Document:

cnfr-ex1023_115.htm

 

Exhibit 10.23

 

PROMISSORY NOTE    

(Paycheck Protection Program Loan)

 

SBA Loan No. 48220270-08

Principal Amount $2,744,667.004/24/2020

 

FOR VALUE RECEIVED, the undersigned (“Borrower”), with an address of 550 W. Merrill St.

#200 Birmingham, MI 48009, promises to pay to the order of The Huntington National Bank (“Lender”, which term shall include any holder hereof) at such place as Lender may designate or, in the absence of such designation, at any of Lender’s offices, the sum of $2,744,667.00 (the “Principal Sum”) together with interest as hereinafter provided, and payable at the time(s) and in the manner(s) hereinafter provided.

 

INTEREST. Interest will accrue on the unpaid balance of the Principal Sum at the rate of 1.000% per annum and is computed on a simple interest 365/365 basis.

 

MANNER OF PAYMENT. The Principal Sum and accrued interest shall be repaid in eighteen installments of $153,691.49 beginning on 11/24/2020 and continuing on the same day of each month thereafter, with the final payment due on 4/24/2022 (the “Maturity Date”). Payments include principal and interest. On the Maturity Date, all unpaid principal and all accrued unpaid interest shall be due and payable.

 

The monthly payment amount specified above is based on the assumption that none of the Principal Sum is forgiven pursuant to Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (as amended, the “CARES Act”), its implementing regulations and Small Business Administration (“SBA”) rules.   If only part of the Principal Sum is forgiven in connection with the CARES Act, then after application of such forgiveness amount, the loan evidenced hereby shall be re-amortized and a new monthly payment amount shall be communicated to Borrower. In addition, the initial monthly payments made by Borrower shall be credited first to the interest that has accrued during the initial deferment period on any unforgiven portion of the Principal Sum until all accrued interest is paid.

 

This Note may be prepaid in full by Borrower at any time without penalty.

 

LATE CHARGE. If any payment is 11 days or more late, Borrower will be charged 5.00% of the regularly scheduled payment, to the extent permitted under applicable law and SBA rules.

 

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower makes a payment on the loan and the check or preauthorized charge with which Borrower pays is later dishonored, to the extent permitted under applicable law and the SBA rules.

 

NO COLLATERAL. The loan evidenced hereby is unsecured and, notwithstanding anything to the contrary therein, is not secured by any existing collateral documents executed by Borrower or any other person in favor of Lender with respect to any other loans or obligations of Borrower.

 

DEFAULT. Upon the occurrence of any of the following events:

 

(1) Borrower fails to pay any installment when due hereunder or to perform any obligation of

Borrower to Lender;

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(2) Borrower fails to furnish true and complete financial statements from time to time on request of

Lender;

 

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(3) the death of any individual Borrower;

 

(4) any representation, warranty, certification or other information given to Lender by Borrower proves to be false, untrue or misleading in any material respect; or

 

(5) the dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower;

 

then Lender may, at its option, without further notice or demand, accelerate the maturity of the obligations evidenced hereby, which obligations shall become immediately due and payable.  In the event Lender shall institute any action for the enforcement or collection of the obligations evidenced hereby, Borrower agree to pay all costs and expenses of such action, including reasonable attorneys’ fees, to the extent permitted by law.

 

ACKNOWLEDGEMENT; WAIVER AND RELEASE; HOLD HARMLESS.

 

In connection with all aspects of the loan evidenced by this Note (the “PPP Loan”), Borrower acknowledges and agrees, on behalf of itself and, as applicable, its shareholders, partners, members, officers, managers, directors and affiliates (collectively, together with the Borrower, the “Borrower Parties”), that: (a)(i) this Note is an arm’s-length commercial transaction between Borrower, on the one hand, and Lender, on the other hand, (ii) each Borrower Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, (iii) each Borrower Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of this Note, the PPP Loan and the Paycheck Protection Loan Borrower Application Form executed and delivered to Lender in connection with this Note (the “Application”) and (iv) each Borrower Party has made its own independent determination regarding (A) Borrower’s eligibility for the PPP Loan and the maximum permitted amount of the PPL Loan and (B) the ability of the Borrower Parties to make each of the representations, warranties and certifications made in the Application.  Borrower hereby represents and warrants to Lender that all information set forth in the Application, all other information provided to Lender, and all representations, warranties and certifications of the Borrower Parties set forth in the Application are true and correct. Lender has no obligation to any Borrower Party with respect to this Note or the PPP Loan except those obligations expressly set forth in this Note. Borrower, on behalf of itself and the other Borrower Parties, hereby waives and releases, and agrees to hold the Lender harmless from, any claims that any Borrower Party may have against Lender with respect to or arising out of this Note, the PPP Loan, the Application and the transactions evidenced thereby, including any breach or alleged breach of agency or fiduciary duty.

 

ELIGIBILITY FOR LOAN FORGIVENESS. By execution of this Note, Borrower acknowledges the NOTICE REGARDING ABILITY TO APPLY FOR LOAN FORGIVENESS attached hereto and made a part hereof.

 

AUTHORIZATION. Borrower represents and warrants to Lender that (A) Borrower is duly organized, validly existing, and in good standing under and by virtue of the laws of the state in which Borrower is organized; (B) Borrower is duly authorized to transact business in all other states in which Borrower is doing business, including registering as a foreign entity in any such states if necessary; (C) the execution, delivery, and performance of this Note on behalf of Borrower has been duly authorized and is not in conflict with Borrower’s articles of incorporation, articles of organization, partnership agreement, joint venture agreement, bylaws or code of regulations, operating agreement, or other similar agreement; and (D) the person(s) executing this Note has been duly authorized to do so. At least thirty (30) days prior to

 

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the occurrence of any of the following events, Borrower shall deliver to Lender written notice of such impending event:  (i) change in Borrower’s principal place of business or chief executive office or residence (if Borrower is an individual) or (ii) change in Borrower’s name, identity, or corporate structure.

 

WAIVER OF PRESENTMENT. Borrower hereby waives presentment, notice of dishonor, protest, notice of protest, and diligence in bringing suit against any party hereto.

 

FEES AND EXPENSES. Borrower agrees to pay all costs, expenses (including reasonable attorneys’ fees), and disbursements incurred by Lender (a) in all efforts made to enforce payment of the indebtedness represented by this Note, (b) in connection with entering into, modifying, amending, and enforcing this Note and all related agreements, documents and instruments, (c) in defending or prosecuting any actions or proceedings arising out of or relating to Lender’s transactions with Borrower under this Note, or (d) in connection with any advice given to Lender with respect to its rights and obligations under this Note and all related agreements.

 

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts, for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness hereunder against any and all such accounts.

 

WAIVER/AMENDMENT. No waiver of any term or condition of this Note shall be effective unless in writing and signed by the party giving or granting the waiver. No amendment of any term or condition of this Note shall be effective unless in writing and signed by Borrower and Lender. No failure or delay on the part of Lender in exercising any right, power or privilege under this Note, related loan documents or law nor any course of dealing, shall operate as a waiver of such right, power or privilege or preclude any other or further exercise thereof or of any other right, power or privilege.

 

PREFERENCE. Borrower agrees that, to the extent that Borrower makes a payment or payments to Lender, which payment or payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to Borrower, Borrower’s estate, trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the obligations under this Note or the part thereof which has been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred.

 

IMPORTANT INFORMATION ABOUT PROCEDURES REQUIRED BY THE USA PATRIOT ACT

 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each entity or person who opens an account or establishes a relationship with Lender.

 

What this means: When an entity or person opens an account or establishes a relationship with Lender, Lender may ask for the name, address, date of birth, and other information that will allow Lender to identify the entity or person who opens an account or establishes a relationship with Lender. Lender may also ask to see identifying documents for the entity or person.

 

WAIVER OF RIGHT TO TRIAL BY JURY. Borrower acknowledges that, as to any and all disputes that may arise between Borrower and Lender, the commercial nature of the transaction out of which this Note arises makes any such dispute unsuitable  for trial by jury. Accordingly, Borrower hereby

 

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waives any right to trial by jury as to any and all disputes that may arise relating to this Note, or to any of the instruments or documents executed in connection therewith.

 

SEVERABILITY; GOVERNING LAW. The captions used herein are for reference only and shall not be deemed a part of this Note. If any of the terms or provisions of this Note shall be deemed unenforceable, the enforceability of the remaining terms and provisions shall not be affected. This Note shall be governed by and construed in accordance with the law of the State of Ohio.

 

 

 

 

PRIOR  TO SIGNING THIS NOTE, BORROWER HAS READ AND UNDERSTANDS All THE PROVISIONS  OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

Borrower:

 

Conifer Holdings Inc.

 

 

 

By:                                                                   

 

 

Print Name and Title

 

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NOTICE REGARDING  ABILITY TO APPLY FOR LOAN FORGIVENESS

 

You are receiving a Paycheck Protection Program loan extended pursuant to Sections 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), any implementing regulations and U.S. Small Business Administration (the “SBA”) rules. Pursuant to Section 1106 of the CARES Act, some or all of the loan may be forgiven subject to satisfaction of certain conditions. You will be required to follow an application process to receive any loan forgiveness.

 

You will be eligible for forgiveness of the loan only in an amount  equal to the sum of the following costs incurred and payments made during the 8-week period beginning on the date the loan is made (the “covered period”):

 

o Payroll costs (as defined in Section 1102 of the CARES Act)

	
 
	
o 
	
Interest on any mortgage obligation incurred prior to  February 15, 2020 (does not include prepayment penalties or principal payments)
	
 

o Rent under any leasing agreement entered into prior to February 15, 2020

	
 
	
o 
	
Utilities for which service began prior to February 15, 2020 (electric, gas, water, transportation, telephone, internet service)
	
 

 

The SBA has stated that at least 75% of the requested forgiveness amount  must have been used to fund payroll costs.

 

In addition, the amount of any loan forgiveness will be reduced based on reductions in wages or the number of full-time equivalent employees compared to certain prior periods.  You have until June

30, 2020 to restore your full-time  employment  and  salary levels for any changes  made  between

February 15, 2020 and April 26, 2020.

 

When  you apply  for loan forgiveness,  the following documentation of use of the loan funds  for eligible expenses must be submitted:

	
 
	
o 
	
Proof of payment (copies of cancelled checks or evidence of electronic payment, transcript of account, or other documents verifying payment)
	
 

	
 
	
o 
	
Documentation verifying number of employees and pay rates for the applicable periods, including payroll reports, payroll tax filings reported to the Internal Revenue Service, and State income, payroll, and unemployment insurance filings
	
 

o Any other documentation required by SBA rules

 

 

Please refer to the CARES Act and SBA rules for complete rules and requirements regarding forgiveness of the loan.cnfr-ex1024_116.htm

Exhibit 10.24

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (“Amendment”), is made as of the 24th day of April, 2020, by and among CONIFER HOLDINGS, INC. (“Borrower”) and THE HUNTINGTON NATIONAL BANK (“Bank”).

 

RECITALS:

 

A.        Borrower and Bank entered into a Credit Agreement dated as of June 21, 2018, as amended by a First Amendment to Credit Agreement dated December 27, 2018 and a Second Amendment to Credit Agreement dated June 20, 2019 (and effective as of June 21, 2019) (“Agreement”).

 

 

B.Borrower and Bank desire to amend the Agreement, all as set forth below. NOW, THEREFORE, the parties agree as follows:

1.The following definitions are added to Section 1.1 of the Agreement to read as follows:

 

“CARES Act” means the Coronavirus Aid, Relief, and Economic Securities Act as in effect as of the date of this Amendment (or any amended or successor version that is substantively comparable and not materially more adverse to the interest of the Bank) and any current or future regulations or official interpretations thereto.

 

“Permitted Purposes” means the “Allowable Uses of Covered Loans” set forth in Section 7(a)(36)(F) of the Small Business Act, as in effect on the date hereof.

 

“PPP   Loan   Reserve”   shall   mean   an   amount   equal   to   the outstanding principal amount of the SBA PPP Loan.

 

“SBA” means the U.S. Small Business Administration.

 

“SBA PPP Loan” means a loan incurred by the Borrower under 15

U.S.C. 636(a)(36) (as added to the Small Business Act by Section 102 of the CARES Act).

 

“SBA PPP Loan Documents” means the loan agreement by and between the Borrower and Bank, together with each other agreement or document delivered in connection therewith from time to time, pursuant to which Bank agrees to make SBA PPP Loans to the Borrower in the aggregate amount not to exceed $6,160,000 on the terms and conditions set forth therein.

 

Bodman_16713974_1

 
 

“Small  Business  Act”  means  the  Small  Business  Act  (15  U.S. Code Chapter 14A – Aid to Small Business) after giving effect to the implementation of the CARES Act, as in effect of the date of this Amendment (or any amended or successor version that is substantively comparable and not materially more adverse to the interest of the Holders) and any current or future regulations or official interpretations thereof.”

 

2.Section 2.3(v) of the Agreement is amended to read as follows:

 

	
 
	
“(v)
	
after giving effect to such Advance, the aggregate principal amount  of  the  outstanding  Advances  plus  the  Letter  of Credit Reserve, plus the CC Reserve, plus the PPP Loan Reserve does not exceed the Borrowing Limit; and”
	
 

 

3.Section 2.7 of the Agreement is amended to read as follows:

 

“2.7      Reduction of Obligations. If at any time and for any reason the aggregate outstanding principal amount of Advances hereunder to Borrower plus the Letter of Credit Reserve plus the CC Reserve, plus the PPP Loan Reserve shall exceed the lesser of (i) the Revolving Credit Commitment   and   (ii)   the   Borrowing   Limit,   then   Borrower   shall immediately reduce any pending request for an Advance on such day by the amount of such excess and, to the extent any excess remains thereafter, immediately repay an amount of the Obligations equal to such excess. Borrower acknowledges that, in connection with any repayment required hereunder, it shall also be responsible for the reimbursement of any prepayment  or  other  costs  required  under  the  terms  of  the  Revolving Credit Note.”

	
 
	
4.
	
The following Section 8.17 is added to the Agreement to read as follows: “Section 7.17   SBAPPPLoans. Borrower shall:
	
 

 

(a)comply in all respects with the applicable requirements of the CARES Act;

 

(b)use all proceeds of the SBA PPP Loan exclusively for Permitted Purposes under the applicable provisions of the CARES Act (the “Applicable Provisions”);

 

(c)use its commercially reasonable efforts to conduct its business in a manner that maximizes the amount of the SBA PPP Loan that may be forgiven under the Applicable Provisions;

 

(d)maintain all records required to be submitted in connection with the forgiveness of the SBA PPP Loan and all records of the Borrower’s utilization of the proceeds of the SBA PPP Loan;

 

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Bodman_16713974_1

 
 

(e)apply for forgiveness of the SBA PPP Loan in accordance with the Applicable Provisions promptly following the first date on which the Borrower may apply for such forgiveness by submitting its application and all related supporting documentation required by the SBA or the lender providing the SBA PPP Loan;

 

(f)promptly provide Bank with copies of all material correspondence and documentation regarding the SBA PPP Loans, including, without limitation, (i) notification of the application for forgiveness of any SBA PPP Loans incurred by the Borrower and/or the acceptance or failure of any SBA PPP Loans incurred by the Borrower to qualify for forgiveness under the CARES Act; and (ii) such other information regarding the SBA PPP Loans as reasonably requested by Bank from time to time;

 

(g)provide Bank at least five (5) days’ prior written notice of any repayment or prepayment of the SBA PPP Loan.”

 

5.         Section 9.1(a) of the Agreement is amended to read as follows:

 

“(a)the Obligations and any renewals or refinancings thereof and   an   unsecured   SBA   PPP   Loan   in   an   amount   not   exceeding

$6,160,000.”

	
 
	
6.
	
The following Section 9.19 is added to the Agreement to read as follows: “9.19   Amendment of SBA PPP Loans. Borrower will not amend,
	
 

modify or waive any of its rights under any SBA PPP Loan Document other than to the extent required by the CARES Act or otherwise approved by Bank.  Without limitation of the foregoing, Borrower will not modify or waive any of its rights under any SBA PPP Loan Document to the extent any such amendment, modification or waiver could be reasonably expected to be materially adverse to the interests of the Bank.”

 

7.The failure of the Borrower to pay when due any principal or interest for the SBA PPP Loan shall constitute an immediate Event of Default under the Agreement.

 

8.         Borrower  hereby  represents  and  warrants  that,  after  giving  effect  to  the amendments contained herein, (a) execution, delivery and performance of this Amendment and any other documents and instruments required under this Amendment or the Agreement are within its corporate powers, have been duly authorized, are not in contravention of law or the terms of such Borrower’s Articles of Incorporation or Bylaws and do not require the consent or approval of any governmental body, agency, or authority; and this Amendment and any other documents and instruments required under this Amendment or the Agreement, will be valid and binding in accordance with their terms; (b) the continuing representations and warranties of Borrower set forth in the Agreement are true and correct on and as of the date hereof with the same force and effect as made on and as of the date hereof; (c) except as previously disclosed by Borrower to Bank, no Event of Default (as defined in the Agreement) or condition or event

 

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Bodman_16713974_1

 
 

which, with the giving of notice or the running of time, or both, would constitute an Event of Default under the Agreement, as hereby amended, has occurred and is continuing as of the date hereof.

 

9.         Borrower   hereby   waives,   discharges,   and   forever   releases   Bank,   Bank’s employees, officers, directors, attorneys, stockholders and successors and assigns, from and of any and all claims, causes of action, allegations or assertions that Borrower has or may have had at any time up through and including the date of this Amendment, against any or all of the foregoing, regardless of whether any such claims, causes of action, allegations or assertions arose as  a  result  of  Bank’s  actions  or  omissions  in  connection  with  the  Agreement,  or  any amendments, extensions or modifications thereto, or Bank’s administration of debt evidenced by the Agreement or otherwise.

 

10.Except  as  expressly  provided  herein,  all  of  the  terms  and  conditions  of  the

Agreement remain unchanged and in full force and effect.

 

11.       This Amendment shall be effective as of the date hereof upon (a) execution of this Amendment by Borrower and Bank, (b) receipt by Bank of an executed Amendment to Note in form acceptable to Bank, and (c) receipt by Bank of a consent to the SBA PPP Loan from the holders of all Subordinated Debt.

 

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Bodman_16713974_1

 
 

IN WITNESS the due execution hereof as of the day and year first above written.

 

THE HUNTINGTON NATIONAL BANKCONIFER HOLDINGS, INC.

 

 

 

 

By:  By:

Andrew R. CraigBrian Roney

 

Its: Senior Vice PresidentIts:President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Third Amendment to Credit Agreement (16713974)

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