exv10w1w26



 




EXHIBIT 10.1.26




THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION THEREUNDER.




AEON INSURANCE GROUP, INC.




Promissory Note




	 	 	 	 	 
	$1,000,000.00

	 	 	 	 
	

	 	 	 	September 30, 2004
	 

	 	 	 	New York, New York







          1. General. AEON INSURANCE GROUP, INC., a C Corporation (the
“Company”), for value received, hereby promises to pay to the order of
SPECIALTY UNDERWRITERS’ ALLIANCE, INC. (the “Holder”), the principal sum of one million dollars
($1,000,000), without interest, in installments as follows: $50,000 due and payable at the closing of a Qualified Equity Offering (as
defined herein), $50,000 due and payable 180 days after the closing of a
Qualified Equity Offering, $100,000 due and payable on the one year anniversary
after the closing of a Qualified Equity Offering (the “Anniversary”), $150,000
due and payable 180 days after the Anniversary and $650,000 due and payable on
the two year anniversary after the closing of a Qualified Equity Offering.
For purposes hereof, a “Qualified Equity Offering” shall mean a private equity offering of the
capital stock of the Holder or an initial public offering of shares of the
Holder pursuant to an effective registration statement under the Securities Act
of 1933, as amended, other than pursuant to a registration statement on Form
S-4 or Form S-8 or any successor or similar form, in each case in which the
proceeds to the Holder are not less than $100,000,000, before deduction of
underwriting commissions, placement agent fees or similar charges, and other
offering expenses.




               This note (the “Note”) is issued by the Company pursuant to that certain
Agreement, dated as of September 30, 2004 (the “Agreement”), between the Company
and the Holder with respect to the purchase by the Company from the Holder of
shares of the Holder’s Class B Common Stock, par value $.01 per share.



          2. Payment. Payments due hereunder shall be made to the Holder at
its address set forth in the Agreement or at such other address as it shall
have provided to the Company. In any case where a payment due under this Note
shall be due on a date that is not a business day, then the payment thereof
shall be made on the next succeeding business day, with the same force and
effect as if made on the payment due date. Payments due under this Note shall
be payable in lawful money of the United States of America. Each payment under
this



 









 





Note shall comprise principal and interest at the lowest rate necessary to
avoid imputed interest under the Internal Revenue Code of 1986, as
amended.




          3. Prepayment. This Note may be prepaid at any time with one (1)
business day’s prior written notice to the Holder, without penalty or premium.



          4. Events of Default. Upon the occurrence and during the
continuance of any of the following (each, an “Event of Default”), the Holder
may declare by notice to the Company any and all obligations of the Company
under the Note to be immediately due and payable, and in the case of any Event
of Default referred to in clause (c) below, any and all obligations of the
Company under the Note shall automatically become due and payable immediately
without notice or demand:



               (a) any default in any payment due (whether at stated maturity, by
acceleration or otherwise) under the Note, which default continues for a period
of three (3) days after the date on which a payment is due under the Note;



               (b) any representation or warranty of the Company in the Securities
Purchase Agreement, dated as of May 18th, 2004, by and among the Company and
the Holder (the “Purchase Agreement”) shall be untrue or incorrect in any
material respect as of the date when made;



               (c) commencement by or against the Company of any case, proceeding or
other action under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with respect
to the Company, or seeking to adjudicate the Company a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to the Company or any of
its debts, or seeking appointment of a receiver, trustee, custodian or other
similar official for the Company or any substantial part of its assets, or a
general assignment by the Company for the benefit of its creditors, or
commencement against the Company of any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of the assets of the Company that
results in the entry of an order for any such relief, or the Company’s taking
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this clause (c), or the Company’s
inability, or admitting in writing its inability, to pay its debts as they
become due, or generally not paying its debts as they become due; and



               (d) dissolution or liquidation of the business of the Company or
suspension of the usual business of the Company for a period of thirty (30)
consecutive days.



          5. Unconditional Obligation, Waivers, Other.



               (a) The obligations to make the payments provided for in this Note are
absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever.



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               (b) No forbearance, indulgence, delay or failure to exercise any right or
remedy with respect to this Note shall operate as a waiver, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
right or remedy preclude any other or further exercise thereof or the exercise
of any right or remedy.



               (c) The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of protest,
bringing of suit, and diligence in taking any action to collect amounts called
for hereunder, and shall be directly and primarily liable for the payment of
all sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called
for hereunder or in connection with any right at any and all times that the
Holder had or is existing hereunder.



          6. Miscellaneous.



               (a) Amendment and Modification. This Note shall not be changed, modified
or amended except pursuant to a written agreement between the parties hereto.



               (b) Severability. If any provision of this Note shall be held to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Note, and this
Note shall be construed as if any invalid, illegal or unenforceable provisions
had not been contained herein.



               (c) Successors and Assigns. Subject to the restrictions on transfer
described in the Purchase Agreement, the rights and obligations of the Company
and the Holder of this Note will be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.



               (d) Headings. The headings of this Note are for convenience only and
shall not control or affect the meaning or construction of any provisions
hereof.



               (e) Lost or Stolen Note. If this Note is mutilated, lost, stolen or
destroyed, the Company may issue a new Note of like form and maturity to the
Holder upon presentment and surrender of the mutilated Note in the case of
mutilation, and upon receipt of evidence of loss, theft or destruction and of
indemnity in all other cases, each in form satisfactory to the Company.



               (f) Governing Law. This Note and all actions arising out of or in
connection with this Note will be governed by and construed in accordance with
the laws of the State of New York without reference to its conflicts of laws
provisions.



[SIGNATURE PAGE FOLLOWS]




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          IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.


	 	 	 	 	 
	 	AEON INSURANCE GROUP, INC.

 	 
	 	By:  	/s/ Lee Wendleton
 	 
	 	 	Name:  	Lee Wendleton 	 
	 	 	Title:  	President 	 
	 





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