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EXHIBIT 10.36
BUSINESS PURPOSE
CONVERTIBLE NOTE
$6,000,000.00
Southfield, Michigan
Dated: December 20, 2005
TERMS
Principal Sum:
Six Million and no/100 ($6,000,000.00) Dollars
Effective Interest Rate:
Three Month LIBOR plus 5.20%
Commencement Date:
December 20, 2005
Due Date:
December 20, 2010
FOR VALUE RECEIVED and as provided in this Convertible Note
("Note")
the undersigned, including all endorsers ("Debtor"), jointly and
severally
promise(s) to pay to the order of MEADOWBROOK INSURANCE GROUP,
INC., a Michigan
corporation (or any holder of this Note, which collectively are
referred to as
"Lender") at its offices located at 26255 American Drive,
Southfield, Michigan
48034 or such other place as Lender may designate in writing, the
Principal Sum
together with interest as provided in this Note.
The unpaid indebtedness under this Note shall be repayable to
Lender in
lawful money of the United States of America, and all principal
indebtedness
shall bear interest on the basis of a year of 360 days for the
actual number of
days elapsed at a rate of interest equal to the "Effective Interest
Rate" before
demand, and at the Effective Interest Rate plus three (3%) percent
per annum
("Maturity Rate") after an Event of Default (as defined in that
certain Loan and
Security Agreement dated December 20, 2005 between Borrower and
Lender [the
"Loan Agreement"]). Interest shall accrue from the date the Lender
disburses the
loan proceeds, whether disbursed to the Debtor, for the benefit of
Debtor, or to
a third party designated by Debtor.
Beginning on the Commencement Date and continuing on the same day
(or,
if there is no "same day," the last day of the month) of each
subsequent month
until an Event of Default, Debtor shall pay Lender interest on the
unpaid
principal balance of the loan at the Effective Interest Rate.
ALL OUTSTANDING PRINCIPAL, LATE PAYMENT CHARGES AND ACCRUED AND
UNPAID
INTEREST SHALL BE DUE AND PAYABLE ON THE DUE DATE.
This Note may not be prepaid, in full or in part, at any time,
except
as provided in the Loan Agreement without the express written
consent of Lender,
which consent may be withheld in Lender's sole and absolute
discretion.
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All payments made under this Note shall be applied in the
following
order: First to late payment charges, then to interest, then to
advances and
last to principal. The Debtor acknowledges the payments required
under this Note
might not fully amortize the indebtedness evidenced by the Note and
the final
payment due at the Due Date accordingly might be a balloon payment
comprising
all the outstanding principal, late payment charges, advances and
interest then
due.
The Lender will credit any payment made by mail or night
depository
only upon the day of actual receipt by Lender, whether or not
Lender has
authorized payment by mail. Debtor expressly assumes all risks of
loss or
liability resulting from non-delivery or delay in delivery of any
payment
transmitted by mail, and no course of conduct or dealing shall
affect Debtor's
assumption of these risks.
If any payment due under this Note shall become overdue for a
period in
excess of five (5) days and for which the Maturity Rate is not in
effect, the
Debtor shall pay to the Lender a "late payment charge" equal to
four (4%)
percent of the delinquent payment to defray the expense incidental
to handling
such delinquent payment and not as a penalty. Acceptance of payment
of a late
payment charge shall not waive any default under this Note.
Upon the occurrence of an Event of Default (as defined in the
Loan
Agreement), this Note and all other obligations and indebtedness of
the Debtor
to the Lender, whether absolute or contingent, direct, present or
future, and
however evidenced, shall become and shall be immediately due and
payable.
If: (a) this Note or any loan document is referred to an attorney
after
demand for collection or enforcement or is collected or enforced
through any
