Exhibit 10.5
BUSINESS PURPOSE
DEMAND NOTE
$2,500,000.00 Southfield, Michigan
Dated: July 1, 2005
TERMS
Principal Sum: Two Million Five Hundred Thousand and
no/100 ($2,500,000.00) Dollars
Effective Interest Rate: Three Month LIBOR plus 5.20%
Commencement Date: June 30, 2005
Due Date: ON DEMAND
FOR VALUE RECEIVED and as provided in this Demand 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 demand. 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 demand, Debtor shall pay Lender interest on the unpaid principal balance
of the loan at the Effective Rate of Interest.
ALL OUTSTANDING PRINCIPAL, LATE PAYMENT CHARGES AND ACCRUED AND UNPAID
INTEREST SHALL BE DUE AND PAYABLE ON DEMAND.
This Note may be prepaid, in full or in part, at any time, without any
prepayment fee or penalty. All partial prepayments shall be applied against the
last accruing installment or amount due under this Note and no partial
prepayments shall affect the obligation of Debtor to continue making all
payments specified in this Note until the entire unpaid principal and all
accrued interest shall have been paid in full.
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 fifteen (15) 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.
The 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 on demand,
anything in this Note or any of the loan documents to the contrary
notwithstanding. Lender may demand payment at any time without advance notice to
Debtor.
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
legal proceeding; (b) an attorney is retained to represent the Lender in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Note or any loan document;
(c) an attorney is retained to protect or enforce any mortgage or lien securing
this Note; or (d) an attorney is retained to represent the Lender in any action
arising out of any claim by Debtor or any other person against the Lender which
would not have been asserted were it not for Lender's relationship with the
Debtor, then the Debtor shall pay to the Lender all costs and expenses and
actual attorney fees incurred by the Lender in addition to all other amounts due
under this Note.
Acceptance by Lender of any payment in an amount less than the amount then
due shall be deemed an acceptance on account only. No forbearance by Lender in
enforcing any of its rights under this Note, nor any renewal, extension, or
modification of any payment to be made under this Note, nor any acceptance by
Lender of any payment in an amount less than the amount then due under this Note
shall constitute a waiver of any of the terms of this Note or of any of Lender's
rights under this Note. The Lender shall not by any act of omission or
commission be deemed to waive any of its rights or remedies under this Note
unless such waiver is in writing and signed and delivered by an authorized
officer of the Lender and then only to the extent specifically set forth in the
writing. No waiver shall operate as a waiver of the same right or remedy on a
future occasion.
The rights, remedies, and benefits provided to the Lender in this Note and
in documents given to secure the payment of this Note shall be cumulative, and
shall not be exclusive of any other rights, remedies or benefits allowed by law
or equity, and may be exercised either successively or concurrently.
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It is the intention of Debtor and Lender to conform strictly to state and
federal usury laws applicable to this loan transaction in permitting the highest
rate of interest. Accordingly, the aggregate of all interest as determined under
applicable law, chargeable or receivable under this Note or otherwise in
connection with this loan transaction shall under no circumstances exceed the
maximum amount of interest permitted by law. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for in this
Note, or in any of the documents securing payment of this Note or otherwise
relating to this loan transaction then in such event (a) the provisions of this
paragraph shall govern and control, (b) neither the Debtor nor the Debtor's
successors and assigns or any other party liable for the payment of this Note
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the maximum permitted by law and (c) the Effective Interest Rate
shall be automatically subject to reduction to the maximum lawful contract rate
allowed under such laws, as now or subsequently construed by courts of
appropriate jurisdiction.
The term "Lender" includes any holder of this Note. If more than one party
signs, guarantees or acts as a surety for this Note, then the term "Debtor"
shall mean all of them and any one of them and their obligations under this Note
shall be joint and several.
The Debtor jointly and severally waives valuation and appraisement,
demand, notice of protest or protest, presentment for payment, notice of
nonpayment, dishonor and notice of dishonor and all other notices in connection
with the exercise or enforcement of the Lender's rights or remedies, or any
defense by reason of extension of time, renewals or other indulgences granted by
Lender with respect to the Debtor or any of the collateral securing this Note.
Debtor consents to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the Lender with respect to the payment or
other provisions of this Note and consents to the release of any collateral
given to secure the payment of this Note or of any part thereof, with or without
substitution. Debtor agrees that additional makers, accommodation parties, or
guarantors may become parties to this Note without notice to Debtor or affecting
Debtor's liability under this Note. The liability to Lender of each person or
entity signing this Note shall be absolute and unconditional, without regard to
the liability of any other person or entity.
The invalidity of any of the provisions in this Note shall not affect any
remaining provisions which can be given effect without the invalid provision. To
this end, the provisions of this Note are declared to be severable.
This Note is secured by a Security Agreement in All Assets of the Debtor,
the Unlimited Personal Guaranty of Renaissance Insurance Agency, Inc., the
Unlimited Guaranty of Cochrane & Porter Insurance Agency, Inc. and the Unlimited
Personal Guaranty of J. Bruce Cochrane and Janet H. Cochrane, his wife.
Reference is also made to the security documents for additional terms
relating to the transaction giving rise to this Note, the security given for
Note, and additional terms, agreements, representations and conditions of the
loan evidenced by this Note. If there is any express conflict between the terms
and provisions of this Note and those contained in any security document, the
terms and provisions of this Note shall govern and control.
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This Note has been delivered for value in Michigan, and shall be deemed
executed in the State of Michigan. The liability of the Debtor shall be governed
by, construed and enforced according to the laws of the State of Michigan.
"DEBTOR"
RENAISSANCE ALLIANCE INSURANCE SERVICES, LLC,
a Massachusetts limited liability company
By: /s/ J. Bruce Cochrane
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Its: President
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Federal Tax I.D. No.: 04-3456048
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