Exhibit 10.14
PARTNERSHIP INTEREST PLEDGE AND
SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT
--------------------------------------------
This PARTNERSHIP INTEREST PLEDGE AND SECURITY AGREEMENT AND COLLATERAL
ASSIGNMENT (this "Agreement") is entered into as of December 28, 2005 (the
"Effective Date") by and between STANFORD INTERNATIONAL BANK, LTD., an Antiguan
banking corporation, ("SECURED PARTY"), TIERRA DEL SOL RESORT, INC., a Florida
corporation ("PLEDGOR"), and TDS MANAGEMENT LLC, a Florida limited liability
company ("TDSM") .
WHEREAS, SECURED PARTY is the owner and holder of a $6,000,000 promissory
note dated as of December 18, 2003, issued by PLEDGOR's indirect parent company
American Leisure Holdings, Inc. ("AMLH"), and certain of AMLH's affiliates in
favor of SECURED PARTY's affiliate Stanford Venture Capital Holdings, Inc., (the
"Note");
WHEREAS, the Note is secured by a mortgage on approximately 162 acres of
real property located in Polk County, Florida (the "Property"), owned by
affiliates of AMLH (the "Mortgage");
WHEREAS, KeyBank National Association ("Key"), the lender for the proposed
development of the portion of the Property owned by subsidiaries of TIERRA DEL
SOL RESORT (PHASE 1) LTD, a Florida limited partnership of which TDSM is the
general partner (the "Partnership"), requires release of the Mortgage as to 122
acres of the Property as a condition to the provision of such financing;
WHEREAS, SECURED PARTY will not release the Mortgage without the pledge and
collateral assignment as security for the Note of all of PLEDGOR's limited
partner interest in the Partnership, representing a 72.928% Partnership
Percentage (as defined in the Partnership's Agreement of Limited Partnership
dated December 28, 2005 [the "Partnership Agreement"]); and
WHEREAS, PLEDGOR desires to secure AMLH's obligations under the Note by
granting SECURED PARTY a security interest in all of PLEDGOR's interest in the
Partnership, pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the matters set forth in the above
Recitals and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, PLEDGOR hereby agrees as follows:
1. Security. The term "Collateral" shall mean all of the limited partner
--------
interests in the Partnership held by the PLEDGOR, including all capital
accounts, rights of distribution, profits and losses and all proceeds thereof,
all additions, attachments, accessories and accessions thereto, and any and all
substitutions, replacements or exchanges therefore, and all of PLEDGOR's right,
title and interest as a limited partner in the Partnership and pursuant to the
Partnership Agreement, as amended from time to time, including, without
limitation, and as applicable, the right to: (A) vote (provided however that
PLEDGOR shall continue to exercise its right to vote prior to the occurrence of
an Event of Default and the expiration of any applicable grace period); (B) upon
prior written notice, inspect the books, records and documents of the
Partnership during normal business hours at the office of PLEDGOR or such other
place as PLEDGOR may keep such records and documents; (C) receive a return of
capital contributions in accordance with the Partnership Agreement; (D) receive
tax benefits; (E) receive payments or distributions made to PLEDGOR by or on
behalf of the Partnership; and (F) receive all proceeds from the sale or
transfer of PLEDGOR's interest in the Partnership or any part thereof.
2. Obligations. As used herein, the term "Obligations" shall mean all of
-----------
AMLH's and PLEDGOR's obligations, covenants and agreements under the Note, this
Agreement, and all other documents or instruments, evidencing, securing or
otherwise executed and delivered in connection with the Note (collectively, the
"Loan Documents").
3. Grant of Security Interest. As security for full and timely payment,
-----------------------------
performance and satisfaction of the Obligations, the PLEDGOR hereby collaterally
assigns, grants, transfers, hypothecates and delivers to SECURED PARTY, its
successors and assigns, a first priority security interest in the Collateral.
4. Perfection: UCC Filings. To perfect the security interest in the
----------
Collateral granted hereby, concurrently with the execution hereof, the PLEDGOR
shall deliver to SECURED PARTY an executed Assignment Separate from Collateral
(the "Assignment") in the form attached hereto as Exhibit "A" and incorporated
herein by this reference. SECURED PARTY shall hold the Assignment as security
for the Note and upon indefeasible payment in full of the Note shall return the
original of the Assignment to the PLEDGOR. TDSM, as general partner if the
Partnership, by its execution of this Agreement, acknowledges SECURED PARTY's
rights in the Collateral and acknowledges that it has made the appropriate
entries on the Partnership's books and records to effect and evidence the pledge
of a security interest in the Collateral to SECURED PARTY. Further, the PLEDGOR
acknowledges and agrees that the Partnership shall act as SECURED PARTY's
bailee, agent and pledgeholder with respect to possession of the Collateral. To
further perfect the security interest in all of the Collateral generally, the
PLEDGOR shall deliver to SECURED PARTY a UCC-1 Financing Statement in proper
form for filing describing the Collateral.
5. Representations by PLEDGOR and TDSM. The PLEDGOR and TDSM, jointly and
------------------------------------
severally, represent and warrant to SECURED PARTY that:
(a) Pledgor is the sole owner of all the limited partner interests in
the Partnership, except for the interest held by Tierra del Sol Resort
(Phase 2), Ltd., a Florida limited partnership ("Phase 2"), free and clear
of all liens or encumbrances or prior pledges;
(b) the limited partner interest pledged pursuant to this Agreement
constitutes 71.928 % of the Partnership Percentage in the Partnership, and
the remaining 28.072 % Partnership Percentage is owned 27.972 % by Phase 2
and .1% by TDSM as sole general partner of the Partnership;
(c) so long as the Obligations secured by this Agreement are
outstanding, no new interests in the Partnership will be issued and that
the PLEDGOR shall not further assign, transfer, pledge or encumber its
limited partner interests in the Partnership;
(d) so long as the Obligations secured by this Agreement are
outstanding, AMLH will maintain ownership of at least 81% of PLEDGOR's
common stock;
(e) the execution and delivery by the PLEDGOR of this Agreement will
not result in the violation of or default under any agreement or any law or
governmental regulation applicable to the PLEDGOR, TDSM, or the
Partnership;
(f) the collateral assignment of PLEDGOR's limited partner interest
contained in this Agreement is permitted under the Partnership Agreement;
and
(g) The Partnership does not directly or indirectly own any real
property or assets other than that certain real property in Polk County,
Florida, legally described in Exhibit "B" attached hereto (the "Partnership
Property") and does not operate any business other than the development,
management and operation of the Partnership Property.
6. Covenants by PLEDGOR and TDSM. The PLEDGOR and TDSM, jointly and
---------------------------------
severally, hereby covenant that, until such time as the Obligations have been
fully paid, performed and satisfied:
(a) all payments or distributions of cash or other assets made by or
on behalf of the Partnership with respect to or on account of the
Collateral shall be made directly to Secured Party;
(b) the PLEDGOR shall not sell, convey or otherwise dispose of any of
the Collateral or any interest therein, or create, incur or permit to exist
any other pledge, mortgage, lien, charge, encumbrance or security interest
in or with respect to any of the Collateral, or the proceeds thereof;
(c) no new partners of the Partnership shall be added without the
prior written consent of SECURED PARTY (which SECURED PARTY may withhold in
its absolute discretion);
(d) the PLEDGOR shall promptly deliver to SECURED PARTY a copy of all
written notices or correspondence received by the PLEDGOR with respect to
the Collateral;
(e) the PLEDGOR shall, at PLEDGOR's own expense, promptly execute,
acknowledge and deliver all such instruments and take all such reasonable
actions as SECURED PARTY from time to time may reasonably request in order
to ensure to SECURED PARTY the benefits of the lien in and to the
Collateral intended to be created by this Agreement; and
(f) Neither PLEDGOR nor any of its shareholders nor any affiliated,
related or associated party or person shall, prior to the payment in full
of the Note, demand, accept or receive any payment, distribution or other
consideration, directly or indirectly, from the Partnership.
7. Events of Default. The happening of any of the following events shall
-------------------
constitute an event of default ("Event of Default") under this Agreement:
(a) the occurrence of an Event of Default under the Note;
(b) the occurrence of an Event of Default under the Credit Agreement
of even date between SECURED PARTY and PLEDGOR (the "Credit Agreement");
(c) the failure by TDSM or PLEDGOR to keep or perform any of the
material terms, covenants and conditions of this Agreement and continuation
of such failure for 10 days after written notice from SECURED PARTY;
(d) the levy of any attachment, execution or other process against any
of the Collateral and the failure to remove or stay such process within 10
days after the date thereof; or
(e) the occurrence of an Event of Default under either of the loan
agreements of even date providing for financing from Key for the
development of portions of the Property (the "Senior Financing"); provided,
however, that if any event of default under such loan agreements is cured
within the applicable time period, it shall not constitute an Event of
Default hereunder.
8. Rights of SECURED PARTY. Upon the occurrence of an Event of Default,
--------------------------
SECURED PARTY may, at its option, do any one or more of the following:
(a) declare all indebtedness of AMLH to SECURED PARTY to be
immediately due and payable, whereupon all unpaid principal and interest on
the Note shall become and be immediately due and payable;
(b) exercise any and/or all of the rights and remedies of a secured
party as provided for by the Uniform Commercial Code of the State of
Florida;
(c) proceed by an action or actions at law or in equity to recover the
indebtedness secured hereby or to foreclose under this Agreement and sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of
a court or courts of competent jurisdiction;
(d) proceed immediately to have any or all of the Collateral
registered in SECURED PARTY's name or in the name of its nominee;
(e) exercise all voting rights with respect to the Collateral and all
other rights;
(f) enforce one or more remedies hereunder, successively or
concurrently; and
(g) proceed immediately to dispose of and realize upon the Collateral,
or any part thereof, and in connection therewith, sell or otherwise dispose
of and deliver the Collateral, or any part thereof, at public or private
sale or sales, at any exchange, broker's board or at any of SECURED PARTY's
offices or elsewhere, at such prices and on such terms as SECURED PARTY may
deem best, for cash or on credit, or for future delivery without assumption
of any credit risk, with the right of SECURED PARTY or any purchaser to
purchase at any such sale either the whole or any part of the Collateral
(in connection with any such sale or disposition, SECURED PARTY shall give
10 calendar days or more notice of the time and place of any public sale or
of the time after which a private sale may take place, which notice the
PLEDGOR hereby acknowledges to be reasonable ["Notice of Sale"]).
Notwithstanding the foregoing or anything else herein to the contrary,
SECURED PARTY agrees that it shall accord the PLEDGOR a period of 10 days
from the date of occurrence of an Event of Default (the "Redemption
Period") before SECURED PARTY will have the right to sell the Collateral to
a third party, and that during such Redemption Period the PLEDGOR may
redeem and recover the Collateral by payment to SECURED PARTY of all
amounts due under the Note, including all principal, interest and any fees
and expenses due. All other rights and remedies of SECURED PARTY remain
available during the Redemption Period.
9. PLEDGOR' Rights Prior to Default. So long as no Event of Default occurs
--------------------------------
and is continuing under this Agreement, the PLEDGOR shall have the sole and
exclusive right to exercise its pre-existing rights under the Partnership
Agreement, other than its right to receive payments or distributions, which
shall be made directly to SECURED PARTY pursuant to Section 6(a) above;
provided, however, that as long as this Agreement remains in effect, without the
-----------------
prior written consent of SECURED PARTY (or its successor in interest), PLEDGOR
and TDSM shall not permit the Partnership to:
(i) merge, consolidate, reorganize, liquidate, dissolve,
recapitalize, sell, lease, transfer, or otherwise dispose of its
assets other than in the normal course of business;
(ii) issue, sell, or otherwise dispose of or acquire any of its
equity or debt securities (or securities convertible or exchangeable
into any of its equity or debt securities);
(iii) create or permit to exist any lien, charge, or encumbrance
upon any of its assets, whether now owned or hereafter acquired,
except for:
(a) liens for taxes not yet due or which are being contested
in good faith by the Partnership;
(b) liens and encumbrances directly related to the Senior
Financing;
(c) liens and encumbrances operating in favor of SECURED
PARTY; and
(d) other liens and encumbrances incidental to the conduct
of the business of the Partnership which were not incurred in
connection with the borrowing of money and which do not in the
aggregate materially detract from the value of the Partnership's
assets or materially impair the use thereof in the operation of
its business;
(iv) incur or permit to exist any indebtedness, other than any
indebtedness existing pursuant to the Senior Loan or in favor of
SECURED PARTY, and other than indebtedness incurred in the ordinary
course of its business, nor shall it give its guarantee in connection
with the obligation of any person or entity.
(v) amend the Partnership Agreement or other governing documents
of the Partnership; or,
In addition, at all times during the term of this Agreement, PLEDGOR and
TDSM shall cause the Partnership to:
(i) maintain its entity existence and continue to operate its
business in the ordinary course; and
(ii) maintain its financial condition so that there is no
material adverse charge in its condition.
Upon the occurrence and during the continuance of an Event of Default hereunder,
SECURED PARTY at its option shall succeed immediately to all rights of the
PLEDGOR in connection with the Partnership.
10. Proceeds. The proceeds of any disposition of all or any part of the
--------
Collateral shall be applied as follows:
(a) first, to the costs and expenses incurred in connection therewith
or incidental thereto, including reasonable attorneys' fees and legal
expenses;
(b) second, to the satisfaction of the Obligations;
(c) third, to the payment of any other amounts required by applicable
law; and
(d) fourth, to the PLEDGOR to the extent of any surplus remaining.
11. Consent. The PLEDGOR hereby consents that, from time to time, before or
-------
after the occurrence or existence of any Event of Default, with or without
notice to or assent from the PLEDGOR, any other security at any time held by or
available to SECURED PARTY for any of the Obligations or any other security at
any time held by or available to SECURED PARTY or any other person, firm or
corporation secondarily or otherwise liable for any of the Obligations, may be
exchanged, surrendered or released, and any of the Obligations may be exchanged,
altered, renewed, extended, continued, surrendered, compromised, waived or
released, in whole or in part, as SECURED PARTY may see fit, and the PLEDGOR
shall remain bound under this Agreement notwithstanding any such exchange,
surrender, release, alteration, renewal, extension, continuance, compromise,
waiver or inaction, or extension of further credit.
12. Private Sale. The PLEDGOR recognizes and acknowledges that SECURED
-------------
PARTY may be unable to effect a public sale of all or a part of the Collateral
and may elect to resort to one or more private sales to purchasers who will be
obligated to agree, among other things, to acquire the Collateral for their own
account, for investment, and not with a view to the distribution or resale
thereof. The PLEDGOR acknowledge that any such private sales may be at prices
and on terms less favorable than those of public sales, and agree that such
private sales shall be deemed to have been made in a commercially reasonable
manner provided the SECURED PARTY provides the Notice of Sale as set forth in
paragraph 8.
13. Termination. Upon full payment and performance of all of the
-----------
Obligations, this Agreement shall terminate.
14. Further Assurances. The PLEDGOR and TDSM shall, upon request of SECURED
------------------
PARTY, furnish to SECURED PARTY such further information, execute and deliver to
SECURED PARTY such additional documents and instruments (including, without
limitation, further Uniform Commercial Code financing statements) and do such
other acts and things, as SECURED PARTY may at any time reasonably request
relating to the perfection or protection of the security interest created by
this Security Agreement or for the purpose of carrying out the intent of this
Security Agreement. Without limiting the foregoing, PLEDGOR shall cooperate and
do all reasonable acts deemed necessary or advisable by SECURED PARTY to
maintain in SECURED PARTY a perfected first security interest in the Collateral,
and shall obtain and furnish to SECURED PARTY any subordinations, releases,
waivers, and similar documents as may be from time to time requested by, and
which are in form and substance satisfactory to, SECURED PARTY.
15. Authority of SECURED PARTY. The SECURED PARTY shall have and be
-----------------------------
entitled to exercise all such powers hereunder as are specifically delegated to
the SECURED PARTY by the terms hereof, together with such powers as are
incidental thereto. The SECURED PARTY may execute any of its duties hereunder by
or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of such counsel concerning all matters
pertaining to its duties hereunder. During the continuance of an Event of
Default, the PLEDGOR and TDSM hereby consent to the admission and substitution
of the SECURED PARTY as the sole limited partner of the Partnership.
16. Attorneys' Fees. If any legal action or other proceeding is brought for
---------------
the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in connection with that
action or proceeding, including before the filing of suit, in addition to any
other relief to which it or they may be entitled.
17. Miscellaneous. This Agreement is made and shall be interpreted,
-------------
construed and enforced in accordance with the laws of the State of Florida. This
Agreement has been negotiated by parties knowledgeable in the matters contained
in this Agreement, with the advice of counsel, is to be construed and
interpreted in absolute parity, and shall not be construed or interpreted
against any party by reason of such party's preparation of the initial or any
subsequent draft of the Agreement. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument. Executed
copies of this Agreement may be delivered by facsimile, with originals to
follow. All periods of time referred to in this Agreement shall include
Saturdays, Sundays and state or national holidays, unless the period of time
specifies business days, provided that if the date or last date to perform any
act or give any notice or approval shall fall on a Saturday, Sunday or state or
national holiday, such act or notice may be timely performed or given on the
next succeeding day which is not a Saturday, Sunday or state or national
holiday. This Agreement shall be binding upon and shall inure to the benefit of
all the parties hereto, their respective beneficiaries, successors and assigns.
Each party signing this Agreement on behalf of an entity represents and warrants
that he or she has full authority to do so and the signature of no other party
is necessary for this Agreement to be effective. Headings at the beginning of
each numbered section of the Agreement are solely for the convenience of the
parties and are not a part of this Agreement. This Agreement contains all of the
agreements of the parties hereto with respect to the matters contained herein,
and no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provision of this Agreement may be amended or
added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. If any of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable by a court of
competent jurisdiction, such provision(s) shall be reformed by such court to the
minimum extent possible to render it valid, legal and enforceable (if possible),
and the validity, legality and enforceability of the remaining portions hereof
shall not in any way be affected or impaired. Time is of the essence under this
Agreement and any amendment, modification or revision of it.
IN WITNESS THEREOF, the parties have entered into this Agreement as of the
Effective Date.
PLEDGOR:
TIERRA DEL SOL RESORT, INC.
a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
SECURED PARTY:
STANFORD INTERNATIONAL BANK, LTD.
By:
----------------------------
TDS MANAGEMENT, LLC,
a Florida limited liability company
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
