Eighth Amendment to Amended and Restated Credit Agreement, dated as of June 15, 2023, among The Hagerty Group LLC, Broad Arrow Capital Europe Limited, Broad Arrow Capital UK Limited, the Lenders party hereto, and JPMorgan Chase Bank, N.A., as Administrative Agent

    This Eighth Amendment to Amended and Restated Credit Agreement, dated as of June 15, 2023 (this “Amendment”), is by and among THE HAGERTY GROUP, LLC (the “Company”), Broad Arrow Capital Europe Limited, a private limited company incorporated in England and Wales with company number 13872922 (“BAC Europe”), Broad Arrow Capital UK Limited, a private limited company incorporated in England and Wales with company number 13872844 (“BAC UK” and, together with BAC Europe, the “Foreign Subsidiary Borrowers”; the Foreign Subsidiary Borrowers, together with the Company, the “Borrowers”), and JPMORGAN CHASE BANK, N.A., a national banking association, as administrative agent for the Lenders party to the Credit Agreement described below (in such capacity, the “Administrative Agent”).

    RECITALS

    A.    The Company, the Administrative Agent and the Lenders party thereto entered into an Amended and Restated Credit Agreement, dated as of December 12, 2018 (as amended, restated, amended and restated, supplemented or modified from time to time, including pursuant to certain Foreign Subsidiary Borrower Agreements joining the Foreign Subsidiary Borrowers as party thereto, the “Credit Agreement”).

    B.    The Borrowers desire to amend the Credit Agreement in accordance with the terms hereof, and the Administrative Agent and the Lenders are willing to do so strictly in accordance with the terms hereof.

    TERMS

    In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows:

    Upon the Eighth Amendment Effective Date, the parties hereto agree that the Credit Agreement is hereby amended as follows:

1.1     The following definitions are added to Section 1.01 of the Credit Agreement in appropriate alphabetical order:

“Eighth Amendment” means the Eighth Amendment to this Agreement.

“Eighth Amendment Effective Date” means the date the Eighth Amendment is effective.

“Fundamental Transaction” means any acquisition by the Company or Hagerty, Inc. with a transaction value of at least $500,000,000 or any equity or debt financing, or series of financings, by the Company, Hagerty, Inc. or their respective Affiliates that raises at least $500,000,000.

“Hagerty, Inc.” means Hagerty, Inc., a Delaware corporation.

“Reinsurance Loan Documents” means the agreements and documents evidencing (a) a financing by State Farm and any other lenders from time to time party thereto or (b) any one or more other pari passu financing by any other lender or group of lenders, in each case to the Reinsurance Subsidiary and any subsidiary guarantors from time to time party thereto, as any such agreements and documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, provided that such agreements and documents shall be on the terms set forth on Schedule 1.02 hereto in

all material respects and shall not have any cross default (or similar term) to a Default under this Agreement.

“State Farm” means State Farm Mutual Automobile Insurance Company, an Illinois-domiciled mutual insurance company.

1.2    The definition of “Disqualified Equity Interests” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Disqualified Equity Interests” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable (other than for Qualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part (other than for Qualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), in each case, prior to the date that is ninety-one (91) days after the Revolving Credit Maturity Date in effect at the time of issuance of such Equity Interest, unless, in each case, such term, event or condition is subject to the Payment in Full of the Obligations; provided, that the foregoing shall not apply to (i) a redemption, conversion or exchange into equity interests that do not themselves constitute Disqualified Equity Interests, (ii) any offer to redeem or repurchase required to be made in connection with a change of control, initial public offering, Disposition, Fundamental Transaction or similar event or (iii) compensatory equity awards to directors, managers, officers and employees in which shares are withheld (redeemed) upon vesting or exercise to pay applicable withholding taxes or, in the case of an option, the exercise price of the option.

1.3    The definition of “Permitted Acquisition” in Section 1.01 of the Credit Agreement is hereby amended by replacing the period at the end of clause (g) thereof with “; and” and adding the following thereafter:

(h)    such Acquisition does not constitute a Fundamental Transaction.

1.4    The definition of “Reinsurance Subsidiary” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Reinsurance Subsidiary” means Hagerty Reinsurance Limited, a Bermuda Class 3A Reinsurance Company and a wholly-owned Subsidiary of the Company, together with its Subsidiaries.

1.5    Section 6.01(u) of the Credit Agreement is re-designated as Section 6.01(v), and the following new Section 6.01(u) is added immediately prior thereto:

(u)     Indebtedness of the Reinsurance Subsidiary under the Reinsurance Loan Documents in an aggregate principal amount not to exceed $50,000,000, as reduced from time to time; provided that, (i) no Default exists or would be caused by the incurrence thereof, (ii) the Company is receiving at least $50,000,000 of proceeds from the issuance of Qualified Equity Interests prior to or substantially simultaneously with the initial incurrence of such Indebtedness, and (iii) neither the Company nor any of its Subsidiaries (other than the Reinsurance Subsidiary) is liable, directly or indirectly, by a Guarantee or otherwise, for such Indebtedness or any of the other obligations or other liabilities thereunder; and

1.6    Section 6.08(a) of the Credit Agreement is amended and restated in its entirety as follows:

(a)    restrictions and conditions imposed by law, by this Agreement, by any other Loan Document or, solely with respect to the Reinsurance Subsidiary or any Subsidiary thereof, by any Reinsurance Loan Document;

1.7    Schedule 1.02 attached hereto is added as Schedule 1.02 to the Credit Agreement.

    Each Borrower represents and warrants to the Administrative Agent and the Lenders that:

2.1    The execution, delivery and performance of this Amendment are within such Borrower’s powers and have been duly authorized by all necessary limited liability company action. This Amendment has been duly executed and delivered by such Borrower and constitutes a legal, valid and binding obligation of such Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

2.2    After giving effect to the amendments herein contained, the representations and warranties contained in Article III of the Credit Agreement and the representations and warranties contained in the other Loan Documents, which are qualified by materiality, are true in all respects and the representations and warranties therein that are not qualified by materiality are true in all material respects, on and as of the date hereof (other than such representations and warranties that refer to an earlier date, in which case such representations and warranties are true in all respects, or true in all material respects, as applicable, on and as of such earlier date).

2.3    After giving effect to the amendments herein contained, no Default has occurred and is continuing on the date hereof.    

    This Amendment shall become effective as of the date specified in the first paragraph hereof when each of the following conditions is satisfied or waived (the “Eighth Amendment Effective Date”):

    3.1    This Amendment shall be executed by each of the Borrowers, the Required Lenders and the Administrative Agent.

    3.2    The Consent and Agreement attached hereto shall be executed by each of the Guarantors.

    4.1    References in the Credit Agreement or in any other Loan Document to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended hereby and as further amended from time to time.

    4.2    Except as expressly amended hereby, each Borrower acknowledges and agrees that (a) the Credit Agreement and all other Loan Documents to which it is a party are ratified and confirmed and shall remain in full force and effect, (b) it has no setoff, counterclaim, defense or other claim or dispute with respect to any Loan Document, (c) the security interests and other Liens created by the Loan Parties under the Collateral Documents continue in full force and effect after giving effect to this Amendment, and secure, in addition to other obligations described as secured thereby, all Secured Obligations, and (d) the guaranties granted by the Loan Parties under the Subsidiary Guaranty continue in full force and effect after giving effect to this Amendment, and guaranty, in addition to other obligations described as being guarantied thereby, all Secured Obligations.

    4.3    This Amendment shall be governed by and construed in accordance with the laws of the State of New York. This Amendment shall not be deemed to have otherwise prejudiced any present or future right or rights which the Lenders now have or may have under the Credit Agreement or in any other Loan Document and, in addition, shall not entitle the Borrowers to a waiver, amendment, modification or other change to, of or in respect of any provision of the Credit Agreement or in any other Loan Document in the future in similar or dissimilar circumstances. This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement, as amended hereby. This Amendment is a Loan Document. Among

other provisions of the Credit Agreement, this Amendment is subject to Sections 9.06(b), 9.09 and 9.10 of the Credit Agreement as if such provisions were set forth fully herein.

        IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and delivered as of the day and year first above written.

    

THE HAGERTY GROUP, LLC

By: /s/ Patrick McClymont

Name: Patrick McClymont

Title: Chief Financial Officer

BROAD ARROW CAPITAL EUROPE LIMITED

By: /s/ Kenneth Ahn

Name: Kenneth Ahn

Title: Director

BROAD ARROW CAPITAL UK LIMITED

By: /s/ Kenneth Ahn

Name: Kenneth Ahn

Title: Director

JPMORGAN CHASE BANK, N.A., as a Lender and as Administrative Agent

By: /s/ Nathan Wright

Name: Nathan Wright

Title: Authorized Officer

KEYBANK NATIONAL ASSOCIATION

By: /s/ Brian P. Fox

Name:    Brian P. Fox            

Title: Senior Vice President

    CITIZENS BANK N.A.

    By: /s/ Donald Wright

    Name: Donald Wright            Title: SVP

    

    (a)    Each of the undersigned hereby fully consents to the terms and provisions of the above Amendment and the consummation of the transactions contemplated hereby and acknowledges and agrees to all of the representations, covenants, terms and provisions of the above Amendment applicable to it.

    (b)     Each of the undersigned hereby represents and warrants to the Administrative Agent and the Lenders that (i) the execution, delivery and performance of this Consent and Agreement are within its powers and have been duly authorized by all necessary action, and (ii) this Consent and Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation of it, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

    (c)    Except as expressly amended hereby, each of the undersigned hereby acknowledges and agrees that (i) the Credit Agreement and all Loan Documents to which it is a party are ratified and confirmed and shall remain in full force and effect, (ii) it has no set off, counterclaim, defense or other claim or dispute with respect to any Loan Document; and (iii) notwithstanding anything to the contrary in any Loan Document, the term “Guaranteed Obligations” and “Secured Obligations” as used and defined in the Subsidiary Guaranty and any Collateral Document executed by each of the undersigned shall include all Secured Obligations of The Hagerty Group, LLC as a Borrower.

    (d)    Each of the undersigned hereby acknowledges that its consent and agreement hereto is a condition to the Agent’s agreement pursuant to the above Amendment and it is in its interest and to its financial benefit to execute this consent and agreement. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement described in the above Eighth Amendment to Amended and Restated Credit Agreement.

                        

                        

                                    

                        Each By: /s/ Patrick McClymont

    

                         Name: Patrick McClymont

                         Title: Chief Financial Officer

                        

                    

Each By: BROAD ARROW GROUP, INC., its Sole Member

1 NTD: To the extent this covenant restricts amending material contracts, such restrictions shall only apply to the extent the amendment is materially adverse to the Lender.

2 To permit restricted payments in an unlimited amount so long as after giving pro forma effect to such restricted payment, Borrower has available capital and surplus (as calculated under the Bermuda solvency model) in an aggregate amount not less than the sum of (i) ECR and (ii) (A) from the Closing Date until the date that is the first anniversary of the Closing Date, 10% of the outstanding obligations under this Credit Facility, (B) from the date that is the first day following the first anniversary of the Closing Date through the date that is the second anniversary of the Closing Date, 20% of the outstanding obligations under this Credit Facility, (C) from the date that is the first day following the second anniversary of the Closing Date through the date that is the third anniversary of the Closing Date, 30% of the outstanding obligations under this Credit Facility, (D) from the date that is the first day following the third anniversary of the Closing Date through the date that is the fourth anniversary of the Closing Date, 40% of the outstanding obligations under this Credit Facility, (E) from the date that is the first day following the fourth anniversary of the Closing Date through the date that is the fifth anniversary of the Closing Date, 50% of the outstanding obligations under this Credit Facility, (F) from the date that is the first day following the fifth anniversary of the Closing Date through the date that is the sixth anniversary of the Closing Date, 60% of the outstanding obligations under this Credit Facility, (G) from the date that is the first day following the sixth anniversary of the Closing Date through the date that is the seventh anniversary of the Closing Date, 70% of the outstanding obligations under this Credit Facility, (H) from the date that is the first day following the seventh anniversary of the Closing Date through the date that is the eighth anniversary of the Closing Date, 80% of the outstanding obligations under this Credit Facility, (I) from the date that is the first day following the eighth anniversary of the Closing Date through the date that is the ninth anniversary of the Closing Date, 90% of the outstanding obligations under this Credit Facility and (J) from the date that is the first day following the ninth anniversary of the Closing Date and thereafter, 100% of the outstanding obligations under this Credit Facility.

Except for the provisions with the headings “Confidentiality,” “Governing Law,” “Third Party Beneficiaries” and “Miscellaneous,” each of which is expressly intended to bind, and shall be construed to bind the undersigned regardless of whether any further definitive agreement is subsequently executed, the foregoing provisions of this Term Sheet reflect the current intent of the parties hereto with respect to the contemplated transaction and such non-binding provisions shall not obligate either party to one another or create any liability to the other for any failure to comply with those non-binding provisions or the failure to enter into a definitive agreement.

By:                            By:                    

Name:                            Name:                    

Title:                            Title:                    

Date:                            Date: