Exhibit 10.1


 


FIRST AMENDMENT TO CREDIT AGREEMENT


 


This FIRST
AMENDMENT TO CREDIT AGREEMENT, dated as of July 22, 2008 (this “Amendment”),
among (i) ONEBEACON U.S. HOLDINGS, INC. (f/k/a FUND AMERICAN COMPANIES, INC.), a
Delaware corporation (the “Borrower”), (ii) ONEBEACON
INSURANCE GROUP, LTD., a company existing under the laws of Bermuda
(the “Parent”), (iii) the undersigned Lenders, and (iv) BANK OF AMERICA, N.A., as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”),
amends certain provisions of the Credit Agreement, dated as of November 14,
2006 (as amended, the “Credit Agreement”), among the Borrower, the
Parent, the Lenders, Bank of America, N.A., as Administrative Agent, Swing Line
Lender and the Issuing Lender, and Lehman Brothers Inc., as Syndication
Agent.  Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the Credit
Agreement.


 


RECITALS


 


WHEREAS,
the Borrower has requested that the undersigned Lenders and the Administrative
Agent agree to amend certain of the terms and provisions of the Credit
Agreement, as specifically set forth in this Amendment; and


 


WHEREAS,
the undersigned Lenders and the Administrative Agent are prepared to amend the
Credit Agreement on the terms, subject to the conditions and in reliance on the
representations set forth herein.


 


NOW
THEREFORE, in consideration of the mutual agreements
contained in the Credit Agreement and herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:


 


Section 1.              Amendment
to Credit Agreement.


 


(a)           Amendments to Section 1.1
(Defined Terms).  Section 1.1 of
the Credit Agreement is hereby amended by inserting the following new paragraph
immediately following the last sentence in the definition of “Applicable Margin”:


 


“Notwithstanding the foregoing,
if (x) the Total Consolidated Debt to Total Consolidated Capitalization
Ratio of the Parent, as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.2(b) (commencing
with the Compliance Certificate delivered pursuant to Section 6.2(b) for
the fiscal quarter of the Borrower ending June 30, 2008), exceeds
thirty-five percent (35.0%) or (y) a Compliance Certificate is not
delivered when due in accordance with Section 6.2(b) (commencing
as aforesaid), the Applicable Margin (at any level) shall be increased by an
amount equal to 0.425%.  Any increase or
decrease in the Applicable Margin pursuant to the preceding sentence shall
become effective as of the first Business Day immediately following the date (x) a
Compliance Certificate is delivered pursuant to Section 6.2(b) or
(y) a Compliance Certificate is required to have been delivered pursuant
to Section 6.2(b), as the case may be, and shall remain in effect
until, in the case of clause (x), the Applicable


 

















 


Margin is further adjusted
pursuant to the preceding sentence, or, in the case of clause (y), the first
Business Day immediately following the date such Compliance Certificate is
delivered, provided that the Applicable Margin at such time shall be
determined by reference to the Total Consolidated Debt to Total Consolidated
Capitalization Ratio of the Parent as set forth in such Compliance Certificate.”


 


(b)           Amendments to Section 1.1
(Defined Terms).  Section 1.1 of
the Credit Agreement is hereby amended by inserting the following new paragraph
immediately following the last sentence in the definition of “Facility Fee Rate”:


 


“Notwithstanding the foregoing,
if (x) the Total Consolidated Debt to Total Consolidated Capitalization
Ratio of the Parent, as set forth in the most recent Compliance Certificate
received by the Administrative Agent pursuant to Section 6.2(b) (commencing
with the Compliance Certificate delivered pursuant to Section 6.2(b) for
the fiscal quarter of the Borrower ending June 30, 2008), exceeds
thirty-five percent (35.0%) or (y) a Compliance Certificate is not
delivered when due in accordance with Section 6.2(b) (commencing
aforesaid), the Facility Fee Rate (at any level) shall be increased by an
amount equal to 0.075%.  Any increase or
decrease in the Facility Fee Rate pursuant to the preceding sentence shall
become effective as of the first Business Day immediately following the date (x) a
Compliance Certificate is delivered pursuant to Section 6.2(b) or
(y) a Compliance Certificate is required to have been delivered pursuant
to Section 6.2(b), as the case may be, and shall remain in effect
until, in the case of clause (x), the Facility Fee Rate is further adjusted
pursuant to the preceding sentence, or, in the case of clause (y), the first
Business Day immediately following the date such Compliance Certificate is
delivered, provided that the Facility Fee Rate at such time shall be
determined by reference to the Total Consolidated Debt to Total Consolidated
Capitalization Ratio of the Parent as set forth in such Compliance Certificate.”


 


(c)           Amendments to Section 7.1(b) (Maintenance
of Total Consolidated Debt to Total Consolidated Capitalization Ratio).  Section 7.1(b) of the Credit
Agreement is hereby amended by restating such Section in its entirety as
follows:


 


“(b)         Maintenance of Total Consolidated
Debt to Total Consolidated Capitalization Ratio. Parent shall not permit
its Total Consolidated Debt to Total Consolidated Capitalization Ratio as of
the end of any fiscal quarter to be greater than thirty-seven and one half of
one percent (37.5%).”


 


Section 2.              Conditions Precedent.  This Amendment shall become effective as of
the date first written above upon (a) execution hereof by the Borrower,
the Parent, the Administrative Agent and the Majority Lenders, and (b) the
Administrative Agent’s receipt, for the account of each Lender consenting to
this Amendment, a work fee in the amount of $3,000 per such Lender and its
Affiliates who are Lenders, which fee shall be deemed fully earned and
non-refundable upon receipt thereof.


 


Section 3.              Continued Validity of Loan
Documents.  Except for the
amendments to the Credit Agreement set forth in Section 1 hereof,
this Amendment shall not, by implication or otherwise, limit, impair,
constitute a waiver of or otherwise affect any rights or


 


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remedies of the Administrative Agent or any
Lender under any of the Loan Documents, nor alter, modify, amend or in any way
affect any of the rights, remedies, obligations or any covenants of the
Borrower or the Parent contained in any of the other Loan Documents, all of
which are ratified and confirmed in all respects and shall continue in full
force and effect.


 


Section 4.              Representations and Warranties.  Each Loan Party hereby represents and
warrants to the Administrative Agent and the Lenders as follows:


 


(a)           Due Execution and Authorization;
Legal, Valid and Binding Obligation. 
This Amendment has been duly executed and delivered by such Loan
Party.  The execution and delivery and
performance by such Loan Party of this Amendment is within such Person’s
corporate powers and has been duly authorized by all necessary action on its
part.  This Amendment, the Credit
Agreement as amended hereby and all other Loan Documents to which such Person
is a party constitute the legal, valid and binding obligations of such Person,
enforceable against such Person in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).


 


(b)           No Legal Bar.  The execution and delivery by such Loan Party
of this Amendment and the performance by such Person of this Amendment and the
Credit Agreement as amended hereby, will not violate any Requirement of Law or
any Contractual Obligation of such Loan Party or any of its Subsidiaries and
will not result in, or require, the creation or imposition of any Lien on any
of their respective properties or revenues pursuant to any Requirement of Law
or any such Contractual Obligation, except to the extent such violation or Lien
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.


 


(c)           Representations and Warranties in
Loan Documents.  All representations
and warranties of each Loan Party set forth in the Credit Agreement and in any
other Loan Document are true and correct in all material respects on and as of
the date hereof to the same extent as though made on and as of such date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date.


 


(d)           No Default.  No Default or Event of Default has occurred
and is continuing.


 


Section 5.              Ratification.  Except as expressly amended or waived hereby,
the Credit Agreement, the other Loan Documents and all documents, instruments
and agreements related thereto, are hereby ratified and confirmed in all
respects and shall continue in full force and effect.  The Credit Agreement, together with this
Amendment, shall be read and construed as a single agreement.  All references in the Loan Documents to the
Credit Agreement or any other Loan Document shall hereafter refer to the Credit
Agreement or any other Loan Document as amended hereby.


 


Section 6.              Counterparts; Integration;
Effectiveness.  This Amendment
may be executed in counterparts (and by different parties hereto in different
counterparts), each


 


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of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.  Delivery of an executed
counterpart of a signature page to this Amendment by telecopier (or electronic
mail (in PDF format)) shall be effective as delivery of a manually executed
counterpart of this Amendment.


 


Section 7.              Miscellaneous.  This Amendment constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersedes
any prior understandings or agreements which may have existed with respect
thereto.  Except as expressly provided
herein, this Amendment shall not, by implication or otherwise, limit, impair,
constitute a waiver of or otherwise affect any rights or remedies of the
Administrative Agent or any Lender under the Credit Agreement or the other Loan
Documents, nor alter, modify, amend or in any way affect any of the obligations
or covenants contained in the Credit Agreement or any of the other Loan Documents,
all of which are ratified and confirmed in all respects and shall continue in
full force and effect.  To the extent
there is any inconsistency between the terms and provisions of any Loan
Document and the terms and provisions of this Amendment, the terms and
provisions of this Amendment shall govern. 
The headings used in this Amendment are for convenience of reference
only and shall not in any way be deemed to limit, define or describe the scope
and intent of this Amendment or any provision hereof.  This Amendment shall be binding upon and
inure to the benefit of the Administrative Agent, each of the Lenders and each
of the Loan Parties, and to each of their respective successors in title and
assigns.  This Amendment may not be
modified or amended except in a manner permitted by Section 10.1 of the
Credit Agreement.  In making proof of
this Amendment, it shall not be necessary to produce or account for more than
one such counterpart.


 


Section 8.              Costs and Expenses.  Pursuant to Section 10.5 of the Credit
Agreement, all reasonable out-of-pocket costs and expenses incurred or
sustained by the Administrative Agent in connection with this Amendment,
including all Attorney Costs of the Administrative Agent in producing,
reproducing and negotiating this Amendment, will be for the account of the
Borrower whether or not this Amendment is consummated.


 


Section 9.              Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY).


 


[Remainder of page intentionally blank.]


 


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


 


	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  ONEBEACON U.S. HOLDINGS, INC. (f/k/a

  Fund American Companies, Inc.)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Mills

  
	
   

  	
  Name: Todd Mills

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  Parent:

  
	
   

  	
   

  
	
   

  	
  ONEBEACON INSURANCE GROUP, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Mills

  
	
   

  	
  Name: Todd Mills

  
	
   

  	
  Title: Treasurer

  
				



 

















 


	
   

  	
  BANK OF AMERICA, N.A.,
  as

  	
   

  
	
   

  	
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aamir Saleem

  
	
   

  	
  Name: Aamir Saleem

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  
				



 

















 


	
   

  	
  BANK OF AMERICA, N.A.,
  as

  
	
   

  	
  a Lender, Issuing Lender and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ James H. Harper

  
	
   

  	
  Name: James H. Harper

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  LEHMAN BROTHERS BANK, FSB,
  as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s Brian Halbelsen

  
	
   

  	
  Name: Brian Halbelsen

  
	
   

  	
  Title: Vice President and Credit Officer

  



 

















 


	
   

  	
  THE BANK OF NEW YORK,
  as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey R. Dickson

  
	
   

  	
  Name: Jeffrey R. Dickson

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  THE BANK OF TOKYO-MITSUBISHI UFJ.

  LTD., NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott Schaffer

  
	
   

  	
  Name: Scott Schaffer

  
	
   

  	
  Title: Authorized Signatory

  



 
















 


	
   

  	
  DEUTSCHE
  BANK AG NEW YORK

  BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Richard Herder

  
	
   

  	
  Name: Richard Herder

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Michael Campites

  
	
   

  	
  Name: Michael Campites

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  HSBC BANK
  USA, N.A., as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jimmy Tse

  
	
   

  	
  Name: Jimmy Tse

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  ROYAL
  BANK OF CANADA, as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evan Glass

  
	
   

  	
  Name: Evan Glass

  
	
   

  	
  Title: Authorized
  Signatory

  



 

















 


	
   

  	
  MELLON
  BANK, N.A., as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey R. Dickson

  
	
   

  	
  Name: Jeffrey R. Dickson

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  PNC BANK, as

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward J. Chidiac

  
	
   

  	
  Name: Edward J. Chidiac

  
	
   

  	
  Title: Managing Director

  



 

















 


	
   

  	
  THE ROYAL
  BANK OF SCOTLAND,

  PLC, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: GREENWICH CAPITAL
  MARKETS,

  INC., as agent for The Royal Bank of

  Scotland plc

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Howes

  
	
   

  	
  Name: David Howes

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  STATE
  STREET BANK AND TRUST

  COMPANY, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward M. Anderson

  
	
   

  	
  Name: Edward M. Anderson

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION, as a
  Lender

  
	
   

  	
  By:

  	
  /s/ Thomas W. Doddridge

  
	
   

  	
  Name: Thomas W. Doddridge

  
	
   

  	
  Title: Senior Vice
  President

  



 

















 


	
   

  	
  WACHOVIA
  BANK, NATIONAL

  ASSOCIATION, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michelle S. Dagenhart

  
	
   

  	
  Name: Michelle S.
  Dagenhart

  
	
   

  	
  Title: Vice President

  



 

















 


	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark M. Cisz

  
	
   

  	
  Name: Mark M. Cisz

  
	
   

  	
  Title: Executive Director