STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is
made and entered into on this 31st day of July, 1996, by and
between (i) FREEDOM FINANCIAL CORPORATION, an Indiana
Corporation, the "Pledgor"; and (ii) PIONEER BANK, a Kentucky
Corporation, with principal office and place of business in
Munfordville, Kentucky (the "Bank").
PRELIMINARY STATEMENT
A. Pursuant to that certain Loan Agreement of even date
herewith, between the Pledgor and Pioneer Bank, the Bank has made
a loan to Freedom Financial Corporation (the "Borrower") in the
original principal amount of ONE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 DOLLARS ($1,800,000.00) (the "Loan"), which Loan is
evidenced by that certain Promissory Note of even date herewith,
made by the Borrower, payable to the order of the Bank and in the
face principal amount of ONE MILLION EIGHT HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,800,000.00) (the "Note").
X. X. Xxxxxxx Xxxxxxx has executed the Guaranty Agreement
(defined below), guaranteeing repayment of the Note.
C. The Pledgor has agreed and hereby agrees that the
Guaranty Agreement and the payment of the Note and the other
indebtedness referred to below shall be secured by this Pledge
Agreement.
NOW, THEREFORE, in consideration of the Loan made
contemporaneously herewith by the Bank to the Borrower, and for
other good and valuable consideration, the mutuality, receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the
Bank here by agree as follows:
1. Definitions. The capitalized terms and phrases not
otherwise defined herein shall have the meanings given them in
the Loan Agreement, and the following terms or phrases shall have
the following meanings:
1.1 "Collateral" means the Pledged Shares and all
other property described in Section 2 of this Pledge Agreement.
1.2 "Event of Default" shall have the meaning set
forth in Section 10 of this Pledge Agreement.
1.3 "Guarantor" means, X. Xxxxxxx Xxxxxxx.
1.4 "Secured Obligations" means the obligations
secured by this Pledge Agreement as described in Section 3 of
this Pledge Agreement.
1.5 "Pledged Shares" means the 1,000,000 shares of
Florida Gaming Corporation common stock owned by Financial
Freedom Corporation, rerepresented by Certificate Nos. FGC0050,
FGC0051, FGC0052, FGC0053, FGC0421, FGC0422, FGC0423, FGC0424,
FGC0507, FGC0508.
2. Grant of Security Interest
2.1 The Pledgor hereby pledges and assigns to the
Bank, and hereby grants to the Bank a security interest in the
Pledged Shares owned by the Pledgor. Pledgor further assigns to
the Bank a security interest in any and all stock rights, rights
to subscribe, liquidating dividends, dividends paid in stock, new
securities or any other property to which the Pledgor is or may
hereafter become entitled to receive on account of the Pledged
Shares owned by the Pledgor. If the Pledgor receives additional
property of such nature, the Pledgor shall immediately deliver
such property the Bank, to be held by the Bank pursuant to this
Pledge Agreement.
2.2 The Pledgor hereby grants a security interest in
the Pledgor's share of all dividends and distributions declared
in respect to the Pledged Shares and the Pledgor's share of
proceeds of any sale or other disposition of the Pledged Shares.
3. Secured Obligations. The Pledgor has granted to the
Bank a security interest in the Collateral to secure (a) the
payment of the entire unpaid principal of, and all interest now
accrued or hereafter to accrue on, the Note and all costs and
expenses, including, without limitation, reasonable attorneys'
fees now or hereafter incurred by the Bank in enforcing the Loan
Agreement, the Note, the Guaranty Agreement and this Pledge
Agreement, and (b) the performance of all other covenants,
agreements and obligations of the Pledgor set forth herein and in
the Loan Agreement and the other Loan Documents.
4. Representations and Warranties. To induce the Bank to
enter into the Loan Agreement, and to make the Loan to the
Borrower, the Pledgor hereby represents and warrants to the Bank
as follows, which representations and warranties shall survive
the execution and delivery of this Pledge Agreement and the
delivery of the Pledged Shares to the Bank.
4.1 The Pledgor has the full right, power and
authority to enter into and perform this Pledge Agreement. This
Pledge Agreement has been duly entered into and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor, enforceable in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally,
and by the application of usual equitable principles where
equitable principles are sought.
4.2 The Pledgor has good and marketable title to the
Pledged Shared represented to be owned by the Pledgor, and the
Pledged Shares are not subject to any lien, charge, pledge,
encumbrance, claim or security interest of any nature whatsoever,
other than the security interest created by this Pledge
Agreement.
4.3 The Pledged Shares are fully paid and
nonassessable.
4.4 The Pledgor has not entered into any stock
restriction or purchase agreement with respect to the Pledged
Shares owned by the Pledgor which would in any way restrict the
sale, pledge or other transfer of the Pledged Shares or of any
interest in or to the Pledged Shares.
5. Duration of Security Interest. The Bank shall hold the
Pledged Shares upon the terms and provision of this Pledge
Agreement and the security interest in the Collateral granted to
the Bank pursuant to this Pledge Agreement shall continue until
all of the Secured Obligations have been paid and performed in
full to the Bank.
6. Maintaining Freedom from Liens. The Pledgor shall keep
the Pledged Shares and the other Collateral owned by such Pledgor
free and clear of all liens and encumbrances and shall pay all
amounts, including taxes, assessments or charges, which might
result in a lien against the Pledged Shares or other Collateral
if left unpaid, unless the Pledgor, at the Pledgor's expense, is
contesting any such amount in good faith by an appropriate
proceeding timely instituted and which shall operate to prevent
the collection or satisfaction of the lien or amount so
contested. If the Pledgor fails to pay such amounts and is not
contesting the validity or amount thereof in accordance with the
preceding sentence, the Bank may, but is not obligated to pay
such amounts, and such payment shall be conclusive evidence of
the legality or validity thereof.
7. Certain Rights Respecting the Collateral.
7.1 The Pledgor shall continue to be the sole owner of
the Pledged Shares and the other Collateral represented to be
owned by such Pledgor, and may exercise all voting rights with
respect to the Pledged Shares owned by such Pledgor, so long as
no Event of Default has occurred and is continuing.
7.2 The Pledgor shall not sell, transfer or attempt to
sell or transfer the Pledged Shares or the other Collateral
represented to be owned by such Pledgor, or any part thereof or
interest therein, without the prior express written consent of
the Bank. Any such consent of the Bank shall not constitute the
release by the Bank of its security interest in the Pledged
Shares so sold or transferred, and any such sale or transfer
consented to the Bank shall transfer the Pledged Shares, subject
to the security interest therein of the Bank created pursuant to
this Pledge Agreement.
7.3 The Bank, at its option upon the occurrence of any
Event of Default, and so long as such event of Default exists,
may exercise all voting rights and privileges whatsoever with
respect to the Pledged Shares, and to that end the Pledgor hereby
constitutes any officer of the Bank as such Pledgor's proxy and
attorney-in-fact for all purposes of voting the Pledged Shares
represented to be owned by such Pledgor at any annual, regular or
special meeting of shareholders of Florida Gaming Corporation,
and this appointment shall be deemed coupled with an interest and
shall by irrevocable until all of the Secured obligations have
been fully paid and preformed to the Bank, and all Persons
whatsoever shall be conclusively entitled to rely upon any oral
or written certification of the Bank that it is entitled to vote
the Pledged Shares and other Collateral hereunder. The Pledgor
shall execute and deliver to the Bank any additional proxies and
powers of attorney that the Bank may desire in its own name to
effectuate the provisions of the Loan Agreement and this Pledge
Agreement.
7.4 All dividends or other distributions declared in
respect of the Pledged Shares shall be immediately remitted by
the Pledgor to the Bank, as applicable, to the applied by the
Bank to the payment of the unpaid principal balance of, and all
accrued and unpaid interest on, the Note, in such order as the
Bank shall elect in its sole and absolute discretion, and until
such dividends or other distributions are paid to the Bank, the
Pledgor receiving the same shall hold all of the same in trust
and as a fiduciary for the Bank.
8. Issuance or Acquisition of New Stock or Sale of
Treasury Shares; Mergers, Sales and Other Distribution of Assets.
Until the Secured Obligations have been paid and performed in
full to the Bank, Pledgor shall not vote in favor of permitting
Florida Gaming Corporation (a) to issue new shares of its capital
stock, or any options, subscription rights or warrants with
respect thereto, to merge into or with, or consolidate with, any
other entity, except as set out hereto below in Paragraph 8.1;
(b) to merge into or with or consolidate with, any other entity;
(c) to sell or otherwise transfer any material part of its
assets; or (d) to liquidate or dissolve or take any action with a
view towards liquidation or dissolution.
8.1 Issuance of New Stock. Pledgor may vote in favor of
permitting Florida Gaming Corporation to issue new shares of its
capital stock, or any options, subscription rights or warrants
with respect thereto as long as the stock price for the issuance
is equal to or greater than $5.00 per share. Further Pledgor
acknowledges and agrees that in the event the stock price for
Florida Gaming Corporation as quoted in the Wall Street Journal
at any time is quoted below $5.00 per share then the Bank may
demand the loan, make a call for additional collateral or demand
a principal payment to reduce the outstanding principal balance
in such an amount that the Bank will be fully secured with the
existing collateral, with the Bank determining if it is fully
secured, at the Bank's sole option and discretion.
9. Delivery of Certificates and Stock Powers. The Pledgor
shall deliver to the Bank, and the Bank shall be entitled to
possess, the share certificates evidencing the Pledged Shares
represented to be owned by the Pledgor and an executed blank
stock power with respect to each share certificate. Should the
Pledgor acquire any interest in any additional capital stock of
Florida Gaming Corporation not otherwise contemplated herein,
such Pledgor shall immediately deliver certificates representing
that stock and a blank stock power for those certificates to the
Bank, to be held by the Bank in the same manner as the Pledged
Shares, and that the stock shall be pledged under this Pledge
Agreement and shall constitute a part of the Collateral only in
the event that the stock price for Florida Gaming Corporation as
quoted in the Wall Street Journal at any time is quoted below
$5.00 per share and the Bank elects at its sole option and
discretion to call for additional collateral.
10. Event of Default. The following shall each constitute
an "Event of Default" hereunder:
10.1 If any principal or interest on the Note shall
not be paid in full punctually when due and payable and shall
remain unpaid for a period of ten (10) days after written notice
of such default has been given to the Pledgor.
10.2 If Pledgor breaches, violates or fails to perform
or observe any covenant, obligation, agreement, condition or
other provision contained in the Pledge Agreement or any other
Loan Document, and the same is not cured to the satisfaction of
the Bank within thirty (30) days after the Bank has specified
such default in a written notice delivered to the Pledgor.
10.3 If any representation or warranty or other
statement of fact contained herein or in any related writing
furnished to the Bank in connection with the transactions
contemplated hereby shall false or misleading in any material
respect as of the date of this Pledge Agreement and shall
continue to be false or misleading in any material respect, or
shall omit to state a material fact required to be stated therein
in order to make the statements contained there, in light of the
circumstances under which made, not misleading as of the date of
this Pledge Agreement, whether or not made with knowledge of the
same, and such omission to state a material fact shall not have
been corrected.
10.4 The occurrence of any other Event of Default
under, and defined in, the Loan Agreement or other Loan
Documents.
11. Remedies.
11.1 Upon the occurrence of any Event of Default, the
Bank may, at its option, declare any and all of the Secured
Obligations to be immediately due and payable, may exercise the
rights with respect to the Pledged Shares contemplated in Section
7 of this Pledge Agreement and, in addition to exercising all
other rights or remedies, proceed to exercise with respect to the
Pledged Shares all rights, options and remedies of a secured
party upon default as provided for under the Uniform Commercial
Code as enacted in the Commonwealth of Kentucky.
11.2 The rights of the Bank upon the occurrence of any
Event of Default shall include, without limitation, the
following:
(a) The right to the immediate possession of
Pledged Shares not then in the Bank's possession without
requirement of notice or demand or of any legal process.
(b) The right to sell the Pledged Shares or the
other Collateral at public or private sale and in one or more
lots. The Bank shall be entitled to apply the proceeds of any
such sale to the satisfaction of the Secured Obligations and to
expenses incurred in realizing upon the Pledged Shares or the
other Collateral in accordance with the Uniform Commercial Code
as enacted in the Commonwealth of Kentucky. Provided, the Bank
may, but shall not be obligated to, postpone the time of any
proposed sale of any of the Pledged Shares, or any part thereof,
and may change the time and/or place of such sale, subject to the
obligations of the Bank to give the Pledgor notice of such new
time and/or place of sale of the Pledged Shares, or any part
thereof, as applicable, as provided in Section 18.1 below. In
the event the Bank sells the Pledged Shares or any part thereof
on credit or for future delivery, which may be elected by the
Bank at its sole option, the Pledged Shares so sold may, at the
Bank's sole option, be transferred and/or delivered to the
purchaser thereof or retained by the Bank until the purchase
price thereof has been paid by the purchaser thereof.
(c) The right to recover the reasonable expenses
of the Bank in preparing for sale and selling the Pledged Shares
and other like expenses, together with court costs and reasonable
attorney's fees incurred by the Bank.
(d) The right to proceed by appropriate legal
process at law or in equity to enforce any provision of this
Pledge Agreement or in aid of the execution of any power of sale,
or for foreclosure of the security interest of the Bank in the
Pledged Shares, or for the sale of the Pledged Shares under the
judgment or decree of any court.
(e) In furtherance of the rights and remedies of
the Bank upon the occurrence of an Event of Default, the Pledgor
hereby constitutes any officer of the Bank as such Pledgor's
proxy and attorney-in-fact to complete, execute and file with the
Securities and Exchange Commission, if such filing be required by
law, one or more notices of proposed sale of securities pursuant
to Rule 144 under the Securities Act of 1933, as amended, and
this appointment shall be deemed coupled with an interest, and is
and shall be irrevocable, until all of the Secured Obligations
have been paid and performed in full to the Bank.
12. Exercise of Remedies. The rights and remedies of the
Bank shall be deemed to be cumulative, and any exercise of any
right or remedy shall not be deemed to be an election of that
right or remedy to the exclusion of any other right or remedy.
13. Waiver. The Pledgor hereby waives any claim arising
by reason of (a) the fact that the price or prices for which the
Pledged Shares or any part thereof is sold at any private sale or
sales is less than the price which would have been obtained at a
public sale or sales or is less than the amount of the Secured
Obligations; (b) any reasonable delay by the Bank in selling the
Pledged Shares following the occurrence of an Event of Default,
including, without limitation, any delays in selling the Pledged
Shares resulting from the compliance by the Bank with applicable
federal and state securities laws, even if the price of the
Pledged Shares thereafter declines; or (c) the immediate sale of
the Pledged Shares upon the occurrence of an Event of Default,
even if the price of the Pledged Shares should thereafter
increase. The Pledgor shall remain liable for any deficiency
remaining due, after the sale of the Pledged Shares, on the
Secured Obligations.
14. Payment of Costs, Attorney's Fees and Expenses. To
the extent not paid out of the proceeds of the sale of the
Pledged Shares, the Pledgor shall pay any and all reasonable
costs, attorney's fees and other expenses of whatever kind
incurred by the Bank in connection with (i) enforcing the Loan
Agreement, the Note, the other Loan Documents and/or this Pledge
Agreement (ii) obtaining possession of the Pledges Shares, (iii)
the protection and preservation of the Pledged Shares, (iv) the
collection of the Secured Obligations or any part thereof, and
(v) any litigation involving the Pledged Shares, any benefit
accruing by virtue of the provisions hereof or the rights of the
Bank hereunder.
15. Advances by Bank. The Pledgor shall reimburse the
Bank for all reasonable advances made by the Bank in performing
any actions on behalf of the Pledgor pursuant to this Pledge
Agreement, including, without limitation, all amounts paid by the
Bank (a) to discharge taxes, levies, liens and/or security
interest against the Collateral, and/or (b) in connection with
the exercise by the Bank of its rights and remedies hereunder.
All such advances made by the Bank shall bear interest at the
rate set forth in the Note as applicable to overdue principal
and/or accrued interest on the Note, and all such advances and
all interest thereon shall be secured by this Pledge Agreement
with the same priorities as the Note, to the fullest extent
permitted by applicable law, and shall be due and payable in full
to the Bank upon demand by the Bank at any time in its sole and
absolute discretion.
16. Irrevocable Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Bank as such Pledgor's attorney-in-fact
(a) to do all acts and things which the Bank may deem necessary
or appropriate in its sole and absolute discretion to perfect and
to continue the perfected status of the security interest in the
Collateral created in favor of the Bank pursuant to this Pledge
Agreement and to protect the Collateral, and (b) to perform such
other acts in connection with the Collateral as the Bank
determines in its reasonable discretion to be necessary or
appropriate to effectuate the purposes of this Pledge Agreement.
17. Return of Collateral. The Bank may, at any time,
deliver the Pledged Shares, the other Collateral, or any part
thereof, to the Pledgor. The receipt by the Pledgor of the
Pledged Shares, or any part thereof shall be a complete and full
discharge of the Bank, and the Bank shall be discharged from any
liability or responsibility with respect thereto.
18. Notice.
18.1 Any requirement of the Uniform Commercial Code of
reasonable notice of the intended sale or other disposition of
the Collateral shall be met if such notice is given to the
Pledgor at least ten (10) business days before the time of sale,
disposition or other event or thing giving rise to the
requirement of notice.
18.2 All notices or communications under this Pledge
Agreement shall be in writing and shall be personally delivered
or sent by express courier service or by registered or certified
United States mail, return receipt requested, postage prepaid,
addressed as follows (or to such other address as to which either
party shall have given the other party written notice):
If to the Pledgor: Freedom Financial Corporation
0000 Xxxxxxxxxxx Xxxx, Xxxxx X
Xxx Xxxxxx, Xxxxxxx 00000
If to the Bank Xxxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxxxxxx, Xx. 00000
All notices and other communications hereunder shall be
deemed given upon the earliest of (a) actual delivery in person,
(b) one (1) business day after having been delivered to an
express courier service, or (c) two (2) business days after
having been deposited in the United States mails, in accordance
with the foregoing, as applicable.
19. Further Assurances. The Pledgor shall execute any such
other documents or instruments, and take such other actions, as
the Bank may request to more fully create and maintain, or to
verify or perfect the security interest intended to be created in
this Pledge Agreement.
20. No Implied Waiver. All options and rights of the Bank
hereunder are continuing and the failure of the Bank to exercise
any such option or right of election in any instance shall not be
construed as waiving the right to exercise such option or right
at any subsequent time or be construed as waiving the right to
exercise any other option or right hereunder, at law or at
equity. Not exercise by the Bank of any of the options, rights
or powers provided herein and no delay or omission in the
exercise of such options, rights or powers provided herein shall
be construed to exhaust the same or be construed as a waiver
thereof, and each such option right and power may be exercised at
any time and from time to time.
21. Severability of Provisions. If any term or provision
of this Pledge Agreement is held to be invalid or unenforceable
in any jurisdiction, the other terms and provision hereof shall
remain in full force and effect in such jurisdiction and the
invalid or unenforceable provision shall remain in full force and
effect in all other jurisdictions.
22. Governing Law. This Pledge Agreement and the respective
rights, duties and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of the
Commonwealth of Kentucky.
23. Successors and Assigns. This Pledge Agreement shall
bind the Pledgor and their respective heirs, personal
representatives, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns, including,
without limitation, each subsequent holder of the Note.
24. Captions. The various section headings used in the
Pledge Agreement are inserted for convenience of reference only
and shall be ignored in construing the provisions hereof.
25. Time of the Essence. Time shall be of the essence
in the performance of all of the Pledgor' covenants, obligations
and agreements under this Pledge Agreement.
26. Entire Agreement. This Pledge Agreement constitutes
the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior understandings with
respect to the subject matter hereof. No change, modification,
addition or termination of this Pledge Agreement shall be
enforceable unless in writing and signed by the party against
whom enforcement is sought.
27. Joint and Several. All obligations of the Pledgor
under this Pledge Agreement shall be joint and several.
IN WITNESS WHEREOF, the Pledgor and the Bank have executed
this Pledge Agreement on the day, month and year first above
written.
FREEDOM FINANCIAL CORPORATION, "Pledgor"
BY:
X. XXXXXXX XXXXXXX, C.E.O.
PIONEER BANK "Bank"
BY:
XXXXXXX XXXX, Vice-President
This instrument prepared by:
XXXXX X. XXXXXXXX, ESQ.
X.X. Xxx 000
Xxxxxxxxxxxx, XX 00000
502/477-6412
