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EXHIBIT 10.73
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into
by and among GEOTRAC OF AMERICA INC., (formerly known as Bankers Hazard
Determination Systems, Inc. and successor by merger to Geotrac, Inc., (formerly
known as YoSystems, Inc. and successor by merger to SMS Geotrac, Inc.)), a
Florida corporation ("Borrower"), DANIEL J. AND SANDRA WHITE, (collectively,
"Subordinated Lender") and THE HUNTINGTON NATIONAL BANK, a national banking
association, its successors and assign ("Senior Lender").
RECITALS
A. Geotrac, Inc. (formerly known as YoSystems, Inc. and successor by merger
to SMS Geotrac, Inc.) ("Old Geotrac"), Bankers Insurance Group, Inc. ("BIG"),
Insurance Management Solutions Group, Inc. ("IMSG") and Bankers Hazard
Determination Services, Inc. ("BHDS") and Subordinated Lender entered into an
Agreement and Plan Merger dated as of the 28th day of May, 1998, (the "Merger
Agreement"), a copy of which has been furnished to Senior Lender. Old Geotrac
and BHDS merged pursuant to the terms of the Agreement, the surviving entity
referred to herein as Borrower. The indebtedness of Borrower to Subordinated
Lender under the Merger Agreement is represented by a Subordinated Promissory
Note dated as of ____________ , 1998 (the "Subordinated Note"). The parties
hereto represent that the Subordinated Indebtedness (as hereinafter defined) has
not heretofore been assigned to or subordinated in favor of any other person.
B. Old Geotrac has borrowed monies (the "Loans") from Senior Lender, as
evidenced by a Loan and Security Agreement dated as of July 31, 1997, as
amended from time to time (the "Loan Agreement") and related documents between
Senior Lender and Old Geotrac of even date therewith, as the same may be
amended from time to time (collectively, the "Loan Documents"). The Loans and
the Loan Documents have been assumed and ratified by Borrower. The Loans are
secured by a first priority blanket lien on all of Borrower's assets.
C. In order to induce Senior Lender, its successors or assigns, to
continue to make the Loans, or to grant renewals, or extensions, modifications,
or amendments to the Loans, as Senior Lender may deem advisable, Subordinated
Lender desires to subordinate the Subordinated Indebtedness and all security
held therefor to any and all indebtedness now or hereafter owing by Borrower to
Senior Lender in accordance with the provisions of this Agreement.
D. Subordinated Lender acknowledges that the continuing extensions of
credit and other financial accommodations to Borrower by Senior Lender is of
value to Subordinated Lender.
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PROVISIONS
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged by Subordinated Lender, and in order to induce Senior
Lender, now or from time to time hereafter, to extend credit or other financial
accommodation to Borrower pursuant to the Loan Agreement as it may be amended,
modified or restated, Subordinated Lender hereby agrees as follows:
1. Subordination of Subordinated Indebtedness. All indebtedness evidenced
by the Subordinated Note together with all accrued interest thereon; and any
other indebtedness for borrowed money now owing or which hereafter may become
owing by or from Borrower to Subordinated Lender, howsoever such indebtedness
for borrowed money may be hereafter created, extended, renewed or evidenced,
together with all accrued interest thereon and any and all other present and
future obligations and liabilities owing by Borrower to Subordinated Lender,
howsoever such obligations and liabilities may be created, extended, renewed or
evidenced (all such indebtedness, obligations and liabilities referred to
collectively as the "Subordinated Indebtedness") shall at all times and in all
respects be subordinate and junior in right of payment to any and all
indebtedness of Borrower to Senior Lender, its successors and assigns,
including, without limitation, the Loans and any extensions, renewals,
modifications, and amendments thereof and all accrued interest thereon
(collectively, the "Senior Debt"). For purposes of this Agreement, Subordinated
Indebtedness shall not include any amounts payable to Daniel J. White pursuant
to that certain Employment Agreement by and between Mr. White and Borrower
dated as of _____________, 1998 (the "Employment Agreement").
2. Permitted Payments. Unless and until (A) all of the Senior Debt shall
have been fully and finally paid and satisfied, and (B) all financing
arrangements, including, but not limited to the Loan Agreement, between
Borrower and Senior Lender have been terminated, no payments of principal or
interest shall be made on or with respect to the Subordinated Indebtedness by
or on behalf of Borrower (or by Guarantor) or accepted by Subordinated Lender,
except as permitted in this Section 2. Borrower may from time to time, pay or
cause to be paid to Subordinated Lender and Subordinated Lender may accept from
Borrower payment of regularly scheduled installments of interest (at a
non-default rate of interest) pursuant to the terms and conditions of the
Subordinated Note, provided that no Event of Default then exists or would have
occurred but for the passage of time or giving of notice or both, or will have
occurred after giving effect to any payment which otherwise would be permitted
hereby under the Loan Agreement or any of the other Loan Documents (herein
referred to as a "Standstill Event"). In the event any Standstill Event shall
have occurred, all payments pursuant to the Subordinated Note from Borrower to
Subordinated Lender shall cease immediately and Borrower shall not make, nor
shall Subordinated Lender accept any such payment from or on behalf of Borrower
until such time as Subordinated Lender and Borrower receive written permission
from Senior Lender to commence such payments again. Subordinated Lender hereby
agrees not to accept any prepayments of any payment due on account of the
Subordinated Indebtedness.
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3. Forbearance: Subordination of Liens. Unless and until (A) all of the
Senior Debt shall have been fully and finally paid and satisfied, and (B) all
financing arrangements, including, but not limited to the Loan Agreement,
between Borrower and Senior Lender have been terminated, Subordinated Lender
shall not: (i) declare the Subordinated Indebtedness or any portion thereof to
be due and payable prior to the stated maturity date, nor accelerate the
maturity date thereof; (ii) enforce or exercise any right of demand or setoff
or commence any legal or other action against Borrower or any third party to
collect upon any Subordination Indebtedness; (iii) take or accept any
collateral or security with respect to the Subordinated Indebtedness without
the prior written consent of Senior Lender; (iv) commence foreclosure or any
other similar type of proceedings or exercise any similar remedies in respect
of any collateral for the Subordinated Indebtedness; (v) enforce any judgment
that it might obtain with respect to the Subordinated Indebtedness (including,
without limitation, execution, attachment or foreclosure of judgment liens
against any assets of Borrower) without obtaining the prior written consent of
Senior Lender; or (vi) commence or join with any other creditor or creditors of
Borrower in commencing any bankruptcy, reorganization or insolvency proceedings
against Borrower. All rights, liens and security interests of Subordinated
Lender in any assets of Borrower or any other person securing the Senior Debt,
whether now or hereafter arising and howsoever existing, shall be and hereby
are subordinated to the rights and interests of Senior Lender under this
Agreement and in those assets. Subordinated Lender shall have no right to
possession of any such assets or to foreclose or execute upon any such assets,
whether by judicial action or otherwise. Notwithstanding the foregoing,
Subordinated Lender may take those actions as described in clauses (i) through
(vi) above at any time following the date which is three hundred sixty-five
(365) days after the occurrence of a Standstill Event (a "Standstill Period")
as evidenced by written notice from Senior Lender; provided that Senior Lender
shall not have rescinded such notice of a Standstill Event prior to the
expiration of such Standstill Period; and provided further that Subordinated
Lender shall have given Senior Lender written notice at least ten (10) days
prior to taking such action. Senior Lender and Subordinated Lender further
agree that Senior Lender shall have the right to extend a Standstill Period for
an additional one hundred eighty (180) days upon ten (10) days prior written
notice to Subordinated Lender of such extension.
4. Bankruptcy Proceedings. In the event of (i) any distribution, division
or application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of Borrower or the proceeds
thereof, to creditors of Borrower by reason of the liquidation, dissolution or
other winding up of Borrower's business, or (ii) any sale, receivership,
insolvency or bankruptcy proceeding, or assignment for the benefit of creditors,
or any proceeding by or against Borrower for any relief under any bankruptcy or
insolvency laws relating to the relief of debtors, readjustment of indebtedness,
reorganization, compositions or extensions, Subordinated Lender covenants that
any payment or distribution of any kind or character to or received by
Subordinated Lender, either in cash, securities or other property which shall be
paid or delivered, or payable or deliverable, upon or with respect to the
Subordinated Indebtedness immediately shall be paid or delivered directly to
Senior Lender for application on the Senior Debt, whether or not due, of
Borrower to Senior Lender until the Senior Debt to Senior Lender first shall
have been fully paid and satisfied. Until Senior Debt shall have been fully and
finally paid and satisfied with interest and financing arrangements, including,
but not limited to
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the Loan Agreement, between Borrower and Senior Lender have been terminated, in
order to enable Senior Lender to enforce its rights hereunder in any such action
or proceeding, Senior Lender is hereby irrevocably authorized and empowered in
its sole discretion to make and present for and on behalf of Subordinated Lender
such proofs of claims against Borrower on account of the Subordinated
Indebtedness hereby subordinated as Senior Lender may deem expedient or proper
and to vote such proofs of claims in any such proceeding and to receive and
collect any and all dividends or other payments or disbursements made thereon in
whatever form the same may be paid or issued and to apply the same on account of
any of the Senior Debt; provided, however, that if Senior Lender has failed to
file proofs of claims against Borrower on behalf of Subordinated Lender within
seven (7) days prior to any applicable bar date in a bankruptcy proceeding,
Subordinated Lender may file such proofs of claims on account of the
Subordinated Indebtedness.
5. Appointment of Power of Attorney. Upon the occurrence of an Event of
Default, Subordinated Lender irrevocably authorizes, appoints, and empowers
Senior Lender to demand, sue for, collect, and receive every such payment or
distribution and give acquittance therefor and to file claims and take such
other proceedings, in Senior Lender's own name or in the name of and as
attorney-in-fact for Subordinated Lender, as Senior Lender may deem necessary or
advisable for the enforcement of this Agreement; and Subordinated Lender shall
execute and deliver to Senior Lender such powers of attorney, assignments, or
other instruments as may be requested by Senior Lender to enable Senior Lender
to enforce any and all claims upon or with respect to the Subordinated
indebtedness and to collect and receive all payments or distributions which may
be payable or deliverable at any time upon or with respect to the Subordinated
Indebtedness.
6. Delivery of Payment to Senior Lender. Except for the payments permitted
pursuant to Section 2 of this Agreement, if any payment, distribution, security
or proceeds thereof is received by Subordinated Lender upon or with respect to
any indebtedness of Borrower to Subordinated Lender (including the Subordinated
Indebtedness) prior to the satisfaction in full of the Senior Debt by Borrower,
Subordinated Lender immediately shall deliver the same to Senior Lender in
precisely the form received (except for the endorsement or assignment of
Subordinated Lender where necessary), for application to the Senior Debt,
whether or not due, and until so delivered the same shall be held in trust by
Subordinated Lender as property of Senior Lender. In the event of the failure
of Subordinated Lender to make any such endorsement or assignment, Senior
Lender, or any of its officers or employees, hereby irrevocably is constituted
and appointed attorney-in-fact of Subordinated Lender with full power to make
the same. Subordinated Lender hereby agrees that all payments received by
Senior Lender may be applied and reapplied, in whole or in part, to any of the
Senior Debt, as Senior Lender, in its sole discretion, deem appropriate. By its
execution of this Agreement, Borrower agrees not to pay Subordinated Lender any
sum on account of any of the Subordinated Indebtedness or to give Subordinated
Lender any collateral as security therefor at any time when payment thereof
would be in breach of any of the terms of this Agreement.
7. Assignment of Claims. Subordinated Lender shall not assign or transfer
any claim, nor suffer or permit the creation or attachment of any lien, claim
or encumbrance, hypothecation or pledge upon any claim, it has or may have
against Borrower other than claims arising under the
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Employment Agreement and/or that certain Corporate Governance Agreement by and
between Borrower, Subordinated Lender and IMSG dated as of ___________, 1998,
while any portion of the Senior Debt remains unpaid unless such assignment or
transfer is made expressly subject to this Agreement and upon obtaining Senior
Lender's prior written consent to such an assignment or transfer.
8. Legend. The Subordinated Note, and any other instrument evidencing any
of the Subordinated Indebtedness, or any portion thereof, shall bear the
following legend on the first page thereof:
"THE INDEBTEDNESS EVIDENCED BY THIS NOTE OR INSTRUMENT IS SUBORDINATE TO
THE INDEBTEDNESS OF THE MAKER (OR ANY SUCCESSOR THERETO) TO THE HUNTINGTON
NATIONAL BANK OR ITS SUCCESSORS OR ASSIGNS PURSUANT TO THE TERMS OF A
SUBORDINATION AGREEMENT DATED JULY 31, 1998 (OR ANY SUCCESSOR AGREEMENT
WHICH REPLACES AND REFERENCES SUCH AGREEMENT)."
9. Subordinated Note. Any instrument evidencing any of the Subordinated
Indebtedness, or any portion thereof, which is hereafter executed by Borrower
will, on the date of such execution, be inscribed with the aforesaid legend.
Subordinated Lender will not modify, amend, change, or otherwise alter the
terms and provisions of the Subordinated Note or any other instrument
evidencing the Subordinated Indebtedness in any manner that affects Senior
Lender's rights under this Agreement, without the prior written consent of
Senior Lender.
10. Additional Agreements with Senior Lender; Cross-Default. At any time,
and from time to time, Senior Lender may enter into any agreements with
Borrower as Senior Lender may deem proper extending the time of payment or
renewing or otherwise altering the terms of the Loan Documents or affecting the
security underlying any or all of such obligations, or may exchange, sell, or
surrender or otherwise deal with any such security, or may release any balance
of funds of Borrower, with Senior Lender, without notice to Subordinated
Lender, and without in any way impairing or affecting this Agreement thereby.
Any default by Borrower or Subordinated Lender pursuant to the terms and
conditions of this Agreement shall constitute an Event of Default under the
Loan Agreement.
11. Continuing Nature of Subordination. This is a continuing agreement of
subordination and Senior Lender may continue, at any time and without notice to
Subordinated Lender, to extend credit or other financial accommodation or
benefit and loan monies to or for the account of Borrower on the faith hereof.
This Agreement shall be irrevocable by Subordinated Lender and shall continue
to be effective until the Senior Debt shall have been fully and finally
discharged and all financing arrangements, including, but not limited to the
Loan Agreement, between Borrower and Senior Lender have been terminated.
Subordinated Lender consents and covenants that all obligations and liabilities
of Borrower to Senior Lender shall be deemed to have been made or incurred, in
part, in reliance upon this Agreement.
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12. Waiver of Notice. The undersigned waive: (a) notice of acceptance of
this Agreement; (b) notice of the existence, creation, extension, refunding,
refinancing or non-payment of all or any of the Senior Debt; (c) all diligence
in collection or protection of or realization upon the Senior Debt or any part
thereof or any security therefor; and (d) notice of the release, waiver or
cancellation of any obligors or guarantors of all or any portion of the Senior
Debt or any security therefor. Subordinated Lender agrees that Senior Lender
has made no warranties or representations with respect to the due execution,
legality, validity, completeness or enforceability of the Loan Agreement, or
the collectability of the Senior Debt, that Senior Lender shall be entitled to
manage and supervise its loans to Borrower and its relationship with Borrower
in accordance with its usual practices, modified from time to time as Senior
Lender deems appropriate under the circumstances, without regard to the
existence of any rights that Subordinated Lender may now or hereafter have in
or to any of the assets of Borrower. Subordinated Lender agrees that Senior
Lender shall not have any liability to Subordinated Lender for, and waives
any claim which Subordinated Lender may now or hereafter have against Senior
Lender arising out of: (i) any and all actions which Senior Lender, in good
faith, takes or omits to take with respect to the Loan Agreement or any
other agreement related thereto or to the collection of the Senior Debt;
(ii) Senior Lender's election, in any proceeding instituted under Chapter 11
of Title 11 of the United States Code (11 U.S.C. Section 101 et seq.) (the
"Bankruptcy Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code; and/or (iii) any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Code.
13. Refinancing of Senior Debt. Senior Lender may, from time to time,
without notice to the undersigned, assign or transfer any or all of the Senior
Debt or any interest therein or permit another person (a "Refinancing Party")
to extend credit to Borrower to enable Borrower to repay all or a portion of
the Senior Debt (a "Refinancing"), and, notwithstanding any such assignment,
transfer or Refinancing or any subsequent assignment, transfer or Refinancing,
such Senior Debt shall be and remain Senior Debt for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any of
the Senior Debt or of any interest therein, including, without limitation, any
Refinancing Party, shall, to the extent of the interest of such assignee,
transferee or Refinancing Party in the Senior Debt, be entitled to the benefits
of this Agreement to the same extent as if such assignee, transferee or
Refinancing Party were Senior Lender. Borrower and Subordinated Lender agree to
execute a subordination agreement in substantially the same form as this
Agreement in favor of the Refinancing Party upon request by Senior Lender.
14. Information Concerning Financial Condition of Borrower. Subordinated
Lender hereby assumes responsibility for keeping itself informed of the
financial condition of Borrower, any and all endorsers and any and all
guarantors of the Senior Debt and of all other circumstances bearing upon the
risk of non-payment of the Senior Debt and/or Subordinated Indebtedness that
diligent inquiry would reveal, and Subordinated Lender hereby agrees that
Senior Lender shall not have any duty to advise Subordinated Lender of
information known to Senior Lender regarding such condition or any such
circumstances. In the event Senior Lender, in its sole discretion, undertakes,
at any time or from time to time, to provide any such information to
Subordinated Lender, Senior Lender shall not be under any obligation to
disclose any information which,
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pursuant to accepted or reasonable commercial finance practice, Senior Lender
wishes to maintain confidential.
15. Representation and Warranty of Subordinated Lender. Borrower and
Subordinated Lender hereby represent and warrant to Senior Lender as follows:
(i) that the current unpaid principal balance due under the Subordinated Note
is $1,500,000.00 and that Borrower is not in default of any covenant and no
event of default has occurred or would occur with the passage of time under or
pursuant to the Subordinated Note or any other agreement or instrument issued
in connection with the Subordinated Indebtedness; (ii) that the terms and
provisions of the Loan Agreement, this Agreement and the other Loan Documents
do not violate any term or provision of the Subordinated Indebtedness; (iii)
that it has not previously assigned any interest in the Subordinated
Indebtedness; (iv) that no other party owns any interest in the Subordinated
Indebtedness other than Subordinated Lender (whether as joint holders of the
Subordinated Indebtedness, participants or otherwise) and that the entire
Subordinated Indebtedness is and shall continue to be owing only to
Subordinated Lender; (v) that as of the date hereof, other than amounts owed
under the Employment Agreement, the Subordinated Note is the only monetary
obligation owing by Borrower to Subordinated Lender; (vi) that Borrower has no
obligations, monetary or otherwise, to Subordinated Lender, other than the
Subordinated Note; and (vii) that it has all necessary authority to grant the
subordination evidenced hereby and execute this Agreement.
16. No Waiver of Senior Lender's Rights. No waiver shall be deemed to be
made by Senior Lender or any of its rights hereunder, unless the same shall be
in writing signed on behalf of Senior Lender, and each waiver, if any, shall be
a waiver only with respect to the specific instance involved and shall in no
way impair the rights of Senior Lender or the obligations of Subordinated
Lender to Senior Lender in any other respect at any other time. The
subordination provisions contained in this Agreement are for the benefit of
Senior Lender and may not be rescinded, canceled, amended or modified in any
way without the prior written consent thereto executed by Senior Lender. Senior
Lender shall not be prejudiced in its rights to enforce the subordination
contained in this Agreement in accordance with the terms hereof by any act or
failure by Senior Lender or Borrower to provide Subordinated Lender with any
notice.
17. Governing Law. This Agreement shall be construed according to the laws
of the State of Ohio. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provisions of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
18. Entire Agreement. This Agreement sets forth the entire Agreement and
understanding among the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements, and undertakings of every kind
and nature among them with respect to the subject matter hereof. This
Agreement shall be immediately binding upon Borrower and
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Subordinated Lender, and their successors and permitted assigns, and the
subordination described herein shall inure to the benefit of any assignee or
successor in interest of Senior Lender.
19. Counterparts. This Agreement may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be
an original, but all such counterparts shall together constitute but one and
the same Agreement.
20. Notice. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if mailed by registered mail or
delivered, addressed at the address specified on the signature pages of this
Agreement. All notices, statements, requests, demands and other communications
provided for hereunder shall be deemed to be given or made when delivered or,
if registered mail, upon refusal to accept.
21. Jurisdiction and Venue. All judicial proceedings arising out of or
relating to this Agreement or any obligation hereunder will be brought in the
United States District Court for the Northern District of Ohio or in the Court
of Common Pleas, Cuyahoga County, Ohio, and by their respective execution and
delivery of this Agreement, the undersigned accept for themselves and in
connection with their properties, generally and unconditionally, the
jurisdiction of the aforesaid courts and waive any defense of forum non
conveniens, and irrevocably agree to be bound by any judgment rendered thereby
in connection with this Agreement.
22. JURY TRIAL WAIVER. THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW,
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG SENIOR LENDER AND ANY OF THEM
ARISING OUT OF, IN CONNECTION WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 31st day of July, 1998.
SENIOR LENDER: BORROWER:
THE HUNTINGTON NATIONAL BANK, GEOTRAC OF AMERICA, INC.
a national banking association (formerly known as Bankers Hazard
Determination Services, Inc. and successor
by merger to Geotrac, Inc.
(formerly known as YoSystems, Inc. and
successor by merger to SMS Geotrac,
Inc.)), a Florida corporation
By: /s/ Timothy M. Ward By: /s/ Daniel J. White
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Name: Timothy M. Ward Name: Daniel J. White
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Title: V.P. Title: President
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SUBORDINATED LENDERS:
/s/ Daniel J. White
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Daniel J. White, an individual
/s/ Sandra White
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Sandra White, an individual
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