PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of February 16, 2006 (together with all
amendments, if any, from time to time hereto, this "Agreement") is between
JAINDL ASSOCIATES, L.P., a Delaware limited partnership (the "Pledgor"), and THE
ESTATE OF XXXXXXXXX X. XXXXXX, A/K/A XXXX X. XXXXXX, A/K/A XXXX XXXXXX, DECEASED
(the "Estate" or "Lender").
W I T N E S S E T H:
WHEREAS, Xxxxxxxxx X. Xxxxxx has heretofore provided a loan to the Pledgor
in the original principal amount of $4,493,812, the current principal balance
being $4,421,297.98 (the "Loan"), pursuant to the terms and conditions of that
certain Promissory Note dated March 1, 2004 executed by the Pledgor in favor of
Xxxxxxxxx X. Xxxxxx (as amended, modified and restated from time to time, the
"Note"); and
WHEREAS, Xxxxxxxxx X. Xxxxxx died on March 29, 2004, and Letters
Testamentary were duly issued by the Register of Xxxxx of Lehigh County on April
6, 2004 appointing Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx and Xxxx X. Xxxxxxx as
Co-Executors (collectively, the "Co-Executors"); and
WHEREAS, on November 30, 2005, the Co-Executors of the Estate called the
Note to be paid in accordance with its terms so that the payments under the Note
would be due on or before November 30, 2006; and
WHEREAS, the Lender has become aware that certain distributions of common
stock are contemplated to be distributed by the General Partner, Xxxx X. Xxxxxx,
to the partners of the Pledgor in the amount of 2,561,835.07 shares of common
stock of American Bank Incorporated (the "American Bank Stock"); and
WHEREAS, in the negotiations of this transaction, Xxxx X. Xxxxxx in his
capacity as General Partner of Pledgor has agreed to secure the Pledgor's
duties, obligations and liabilities under the Note, with the distributions being
made by Pledgor to the partners of Pledgor (including Xxxx X. Xxxxxx, in his
individual capacity), by pledging the American Bank Incorporated Trust Preferred
Stock to the Lender, pursuant to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and intending to be legally bound hereby, it is agreed as
follows:
1. Definitions. Unless otherwise defined herein, terms defined in the Note
are used herein as therein defined, and the following shall have (unless
otherwise provided elsewhere in this Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):
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"Bankruptcy Code" means title 11, United States Code, as amended
from time to time, and any successor statute thereto.
"Default" shall mean any event specified in Section 8 hereof,
whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Event of Default" shall mean any event specified in Section 8
hereof, provided that any requirement for notice or lapse of time or
any other condition has been satisfied.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
"Pledged Entity" means American Bank and American Bank
Incorporated.
"Pledged Shares" means those shares of the American Bank
Incorporated Trust Preferred Stock listed and described on Part A of
Schedule I hereto.
"Secured Obligations" has the meaning assigned to such term in
Section 3 hereof.
2. Pledge. Pledgor hereby pledges to the Lender a security interest in all
of its right, title and interest in and to the Pledged Shares and the
certificates representing the Pledged Shares, and all dividends, distributions,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares.
3. Security for Secured Obligations. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment and performance in full
when due, whether at stated maturity, by acceleration or otherwise, of all of
Pledgor's obligations of any kind under the Note and all obligations of Pledgor
now or hereafter existing under this Agreement, including, without limitation,
all fees (including attorneys' fees), costs and expenses recoverable under the
Note, whether in connection with collection actions hereunder or thereunder or
otherwise (collectively, the "Secured Obligations").
4. Delivery of Pledged Collateral. All certificates evidencing the Pledged
Collateral shall be delivered to Xxxx X. Xxxxxxx, as the Co-Executor of Lender,
and held by or on behalf of the Lender pursuant hereto. All Pledged Shares shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Lender.
5. Representations and Warranties. Pledgor represents and warrants to the
Lender that:
(a) Pledgor is the sole holder of record and the sole beneficial owner
of the Pledged Collateral pledged by such Pledgor free and clear of any Lien
thereon or affecting the title thereto, except for any Lien created by this
Agreement;
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(b) All of the Pledged Shares have been duly authorized, validly
issued and are fully paid and non-assessable;
(c) Pledgor has the right and requisite authority to pledge, assign,
transfer, deliver, deposit and set over the Pledged Collateral pledged by
Pledgor to the Lender as provided herein;
(d) None of the Pledged Shares has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject;
(e) All of the Pledged Shares are presently owned by Pledgor as set
forth on Part A of Schedule I hereto, and, if certificated, are presently
represented by the certificates listed on Part A of Schedule I hereto and, as of
the date hereof, there are no existing options, warrants, calls or commitments
of any character whatsoever relating to the Pledged Shares;
(f) No consent, approval, authorization or other order or other action
by, and no notice to or filing with, any governmental authority or any other
Person is required (i) for the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of this
Agreement by Pledgor, or (ii) for the exercise by the Lender of the voting and
other rights conditionally provided for in this Agreement, or the remedies upon
on Event of Default, in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally;
(g) The pledge, assignment and delivery of the Pledged Collateral
pursuant to this Agreement will create a valid first-priority Lien on and a
first-priority perfected security interest in favor of the Lender in the Pledged
Collateral and the proceeds thereof, securing the payment of the Secured
Obligations; and
(h) This Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of Pledgor
enforceable against Pledgor in accordance with its terms.
The representations and warranties set forth in this Section 5 shall
survive the execution and delivery of this Agreement, but shall be deemed made
by Pledgor only as of the date hereof.
6. Covenants. Pledgor covenants and agrees that until the payment and
satisfaction in full of the Note and the Secured Obligations by wire or
certified check:
(a) Without the prior written consent of the Lender, Pledgor will not
sell, assign, transfer, pledge, or otherwise encumber any of its rights in or to
the Pledged Collateral, or any unpaid dividends, interest or other distributions
or payments with respect to the Pledged Collateral or xxxxx x Xxxx in the
Pledged Collateral, unless otherwise expressly permitted by the Note;
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(b) Pledgor will, at its expense, promptly execute, acknowledge and
deliver all such instruments and take all such actions as the Lender from time
to time may request in order to ensure to the Lender the benefits of the Liens
in and to the Pledged Collateral intended to be created by this Agreement,
including the filing of any necessary financing statements, which may be filed
by the Lender with or (to the extent permitted by law) without the signature of
Pledgor, and will cooperate with the Lender, at Pledgor's expense, in obtaining
all necessary approvals and making all necessary filings under federal, state,
local or foreign law in connection with such Liens or any sale or transfer of
the Pledged Collateral;
(c) Pledgor has and will defend the title to the Pledged Collateral
and the Liens of the Lender in the Pledged Collateral against the claim of any
Person and will maintain and preserve such Liens.
7. Pledgor's Rights. As long as no Event of Default (as hereinabove defined)
shall have occurred and be continuing and until written notice shall be given to
Pledgor:
(a) Pledgor shall have the right, from time to time, to vote and give
consents with respect to the Pledged Collateral, or any part thereof for all
purposes not inconsistent with the provisions of this Agreement or the Note;
provided, however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or interest
of the Lender in respect of the Pledged Collateral or which would authorize,
effect or consent to (unless and to the extent expressly permitted by the Note,
or unless as part of or as a result of that transaction the Note would be paid
off in full):
(i) the dissolution or liquidation, in whole or in part, of a
Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity with any
other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity; or
(iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of a Pledged Entity or the issuance of
any additional ownership interests; and
(b) (i) Pledgor shall be entitled, from time to time, to collect and
receive for its own use all cash dividends and interest paid in respect of the
Pledged Shares to the extent not in violation of the Note other than any and
all: (A) dividends and interest paid or payable other than in cash in respect of
any Pledged Collateral, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged
Collateral; (B) dividends and other distributions paid or payable in cash in
respect of any Pledged Shares in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus or
paid-in capital of a Pledged Entity; and (C) cash paid, payable or otherwise
distributed, in respect of principal of, or in redemption of, or in exchange
for, any Pledged Collateral; provided, however, that until actually
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paid all rights to such distributions shall remain subject to
the Lien created by this Agreement; and
(ii) all dividends and interest (other than such cash dividends
and interest as are permitted to be paid to Pledgor in accordance with clause
(i) above) and all other distributions in respect of any of the Pledged Shares,
whenever paid or made, shall be delivered to the Lender to hold as Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of the Lender, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to the Lender as Pledged Collateral in the
same form as so received (with any necessary endorsement).
8. Events of Default. Each of the following shall constitute an Event of
Default:
(a) Event of Default Under the Note. Occurrence of an Event of Default
under the Note.
(b) Non-Payment. Failure by Pledgor to pay any amounts due to the
Lender under this Agreement, and such failure is not cured within sixty (60)
days by payment of the amount due to Lender.
(c) Falsity of Representations and Warranties. Any representation or
warranty made by Pledgor in this Agreement, or in any certificate, financial
statement or other statement furnished at any time under or in connection with
this Agreement, shall prove to be false or misleading in any material respect as
of the date when made, and such situation is not remedied or corrected within
thirty (30) days of written notice from Lender to Pledgor.
(d) Failure to Perform Certain Covenants. Failure by Pledgor to
observe or perform any other covenants, conditions or provisions contained in
this Agreement, and such failure is not cured within sixty (60) days of written
notice from Lender to Pledgor of such failure.
9. Defaults and Remedies. Upon the occurrence of an Event of Default, the
Lender shall have, in addition to any other rights and remedies contained in
this Agreement or in the Note, all the rights and remedies of a secured party
under the UCC, all of which shall be cumulative to the extent permitted by law.
In addition to all such rights and remedies, the Lender may sell or otherwise
dispose of the Pledged Collateral, or any part thereof, at public or private
sale, for cash, credit or any combination thereof. The Lender shall have the
right to bid and purchase at such sale or sales. The proceeds of any sale or
other disposition of all or any part of the Pledged Collateral upon which Lender
has a security interest, after payment of all costs and expenses of sale,
including retaking, holding, preparing for sale, selling and the like and also
including reasonable attorneys' fees and legal expenses incurred by the Lender,
shall be applied by the Lender to the then-outstanding balance of any of the
Secured Obligations and any surplus shall be paid by the Lender to Pledgor.
Pledgor shall be liable to the Lender for any deficiency. NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, NO DISPOSITION OR LIQUIDATION OF THE PLEDGED
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COLLATERAL SHALL OCCUR UNLESS THE PLEDGOR IS GIVEN 20 BUSINESS DAYS NOTICE OF
THE INTENDED SALE OR OTHER DISPOSITION OF THE PLEDGED COLLATERAL, INCLUDING WHEN
AND WHERE THE SALE OR OTHER DISPOSITION OF THE PLEDGED COLLATERAL WILL OCCUR.
10. Waiver. No delay on the Lender's part in exercising any power of sale,
Lien, option or other right hereunder, and no notice or demand which may be
given to or made upon Pledgor by the Lender with respect to any power of sale,
Lien, option or other right hereunder, shall constitute a waiver thereof, or
limit or impair the Lender's right to take any action or to exercise any power
of sale, Lien, option, or any other right hereunder, without notice or demand,
or prejudice the Lender's rights as against Pledgor in any respect.
11. Termination. Immediately following the payment by wire transfer or
certified check in satisfaction of the Note and the Secured Obligations, the
Lender shall deliver to Pledgor the Pledged Collateral subject to this
Agreement, along with all instruments of assignment executed in connection
therewith, free and clear of the Liens hereof and all of Pledgor's obligations
hereunder shall at such time terminate.
12. Lien Absolute. All rights of the Lender hereunder, and all obligations
of Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Note or any other
agreement or instrument governing or evidencing any Secured Obligations;
(b) any waiver by Lender of or any consent to any departure from the
Note or any other agreement or instrument governing or evidencing any Secured
Obligations;
(c) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations;
(d) the insolvency of Pledgor; or
(e) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Pledgor.
13. Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any bankruptcy petition be filed by or against
Pledgor or any Pledged Entity for liquidation or reorganization, should Pledgor
or any Pledged Entity become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of Pledgor's or a Pledged Entity's assets, and shall continue
to be effective, as the case may be, if at any time payment and performance of
the Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Secured Obligations shall be
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
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14. Miscellaneous.
(a) The Lender may execute any of its duties hereunder by or through
agents and shall be entitled to advice of counsel, at Lender's expense,
concerning all matters pertaining to its duties hereunder.
(b) Neither the Lender, nor any of its Co-Executors, agents or counsel
shall be liable for any action lawfully taken or omitted to be taken by it or
them hereunder or in connection herewith, except for (a) any breach or default
by Lender under this Agreement, or (b) its or their own gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction.
(c) THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS SUCCESSORS
AND ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF SUCH PLEDGOR), AND
SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, THE LENDER AND ITS
SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS
OF THIS AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING
DULY SIGNED FOR AND ON BEHALF OF THE LENDER AND PLEDGOR.
15. Severability. If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or effect those portions of this
Agreement which are valid.
16. Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give or serve upon any
other a communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and sent to the other parties hereto:
The Lender: The Estate of Xxxxxxxxx X. Xxxxxx, a/k/a Xxxx X.
Xxxxxx, a/k/a Xxxx Xxxxxx, Deceased
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Co-Executor, Xxxx X.
Xxxxxx, Co-Executor, Xxxx X. Xxxxxxx, Co-Executor
with a copy to: Xxxxxxx & Xxx
000 Xxxxxxxx Xxxx, Xxxxx 000
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X.X. Xxx 00000
Xxxxxx Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esquire
The Pledgor: Xxxxxx Associates, L.P.
c/o American Bank
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
with a copy to: Law Offices of Xxxxx X. Xxxxxxx
Mill Run Office Center
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
17. Section Titles. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
18. Counterparts. This Agreement may be executed in any number of separate
counterparts by one or more of the parties hereto and all of said counterparts
taken together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
JAINDL ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, General Partner
("Pledgor")
ESTATE OF XXXXXXXXX X. XXXXXX, A/K/A XXXX X.
XXXXXX, A/K/A XXXX X. XXXXXX, DECEASED
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Co-Executor
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, Co-Executor
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxx, Co-Executor
("Lender")
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SCHEDULE I.
PART A
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PLEDGED SHARES
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Stock
Class Certificate
Pledged Entity of Stock Number(s) Number of Shares
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American Bank Incorporated Trust Preferred 415,000
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