Document:

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                                                                    EXHIBIT 10.3

                           SUBSIDIARY PLEDGE AGREEMENT

         THIS STOCK PLEDGE ("Stock Pledge") made as of the 25th day of
September, 2002 by and between Crest Financial Corporation, a Nevada corporation
("Company") and Comerica Bank, a Michigan banking corporation, ("Bank").

                                    RECITALS

         A. Pursuant to that certain Restated Credit Agreement dated as of
September 25, 2002 (as may be amended or otherwise modified from time to time,
the "Credit Agreement") by and between Meadowbrook Insurance Group, Inc.
("Borrower") and Bank, the Bank has agreed to extend credit to Borrower on the
terms set forth in the Credit Agreement.

         B. As a condition to the performance of their respective obligations
under the Credit Agreement, Bank has required that Company provide this Stock
Pledge to Bank, granting various security interests, liens and other
encumbrances as security for the Borrower's obligations under its Notes, the
Credit Agreement and the other Loan Documents.

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:

         I. Creation of Security Interest

         Company hereby grants to Bank a security interest in the property
described in paragraph II, below ("Collateral").

         II. Collateral.

         The Collateral consists of the following:

         (a) 100% of the outstanding shares of each class of stock (or other
ownership interest) of each Subsidiary listed on Schedule A hereto (as such
Schedule may be revised pursuant to Section III B. l hereof), together with all
of the certificates and/or instruments representing such shares of stock (or
other ownership interest), and all cash, securities, dividends, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares;

         (b) 100% of any additional shares of stock of any of the Subsidiaries
listed on Schedule A hereto, at any time and from time to time acquired by the
Company in any manner, all of the cash, securities, dividends, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares;

         (c) All other property hereafter delivered to the Bank in substitution
for or in addition to the foregoing, all certificates and instruments
representing or evidencing such property, and all cash, securities, interest,
dividends, rights and other property at any time and from time to time

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received, receivable or otherwise distributed in respect of or in exchange for
any or all thereof; and

         (d) All products and proceeds of all of the foregoing.

         III. Company's Obligations

         A. Payment of Secured Indebtedness. The security interest created
herein is given as security for:

         (1) All of Borrower's obligations contained in or arising under or in
connection with the Credit Agreement and the Notes issued by it from time to
time pursuant to the Credit Agreement, and all obligations of Borrower contained
in or arising under the other Loan Documents executed by Borrower;

         (2) All of Borrower's obligations contained in or arising under any
Interest Rate Protection Agreements;

         (3) The obligations of Borrower and Company for payment of all sums
hereafter loaned, paid out, expended or advanced by or for the account of the
Bank under the terms of this Stock Pledge, the Credit Agreement, or the other
Loan Documents, in connection with the Collateral or any of the documents or
instruments described in this Stock Pledge, the Credit Agreement or the other
Loan Documents; together with interest thereon as provided for herein or
therein; and also as security for all other indebtedness and liabilities,
whether direct, indirect, absolute or contingent, owing by the Borrower or the
Company to the Bank in any manner under the Credit Agreement or the Loan
Documents, which hereafter become due, or that may hereafter be incurred by the
Borrower to or acquired (pursuant to the Credit Agreement or the other Loan
Documents) by the Bank, and all other future obligations of the Borrower to the
Bank, its successors and assigns, howsoever created, arising or evidenced,
whether joint or several, direct or indirect, absolute or contingent, primary or
secondary, and any judgments that may hereafter be rendered on such indebtedness
or an part thereof, with interest according to the rates and terms specified, or
as provided by law, and any and all replacements, consolidations, amendments,
renewals or extensions of the foregoing (collectively herein called the
"Indebtedness").

         B. Protection of Security Interest.

         (1) Company shall take any and all steps required to protect the
Collateral, and in pursuance thereof Company agrees that Company shall deliver
or caused to be delivered to Bank, and Bank shall receive possession, of
certificates representing all of the pledged shares referred to in Schedule A,
as the case may be, properly endorsed or with assignments separate from such
certificates in blank for transfer. In addition Bank shall receive proof that
appropriate acknowledgments, governmental approvals, share register entries,
local pledge agreements, financing statements, collateral and other documents
covering the Collateral have been executed and delivered by the appropriate
parties and recorded on file with such Persons and in such jurisdictions as
necessary to perfect the security interests, or other liens granted hereby
and/or

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thereby. The Bank from time to time shall revise Schedule A and promptly deliver
a copy thereto to Company, on the effective date of the acquisition or creation
by Company of a Subsidiary (which is not a regulated insurance subsidiary),
adding to Schedule A the name of each such Subsidiary so acquired or created,
and upon such revision, Company shall be deemed to have pledged 100% of the
capital stock (or other ownership interests) of each such Subsidiary so acquired
or created to Bank.

         (2) Company will not sell, transfer, assign or otherwise dispose of any
of the Collateral or any interest therein or offer to do so without the prior
written consent of Bank, or permit anything to be done that may materially
impair the value of any of the Collateral or the security intended to be
afforded by this Stock Pledge.

         (3) Company will, subject to the applicable terms of the Credit
Agreement, pay all taxes and assessments upon the Collateral or for its use or
operation before any interest or penalty for nonpayment attaches thereto unless
said payment is being contested in good faith and it establishes a reserve as
required by generally accepted accounting principles.

         (4) Company will, subject to the applicable terms of the Credit
Agreement, sign and execute alone or with Bank any financing statement or other
document or procure any documents and pay all reasonable connected costs,
necessary to protect the security interest under this Stock Pledge against the
rights or interests of third persons.

         (5) Company will, subject to the applicable terms of the Credit
Agreement, reimburse Bank for all reasonable costs, including reasonable
attorneys' fees, incurred for any action taken by Bank to remedy an Event of
Default which Bank elects to remedy pursuant to its rights under Article VI
hereof.

         (6) Company will:

         (i) subject to the applicable terms of the Credit Agreement, allow Bank
to examine, audit and inspect Company's books, accounts, records (including
without limitation all records relating to the Collateral or the Indebtedness),
ledgers and assets and properties of every kind and description wherever located
at all reasonable times during normal business hours, upon oral or written
request of Bank, and to make and take away copies of any and all such books,
accounts, records and ledgers;

         (ii) punctually and properly perform all of its covenants and duties
under any other security agreement, mortgage, collateral pledge agreement or
contract of any kind now or hereafter existing as security for or in connection
with payment of the Indebtedness, or any part thereof;

         (iii) perform its obligations under the Loan Documents;

         (iv) promptly furnish Bank with any information in writing which Bank
may reasonably request concerning the Collateral;

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         (v) promptly notify Bank of any material change in any fact or
circumstances warranted or represented by Company in this Stock Pledge or in any
other writing furnished by Company to Bank in connection with the Collateral or
the Indebtedness;

         (vi) promptly notify Bank of any material claim, action or proceeding
affecting the Collateral and title therein, or in any part thereof, or the
security interest created herein, and, at the request of the Bank, appear in and
defend, at Company's expense, any such action or proceeding; and

         (vii) promptly, after being requested by Bank, pay to Bank the amount
of all reasonable expenses, including reasonable attorneys' fees and other legal
expenses, incurred by Bank in protecting and maintaining the Collateral or its
rights hereunder, or in connection with any audit or inspection of the
Collateral pursuant to the terms hereof, and in enforcing the security interest
created herein.

         (7) With respect to any Collateral of a kind requiring an additional
security agreement, financing statement, or other writing to perfect a security
interest therein in favor of Bank, Company will forthwith execute and deliver to
Bank whatever the Bank shall deem necessary or proper for such purpose. Should
any covenant, duty or agreement of Company fail to be performed in accordance
with its terms hereunder, Bank may, but shall never be obligated to, perform or
attempt to perform such covenant, duty or agreement on behalf of Company, and
any amount expended by Bank in such performance or attempted performance shall
become part of the Indebtedness, and, at the request of Bank, Company agrees to
pay such amount to Bank upon demand at Bank's office in Detroit, Michigan
together with interest thereon at the highest rate which interest accrues on
amounts after the same become due pursuant to the terms of any note executed
pursuant to the Credit Agreement from the date of such expenditure by Bank until
paid. With respect to any Collateral in which Company acquires any rights
subsequent to the date hereof and which, under applicable law, a security
interest is or can be perfected by possession, Company agrees to deliver
possession of such Collateral to Bank immediately upon its acquisition of rights
therein.

         (8) Company will hold the proceeds of any of the Collateral in trust
for Bank, will not commingle said proceeds with any other funds, and, after an
Event of Default, will deliver such proceeds to Bank at its request.

         (9) If Bank, acting in its sole discretion, redelivers any Collateral
to Company or Company's designee for the purpose of

         (i) the ultimate sale or exchange thereof, or

         (ii) presentation, collection, renewal, or registration of transfer
thereof, such redelivery shall not constitute a release of Bank's security
interest therein or in the proceeds thereof unless Bank, specifically so agrees
in writing.

         (10) If Company requests any such redelivery, Company will deliver with
such request a duly executed financing statement in form and substance
satisfactory to Bank.

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         IV. Default

         The term "Event of Default", as used herein, means the occurrence of
any Event of Default under the Credit Agreement.

         V. Consequence of Default.

         Upon an Event of Default, Bank shall be entitled, subject to applicable
law, to all of its remedies specified herein, in the Credit Agreement, or in any
other document executed in connection with the Credit Agreement or this Stock
Pledge, or provided by law. Additionally, upon an Event of Default and subject
to applicable law, Bank will be entitled to receive all dividends payable in
respect of the pledged shares evidencing the Collateral pledged under this Stock
Pledge, and may change the registration of any registerable Collateral to any
other name or form and is hereby authorized to appoint any officer or agent of
Bank as Company's true and lawful proxy and attorney-in-fact, with power, upon
the occurrence of any Event of Default (exercisable so long as such Event of
Default is continuing), to exercise all voting rights in respect of the shares
evidencing the Collateral pledged hereby; to endorse Company's name or any of
its officers' names or agents' names upon any notes, checks, drafts, money
orders, or other instruments of payment (including payments payable under any
policy of insurance on the Collateral) or Collateral that may come into
possession of the Bank in full or part payment of any amounts owing to the Bank;
to give written notice to such office and officials of the United States Post
Office to effect such change or changes of address so that all mail addressed to
Company may be delivered directly to Bank; to execute on behalf of Company any
financing statements, amendments, subordinations or other filings pursuant to
the Credit Agreement; granting unto Bank, as the proxy and attorney-in-fact of
Company, full power to do any and all things necessary to be done in and about
the premises as fully and effectually as Company might or could do, and hereby
ratifying all that said proxy and attorney shall lawfully do or cause to be done
by virtue hereof. The proxy and power of attorney described herein shall be
deemed to be coupled with an interest and shall be irrevocable for the term of
the Credit Agreement, and all transactions thereunder and thereafter as long as
any Indebtedness or any of the commitments to lend remain outstanding. The Bank
shall have full power, subject to applicable law to collect, to compromise, to
endorse, to sell or otherwise to deal with the Collateral or proceeds thereof on
in its own name or in the name of Company provided that Bank shall act in a
commercially reasonable manner.

         VI. Bank's Rights and Remedies.

         Bank shall have available to it (subject to applicable law) the
following rights and remedies upon occurrence of an Event of Default:

         A. Right to Assign. Bank may assign this Stock Pledge only as provided
in the Credit Agreement and if Bank does assign this Stock Pledge, the assignee
shall be entitled to the performance of all of Company's obligations and
agreements under this Stock Pledge, and the assignee shall be entitled to all
the rights and remedies of Bank under this Stock Pledge.

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         B. Right to Discharge Company's Obligations. Bank may (i) discharge
taxes, liens or security interests or other encumbrances at any time levied or
placed on the Collateral which are superior to the security interest herein
granted, (ii) remedy or cure any default of Company under the terms of any
lease, rental agreement, land contract or other document which in any way
pertains to or affects Company's title to or interest in any of the Collateral,
(iii) pay for insurance on the Collateral, and (iv) pay for the maintenance and
preservation of the Collateral, unless with respect to the obligations under
clauses (i) or (ii) Company is contesting in good faith such obligations, and
Company agrees to reimburse Bank, on demand, for any payment made or any expense
incurred by Bank pursuant to the foregoing authorization, with interest, which
payments and expenses shall be secured by the security intended to be afforded
by this Stock Pledge.

         C. Remedies and Enforcement. Bank shall have and may exercise any and
all rights of enforcement and remedies afforded to a secured party under the
Uniform Commercial Code as adopted and in force in the State of Michigan, to the
extent permitted by applicable law, on the date of this Stock Pledge or the date
of Company's default together with any and all other rights and remedies
otherwise provided and available to Bank by law unless such application would
result in the invalidity or unenforceability of any provision hereof, in which
case the law of the state in which any of the Collateral is located shall apply
to the extent necessary to render such provision valid and enforceable; and, in
conjunction with, in addition to, or substitution for those rights, at Bank's
discretion, Bank may:

         (1) Apply any of the Collateral against any of the Indebtedness secured
hereby;

         (2) Waive any default, or remedy any default in any reasonable manner,
without waiving its rights and remedies upon default and without waiving any
other prior or subsequent default;

         (3) Without any notice to Company, notify any parties obligated on any
of the Collateral to make payment to the Bank of any amounts due or to become
due thereunder and enforce collection of any of the Collateral by suit or
otherwise and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) the indebtedness thereunder or evidenced thereby. Upon request
of the Bank, Company will, at its own expense, notify any parties obligated to
Company on any of the Collateral to make payment to the Bank of any amounts due
or to become due thereunder. Company agrees that Bank shall not be liable for
any loss or damage which Company suffers or may suffer as a result of Bank's
processing of items or its exercise of any other rights or remedies under this
Stock Pledge, including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action by any
third party not related to or affiliated with Company arising out of or in
connection with the processing of items (excluding only the claims of such third
parties in connection with the processing of items based solely upon the gross
negligence or willful misconduct of Bank) or the exercise of any other rights or
remedies hereunder. Company further agrees to indemnify and hold Bank harmless
from and against all such third party claims, demands or actions, including
without limitation litigation costs and reasonable attorneys' fees.

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         D. Right of Sale.

         (1) Company agrees that upon the occurrence of an Event of Default
(taking into account applicable periods of cure, if any), Bank may, at its
option, sell and dispose of the Collateral at public or private sale without any
previous demand of performance.

Company agrees that notice of such sale sent to Company's address, as set forth
in the Credit Agreement, by certified or registered mail sent at least five (5)
days prior to such sale, shall constitute reasonable notice of sale. The
foregoing shall not require notice if none is necessary under applicable law.
The proceeds of sale shall be applied in the following order:

         (i) to all reasonable costs and charges incurred by Bank in the taking
and causing the removal and sale of said property, including such reasonable
attorneys' fees as shall have been incurred by Bank;

         (ii) to the Indebtedness, including all accrued interest thereon; and

         (iii) any surplus of such proceeds remaining shall be paid to the
Company, or to such other party who shall lawfully be entitled thereto.

         (2) At any sale or sales made pursuant to this Stock Pledge or in a
suit to foreclose the same, the Collateral may be sold en masse or separately;
at the same or at different times, at the option of the Bank or its assigns.
Such sale may be public or private with notice as required by the Uniform
Commercial Code as then in effect in the state in which the Collateral is
located, and the Collateral need not be present at the time or place of sale. At
any such sale, the Bank or the holder of any note hereby secured may bid for and
purchase any of the property sold, notwithstanding that such sale is conducted
by the Bank or its attorneys, agents, or assigns.

         E. Miscellaneous. Bank shall have the right at all times to enforce the
provisions of this Stock Pledge in strict accordance with the terms hereof,
notwithstanding any conduct or custom on the part of Bank in refraining from so
doing at any time or times. The failure of Bank at any time or times to enforce
its rights under said provisions strictly in accordance with the same shall not
be construed as having created a custom in any way or manner contrary to the
specific provisions of this Stock Pledge or as having in any way or manner
modified the same. All rights and remedies of Bank are cumulative and
concurrent, and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.

         VII. Representations and Warranties of Company.

         Company represents and warrants, as continuing representations and
warranties so long as the Guaranty remains in effect, that:

         A. The individual signatory hereto has authority to execute and deliver
this Stock Pledge on behalf of Company.

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         B. No financing statement covering the Collateral, or any part thereof,
has been filed with any filing officer other than in favor of Bank.

         C. No other agreement, pledge or assignment covering the Collateral, or
any part thereof, has been made and no security interest, other than the one
created hereby or pursuant to pledges and security agreements previously made in
favor of Bank has attached or been perfected in the Collateral or in any part
thereof.

         D. No material dispute, right of setoff, counterclaim or defenses exist
with respect to any part of the Collateral.

         E. All information supplied and statements made in any financial or
credit statements or application for credit prior to the execution of this Stock
Pledge are true and correct as of the date hereof in all material respects.

         F. The Collateral, (1) constitutes all the issued and outstanding
capital stock (or other ownership interests) of the Subsidiaries, (2) have been
duly authorized and issued to Company, (3) is fully paid and non-assessable, (4)
is freely and validly assignable, and (5) is not subject to any option, warrant
right to call or commitment of any kind or nature.

         G. At the time Bank's security interest attaches to any of the
Collateral or its proceeds, Company will be the lawful owner with the right to
transfer any interest therein, and that Company will make such further
assurances as to prove its title to the Collateral as may be reasonably required
and will defend the Collateral and its proceeds against the lawful claims and
demands of all persons whomsoever. The delivery at any time by Company to Bank
of Collateral or financing statements covering Collateral shall constitute a
representation and warranty by Company under this Stock Pledge that, with
respect to such Collateral, and each item thereof, Company is owner of the
Collateral and the matters heretofore warranted in this paragraph are true and
correct.

         VIII. Mutual Agreements.

         Company and Bank mutually agree as follows:

         A. "Company," "Bank," and "Borrower" as used in this Stock Pledge
include the successors and permitted assigns of those parties.

         B. To the extent permitted by applicable law, except as otherwise
provided herein, the law governing this secured transaction shall be that of the
State of Michigan.

         C. This Stock Pledge includes all amendments and supplements hereto and
assignments hereof and Company and Bank shall not be bound by any amendment or
undertaking not expressed in a writing executed by each of them.

         D. All capitalized terms not specifically defined herein which are
defined in the Credit Agreement are used as defined in the Credit Agreement.

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         E. This Stock Pledge shall be a continuing security interest in every
respect (whether or not the outstanding balance of the Indebtedness is reduced
to zero) and Bank's security interest in the Collateral as granted herein shall
continue in full (other than contingent indemnification obligations to the
extent no unsatisfied claim giving rise thereto has been asserted) force and
effect until all of the Indebtedness is indefeasibly repaid and discharged in
full and no commitment (whether optional or obligatory) to extend any credit
under the Credit Agreement remains outstanding.

         F. The parties hereto acknowledge that this Stock Pledge is subject to
the mutual waiver of jury trial contained in Section 10.14 of the Credit
Agreement and to the consent to jurisdiction provisions contained in Section
10.2 of the Credit Agreement.

         G. This Stock Pledge has been executed and delivered pursuant to the
Credit Agreement and in the event of any conflict between this Stock Pledge and
the Credit Agreement, the Credit Agreement shall govern.

         IN WITNESS WHEREOF, Company and Bank have executed this Stock Pledge on
the day and year first above written.

                                  COMPANY:

                                  CREST FINANCIAL CORPORATION, a Nevada
                                  corporation,

                                  By:      /s/ Michael O'Shea
                                      ------------------------------------------
                                           Michael O'Shea
                                  Its:     Assistant Secretary

                                  ACCEPTED BY BANK:
                                  ----------------

                                  COMERICA BANK, a Michigan banking corporation,

                                  By:      /s/ Julie J. Nowicki
                                      ------------------------------------------
                                           Julie J. Nowicki
                                  Its:     Account Officer

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<PAGE>

                                   SCHEDULE A

                                  SUBSIDIARIES

    1.     Commercial Carriers Insurance Agency, Inc., a California corporation

    2.     Interline Insurance Services, Inc., a California corporation

    3.     Liberty Premium Finance, Inc., a California corporation

                                       10<PAGE>

                                                                   EXHIBIT 10.24

                        THIRD NOTE MODIFICATION AGREEMENT

         THIS AGREEMENT is made and entered into on this 23 day of April,
2003, by and among Caraco Pharmaceutical Laboratories Ltd., a Michigan
corporation, of 1150 Elijah McCoy Drive, Detroit, Michigan 48202 ("Borrower"),
and the Economic Development Corporation of the City of Detroit, a Michigan
public body corporate, of 211 West Fort Street, Suite 900, Detroit, Michigan
48226 ("Lender").

                              W I T N E S S E T H:

         WHEREAS, on August 10, 1990, Lender made a loan to Borrower in the
original principal sum of Nine Million and no/100 ($9,000,000.00) Dollars (the
"Original Loan"); and

         WHEREAS, the Original Loan is evidenced and secured in part by the
following instruments (collectively, the "Original Loan Documents"):

         A.       Section 108 Note dated August 10, 1990, executed by Borrower
                  in favor of Lender in the original principal amount of Nine
                  Million and no/100 ($9,000,000.00) Dollars (the "Note"), as
                  modified by that certain Note and Mortgage Modification
                  Agreement dated as of March 1, 1994 (the "First Note and
                  Mortgage Modification Agreement"), and as further modified by
                  that certain Second Note and Mortgage Modification Agreement
                  dated as of August 5, 1997 (the "Second Note and Mortgage
                  Modification Agreement");

         B.       Second Mortgage and Security Agreement dated August 10, 1990,
                  granted by Borrower to Lender and recorded on September 21,
                  1990 in Liber 24815, at Page 715, Wayne County Register of
                  Deeds, as amended by that certain Amendment to Mortgage and
                  Security Agreement dated April 2, 1993, as further amended by
                  the First Note and Mortgage Modification Agreement, as further
                  amended by that certain Amendment to Second Mortgage and
                  Security Agreement dated as of February 28, 1995, and as
                  further amended by the Second Note and Mortgage Modification
                  Agreement (the "Mortgage");

         C.       Guaranty of Dr. C. Arnold Curry and Cara Jean Curry
                  (collectively, "Guarantors," and individually, a "Guarantor"),
                  husband and wife, dated August 10, 1990, as amended and
                  restated on April 2, 1993 (the "Guaranty"); and

         D.       UCC-1 Financing Statement recorded at the Michigan Secretary
                  of State's Office on October 10, 1990, at File No. C400998,
                  and a UCC 1-A Financing Statement recorded on September 12,
                  1990 at Liber 24815,

         WHEREAS, Borrower has requested that Lender modify the terms of the
Original Loan and Lender has agreed to do so, subject to the terms and
conditions set forth in this Agreement; and

         WHEREAS, the parties have agreed that the Mortgage shall be further
amended to reflect the modification of the Original Loan, by that certain Third
Mortgage Modification Agreement executed of even date herewith (the "Third
Mortgage Modification Agreement").

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower do hereby covenant and agree as follows:

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<PAGE>

         1.       RECITALS ARE TRUE AND CORRECT; DEFINED TERMS.

                  A. RECITALS TRUE AND CORRECT. The foregoing recitals are true
and correct in all respects.

                  B. DEFINED TERMS. In addition to terms defined elsewhere
within this Agreement, the following terms shall have the following meanings:

                           (i) "Additional Loan Documents" shall mean this
Agreement, the Third Mortgage Modification Agreement and all documents and
instruments executed and delivered by Borrower pursuant to or in connection with
this Agreement.

                           (ii) "Loan" shall mean the Original Loan, as modified
by this Agreement and the other Additional Loan Documents.

                           (iii) "Loan Documents" shall mean any and all
documents and instruments evidencing or securing the Loan, including the
Original Loan Documents and the Additional Loan Documents.

                           (iv) "Obligations" shall mean the payment of the Loan
and the payment and performance of all other obligations of Borrower to Lender
now existing or hereafter arising under the Loan Documents.

                           (v) "Property" means the real and personal property
encumbered by the Mortgage or the other Loan Documents.

                           (vi) "Real Property" means the real property
encumbered by the Mortgage.

                  C. OTHER TERMS. All other capitalized terms contained in this
Agreement and not otherwise defined herein shall have the same meanings, if any,
as are ascribed to such terms in the Original Loan Documents.

         2. EXISTING INDEBTEDNESS. As of the date of this Agreement, the unpaid
principal balance owing by Borrower to Lender under the Original Loan is Seven
Million Six Hundred Two Thousand Five Hundred Forty-Six and 56/100
($7,602,546.56) Dollars (the "Existing Indebtedness").

         3. PAYMENT RESTRUCTURING. Lender agrees to restructure repayment of the
Existing Indebtedness in accordance with the terms stated herein. More
specifically, the occurrence of each of the following before the close of
business on April 23, 2003 (the "Closing Date"), shall constitute a condition
precedent to any such restructuring by Lender as described in Section 4 below:

                  A. Prior to or contemporaneously with the execution of this
Agreement, Borrower shall have paid any and all delinquent real and personal
property taxes assessed against the Property in full;

                  B. Borrower shall have satisfied any and all conditions
precedent set forth in the Third Mortgage Modification Agreement;

                  C. Borrower shall have reimbursed the EDC in full for its
costs incurred in connection with the restructuring of the Original Loan as
contemplated by this Agreement, including, but not limited to, filing and
recording costs, title insurance premiums, appraisal fees, and legal fees; and

                  D. Borrower shall have reimbursed the City of Detroit for its
costs incurred in connection with the issuance of securities by the United
States Department of Housing and Urban Development ("HUD"), including, but not
limited to, legal fees and syndication costs.

         Borrower agrees that in the event that any one or more of the
conditions precedent enumerated in subsections 3.A. through 3.D. above shall not
have been satisfied before the close of business on the Closing

                                       2
<PAGE>

Date, the same shall constitute an Event of Default under this Agreement and the
other Loan Documents, entitling Lender to exercise its remedies hereunder and
thereunder.

         4.       MODIFICATION OF THE ORIGINAL LOAN.

                  A. MODIFICATION OF THE NOTE.

                           (i) PAYMENT SCHEDULE. Upon satisfaction of the
conditions precedent set forth in Section 3 above and Section 5 below before the
close of business on the Closing Date, the Note shall be deemed automatically
modified to provide that the monthly payments shall be hereafter paid in
accordance with this Section 4. The term of the Note shall be six years and
shall commence on the date of the first payment described below.

         After the Closing Date, Borrower shall commence making monthly payments
of principal and interest due under the Note, each such payment due on the first
day of each month, in accordance with the loan amortization table attached
hereto as Exhibit A.

                           (ii) MATURITY DATE. The maturity date of the Loan
shall be February 1, 2009 (the "Maturity Date"). Borrower may prepay all or any
portion of the Loan at any time without penalty.

                  B. OTHER MODIFICATIONS TO THE ORIGINAL LOAN DOCUMENTS.

                           (i) FUNDING OBLIGATIONS TERMINATED. Lender shall have
no obligation to make any further advances or disbursements to Borrower on
account of the Loan or otherwise.

                           (ii) REFERENCES. Any reference made in the Mortgage
or the other Original Loan Documents to the "Note" shall mean the Note as
modified by this Agreement and any reference in any of the Original Loan
Documents to "Loan Documents" shall mean the Loan Documents as modified by this
Agreement and the Third Mortgage Modification Agreement.

                  C. EQUIPMENT. So long as Borrower is not in default in any of
its obligations hereunder, it may purchase new capital and/or sell the existing
capital equipment described on Exhibit B attached hereto and made a part hereof,
so long as that (a) as a result of those transactions, the book value of
Borrower's assets is not diminished below the book value of all of Borrower's
assets as of December 31, 2002 and (b) the proceeds of any such sales are
retained by Borrower.

         5. THIS AGREEMENT IS SUBJECT TO SATISFACTION OF CONDITIONS PRECEDENT.
The covenants and agreements of Lender contained in this Agreement, including,
but not limited to, Lender's obligation to modify the Loan as provided herein,
are contingent upon and subject to each of the following conditions being
satisfied as of the time Borrower executes this Agreement, or at such other time
as Lender may permit in its sole and absolute discretion:

                  A. RECEIPT OF TITLE INSURANCE. Lender's receipt, at the
expense of Borrower, of a title insurance policy which insures the lien of the
Mortgage: (i) showing that no encumbrances affect the Real Property other than
encumbrances which are acceptable to Lender, in the exercise of its reasonable
discretion, and (ii) insuring, to the satisfaction of Lender, that the Mortgage
remains a valid first lien on the Real Property, subject only to matters
disclosed in the title insurance policy or such other matters as may be
acceptable to Lender in the exercise of its reasonable discretion.

                  B. DELIVERY OF ADDITIONAL LOAN DOCUMENTS. Borrower having
delivered to Lender, in form and substance satisfactory to Lender:

                           (i) the Third Mortgage Modification Agreement;

                           (ii) an owner's affidavit executed by Borrower;

                                       3
<PAGE>

                           (iii) an opinion of counsel to Borrower, opining as
to such matters in respect of the Loan as Lender may request;

                           (iv) a good standing certificate for Borrower;

                           (v) such resolutions, affidavits, certificates and
other documents as Lender may reasonably require to evidence Borrower's
capacity, power and authority to execute, deliver and perform its obligations
under the Additional Loan Documents; and

                           (vi) such other documents, instruments, certificates
and further assurances as Lender may reasonably require.

                  C. UCC SEARCHES. Lender's receipt of UCC searches confirming
that no personal property or fixtures of Borrower are subject to security
interests other than Lender's security interests or other than as previously
disclosed by Borrower to Lender.

         6. RATIFICATION OF SECURITY AND OBLIGATIONS; WAIVER OF CLAIMS AND
DEFENSES OF BORROWER.

                  A. RATIFICATION OF SECURITY AND OBLIGATIONS OF BORROWER.
Borrower hereby covenants, warrants and agrees that, except as modified by the
Third Mortgage Modification Agreement: (i) the Mortgage secures and shall
continue to secure full repayment of the Loan, as evidenced by the Note; (ii)
the Mortgage is and shall remain a continuous and valid first priority lien on
the Property until the Loan is repaid in full; (iii) the Loan Documents secure
and shall continue to secure the repayment of the Loan, as evidenced by the Note
and all other Obligations; and (iv) all Obligations and all Loan Documents
granted as security for the repayment of the Loan remain and shall continue to
remain valid, binding and effective, except as amended by this Agreement or the
Third Mortgage Modification Agreement, this Agreement being an affirmation and
ratification thereof.

                  B. WAIVER OF CLAIMS AND DEFENSES. Borrower hereby waives,
releases, acquits, satisfies and forever discharges Lender from any and all
claims, counterclaims, defenses, actions, causes of action, suits,
controversies, agreements, promises and demands whatsoever in law or in equity
which Borrower ever had, now has, or which any successor or assign of Borrower
can, shall or may have against Lender for, upon or by reason of any matter,
cause or thing whatsoever from the beginning of time to the date hereof.

                  C. NO DEFENSES. There is no defense or right of offset against
any Obligations of Borrower to Lender, including, but not limited to, any
obligation under the Note or Mortgage.

         7.       DEFAULT.

                  A. EVENTS OF DEFAULT. The Mortgage, Note and all other Loan
Documents shall all be in default (in any case, an "Event of Default") (i) if
Borrower shall be in default under or fail to perform any agreement, covenant,
condition, obligation or undertaking, or breach any warranty or representation,
contained in this Agreement, or any agreement to which Borrower is a party that
materially and adversely affects this Agreement, the Note, or any of the other
Additional Loan Documents; (ii) if any of the other Loan Documents shall be in
default in accordance with the terms thereof; or (iii) if a judgment in excess
of $1,000,000, not fully covered by insurance, is entered against Borrower,
enforcement of which is not stayed or bonded within thirty (30) days after
entry.

                  B. REMEDIES. Upon the occurrence of any Event of Default, each
of the Loan Documents and all Obligations of Borrower shall be in default and,
at the option of Lender, all Loan indebtedness, and all other Obligations, shall
become immediately due and payable if such Event of Default is not cured within
(i) fifteen (15) days after the date of such Event of Default in the event such
Event of Default involves the payment of money by the Borrower, or (ii) whether
thirty (30) days after the date of written notice from Lender to Borrower of
such Event of Default, in the event such Event of Default involves the
performance by Borrower of a non-monetary obligation, and the Lender shall
thereupon be entitled,

                                       4
<PAGE>

authorized and empowered to exercise any and all rights and remedies available
under the Loan Documents, at law or in equity, including, but not limited to,
its right to foreclose the Mortgage lien and its right to collect the Loan
indebtedness under the Note and Guaranty.

         8.       BANKRUPTCY.

                  A. EVENT OF BANKRUPTCY DEFINED. When appearing in this
Agreement, the term "Event of Bankruptcy" shall mean: (a) if Borrower shall: (i)
file a voluntary petition in bankruptcy for adjudication as bankrupt, (ii) seek
reorganization or an arrangement under any bankruptcy or similar statute of the
United States of America or any subdivision thereof or of any foreign
jurisdiction in response to an involuntary petition, (iii) consent to the filing
of a petition in bankruptcy or reorganization, (iv) consent to the appointment
of a receiver or a trustee or officer performing similar functions with respect
to any substantial part of their property, (v) make a general assignment for the
benefit of creditors, (vi) execute a consent to any other type of insolvency
proceeding or any informal proceeding for the dissolution or liquidation of or
settlement of claims against or winding up of affairs or the appointment of a
receiver or trustee or officer performing similar functions for any of them, or
for any of their assets, or (b) the filing against Borrower of a petition for
adjudication as bankrupt or insolvent or for reorganization under any bankruptcy
or similar laws of the United States of America or any state thereof or any
foreign jurisdiction, or the institution against Borrower of any other type of
insolvency proceeding or any formal or informal proceeding for the dissolution,
liquidation, settlement of claims against or winding up of any of their
respective affairs, which proceeding is not dismissed within forty-five (45)
days of filing.

                  B. CERTAIN REPRESENTATIONS AS TO BANKRUPTCY. Borrower
represents that, as of the date hereof, no Event of Bankruptcy has occurred with
respect to Borrower and to the best of Borrower's knowledge, no Event of
Bankruptcy has occurred with respect to Guarantors.

                  C. RELIEF FROM STAY AND DISMISSAL. If any Event of Bankruptcy
shall occur with respect to Borrower, Lender shall be entitled to immediate and
complete relief from any automatic stay or moratorium (including, but not
limited to, the immediate lifting of such stay "for cause") arising out of or
related to the occurrence of any Event of Bankruptcy with respect to Borrower,
and Lender shall be permitted to proceed to protect and enforce its rights or
remedies either by suit in equity or by action at law, or both. Borrower
covenants and agrees that it will not oppose, and, upon request by Lender, will
consent in writing to the filing of the appropriate petitions or requests for
relief required to obtain the relief referred to herein.

         9.       INTENTIONALLY OMITTED.

         10.      ORIGINAL LOAN DOCUMENTS REMAIN EFFECTIVE EXCEPT AS MODIFIED
HEREBY. This Agreement and the other Additional Loan Documents amend and modify
the Original Loan Documents to the extent that any of the Original Loan
Documents are directly inconsistent with the Additional Loan Documents. To the
extent not directly inconsistent with the Additional Loan Documents, all of the
covenants, agreements and other provisions of the Original Loan Documents shall
remain unaltered and in full force and effect, and all representations and
warranties contained in the Original Loan Documents are hereby ratified and
reaffirmed as true, accurate and complete as if made on the date hereof. Nothing
herein contained shall in any manner whatsoever impair the Note, as modified
hereby, or the first lien created by the Mortgage or any other documents
executed by Borrower in connection therewith, or alter, waive, vary or affect
any promise, agreement, covenant or condition recited in any of the Loan
Documents. Except as herein otherwise provided, all terms and provisions of the
Note and other instruments and documents executed in connection with the Loan
shall remain in full force and effect and shall be binding upon the parties
hereto, their successors and assigns.

         11.      ADDITIONAL COVENANTS OF BORROWER. Borrower covenants and
agrees with Lender as follows:

                  A.       To maintain adequate insurance with responsible
                           companies in such amounts and against such risks and
                           hazards as are normally insured against by similar
                           businesses; to pay before penalties attach all taxes,
                           assessments, fees and similar

                                       5
<PAGE>

                           charges lawfully assessed upon Borrower and/or the
                           Property, except to the extent being contested in
                           good faith; to preserve its corporate existence in
                           good standing and continue to conduct and operate its
                           business substantially as presently conducted in
                           accordance with all applicable laws and regulations;
                           to pay its indebtedness and obligations when due
                           under normal terms; to maintain proper books of
                           record and account; and to furnish to Lender and
                           allow Lender to review such information and books and
                           records as Lender may reasonably request.

                  B.       To furnish to Lender within ninety (90) days after
                           the close of each fiscal year, audited financial
                           statements as of the close of such year, containing a
                           balance sheet and statements of income, retained
                           earnings and cash flows for such year, prepared in
                           accordance with generally accepted accounting
                           principles and certified by independent certified
                           public accountants.

                  C.       To furnish to Lender, within forty-five (45) days
                           after the close of each quarter of each fiscal year,
                           detailed financial statements as of the close of such
                           fiscal period, containing a balance sheet and
                           statements of income, retained earnings and cash
                           flows for such period and for the portion of its year
                           ending with such period, prepared in accordance with
                           generally accepted accounting principles and
                           containing the written statement of the chief
                           financial officer of Borrower that to the best of his
                           knowledge and belief, the financial statements are
                           accurate and complete and have been prepared in
                           accordance with generally accepted accounting
                           principles and the requirements of the Securities and
                           Exchange Commission.

                  D.       To furnish to Lender, within forty-five (45) days
                           after the close of each quarter of each fiscal year,
                           all quarterly financial statements submitted to the
                           Securities and Exchange Commission.

                  E.       That Borrower shall use its best efforts to hire and
                           retain residents of the City of Detroit whose
                           qualifications meet applicable job requirements,
                           consistent with current hiring practices.

                  F.       To keep Lender periodically apprised of the progress
                           of Dr. Curry's suit against Borrower, and of the
                           progress of the two pending Miraphen product
                           liability suits against Borrower, including, but not
                           limited to, outcomes at all levels of the litigation,
                           and to inform Lender in the event any other material
                           actions are instituted against Borrower, a "material
                           action" being one in which a judgment in excess of
                           $1,000,000 could be entered against Borrower.

         12.      REPRESENTATIONS. Borrower represents and warrants that all
statements contained herein and in all documentation provided by Borrower to
Lender and all other representations or statements made by or on behalf of
Borrower to Lender in connection with the concessions described in this
Agreement are true and complete and do not state or omit to state any material
fact. Borrower further represents that it is not insolvent and will not be
rendered insolvent by entering into this Agreement. Borrower acknowledges that
Lender has relied on the foregoing representations and warranties in entering
into this Agreement. In the event that Borrower shall have made any
misrepresentation in connection with the circumstances giving rise to this
Agreement, such misrepresentation shall be deemed to be an Event of Default
under the Mortgage, the Note and the other Loan Documents, thereby entitling
Lender, subject to paragraph 7.B., to exercise its rights to accelerate the
maturity of the indebtedness secured by the Mortgage and any and all other
rights available to Lender under the Loan Documents or at law or in equity.

         13.      RELEASE. As additional consideration for the modification of
the terms of the Original Loan, as provided herein, Borrower does hereby release
and forever discharge Lender and the City of Detroit, their agents, servants,
employees, directors, officers, attorneys, affiliates, successors and assigns
from all liabilities, obligations, actions and causes of action whatsoever
related to the Loan which Borrower may now

                                       6
<PAGE>

have or claim to have against Lender or the City of Detroit as of the date
hereof, whether presently known or unknown, of every nature and extent
whatsoever on account of or in any way touching, concerning, arising out of or
founded upon the Note, as modified hereby, including, but not limited to, all
such loss or damage of any kind heretofore sustained, or that may arise as a
consequence of the dealings between the parties up to the date of this
Agreement. Borrower acknowledges that, as of the date of this Agreement, there
are no statements, agreements, waivers, estoppels or representations made by
Lender which would constitute a claim, defense, counterclaim or right of offset
in any foreclosure action that may hereafter be instituted by Lender under the
Mortgage, or in any independent claim or action that may hereafter be brought by
Borrower against Lender. This agreement and covenant on the part of Borrower is
contractual, and not a mere recital, and the parties acknowledge and agree that
no liability whatsoever is admitted on the part of any party, except Borrower's
indebtedness to Lender under the Note, as modified hereby, and that all
agreements and understandings between Borrower and Lender are expressed and
embodied in the Note, as modified hereby and in the Mortgage, as modified by the
Third Mortgage Modification Agreement. In the event that Lender is involved in
litigation concerning the subject matter of this Agreement, Lender shall be
entitled to receive from Borrower all of Lender's reasonable and necessary costs
for such litigation, including Lender's reasonable attorneys' fees and costs
incurred through all trial, appellate and other proceedings.

         14.       KNOWLEDGE. Borrower acknowledges that (A) it has thoroughly
read and reviewed the terms and provisions of this Agreement and is familiar
with same, that the terms and provisions contained herein are clearly understood
by Borrower and have been fully and unconditionally consented to by Borrower,
(B) it has had full benefit and advice of counsel of its own selection, or the
opportunity to obtain the benefit and advice of counsel of its own selection, in
regard to understanding the terms, meaning and effect of this Agreement, (C) it
has freely, voluntarily, with full knowledge, and without duress, executed this
Agreement, (D) in executing this Agreement, it is not relying on any other
representations, either written or oral, express or implied, made to it by
Lender, and (E) that the consideration received by it hereunder has been actual
and adequate.

         15.       WAIVER OF JURY TRIAL. THE UNDERSIGNED HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT WHICH THE UNDERSIGNED MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BETWEEN THE PARTIES HERETO,
INCLUDING, BUT NOT LIMITED TO, WITH RESPECT TO ANY AND ALL CAUSE OR CAUSES OF
ACTION, DEFENSES, COUNTERCLAIMS, CROSSCLAIMS, THIRD PARTY CLAIMS AND
INTERVENORS' CLAIMS, REGARDLESS OF THE CAUSE OR CAUSES OF ACTION, DEFENSES OR
COUNTERCLAIMS ALLEGED OR THE RELIEF SOUGHT BY SUCH PARTY, AND REGARDLESS OF
WHETHER SUCH LITIGATION IS BASED ON, ARISES OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN OR THIS AGREEMENT, THE NOTE, GUARANTY OR ANY OF THE OTHER LOAN
DOCUMENTS, OR OUT OF ANY ALLEGED CONDUCT OR COURSE OF CONDUCT, DEALING OR COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PARTIES
HERETO, OR OTHERWISE.

         16.       CONSTRUCTION. This Agreement shall not be construed more
strictly against Lender merely by virtue of the fact that the same has been
prepared by Lender or its counsel, it being recognized that Borrower has also,
through its counsel, contributed substantially and materially to the preparation
of this Agreement.

         17.       ENTIRE AGREEMENT. Borrower acknowledges that there are no
other agreements or representations, either oral or written, express or implied,
not embodied in this Agreement and the Loan Documents, which, together,
represent a complete integration of all prior and contemporaneous agreements and
understandings of the parties.

         18.       TIME IS OF THE ESSENCE. Time is of the essence as to all
Obligations of Borrower under the Loan Documents.

         19.       COUNTERPARTS. This Agreement may be executed and delivered in
any number of counterparts, each of which, when so executed and delivered, shall
be and constitute an original and one and the same document.

                                       7
<PAGE>

         20.       MODIFICATION MUST BE IN WRITING. This Agreement may not be
changed or terminated, except in a writing signed by Lender and Borrower.

         21.       CAPTIONS. All captions or headings contained in this
Agreement are provided for convenience and ease of reference only, and are in no
way intended to, nor shall they, form a part of or limit, restrict or define the
scope or content of this Agreement.

         22.       GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Michigan.

         23.       SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of the parties hereto and their respective successors and
assigns.

                            (REMAINDER OF PAGE BLANK)

                                       8

<PAGE>

         IN WITNESS WHEREOF, Lender and Borrower have executed this Agreement as
of the date first written above.

                                             LENDER:

                                             THE ECONOMIC DEVELOPMENT
                                             CORPORATION OF THE CITY OF DETROIT,
                                             a Michigan public body corporate

                                             By:      /s/ Brian J. Holdwick
                                                      -------------------------

                                             Its:     Authorized Agent

                                             By:      /s/ Athanosios Papapanos
                                                      -------------------------

                                             Its:     Authorized Agent

                                             BORROWER:

                                             CARACO PHARMACEUTICAL LABORATORIES
                                             LTD., a Michigan corporation

                                             By:      /s/ Narendra N. Borkar
                                                      -------------------------

                                             Its: Chief Executive Officer

                                             By:
                                                      -------------------------

                                             Its:
                                                      -------------------------

STATE OF MICHIGAN)
                 ) SS.
COUNTY OF WAYNE  )

         On this ______ day of April, 2003, before me personally appeared
________________________, and _______________________ the Authorized Agents of
the Economic Development Corporation of the City of Detroit, a Michigan public
body corporate, who, being duly sworn, stated that they have read the foregoing
Third Note Modification Agreement and have signed same on behalf of said
corporation.

                                               ---------------------------------

                                       9
<PAGE>

                                             Notary Public
                                             Wayne County, Michigan
                                             My Commission Expires: ____________

STATE OF MICHIGAN)
                 ) SS.
COUNTY OF WAYNE  )

         On this ______ day of April, 2003, before me personally appeared
________________________ and ________________________, the President and
_______________________, respectively, of Caraco Pharmaceutical Laboratories
Ltd., a Michigan corporation, who, being duly sworn, stated that they have read
the foregoing Third Note Modification Agreement and have signed same on behalf
of said corporation.

                                              ----------------------------------

                                              Notary Public
                                              Wayne County, Michigan
                                              My Commission Expires: ___________

                                       10

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