffiliated with Borrower;




          (g) Within fifteen (15) business days, Borrower shall notify Lender in writing of any material
changes in Borrower’s and GIC’s business operations, which includes, but is not limited to the
following: (i) GIG or Borrower having received any notification regarding concern or action from
the Florida Department of Insurance or any other regulator on the subject of financial condition or
solvency, (ii) GIC or Borrower having received any notification regarding concern or action from
the NAIC or having experienced any material changes in its reinsurance contracts or coverage
amounts or any change in its regulatory status, (iii) Borrower or GIC having incurred or
experienced any material adverse financial circumstance, condition or results, (iv) if Borrower or
GIC shall have any of their respective licenses or permits suspended, terminated or revoked by any
governmental or regulatory authority, or (v) if the sums payable under any material insurance
company contracts, servicing contracts or other contract are modified or terminated in any material
respect;




23









 





          (h) Prior to payment in full of all obligations pursuant to the Loan Documents, Borrower will
not change its state of organization or name without the prior written consent of Lender, which
consent will not be unreasonably withheld, delayed or conditioned;




          (i) Prior to the payment in full of all obligations pursuant to the Loan Documents, all of the
reinsurance contracts of GIC shall provide for commercially reasonable terms and conditions;




          (j) Prior to the payment in full of all obligations pursuant to the Loan Documents Borrower
shall, and shall cause GIC to: (i) maintain errors and omissions coverage reasonably acceptable to
Lender, but with limits no lower than One Million Dollars ($1,000,000) per claim One Million
Dollars ($1,000,000) aggregate; and (ii) and maintain such other coverage as is commercially
reasonable. At Lender’s request, Borrower shall provide evidence of such insurance; and/or




          (k) Without Lender’s prior written consent, which shall not be unreasonably withheld, the
Tarheel Group, Inc., Tarheel Insurance Management Company and/or Foundation Insurance Company (each
a “Run off Company”) shall not materially change their operations, which Borrower represents to
Lender as being inactive or in run off. Furthermore, without Lender’s prior written consent, which
shall not be unreasonably withheld, delayed or conditioned, no business written or conducted by or
through Borrower or GIC shall be commenced, transferred or diverted to any Run off Company.




          (l) SPECIFIC AMENDMENTS TO COMMERCIAL LOAN AGREEMENT.



LATE CHARGES. The paragraph title “LATE CHARGES” on page 1 of the Agreement is amended and restated
in its entirety to read as follows:




               “LATE CHARGES. If a payment is made more than five (5) days after it is due, Borrower will
pay
a late charge of 5% of the amount due and not paid.”


COVENANTS. Sub-paragraph 3 under the paragraph titled “COVENANTS”, on page 2 of the Agreement,
is amended and restated in its entirety to read as follows:




               “(3) inspect Borrower’s Property, audit for the use and disposition of the
Property’s
proceeds; or do whatever else Lender may decide is reasonably necessary to preserve and protect the
Property and Lender’s interest in the Property.”


GENERAL PROVISIONS. The final sentence under the sub-paragraph “Waivers and Consent” under GENERAL
PROVISIONS on page 2 of the Agreement, is amended and restated in its entirety to read as follows:




               “Lender may participate or syndicate the Loan and share any information that the Lender
decides is necessary about Borrower and the Loan with other participants, provided such other
participants are required to keep such information confidential.”



     NONSTANDARD TERMS OF CREDIT AGREEMENT:



24









 





     31. Conditions to Loan. The obligation of Lender to make the Loan shall be subject to
the satisfaction of the following conditions precedent (all instruments, agreements and documents
from Borrower or any other person to be in form and substance acceptable to Lender in its sole and
absolute discretion):



          (a) Executed Credit Documents. Receipt by Lender of duly executed copies of: this
Agreement, the Note and all other Loan Documents.




          (b) Formation Documents. Receipt by Lender of the following:





     (i) Charter Documents. Copies of the certificates of incorporation or
other charter documents of Borrower certified to be true and complete as of a
recent date by the appropriate governmental authority of the state or other
jurisdiction of Borrower’s formation and certified by the chief executive officer
of Borrower to be true and correct as of the closing date.




     (ii) Bylaws. A copy of the Bylaws of Borrower certified by the chief
executive officer to be true and correct as of the closing date.




     (iii) Resolutions. Copies of resolutions or unanimous written consent
of the board of directors of Borrower approving and adopting the Loan Documents,
the transactions contemplated therein and authorizing execution and delivery
thereof, certified by the chief executive officer of Borrower to be true and
correct and in force and effect as of the closing date.




     (iv) Good Standing. Copies of (i) a certificate of good standing,
existence or its equivalent with respect to Borrower certified as of a recent date
by the appropriate governmental authorities of the state or other jurisdiction of
their formation and each other jurisdiction in which the failure to so qualify and
be in good standing would reasonably be expected to have a material adverse effect
and (ii) to the extent available, a certificate indicating payment of all franchise
taxes certified as of a recent date by the appropriate taxing governmental
authorities.




     (v) Incumbency. An incumbency certificate of Borrower certified by the
chief executive officer of Borrower to be true and correct as of the closing date.




     (vi) Perfection Certificates. Borrower shall have delivered to Lender
Perfection Certificates for Borrower which shall be true and complete in all
material respects. Such Perfection Certificates shall be deemed to be “Loan
Documents” for all purposes.



          (c) Financial Statements. Receipt by Lender of such financial statements and other
information relating to Borrower as Lender may reasonably require in connection with the Loan.




25









 





          (d) Opinions of Counsel. Receipt by Lender of an opinion, or opinions (which shall
cover, among other things, authority, legality, validity, binding effect, enforceability, absence
of conflict with laws, formation documents, and all applicable law, and other agreements, and
attachment and perfection) satisfactory to Lender, addressed to Lender and dated the closing date,
from legal counsel to Borrower.




          (e) Priority of Liens. Lender shall have received satisfactory evidence that (i)
Lender holds a perfected first priority Lien on all Collateral, subject only to liens that have
been disclosed in writing by Borrower to Lender (including the liens on the assets of Borrower
pursuant to that certain Commercial Loan Agreement, dated as of March 30, 2006, by and between
Borrower and Brooke Credit Corporation (as amended, together with all agreements and instruments
entered into by the parties in connection therewith, the “Existing Senior Debt Documents”),
and (ii) none of the Collateral is subject to any liens other than such previously disclosed liens.




          (f) Evidence of Insurance. Receipt by Lender of copies of insurance policies or
certificates of insurance (on Acord Forms 25 and 27) of Borrower evidencing liability and casualty
insurance meeting the requirements set forth in the Loan Documents, including, without limitation,
naming Lender as loss payee and as additional insured as its interests may appear.




          (g) Consents. Receipt by Lender of evidence that all governmental and third party
consents and approvals required in connection with the transactions, including without limitation
the approval of the holders of the senior debt evidenced by the Existing Senior Debt Documents and
the related financings contemplated hereby and expiration of all applicable waiting periods without
any action being taken by any authority that could restrain, prevent or impose any material adverse
conditions on such transactions or that could seek or threaten any of the foregoing, and no law or
regulation shall be applicable which in the judgment of Lender could have such effect.




          (h) Officer’s Certificate. Lender shall have received a certificate or certificates
executed by the chief executive officer and chief financial officer of Borrower as of the closing
date covering such matters as Lender may require, including without limitation the following: (i)
after giving effect to the making of the Loan and application of the proceeds thereof, Borrower is
in compliance with all existing financial obligations, (ii) all governmental, member and third
party consents and approvals, if any, with respect to the Loan Documents and the transactions
contemplated thereby have been obtained, (iii) no action, suit, investigation or proceeding is
pending or threatened in any court or before any arbitrator or governmental instrumentality that
purports to affect Borrower or any transaction contemplated by the Loan Documents, if such action,
suit, investigation or proceeding would reasonably be expected to have a material adverse effect
and (iv) immediately after giving effect to this Agreement, the other Loan Documents and all the
transactions contemplated therein to occur on such date, (A) Borrower is solvent, (B) no Default or
Event of Default exists, (C) all representations and warranties contained herein and in the other
Loan Documents are true and correct in all material respects, and (D) the Borrower is in compliance
with each of the financial covenants set forth this Agreement.




26









 





          (i) Equity. Evidence that management of the Borrower has contributed not less than
$1,000,000 to the capital of Borrower in exchange for common capital stock in Borrower.




          (j) Fees and Expenses. Payment by Borrower of all fees and expenses owed by it to
Lender in an amount of up to $75,000.




          (k) Re-Insurance Treaty. Borrower shall have entered into a binding reinsurance treaty
with Lender or one of its affiliates on terms acceptable to Lender or such affiliate of Lender.




          (1) Licenses/Permits. Receipt by Lender of copies of all authorizations, licenses,
permits and other approvals required for the conduct of Borrower’s business.




          (m) Other. Receipt by Lender of such other documents, instruments, agreements or
information as are required to be provided herein or under any other Loan Documents or as may other
wise be or have been requested by Lender.




     32. Representation and Warranty regarding Leverage Compliance. Borrower hereby
represents and warrants to Lender that, to the best of its knowledge, that, after giving effect to
the Loan, as of December 31, 2008 (i) GIC shall be in compliance with all capital requirements,
including, without limitation, required statutory leverage tests, under all applicable state laws
and regulations and (ii) Borrowers shall be in compliance with all covenants under the Existing
Senior Debt Documents. Borrower shall provide Lender with Borrower’s unaudited statutory financial
statements with respect to the fiscal year ending December 31, 2008 on or before January 30, 2009.
To the extent that such unaudited statutory financial statements indicate that GIC will not be in
compliance with all capital requirements, including, without limitation, required statutory
leverage tests, required statutory leverage tests under applicable state laws and regulations as of
December 31, 2008 or otherwise reflect any other default under the Existing Senior Debt Documents,
Borrower shall be deemed to be automatically in default under this Agreement and the other Loan
Documents; provided that Borrower shall have until March 1, 2009 to obtain such additional capital
contributions and take such other action as may be reasonable required by Lender to cure such
default before Lender may enforce any of its rights hereunder with respect to such default.



     33. Representation and Warranty Accuracy and Completeness of Information. Borrower
hereby represents and warrants to Lender that all factual information heretofore, contemporaneously
or hereafter furnished by or on behalf of Borrower to Lender for purposes of or in connection with
this Agreement or any Loan Documents, or any transaction contemplated hereby or thereby, is or will
be true and accurate in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to make such
information not misleading at such time. There is no fact about Borrower, its business now known to
any executive officer or director of Borrower which has, or would have, a material adverse effect
with respect to Borrower’s property, operations or financial condition, which fact has not been set
forth herein, or any certificate, opinion or other written statement made or furnished by Borrower
to Lender.




27











 





     34. Representation and Warranty Regarding Solvency. Borrower hereby represents and
warrants to Lender that the fair saleable value of Borrower’s assets exceeds all known and
reasonably foreseeable liabilities of Borrower, including those to be incurred pursuant to this
Agreement. Borrower (i) does not have unreasonably small capital in relation to the business in
which it is or proposed to be engaged in (ii) has not incurred, and does not believe that it will
incur after giving effect to the transactions contemplated by this Loan Agreement, debts beyond its
ability to pay such debts in the ordinary course as they become due.



Initials:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lender	 	PRM	 	PRS Group	 	GIGI	 	Patriot RS	 	PRMF	 	SunCoast
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	/s/ James M. Paul
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	James M. Paul
Senior V.P., Chief Operating Officer






[Remainder of page intentionally left blank; Signature page immediately follows]






28









 








     34. Representation and Warranty Regarding Solvency. Borrower hereby represents and
warrants to Lender that the fair saleable value of Borrower’s assets exceeds all known and
reasonably foreseeable liabilities of Borrower, including those to be incurred pursuant to this
Agreement. Borrower (i) does not have unreasonably small capital in relation to the business in
which it is or proposed to be engaged in (ii) has not incurred, and does not believe that it will
incur after giving effect to the transactions contemplated by this Loan Agreement, debts beyond its
ability to pay such debts in the ordinary course as they become due.



Initials:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lender	 	PRM	 	PRS Group	 	GIGI	 	Patriot RS	 	PRMF	 	SunCoast
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Illegible
	 	Illegible
	 	Illegible
	 	Illegible
	 	Illegible
	 	Illegible
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





[Remainder of page intentionally left blank; Signature page immediately follows]






28









 








     IN WITNESS WHEREOF, the parties have executed and delivered this Addendum to Commercial Loan
Agreement as of the 31st of December, 2008.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT, INC.,	 	 	 	ULLICO INC.,	 	 
	a Delaware corporation	 	 	 	a Maryland corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 	 	By:	 	/s/ James M. Paul	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano
	 	 	 	 	 	Name:
	 	James M. Paul	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 
	 	 	 	Title:
	 	Senior V.P., Chief Operating Officer
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRS GROUP, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GUARANTEE INSURANCE GROUP, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK SERVICES, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT OF
FLORIDA, INC., a Delaware
corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 	 	 	 	 	 	 






29









 






     IN WITNESS WHEREOF, the parties have executed and delivered this Addendum to Commercial Loan
Agreement as of the 31st of December, 2008.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT, INC.,	 	 	 	ULLICO INC.,	 	 
	a Delaware corporation	 	 	 	a Maryland corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Steven M. Mariano	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano
	 	 	 	 	 	Name:
	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 
	 	 	 	Title:
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRS GROUP, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Eric S. Dawson	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Eric S. Dawson	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Secretary	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GUARANTEE INSURANCE GROUP, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK SERVICES, INC.,	 	 	 	 	 	 	 	 	 	 
	a Delaware corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Eric S. Dawson	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Eric S. Dawson	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Secretary	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT OF
FLORIDA, INC., a Delaware
corporation	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Steven M. Mariano	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	Chairman	 	 	 	 	 	 	 	 	 	 






29









 






	 	 	 	 	 
	SUNCOAST CAPITAL, INC.,

a Delaware corporation

 	 	 
	By:  	/s/ Steven M. Mariano
 	 	 
	 	Name:  	Steven M. Mariano 	 	 
	 	Title:  	President and Chief Executive Officer 	 	 
	 



[Signature Page To Addendum to Commercial Loan Agreement (Continued)]


30









 











AGREEMENT NOT TO SOLICIT




     The undersigned individual agrees to and is bound by the covenants set forth in paragraph
9(a) herein and specifically acknowledge that the covenants contained in said paragraph are
reasonable and necessary and that the undersigned have received ample consideration for same.



/s/ Steven M. Mariano
 

Steven M. Mariano






31














 





EXHIBIT I




Reports




MONTHLY, QUARTERLY & YEARLY REPORTING





	1.	 	All reports and reconciliations are to be provided to Lender under this Agreement in either
hard copy or electronic format.






	2.	 	All agreed end-of-month accounting, financial and management reports shall be reconciled and
delivered on-line or in print within twenty-one (21) days following month-end, or if a
Borrower or GIC is required to file a similar report with a regulator, within 15 business days
after the date such filing is required to be filed with the regulator.






	3.	 	Such reports may include, but are not limited to, information and statistical data required
by regulators such as the National Association of Insurance Commissioners (NAIC), Insurance
Services Office (ISO), catastrophe pools, reinsurers, or any other reports reasonably
requested to monitor and evaluate the subject business.






	4.	 	Other reports may be requested.
	 
	5.	 	Mandatory reports:
	 
	 	 	Patriot Risk Management, Inc. (f/k/a SunCoast Holdings, Inc.):




Consolidated Balance Sheet (monthly)



Consolidated Income Statement (monthly)



Consolidated Cash Flow (quarterly)





	 	 	Guarantee Insurance Group, Inc. (f/k/a Brandywine Insurance Holdings, Inc.):




Consolidated Balance Sheet (monthly)



Consolidated Income Statement (monthly)



Consolidated Cash Flow (quarterly)





	 	 	PRS Group, Inc. (f/k/a Patriot Risk Management, Inc.):




Consolidated Balance Sheet (monthly)



Consolidated Income Statement (monthly)



Consolidated Cash Flow (quarterly)





32









 








EXHIBIT II




Underwriting Guidelines




[See Attached]





33









 








GUARANTEE









INSURANCE COMPANY




Underwriting Guidelines




Applications



A fully completed, signed application is required for each, workers’ compensation risk. The ACORD
Commercial Insurance Application along with the Worker’s Compensation Section or reasonable
facsimiles are acceptable forms. All questions must be answered.



The application must include a full account of all operations, the classification code numbers and
descriptions, the appropriate payrolls for each classification, and very importantly, the number of
employees by individual class code. Underwriters should pursue such key information whenever
missing or return incomplete applications to producers.



Prior carrier information of all previous insurers should be provided, including the names, policy
numbers, effective dates, premiums and the experience modification factor. This information must be
provided for a minimum of the last three years and preferably for the last five.




Loss History



A complete loss history must be secured for a minimum of the past three years (preferably five)
plus the current year to date. Whenever possible, the history should be in the form of hard copy
loss runs from the previous insurer(s).



The information provided must be valued within 90 days of the effective date being quoted and must
minimally include the following data:





	 	•	 	Date of loss;
	 
	 	•	 	Description of loss;
	 
	 	•	 	Paid amounts;
	 
	 	•	 	Reserve amounts.




Depending on premium size, hard copy loss runs from previous insurers are not always available.
Therefore, underwriters may consider a tiered approach to obtaining this data as outlined below:




 









 








	 	 	 
	Estimated Annual Premium	 	Requirement
	Less than $10,000

$10,000 to $25,000

	 	Completed, signed application 

A written statement on company letterhead,
signed by an owner or officer plus any
available experience rating worksheet.
	 
	 	 
	Greater than $25,000

	 	Hard copy loss runs required from previous
insurer, or a loss report from a previous
PEO, plus any available experience rating
worksheet.





Underwriters must determine the average loss ratio based on the minimum requirement of three years
of loss history. Any risk with a loss ratio greater than 50% must be referred to underwriting
management for approval. Additionally, an analysis of all loss producing conditions should be
included in the documentation form. The information must include how these conditions have been
mitigated to prevent similar losses from recurring.



For any risk that has one or more incurred losses equal to or greater than $25,000, a detailed
description of the loss must be obtained. Such details should include: how the accident happened,
the resulting injury, current work status and details regarding the remaining reserves.




Financial Reports



A financial report such as a Dun & Bradstreet, annual statement or similar synopsis, should be
ordered for all accounts with a premium greater than $100,000 or for any risk which may require
collateral. Additionally, financials should be obtained for all newly bound accounts as indicated
in the matrix below.




	 	 	 	 	 	 	 
	 	 	BEST’S HAZARD	 	BEST’S HAZARD	 	BEST’S HAZARD
	PREMIUM SIZE	 	1 TO 3	 	4 TO 7	 	8 TO 10
	Less than $10,000
	 	Not required
	 	Not Required
	 	Underwriter’s Judgment
	$10,000 to $25,000
	 	Not Required
	 	Underwriter’s Judgment
	 	Underwriter’s Judgment
	$25,000 to $100,000
	 	Underwriter’s Judgment
	 	Underwriter’s Judgment
	 	Required For premiums

over $50,000
	Over $100,000
	 	Required
	 	Required
	 	Required
	All Referral Classes
	 	Underwriter’s Judgment
	 	Underwriter’s Judgment
	 	Required
	All Collateralized Risks
	 	Required
	 	Required
	 	Required.







 









 







Refer to the section on financial analysis for complete details on how to interpret the information
and for our guidelines on acceptability.




Qualifying Accounts



All business applicants must be for a corporation, association, partnership, Limited Liability
Company, limited liability partnership, or other legal entity and be in good standing within their
state. All underwriting guidelines must be applied to determine the account’s acceptability.




Referral Accounts



Submissions with the following characteristic(s) must be referred to Underwriting Management for
approval prior to releasing a quote:





	 	•	 	Accounts with 24 hour operations
	 
	 	•	 	An incurred loss ratio of 50% or higher
	 
	 	•	 	NCCI hazard group III in combination with a Best hazard group of 8 or higher (unless
listed as an exclusion)
	 
	 	•	 	Height exposure above 2 stories
	 
	 	•	 	More than 20% use of subcontractors
	 
	 	•	 	An experience modification factor of less than .65 or greater than 1.50
	 
	 	•	 	Any deductible greater than state mandated deductibles
	 
	 	•	 	Risks with an occupational disease exposure other than specifically excluded
classifications (those with a “D” or “E” tax load)
	 
	 	•	 	Accounts requiring a review of financials





Non-Qualifying Accounts



We will not provide coverage to risks with exposures that are excluded by our reinsurance
contract(s). Attached are the current reinsurance exclusions, which have been categorized as
follows:





	 	•	 	Broad Exclusions- those descriptions that may span many class codes and therefore must
be considered while evaluating each risk
	 
	 	•	 	Specific Class Code Exclusions- identifiable class codes that are to be excluded. The
list does not include State Special codes that may also need to be excluded. Underwriters
are not required to identify those through use of the Scopes Manual.
	 
	 	•	 	Specific Business Operation Exclusions — these exclusions apply based on the
activities performed by a business and therefore will not always be identified by a class
code. The related class codes are provided for those operations that are known to apply
to excluded operations. They are not meant to be all-inclusive and do not include State
Special codes.
	 
	 	•	 	General Exclusions — these are program restrictions and catastrophic loss exclusions
where no coverage is available.