EXHIBIT 10.94
LOAN AND PLEDGE AGREEMENT
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This Loan and Stock Pledge Agreement the ("Agreement") is made and
executed as of November 5, 1998 by and among Xxxxxxxxx X. X'Xxxx and the
Xxxxxxxxx X. X'Xxxx Living Trust (collectively, "Pledgor"), BPN Corporation, a
California corporation ("BPN") and Pan American Bank, FSB ("Lender").
RECITALS
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A. The Xxxxxxxxx X. X'Xxxx Living Trust ("Trust") is the owner of 350
shares of the common stock (the "Shares") of BPN.
B. BPN is a party to an agreement for Purchase of Assets dated November
5, 1998 (the "Asset Purchase Agreement") under which BPN and Lender are
purchasing certain assets ("Assets") from Norwest Financial Coast, Inc.
C. The parties hereto desire to specify their agreement respecting the
acquisition of the Assets under the Asset Purchase Agreement and of certain
financing to be provided to Pledgor in connection therewith.
NOW, therefore, the parties agree as follows:
1. Asset Purchase Agreement. BPN shall pay $1,200,000 and Lender
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shall pay $1,800,000 of the total $3,000,000 acquisition price for the Assets.
Lender shall have the exclusive right to finance insurance premium finance
receivables ("IPF Loans") generated through the exploitation of the Assets under
the terms of the Insurance Premium Financing Management Agreement (the "IPF
Agreement") dated May 17, 1995 between Lender and BPN, which right shall not be
subject to termination under such agreement. The IPF Agreement shall otherwise
govern exploitation of the Assets by BPN and Lender. In addition, Lender has
agreed to pay a total of $25,000 to BPN to defer expenses to be incurred by BPN
in connection with taking over the business included as part of the Assets and
handling the IPF Loans generated thereby (the "Expense Reimbursement"), which
shall be credited pro rata against the initial principal repayment obligation of
Pledgor hereunder and of Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and The Xxxxxx
Family Trust (collectively "Xxxxxx") under a $780,000.00 promissory note of
Xxxxxx evidencing credit extended by Lender to Xxxxxx in connection with the
acquisition of the Assets (the "Xxxxxx Note"). Upon the crediting of the
Expense Reimbursement to the Note and Xxxxxx Note, Lender shall have no
obligation to fund the Expense Reimbursement. All other such expenses shall be
paid by BPN.
2. Loan; Initial Payment. Pledgor has agreed to borrow, and Lender
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has agreed to loan to Pledgor the sum of $420,000.00, to be used by Pledgor
solely for the purpose of funding the payment to be made by BPN to acquire the
Assets under the Asset Purchase Agreement (the "Loan"). The Loan is evidenced
by this Agreement and a Promissory Note (the "Note") of even date. This
Agreement, the Note and any and all documents and instruments now or hereafter
executed and evidencing the Loan or any security therefore are referred to
herein as the "Loan
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Documents". Immediately following funding of the Loan, Pledgor shall pay
$70,000.00 to Lender as a payment of principal. There shall be credited against
such payment the sum of $8,750.00, representing 35% of the amount of the Expense
Reimbursement.
3. Security. Pledgor hereby assigns, grants, pledges and transfers
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to Lender, a security interest in and lien upon all Collateral (as defined in
paragraph 4) as security for the payment and performance of any and all of the
following obligations and liabilities ("Obligations") of Pledgor owing to
Lender: (i) payment of all of the indebtedness evidenced by the Note in the
face amount of $420,000.00, executed by Pledgor in favor of the Lender; (ii)
payment and performance of all existing and future indebtedness and obligations
of the Pledgor to the Lender under the Loan Documents; and (iii) any and all
amendments, modifications, renewals and/or extensions of any of the foregoing,
including, but not limited to amendments, modifications, renewals or extensions
which are evidenced by new or additional instruments, documents or agreements or
which change the rate of interest on any indebtedness or obligations secured
hereby. The term "Obligations" as used herein is intended to mean Obligations
in its most comprehensive sense and includes all present and future
indebtedness, liabilities, undertakings, covenants and other obligations of
Pledgor, whether voluntary or involuntary, absolute or contingent, liquidated or
unliquidated, determined or undetermined, earned or unearned, and due or not
due.
4. Collateral. Pledgor hereby assigns, grants, pledges and
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transfers to Lender, as security for the payment and performance of the
Obligations described in paragraph 3 above, a security interest in, and lien
upon all of Pledgor's right, title and interest in and to the following:
(a) the Shares;
(b) all options or warrants for the purchase of additional Shares
and all rights represented thereby held by Pledgor if any (the "Options");
(c) stock powers ("Powers") duly executed in blank, with such
signatures properly guaranteed covering all of the Shares; and
(d) the proceeds of each of the foregoing including, without
limitation any and all dividends, cash, instruments and other property from time
to time received, receivable, or otherwise distributed in respect of or in
exchange for any of the Shares or Options (the "Proceeds") (The Shares, the
Options, the Powers, and the Proceeds shall be collectively referred to as the
"Collateral").
5. Delivery. Concurrent with the execution hereof, Pledgor has
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delivered Certificate(s) No(s). ____________________, representing all of the
Shares to Lender together with related Powers or endorsements, to be held
pursuant to the terms hereof for the benefit of Lender.
6. Lender's Duties. Lender shall have no duty with respect to the
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Collateral other than the duty to use reasonable care if it is in its
possession. Without limiting the generality of the foregoing, Lender shall be
under no obligation to take any steps necessary to preserve rights
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in the Collateral against any other parties, to sell same if it threatens to
decline in value, or to exercise any rights represented thereby.
7. Voting Rights; Dividends; Etc. During the term of this Agreement
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and as long as no Event of Default, as defined herein shall have occurred and be
continuing:
(a) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Shares or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the other Loan
Documents.
(b) Pledgor shall be entitled to receive and retain any and all
dividends and distributions paid in respect of the Shares; provided, however,
that any and all
(i) dividends and distributions paid or payable other
than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Shares,
(ii) dividends and distributions paid or payable in cash
in respect of any Shares in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, and
(iii) cash paid with respect to, payable or otherwise
distributed on redemption of, or in exchange for, or upon the sale of any
Shares, shall be forthwith delivered to Lender to hold as Collateral and shall,
if received by Pledgor, be received in trust for the benefit of Lender, be
segregated from the other property or funds of Pledgor, and be forthwith
delivered to Lender as Collateral in the same form as so received (with any
necessary endorsement).
(c) Lender shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise those voting
and other rights which it is entitled to exercise pursuant to paragraph 7(a)
above and to receive those dividends or distributions which it is authorized to
receive and retain pursuant to paragraph 7(b) above.
(d) If an Event of Default shall have occurred and be
continuing and any amounts shall be due and payable (whether by acceleration,
maturity, or otherwise) under any of the Obligations, all rights of Pledgor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to this paragraph 7 and to receive the dividends
and distributions which it would otherwise be authorized to receive and retain
pursuant to this paragraph shall, at Lender's option, cease, and all such rights
shall, at Lender's option, thereupon become vested in Lender so long as an Event
of Default shall continue, and Lender shall, at its option, thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and hold as Collateral such dividends and interest payments.
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8. Representations. Pledgor warrants, represents and covenants, and
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to the extent expressly mentioned below, BPN warrants, represents and covenants
that:
(a) There are no restrictions upon the transfer of any of the
Collateral and Pledgor has the right to pledge and grant a security interest in
or otherwise transfer such Collateral free of any encumbrances or rights of
third parties, except for the rights of United PanAm Financial Corp., f/k/a Pan
American Group, Inc. ("UPFC"), under that certain Stock Option Agreement dated
May 17, 1995, as amended, between UPFC, Pledgor, BPN and Xxxxxx. Pledgor and BPN
hereby waive any rights that Pledgor or BPN may have under the Stock Redemption
Agreement between BPN, Pledgor and Xxxxxx dated August 25, 1990 (the "Stock
Redemption Agreement") to the extent such rights would hinder or impede Lender's
right to dispose of the Collateral, and further agree that Lender may, upon
foreclosure and sale of its Collateral or acceptance thereof in lieu of sale or
foreclosure, dispose of the Shares free and clear of any restriction or rights
of any third party arising under the Stock Redemption Agreement.
(b) All of the Collateral is and shall remain free from all
liens, claims, encumbrances, and purchase money or other security interests.
Pledgor shall not, without Lender's prior written consent, sell, transfer or
otherwise dispose of any or all of the Collateral.
(c) This Agreement, and the delivery to Lender of the
certificates representing the Shares, creates a valid and perfected security
interest in the Collateral in favor of Lender, and all actions necessary or
desirable to such perfection have been duly taken.
(d) No authorization or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required either
(i) for the grant by Pledgor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by Pledgor, (ii) for the
perfection of or exercise by Lender of its rights and remedies hereunder; or
(iii) for the exercise by Lender of the voting or other rights provided for in
this Agreement or the remedies in respect of the Shares pursuant to this
Agreement (except as may be required in connection with a disposition of the
Shares by laws affecting the offering and sale of securities generally).
(e) Pledgor has made its own arrangements for keeping informed
of changes or potential changes affecting the Collateral (including, but not
limited to, rights to convert, rights to subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights) and Pledgor
agrees that Lender shall have no responsibility or liability for informing
Xxxxxxx of any such changes or potential changes or for taking any action or
omitting to take any action with respect thereto.
(f) The Shares and any shares owned by Xxxxxx and pledged to
Lender represent, and will at all times represent, all of the issued and
outstanding shares of capital stock of BPN. Pledgor and BPN agree that no
additional Shares shall be issued except to Lender without Lender's written
prior approval.
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(g) Pledgor and BPN represent that there are and will be no
options, ants or other rights to acquire capital stock of BPN outstanding other
than the option of UPFC under the Stock Option Agreement.
(h) Pledgor and BPN represent, warrant and covenant that all of
the outstanding Shares have been duly and validly issued by BPN and they are
fully paid and nonassessable.
(i) The financial statements of Pledgor and BPN provided and to
be provided to Lender in connection with the Loan fairly represent the financial
condition, operation and income of such persons as of the date covered thereby.
(j) Pledgor represents that Xxxxxxxxx X. X'Xxxx is a trustee of
the Trust, that he has the full power and authority to execute all Loan
Documents on behalf of the Trust, that the Trust is not restricted from entering
into and performing its obligations under the Loan Documents, and that Lender
has or will be delivered a true and correct copy of the Trust.
9. Additional Covenants. Pledgor and BPN covenant and agree that:
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(a) BPN will not incur any indebtedness other than for trade
payables incurred for goods and services acquired or utilized in the ordinary
course of business and paid within 90 days, or guaranty or pledge any assets to
secure any indebtedness of any other person, and any obligation to repay Pledgor
and Xxxxxx any funds advanced to BPN from the proceeds of the Note and the
Xxxxxx Note,
(b) Lender may collect all Loan payments, when due, by directly
debiting amounts otherwise due BPN from Lender under the IPF Agreement.
(c) BPN and each party comprising Pledgor shall provide Lender
annually with financial statements in form satisfactory to Lender and copies of
all federal and state income tax returns filed by them.
(d) BPN and Pledgor have materially benefitted from the
proceeds of the Loan, and Lender would not extend such credit without BPN's and
Pledgor's agreement to the terms of this Agreement, including specifically this
paragraph 9.
10. Share Adjustment. In the event that during the term of this
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Agreement, any reclassification, readjustment or other change is declared or
made in the capital structure of BPN, or any Option is exercised, all new
substituted and additional shares, options, or other securities, issued, or
issuable, to Pledgor by reason of any such change or exercise shall be delivered
to and held by Lender under the terms of this Agreement in the same manner as
the Collateral originally pledged hereunder.
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11. Warrants. In the event that during the term of this Agreement,
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subscription warrants or any other rights or options shall be issued or
exercised in connection with the Collateral, such warrants, rights and options
acquired by Pledgor shall be immediately assigned by Pledgor to Lender and all
new stock or other securities so acquired by Pledgor shall also be immediately
assigned to Lender to be held under the terms of this Agreement in the same
manner as the Collateral originally pledged hereunder.
12. Consent. Pledgor hereby consents that, from time-to-time, before
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or after the occurrence or existence of any Event of Default, with or without
notice to or assent from Pledgor, any other security at any time held by or
available to Lender for any of the Obligations or any other security at any time
held by or available to Lender of 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 changed, altered,
renewed, extended, continued, surrendered, compromised, waived or released, in
whole or in part, as Lender may see fit, and 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.
13. Events of Default. The Lender may exercise the remedies held by
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the Lender under this Agreement and other Loan Documents if any of the following
events (an "Event of Default") occur and are not remedied by the defaulting
party or waived in writing by the Lender.
(a) The nonpayment, within five (5) days of the date when due,
of any installment of interest or principal owing under the Note or of any other
amount payable to the Lender under the terms of the Loan Documents.
(b) The failure by the Pledgor or BPN to perform or observe any
representation, warranty or agreement contained in any of the Loan Documents,
which shall continue for a period of thirty (30) days after the Pledgor or BPN
become aware thereof, except that any obligations related to the payment of
money shall have no grace period except as otherwise expressly provided in
paragraph 13(a) hereof.
(c) The existence for a period of thirty (30) days of any lien
other than liens created by the Loan Documents or permitted hereunder covering
all or any portion of the Collateral, unless the validity thereof is being
contested in good faith by the Pledgor.
(d) Any representation, statement, certificate, schedule or
report made or furnished to the Lender by or on behalf of the Pledgor or BPN
proves to be false or erroneous in any material respect at the time of the
making thereof or any representation or warranty contained in the Loan Documents
ceases to be complied with in any material respect.
(e) The insolvency (meaning an inability to pay debts as the
same become due or the existence of liabilities in excess of assets) of any of
the parties comprising Pledgor or
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BPN, or the institution of bankruptcy, reorganization, liquidation, receivership
or conservatorship proceeding by or against any of the parties comprising
Pledgor or BPN.
(f) The default in payment or acceleration of the maturity of
any indebtedness any of the parties comprising Pledgor or BPN owing to any other
person.
(g) For any reason after execution and delivery thereof, any
document delivered pursuant hereto that creates, or was intended to create, a
security interest or to provide collateral security for indebtedness created
hereunder ceases to be in full force and effect, or the liens intended to be
created thereby cease to be or are not valid and perfected first liens, subject
to no other liens.
14. Remedies Upon Default. Upon the occurrence of an Event of
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Default, Lender shall have, in addition to any other rights given by law or the
rights hereunder, all of the rights and remedies with respect to the Collateral
of a secured party under the California Uniform Commercial Code.
In addition, with respect to the Collateral, or any part thereof,
Lender may sell or cause the same to be sold at any public or private sale, in
one or more sales or lots, at such price as Lender may deem best, and for cash
or on credit or for future delivery, without assumption of any credit risk, and
the purchaser of any or all of the Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever.
Any sale of the Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies or other financial
institutions disposing of property similar to the Collateral shall be deemed to
be commercially reasonable. Any requirements of reasonable notice shall be met
if such notice is mailed to Pledgor, at the address set forth in this Agreement,
at least ten (10) calendar days before the time of the sale or disposition. Any
other retirement of notice, demand or advertisement for sale, is, to the extent
permitted by law, waived.
Lender may, in its own name, or in the name of a designee or nominee,
buy at any public sale of the Collateral. Lender shall have the right to
execute any document or form, in its name or in the name of the Pledgor, which
may be necessary or desirable in connection with such sale of Collateral.
In addition to specific rights provided herein with respect to sales
of the Shares, and subject to applicable law, sales of the Collateral may be
conducted with or without demand and with or without notice or advertisement,
for cash, credit or for future delivery, all as the Lender shall deem
appropriate. Without limiting the foregoing, the Lender may (i) approach and
negotiate with potential purchasers, and (ii) restrict the prospective bidders
or purchasers to persons who will represent and agree that they are purchasing
such Collateral for their own account for investment and not with a view to the
distribution or resale thereof. In the event any such Collateral is sold at
private sale, Pledgor agrees that such sale shall not, by reason merely that it
is a private sale subject to the potential restrictions described herein, or
that there is a possibility that a substantially higher
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price might have been realized at a public sale, be deemed to have not been made
in a commercially reasonable manner. Pledgor recognizes that no ready market may
exist for such Collateral and that a sale by Lender of any such Collateral for
an amount substantially less than the value of the Shares may be commercially
reasonable in view of the difficulties that may be encountered in attempting to
sell securities that are not publicly traded. Upon consummation of any such
sale, Lender shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof, the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of the Pledgor. Pledgor hereby waives (to the extent permitted
by law) all rights of redemption, stay and/or appraisal which Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted. If any consent, ruling or authorization of any state,
municipal or other governmental agency or authority shall be necessary to
effectuate any sale or disposition of the Collateral, Pledgor shall execute all
such applications and other instruments as may be required in connection with
securing any such consent, ruling or authorization and, will otherwise use its
best efforts to secure the same. Under no circumstances will Lender be obligated
to register any securities under the Securities Act of 1933 or any similar
qualification or registration law of any state, unless, in its sole discretion,
it shall elect to do so, in which case the cost of such registration and
qualification shall become part of the Obligations secured hereby.
15. Lender as Pledgor's Attorney-in-Fact. Pledgor hereby irrevocably
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appoints Lender as its attorney-in-fact to arrange for the transfer, at any time
after the existence or occurrence of an Event of Default, of the Collateral on
the books of BPN to the name of Lender or to the name of Lender's nominee.
16. Further Assurances. Pledgor agrees that it will cooperate with
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Lender and will execute and deliver, or cause to be executed and delivered, all
such other stock powers, proxies, instruments, and documents and will take all
such other action, as Lender may reasonably request from time to time in order
to carry out the provisions and purposes hereof.
17. Attorneys' Fees and Costs. Pledgor hereby agrees to pay all
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reasonable attorneys' fees and all other costs and expenses which may be
incurred by Lender in the enforcement of this Agreement, whether or not suit is
brought.
18. Notices. Any notice, demand or communication required or
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permitted to be given by any provision of the Loan Documents will be in writing
and will be deemed to have been given when delivered personally or be
telefacsimile, receipt confirmed, to the party designated to receive such notice
or on the business date following the day sent by overnight courier or on the
third (3rd) business day after the same is sent by certified mail, postage and
charges prepaid, directed to the following addresses or to such other or
additional addresses as any party might designate by written notice to the other
party:
To Pledgor or BPN: BPN
00000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx 00000
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Attention: Xxxxxxxxx X. X'Xxxx
To Lender: PanAm Bank
0000 X. Xx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: President
19. Choice of Law and Venue. The validity of this Agreement, its
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construction, interpretation, and enforcement and the rights of the parties
hereto shall be determined under the laws of the State of California. The
parties agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the state and federal courts
located in the County of Los Angeles, State of California. Each party waives
any right it may have to assert the doctrine of forum non conveniens or to
object to venue to extent any proceeding is brought in accordance with the terms
hereof.
20. General Provisions.
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(a) This Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties; provided, however, that
Pledgor and BPN may not assign this Agreement or any rights hereunder without
Lender's prior written consent and any prohibited assignment shall be absolutely
void. No consent to an assignment by Lender shall release Pledgor or BPN from
its obligations to Lender hereunder. Lender may assign its rights and duties
hereunder. Lender reserves the right to sell, assign, transfer, negotiate, or
grant participations in all or any part of, or any interest in rights and
benefits hereunder. In connection therewith, Lender may disclose all documents
and information which Lender now or hereafter may have relating to Pledgor or
Pledgor's business.
(b) Paragraph headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Paragraph hereof applies equally to this entire
Agreement.
(c) Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against any party hereto, whether under
any rule of construction or otherwise, by virtue of such party's having prepared
the same. On the contrary, this Agreement has been reviewed by each of the
parties and shall be construed and interpreted according to the ordinary meaning
of the words used so as to fairly accomplish the purposes and intentions of all
parties hereto.
(d) Each provision of this Agreement shall be severable from
every other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
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(e) This Agreement cannot be changed or terminated orally. All
prior agreements, understandings, representations, warranties, and negotiations,
if any, are merged into this Agreement, the Loan Documents and the other
documents and agreements entered into in connection herewith and therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written.
BPN Corporation
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxxxxxx X. X'Xxxx
_________________________ _________________________________
Xxxxx X. Xxxxxx Xxxxxxxxx X. X'Xxxx
Title: Pres.
_________________
By: /s/ Xxxxxxxxx X. X'Xxxx
________________________
Xxxxxxxxx X. X'Xxxx
Title: VP
_________________
Pan American Bank, FSB
By: /s/ Xxxxxxxx X. Grill
_________________________
Xxxxxxxx Grill, President
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