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EXHIBIT 10.10(1)
PROMISSORY NOTE
Borrower: IGF Holdings, Inc. (TIN: ) Lender: Union Federal Savings Bank
4720 Kingsway Drive of Indianapolis
Indianapolis, IN 46205 Private Banking Department
45 N. Pennsylvania
Suite 600
Indianapolis, IN 46204
Principal Amount: $7,500,000.00 Date of Note: April 29, 1996
PROMISE TO PAY. IGF Holdings, Inc. ("Borrower") promises to pay to Union Federal
Savings Bank of Indianapolis ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Seven Million Five Hundred Thousand &
00/100 Dollars ($7,500,000.00), together with interest on the unpaid principal
balance from April 29,1996, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule:
2 consecutive quarterly interest payments, beginning July 1,
1996, with interest calculated on the unpaid principal balances at an
interest rate of 0.00 percentage points over the index described below;
17 consecutive quarterly interest payments, beginning January 1, 1997,
with interest calculated on the unpaid principal balances at an
interest rate of 1.000 percentage points over the Index described
below; 15 consecutive quarterly principal payments of $468,750.00 each,
beginning April 1, 1997, with interest calculated on the unpaid
principal balances at an interest rate of 1.000 percentage points over
the Index described below; and 1 principal payment of $468,750.00 on
January 1, 2001, with interest calculated on the unpaid principal
balances at an interest rate of 1.000 percentage points over the Index
described below. This estimated final payment is based on the
assumption that all payments will be made exactly as scheduled and that
the Index does not change; the actual final payment will be for all
principal and accrued interest not yet paid, together with any other
unpaid amounts under this Note.
Interest on this Note is computed on a 30/360 simple interest basis; that is,
with the exception of odd days in the first payment period, monthly interest is
calculated by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by a month of
30 days. Interest for the odd days is calculated on the basis of the actual days
to the next full month and a 360-day year. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining amount to
any unpaid collection costs and late charges.
DEMAND FEATURE. In the event of an Initial Public Offering (IPO) of the stock of
Borrower or Symons International Group, Inc., or a secondary offering of Goran
Capital, Inc., all outstanding principal and accrued unpaid interest on this
Note shall become due and payable. In the event there is no Initial Public
Offering or secondary offering as contemplated above, then with respect to that
certain Subordinated Promissory Note from Borrower to Pafco General Insurance
Company dated April 29, 1996, and subject to the Subordination and Intercreditor
Agreement of the same date, Borrower hereby agrees that payment in full of the
Subordinated Promissory Note will be made from the proceeds from a capital
infusion. Should Borrower fail to demonstrate the infusion of capital for the
express purpose of payment of the Subordinated Promissory Note, then the entire
balance of principal together with the accrued, unpaid interest shall become due
and payable November 29, 1996. Further, the failure to make a payment due under
the Subordinated Promissory Note from Borrower to Pafco General Insurance
Company dated the date hereof within thirty (30) days of the date such payment
is due will constitute an event of default under this Agreement for all purposes
under this Agreement. Such an event of default will not be waived by the Lender,
all Indebtedness hereunder will become automatically due and payable and the
Lender will exercise its rights and remedies under the Commercial Pledge and
Security Agreement, dated the date hereof, with respect to the shares of IGF
Insurance Company.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the The Wall
Street Journal Prime Rate (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notice to
Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates as
well. The interest rate change will not occur more often than each day. The
Index currently is 8.250% per annum. The interest rate or rates to be applied to
the unpaid principal balance of this Note will be the rate or rates set forth
above in the "Payment" section. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
Whenever increases occur in the interest rate, Lender, at its option, may do one
or more of the following: (a) increase Borrower's payments to ensure Borrower's
loan will pay off by its original final maturity date, (b) increase Borrower's
payments to cover accruing interest, (c) increase the number of Borrower's
payments, and (d) continue Borrower's payments at the same amount and increase
Borrower's final payment.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due
and may result in Borrower making fewer payments.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
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LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note by 2.000
percentage points. The interest rate will not exceed the maximum rate permitted
by applicable law. Lender may hire or pay someone else to help collect this Note
if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. If not prohibited by applicable
law, Borrower also will pay any court costs, in addition to all other sums
provided by law. This Note will be repaid under all circumstances without relief
from any Indiana or other valuation and appraisement laws. This Note has been
delivered to Lender and accepted by Lender in the State of Indiana. If there is
a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction
of the courts of Marion County, the State of Indiana. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of Indiana.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $19.00 if Borrower
makes a payment on Borrowers loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts, and, at Lender's option, to administratively freeze all such
accounts to allow Lender to protect Lender's charge and setoff rights provided
on this paragraph.
COLLATERAL. This Note is secured by Security Agreements from IGF Holdings, Inc.,
Borrower, and Symons International Group LTD, Grantor, to Lender dated April 29,
1996.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL
THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE AND
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
IGF Holdings, Inc.
By: /s/ Douglas H. Symons
Douglas H. Symons, Vice President