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EXHIBIT 10.15(2)
THE PURCHASE or PROMISSORY NOTE AND ASSIGNMENT OF SECURITY AGREEMENT
made as of the 30th day of September 1992
BY AND BETWEEN PAFCO GENERAL INSURANCE COMPANY, a corporation duly
constituted pursuant to the laws of the State of
Indiana having its head office in the City of
Indianapolis (hereinafter referred to as "Pafco")
AND GRANITE REINSURANCE COMPANY LTD. a corporation duly
constituted pursuant to the laws of Barbados having its
head office in the City of Bridgetown, Barbados
(hereinafter referred to as "Granite Re")
WHEREAS Cliffstan Investments, Inc. is a corporation duly incorporated
under the laws of the State of Nevada with offices situated in the City of Las
Vegas, State of Nevada (hereinafter referred to as "Cliffstan");
AND WHEREAS Pafco did on or about the first day of September 1989 lend
to Cliffstan the sum of $1,700,000 U.S. funds, the whole as evidenced by
promissory note dated September 1, 1989 a copy of which is attached hereto as
Schedule "A";
AND WHEREAS the above mentioned loan has been renewed from time to time to
expire the 30th day of September 1992, the whole as evidenced by copies of two
letters of renewal dated September 15, 1990 and June 25, 1991, respectively,
attached hereto as Schedule "B", the said Promissory Note and renewals being
collectively referred to as the "Pafco Promissory Note";
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AND WHEREAS as security for the above loan, Pafco received from Gage North
Holdings Inc., a corporation incorporated pursuant to the laws of Ontario
having its head office in the City of Hamilton, Ontario (hereinafter referred
to as "Gage North") an unconditional guarantee of all amounts due to Pafco from
Cliffstan and as security for the said guarantee Pafco received a mortgage on
real property owned by Gage North, the whole as evidenced by a copy of the said
guarantee and mortgage attached hereto as Schedule "C", the said guarantee and
mortgage being hereinafter collectively referred to as the "Collateral
Security";
AND WHEREAS Granite Re now wishes to purchase the Pafco Promissory Note
together with the Collateral Security and Pafco wishes to sell same on the
terms and conditions outlined hereinbelow;
NOW THEREFORE this agreement witnesses that in consideration of the premises
and the covenants contained herein the parties hereto agree as follows:
Preamble
1. The preamble shall form part hereof as if fully recited at length.
Cliffstan Acknowledgment
2. The addendum attached hereto as Schedule "D" shall be
executed by Cliffstan acknowledging, inter alia, that the
Pafco Promissory Note is now payable on written demand in
the principal amount of $2,045,201 U.S. funds, being the
original principal amount plus accrued and outstanding
interest of $345,201.00 U.S.
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Purchase and Sale
3. Granite Re hereby purchases from Pafco and Pafco hereby without
recourse sells, transfers and assigns to Granite Re the Pafco
Promissory Note as amended and acknowledged by Cliffstan (Schedules
A and B and D), hereinafter collectively referred to as the "Promissory
Note", subject to the terms and conditions hereof.
Purchase Price
4. The purchase price payable by Granite Re to Pafco for the Promissory
Note is the principal amount of $2,045,201 plus interest commencing
October 1, 1992 on the outstanding principal amount accruing at the
simply interest rate of 7.8% per annum, all of which shall be paid in
accordance with the following schedule of payments:
(i) On or about September 30, 1992, Granite Re shall pay to Pafco the sum
of $345,201.00;
(ii) Interest shall be paid quarterly in arrears with the first such payment
due December 31, 1992; and
(iii) Principal payments shall be paid quarterly in the amount of
$200,000.00 per quarter, the first such payment to be made December
31, 1992, which payments shall continue until the full amount of the
principal has been paid (the last principal payment being adjusted
accordingly).
(iv) In the event that Granite Re fails to make any payment as required by
this paragraph 4 within sixty days from the date on which said payment
is due, Pafco may, at its option, declare the entire principal
balance then outstanding, together with all accrued and unpaid
interest, to be due and payable upon written notice to Granite Re that
it is making such declaration.
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Collateral security
5. Pafco shall retain title to the Promissory Note and
Collateral Security until such time as the full amount of the purchase
price has been paid by Granite Re. Until that time, Pafco acknowledges
and agrees that Granite Re has a beneficial interest in the Promissory
Note and Collateral Security to the extent and in the amount of the
payments made by Granite Re at any time.
6. At such time as the full amount of the purchase price has been paid,
Pafco agrees to transfer and assign to Granite Re the Promissory Note
and the Collateral Security held by Pafco.
Beneficial Interest
7. During the interim period until Granite Re has paid in full for the
Promissory Note, Pafco agrees that it will at all times recognize and
protect Granite Re's beneficial interest in the Collateral Security.
Granite Re hereby appoints Pafco, and Pafco accepts such appointment,
as trustee to act on its behalf in respect to its interest in the
Collateral Security until such time as the purchase price has been
paid in full.
Right of Action
8. Pafco shall have the right to initiate and maintain any demand,
claim, action, suit, cause of action or other right available to it in
law in respect to the Promissory Note and the Collateral Security for
the full amount of the Promissory Note as remains outstanding from
time to time (plus outstanding interest, fees and expenses),
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regardless of how much of the purchase price has been paid by Granite
Re, until such time as the purchase price has been paid in full,
subject to distribution of any proceeds from any realization in
accordance with the provisions hereof.
Proceeds of Realization
9. In the event of any realization in respect to the Collateral Security
held by Pafco, then the parties agree that Pafco is to first use the
proceeds from any such realization to pay in full the outstanding
principal and interest due to it and fees and expenses incurred in the
said realization and then any surplus shall be paid to Granite Re to
the extent of all payments made by Granite Re to Pafco to the date of
such realization. Any funds remaining thereafter shall be paid to
Cliffstan or Gage North as the case may be.
Payments by Cliffstan
10. In the event that Cliffstan makes any payments pursuant to its
obligations under the Promissory Note, then such payments shall be
made to Pafco until such time as the purchase price has been paid in
full and shall first be applied by Pafco to satisfy outstanding
interest due and thereafter to reduce the outstanding principal amount
owed. The purchase price to be paid by Granite Re shall be adjusted
accordingly and at such time as the full amount of the purchase price
has been paid, the parties agree that the Promissory Note and
Collateral Security shall be duly assigned to Granite Re and all
further payments from Cliffstan shall be made to Granite Re, first to
be applied in reduction of outstanding interest.
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Covenants by Pafco
11. Pafco hereby covenants, represents and warrants to
Granite Re as follows:
a) The Pafco Promissory Note is owned by Pafco with good and marketable
title, free and clear of all charges and encumbrances and restrictions
whatsoever.
b) There are no claims, actions, suits, requests, investigations or
proceedings outstanding regarding the Pafco Promissory Note.
c) The sale, transfer and assignment of the Promissory Note by Pafco will
not violate or result in any default under any agreement or any
statute, regulation, order or law to which Pafco is a party or subject
to which Pafco is bound.
d) The mortgage charge on Gage North real property and the Assignment of
Mortgage are and will be valid obligations in favour in Pafco and
Granite Re, respectively, and Pafco has all the power, capacity and
authority to transfer and assign same.
Covenants by Granite Re
12. Granite Re hereby covenants, represents and warrants to Pafco as
follows:
a) Granite Re is a corporation duly incorporated and validly existing
under the laws of Barbados and has the requisite corporate capacity
and authority to purchase the Promissory Note from Pafco and to enter
into this agreement and to carry out the transactions contemplated
herein;
b) No consent, approval or authorization under any applicable law or any
governmental authority having
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jurisdiction is required in respect to the purchase of the Promissory
Note from Pafco and to enter into this agreement and to carry out the
transactions contemplated herein;
Survival of Covenants
13. The covenants, representations and warranties of Pafco and Granite Re
contained in this agreement and contained in any document given
pursuant hereto shall be true and correct, valid and enforceable after
this date and shall survive hereafter.
Entire Agreement
14. This agreement shall constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof. This
agreement supersedes any prior or contemporaneous contracts,
negotiations and discussions, of the parties in respect to the subject
matter hereof. No amendment, waiver or termination of this agreement
shall be binding unless executed in writing by the party to be bound
thereby and no such amendment or waiver shall extend to anything other
than the specific subject matter thereof.
Governing Law
15. This agreement shall be governed by and construed in accordance with
the laws of the State of Indiana.
Notice
16. Any notice provided for in this agreement shall be in writing directed
to the party to whom it is delivered and shall be delivered or given
at the following addresses:
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To Pafco
Pafco General Insurance Company
4720 Kingsway Drive
Indianapolis, Indiana
46205
Attention: Douglas H. Symons
To Granite Re
Granite Reinsurance Company
Collymore Rock
St. Michael, Barbados
West Indies
Attention: G. Gordon Symons
Each party may change its address for the purposes of this section
from time to time by giving written notice of such change to the other
parties in accordance with this section.
Other Actions
17. The parties hereto shall do all such things and provide all such
reasonable assurances as may be required to consummate the transaction
contemplated hereby and each party shall provide such further
documents or instruments required by the other party as may reasonably
be necessary or desirable to effect the purpose of this agreement and
carry out its provisions.
Execution in Counterparts
18. This agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts
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shall together constitute one and the same instrument. Execution by
facsimile transmission or other such electronic means shall be deemed
to be equivalent to the execution of the documents in their original
form, subject to the ultimate delivery and receipt of signed
originals.
IN WITNESS WHEREOF this agreement has been executed by the parties hereto by
their authorized representatives as of the date indicated hereinabove.
PAFCO GENERAL INSURANCE COMPANY GRANITE REINSURANCE COMPANY LTD.
Per: /s/ Douglas Symons Per: /s/ G. Symons
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This agreement and the terms and provisions hereof are hereby acknowledged and
accepted by the underesigned effective as of September 30, 1992. Gage North
hereby agrees that its guarantee dated September 1, 1989 shall continue in full
force and effect with respect to the Pafco Promissory Note as amended by the
Addendum which is attached-hereto as Schedule "D".
CLIFFSTAN INVESTMENTS INC. GAGE NORTH HOLDINGS INC.
Per: /s/ Cannot read signatures Per: /s/ Cannot read signatures
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