exv10w1



 





EXHIBIT 10.1




FOURTH AMENDMENT TO CREDIT AGREEMENT




     THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth Amendment”), is made on this
10th day of April, 2007, by and between MEADOWBROOK INSURANCE GROUP, INC. (the “Company”),
MEADOWBROOK, INC., (“Meadowbrook”), CREST FINANCIAL CORPORATION (“Crest” and,
collectively, with Meadowbrook, the “Guarantors”), and LASALLE BANK MIDWEST NATIONAL
ASSOCIATION, a national banking association (the “Lender”), and is based upon the
following:



Recitals




     A. Company executed and delivered to Lender’s predecessor-in-interest, Standard Federal Bank
National Association, a certain Revolving Note (the “Promissory Note”), a certain Credit
Agreement (the “Credit Agreement”) and other related documents (together with the
Promissory Note and the Credit Agreement, collectively, the “Loan Documents”), each dated
as of November 12, 2004, evidencing, securing or relating to a certain revolving loan from Lender
to Company in an amount not to exceed Twenty-Five Million and 00/100 Dollars ($25,000,000.00) (the
“Loan”).



     B. In connection with the Credit Agreement, the Guarantors executed certain Guaranties dated
as of November 12, 2004, to and for the benefit of Lender (collectively, the “Guaranties”).



     C. On or about May 20, 2005, Company executed and delivered to Lender a certain Amendment to
Credit Agreement (the “First Amendment”), modifying the financial covenants applicable to
the Loan.



     D. On or about September 8, 2005, Company executed and delivered to Lender a certain Second
Amendment to Credit Agreement (the “Second Amendment”), further modifying the Loan
Documents.



     E. On or about December 28, 2005, Company executed and delivered to Lender a certain Third
Amendment to Credit Agreement (the “Third Amendment”), further modifying the Loan
Documents.



     F. Company, Guarantors and Lender desire to amend the terms of the Loan Documents, as more
particularly provided herein.



     G. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in
the Loan Documents.



Agreement




     Now, therefore, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by each of Lender, Guarantors and Company and further, in
consideration of the mutual covenants, promises, and agreements and subject to the terms,
provisions, and conditions contained herein, the parties hereto hereby agree as follows:



 









 






	1.	 	Credit Agreement.





     (a) Section 1.1 of the Credit Agreement is hereby amended by replacing the pricing
matrix set forth in the definition of “Applicable Margin” with the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	A.M. Best	 	 	 	 	 	Base Rate	 	Non-Use	 	L/C Fee
	Level	 	Rating	 	LIBOR Margin	 	Margin	 	Fee Rate	 	Rate
	I
	 	 	A	 	 	75 bps	 	(125) bps	 	10 bps	 	 	.75	%
	II
	 	 	A-	 	 	100 bps	 	(100) bps	 	15 bps	 	 	1.00	%
	III
	 	 	B++	 	 	125 bps	 	(75) bps	 	15 bps	 	 	1.25	%
	IV
	 	 	B+	 	 	175 bps	 	(25) bps	 	25 bps	 	 	1.75	%






     In addition to the foregoing, all references to “Adjusted EBITDA” in the definition of
“Applicable Margin” in Section 1.1 of the Credit Agreement shall be replaced in their
entirety with “A.M. Best Rating”. The Applicable Margin shall be based on the A.M. Best
rating of the Company’s Insurance Subsidiaries, in accordance with the above pricing matrix.



     (b) Section 1.1 of the Credit Agreement is hereby further amended by replacing the
current definition of “Revolving Commitment” with the following:




     Revolving Commitment means $35,000,000, as reduced from time to time
pursuant to Section 6.1.



     (c) Section 1.1 of the Credit Agreement is hereby further amended by replacing the
current definition of “Swing Line Commitment Amount” with the following:




     Swing Line Commitment Amount means $3,500,000, as reduced from time to
time pursuant to Section 6.1, which commitment constitutes a subfacility of
the Revolving Commitment of the Swing Line Lender.



     (d) Section 1.1 of the Credit Agreement is hereby further amended by replacing the
current definition of “Termination Date” with the following:




     Termination Date means the earlier to occur of (a) September 30, 2010
or (b) such other date on which the Commitments terminate pursuant to Section
6 or 13, or otherwise pursuant to this Agreement or the other Loan
Documents.



     (e) Section 2.1.2 of the Credit Agreement is hereby amended by replacing the entirety
of said Section with the following:



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     2.1.2 L/C Commitment. Subject to Section 2.3.1, the Issuing
Lender agrees to issue letters of credit, in each case containing such terms and
conditions as are permitted by this Agreement and are reasonably satisfactory to the
Issuing Lender (each, a “Letter of Credit”), at the request of and for the
account of the Company from time to time before the scheduled Termination Date and,
as more fully set forth in Section 2.3.2, Lender agrees to purchase a
participation in each such Letter of Credit; provided that (a) the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed $3,500,000 and
(b) the Revolving Outstandings shall not at any time exceed Revolving Loan
Availability (less the amount of any Swing Line Loans outstanding at such time).




	2.	 	Promissory Note.





     (a) The Revolving Loan Maturity Date set forth in the Promissory Note is hereby
extended to September 30, 2010.



     (b) The reference to “TWENTY-FIVE MILLION and 00/100 DOLLARS ($25,000,000.00)” in the
Promissory Note is hereby deleted in its entirety and replaced with “THIRTY-FIVE MILLION and
00/100 DOLLARS ($35,000,000.00)”.



     (c) Except as specifically modified or amended by this Fourth Amendment, the Promissory
Note, and all of the terms, covenants, conditions, and provisions thereof, are hereby
ratified and confirmed in their entirety and shall remain in full force and effect.



     (d) Lender is hereby authorized to place a notation on the Promissory Note that it has
been amended by this Fourth Amendment.




	3.	 	Reaffirmation of Guaranties. Each of the Guarantors hereby expressly:





     3.1 consents to the execution by the Company and Lender of this Fourth Amendment;



     3.2 acknowledges that the “Guaranteed Debt” (as defined in each of the Guaranties)
includes all of the obligations and liabilities owing from time to time by the Company to
Lender, including, but not limited to, the obligations and liabilities of the Company to the
Lender under and pursuant to the Credit Agreement, as amended from time to time, and as
evidenced by the Note, as modified, extended and/or replaced from time to time;



     3.3 acknowledges that such Guarantor does not have any set-off, defense or counterclaim
to the payment or performance of any of the obligations of the Company under the Credit
Agreement or such Guarantor under his or its respective Guaranty, as the case may be;



     3.4 reaffirms, assumes and binds itself or himself, as the case may be, in all respects
to all of the obligations, liabilities, duties, covenants, terms and conditions that are
contained in his or its respective Guaranty, as the case may be;



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     3.5 agrees that all such obligations and liabilities under his or its respective
Guaranty, as the case may be, shall continue in full force and that the execution and
delivery of this Fourth Amendment to, and its acceptance by, Lender shall not in any manner
whatsoever:




     (a) impair or affect the liability of any Guarantor to Lender under his or its
respective Guaranty, as the case may be,




     (b) prejudice, waive, or be construed to impair, affect, prejudice or waive the
rights and abilities of Lender at law, in equity or by statute, against any
Guarantor pursuant to their respective Guaranty, and/or




     (c) release or discharge, nor be construed to release or discharge, any of the
obligations and liabilities owing to Lender by any Guarantor under their respective
Guaranty; and



     3.6 represents and warrants that each of the representations and warranties made by
such Guarantor in any of the documents executed in connection with the Loans remain true and
correct as of the date hereof.




	4.	 	Loan Documents.





     (a) Except as specifically modified or amended by the First Amendment, Second
Amendment, Third Amendment or this Fourth Amendment, the Loan Documents, and all of the
terms, covenants, conditions, and provisions thereof, are hereby ratified and confirmed in
their entirety and shall remain in full force and effect.



     (b) The Loan Documents are hereby ratified and affirmed by Company and shall remain in
full force and effect as modified herein. Any property or rights to or interests in
property granted as security in the Loan Documents shall remain as security for the Loan and
the obligations of Company in the Loan Documents.




	5.	 	Company’s Representations and Warranties.





     (a) No default, event of default or event of acceleration under any of the Loan
Documents, as modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default, an event of default or event of acceleration under the
Loan Documents, as modified herein, has occurred and is continuing.



     (b) There has been no material adverse change in the financial condition of Company or
any other person whose financial statement has been delivered to Lender in connection with
the Loan from the most recent financial statements received by Lender.



     (c) Each and all representations and warranties of Company in the Loan Documents are
accurate on the date hereof, continue to be satisfied in all respects and are valid and
binding obligations with the same force and effect as if entirely restated in this Fourth
Amendment.



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     (d) Company has no claims, counterclaims, defenses or set-offs with respect to the Loan
or the Loan Documents, as modified herein.



     (e) The Loan Documents, as modified herein, are the legal, valid and binding
obligations of Company, enforceable against Company in accordance with their terms.




	6.	 	Company’s Covenants. Company covenants with Lender:





     (a) Company shall execute, deliver and provide to Lender such additional agreements,
documents and instruments as are reasonably required by Lender to effectuate the intent of
this Fourth Amendment.



     (b) Contemporaneously with the execution and delivery of this Fourth Amendment, Company
has paid to Lender:




     (i) All accrued and unpaid interest under the Promissory Note and all amounts,
other than interest and principal, due and payable by Company under the Loan
Documents as of the date hereof.




     (ii) All the external costs and expenses incurred by Lender in connection with
this Fourth Amendment (including, without limitation, outside attorneys and
appraisal, appraisal review, processing, title, filing and recording costs, expenses
and fees).




	7.	 	Miscellaneous.





     (a) Lender shall not be bound by this Fourth Amendment until (i) Lender has executed
and delivered this Fourth Amendment, and (ii) Company has performed all of the obligations
of Company under this Fourth Amendment to be performed contemporaneously with the execution
and delivery of this Fourth Amendment.



     (b) This Fourth Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective representatives, successors, and assigns; provided,
however, that Company may not assign any of its rights or delegate any of its obligations
under the Loan Documents and any purported assignment or delegation shall be void.



     (c) The invalidity or unenforceability of a particular provision of this Fourth
Amendment shall not affect the other provisions hereof, and this Fourth Amendment shall be
construed in all respects as if such invalid or unenforceable provision were omitted.



     (d) The Loan Documents, as modified herein, contain the complete understanding and
agreement of Company and Lender in respect of the Loan and
supersede all prior representations, warranties, agreements, arrangements,
understandings and negotiations. No provision of the Loan Documents, as modified herein,
may be changed, discharged, supplemented, terminated or waived except in a writing signed by
the parties thereto.



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     (e) This Fourth Amendment shall be governed by and construed in accordance with the
laws of the State of Michigan, without giving effect to conflicts of law principles that
would require the application of the laws of another state.



     (f) This Fourth Amendment shall be deemed controlling in the event of any
inconsistency, ambiguity or conflict between the terms of this Fourth Amendment and the
terms contained in the Promissory Note, the Credit Agreement and the Loan Documents.



     (g) This Fourth Amendment may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and the same
document. Signature pages may be detached from the counterparts and attached to a single
copy of this Fourth Amendment to physically form one document.



[Remainder of Page Intentionally Left Blank]




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     The undersigned have executed this Fourth Amendment on the date first above written.



	 	 	 	 	 
	 	COMPANY:



MEADOWBROOK INSURANCE GROUP, INC.

 	 
	 	By:  	/s/ Karen Spaun
 	 
	 	 	Karen Spaun                  	 
	 	 	Its: Sr. VP, Treasurer & CFO 	 
	 
	 	GUARANTORS:



MEADOWBROOK, INC.

 	 
	 	By:  	/s/ Karen Spaun
 	 
	 	 	Karen Spaun          	 
	 	 	Its: Vice President 	 
	 
	 	CREST FINANCIAL CORPORATION

 	 
	 	By:  	/s/ Karen Spaun
 	 
	 	 	Karen Spaun        	 
	 	 	Its: CFO 	 
	 
	 	LENDER:



LASALLE BANK MIDWEST NATIONAL ASSOCIATION,

a national banking association

 	 
	 	By:  	/s/ Laura M. Kalil
 	 
	 	 	Laura M. Kalil 	 
	 	 	Its:      First Vice President 	 
	 




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