STOCK PLEDGE AGREEMENT
This
Agreement is made and entered into as of the 18th
day of
August, 2006, by and between HEARTLAND
BANK,
a
federal savings bank (“Pledgee”), and Freedom Financial Group, Inc., a Delaware
corporation (“Pledgor”).
Recitals
A. Pledgee,
T.C.G. - The Credit Group Inc., a Manitoba, Canada corporation (the “Company”),
and Pledgor have entered into that certain Loan and Security Agreement of even
date herewith (as the same may be renewed, extended, amended, restated, replaced
or otherwise modified from time to time, the “Loan Agreement”) whereby Pledgee
has extended a revolving credit facility available to the Company and Pledgor
in
the principal face amount of $3,000,000.
B. Pledgor
owns 1,100 shares of common stock, par value $ N/A
per
share, of the Company, representing on the date hereof 100% of the issued and
outstanding voting common stock of the Company.
C. Pledgor
and Pledgee desire to secure the payment of all of the obligations of the
Company and Pledgor to Pledgee arising from time to time under the Loan
Agreement (collectively, the “Secured Obligations”).
In
consideration of the foregoing, the agreements below and other sufficient
consideration, the receipt of which is hereby acknowledged, Pledgor and Pledgee
agree as follows:
1. Pledge
and Grant of Security Interest.
a. To
secure
the due and punctual payment and performance of all the Secured Obligations,
Pledgor hereby grants to Pledgee a security interest in 1,100 shares of voting
common stock of the Company (said interests of Pledgor in the voting stock
of
the Company, together with such additional shares of common stock of the Company
as may from time to time be pledged by Pledgor hereunder as provided by the
Loan
Agreement, are hereinafter collectively called the “Shares” and individually a
“Share”). Delivered herewith are the original certificates for the Shares and
stock powers for the Shares executed in blank by Pledgor.
b. In
addition, Pledgor hereby grants to Pledgee a security interest in the following
(which shall be deemed included in the term “Shares”): (i) all dividends, cash,
securities, distributions, instruments and other property from time to time
paid, payable or otherwise distributed in respect of or in exchange for any
or
all of such Shares, (ii) any and all distributions made in respect to the
Shares, whether in cash or in kind, by way of dividends or stock splits,
or
pursuant to a merger or consolidation or otherwise, or any substitute security
issued upon conversion, reorganization or otherwise, (iii) any and all other
property hereafter delivered to Pledgor or Pledgee in substitution for or
in
addition to any of the foregoing (including without limitation all securities
issued pursuant to any shareholder agreement, stock purchase agreement, stock
purchase rights or other agreement with respect to Shares to which the Pledgor
may now or hereafter be a party), all certificates and instruments representing
or evidencing such property and all cash, securities, interest, dividends,
rights, promissory notes and other property at any time and from time to
time
received, receivable or otherwise distributed in respect of or in exchange
for
any or all thereof, and (iv) any and all proceeds of any of the foregoing.
If
any of the foregoing shall be received by Pledgor, contrary to the terms
hereof
or the Loan Agreement, or during the continuance of an Event of Default,
they
shall immediately deliver the same to Pledgee or its designated nominee,
accompanied, if appropriate, by proper instruments of assignment and/or stock
powers executed by Pledgor in accordance with Pledgee’s instructions, to be held
subject to the terms of this Agreement.
2. Representations
and Warranties.
Pledgor
represents and warrants that:
a. Pledgor
owns the Shares, free of all Liens (as those terms are defined in the Loan
Agreement) and shareholders’ agreements, cross-sell agreements, buy-sell
agreements and similar contractual restrictions concerning the sale, assignment
or pledge of the Shares, except for the restrictions applicable under Rule
144
of the General Rules and Regulations under the Securities Exchange Act of 1933.
The information concerning the capital structure of the Company as shown on
Schedule
1
attached
is accurate.
b. The
delivery of the original certificates for the Shares to Pledgee concurrently
with the execution of this Agreement shall create a valid and fully perfected
security interest in the Shares, securing the payment of the Secured
Obligations.
c. No
consent of any third party (including, without limitation, any stockholder
or
creditor of Pledgor) and no governmental approval is required for the exercise
by Pledgee 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 such disposition by laws affecting the offering
and
sale of securities generally).
3. Additional
Liens.
Pledgor
agrees that he will not (i) sell or otherwise dispose of, or grant any option
with respect to, any of the Shares, (ii) create or permit to exist any Lien
upon
or with respect to any of the Shares, except for the security interest under
this Agreement, or (iii) enter into any other contractual obligations which
may
restrict or inhibit Pledgee’s rights or ability to sell or otherwise dispose of
the Shares or any part thereof after the occurrence and during the continuance
of an Event of Default hereunder.
4. Default.
Any one
or more of the following shall constitute a default hereunder (an “Event of
Default”):
a. An
Event
of Default under the Loan Agreement; or
b. A
violation by Pledgor of any of the provisions or conditions of this
Agreement.
5. Custody
and Preservation of the Collateral.
Pledgee
shall be deemed to have exercised reasonable care in the custody and
preservation of any Shares in its possession (even if it fails to sell or
convert Shares which are falling in market value) provided the Pledgee acts
in a
commercially reasonable manner. The failure of Pledgee to preserve or protect
any rights with respect to any of the Shares against other parties shall not
be
deemed a failure to exercise reasonable care in the custody or preservation
of
such Shares.
2
6. Remedies.
Upon
the occurrence and during the continuance of an Event of Default:
a. Pledgee
may at any time exercise the rights and pursue the remedies provided under
Article 9 of the Uniform Commercial Code as currently effective in, or as
hereafter amended by, the State of Missouri, including but not limited to
selling the Shares at any public sale or at private sale without advertisement
if in Pledgee’s reasonable judgment such private sale would result in a greater
sale price than a public sale. The parties agree that in the event Pledgee
elects to proceed with respect to the Shares, whenever applicable provisions
of
the Uniform Commercial Code require that notice be reasonable, ten (10) days’
notice shall be deemed reasonable. Pledgee shall not be obligated to make any
sale of the Shares regardless of notice of sale having been given. Pledgee
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. Pledgee may bid and become
a
purchaser at any such sale, if public, and upon any such sale Pledgee may
collect, receive, and hold and apply, as provided herein, the proceeds thereof
to the payment of the Secured Obligations, and assign and deliver the Shares
and
the certificate therefor to the purchaser at any such sale. The proceeds from
any such sale shall be applied first to the payment of all legal and other
costs
and expenses incurred in connection with the sale and next to the payment of
the
Secured Obligations. The balance, if any, of such proceeds remaining after
such
application shall be paid as provided by law.
b. Upon
the
occurrence and continuation of an Event of Default, in the event that Pledgee
determines that it is advisable to register under or otherwise comply in any
way
with the Securities Act of 1933 or any similar federal or state law, or if
such
registration or compliance is required with respect to the Shares prior to
the
sale thereof by Pledgee, Pledgor will use its best efforts to cause such
registration to be effectively made, at no expense to Pledgee, and to continue
such registration effective for such time as may be reasonably necessary in
the
opinion of Pledgee, and will reimburse Pledgee for any reasonable expense
incurred by Pledgee including, without limitation, reasonable attorneys’ and
accountants’ fees and expenses in connection therewith; and should Pledgee
determine that, prior to any public offering of any of the Shares, such
securities should be registered under the Securities Act of 1933 and/or
registered or qualified under any other federal or state law, and that such
registration and/or qualification is not practical, then the Pledgor agrees
that
it will be commercially reasonable to arrange a private sale so as to avoid
a
public offering, even though the sales price established and/or obtained may
be
substantially less than might have been obtained through a public offering.
The
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by Pledgee by reason of the failure by the
Pledgor to perform any of the covenants contained in this paragraph and,
consequently, agrees that, if the Pledgor shall fail to perform any of such
covenants, Pledgor shall pay, as damages and not as a penalty, an amount equal
to the value of the Shares on the date Pledgee shall demand compliance
herewith.
3
7. Right
to Vote Shares.
Until
the Secured Obligations are fully paid, Pledgee shall have the right to vote
the
Shares with regard to any proposed amendment to the articles of incorporation
or
by-laws of Company which would result in a change in the voting rights and
power
of the Shares. Otherwise, Pledgor shall have the sole right to vote the Shares
unless there is an Event of Default that is continuing hereunder, in which
event
Pledgee shall have the sole right to vote the Shares.
8. Preservation
and Perfection of Liens.
Pledgor
shall promptly, upon the request of Pledgee and at Pledgor’s expense, execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery
of,
and thereafter, if applicable, register, file or record in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of this Agreement, and give such further assurances as may otherwise be
necessary or desirable for the creation, preservation and/or perfection of
the
liens created by this Agreement.
9. Release
of Shares.
Whenever the full amount of the Secured Obligations have been finally and
unconditionally paid to Pledgee, Pledgee shall return to Borrower any
certificates representing the Shares held by Pledgee with the stock powers
or
assignments executed by Pledgor attached, and such Shares shall be deemed
released from any Lien hereunder.
10. Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile),
each of which shall be deemed to be an original, but all of which shall be
deemed to be one and the same instrument.
11. Severability.
Any
provision of this Agreement which is prohibited, unenforceable or not authorized
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition, unenforceability or nonauthorization without invalidating
the remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction unless the ineffectiveness
of such provision would result in such a material change as to cause completion
of the transactions contemplated hereby to be unreasonable.
12. Notices.
All
notices, consents, requests and demands to or upon the respective parties hereto
shall be given in the manner required for notices under the Loan
Agreement.
13. Dividends.
So long
as no Event of Default has occurred and is continuing, Pledgor shall be entitled
to receive ordinary cash dividends declared and paid by the Company from time
to
time.
14. Attorney-In-Fact.
Pledgor
hereby irrevocably appoints Pledgee as Pledgor’s attorney-in-fact effective
during the continuance of an Event of Default, with full authority in the place
and stead of Pledgor and in the name of Pledgor, Pledgee or otherwise, from
time
to time in Pledgee’s sole discretion to take any action (including completion
and presentation of any proxy) and to execute any instrument that Pledgee may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation (but subject to the other provisions
hereof), to (i) receive, endorse and collect all instruments made payable to
Pledgor representing any dividend or other distribution in respect of the Shares
or any part thereof; (ii) exercise the voting and other consensual rights
pertaining to the Shares; and (iii) sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Shares as fully and completely
as though Pledgee was the absolute owner thereof for all purposes, and to do,
at
Pledgee’s option and Pledgor’s expense, at any time or from time to time, all
acts and things that Pledgee reasonably deems necessary to protect, preserve
or
realize upon the Shares. Pledgor hereby ratifies and approves all acts of
Pledgee made or taken pursuant to this Section 14. This power of attorney,
being
coupled with an interest, shall be irrevocable until all Secured Obligations
shall have been paid in full and the Loan Agreement shall have been
terminated.
4
15. Governing
Law.
This
Agreement shall be governed and construed under the internal laws of the State
of Missouri.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
| PLEDGOR | ||
| |
Freedom Financial Group, Inc., a Delaware corporation, |
|
| By: | /s/ Xxxxxx X. Xxxxxxxxxxxx | |
|
Name:
|
Xxxxxx X. Xxxxxxxxxxxx |
|
| Title: | President | |
| PLEDGEE | ||
| HEARTLAND BANK | ||
| |
|
|
| By: | /s/ Xxxxxxx X. XxxXxxxxx | |
|
|
||
| Name: | Xxxxxxx XxxXxxxxx | |
| Title: | Senior Vice President | |
5
Schedule
1
T.C.G.
- The Credit Group Inc.
|
Total
Shares of Common
Stock
Outstanding (as of 7/31/06):
1,100
shares
|
|
Total
Shares of Common Stock
Owned
by Pledgor
1,100
shares
|
|
%
of Outstanding Shares of
Common
Stock Owned by Pledgor
100%
|
|
Certificate
Nos. for Shares of
Common
Stock Owned by Pledgor and
Pledged to Pledgee
#1C/03
|
6
