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EXHIBIT 10.10(3)
INTERCREDITOR AND SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is entered into as of April 29, 1996 among IGF
Holdings, Inc. ("Borrower"), whose address Is 4720 Kingsway Drive, Indianapolis,
IN 46205; Union Federal Savings Bank of Indianapolis ("Lender"), whose address
is 45 N. Pennsylvania, Suite 600, Indianapolis, IN 46204; and Pafco General
Insurance Company ("Creditor"), whose address Is 4720 Kingsway Drive,
Indianapolis, IN 46205.
RECITALS. Borrower is indebted to Creditor in the aggregate amount of
$3,500,000.00. This amount is the total indebtedness of every kind from Borrower
to Creditor. Borrower and Creditor each want Lender to provide financial
accommodations to Borrower in the form of a term loan in the amount of
$7,500,000.00. Borrower and Creditor each represent and acknowledge to Lender
that Creditor will benefit as a result of these financial accommodations from
Lender to Borrower, and Creditor acknowledges receipt of valuable consideration
for entering into this Agreement. Based on the representations and
acknowledgments contained in this Agreement, Creditor and Borrower agree with
Lender as follows:
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Intercreditor and
Subordination Agreement, as this Intercreditor and Subordination
Agreement may be amended or modified from time to time, together with
all exhibits and schedules attached to this Intercreditor and
Subordination Agreement from time to time.
Borrower. The word "Borrower" means IGF Holdings, Inc.
Creditor. The word "Creditor" means Pafco General Insurance Company.
Lender. The word "Lender" means Union Federal Savings Bank of
Indianapolis, its successors and assigns.
Security interest. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the form
of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or lien retention contract, lease or
consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract or
otherwise.
Subordinated Indebtedness. The words "Subordinated Indebtedness" mean
and include without limitation all amounts outstanding under the terms
of that certain promissory note dated as of April 29, 1996 in the
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aggregate principal amount of $3,500,000.00 from Borrower to Creditor.
The term "Subordinated Indebtedness" is used in its broadest sense and
includes without limitation all principal, all interest, all costs and
attorney's, fees, and all sums paid for the purpose of protecting the
rights of a holder of security (such as a secured party paying for
insurance on collateral if the owner fails to do so).
Superior Indebtedness. The words "Superior Indebtedness" mean and
include without limitation all amounts outstanding under the terms of
that certain promissory note dated as of April 29, 1996 in the
aggregate principal amount of $7,500,000.00 from the Borrower to the
Lender. The term "Superior Indebtedness" is used in its broadest sense
and includes without limitation all principal, all interest all costs
and attorney fees and all sums paid for the purpose of protecting
Lender's rights in security (such as paying for insurance on collateral
if the owner fails to do so).
SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to the prior payment and satisfaction in
full of all Superior Indebtedness of Borrower to Lender. If Creditor holds one
or more Security Interests, whether now existing or hereafter acquired, in any
of Borrower's property, Creditor also subordinates all its Security Interests to
all Security Interests held by Lender, whether the Lender's Security Interest or
Interests exist now or are acquired later. The Creditor hereby agrees not to
take any action to foreclose or otherwise realize upon any property in which the
Lender maintains an Security Interest before the earlier of (a) a Proceeding,
(b) payment in full of the Superior Indebtedness, or (c) the commencement by the
Lender of the exercise of its remedies with respect to the property in which the
Lender maintains a Security Interest, or (d) ninety (90) days after the
occurrence of both (i) an "event of default" under the terms of the Superior
Indebtedness, and (ii) a payment default under these Subordinated Indebtedness.
As used herein, the term "Proceeding" means the making of an assignment for the
benefit of creditors of the Borrower; the voluntary or involuntary dissolution,
winding up, total or partial liquidation, reorganization, bankruptcy,
insolvency, receivership, or marshalling of assets or liabilities of the
Borrower; or any other statutory, common law or other contractual proceeding or
arrangement for the postponement or adjustment of all or substantial part of the
liabilities of the Borrower.
PAYMENTS TO CREDITOR. Except as provided below, Borrower will not make and
Creditor will not accept, at any time while any Superior Indebtedness is owing
to Lender, (a) any payment upon any Subordinated Indebtedness, (b) any advance,
transfer, or assignment of assets to Creditor in any form whatsoever that would
reduce at any time or in any way the amount at Subordinated Indebtedness, or (c)
any transfer of any assets as security for the Subordinated Indebtedness.
Notwithstanding the foregoing, Borrower may make payments of principal and
interest to Creditor in accordance with the terms of the Subordinated
Indebtedness if and only if at the time of making such payment and immediately
after giving effect thereto no "event of default" with respect to the Superior
Indebtedness or the documents or instruments executed in connection therewith,
or an event which, with the giving of notice or the lapse of time, or both,
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would become such an event of default, shall occur or have occurred and be
continuing unremedied or unwaived in a writing signed by Lender in which Lender
expressly consents to resumption of such payments on the Subordinated
Indebtedness. Creditor may not accelerate any amounts owed to Creditor without
Lender's prior written consent.
In the event of any distribution, division, or application, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrowers assets, in whatever
form, to creditors of Borrower or upon any indebtedness of Borrower, whether by
reason of the liquidation, dissolution or other winding-up of Borrower, or by
reason of any execution, sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event (a) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (b) all payments and
distributions, of any kind or character and whether in cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shall be paid or delivered directly to Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor where necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, and until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.
CREDITOR'S NOTES. Creditor or Borrower shall mark any note or other instrument
evidencing Subordinated Indebtedness with a notation indicating that the debt
evidenced thereby is subordinated under the terms of this Agreement. Creditor
shall not assign, pledge or otherwise transfer any such note or instrument
without the prior written approval of Lender, unless the person or entity to
whom the note or instrument is otherwise assigned, pledged or transferred agrees
in writing to be bound by the terms of this Agreement. Creditor shall notify
Lender within five business days after such assignment, pledge or transfer of
the name and address of the assignee, pledgee or transferee.
COLLATERAL AGENT. Creditor hereby appoints Lender as its agent to hold shares of
common stock in IGF Insurance Company identified on Schedule A hereto (the
"Pledged Shares"), in which both Lender and Creditor have obtained a Security
Interest. The sole purpose of this appointment shall be to permit Creditor to
perfect its security interest in the Pledged Shares. The Lender's only duty in
its capacity as collateral agent for Creditor shall be to hold the Pledged
Shares for its own account and the account of the Creditor. It is agreed that
the duties of the Lender in its capacity as collateral agent are only as set
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forth herein and that it shall incur no liability whatever in connection with
its acting as collateral agent. After the repayment of the Superior Indebtedness
or the release of Lender's Security Interest in the Pledged Shares, the Lender
may resign and be discharged from its duties as collateral agent hereunder by
giving notice in writing of such resignation and delivering the Pledged Shares
to the Creditor. Upon the resignation of the Lender from its capacity as
collateral agent for Creditor, Creditor shall hold the Pledged Shares on its own
behalf. Lender's acceptance of the appointment as collateral agent for Creditor
shall in no way impair or restrict its ability to deal with the Pledged Shares
as contemplated under that certain Pledge Agreement dated as of April 29, 1996
between Lender and Borrower. Creditor hereby agrees to indemnify and hold
harmless Lender against any damages, costs or expenses incurred by Lender as a
result of its acting as collateral agent for Creditor with respect to the
Pledged Shares.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (a) no representations or agreements of any kind have been made to
Creditor which would limit or qualify in any way the terms of this Agreement;
(b) this Agreement is executed at Borrower's request and not at the request of
Lender; (c) Lender has made no representation to Creditor as to the
creditworthiness of Borrower; and (d) Creditor has established adequate means of
obtaining from Borrower on a continuing basis information regarding Borrower's,
financial condition. Creditor agrees to keep adequately informed from such means
of any facts, events, or circumstances which might in any way affect Creditor's
risks under this Agreement, and Creditor further agrees that Lender shall have
no obligation to disclose to Creditor information or material acquired by Lender
in the course of its relationship with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (a) to make,
extend, renew, or modify any loan to Borrower or to grant any other financial
accommodations to Borrower whatsoever, (b) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Superior Indebtedness or of any nonpayment related to any Security Interests, or
notice of any action or non-action on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Superior Indebtedness; (c)
to resort for payment or to proceed directly or at once against any person,
including Borrower; (d) to proceed directly against or exhaust any Security
Interests held by Lender from Borrower, any other guarantor, or any other
person; (e) to give notice of the terms, time, and place of any public or
private sale of personal property security held by Lender from Borrower or to
comply with any other applicable provisions of the Uniform Commercial Code; (f)
to pursue any other remedy within Lender's power; or (g) to commit any act or
omission of any kind, at any time, with respect to any matter whatsoever.
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to the
Superior Indebtedness or any Security Interests for the Superior Indebtedness
without affecting whatsoever any of Lender's rights under this Agreement. In
particular, without limitation, Lender may, without notice of any kind to
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Creditor, (a) alter, compromise, renew, extend, accelerate, or otherwise change
the time for payment or other terms of the Superior Indebtedness or any part
thereof, including increases and decreases of the rate of interest on the
Superior Indebtedness; (b) take and hold Security Interests for the payment of
the Superior Indebtedness, and exchange, enforce, waive, and release any such
Security Interests, with or without the substitution of new collateral; (c)
release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorses, or guarantors on any terms or manner Lender
chooses; (d) determine how, when and what application of payments and credits,
shall be made on the Superior Indebtedness; (e) apply such security and direct
the order or manner of sale thereof, as Lender in its discretion may determine;
and (f) assign this Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect. In the event of a corporate
reorganization or corporate arrangement of Borrower under the provisions of the
Bankruptcy Code, as amended, this Agreement shall remain in full force and
effect and the court having jurisdiction over the reorganization or arrangement
is hereby authorized to preserve such priority and subordination in approving
any such plan of reorganization or arrangement. Any default by Borrower under
the terms of the Subordinated Indebtedness also shall be a default under the
terms of the Superior Indebtedness to Lender.
DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall notify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Applicable Law. This Agreement has been delivered to Lender and
accepted by Lender in the State of Indiana. If there is a lawsuit,
Creditor and Borrower agree upon Lender's request to submit to the
jurisdiction of the courts of Marion County, State of Indiana. Lender,
Creditor and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender, Creditor
or Borrower against the other. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana. No
provision contained in this Agreement shall be construed (a) as
requiring Lender to grant to Borrower or to Creditor any financial
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assistance or other accommodations, or (b) as limiting or precluding
Lender from the exercise of Lender's own judgment and discretion about
amounts and times of payment in making loans or extending
accommodations to Borrower.
Amendments. This Agreement constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Agreement.
No alteration of or amendment to this Agreement shall be effective
unless made in writing and signed by Lender, Borrower, and Creditor.
Attorneys' Fees; Expenses. Creditor and Borrower agree to pay upon
demand all of Lender's costs and expenses, including attorneys' fees
and Lender's legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may pay someone else to help
enforce this Agreement, and Creditor and Borrower shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(and including efforts to modify or vacate any automatic stay or
Injunction), appeals, and any anticipated post-judgment collection
services. Creditor and Borrower also shall pay all court costs and such
additional fees as may be directed by the court.
Successors. This Agreement shall extend to and bind the respective
heirs, personal representatives, successors and assigns of the parties
to this Agreement, and the covenants of Borrower and Creditor
respecting subordination of the Subordinated Indebtedness in favor of
Lender shall extend to, include, and be enforceable by any transferee
or endorsee to whom Lender may transfer any or all of the Superior
Indebtedness.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Creditor, shall constitute a waiver of any of Lender's
rights or of any of Creditor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
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BORROWER AND CREDITOR ACKNOWLEDGE HAVING READ ALL THE
PROVISIONS OF THIS INTERCREDITOR AND SUBORDINATION AGREEMENT,
AND BORROWER AND CREDITOR AGREE TO ITS TERMS. THIS AGREEMENT
IS DATED AS OF APRIL 29, 1996.
BORROWER:
IGF Holdings, Inc.
By: /s/ Douglas H. Symons
Douglas H. Symons, Vice President
CREDITOR:
Pafco General Insurance Company
By: /s/ Douglas H. Symons
Douglas H. Symons, President
LENDER:
Union Federal Savings Bank of Indianapolis
By: /s/ Christopher K. Stark
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