EXHIBIT 10.13(c)
PLEDGE AGREEMENT
PLEDGE AGREEMENT ("AGREEMENT"), dated as of October 1, 1999,
made by Xxxx Xxxxxx, an individual residing at [XXXADDRESS DELETED FOR
PRIVACYXXX] (the "PLEDGOR"), to Aames Financial Corporation, a Delaware
corporation ("AAMES").
WHEREAS, on the date hereof, the Pledgor is purchasing shares
of Aames' Series C Convertible Preferred Stock, par value $0.001 per share
("SERIES C PREFERRED STOCK"), pursuant to a Management Investment Agreement,
dated the date hereof, between Pledgor and Aames (the "MANAGEMENT INVESTMENT
AGREEMENT"); and
WHEREAS, as part of the transactions contemplated by the
Management Investment Agreement, the Pledgor is executing and delivering to
Aames a Secured Promissory Note dated as of the date hereof in favor of Aames
(the "AAMES NOTE") as part of the purchase price for the Series C Preferred
Stock, and in accordance with the terms and conditions set forth herein,
pledging the Series C Preferred Stock, together with any shares of Aames' common
stock, par value $0.001 per share that may be acquired upon conversion of the
Series C Preferred Stock (the "UNDERLYING COMMON SHARES, and, together with the
shares of Series C Preferred Stock, the "PLEDGED SHARES").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained in this Agreement, and in order to induce Aames to
accept the Aames Note, the Pledgor hereby agrees as follows:
SECTION 1. PLEDGE. The Pledgor hereby pledges to Aames, and
grants to Aames a security interest in, the following (the "PLEDGED
COLLATERAL"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property of any
character whatsoever (including, without limitation, shares of Common Stock)
from time to time received, receivable or otherwise distributed or distributable
in respect of or in exchange for any or all of the Pledged Shares; and
(ii) all proceeds of any and all of the foregoing collateral
(including, without limitation, proceeds that constitute property of the types
described above).
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures
the payment of all obligations, whether for principal, interest, fees, expenses
or otherwise, now or hereafter existing, of the Pledgor under the Aames Note and
under this Agreement (all such obligations of the Pledgor being the
"OBLIGATIONS"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts which constitute part of the Obligations and
would be owed by the Pledgor to Aames under the Aames Note or this Agreement but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Pledgor.
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Aames pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Aames. Aames shall have the right, at any time in its discretion
and without notice to the Pledgor, to transfer to or to have registered in the
name of Aames or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 6(a). For the better
perfection of Aames's rights in and to the Pledged Collateral, the Pledgor shall
forthwith, upon the pledge of any Pledged Collateral hereunder, cause such
Pledged Collateral to be registered in the name of Aames or such nominee or
nominees of Aames as Aames shall direct, subject only to the revocable rights
specified in Section 6(a). In addition, Aames shall have the right at any time
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Pledgor
represents and warrants as follows:
(a) Neither the execution nor the delivery by the Pledgor of
this Agreement nor the consummation by the Pledgor of the transactions
contemplated hereby, nor compliance with nor fulfillment by the Pledgor
of the terms and provisions hereof, will conflict with or result in a
breach of the terms, conditions or provisions of or constitute a
default under any lease, contract, instrument, mortgage, deed of trust,
trust deed or deed to secure debt evidencing or securing indebtedness
for borrowed money, financing lease, law, rule, regulation, judgment,
order,
award, decree or other restriction of any kind to which the Pledgor is
a party or by which he is bound.
(b) This Agreement has been duly executed and delivered by the
Pledgor and is the legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms.
(c) There is no action, lawsuit, claim, counterclaim,
proceeding, or investigation (or group of related actions, lawsuits,
claims, proceedings or investigations) pending or, to the knowledge of
the Pledgor, threatened, relating to or challenging the Pledgor's
obligations under this Agreement or the pledge of the Pledged
Collateral hereunder.
(d) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest,
option or other charge or encumbrance except for the security interest
created by this Agreement.
(e) The pledge of the Pledged Shares pursuant to this
Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral, securing the payment of the
Obligations.
(f) No consent of any other person or entity and no
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this
Agreement by the Pledgor, (ii) for the perfection or maintenance of the
security interest created hereby (including the first priority nature
of such security interest) or (iii) for the exercise by Aames of the
voting or other rights provided for in this Agreement or the remedies
in respect of the Pledged Collateral pursuant to this Agreement (except
as may be required in connection with any disposition of any portion of
the Pledged Collateral by laws affecting the offering and sale of
securities generally).
(g) There are no conditions precedent to the effectiveness of
the Pledgor's obligations under this Agreement that have not been
satisfied or waived.
SECTION 5. FURTHER ASSURANCES. (a) The Pledgor agrees that at
any time and from time to time, at the expense of the Pledgor, the Pledgor will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Aames may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Aames to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral.
(b) The Pledgor hereby authorizes Aames to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Pledged Collateral without the signature of the Pledgor where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering the Pledged Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
SECTION 6. VOTING RIGHTS; DIVIDENDS, ETC. (a) so long as no
Event of Default (as defined in the Aames Note) or event which, with the giving
of notice or the lapse of time, or both, would become such an Event of Default
shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to
the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Aames Note;
PROVIDED, HOWEVER, that the Pledgor shall not exercise or refrain from
exercising any such right if, in Aames's judgment, such action would
have a material adverse effect on the value of the Pledged Collateral
or any part thereof.
(ii) The Pledgor shall be entitled to any and all dividends
paid in respect of the Pledged Collateral; PROVIDED, HOWEVER, that any
and all dividends 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 Pledged Collateral,
shall be, and shall be forthwith delivered to Aames to hold as, Pledged
Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of Aames, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to Aames as Pledged
Collateral in the same form as so received (with any
necessary endorsement or assignment); and PROVIDED, FURTHER, that
the after tax amount of any cash dividends, proceeds, or other
distributions paid in respect of the Pledged Collateral shall be
applied as an immediate prepayment in respect of the Aames Note,
with such prepayments to be applied first to the payment of all
interest accrued on, and then to the payment of unpaid principal of,
the Aames Note.
(iii) Aames shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii)
above.
(b) Upon the occurrence and during the continuance of an Event
of Default or an event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default:
(i) All rights of the Pledgor (x) to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6(a)(i) shall,
upon notice to the Pledgor by Aames, cease and (y) to receive the
dividends payments which it would otherwise be authorized to receive
and retain pursuant to Section 6(a)(ii) shall automatically cease, and
all such rights shall thereupon become vested in Aames (or its
designee), who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to
receive and hold as Pledged Collateral such dividends.
(ii) All dividends which are received by the Pledgor contrary
to the provisions of paragraph (i) of this Section 6(b) shall be
received in trust for the benefit of Aames, shall be segregated from
other funds of the Pledgor and shall be forthwith paid over to Aames as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
SECTION 7. TRANSFERS AND OTHER LIENS. The Pledgor agrees that
it will not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral
or (ii) create or
permit to exist any lien, security interest, option or other charge or
encumbrance upon or with respect to any of the Pledged Collateral, except for
the security interest under this Agreement and except for any such sale the
proceeds from which are used to repay all unpaid principal of, and accrued
interest on, the Aames Note (with such proceeds first being applied to
accrued interest and then to principal).
SECTION 8. APPOINTMENT OF ATTORNEY-IN-FACT. The Pledgor hereby
appoints Aames Financial Corporation the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time in Aames's discretion to take any action and to
execute any instrument that Aames may deem necessary or advisable to accomplish
the purposes of this Agreement (subject to the rights of the Pledgor under
Section 6), including, without limitation, to receive, indorse and collect all
instruments made payable to the Pledgor representing any dividend or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same.
SECTION 9. AAMES MAY PERFORM. If the Pledgor fails to perform
any agreement contained herein and does not cure such failure within 10 days
after its receipt of written notice from Aames, Aames may itself perform, or
cause performance of, such agreement, and the expenses of Aames incurred in
connection therewith shall be payable by the Pledgor under Section 12.
SECTION 10. AAMES' DUTIES. The powers conferred on Aames
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Aames shall have no duty as to any
Pledged Collateral as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not Aames has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Pledged Collateral.
Aames shall be deemed to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Aames accords
its own property.
SECTION 11. REMEDIES UPON DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) Aames may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code in effect in the
State of Delaware at that time (the "Code") (whether or not the Code
applies to the affected Collateral), and may also, without notice
except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any
exchange or broker's board or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as Aames may deem
commercially reasonable. The Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the
Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. Aames shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Aames may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by Aames as Pledged Collateral and all cash
proceeds received by Aames in respect of any sale of, collection from
or other realization upon all or any part of the Pledged Collateral
may, in the discretion of Aames, be held by Aames as collateral for,
and/or then or at any time thereafter be applied (after payment of any
amounts payable to Aames pursuant to Section 12) in whole or in part by
Aames against, all or any part of the Obligations in such order as
Aames shall elect. Any surplus of such cash or cash proceeds held by
Aames and remaining after payment in full of all the Obligations shall
be paid over to the Pledgor or to whomsoever may be lawfully entitled
to receive such surplus.
SECTION 12. EXPENSES. The Pledgor will upon demand pay to
Aames the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which Aames may
incur in connection with (i) the exercise or enforcement of any of the rights of
Aames
hereunder or (ii) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 13. SECURITY INTEREST ABSOLUTE. The obligations of the
Pledgor under this Agreement are independent of the Obligations, and a separate
action or actions may be brought and prosecuted against the Pledgor to enforce
this Agreement. All rights of Aames and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the Aames Note
any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the obligations, or any other
amendment or waiver of or any consent to any departure from the Aames
Note;
(iii) any taking, exchange, release or nonperfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the
Obligations;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Obligations
or any other assets of the Pledgor;
(v) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Pledgor.
SECTION 14. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by the parties hereto, and no consent to any
departure by one party herefrom, shall in any event be effective unless the same
shall be in writing and signed by the other party, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 15. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and
sent by express courier, telecopied, telegraphed, telexed or hand-delivered,
if to the Pledgor, at his address first set forth above; and, if to Aames, at
its address at 2 California Plaza, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, XX
00000, Attention: Xxxx Xxxxxxxx; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other party.
All such notices and communications shall, when sent by express courier, be
effective three days after being sent, when telecopied, telegraphed, telexed
or hand-delivered, be effective when telecopied, delivered to the telegraph
company, confirmed by telex answerback or delivered, respectively.
SECTION 16. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER
AAMES NOTE. This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full of the Obligations and all other amounts payable under this
Agreement, (ii) be binding upon the Pledgor, its successors and assigns and
(iii) inure to the benefit of, and be enforceable by, Aames and its successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(iii), Aames may assign or otherwise transfer all or any portion of its rights
and obligations under the Aames Note to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to Aames herein or otherwise. Upon the payment in full
of the Obligations and all other amounts payable under this Agreement, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to the Pledgor. Upon any such termination, Aames will,
at the Pledgor's expense, return to the Pledgor such of the Pledged Collateral
as shall not have been sold or otherwise applied pursuant to the terms hereof
and execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence such termination.
SECTION 17. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
DELAWARE. Unless otherwise defined herein or in the Aames Note, terms defined in
Article 9 of the Code are used herein as therein defined.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
/s/ XXXX XXXXXX
----------------------------
Pledgor
ACKNOWLEDGED AND AGREED:
AAMES FINANCIAL CORPORATION
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
