Document:

<PAGE>   1
                                                                    EXHIBIT 10.3
                                                                    ------------
                                SECOND AMENDMENT
                                ----------------

         SECOND AMENDMENT (this "Amendment"), dated as of July 25, 2000, among
Ceres Group, Inc., a Delaware corporation (the "Borrower"), the lending
institutions party to the Credit Agreement referred to below (each a "Bank" and,
collectively, the "Banks") and The Chase Manhattan Bank, as Administrative Agent
(the "Administrative Agent"). All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings provided such terms
in the Credit Agreement.

                              W I T N E S S E T H:
                              --------------------

         WHEREAS, the Borrower, the Banks and the Administrative Agent are party
to a Credit Agreement, dated as of February 17, 1999 (as amended, modified and
supplemented prior to the date hereof, the "Credit Agreement"); and

         WHEREAS, the Borrower has requested that the Banks provide the
amendments provided for herein and the Banks have agreed to provide such
amendments on the terms and conditions set forth herein;

         NOW, THEREFORE, it is agreed:

         1. On the Second Amendment Effective Date (as hereinafter defined), the
Revolving Loan Commitment of each Bank shall be modified to be the amount set
forth opposite the name of such Bank on Annex I hereto, directly below the
column entitled Revolving Loan Commitment. In connection with the foregoing, on
the Second Amendment Effective Date, the Borrower shall, in coordination with
the Administrative Agent and the Banks, repay outstanding Revolving Loans of
certain Banks and incur additional Revolving Loans from other Banks, in each
case if necessary so that the Banks participate in each Borrowing of Revolving
Loans PRO RATA on the basis of their Revolving Loan Commitments (after giving
effect to this Section 1). It is hereby agreed that the breakage costs incurred
by the Banks in connection with the repayment of Revolving Loans contemplated by
this Section 1, if any, shall be for the account of the Borrower. On the Second
Amendment Effective Date, Annex I to the Credit Agreement shall be deemed
amended to read as set forth in Annex I attached hereto to give effect to the
foregoing.

        2. Section 5.05(b) of the Credit Agreement is hereby amended by
inserting the following text at the end thereof:

         "(it being understood and agreed that, in any event, the use of such
         proceeds to finance the Pyramid Acquisition shall be permitted)".

         3. Notwithstanding anything to the contrary contained in Section
7.02(h)(iii) of the Credit Agreement, the Borrower may consummate the Pyramid
Acquisition so long as all of the conditions set forth in Section 7.02(h) (other
than clause (iii) thereof) are satisfied with respect to

<PAGE>   2

such acquisition.

         4. Section 7.05 of the Credit Agreement is hereby amended by (i)
deleting the period appearing at the end of said Section and (ii) inserting the
following text in lieu thereof:

         "; provided further that any portion of the Pyramid Acquisition that
         would constitute a Capital Expenditure will be excluded for purposes of
         the calculation required pursuant to this Section 7.05."

         5. Section 7.08(a) of the Credit Agreement is hereby amended by
deleting the phrase "except that any Subsidiary of the Borrower may pay cash
dividends to its parent if such parent is the Borrower or a Wholly-Owned
Subsidiary of the Borrower," appearing at the end thereof and by inserting in
lieu thereof the following new phrase:

                  "except that the following shall be permitted:

                                    (i) any Subsidiary of the Borrower may pay
                  cash dividends to its parent if such parent is the Borrower or
                  a Wholly-Owned Subsidiary of the Borrower; and

                                    (ii) the Borrower may pay regularly
                  scheduled dividends on the Pyramid Seller Preferred Stock
                  through the issuance of additional shares of Pyramid Seller
                  Preferred Stock, or through accrual or accretion, but not in
                  cash."

         6. Section 7.10 of the Credit Agreement is hereby amended by deleting
the table appearing therein in its entirety and by inserting in lieu thereof the
following new table:

                  "Period                                     Ratio
                  -------                                     -----

                  Initial Borrowing Date through
                  December 31, 1999                           0.50:1.00

                  Thereafter through
                  December 31, 2000                           0.40:1.00

                  Thereafter through
                  December 31, 2001                           0.35:1.00

                  Thereafter                                  0.30: 1.00 "

         7. Section 7.13 of the Credit Agreement is hereby amended by deleting
the table appearing therein in its entirety and by inserting in lieu thereof the
following new table:

                                       2
<PAGE>   3

                   "Year                                         Amount
                   -----                                         ------

                  Initial Borrowing Date through
                  December 31, 1999                           $  35,000,000

                  Thereafter through
                  December 31, 2000                           $ 80,000,000

                  Thereafter through
                  December 31, 2001                           $110,000,000

                  Thereafter through
                  December 31, 2002                           $160,000,000

                  Thereafter                                  $200,000,000"

        8. Section 7.14(a) of the Credit Agreement is hereby amended by
inserting the sentence at the end thereof:

         "Notwithstanding anything to the contrary contained in this Section
         7.14(a), the Borrower may issue Pyramid Seller Preferred Stock having
         an aggregate liquidation preference of not more that $7,500,000 in
         connection with the Pyramid Acquisition (and additional shares as
         payment of dividends thereon pursuant to Section 7.08(a)(ii))."

        9. Section 7 of the Credit Agreement is hereby amended by adding at the
end thereof the following now Section 7.17:

                        "7.17 FIXED CHARGE COVERAGE RATIO. The Borrower will not
                permit the Fixed Charge Coverage Ratio for any Test Period
                ending during a period set forth below to be less than the ratio
                set forth opposite such period below:

                    Period                                      Ratio
                    ------                                      ------

                    June 30, 2000 through
                    June 30, 2001                               1.05:1.00

                    Thereafter through
                    June 30, 2002                               1.10:1.00

                    Thereafter through
                    June 30, 2003                               1.20:1.00

                                       3
<PAGE>   4
                    Thereafter                                  1.30:1.00

         10. Section 9 of the Credit Agreement is hereby amended by (a) deleting
the definitions of "Consolidated Indebtedness" and "Test Period" appearing
therein, and (b) inserting the following definitions in the appropriate
alphabetical order:

                  "Borrower Cash Flow" shall mean, for any period, the sum of
         (i) dividends paid by Regulated Insurance Companies during such period,
         (ii) the net income (before dividend payments, interest expense,
         depreciation and amortization) or the Borrower for such period
         (determined on a stand-alone basis, without giving effect to the income
         of or dividends received from its Subsidiaries) and (iii) the net
         income (before interest expense, dividend payments, depreciation, and
         amortization) of each Non-Regulated Company for such period (determined
         on a stand-alone basis, without giving effect to the income of or
         dividends received from its Subsidiaries).

                  "Consolidated Indebtedness" shall mean, at any time and as to
         any Person, all indebtedness for borrowed money of such Person and its
         Subsidiaries at such time determined on a consolidated basis in
         accordance with GAAP but, in the case of the Borrower, excluding the
         mortgage indebtedness listed on Annex III.

                  "Fixed Charge Coverage Ratio" shall mean, for any period, the
         ratio of Borrower Cash Flow for such period to the sum for such period
         of (i) Consolidated Interest Expense and (ii) Scheduled Repayments
         required to be made during such period.

                  "Pyramid Acquisition" shall mean the acquisition by the
         Borrower of 100% of the capital stock of Pyramid Life Insurance
         Company, from Unitrin, Inc., to be financed through (i) the proceeds of
         a common equity issuance by the Borrower, (ii) the issuance of Pyramid
         Seller Preferred Stock to Unitrin, Inc. and/or (iii) proceeds from the
         incurrence of Revolving Loans.

                  "Pyramid Seller Preferred Stock" shall mean preferred stock
         issued by the Borrower as partial consideration for the Pyramid
         Acquisition (or issued pursuant to Section 7.08(a)(ii)), the terms and
         conditions of which are satisfactory to the Administrative Agent.

                   "Test Period" shall mean (a) for purposes of Section 7. 11,
         (i) for any determination made on and prior to December 31, 1999, the
         period from April 1,1999 to the last day of the fiscal quarter of the
         Borrower then last ended, PROVIDED that for this purpose the first Test
         Period shall end on June 30, 1999, and (ii) for any determination made
         thereafter, the four consecutive fiscal quarters of the Borrower ended
         on the last day of the most recently ended fiscal quarter of the
         Borrower (taken as one accounting period) and (b) for purposes or
         Section 7.17, (i) for any determination made on or prior to December
         31, 2000, the period from April 1, 2000 to the last day of the fiscal
         quarter of the Borrower then last ended, PROVIDED that for this purpose
         the first Test Period shall end on June 30, 2000, and (ii) for any

                                       4
<PAGE>   5

         determination made thereafter, the four consecutive fiscal quarters of
         the Borrower ended on the last day of the most recently ended fiscal
         quarter of the Borrower (taken as one accounting period).

         11. In order to induce the Banks to enter into this Amendment, the
Borrower represents and warrants that (i) all of the representations and
warranties contained in the Credit Agreement or in the other Credit Documents
are true and correct in all material respects on and as of the Second Amendment
Effective Date, both before and after giving effect to this Amendment unless
such representation and warranty expressly indicates that it is being made as of
any other specific date in which case such representation and warranty shall be
true and correct in all material respects as of such other specified date, and
(ii) there exists no Default or Event of Default on the Second Amendment
Effective Date, both before and after giving effect to this Amendment.

        12. This Amendment shall become effective as of the date hereof (the
"Second Amendment Effective Date") when:

                  (a) the Borrower and each Bank shall have signed a counterpart
         hereof (whether the same or different counterparts) and shall have
         delivered (including by way of facsimile transmission) the same to the
         Administrative Agent at its Notice Office;

                  (b) the Borrower shall have delivered to the Administrative
         Agent a new Revolving Note for each Bank whose Revolving Loan
         Commitment is increasing as a result of this Amendment, reflecting its
         increased Revolving Loan Commitment, which Revolving Note shall be
         issued in exchange for the Revolving Note currently held by such Bank;
         and

                  (c) the Borrower shall have delivered to the Agent a certified
         copy of resolutions duly adopted by the Borrower authorizing the
         increase in the Total Revolving Loan Commitment contemplated by this
         Amendment.

         13. From and after the Second Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as amended hereby.

         14. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.

         15. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.

         16. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

                                      * * *

                                       5
<PAGE>   6

                                     ANNEX I
                                     -------

                          LIST OF BANKS AND COMMITMENTS
                          -----------------------------

<TABLE>
<CAPTION>
Bank                           Term Loan Commitment   Revolving Loan Commitment
----                           --------------------   -------------------------
<S>                           <C>                   <C>
Chase Manhattan Bank           $12,000,000            $4,500,000
KeyBank                        $4,000,000             $1,500,000
Dresdner Bank AG,              $12,000,000            $4,500,000
New York Branch and
Grand Cayman Branch
Firstar Bank Milwaukee, N.A.   $4,000,000             $1,500,000
Fleet National Bank            $8,000,000             $3,000,000
Total                          $40,000.000            $15,000,000
                               ===========            ===========
</TABLE>

                                       2
<PAGE>   7

         IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date hereof:

                                     CERES GROUP, INC

                                     /s/ Larry E. Wharton
                                     -------------------------------------
                                     By: Larry E. Wharton
                                     Its: Vice President and Treasurer

                                     THE CHASE MANHATTAN BANK

                                     /s/ Helen L. Newcomb
                                     -------------------------------------
                                     By: Helen L. Newcomb
                                     Its: Vice President

                                     DRESDNER BANK AG NEW YORK BRANCH
                                     AND GRAND CAYMAN BRANCH

                                     /s/ George T. Ferguson, Iv
                                     -------------------------------------
                                     By: George T. Ferguson, IV
                                     Its: Assistant Vice President

                                     /s/ James J. Smith
                                     -------------------------------------
                                     By: James J. Smith
                                     Its: Vice President

                                     KEYBANK NATIONAL ASSOCIATION

                                     /s/ Sherrie F. Manson
                                     -------------------------------------
                                     By: Sherrie F. Manson
                                     Its: Vice President

                                     FIRSTAR BANK MILWAUKEE, N.A.

                                     /s/
                                     -------------------------------------
                                     By:
                                     Its: Vice President

                                     FLEET NATIONAL BANK

                                     /s/
                                     -------------------------------------
                                     By:
                                     Its: Vice President

                                       7<PAGE>   1
                      AMENDMENT NO. 1 TO CREDIT AGREEMENT

     THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment Agreement") is
made and entered into, effective as of this 26th day of June, 2000, by and among
P.F. CHANG'S CHINA BISTRO, INC., a Delaware corporation having its principal
place of business in Phoenix, Arizona (the "Borrower"), and BANK OF AMERICA,
N.A. in its capacity as agent (the "Agent") for the financial institutions (the
"Lenders") party to the Credit Agreement (as defined below) and as a Lender, and
consented to by the Guarantors (as defined in the Credit Agreement).

                              W I T N E S S E T H:

     WHEREAS, the Borrower, the Lender and the Agent have entered into that
certain Credit Agreement dated as of December 3, 1999 (as heretofore or
hereafter amended, modified, supplemented, amended and restated or replaced, the
"Credit Agreement"), pursuant to which the Lenders have agreed to make certain
loans to the Borrower;

     WHEREAS, the Borrower has requested that the Agent and the Lender make
certain amendments to the Credit Agreement including increasing the total
revolving credit commitment amount from $15,000,000 to $45,000,000 (the
"Amendments"); and

     WHEREAS, the Agent and Lender are willing to make the Amendments;

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

     1.   Definitions. Unless the context otherwise requires, all terms used
herein without definition shall have the definitions provided therefor in the
Credit Agreement.

     2.   Credit Agreement Amendments. Subject to the conditions hereof, the
Credit Agreement is hereby amended, effective as of the date hereof, as follows:

          (a)  Paragraph 1 of the Recitals is hereby amended by deleting the
     term "$15,000,000" and inserting, in lieu thereof, the term "$45,000,000".

          (b)  The term "$15,000,000" in the definition of "Total Revolving
     Credit Commitment" in Section 1.1 is hereby deleted and the term
     "$45,000,000" is inserted in lieu thereof.

          (c)  EXHIBIT A is hereby amended by deleting the term "$15,000,000"
     everywhere it appears and inserting, in lieu thereof, the amount
     "$45,000,000".

<PAGE>   2
     3.   Consent of Guarantors. Each of the Guarantors has joined in the
execution of this Amendment Agreement solely for the purposes of consenting
hereto and for the further purpose of confirming its guaranty of the
Obligations of the Borrower pursuant to the Facility Guaranty to which such
Guarantor is party.

     4.   Representations and Warranties. Each Credit Party hereby certifies
that:

          (a)  The representations and warranties made by each Credit Party in
ARTICLE VIII of the Credit Agreement are true on and as of the date hereof,
with the same effect as though such representations and warranties were made on
the date hereof.

          (b)  There has been no material change in the condition, financial or
otherwise, of the Borrower or any of its Subsidiaries since the date of the
most recent financial reports of the Borrower received by each Lender under
Section 9.1 of the Existing Credit Agreement;

          (c)  The business and properties of each Credit Party and any of
their respective Subsidiaries are not, and since the date of the most recent
financial reports of the Borrower received by each Lender under Section 9.1 of
the Existing Credit Agreement have not been, adversely affected in any
substantial way as the result of any fire, explosion, earthquake, accident,
strike, lockout, combination of workmen, flood, embargo, riot, activities of
armed forces, war or acts of God or the public enemy, or cancellation or loss
of any major contracts; and

          (d)  No event has occurred and no condition exists which, upon the
effectiveness of the amendments contemplated hereby, will constitute a Default
or an Event of Default on the part the Borrower under the Credit Agreement
or any other Loan Document either immediately or with the lapse of time or the
giving of notice, or both.

     5.   Conditions Precedent. The effectiveness of this Amendment Agreement
is subject to the receipt by the Agent of four (4) counterparts of this
Amendment Agreement duly executed by all signatories hereto.

     6.   Entire Agreement. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. None of the terms or conditions of
this Amendment Agreement may be changed, modified, waived or canceled orally or
otherwise, except in accordance with the terms of the Credit Agreement.
<PAGE>   3
     7.   Full Force and Effect of Agreement.  Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all of the other
Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.

     8.   Counterparts.  This Amendment Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

     9.   Credit Agreement and Other Loan Documents.  All references in any of
the Loan Documents to the "Credit Agreement" or other defined term for the
Credit Agreement, shall mean the Credit Agreement as amended hereby.

    10.   Reimbursement.  The Borrower agrees to reimburse the Agent and the
Lenders for all costs and out-of-pocket expenses, including reasonable
attorneys' fees, incurred in connection with the preparation, execution, and
delivery of this Amendment Agreement.

                           [Signature pages follow.]

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