Exhibit No. 10.240
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Loan No. 95-227
FIRST AMENDMENT OF
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AMENDED AND RESTATED
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LOAN AND SECURITY AGREEMENT
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THIS FIRST AMENDMENT OF AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
dated as of this 20 day of December____, 2001 (this "Amendment") is made by and
among XXXXXX FINANCIAL, INC., a Delaware corporation ("Lender"), and PREFERRED
EQUITIES CORP., a Nevada corporation ("Borrower").
RECITALS
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Borrower and Lender are parties to that certain Amended and Restated
Loan and Security Agreement dated April 5, 2001 (the "Loan Agreement"),
providing to Borrower a secured interval receivables credit facility in the
amount of $30,000,000.
Borrower and Lender desire to amend the terms and conditions of the
Loan Agreement to provide for, among other things, an increase in the amount of
the credit facility and the modification of the Interest Rate and certain other
terms, covenants, conditions, representations and warranties as more
particularly set forth herein or in the other Loan Documents executed or amended
in connection herewith.
Mego Financial Corp., a New York corporation ("Guarantor") shall
guaranty all of the obligations of Borrower to Lender under the Loan Documents
as amended hereby.
All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Loan Agreement, including the Appendix attached
thereto.
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements, provisions and covenants herein contained, Borrower and Lender
hereby agree as follows:
The Recitals set forth above are true and correct and
incorporated herein by reference.
The current outstanding principal balance of the Note is
$26,329,566.21.
In Section 1.5(b)(i) regarding Excess Outstandings, each
reference to "$30,000,000.00" in the second sentence is hereby deleted and
replaced with "Forty Million Dollars and No/100 ($40,000,000.00)."
Section 1.6, Commitment Fee, is hereby deleted in its entirety
and replaced with the following:
Commitment Fee. The Commitment Fee has been fully earned by Lender.
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Borrower has agreed to pay Lender, in addition to amounts previously
paid to Lender, an additional Commitment Fee in the amount of
$125,000.00, $30,000.00 of which was paid on August 29, 2001, and the
remainder of which shall be due and payable in the amount of
$20,000.00 upon the date hereof, with the balance of $75,000.00 due
and payable no later than forty-five (45) days after the date of this
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Amendment. Borrower hereby authorizes Lender to advance $25,000.00 to
itself at the time of each Advance hereunder until the Commitment Fee
is fully paid and to advance to itself the full amount of any unpaid
balance of the Commitment Fee which may be due and payable at the time
of any Advance on or after the forty-fifth (45/th/) day after the date
hereof.
Section 4.12 is hereby inserted as follows:
Pledge of Interest in Management Company. AB Preferred Holdings, Inc.,
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is an Affiliate of Borrower engaged in the management of the Resort
and will enjoy a material economic benefit due to the making of the
Loan, and Borrower's pledge of its equity ownership interests in AB
Preferred Holdings, Inc. to Lender shall be deemed additional
consideration for the making of the Loan to Borrower.
Section 5.5(h) is hereby deleted in its entirety and replaced
with the following:
(h) Accounting for Defaulted Notes. All financial reporting for
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Borrower shall incorporate either current charge-offs in the amount of
the principal balance of Defaulted Notes (as defined below) or
allowances equal to or greater than the principal balance of Defaulted
Notes, in accordance with GAAP, where "Defaulted Notes" for purposes
of this provision shall mean the principal balance, with respect to
all of Borrower's operations, of all of Borrower's notes receivable
given by purchasers of timeshare intervals and all notes receivable
given by purchasers of parcels of land including, but not limited to,
recreational vehicle lots, which are either ninety (90) days or more
contractually delinquent or are properly deemed uncollectible by
Borrower or Guarantor on the basis of the maker's bankruptcy,
foreclosure on such note or other similar criteria.
Section 5.7, Management, is hereby deleted in its entirety and
replaced with the following:
Management. The manager and the management contracts for the Resort
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shall at all times be satisfactory to Lender. Borrower has further
pledged and created in favor of Lender a perfected security interest
in a majority of all of the equity ownership of AB Preferred Holdings,
Inc., a Florida corporation as the management entity by way of that
certain Pledge Agreement of even date herewith. Borrower covenants to
maintain the effectiveness of the Pledge Agreement at all times
indebtedness is outstanding under the Loan or Lender is obligated to
make Advances. For so long as Borrower controls the Timeshare
Association for the Resort, and unless required by law, Borrower shall
not change the Resort manager or amend, modify or waive any provision
of or terminate the management contract for the Resort without the
prior written consent of Lender, which consent shall not be
unreasonably withheld. At least two of the following individuals,
unless replaced in a timely manner with others who are reasonably
2
acceptable to Lender who shall approve or reject a proposed
replacement within thirty (30) days of written request, shall remain
the principal officers of Borrower and the Resort manager and shall
have authority to make all material business decisions: Xxxxxx Xxxxx,
Xxx Xxxxxx, Xxxxx XxXxxxxx and Xxxxx Xxxxxxxx.
Sections 5.12 and 5.13 are hereby deleted in their entirety and
replaced with the following, and Section 5.25 is inserted as follows:
5.12 Orlando Delinquency Rate. At all times Indebtedness is
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outstanding or Lender is obligated to make Advances, Borrower agrees to
maintain the ratio of (i) the principal balance of all Notes Receivable,
the principal balances of which are sixty (60) to eighty-nine (89) days
delinquent to (ii) the principal balance of all Notes Receivable,
determined in accordance with GAAP on a three (3) month rolling basis
("Orlando Delinquency Rate"), and calculated monthly pursuant to Section
5.5(a), in an amount not greater than 0.035:1 (3.5 percent). As of the date
hereof, Borrower's Delinquency Rate is in the amount set forth on Schedule
5.8-13 attached hereto.
5.13 Overall Delinquency Rate. At all times Indebtedness is
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outstanding or Lender is obligated to make Advances, Borrower shall, with
respect to all of its operations, maintain the ratio of (i) the aggregate
principal balance of all notes receivable given by purchasers of timeshare
intervals and all notes receivable given by purchasers of parcels of land
including, but not limited to, recreational vehicle lots, the principal
balances of which are sixty (60) to eighty-nine (89) days or more
delinquent to (ii) the principal balance of all such foregoing notes
receivable, determined in accordance with GAAP on a three (3) month rolling
basis ("Overall Delinquency Rate"), and calculated monthly pursuant to
Section 5.5(a), in an amount not greater than 0.035:1 (3.5 percent). As of
the date hereof, the Overall Delinquency Rate is in the amount set forth on
Schedule 5.8-.13 attached hereto.
5.25 Conveyance of Resort; Preparation of Cost Analysis. No later
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than July 1, 2002, Borrower shall transfer all of its right, title and
interest in the Resort, the Units, the land described in Exhibit "B", the
improvements thereon, all development rights, entitlements, permits,
contracts, and any and all other property or collateral related thereto or
securing this Loan to a special purpose, bankruptcy remote entity, directly
or indirectly wholly owned by Borrower and pursuant to such documentation
as Lender in its sole and absolute discretion may require, and in
connection therewith Borrower shall cause the Guaranty and all other
documents, instruments and agreements related to the Loan to be modified as
required by Lender in its sole and absolute discretion to reflect the
foregoing transfer and conveyance and the contractual rights and perfected
interest of Lender in all collateral. In addition, no later than July 1,
2002, Borrower shall deliver to Lender a quantitative analysis in form and
substance meeting Lender's approval in its sole and absolute discretion of
the overall cost, without regard to which party may properly bear such
expense, of installing all water, sewer and other utility services to every
lot within each entire project in which any prospective plaintiff or class
member under the matter styled as Xxxxx et al. v. Preferred Equities
Corporation, Case No. A414827, Nevada District Court, County of Xxxxx, owns
property.
Section 9.9, Lender's Right to Provide Financing, is hereby
deleted in its entirety.
Section 9.11 is hereby inserted as follows:
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9.11 UCC Financing Statements. To the extent permitted by law, Borrower
hereby authorizes Lender to complete, file and record, without the
requirement that Borrower join in the execution thereof, such UCC financing
statements as may be required in Lender's judgment to perfect Lender's lien
in any Collateral or other property in which a security interest is or has
been granted hereunder or in any of the other Loan Documents.
The definition of Availability in the Appendix is hereby deleted
in its entirety and replaced with the following:
Availability. At all times during the Revolving Period, the lesser of :
$40,000,000.00 minus the sum of (i) Advances then outstanding, plus (ii)
the then outstanding principal balance of the Acquisition Loan, plus (iii)
the then outstanding principal balance of the Construction Loan; or
an amount equal to 80% of the principal balance of Eligible Notes
Receivable to be assigned to Lender in connection with any then current
Advance; provided, however, that the percentage of the principal balance of
Eligible Notes Receivable for which a Purchaser has made a cash down
payment of at least twenty-five (25) percent of the actual purchase price
of the Interval, and for which no part of such payment was made or loaned
to Purchaser by Borrower or an Affiliate, and to be assigned to Lender in
connection with any then current Advance shall be 85%.
After expiration of the Revolving Period, Availability shall be zero ($0).
The definition of Commitment Fee in the Appendix is hereby
deleted in its entirety and replaced with the following:
Commitment Fee. A loan commitment fee with respect to the Loan equal to
$125,000.00, which is payable in accordance with Section 1.6.
Effective on the date hereof, Subsection (u) of the definition of
Eligible Note Receivable in the Appendix shall be deleted in its entirety and
replaced with the following:
(u) In addition to the foregoing eligibility criteria applicable to
each Note Receivable, a sample shall be drawn by Lender from all the
accounts submitted with each Request for Advance and in the event that
either (i) the minimum score based on FICO guidelines falls below five
hundred (500) (the "Minimum Credit Score"), (ii) more than five (5) percent
of the accounts have a score based on FICO guidelines below five hundred
fifty (550) or (iii) more than twenty (20) percent of the accounts have a
score based on FICO guidelines below six hundred (600), Borrower shall
submit the FICO score for each account which is the subject of the Request
for Advance and Lender shall have the right to reject any and all accounts
whose FICO score falls below the Minimum Credit Score and, in addition, to
reject any and such other accounts as Lender may elect until all the
foregoing FICO score criteria are satisfied.
In the definition of Interest Rate in the Appendix, the reference
to "four percent
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(4.0%)" is hereby deleted and replaced with "four and one-half percent (4.50%)."
In the definition of Loan in the Appendix, each reference to
"Thirty Million and No/100 Dollars ($30,000,000.00)" is hereby deleted and
replaced with "Forty Million and No/100 Dollars ($40,000,000.00)."
The definition of Maximum Exposure in the Appendix is hereby
deleted in its entirety and replaced with the following:
Maximum Exposure. The positive remaining amount, if any, calculated by
deducting the aggregate outstanding principal balance of the Acquisition and
Construction Loan from the lesser of (a) $40,000,000.00 and (b) that percentage
set forth below of the outstanding principal balance of all Financed Notes
Receivable:
as of the date of this Amendment: 84.5%,
from the date of this Amendment until thirty (30) days thereafter:
83.5%,
from the thirty-first (31/st/) day after the date of this Amendment
until thirty (30) days thereafter: 82%,
from the sixty-first (61/st/) day after the date of this Amendment
until thirty (30) days thereafter: 81%, and
beginning on the ninety-first (91/st/) day after the date of this
Amendment and at all times thereafter: 80%;
provided, however, that applicable percentage of the outstanding principal
balance of Financed Notes Receivable shall at all times be eighty-five (85)
percent for each Financed Note Receivable which originated as an Eligible Note
Receivable for which a Purchaser made a cash down payment of at least twenty-
five (25) percent of the actual purchase price of the Interval and for which no
part of such payment was made or loaned to Purchaser by Borrower or an
Affiliate.
The definition of Timeshare Association in the Appendix is hereby
deleted in its entirety and replaced with the following:
Timeshare Association. The not-for-profit Florida corporations which are
responsible for operating and maintaining the Resort pursuant to the terms of
the Declaration.
Section 3 of Schedule 3.2, Deliveries for all Advances, is hereby
deleted in its entirety and replaced with the following:
3. The score based on FICO guidelines calculated on each account in a
sample drawn by Lender from all the accounts submitted with each Request
for Advance and, in the event that either (i) the minimum score based on
FICO guidelines falls below five hundred (500) (the "Minimum Credit
Score"), (ii) more than five (5) percent of the accounts have a score based
on FICO guidelines below five hundred fifty (550) or (iii) more than twenty
(20) percent of the accounts have a score based on FICO guidelines below
six hundred (600), Borrower shall submit the FICO score for each account
which is the subject of the Request for Advance and Lender shall have the
right to reject any
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and all accounts whose FICO score falls below the Minimum Credit Score and,
in addition, to reject any and such other accounts as Lender may elect
until all the foregoing FICO score criteria are satisfied.
Schedule 4.5, List of Litigation Matters, is hereby deleted in
its entirety and replaced with Schedule 4.5 attached hereto.
Schedule 5.8-.13 is hereby deleted in its entirety and replaced
with Schedule 5.8-.13 attached hereto.
Exhibit "F", Permitted Exceptions, is hereby deleted in its
entirety and replaced with Exhibit "F" attached hereto.
Exhibit "H", Borrower's Debt, Liabilities and Obligations to any
Affiliates of Borrower, is hereby supplemented with Exhibit "H" attached hereto.
In connection with this Amendment, Borrower hereby certifies to
Lender that (a) all of Borrower's representations, warranties, covenants and
agreements contained in the Loan Agreement are true and correct and in full
force and effect as of the date hereof, (b) as of the date hereof there are no
Events of Default under the Loan Agreement and all other Loan Documents and
there are no facts or conditions which but for the passing of time or the giving
of notice would constitute an Event of Default, and (c) all of the Loan
Documents as defined herein are in full force and effect.
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Except as modified by this Amendment, all other terms and
conditions of the Loan Agreement and other Loan Documents as amended, modified,
restated or supplemented shall remain in full force and effect. Should Borrower
currently be in default under the Loan Agreement, which default would not have
existed if this Amendment were effective, such default is hereby waived.
As consideration for, and as a mutual inducement to Lender
entering into this Amendment, Borrower and Guarantor each hereby waive and
release any and all claims, setoffs, counterclaims and defenses either has as of
the date hereof with respect to this credit facility and performance by Lender
under the Loan Documents, and each hereby acknowledge that Lender has fully
performed all obligations and is not in default under the Loan Documents.
Execution of this Amendment shall not be deemed to constitute a waiver or
release by Lender of any its rights or remedies under the Loan Documents.
This Amendment may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signature thereto
and hereto were on the same instrument. This Agreement shall become effective
upon Lender's receipt of one or more counterparts hereof signed by Borrower and
Lender.
IN WITNESS whereof the parties have executed this Amendment as of the
date above.
BORROWER: LENDER:
PREFERRED EQUITIES CORPORATION, XXXXXX FINANCIAL, INC., a
a Nevada corporation a Delaware corporation
BY: /s/ Xxxxx X. Xxxxxxxx BY: /s/ Xxxxxx X. Xxxxxxx
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Xxxxx Xxxxxxxx Xxxxxx X. Xxxxxxx
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Print Name Print Name
Its: Sr. V.P Its: Sr. V.P.
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APPROVED BY:
GUARANTOR:
MEGO FINANCIAL CORP.,
a New York corporation
BY: /s/ Xxxxxxx X. Xxxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxx
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Print Name
Its: Sr. V.P
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Schedule 4.5
Litigation Disclosure
8
Schedule 5.8-.13
Tangible Net Worth: $ 33,6854,000
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Debt to Tangible Net Worth Ratio: 4.7:1
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EBITDA Ratio: 17.8
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Total Interest Coverage Ratio: 1.52:1
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Orlando Delinquency Rate: _____ :1 ( 10.05%)
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Overall Delinquency Rate: _____ :1 ( 8.57%)
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Exhibit "F"
Permitted Exceptions
10
Exhibit "H"
Borrower's Debt, Liabilities and Obligations to any Affiliates of Borrower
None.
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ASSIGNMENT AND ASSUMPTION AGREEMENT
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THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into this 20th
day of December, 2001, by and between PREFERRED EQUITIES CORPORATION, a Nevada
corporation (hereinafter referred to as "Assignor"); and AB PREFERRED HOLDINGS,
INC., a Florida corporation ("Assignee").
W I T N E S S E T H:
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WHEREAS, Assignor entered into that certain Management Agreement dated July
7, 1997 with RVS-Orlando Condominium Association, Inc., a Florida not-for-profit
corporation, attached hereto as Exhibit "A" (the "Management Agreement"); and
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WHEREAS, Assignor has agreed to transfer and assign to Assignee all of
Assignor's rights, title and interests in and to the Management Agreement; and
WHEREAS, Assignee has agreed to assume all of Assignor's liabilities and
obligations relating to or arising out of the Management Agreement following the
Effective Date (as described in Paragraph 3 hereinbelow); and
WHEREAS, the parties hereto desire to provide for the assignment of such
rights, title and interests and the assumption of such liabilities and
obligations in accordance with the terms contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and satisfaction
of their respective obligations contained herein, the parties hereto hereby
agree as follows:
1. Assignment. Assignor does hereby convey, sell, transfer, assign and
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deliver unto Assignee, its successors and assigns forever, all of its benefits,
rights, title and interests in and to the Management Agreement.
2. Assumption of Obligations and Liabilities. Assignee hereby assumes and
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agrees to satisfy and perform all of the liabilities and obligations of Assignor
contained under the Management Agreement being assigned hereunder following the
Effective Date hereof. Assignee shall indemnify and hold Assignor harmless from
and against any losses, damages, expenses, liabilities, claims and suits which
arise out of or relate to Assignee's failure to perform such obligations or
satisfy such liabilities assumed by Assignee herein.
3. Effective Date. The effective date of the assignment and assumption of
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the Management Agreement set forth in Paragraphs 1 and 2 hereinabove is December
20, 2001 (the "Effective Date").
4. Third Party Consents and Waivers. The Assignor agrees and undertakes
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to secure any and all consents and waivers required by the Management Agreement,
including
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without limitation, the Consent to Assignment attached hereto as Exhibit "B",
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and the Assignor and Assignee agree to cooperate in obtaining any and all
consents or waivers of third parties necessary to transfer to Assignee all
duties, obligations, rights and benefits in and under the Management Agreement.
5. Further Assurances. Each party hereto shall from and after the date
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hereof, upon the reasonable request of any other party hereto, execute and
deliver such other documents as such other party may reasonably request to
obtain the full benefit of this Assignment and Assumption Agreement.
6. Governing Law. This Assignment and Assumption Agreement shall be
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subject to, and construed and enforced in accordance with, the laws of the State
of Florida without regard to principles of conflicts of law.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and
Assumption Agreement as of the date first written above.
ASSIGNOR:
PREFERRED EQUITIES CORPORATION, a
Nevada corporation
By: s/s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Sr. V.P.
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ASSIGNEE:
AB PREFERRED HOLDINGS, INC., a Florida
corporation
By: s/s/ Xxxxxx XxXxxxx
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Name: Xxxxxx XxXxxxx
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Title: President
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EXHIBIT "A"
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Management Agreement
14
EXHIBIT "B"
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Consent to Assignment
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CONSENT TO ASSIGNMENT
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RVS-Orlando Condominium Association, Inc. ("RVS-Orlando"), a Florida not-
for-profit corporation, consents to the assignment by Preferred Equities
Corporation, a Nevada corporation ("PEC"), to AB Preferred Holdings, Inc., a
Florida corporation ("AB Preferred"), of the Management Agreement dated July 7,
1997 between PEC and RVS-Orlando.
EXECUTED: _____12/20_______, 2001
WITNESSES: RVS-ORLANDO CONDOMINIUM
ASSOCIATION, INC., a Florida
not-for-profit corporation
s/s/ Xxxx Xxxxxx
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Print Name: Xxxx Xxxxxx By: s/s/ Xxxxx X. XxXxxxxxx
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Name: Xxxxx X. XxXxxxxxx
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S/s/ Syonja Xxxxxxxxx
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Title: President
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Print Name: Syonja Xxxxxxxxx
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PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT (the "Pledge Agreement") is made and entered into
this 20 day December of 2001, by and between PREFERRED EQUITIES CORPORATION, a
Nevada corporation located at 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000
(hereinafter referred to as the "Pledgor"); and XXXXXX FINANCIAL, INC., a
Delaware corporation, located at 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 (hereinafter referred to as the "Secured Creditor").
W I T N E S S E T H:
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WHEREAS, the Pledgor and the Secured Creditor entered into that certain
Interval Receivables Loan and Security Agreement dated as of March 28, 1996, as
amended by that certain Interval Receivables Loan and Security Agreement dated
December 23, 1997, that certain Second Amendment to Interval Receivables Loan
and Security Agreement dated July 7, 1998, that certain Amendment No. 2 to
Interval Receivables Loan and Security Agreement dated March 1, 1999, that
certain Fourth Amendment to Interval Receivables Loan and Security Agreement
dated December 22, 1999 and that certain Amended and Restated Loan and Security
Agreement dated April 5, 2001 (the "Receivables Loan Agreement"), and that
certain Acquisition and Construction Loan Agreement dated March 27, 1996, as
amended by that certain Amendment to Acquisition and Construction Loan Agreement
dated December 23, 1997, that certain Second Amendment to Acquisition and
Construction Loan Agreement dated July 7, 1998, that certain Third Amendment to
Acquisition and Construction Loan Agreement dated December 22, 1999, that
certain Fourth Amendment to Acquisition and Construction Loan Agreement dated
September 7, 2000 and that certain Amended and Restated Acquisition and
Construction Loan Agreement dated April 5, 2001 (the "Construction Loan
Agreement", which together with the Receivables Loan Agreement are collectively
referred to as the "Loan and Security Documents") (as amended, modified,
supplemented or restated from time to time, the Loan and Security Documents, the
notes as provided in and relating to the Loan and Security Agreements, and all
other documents relating to the Loans collectively referred to herein as the
"Loan Agreements"), providing for the availability of credit (the "Loans") to
the Pledgor upon the terms and conditions set forth therein; and
WHEREAS, the Secured Creditor and the Pledgor desire to further amend and
modify the terms of the Loan Agreements, as set forth under that certain First
Amendment of Amended and Restated Loan and Security Agreement and that certain
First Amendment of Amended and Restated Acquisition and Construction Loan
Agreement, all of which are dated of even date herewith (the "First
Amendments"); and
WHEREAS, the Pledgor is a sole shareholder of AB Preferred Holdings, Inc.,
a Florida corporation (the "Company"), and the Pledgor and the Company will
derive financial and other benefits from the ongoing lending relationship
between the Secured Creditor and the Pledgor; and
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WHEREAS, the Pledgor is and shall be at all times during the term of this
Pledge Agreement the sole legal and beneficial owner of all of the outstanding
shares of capital stock (constituting all equity interest and voting rights) of
the Company; and
WHEREAS, pursuant to that certain Assignment and Assumption Agreement
dated December 20, 2001 (the "Assignment Agreement"), the Company assumes all
of the Pledgor's rights, benefits, interests and obligations under that certain
Management Agreement dated July 7, 1997 between the Pledgor and RVS-Orlando
Condominium Association, Inc., a Florida not-for-profit corporation (the "RVS-
Orlando I Management Agreement"); and
WHEREAS, the Company entered into that certain Management Agreement between
the Company and RVS-Xxxxxxx XX Condominium Association, Inc., a Florida not-for-
profit corporation, effective November 5, 2001 (the "RVS-Xxxxxxx XX Management
Agreement", which together with the RVS-Orlando I Management Agreement are
collectively referred to as the "Management Agreements"); and
WHEREAS, pursuant to the Management Agreements and the Assignment Agreement
the Company is the Manager of the Resort (as defined in the Amended and Restated
Loan and Security Agreement dated April 5, 2001) which is being developed by the
Pledgor; and
WHEREAS, it is in the best interest of the Pledgor to enter into this
Pledge Agreement; and
WHEREAS, it is in the best interest of the Company to execute the Joinder
by Company hereto; and
WHEREAS, as a condition, among other things, to the amendment and
modification of Loans under the Loan Agreements, the Secured Creditor required
and the Pledgor has agreed, by executing and delivering this Pledge Agreement,
to secure the payment in full of the Pledgor's obligations under the Loan
Agreements.
NOW, THEREFORE, in consideration of the mutual premises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Pledge Agreement, the following terms and
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conditions shall have the meanings set forth below:
"1933 Act" shall mean the Securities Act of 1933, as amended.
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"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
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"Blank Stock Power" shall mean a blank stock power in form and substance
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acceptable to the Secured Creditor executed by the Pledgor and delivered to the
Secured Creditor for each Stock Certificate.
"Collateral" shall mean One Thousand (1,000) shares of Common Stock and all
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18
additional Shares issued in regard thereto as a result of any stock dividend,
stock split, etc., and all other Shares owned at any time by the Pledgor,
whether acquired from the Company or by gift, purchase or otherwise from any
other person whatsoever.
"Common Stock" shall mean all of the issued and outstanding common stock of
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the Company, par value of $0.01 per share.
"Distributions" shall mean any and all present and future payments by the
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Company to the Pledgor whether in the form of dividends, liquidation payments,
profit-sharing payments or any other distribution related to the Shares, any
interest of the Pledgor in the Company, or the sale, transfer or conveyance of
any real or personal property owned by the Company.
"Event of Default" shall mean the occurrence of a default under paragraph
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4.
"Liability" or "Liabilities" shall mean each and all of the following:
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(a) Principal and interest and all other monies due or to become due
under any of the Loan Agreements, as the same may be amended, changed, modified
or renewed from time to time.
(b) All other monies (in addition to principal and interest) due or to
become due to the Secured Creditor from the Pledgor including, but not limited
to, all indemnities, costs and expenses including attorney's fees which the
Secured Creditor is entitled or permitted for any reason whatsoever to recover
under any statute or promissory note or agreement by the Pledgor in favor of the
Secured Creditor in connection with the Loans, including, but not limited to,
the Loan Agreements. As used herein and elsewhere in this Pledge Agreement,
costs and expenses, including attorney's fees, shall include costs and expenses
incurred by the Secured Creditor in proceeding against the Collateral or against
the Pledgor and shall include costs and expenses, including attorney's fees,
which the Secured Creditor may incur or become liable for as a result of
enforcing any of its rights and privileges under this Pledge Agreement or of any
of the Loan Agreements, whether in any initial suit or an appeal therefrom.
(c) All future advances, if any, made by the Secured Creditor to the
Pledgor; provided, however, the Secured Creditor shall not by virtue of this
Pledge Agreement be obligated to make any such future advances to the Pledgor.
However, if, after the date of this Pledge Agreement, the Secured Creditor does
advance monies to the Pledgor, said advances shall be presumed to be future
advances under the provisions of this paragraph such that such future advances
shall be secured by the Collateral under this Pledge Agreement.
"Rule 144" shall mean Rule 144 as promulgated by the SEC under the 1933
--------
Act, as amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
---
"Shares" shall mean the shares of Common Stock.
------
"Stock Certificate(s)" shall mean the stock certificate(s) representing
--------------------
Shares in which the
19
Secured Creditor has been granted a security interest under this Pledge
Agreement which constitute Collateral.
"UCC" shall mean the applicable Uniform Commercial Codes of the State of
---
Florida and the State of Nevada, as the same may now exist or may hereafter be
amended from time to time.
2. GRANT OF SECURITY INTEREST. To secure the payment of all Liabilities
--------------------------
to the Secured Creditor, the Pledgor does hereby pledge, assign and grant to the
Secured Creditor a security interest in all of the Collateral. By executing and
delivering this Pledge Agreement, the Pledgor hereby consents to the transfer by
Secured Creditor of ownership of the Shares upon the foreclosure sale thereof
effected in accordance with the terms and conditions of this Pledge Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor does hereby
-----------------------------------------
represent and warrant to and covenant with the Secured Creditor as follows:
(a) That the Pledgor is the absolute and sole legal, record and
beneficial owner of, or at the time pledged hereunder will have, good and
marketable title to, the Collateral pledged hereunder by the Pledgor, free and
clear of all liens and security interests whatsoever except the security
interest granted the Secured Creditor by this Pledge Agreement, and no person or
person other than the Secured Creditor has any type of interest, claim or lien
whatsoever upon the Collateral and during the term of this Pledge Agreement the
Pledgor shall not grant to any person other than the Secured Creditor any claim,
interest or lien whatsoever in the Collateral.
(b) That the Pledgor will defend the Collateral against the claims and
demands of all persons at any time claiming the same or any interest therein.
(c) That by virtue of this Pledge Agreement and delivery of the Stock
Certificate(s) and Blank Stock Power(s) to the Secured Creditor, the Secured
Creditor has a valid, enforceable, perfected and first security interest in the
Collateral.
(d) That there is not now and will not be filed in the future any
financing statement listing any person other than the Secured Creditor as a
secured party covering any or all of the Collateral.
(e) That the Pledgor will not permit any liens or security interests
other than the Secured Creditor's security interest to attach to any of the
Collateral, permit any of the Collateral to be levied upon under legal process,
sell, transfer, convey, or otherwise dispose of any of the Collateral or any
interest therein or offer to do so, without the prior written consent of the
Secured Creditor, or permit anything to be done that may impair the value of any
of the Collateral (except any loss of value attributable to fluctuation in the
market price thereof) or the security intended to be afforded by this Pledge
Agreement.
(f) That the Pledgor will pay promptly when due all taxes and
assessments upon the Collateral.
20
(g) That at its option, the Secured Creditor may discharge taxes,
liens or security interests or encumbrances at any time levied upon or placed on
the Collateral and to the extent the Secured Creditor elects to do so, the
Pledgor agrees to immediately reimburse the Secured Creditor on demand for any
such payments made or any expenses incurred by the Secured Creditor together
with interest hereon at the highest rate permitted by law.
(h) That the Pledgor will immediately notify the Secured Creditor if
the Company suffers or permits any substantial or material changes in control or
management or the Management Agreements, or ceases to be the Manager of the
Resort or suffers or experiences any material adverse financial change;
provided, however, this shall not apply to any adverse financial changes
resulting from changes in market value of the Collateral.
(i) That the Collateral was acquired by the Pledgor on August 14,
2001, and, as of and by said date, the full purchase price for the Collateral
was paid by the Pledgor, and the "holding period" for the Collateral within the
meaning of Rule 144 commenced on said date.
(j) That in the event the Pledgor subsequently acquires any additional
Shares of the Company whether than by way of stock dividend, stock split, etc.,
or by gift, purchase or otherwise from any third party, that it will immediately
deliver the Stock Certificate(s) for said additional Shares along with Blank
Stock Power(s) therefor to the Secured Creditor and said Shares shall be deemed
to be within the term "Collateral" and subject to the terms and conditions of
this Pledge Agreement; provided, however, this clause shall not, of itself,
authorize the issuance by the Company of any additional Shares.
(k) That in the event the Secured Creditor is entitled to dispose of
the Collateral under this Pledge Agreement, the Pledgor shall, at the request of
the Secured Creditor, execute and file all forms required to be filed under Rule
144 with the SEC and, upon the failure of any Pledgor to do so, such Pledgor
does hereby designate and appoint the Secured Creditor as its attorney-in-fact
to execute in the name of the Pledgor all appropriate forms to be filed under
Rule 144.
(l) That the Pledgor owns the Collateral and the Collateral
constitutes one hundred percent (100%) of all the outstanding Common Stock of
the Company and shall at all times during the term of the Pledge Agreement
represent one hundred percent (100%) equity and ownership interest and one
hundred percent (100%) voting interest of the Company.
(m) That the Pledgor owns One Thousand (1,000) Shares, and all such
Shares owned by the Pledgor and delivered to the Secured Creditor as Collateral
constitute one hundred percent (100%) of the total outstanding capital stock of
the Pledgor and, throughout the term of this Pledge Agreement, the Shares which
have been delivered to the Secured Creditor as Collateral under this Pledge
Agreement shall not constitute less than one hundred percent (100%) of the
issued and outstanding capital stock of the Company.
(n) That the Pledgor shall not enter into any stock restriction or
similar agreement with respect to the Collateral or any voting trust agreement
which applies to the Collateral without the prior written consent of the Secured
Creditor.
21
(o) That the "Whereas" recitals above are true and correct and are
made a part hereof.
All of the foregoing representations, warranties and covenants shall be true and
correct throughout the term of this Pledge Agreement and shall be fulfilled and
maintained by the Pledgor throughout the term hereof.
4. DEFAULT. The occurrence and continuance of one or more of the
-------
following events shall constitute an Event of Default in this Pledge Agreement:
(a) The failure or omission of Pledgor to pay within five (5) days of
the date when due any Liability, including but not limited to, the failure to
pay when due any payment of interest and/or principal of the Loan Agreements.
(b) Pledgor or the Company shall fail to perform or observe any
covenant, agreement or obligation contained in this Pledge Agreement or in any
of the Loan Agreements (other than any covenant or agreement obligating Pledgor
to pay the Liabilities), and such failure shall continue for thirty (30) days
after Secured Creditor deliver written notice thereof to Pledgor, provided,
however, if the failure is incapable of cure within such thirty (30) day period
and Pledgor shall be diligently pursuing a cure, such thirty (30) day cure
period shall be extended by an additional period not to exceed sixty (60) days.
(c) The making or furnishing by Pledgor to the Secured Creditor of any
representation, warranty or covenant in connection with this Pledge Agreement
which is false or misleading in any material respect as of the date hereof.
(d) A petition under any Chapter of Title 11 of the United States Code
or any similar law or regulation is filed by or against Pledgor, the Company or
Guarantor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Resorts then owned by Pledgor is
appointed, or Pledgor, the Company or Guarantor makes an assignment for the
benefit of creditors, or any of them are adjudged insolvent by any state or
federal court of competent jurisdiction, or any of them admit their insolvency
or inability to pay their debts as they become due or an attachment or execution
is levied against any of the Resorts then owned by Pledgor.
(e) The issuance, filing or levy against Pledgor, the Company or
Guarantor of one or more attachments, injunctions, executions, tax liens or
judgments for the payment of money cumulatively in excess of fifty thousand
dollars ($50,000.00) which is not discharged in full or stayed within thirty
(30) days after issuance or filing.
(f) An Event of Default under the terms and conditions of any
document, instrument or agreement executed by Pledgor in favor of the Secured
Creditor in connection with the Loans including, but not limited to, the Loan
Agreements and any other loan agreement or security agreement relating thereto.
(g) The dissolution, merger or consolidation, or transfer of a
substantial part
22
of the property of Pledgor (other than the sale of inventory in the ordinary
course of business).
(h) Pledgor becomes unable to pay debts as they mature.
(i) Either of the Management Agreements is terminated or modified in
any material respect without the Secured Creditor's written consent or the
Pledgor is in material default (after the expiration of applicable cure periods)
under any of the Management Agreements.
5. RIGHTS UPON DEFAULT. Upon the occurrence and continuance of any Event
-------------------
of Default, the Secured Creditor shall have and may exercise any or all of the
following rights (all of which rights shall be cumulative); provided, however,
the Secured Creditor shall be under no duty or obligation to do so:
(a) to receive all Distributions and any other amounts payable in
respect of the Collateral otherwise payable under paragraph 8 below to the
Pledgor;
(b) To exercise from time to time any and all rights and remedies of a
secured party under the UCC and any and all rights and remedies available to it
under any other applicable law.
(c) To dispose of the Collateral under the UCC and, in such case, if
any notice is required under the UCC, the giving of five (5) days written notice
to the Pledgor as set forth in paragraph 11 hereof shall constitute reasonable
notice to the Pledgor provided, however, that this Pledge Agreement and this
subparagraph (c) shall not, of itself, require the giving of any such written
notice.
(d) To declare the Liabilities secured hereby, or any of them
(notwithstanding any provision thereof), immediately due and payable without
demand or notice of any kind and the same thereupon shall immediately become due
and payable without demand or notice, and from and after the date of default the
amount due on the Liabilities shall from and thereafter bear interest at the
Default Rate as defined in the Receivables Loan Agreement.
(e) To immediately offset against the Liabilities all other monies due
or to become due Pledgor from the Secured Creditor.
(f) To exercise any other remedies available to the Secured Creditor
under applicable law or any other agreement.
(g) All proceeds resulting from the disposition of any of the
Collateral shall be applied without marshalling of assets (i) first to the
expenses of retaking and preparing the Collateral for sale including expenses of
sale, (ii) next to other costs and attorneys' fees incurred by the Secured
Creditor in exercising its rights under this Pledge Agreement, (iii) next to the
payment of interest and/or principal due on the Liabilities, as the Secured
Creditor may determine, and (iv) finally to any other moneys due the Secured
Creditor from Pledgor .
(h) To make demand upon the Company to make directly to the Secured
23
Creditor all payments with respect to the Shares such as, for example,
dividends, liquidation payments, etc. Further, the Secured Creditor shall have
the right, but not the duty, to thereafter exercise all rights with respect to
voting privileges for the Shares and upon notice from the Secured Creditor, the
Pledgor shall no longer exercise any voting rights with respect to the Shares,
or if so directed by the Secured Creditor, shall vote the Shares as directed by
the Secured Creditor. The exercise by the Secured Creditor of any of its rights
hereunder with respect to the voting of the Shares shall not constitute in any
way an election by the Secured Creditor to become owner of the Shares and until
such time as the Secured Creditor has so exercised its rights hereunder, the
Pledgor shall be entitled to exercise all voting privileges with respect to the
Shares.
6. PURCHASE OF COLLATERAL. Upon any sale of any Collateral by the Secured
----------------------
Creditor hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Secured Creditor
or the officer making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Secured Creditor or such officer or be answerable in any way
for the misapplication or nonapplication thereof.
7. INDEMNIFICATION. To the extent permitted by law, in no event shall the
---------------
Secured Creditor be liable for any matter or thing in connection with this
Pledge Agreement other than to account for moneys actually received by it in
accordance with the terms hereof and except for fraud, gross negligence, willful
misconduct or violation of law.
8. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default shall
---------------------------------
have occurred and be continuing, all Distributions payable in respect of the
Collateral may be paid to the Pledgor.
Nothing contained in this paragraph 8 shall limit or restrict in any
way the Secured Creditor's right to a security interest in proceeds of the
Collateral in any form in accordance with paragraph 2. All Distributions or
other payments that are received by the Pledgor in violation of the provisions
of this paragraph 8 and paragraph 5 herein shall be received in trust for the
benefit of the Secured Creditor, shall be segregated from other property or
funds of the Pledgor and shall be forthwith paid over to the Secured Creditor as
Collateral in the same form as so received.
9. PERFECTION. In order to perfect the security interest in the
----------
Collateral granted to the Secured Creditor by the Pledgor hereunder, the Pledgor
shall simultaneously with the execution of the Pledge Agreement deliver
possession of the Stock Certificate(s) for the Collateral and Blank Stock
Power(s) therefor to the Secured Creditor. The Pledgor further agrees from time
to time to execute and deliver to the Secured Creditor any and all documents
which are, in the opinion of the Secured Creditor or its counsel, necessary to
perfect said security interest. To the extent any Pledgor subsequently acquires
any additional Shares which are not already pledged to the Secured Creditor,
such Pledgor shall promptly deliver to the Secured Creditor the Stock
Certificate(s) and Blank Stock Power(s) for said Shares and the Shares
24
shall be deemed to be within the definition of the term "Collateral".
10. POSSESSION OF COLLATERAL. The Secured Creditor shall have no duties
------------------------
or obligations whatsoever to exercise or preserve rights in regard to the
Collateral as against any third parties and the sole duty of the Secured
Creditor shall be the reasonable preservation of the physical Collateral itself.
By way of illustration and not limitation, the Secured Creditor shall have no
duty or obligation whatsoever to maintain any market value for the Collateral.
Upon the termination of this Pledge Agreement, the Secured Creditor shall return
the Collateral (including the Stock Certificate(s) and the Blank Stock Power(s))
to the Pledgor along with such endorsements as may be necessary to transfer
title to the Collateral to the Pledgor; provided, however, the transfer shall be
without recourse and the Secured Creditor shall make no representations or
warranties whatsoever in regard to said transfer.
11. NOTICE. All notices shall be in writing and delivered to the person
------
to whom the notice is directed, either (i) in person, (ii) by U.S. Mail, as
registered or certified item with return receipt requested, (iii) delivered by
delivery service, or (iv) sent by facsimile, telex or telecopy. Notices
delivered by mail shall be deemed to be given when deposited in a post office or
other depository under the care or custody of the United States Postal Service,
enclosed in a wrapper, addressed properly with proper postage affixed. All
notices shall be addressed as follows:
To Secured Creditor: XXXXXX FINANCIAL, INC.
Vacation Ownership Finance
000 Xxxx Xxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Portfolio Manager,
Loan No. 95-227
Fax: (000) 000-0000
And copy to: Xxxxxx Financial, Inc.
Real Estate Financial Services
Attn: Group General Counsel
000 Xxxx Xxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Loan No. 95-227
Fax: (000) 000-0000
And copy to: Xxxxx & Xxxxxxxxx LLP
X.X. Xxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxxx X'Xxxx, Esq.
Fax: 000-000-0000
To Pledgor: Preferred Equities Corporation
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: s/s/ Xxx Xxxxxx
-------------------
25
Fax: 000-000-0000
------------
12. FURTHER ASSURANCES; SECURED CREDITOR AS ATTORNEY-IN-FACT, SECURED
-----------------------------------------------------------------
CREDITOR MAY PERFORM.
--------------------
(a) Pledgor agrees that it will join with the Secured Creditor to
execute and, at its own expense, file and refile under any applicable Uniform
Commercial Code such financing statements, continuation statements, Blank Stock
Powers, all necessary forms for filing with the SEC under Rule 144 (if
applicable), and other documents and instruments in such offices as the Secured
Creditor may reasonably deem necessary or appropriate, or wherever required or
permitted by law in order to perfect and preserve the Secured Creditor's
security interest in the Collateral, and hereby authorizes the Secured Creditor
to file financing statements and amendments thereto relating to all or any part
of the Collateral without the signature of the Pledgor, as applicable, where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Secured Creditor such additional assignments, agreements and
other instruments as the Secured Creditor may reasonably require or deem
advisable to carry out the purposes of this Pledge Agreement or to further
assure and confirm unto the Secured Creditor its rights, powers and remedies
hereunder.
(b) Pledgor hereby irrevocably appoints the Secured Creditor its
lawful attorney-in-fact, with full authority in the place of the Pledgor and in
the name of the Pledgor, the Secured Creditor or otherwise, to endorse in the
Pledgor's name all checks, drafts and other instruments representing or
constituting payments made on the Collateral, and upon the occurrence and during
the continuance of an Event of Default, with full power of substitution from
time to time in the Secured Creditor's reasonable discretion to take any action
and to execute any instrument that the Secured Creditor may reasonably deem
necessary or advisable to accomplish the purpose of this Pledge Agreement,
including, without limitation:
(i) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
(ii) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i)
above; and
(iii) to file any claims or take any action or institute any
proceedings that the Secured Creditor may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights
of the Secured Creditor with respect to any of the Collateral;
and, in the case of each of clauses (i), (ii), and (iii) above, the Secured
Creditor shall use its best efforts to give the Pledgor notice of any action
taken by it in accordance with this paragraph as soon as practicable before such
action is taken; provided, however, that the failure to give any such notice
-------- -------
shall not in any way impair the authority of the Secured Creditor pursuant to
this paragraph or the validity of any action taken by the Secured Creditor
pursuant hereto, or result in any liability on the part of the Secured Creditor
to the Pledgor. The exercise by the Secured
26
Creditor of any of its rights pursuant to this paragraph shall not create any
further obligation on the part of the Secured Creditor to exercise any other
rights hereunder or to take any other or further action in respect thereof. The
power of attorney granted under this paragraph, being coupled with an interest,
is irrevocable for so long as this Pledge Agreement shall be in effect.
(c) If Pledgor fails to perform any agreement contained herein after
written request to do so by the Secured Creditor, the Secured Creditor may
itself perform, or cause performance of, such agreement, and the reasonable
expenses so incurred in connection therewith shall be payable by the Pledgor.
13. TERM. This Pledge Agreement and the rights and privileges granted
----
hereunder to the Secured Creditor shall continue and remain in full force and
effect until all Liabilities have been paid in full to the Secured Creditor and
this Pledge Agreement has been marked "Canceled" by the Secured Creditor and
returned to the Pledgor. Upon the full payment of all Liabilities and the
performance of all obligations under the Loan Agreements and the Pledge
Agreement by Pledgor and, if an Event of Default has not occurred and is
continuing, the Secured Creditor shall execute and deliver UCC-3 termination
statement(s) (to the extent necessary) at the expense of the Pledgor and xxxx
this Pledge Agreement "Canceled" and return same along with the Collateral to
the Pledgor.
14. TIME. Time is of the essence of this Pledge Agreement.
----
15. WAIVER. No waiver by the Secured Creditor of any default shall
------
operate as a waiver of any other default or of the same default on a future
occasion. No delay or omission on the part of the Secured Creditor in
exercising any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Secured Creditor of any right or remedy shall include
any other or further exercise thereof or the exercise of any other right or
remedy. Except as provided herein or in any loan document to the contrary, the
Pledgor further waives all notices whatsoever that the Pledgor may be entitled
to under any contract or statute including presentment, notice of dishonor,
protest or notice of protest.
16. MISCELLANEOUS. The provisions of this Pledge Agreement are cumulative
-------------
and are in addition to the provisions of the Loan Agreements secured by this
Pledge Agreement and the Secured Creditor shall have all the benefits, rights
and remedies under the Loan Agreements secured hereby. All rights of the
Secured Creditor hereunder shall inure to the benefits of its successors and
assigns and all duties or obligations of the Pledgor hereunder shall bind the
heirs, executors, administrators, successors and assigns of the Pledgor.
17. GOVERNING LAW. This Pledge Agreement has been delivered in the State
-------------
of Florida and shall be construed and interpreted in accordance with and
governed by the laws of Florida (without regard to the conflict of laws
provisions thereof).
18. SEVERABILITY. Whenever possible, each provision of this Pledge
------------
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating
27
the remainder of such provision or the remaining provisions of this Pledge
Agreement.
19. NO THIRD PARTY BENEFICIARIES. This Pledge Agreement is solely between
----------------------------
the Pledgor and the Secured Creditor, as joined by the Company in respect to the
obligations of the Company as set out in the Joinder By Company, and no persons
other than the Pledgor and the Secured Creditor shall have any rights hereunder,
either as third party beneficiaries or otherwise.
20. COSTS AND ATTORNEYS FEES. The Pledgor agrees (a) to pay or reimburse
------------------------
the Secured Creditor for any and all reasonable and customary out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation,
execution, and delivery of, and amendment, supplement, or modification to, or
waiver or consent under, this Pledge Agreement, and the consummation of the
transactions contemplated hereby; (b) to pay or reimburse the Secured Creditor
for all of its costs and expenses incurred in connection with administration,
collection, enforcement or preservation of any rights under either of the Loan
Agreements and this Pledge Agreement including, without limitation, the fees and
disbursements of counsel for the Secured Creditor, including attorneys' fees,
out of court, in trial, on appeal, in bankruptcy proceedings, or otherwise; and
(c) to pay, indemnify, and hold the Secured Creditor harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance,
and administration of the Loan Agreements and this Pledge Agreement other than
those resulting solely from its own willful misconduct or gross negligence.
This paragraph shall survive the execution of this Pledge Agreement and will
continue to remain in force and effect even after all obligations of the Pledgor
under the Loan Agreements and this Pledge Agreement are satisfied.
21. COMPLETE AGREEMENT. This Pledge Agreement constitutes the complete
------------------
agreement between the parties and incorporates and sets forth all prior
discussions, agreements and representations between the parties in regard to the
matters set forth herein and this Pledge Agreement may not be altered, amended
or otherwise modified except by a writing signed by the person to be charged by
said alteration, amendment or modification. This requirement that this Pledge
Agreement may not be altered, amended or modified except by a writing, may not
itself be waived except by a writing.
22. COUNTERPARTS. This Pledge Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
shall together constitute one and the same instrument.
23. EFFECTIVE DATE. This Pledge Agreement shall be effective as of
--------------
December 20, 2001.
-----------------
[SIGNATURES ON FOLLOWING PAGE]
28
IN WITNESS WHEREOF, the parties hereto have executed this Pledge Agreement
as of the date and year first above written.
WITNESSES: PLEDGOR:
/s/ Xxxx Xxxxxx PREFERRED EQUITIES CORPORATION, a
-------------------------- Nevada corporation
Xxxx Xxxxxx
--------------------------
Print Name
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
/s/ Syonja Xxxxxxxxx Name: Xxxxx X. Xxxxxxxx
-------------------------- --------------------------
Print Name Its: Sr. V.P
--------------------------
Interest in Pledgor: 100% Capital Stock
Ownership
SECURED CREDITOR:
/s/ Xxxxxx X. Xxxxx XXXXXX FINANCIAL, INC., a Delaware
-------------------------- corporation
Xxxxxx X. Xxxxx
--------------------------
Print Name
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
/s/ Xxxxxxxx Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
-------------------------- --------------------------
Print Name Title: Sr. V.P.
--------------------------
29
JOINDER BY COMPANY
------------------
AB PREFERRED HOLDINGS, INC., a Florida corporation whose principal address
is 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000 ("the Company"), being the issuer
of the Collateral as defined in paragraph 1 of this Pledge Agreement does hereby
state to and agree with the Secured Creditor as follows:
1. That the Collateral is shown on the books of the Company as being owned
by the Pledgor.
2. That to the best knowledge of the Company, there are no restrictions on
the granting to the Secured Creditor by the Pledgor of a security interest in
the Collateral as set forth in this Pledge Agreement.
3. That the percentages and number of Shares set forth in subparagraphs
3(l) and 3(m) of the Pledge Agreement regarding the total number of shares of
Common Stock owned by the Pledgor pledged hereunder and the percentage ownership
of the total issued and outstanding Common Stock of the Company represented by
the Collateral are, as of the date hereof, true and correct.
4. That during the term of this Pledge Agreement, the Company shall not,
without the prior written consent of the Secured Creditor, issue any additional
shares of capital stock of any form whatsoever by way of stock dividend, stock
split, outright sale or for any other reason whatsoever.
5. That during the term of the Pledge Agreement, the Company agrees, if
applicable, to promptly and completely file all reports required to be filed
under the 1934 Act such that all current public information as defined in Rule
144 is available.
6. That the Company will use its best efforts to cooperate in good faith
with the Secured Creditor to release any restrictions on the Stock Certificates
for the Collateral as and when permitted under the 1933 Act. The Pledgor agrees
at its expense to file whatever forms, statements or documents which are
necessary with the SEC and other regulatory agencies so that any legend and/or
other restrictions associated with the Collateral may be cleared or released as
soon as possible. It is understood all applicable laws must be complied with by
the Pledgor. The Pledgor will furnish to the Secured Creditor such documents
and information as required by Secured Creditor to determine the necessary
holding period under Rule 144 for each and every share of the Collateral.
[SIGNATURE ON FOLLOWING PAGE]
30
IN WITNESS WHEREOF, the Company has executed this Joinder to this Pledge
Agreement this 20 day of December, 2001.
Signed, sealed and delivered
in the presence of:
/s/ Xxxx Xxxxxx AB PREFERRED HOLDINGS, INC., a
--------------------- Florida corporation
Xxxx Xxxxxx
---------------------
Print Name
By: /s/ Xxxxxx XxXXxxx
-----------------------
/s/ Syonja Xxxxxxxxx Name: Xxxxxx XxXxxxx
--------------------- -----------------------
Title: President
-----------------------
Syonja Gustafso
---------------------
Print Name
(CORPORATE SEAL)
31
Loan No. 95-227
THIS AMENDED, RESTATED AND INCREASED RECEIVABLES PROMISSORY NOTE NO. 2 AMENDS
AND RESTATES IN ITS ENTIRETY AND INCREASES THE PRINCIPAL AMOUNT OF THAT CERTAIN
FIRST AMENDMENT AND RESTATEMENT OF AMENDED, RESTATED AND INCREASED RECEIVABLES
PROMISSORY NOTE NO. 1 DATED APRIL 5, 2001, IN THE ORIGINAL PRINCIPAL AMOUNT OF
$30,000,000.00, THE ORIGINAL OF WHICH IS ATTACHED HERETO.
AMENDED, RESTATED AND INCREASED
RECEIVABLES PROMISSORY NOTE NO. 2
$40,000,000.00 12/20, 2001
THIS AMENDED, RESTATED AND INCREASED RECEIVABLES PROMISSORY NOTE NO. 2
amends and restates in its entirety and increases the principal amount of the
following described promissory note as described in that certain Amended and
Restated Loan and Security Agreement dated April 5, 2001 as amended by that
certain First Amendment of Amended and Restated Loan and Security Agreement of
even date herewith (the "Receivables Loan Agreement"), made by Preferred
Equities Corporation, a Nevada corporation, to Xxxxxx Financial, Inc.: that
certain First Amendment and Restatement of Amended, Restated and Increased
Receivables Promissory Note No. 1 dated April 5, 2001, in the principal amount
of $30,000,000.00; (the "Original Note"). Pursuant to that certain First
Amendment of Amended and Restated Loan and Security Agreement between Holder and
Maker of even date herewith, Maker hereby executes and delivers to Holder this
Amended, Restated and Increased Receivables Promissory Note No. 2 which amends,
restates and increases the principal amount of the Original Note, as follows:
1. Promise to Pay.
--------------
FOR VALUE RECEIVED, PREFERRED EQUITIES CORPORATION, a Nevada corporation
("Maker") whose address is 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000, promises
to pay to the order of XXXXXX FINANCIAL, INC., a Delaware corporation, and its
successors and assigns ("Holder"), in lawful money of the United States of
America and in immediately available funds, the aggregate unpaid principal
amount of all Advances made by Holder to Maker (the "Loan") pursuant to the
Receivables Loan Agreement. This is a revolving Note, the principal amount of
which may increase or decrease from time to time during the term hereof. This
Note shall evidence Advances made under the Receivables Loan Agreement,
notwithstanding that the total aggregate of principal advances and repayments
exceed the original maximum principal amount hereof, and notwithstanding that
the principal balance may be zero at any time. Payments shall be made to Holder
at 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 (or such other
address as Holder may hereafter designate in writing to Maker).
The repayment of the Loan evidenced by this Note is secured by the
Receivables Loan
32
Agreement pursuant to which Maker has assigned, pledged and granted a security
interest to Lender in certain receivables related to the sale of Intervals and
other collateral described therein. This Note, the Receivables Loan Agreement
and any other documents evidencing or securing the Loan or executed in
connection therewith, and any modification, renewal or extension of any of the
foregoing are collectively called the "Receivables Loan Documents".
--------------------------
This Note has been issued pursuant to the Receivables Loan Agreement, and
all of the terms, covenants and conditions of the Receivables Loan Agreement
(including all Exhibits thereto) and all other instruments evidencing or
securing the indebtedness hereunder are hereby made a part of this Note and are
deemed incorporated herein in full. Defined terms used herein and not otherwise
defined shall have the meanings set forth in the Receivables Loan Agreement.
2. Principal and Interest
----------------------
So long as no Event of Default exists, interest shall accrue on the
principal balance hereof from time to time outstanding and Maker shall pay
interest thereon at a rate equal to a floating rate per annum equal to four and
one-half percent (4.50%) plus the Base Rate (the aggregate rate referred to as
the "Interest Rate"). "Base Rate" shall mean the rate published each Business
Day in the Wall Street Journal for deposits maturing ninety (90) days after
-------------------
issuance under the caption "Money Rates, London Interbank Offered Rates
(Libor)." The Interest Rate for each calendar month shall be fixed based upon
the Base Rate published prior to and in effect on the first (1st) Business Day
of such month. Interest shall be calculated on a 360 day year and charged for
the actual number of days elapsed.
3. Payment.
-------
This Note is subject to mandatory payments as provided in Section 1.4
of the Receivables Loan Agreement.
Maker shall pay interest to Lender monthly, in arrears, on the first
day of each calendar month, commencing October 1, 2001, on the unpaid principal
amount of this Note outstanding during the previous calendar month at a
fluctuating interest rate per annum (computed daily on the basis of a year of
360 days and charged for the actual number of days elapsed) equal to the
Interest Rate; provided, however, that after the occurrence of an Event of
-------- -------
Default under the Receivables Loan Agreement this Note shall bear interest at
the Default Rate set forth below.
The Loan shall be due and payable on or before March 30, 2006, or any
earlier date on which the Loan shall be required to be paid in full, whether by
acceleration or otherwise (the "Maturity Date").
4. Prepayment.
----------
This Note is (i) subject to mandatory prepayments in whole or in part
as provided in Section 1.5(b) of the Receivables Loan Agreement; and (ii)
permitted optional prepayments in accordance with Section 1.5(a) of the
Receivables Loan Agreement, subject to applicable
33
Prepayment Premiums.
Not in limitation of any other mandatory prepayment requirements under
the Receivables Loan Agreement, if at any time the outstanding aggregate
principal balance under (i) this Note; (ii) that certain First Amendment and
Restatement of Amended, Restated and Consolidated Acquisition Promissory Note
No. 4 of even date herewith, between Holder and Maker in the principal amount of
$_________________ (the "Acquisition Note"); and (iii) that certain Third
Amendment and Restatement of Amended, Restated and Consolidated Revolving
Renovation Promissory Note of even date herewith, between Holder and Maker in
the maximum principal amount of $2,500,000.00 (the "Renovation Note") exceeds
$40,000,000.00 or such lesser amount as set forth in the Receivables Loan
Agreement, such excess amount shall be due and payable by Maker to Holder within
five (5) Business Days after notice from Holder without premium or penalty and
such amount shall be applied by Holder to reduce the outstanding principal
balance of any of the above-referenced notes in any manner or amount that Holder
determines.
5. Default.
-------
A. Events of Default.
-----------------
An "Event of Default" under this Note shall mean the occurrence of any
----------------
Event of Default under any of the Receivables Loan Documents, after giving
effect to any applicable grace or cure period.
B. Remedies.
--------
So long as an Event of Default remains outstanding: (a) interest shall
accrue at a rate equal to the Interest Rate plus four percent (4%) per annum
(the "Default Rate"); (b) Holder may, at its option and without notice (such
notice being expressly waived), declare the Loan immediately due and payable;
and (c) Holder may pursue all rights and remedies available under the
Receivables Loan Agreement or any other Receivables Loan Documents. Holder's
rights, remedies and powers, as provided in this Note and the other Receivables
Loan Documents, are cumulative and concurrent, and may be pursued singly,
successively or together against Maker, any guarantor of the Loan, the security
described in the Receivables Loan Documents, and any other security given at any
time to secure the payment hereof, all at the sole discretion of Holder.
Additionally, Holder may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in Holder's sole discretion. Failure of Holder, for any period of time or
on more than one occasion, to exercise its option to accelerate the Maturity
Date shall not constitute a waiver of the right to exercise the same at any time
during the continued existence of any Event of Default or any subsequent Event
of Default.
If any attorney is engaged: (i) to collect the Loan or any sums due under
the Receivables Loan Documents, whether or not legal proceedings are thereafter
instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens and security
interests of the Receivables Loan Agreement or any of the Receivables Loan
Documents; (iv) to foreclose on the Collateral; (v) to represent Holder in any
other proceedings whatsoever in
34
connection with the Receivables Loan Agreement or any of the Receivables Loan
Documents including post judgment proceedings to enforce any judgment related to
the Receivables Loan Documents; or (vi) in connection with seeking an out-of-
court workout or settlement of any of the foregoing, then Maker shall pay to
Holder all reasonable costs, attorneys' fees and expenses in connection
therewith, in addition to all other amounts due hereunder.
6. Late Charge.
-----------
If payments of principal and/or interest, or any other amounts under the
other Receivables Loan Documents are not timely made or remain overdue for a
period of ten (10) days, Maker, without notice or demand by Holder, promptly
shall pay an amount ("Late Charge") equal to four percent (4%) of each
-----------
delinquent payment.
7. Governing Law; Severability.
---------------------------
This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
8. Waiver.
------
Maker, for itself and all endorsers, guarantors and sureties of this Note,
and their heirs, successors, assigns and legal representatives, hereby waives
presentment for payment, demand, notice of nonpayment, notice of dishonor,
protest of any dishonor, notice of protest and protest of this Note, and all
other notices in connection with the delivery, acceptance, performance, default
or enforcement of the payment of this Note except as provided in the Receivables
Loan Agreement, and agrees that their respective liability shall be
unconditional and without regard to the liability of any other party and shall
not be in any manner affected by any indulgence, extension of time, renewal,
waiver or modification granted or consented to by Holder. Maker, for itself and
all endorsers, guarantors and sureties of this Note, and their heirs, legal
representatives, successors and assigns, hereby consents to every extension of
time, renewal, waiver or modification that may be granted by Holder with respect
to the payment or other provisions of this Note, and to the release of any
makers, endorsers, guarantors or sureties, and of any collateral given to secure
the payment hereof, or any part hereof, with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties may become parties
hereto without notice to Maker or to any endorser, guarantor or surety and
without affecting the liability of any of them.
9. Security, Application of Payments.
---------------------------------
This Note is secured by the liens, encumbrances and obligations created
hereby and by the other Receivables Loan Documents. Payments will be applied to
any fees, expenses or other costs Maker is obligated to pay under this Note or
the other Receivables Loan Documents, to interest due on the Loan and to the
outstanding principal balance of the Loan, in any order that Holder, at its sole
option, may deem appropriate.
35
10. Miscellaneous.
-------------
A. Amendments.
----------
This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by Holder and Maker.
B. Lawful Rate of Interest.
-----------------------
In no event whatsoever shall the amount of interest paid or agreed to be
paid to Holder pursuant to this Note or any of the Receivables Loan Documents
exceed the highest lawful rate of interest permissible under applicable law.
If, from any circumstances whatsoever, fulfillment of any provision of this Note
and the other Receivables Loan Documents shall involve exceeding the lawful rate
of interest which a court of competent jurisdiction may deem applicable hereto
("Excess Interest"), then ipso facto, the obligation to be fulfilled shall be
--------------- ----------
reduced to the highest lawful rate of interest permissible under such law and
if, for any reason whatsoever, Holder shall receive, as interest, an amount
which would be deemed unlawful under such applicable law, such interest shall be
applied to the principal of the Loan (whether or not due and payable), and not
to the payment of interest, or refunded to Maker if the Loan has been paid in
full. Neither Maker nor any guarantor or endorser shall have any action against
Holder for any damages whatsoever arising out of the payment or collection of
any such Excess Interest.
C. Captions.
--------
The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
D. Notices.
-------
Notices shall be given under this Note in conformity with the terms and
conditions of the Receivables Loan Agreement.
E. Joint and Several.
-----------------
The obligations of Maker under this Note shall be joint and several
obligations of Maker and of each Maker, if more than one, and of each Maker's
heirs, personal representatives, successors and assigns.
F. Time of Essence.
---------------
Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.
11. Venue.
-----
MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY
OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR
36
FROM THIS NOTE SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND ELECTION,
ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS.
MAKER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. MAKER HEREBY IRREVOCABLY
APPOINTS AND DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS MAKER, C/O C T
CORPORATION SYSTEM, 000 X. XXXXXXX XXXXXX, XXXXXXX, XXXXXXXX 00000, AS ITS DULY
AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH
PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON MAKER
PROVIDED A COPY OF SUCH SERVICE OF PROCESS IS ALSO SENT WITHIN THREE (3) DAYS
THEREAFTER TO MAKER EXCEPT IN THE CASE OF SERVICE OF PROCESS FOR ACTIONS WHEREIN
THE MAKER'S RESPONSE IS DUE IN LESS THAN TWENTY (20) DAYS, A COPY OF SUCH
PROCESS WILL BE SENT TO MAKER ON THE SAME DAY AS SERVICE ON C T CORPORATION
SYSTEM. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES
TO DO BUSINESS IN CHICAGO, ILLINOIS, MAKER SHALL, WITHIN TEN (10) DAYS AFTER
HOLDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS
BEHALF AND WITHIN SUCH PERIOD NOTIFY HOLDER OF SUCH APPOINTMENT. IF SUCH
SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, HOLDER SHALL, IN ITS SOLE DISCRETION,
HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO
MAKER. MAKER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE
OF ANY LITIGATION BROUGHT AGAINST IT BY HOLDER ON THE RECEIVABLES LOAN DOCUMENTS
IN ACCORDANCE WITH THIS PARAGRAPH.
12. Sale of Loan.
------------
Holder, at any time and without the consent of Maker, may grant
participations in or sell, transfer, assign and convey all or any portion of its
right, title and interest in and to the Loan, this Note, the Receivables Loan
Agreement and the other Receivables Loan Documents, any guaranties given in
connection with the Loan and any collateral given to secure the Loan. In the
event Holder sells, transfers, conveys or assigns all of Holder's right, title
and interest in this Note or the Loan, Holder shall give notice thereof to Maker
and Holder shall thereupon be released from liability and obligations of the
Lender hereunder and under all other transferred Loan Documents from and after
the date of such transfer provided such transferee agrees to be bound by the
obligations of Lender thereunder and provided such transferee is of equal or
greater financial capacity than Holder. Notice to Maker shall not be required
for any partial sale, transfer, assignment or conveyance of this Note.
13. Jury Trial Waiver.
-----------------
MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKER
37
AND BY HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER HOLDER NOR ANY PERSON ACTING
ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER
OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT MAKER AND HOLDER HAVE ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. MAKER AND HOLDER FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.
IN WITNESS WHEREOF, Maker has executed this Note or has caused the same to
be executed by its duly authorized representatives as of the date first set
forth above.
MAKER:
Preferred Equities Corporation,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------
Print Name: Xxxxx X. Xxxxxxxx
--------------------
As Its: Sr. V.P.
------------------------
38
