SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
FLORIDA GAMING CORPORATION
(Name of Issuer)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
340689 10 8
(CUSIP Number)
James A. Giesel
Brown Todd & Heyburn, PLLC
3200 Providian Center
Louisville, Kentucky 40202
(502) 589-5400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 24, 1997
(Date of Event Which Requires Filing of
This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following box. [ ]
Check the following box if a fee is being paid with this
statement. [ ]
CUSIP NO. - 340689 10 8
1. Name of reporting person. . . . . . . . . Freedom
Financial
Corporation
S.S. or I.R.S. No. of
above person. . . . . . . . . . . . . . . 35-1634756
2. Check the appropriate box
if a member of a group
(see instructions). . . . . . . . . . . . (a)
(b)
3. SEC use only. . . . . . . . . . . . . . .
4. Source of funds (see instructions). . . . 00
5. Check box if disclosure
of legal proceedings is
required pursuant to
Items 2(d) or 2(e). . . . . . . . . . . .
6. Citizenship or place
of organization . . . . . . . . . . . . . Indiana
Number of shares beneficially
owned by each reporting person
with:
7. Sole voting power. . . . . . . . . . . . . 2,557,480(1)
8. Shared voting power. . . . . . . . . . . . 0
9. Sole dispositive power . . . . . . . . . . 2,557,480(1)
10. Shared dispositive power . . . . . . . . . 0
11. Aggregate amount beneficially
owned by each reporting person . . . . . . 2,557,480
12. Check box if the aggregate amount
in Row (11) excludes certain
shares (see instructions). . . . . . . . .
13. Percent of class represented
by amount in Row (11). . . . . . . . . . . 39%
14. Type of reporting person . . . . . . . . . CO
(1) Includes 905,000 shares subject to currently exercisable
options.
Reference is hereby made to that certain Schedule 13D dated
March 31, 1993, as amended, (the "Schedule"), filed by Freedom
Financial Corporation ("Freedom") with respect to the common
stock, par value $.10 per share ("Common Stock"), of Florida
Gaming Corporation, formerly Lexicon Corporation, a Delaware
corporation (the "Issuer"). The Schedule is hereby amended to to
add the following information to the items indicated, including
the reporting of the execution of the Assets Purchase Agreement
dated as of September 24, 1997 (the "Assets Purchase Agreement"),
among the Issuer, Freedom, and Interstate Capital Corporation, a
wholly owned subsidiary of Freedom ("Interstate"). Unless
otherwise indicated, defined terms have the same meaning as set
forth in the Schedule.
Item 1. Security and Issuer.
This statement relates to the Common Stock of the Issuer
whose principal office is located at 3500 N.W. 37th Avenue,
Miami, Florida 33142.
Item 2. Identity and Background.
As set forth below, this filing relates to Freedom. Freedom
holds 100% of Interstate's common stock. Interstate is
incorporated under the laws of the Commonwealth of Kentucky and
its principal business is real estate development. The directors
and officers of Interstate are W. B. Collett, W. B. Collett, Jr.,
Timothy L. Hensley, and Robert L. Hurd.
Freedom Holding, Inc. ("Holding") holds approximately 95% of
Freedom's common stock. FHC Corporation ("FHC") holds 100% of
Holding's common stock. W. B. Collett, the Chief Executive
Officer and Chairman of the Board of the Issuer, Interstate,
Freedom and FHC, and the President and a director of Holding, is
the record holder of approximately 85% of FHC.
Pursuant to General Instruction C to the Schedule 13D, this
Item 2 sets forth certain information with respect to the
executive officers and directors of Freedom and persons who may
be deemed controlling persons of Freedom:
(a)(1) Name: Freedom Financial Corporation
(b)(1) Business Address: 2669 Charlestown Road
New Albany, Indiana 47150
(c)(1) Principal Business: Freedom's principal business
is investments. Freedom was a
bank holding company until
January 29, 1988, at which
time it sold its banking
subsidiaries.
(d)(1) During the last five years, neither Freedom nor
any of its directors and executive officers listed
below has been convicted in a criminal proceeding
(excluding traffic violations or similar
misdemeanors).
(e)(1) During the last five years, neither Freedom nor
any of its directors and executive officers listed
below was a party to a civil proceeding of a
judicial or administrative body resulting in a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating
activities subject to, federal or state securities
laws or finding any violation with respect to such
laws.
(f)(1) Freedom is incorporated under the laws of the
State of Indiana.
The directors and executive officers of Freedom, along with
their addresses and principal occupations are set forth below.
Name and Address Principal Occupation
W. B. Collett CEO & Chairman of the Board - Issuer
3500 N.W. 37th Avenue CEO & Chairman of the Board - Interstate
Miami, Florida CEO & Chairman of the Board - Freedom
33142 President & Director - Holding
CEO & Chairman of the Board - FHC
W. B. Collett, Jr. Executive V.P., Secretary & Director -
3500 N.W. 37th Avenue Issuer
Miami, Florida Executive V.P., Secretary & Director -
33142 Interstate
Executive V.P., Secretary & Director -
Freedom
Secretary & Treasurer - Holding
Executive V.P., Secretary & Director -
FHC
Timothy L. Hensley Executive V.P., Treasurer, CFO & 3500
N.W. 37th Avenue Director - Issuer
Miami, Florida Executive V.P., Treasurer & Director -
33142 Interstate
Executive V.P., Treasurer & Director -
Freedom
Executive V.P., Treasurer, CFO &
Director - FHC
Robert L. Hurd President & Director - Issuer
#7 Partridge Run President - Interstate
Warren, New Jersey President & Director - Freedom
07060 President & Director - FHC
President & Chairman - General Health
Care Corporation
President & CEO - International Barrier
Corporation
(a)(2) Name: Freedom Holding, Inc.
(b)(2) Business Address: 2669 Charlestown Road
New Albany, Indiana 47150
(c)(2) Principal Business: Holding's principal business
is to hold shares of Freedom
and to acquire additional
Freedom shares from time to
time.
(d)(2) During the last five years, neither Holding nor
any of its directors and executive officers listed
below has been convicted in a criminal proceeding
(excluding traffic violations or similar
misdemeanors).
(e)(2) During the last five years, neither Holding nor
any of its directors and executive officers listed
below was a party to a civil proceeding of a
judicial or administrative body resulting in a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating
activities subject to, federal or state securities
laws or finding any violation with respect to such
laws.
(f)(2) Holding is incorporated under the laws of the
State of Delaware.
The directors and officers of Holding are W. B. Collett and
W. B. Collett, Jr. Their addresses and principal occupations are
set forth above.
(a)(3) Name: FHC Corporation
(b)(3) Business Address: 2669 Charlestown Road
New Albany, Indiana 47150
(c)(3) Principal Business: FHC's principal business is to
hold shares of Holding.
(d)(3) During the last five years, neither FHC nor any of
its directors and executive officers listed below
has been convicted in a criminal proceeding
(excluding traffic violations or similar
misdemeanors).
(e)(3) During the last five years, neither FHC nor any of
its directors and executive officers listed below
was a party to a civil proceeding of a judicial or
administrative body resulting in a judgment,
decree or final order enjoining future violations
of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding
any violation with respect to such laws.
(f)(3) FHC is incorporated under the laws of the State of
Delaware.
The directors and officers of FHC are W. B. Collett, Robert
L. Hurd, W. B. Collett, Jr., and Timothy L. Hensley.
(a)(4) Name: W. B. Collett
(b)(4) Business Address: 3500 N.W. 37th Avenue
Miami, Florida 33142
(c)(4) Principal Business: W. B. Collett's principal
occupation is listed above.
(d)(4) During the last five years, W. B. Collett has not
been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e)(4) During the last five years, W. B. Collett was not
a party to a civil proceeding of a judicial or
administrative body resulting in a judgment,
decree or final order enjoining future violations
of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding
any violation with respect to such laws.
(f)(4) Mr. Collett is a citizen of the United States of
America.
Item 3. Source And Amount Of Funds Or Other Consideration.
On September 24, 1997, Freedom and its wholly owned
subsidiary, Interstate, entered into the Assets Purchase
Agreement with the Issuer, a copy of which is attached as Exhibit
99.1 to this Schedule, under which the Issuer agreed to purchase
from Interstate certain unimproved properties and a residential
real estate development called Tara Club Estates (collectively,
the "Properties"), all of which are situated in Loganville,
Walton County, Georgia. As consideration for the purchase, the
Issuer will pay Interstate the sum of $6,373,265 payable as
follows: (i) the Issuer's issuance to Interstate of 2,084 shares
(the "Series F Shares") of proposed Series F 8% Convertible
Preferred Stock (the "Series F Preferred Stock") at a stated
value of $1,000 per share (convertible into the Issuer's Common
Stock on the basis of 296.6689 shares of the Issuer's Common
Stock for each $1,000 of stated value of the proposed Series F
Preferred Stock), (ii) the Issuer's assumption of $1,081,102 of
first mortgage promissory notes to certain lenders secured by the
Properties, and (iii) the cancellation of $3,208,163 owed by
Freedom to the Issuer. Consummation of the transaction is
subject to, among other things, (i) the Issuer's receipt of an
opinion from an investment banker that the consideration to be
paid for the Properties is fair, from a financial point of view,
to the public stockholders of the Issuer, (ii) the Issuer's
receipt of title opinions with respect to the Properties, and
(iii) the approval of Freedom's lenders whose promissory notes
are secured by the Properties.
Item 4. Purpose of Transaction.
Through Interstate, Freedom expects to acquire the Series F
Shares as a result of the sale to the Issuer of the Properties.
The acquisition of the Series F Shares by Interstate will cause
an increase in Freedom's significant equity investment in the
Issuer. At the present time, but subject to Freedom's continuing
evaluation of the factors noted below, it is intended that
Interstate will directly retain the Series F Shares. Freedom may
purchase additional shares of the Issuer in the future and, in
particular, may purchase additional shares of the Issuer pursuant
to the Stock Purchase Agreement (the "Stock Purchase Agreement")
dated as of March 29, 1993, a copy of which is attached as
Exhibit A to the Schedule dated March 31, 1993 and described in
more detail in Item 6 below. Freedom may also purchase
additional shares of the Issuer's Common Stock in open market
transactions, privately negotiated transactions, or otherwise.
Freedom has the right, pursuant to Section 1.6(f) of the
Stock Purchase Agreement, to acquire up to an aggregate of
905,000 additional shares of the Issuer's Common Stock until
March 31, 1998, at a purchase price of $1.25 per share.
A majority of the members of the Issuer's Board of Directors
are directors and executive officers of Freedom. Through these
members, Freedom expects to influence the business and operations
of the Issuer.
In accordance with an assets purchase agreement dated
November 20, 1996 between the Issuer, Florida Gaming Centers,
Inc., a wholly owned subsidiary of the Issuer, and WJA Realty
Limited Partnership, a copy of which is attached as Exhibit 99.2 to
this Schedule, the Issuer expects to increase the number of its
directors to nine and to nominate Roger M. Wheeler, Jr. and
Richard P. Donovan for election by the Issuer's stockholders to
its board of directors.
Whether Freedom purchases any additional shares of the
Issuer's Common Stock, and the amount and timing of any such
purchases, will depend on Freedom's continuing assessment of
pertinent factors, including without limitation, the following:
(i) the availability of shares of Common Stock for purchase at
particular price levels, (ii) the Issuer's and Freedom's
respective business and prospects, (iii) other business and
investment opportunities available to Freedom, (iv) general
economic and industry conditions, (v) stock market and money
market conditions, (vi) the availability and nature of
opportunities to dispose of Freedom's interests, and (vii) other
plans and requirements of Freedom. Depending on its assessment
of these factors from time to time, Freedom may change its
present intentions as stated above, including possibly
determining to dispose of some or all of the shares of Common
Stock held by Freedom.
Freedom's determination to make an equity investment in the
Issuer was made in the context of an overall review of the Issuer
which included the possibility (which Freedom intends to
consider) of seeking to acquire the Issuer as an entity, although
Freedom has no present plans in this regard. Should Freedom in
the future seek to acquire the Issuer as an entity, the prior
establishment of an entity position in the Issuer might assist
Freedom in reaching such result.
Except as stated above, neither Freedom, nor, to the best
knowledge of Freedom, any of the executive officers or directors
of Freedom, have any plans or proposals which relate to or would
result in: (i) the acquisition by any person of additional
securities of the Issuer, or the disposition of securities of the
Issuer, (ii) an extraordinary corporate transaction, such as a
merger, reorganization or liquidations involving the Issuer,
(iii) a sale or transfer of a material amount of assets of the
Issuer, (iv) any change in the present board of directors or
management of the Issuer, including any plans or proposals to
change the number or term of directors or to fill any existing
vacancies on the board, (v) any material change in the present
capitalization or dividend policy of the Issuer, (vi) any other
material change in the Issuer's business or corporate structure,
(vii) changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person, (viii)
causing a class of securities of the Issuer to be delisted from a
national securities exchange or cease to be authorized to be
quoted in an inter-dealer quotation system of a registered
national securities association, (ix) a class of equity
securities of the Issuer becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, or (x) any action similar to any of those
enumerated above. Freedom may formulate plans or proposals with
respect to one or more of the foregoing in the future.
Item 5. Interest In Securities Of The Issuer.
(a) Freedom beneficially owns 2,557,480 shares of
Common Stock (including 905,000 shares which
Freedom has the right to acquire by March 31,
1998), representing 39% of the shares of
outstanding Common Stock.
(b) Freedom has sole voting and investment power with
respect to 2,557,480 shares of Common Stock
(including 905,000 shares which Freedom has the
right to acquire by March 31, 1998).
(c) On August 1, 1997, Freedom exercised an option to
purchase 25,000 shares of the Issuer's Common
Stock at an exercise price of $1.25 per share. On
August 21, 1997, Freedom exercised an option to
purchase 100,000 shares of the Issuer's Common
Stock at an exercise price of $1.25 per share.
Freedom used its working capital to effect these
purchases.
(d) As described in more detail in Item 6 below,
1,652,480 of the shares of Common Stock
beneficially owned by Freedom are subject to
various pledge and related arrangements.
(e) Not applicable.
As of September 30, 1997, directors and executive officers
of Freedom beneficially owned the following shares of Common
Stock of the Issuer: W. B. Collett -- 490,000 shares which may
be acquired under presently exercisable stock options; Robert L.
Hurd -- 1,000 shares owned by the Hurd Family Partnership, L.P.,
of which Mr. Hurd is a general partner, and 65,000 shares which
may be acquired under presently exercisable stock options; W. B.
Collett, Jr., -- 115,000 shares which may be acquired under
presently exercisable stock options; and Timothy L. Hensley --
50,000 shares which may be acquired under presently exercisable
stock options. These shares are not included in the shares of
Common Stock reported by Freedom.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to the Securities of
the Issuer.
Pursuant to the Stock Purchase Agreement, on March 31, 1993,
Freedom purchased 603,000 shares of Common Stock from the Issuer
for total cash consideration of $874,350 ($1.45 per share) (the
"Equity Infusion"). In addition, Freedom was granted options to
purchase an additional 1,750,000 shares of Common Stock at an
exercise price of $1.45 per share, exercisable at any time before
March 31, 1998.
The Stock Purchase Agreement provided that if the Common
Stock was delisted from the Nasdaq SmallCap Market pursuant to a
proceeding commenced before 181 days after March 31, 1993
(regardless of whether the Common Stock was subsequently
relisted), (i) the effective per share purchase price would be
adjusted to $1.25, the purchase price would remain at $874,350
and the number of shares sold to Freedom would be increased to
699,480 shares, and (ii) the per share price pursuant to the
options granted to Freedom would be adjusted to $1.25 and the
number of shares which would be available to be purchased
pursuant to the option would be increased to 2,030,000. Freedom
currently has 905,000 options outstanding.
On April 1, 1993, the Hurd Family Partnership, L.P.
purchased 1,000 shares of Common Stock in an open-market purchase
at a purchase price of $2.125 per share. Mr. Hurd, President of
the Issuer, is the general partner of the Hurd Family
Partnership. Beneficial ownership of such shares by Freedom is
disclaimed.
By letter dated April 7, 1993, the Issuer received notice
that, following review of the Issuer's submissions concerning the
Equity Infusion, the Nasdaq Stock Market would delist the Common
Stock effective April 8, 1993. As a result of the delisting of
the Common Stock and pursuant to the Stock Purchase Agreement,
Freedom was issued an additional 96,480 shares of Common Stock,
the exercise price per share of the options was reduced to $1.25
per share, and the number of shares subject to the options
increased to 2,030,000. The Common Stock was later relisted
following appeal and review by the Nasdaq Qualifications
Committee.
On October 4, 1994, the Issuer entered into a Letter of
Intent with Casino America for the formation of a joint venture
to build and operate a casino at the Issuer's Fort Pierce,
Florida pari-mutuel facility. The Letter of Intent is attached
as Exhibit B to Amendment No. 4 to this Schedule. Under the
Letter Agreement, Freedom sold Casino America 22,500 shares of
its Series AA Preferred Stock (the "Series AA Preferred Stock").
Freedom has also issued 1,181 shares of Series AA Preferred Stock
to Casino America in payment of dividends. As described below,
the Series AA Preferred Stock is convertible into shares of the
Issuer's Common Stock owned by Freedom. Subject to and upon
compliance with certain provisions of Freedom's Articles of
Incorporation, each holder of outstanding shares of Series AA
Preferred Stock has the right, at its option, exercisable at any
time before the close of business five years after the date such
shares are originally issued by Freedom, to convert any or all
outstanding shares of the Series AA Preferred Stock held by such
holder into issued and outstanding shares of Common Stock then
owned by Freedom. For the purpose of such conversion, the shares
of Series AA Preferred Stock are valued at $100.00 each and the
shares of the Issuer's Common Stock are valued as follows:
(i) at $7.50 per share at the time of exercise, if
Florida law does not allow casino style gaming at
the Issuer's fronton located at Fort Pierce,
Florida (the "Fronton"), and
(ii) at $15.00 per share at the time of exercise, if
Florida law allows casino style gaming at the
Fronton.
Freedom used proceeds from the sale of the Series AA
Preferred Stock to, among other things, exercise its option in
part to purchase 300,000 shares of Common Stock at an exercise
price of $1.25 on October 12, 1994. If Freedom does not
otherwise have shares of the Issuer's Common Stock available at
the time of conversion of the Series AA Preferred Stock, Freedom
may exercise a portion of its remaining options to purchase
905,000 shares of the Issuer's Common Stock.
On July 31, 1996, Freedom executed with Pioneer Bank the
1996 Loan Agreement ("1996 Loan Agreement"), a related Stock
Pledge Agreement (the "1996 Pledge Agreement"), and a Promissory
Note (the "Promissory Note"), copies of which are attached as
Exhibit 99.3, Exhibit 99.4 and Exhibit 99.5 to this Schedule,
respectively. Proceeds from the 1996 Loan Agreement were used,
among other things, to pay off a previous line of credit with
Pioneer Bank.
Pursuant to the 1996 Pledge Agreement, Freedom pledged as
collateral 1,000,000 shares of Common Stock (the "1996 Pledged
Shares") it owns to secure a $1,800,000 line of credit (the "Line
of Credit") made by Pioneer Bank to Freedom pursuant to the 1996
Loan Agreement. Under the terms of the 1996 Pledge Agreement,
Pioneer Bank has a security interest in the 1996 Pledged Shares,
as well as in any and all stock rights, rights to subscribe,
liquidation dividends, dividends paid in stock, new securities,
or any other property to which Freedom is or may hereafter become
entitled to receive on account of the 1996 Pledged Shares. The
1996 Pledged Shares shall remain so pledged until, among other
things, the Line of Credit, as well as any obligations related
thereto, have been repaid in full to Pioneer Bank.
On July 31, 1996, W. B. Collett, the Chief Executive Officer
of Freedom, executed a Guaranty Agreement with Pioneer Bank, a
copy of which is attached as Exhibit 99.6 to this Schedule,
personally guaranteeing the obligations of Freedom to Pioneer
Bank pursuant to the Line of Credit. Among the obligations
guaranteed by Mr. Collett are the promises made by Freedom to
Pioneer Bank pursuant to the 1996 Pledge Agreement.
On October 1, 1996, the Issuer and Freedom entered into a
credit line agreement (the "Issuer CreditLine Agreement"), a copy
of which is attached as Exhibit 99.7 to this Schedule, whereby the
Issuer would lend Freedom up to $2,000,000 at an annual interest
rate of 2% above the prime rate, partially secured by Freedom's
federal tax refunds receivable totaling approximately $600,000
through and for the year ended December 31, 1994, and certain
real estate in Georgia. Principal and interest outstanding under
the Issuer CreditLine Agreement are payable upon demand by the
Issuer. The Issuer CreditLine Agreement does not provide for
periodic payments of principal or interest. This line of credit
supersedes a $1,000,000 line of credit established on December 1,
1995. Pursuant to the Assets Purchase Agreement described in
Item 3 herein, the Issuer CreditLine Agreement will be canceled
and $3,208,163 owed by Freedom to the Issuer will be canceled.
On November 8, 1996, Freedom executed a Security and Pledge
Agreement (the "Security and Pledge Agreement") with Park
Financial Group, Inc., a Delaware corporation ("Park Financial").
No loan proceeds were received by Freedom from Park Financial in
connection with the Security and Pledge Agreement. Following the
close of the third calendar quarter of 1997 and after much
dispute between Freedom and Park Financial, Freedom determined to
treat the 122,000 shares of Common Stock pledged under the
Security and Pledge Agreement as having been stolen and therefore
no longer beneficially owned for purposes of this Schedule.
On December 24, 1996, Freedom executed The Investor
CreditLine Service Client Agreement (the "Merrill Lynch
CreditLine Agreement") with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), a copy of which is attached as
Exhibit 99.8 to this Schedule. On May 1, 1997, proceeds from the
Merrill Lynch CreditLine Agreement were used in part to exercise
Freedom's option in part to acquire 300,000 shares of the
Issuer's Common Stock at the current exercise price of $1.25 per
share. Of the 300,000 shares purchased on May 1, 1997, 100,000
shares were pledged to Pioneer Bank (the "Additional Pledged
Shares"). The Additional Pledged Shares are in addition to the
1,000,000 shares of Common Stock pledged to Pioneer Bank pursuant
to the 1996 Loan Agreement and will remain pledged until, among
other things, the Line of Credit, as well as any obligations
related thereto, have been repaid in full to Pioneer Bank. The
remaining 200,000 shares purchased on May 1, 1997 were pledged,
along with an additional 177,480 shares previously pledged, to
Merrill Lynch pursuant to the Merrill Lynch CreditLine Agreement.
Freedom currently has 2,480 shares of the Issuer's Common Stock
pledged to Merrill Lynch under the Merrill Lynch CreditLine
Agreement.
On June 30, 1997, Freedom entered into the Fifth Amendment
to Debt Assumption, Loan and Stock Pledge Agreement (the "Fifth
Amendment") between Freedom, W. B. Collett, Hilda M. Collett, and
PNC Bank, Kentucky, Inc., a copy of which is attached at Exhibit
99.9 to this Schedule. In connection with the Fifth Amendment,
Freedom pledged to PNC 200,000 shares of the Issuer's Common
Stock pursuant to a Stock Pledge Agreement, a copy of which is
attached as Exhibit 99.10.
On July 10, 1997, the Issuer issued a $1,200,000 5%
Cumulative Convertible Debenture due December 31, 1998 (the
"Debenture") pursuant to a Regulation S transaction under the
Securities Act of 1933, as amended. After December 31, 1997, the
purchaser of the Debenture has certain demand rights to redeem
part of the Debenture under certain circumstances (the "Demand
Rights"). Freedom guaranteed the Demand Rights by pledging
300,000 shares of the Issuer's Common Stock pursuant to a
Guaranty and Stock Pledge Agreement (the "Guaranty"), a copy of
which is attached as Exhibit 99.11 to this Schedule.
On August 22, 1997, Freedom amended the Promissory Note with
Pioneer Bank to extend the maturity date from July 31, 1997 to
January 31, 1998. A copy of the amended Promissory Note is
attached as Exhibit 99.11 to this Schedule.
Freedom has pledged 50,000 shares of Common Stock to Roland
Howell, a director of the Issuer, to secure a $300,000 loan.
As reported in Item 5, a total of 720,000 shares are subject
to currently exercisable stock options that have been issued to
directors and officers of Freedom in their capacities as
directors and officers of the Issuer.
Except as otherwise noted herein, there are no contracts,
arrangements, understandings or relationships among the
individuals and entities described in Item 2 of this Schedule
concerning the securities of the Issuer involving the transfer or
voting of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits,
division of profits or losses, giving or withholding proxies or
any other matters concerning this filing.
Item 7. Material to be Filed as Exhibits.
Exhibit 99.1 Assets Purchase Agreement between Florida
Gaming Corporation, Freedom Financial
Corporation, and Interstate Capital
Corporation, dated September 24, 1997,
incorporated by reference to Exhibit 2.1 of
the Issuer's Form 8-K dated September 24,
1997, as amended [File No. 0-9099].
Exhibit 99.2 Assets Purchase Agreement between Florida
Gaming Corporation, Florida Gaming Centers,
Inc., and WJA Realty Limited Partnership,
dated November 20, 1996, incorporated by
reference to Exhibit 10.1 of the Issuer's
Form 8-K dated November 25, 1996 [File No. 0-9099].
Exhibit 99.3 Loan Agreement between Pioneer Bank and
Freedom Financial Corporation, dated July 31,
1996.
Exhibit 99.4 Stock Pledge Agreement between Freedom
Financial Corporation and Pioneer Bank, dated
July 31, 1996.
Exhibit 99.5 Promissory Note from Freedom Financial
Corporation to Pioneer Bank, dated July 31,
1996.
Exhibit 99.6 Guaranty Agreement between W. B. Collett and
Pioneer Bank, dated July 31, 1996.
Exhibit 99.7 CreditLine Agreement dated October 1, 1996
from Freedom Financial Corporation to Florida
Gaming Corporation incorporated by reference
to Exhibit 10.19 of the Issuer's Form 10-KSB
for the year ended December 31, 1996 [File
No. 0-9099].
Exhibit 99.8 The Investor CreditLine Service Client
Agreement between Freedom Financial
Corporation and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, dated December 24,
1996.
Exhibit 99.9 Fifth Amendment to Debt Assumption, Loan and
Stock Pledge Agreement between Freedom
Holding, Inc., W. B. Collett, Hilda M.
Collett, and PNC Bank, Kentucky, Inc., dated
June 30, 1997.
Exhibit 99.10 Stock Pledge Agreement between Freedom
Financial Corporation and PNC Bank, Kentucky,
Inc., dated June 30, 1997.
Exhibit 99.11 Guaranty and Stock Pledge Agreement between
Florida Gaming Corporation and Freedom
Financial Corporation dated July 10, 1997
incorporated by reference to Exhibit 4.2 of
the Issuer's Form 8-K dated July 10, 1997
[File No. 0-9099].
Exhibit 99.12 Amended Promissory Note from Freedom
Financial Corporation to Pioneer Bank, dated
August 22, 1997.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
FREEDOM FINANCIAL CORPORATION
By____________________________
W. B. Collett
Chief Executive Officer
Date: October ___, 1997
Index to Exhibits
Exhibit Page
Exhibit 99.1 Assets Purchase Agreement between Florida
Gaming Corporation, Freedom Financial
Corporation, and Interstate Capital
Corporation, dated September 24, 1997,
incorporated by reference to Exhibit 2.1 of
the Issuer's Form 8-K dated September 24,
1997, as amended [File No. 0-9099].
Exhibit 99.2 Assets Purchase Agreement between Florida
Gaming Corporation, Florida Gaming Centers,
Inc., and WJA Realty Limited Partnership,
dated November 20, 1996, incorporated by
reference to Exhibit 10.1 of the Issuer's
Form 8-K dated November 25, 1996 [File No. 0-9099].
Exhibit 99.3 Loan Agreement between Pioneer Bank and
Freedom Financial Corporation, dated July 31,
1996.
Exhibit 99.4 Stock Pledge Agreement between Freedom
Financial Corporation and Pioneer Bank, dated
July 31, 1996.
Exhibit 99.5 Promissory Note from Freedom Financial
Corporation to Pioneer Bank, dated July 31,
1996.
Exhibit 99.6 Guaranty Agreement between W. B. Collett and
Pioneer Bank, dated July 31, 1996.
Exhibit 99.7 CreditLine Agreement dated October 1, 1996
from Freedom Financial Corporation to Florida
Gaming Corporation incorporated by reference
to Exhibit 10.19 of the Issuer's Form 10-KSB
for the year ended December 31, 1996 [File
No. 0-9099].
Exhibit 99.8 The Investor CreditLine Service Client
Agreement between Freedom Financial
Corporation and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, dated December 24,
1996.
Exhibit 99.9 Fifth Amendment to Debt Assumption, Loan and
Stock Pledge Agreement between Freedom
Holding, Inc., W. B. Collett, Hilda M.
Collett, and PNC Bank, Kentucky, Inc., dated
June 30, 1997.
Exhibit 99.10 Stock Pledge Agreement between Freedom Financial
Corporation and PNC Bank, Kentucky, Inc. dated
June 30, 1997.
Exhibit 99.11 Guaranty and Stock Pledge Agreement between
Florida Gaming Corporation and Freedom
Financial Corporation dated July 10, 1997
incorporated by reference to Exhibit 4.2 of
the Issuer's Form 8-K dated July 10, 1997
[File No. 0-9099].
Exhibit 99.12 Amended Promissory Note from Freedom
Financial Corporation to Pioneer Bank, dated
August 22, 1997.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
FREEDOM FINANCIAL CORPORATION
By /s/ W. B. Collett
W. B. Collett, Chief
Executive Officer
Date: October ___, 1997
LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into on this 31st day
of July, 1996, by and among
PIONEER BANK, A Kentucky Corporation,
P.O. Box 669
Munfordville, KY 42765 ("Bank"),
and
FREEDOM FINANCIAL CORPORATION, An Indiana Corporation
2669 Charlestown Road, Suite D
New Albany, IN 47150 ("Borrower").
PRELIMINARY STATEMENTS
A. The Freedom Financial Corporation, (the "Borrower")
desires to obtain from Pioneer Bank (the "Bank") a loan (the
"Loan") in the original principal sum of ONE MILLION EIGHT
HUNDRED THOUSAND DOLLARS AND NO/100 ($1,800,000.00), to be used
to refinance an existing line of credit with the Bank, with any
remaining proceeds to be used as the Borrower's operating
capital.
B. The Borrower desires to secure this Loan by pledging
1,000,000 shares of common stock in Florida Gaming Corporation, a
Delaware Corporation, copies of said stock certificates attached
hereto as Exhibit "A".
C. The Bank desires to make the Loan to the Borrower and
accept such pledge of stock as security upon the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of
which are hereby acknowledged, the Bank and the Borrower hereby
agree as follows:
SECTION 1. DEFINITIONS
As used in this Loan Agreement:
1.1 "Event of Default" shall mean the occurrence or
happening of any of the matters set forth in Section 7 hereof
which is not cured within the time period (if any) afforded for
curing same.
1.2 "Loan" shall mean the loan made to the Borrower by the
Bank pursuant to Section 2 of this Loan Agreement and as
evidenced by the Note.
1.3 "Loan Documents" shall mean this Loan Agreement, the
Note or Notes, the Stock Pledge Agreement, the Guaranty Agreement
and other instruments, documents and agreements related hereto as
may be reasonably required by the Bank.
1.4 "Note" shall mean the promissory note or notes
evidencing the Loan and shall include any renewal, replacement,
extension or novation thereof (including any note that alters the
applicable interest rate.) A copy of the note is attached
hereto as Exhibit "B".
1.5 "Stock Pledge Agreement" shall mean that certain Stock
Pledge Agreement of even date herewith, referred to in Section
3.1, hereof, pursuant to which Borrower has pledged 1,000,000
Florida Gaming Corporation stock and granted to Bank a priority
security interest in the Florida Gaming Corporation stock.
1.6 "Borrower" means Freedom Financial Corporation, an
Indiana Corporation.
1.7 "Possible Default" shall mean any event, condition, or
thing which, with the lapse of any applicable grace period or the
giving of notice, or both, would constitute an Event of Default.
1.8 "Guaranty Agreement" shall mean that certain Guaranty
Agreement of even date herewith, executed by Guarantor W. Bennett
Collett in favor of the Bank.
1.9 "And/Or" means one or the other, or both, or any one or
more or all, of the things, persons or parties in connection with
which the conjunction is used.
1.10 "Commonwealth" means the Commonwealth of Kentucky.
1.11 "Guarantor" means W. Bennett Collett.
1.12 "Indebtedness" means the Note and all other
indebtedness and/or other obligations of the Borrower to the Bank
of any nature whatsoever arising under or pursuant to this Loan
Agreement, or any of the other Loan Documents, whether debt,
lease, contract or otherwise, whether joint, several, or joint
and several, whether represented by a note or other instrument,
and whether now existing or hereafter incurred or arising either
directly or indirectly by assignment or otherwise or pursuant to
a guarantee.
1.13. "Bank" shall mean Pioneer Bank, a Kentucky
corporation, having its principal office and place of business at
Munfordville, KY 42765, and its successors, legal
representatives, assigns and endorsees.
1.14 "Person" or "Party" means any individual, sole
proprietorship, partnership (both general and limited), joint
venture, trust, unincorporated organization, association,
corporation, other entity or group, institution, party or
government (whether federal, state, county, city, municipal or
other) or agency or division thereof.
1.15 "GAAP" means generally accepted accounting principles.
SECTION 2. LOAN TERMS.
Borrower shall repay the Loan pursuant to the Note. The
following provisions shall apply to payment of the Note.
2.1 Installments of Principal and Interest Under the Note.
This loan provides a loan in the amount of ONE MILLION EIGHT
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) for a term of
one year, which term shall expire on the 31st day of July, 1997,
if not renewed or extended by the Bank, at the Bank's sole
option.
The Borrower shall use the funds from this loan to refinance
the existing line of credit with the Bank and may use any
remaining proceeds as its operating capital pursuant to and in
accordance with corporate resolutions passed and adopted by its
Board of Directors.
Interest on this Loan of ONE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 ($1,800,000.00), shall be paid to the Bank in
quarterly payments. The term of the Loan shall be a one (1) year
period, requiring quarterly payments of interest on the
outstanding balance of the principal borrowed and one final
payment of the outstanding balance of accrued interest and
principal borrowed due on the 31st day of July, 1997.
The amount of the quarterly interest payments shall be as
stated in the Note and may change according to the Note terms.
This is a variable interest rate Note. The interest rate charged
on the outstanding balance is a floating rate of one (1%) percent
in excess of the New York prime rate as quoted in the Wall Street
Journal. On this date, the interest rate is nine and one-quarter
percent (9.25%) per annum. This interest rate may fluctuate on a
daily basis. Any increase in the interest rate will result in
higher quarterly interest payments.
Notice by the Bank to the Borrower of any increase, decrease
or no change, in the interest rate being charged shall be given
prior to a payment of interest being due.
In addition to the quarterly interest payments, Borrower
will also make quarterly principal payments of FIFTY THOUSAND
DOLLARS AND NO/100 ($50,000.00) each to be applied to the
outstanding principal balance.
The Loan may be renewed or extended at the sole discretion
of the Bank.
2.2 Application of Payments. All payments on the Note of
any nature whatsoever, whether received by the Bank by direct
remittance, set-off, foreclosure or other enforcement of security
or otherwise shall be applied first to interest accrued to date
of receipt, then against the principal in accordance with the
terms of the Note thereof, then to any expenses or charges
payable hereunder, finally to the balance -if any- against the
principal in accordance with the terms of the Note thereof.
All payments of principal and accrued interest shall be made
in legal tender of the United States of America in immediately
available funds at the Bank's principal office on each date
specified in the Note and this Loan Agreement.
2.3 Pre-payment Penalty. There is no prepayment penalty
associated with this loan. Borrower can prepay the loan in whole
or in part without penalty at any time during the term of the
loan.
SECTION 3. SECURITY FOR LOAN.
3.1 Security for Loan. The Loan made hereunder shall be
secured by and entitled to the benefits of all of the following:
- That certain Stock Pledge Agreement between Borrower
and the Bank of even date herewith, delivered
contemporaneously with the execution of this Loan
Agreement, pursuant to which the Borrower has pledged
to the Bank, and has granted to the Bank a first
priority security interest in 1,000,000 shares of
Florida Gaming Corporation to secure the payment of the
Note and the performance of all obligations of the
Borrower under this Loan Agreement and the other Loan
Instruments.
- That certain Guaranty Agreement of even date
herewith, executed and delivered by W. Bennett Collett,
Guarantor, in favor of the Bank; and
-Such other security and instruments, if any, granted
by the Borrower to the Bank, whether of even date
herewith or hereafter or hereto before so granted, to
secure the payment of the Note and the other
Indebtedness; and
-The right of offset as described in Section 8.3 herein.
3.2. Additional Collateral. In the event the stock price
for Florida Gaming Corporation as quoted in the Wall Street
Journal at any time is quoted below $5.00 per share then the Bank
may do one or more of the following at the Bank's sole option and
discretion:
1. demand the loan be paid in full immediately;
2. make a call for additional collateral to secure the
loan; or
3. demand a principal payment to reduce the outstanding
principal balance in such an amount that the Bank will
be fully secured with the existing collateral, with the
Bank determining if it is fully secured, at its sole
discretion.
SECTION 4. CONDITIONS PRECEDENT.
The Bank's obligation to make the Loan pursuant to this Loan
Agreement shall be conditioned upon the fulfillment of the
following conditions prior to the making of the Loan hereunder.
4.1 Executed Agreements. Simultaneously with the execution
and delivery of this Loan Agreement, the Borrower and Guarantor
shall duly execute and deliver the other Loan Documents.
4.2 Fees and Expenses. The Borrower shall pay all fees and
expenses associated with the cost of making this Loan by the
Bank, including, without limitation, the fees of J. Chester
Porter & Associates, as the Bank's counsel.
4.3 Corporate Resolutions. Certified copies of the
Resolutions of the Board of Directors of the Borrower evidencing
approval of the execution and delivery of the Loan Documents and
the consummation of all transactions contemplated thereby.
4.4 Certificates of Stock. The certificates evidencing the
Florida Gaming Corporation stock duly endorsed to the order of
the Borrower, together with a blank stock power executed by the
Borrower, delivered to the Bank.
4.5 Certificate of Incumbency. A certificate of the
Secretary of the Borrower certifying the names of the officers of
the Borrower authorized to execute and deliver this Loan
Agreement, the Note, the Stock Pledge Agreement and the other
Loan Instruments to which the Borrower is a party, together with
the true signatures of the officers so authorized.
4.6 Officer's Certificates. A certificate of the President
and Secretary of the Borrower to the effect that each of the
representations and warranties contained in Section 6 hereof is,
to the best of their respective knowledge and belief, true and
correct as to the date hereof, and that no Event of Default or
Potential Default exists as of the date hereof or will begin to
exist immediately after the execution and delivery of the Loan
Documents.
SECTION 5. GENERAL COVENANTS AND CONDITIONS.
5.1 Further Documentation to Assure Liens; Fees and
Expenses. Borrower covenants that it shall, at the sole cost and
expense of Borrower, do, execute, acknowledge and deliver all and
every such further acts, note, notes, guaranty agreements,
assignments, notices of assignment, transfers, consents and
assurances as the Bank shall from time to time require, which are
necessary in the judgment of Bank from time to time to assure,
perfect, assign, transfer and confirm unto Bank the property and
rights to be transferred or assigned as agreed to in the Loan
Documents, or which Borrower may be or may hereafter become bound
to convey or assign to Bank or to facilitate the performance of
the terms of the Loan Documents, or for filing, registering or
recording the Loan Documents.
5.2 Financial Statements.
The Borrower has furnished to the Bank a complete financial
statement of the Borrower. Borrower further covenants to furnish
to the Bank, updated financial statements of the Borrower
annually and as reasonably requested by the Bank. Upon written
request of the Bank, Borrower will allow Bank the opportunity to
review such books, records and accounts of Borrower at Borrower's
premises and make copies thereof as Bank shall desire.
The Guarantor hereby covenants and agrees to furnish to the
Bank (a) a personal financial statement on or before the end of
each fiscal year of the Borrower, dated within thirty (30) days
prior to such fiscal year end and (b) prompt written notice of
any condition or event which has resulted or could reasonably be
expected to result in a material adverse change in the financial
condition or net worth of such Guarantor.
5.3 Failure to Make Certain Payments. If Borrower shall fail
to perform any of the covenants contained in this Loan Agreement
or any Loan Document, Bank may make advances to perform the same
on its behalf, and all sums so advanced shall be included in the
Indebtedness and be secured hereby. Borrower shall repay on
demand all sums so advanced by Bank on behalf of Borrower, with
interest at the rate set out in Section 2 of this Loan Agreement,
payable on demand. The provisions of this Section 5.3 or any
action taken by Bank pursuant to the provision of this Section
5.3 shall not prevent any such failure to observe any covenant
contained in this Loan Agreement from constituting an Event of
Default.
5.4 Authority of Corporation. Borrower has the power and
authority to enter into this Loan Agreement and the Loan
Documents and has obtained all consents required of it to do the
same. Borrower is not in default of any of the terms of any
material agreements to which it is a party or which affect all or
any portion of the collateral.
5.5 Notice. The Borrower shall notify the Bank in writing,
within no more than twenty-four (24) hours (and without the
benefit of any grace period afforded in any provision of this
Loan Agreement, the Note or any other Loan Document), after it
learns of any of the following:
(i) the existence of a set of facts known to the Borrower
which constitutes or may constitute an Event of Default under
this Loan Agreement;
(ii) any representation or warranty made herein, or in any
other Loan Document, shall, for any reason, not be or shall cease
in any material respect to be true and complete and not
misleading; or
(iii) the adverse determination in any litigation,
arbitration, federal or state regulatory examination or
governmental proceedings involving it, including without
limitation, an adverse determination rendered by the Internal
Revenue Service. Notice of any of the foregoing shall describe
the nature of any such litigation, arbitration, regulatory
examination or governmental proceeding, what happened with
respect thereto and what steps are being taken by it with respect
thereto.
5.6 Mergers, Sales, Transfers and Other Disposition of Assets;
Capital Readjustments; Amendments to Charter or Bylaws. Without
Bank's prior written consent, the Borrower shall not
(a) be or become a party to any consolidation,
reorganization, including, without limitation, those types
referred in Section 368 in the Internal Revenue Code, merger or
recapitalization;
(b) Sell all or substantially all of its assets;
(c) Purchase all or a substantial part of the assets of any
other corporation or other business enterprise, other than assets
which may be acquired in any foreclosure or similar proceeding
involving the enforcement of any lien or security interest
granted to the Borrower; and/or
(d) Effect a split, reverse split, reclassification,
reorganization, recapitalization or any other change in its
capital structure or amend its Articles of Incorporation or By-Laws.
5.7. Good Faith Transactions. The Borrower shall not enter
into or be a party to any transaction, except in the ordinary
course of business and upon fair and reasonable terms which
constitute an arms length transaction.
SECTION 6.0 REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Bank as
follows, which representations and warranties shall be deemed to
be continuing and shall survive the execution of this Loan
Agreement and the making of this Loan:
6.1 Authority and Enforceability. No registration with or
approval of any governmental agency of any kind is required for
the due execution and delivery of, or for the enforceability of,
this Loan Agreement, the Note, the Stock Pledge Agreement, or any
of the other Loan Documents to which the Borrower is a party.
The Borrower has the full legal right, power and authority
to execute and deliver this Loan Agreement, the Note, the Stock
Pledge Agreement, or any of the other Loan Documents to which it
is a party, and the performance or observance by the Borrower of
the provisions thereof do not violate and will not violate any
existing provision in the Articles of Incorporation and By-Laws
of the Borrower, or any law, regulation, rule, interpretive
ruling or order applicable to the Borrower, or otherwise
constitute default or violation under any existing contract,
indenture, deed, lease, loan agreement, note or other instrument
or obligation binding upon the Borrower, with or without the
passage of time or the giving of notice or both.
The officers executing and delivering this Loan Agreement
and the other Loan Documents on behalf of the Borrower have been
duly authorized to do so, and this Loan Agreement, Note, the
Stock Pledge Agreement and the other Loan Documents to which the
Borrower is a party are valid, legal and binding obligations of
the Borrower and are enforceable in accordance with their
respective terms.
The Stock Pledge Agreement along with all action required to
perfect the Bank's security interest in and to the Florida Gaming
Corporation stock, creates and constitutes a valid and perfected
first priority security interest in and to the Florida Gaming
Corporation stock, enforceable against all third parties.
6.2 Financial Statements. The financial statements and
other documents previously furnished to the Bank on behalf of the
Borrower and Guarantor are true and complete and are not
misleading. All financial statements so furnished to the Bank
have been prepared in accordance with GAAP and fairly and
accurately present the respective financial conditions of the
Borrower and the Guarantor, as of their respective dates. There
have been no material adverse changes in any of their respective
financial conditions subsequent to the date of which their
respective financial statements were furnished to the Bank.
6.3 Existence and Licenses. The Borrower is a duly
organized and validly existing corporation in good standing under
the laws of the State of Indiana.
The Borrower has all licenses and permits necessary or
appropriate for its business. The Borrower has all requisite
power and authority to own its assets and carry on its businesses
as presently being conducted.
6.4 Ligation and Taxes. There are no claims of any kind or
any actions, suits, proceedings, arbitrations or investigations
pending or, to the best knowledge of the Borrower, threatened,
nor does the Borrower have knowledge of a basis for any claim, in
any court or before any governmental agency or instrumentality or
arbitration panel or otherwise against, by or affecting the
Borrower, or any officer or director of the Borrower, or any of
their businesses, prospects, conditions (financial or otherwise),
or assets which (a) would prevent the performance of this Loan
Agreement or any of the transactions contemplated thereby or
declare the same unlawful or cause the rescission thereof, or (b)
which would likely materially and adversely affect or impair the
business, assets or financial condition or earnings of the
Borrower.
There are no material uncured violations, or violations with
respect to which material refunds or restitution may be required,
cited in any report concerning the Borrower as a result of
examination by any regulatory authority. The Borrower is not in
default in the payment of any tax or in any assessment threatened
in respect thereof to the best knowledge, information ,and belief
of the Borrower, other than the assessment of ad valorem property
taxes not yet due and payable. The Borrower has timely filed all
federal, state and local tax returns and have paid all taxes
required to be paid herewith.
The Borrower has withheld and timely paid to the appropriate
governmental entity proper and accurate amounts from its
employees for all periods in material compliance with all tax
withholding provisions including, without limitation, income,
social security and employment tax for all forms of compensation
of applicable federal, state, foreign and local laws.
6.5 Default. No potential default or event of default
exists under this Loan Agreement nor will any such Potential
Default or Event of Default begin to exist immediately after the
execution and delivery of the Loan Documents.
6.6 No Misleading Statements. Neither the Loan Documents
nor the financial statements referred to in Section 5.2, nor any
other document, certificate, or statement referred to herein or
furnished to the Bank by or on behalf of the Borrower in
connection herewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
SECTION 7.0 EVENTS OF DEFAULT.
Each of the following shall constitute an "Event of
Default":
7.1 Payments. The failure of any installment of principal
or interest on the Note to be paid in full when due and payable
and shall remain unpaid for a period of ten (10) days, after
written notice of such default has been given to the Borrower.
7.2 Covenants and Agreements. If Borrower shall violate,
fail or omit to perform or observe any term, condition,
agreement, provision or covenant contained or referred to in this
Loan Agreement, the Stock Pledge Agreements or any other Loan
Documents, and such failure or omission shall not have been fully
corrected to the complete satisfaction of the Bank within thirty
(30) days after the Bank has given written notice thereof to the
Borrower.
7.3 Default under Guaranty. If the Guarantor shall attempt
to terminate, rescind or otherwise deny his liability under the
Guaranty.
7.4 Failure to Pay or Perform Other Obligations. The
failure of the Borrower to pay or perform any other obligation it
may have or be subject to with any other party within thirty (30)
days after the respective due date or performance date thereof
and the effect of such default in payment or performance is the
imposition of any lien on any assets of the Borrower and/or the
acceleration of the maturity date of any indebtedness of the
Borrower.
7.5 Accuracy of Statements. If any representation or
warranty or other statement of fact contained in any of the Loan
Documents or in any writing, certificate, report or statement at
any time furnished to the Bank pursuant to or in connection with
this Loan Agreement or otherwise shall be false or misleading in
any material respect or shall omit a material fact, whether or
not made with knowledge of same.
7.6 Judgments and Liens. If a final judgment or judgments
for the payment of money in excess of the sum of Fifty Thousand
Dollars ($50,000.00) in the aggregate shall be rendered against
the Borrower and such judgment or judgments shall remain
unsatisfied and in effect and shall not have been discharged
within sixty (60) (60) consecutive days after the entry of such
judgment or judgments unless execution thereof shall have been
stayed pending appeal, or if so stayed, then ten (10) days after
the expiration of such stay.
7.7 Solvency. If the Borrower shall (a) make a general
assignment for the benefit of its creditors, (b) apply for or
consent to the appointment of a receiver, trustee or liquidator
of all or a substantial part of his or her assets, (c) be
adjudicated bankrupt or insolvent, (d) file a voluntary petition
in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal or state)
relating to relief for debtors, (e) admit (by answer, default or
otherwise) the material allegations of any petition filed against
him or her in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief for
debtors, or (f) suffer or permit to continue unstayed and in
effect for thirty (30) consecutive days any judgment, decree or
order entered by a court or governmental agency of competent
jurisdiction, which assumes control of the affairs of the
Borrower, or approve a petition seeking reorganization of the
Borrower or any other judicial modification of the rights of the
Borrower's respective creditors, or appoints a receiver, trustee
or liquidator for the Borrower for all or a substantial part any
of their business or assets.
7.11 Insecurity. If the Bank shall, in the exercise of good
faith, deem itself to be insecure with respect to the Borrowers,
ability or intention (a) to make fully and timely payment of each
and every installment of principal of and/or interest on the Note
or (b) to perform and observe and /or each of the agreements,
obligations, covenants, conditions, representations, or
warranties made or to be performed or observed by the Borrower
under this Loan Agreement, the Note, the Stock Pledge Agreement
and the other Loan Documents, and the event or action giving rise
to the insecurity on the part of the Bank is not cured to the
satisfaction of the Bank within ten (10) days after written
notice thereof has been given to the Borrower.
The parties specifically acknowledge and agree that the Bank
has the right, power and authority to declare itself insecure in
the event the stock price for Florida Gaming Corporation as
quoted in the Wall Street Journal at any time is quoted below
$5.00 per share.
SECTION 8.0 REMEDIES UPON DEFAULT
If any Event of Default shall have occurred, then, and in
any such case, any or all of the following remedies may be
availed of, at the Bank's sole option, to wit:
8.1 Unpaid Balance Due. If any Event of Default shall
occur, the Bank, in its sole and absolute discretion, without
further notice to the Borrower and without obligation on the part
of the Bank, may declare all or any part of the Note to be,
whereupon the same shall be, immediately due and payable in full
to the Bank, without any presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the
Borrower.
8.2 Rights Under Security Instruments. If any Event of
Default shall occur the Bank shall also have all rights and
remedies granted it under the Stock Pledge Agreement and any
other Loan Document now or hereafter securing or intended to
secure the payment of the Note and the other Indebtedness.
8.3 Offsets. If any Event of Default shall occur and be
continuing, the Bank shall have the right to set off against, and
to appropriate and apply toward the payment of, the indebtedness
then owed by Borrower to the Bank, as evidenced by the Note,
whether or not such indebtedness shall be due and payable and
whether or not the Bank has declared the Note to be in default
and immediately due, any and all deposit balances and other sums
and indebtedness then held or owed by the Bank to or for the
credit or account of the Borrower and in all of which the
Borrower hereby grants the Bank a security interest to secure the
Note, all without notice to or demand upon the Borrower or any
other person, all such notices and demands being hereby expressly
waived.
8.4 Remedies Not Exclusive. No remedy conferred upon or
reserved to Bank by this Loan Agreement is intended to be
exclusive of any other remedy or remedies, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy given under this Loan Agreement or in any other Loan
Document or now or hereafter existing at law or in equity. Any
delay or omission of Bank to exercise any right or power accruing
on any Event of Default shall not impair any such right or power
and shall not be construed to be a waiver of or acquiescence in
any such Event of Default. Every power and remedy given by this
Loan Agreement or in any other Loan Document may be exercised
from time to time as often as may be deemed expedient by Bank. If
Bank accepts any moneys required to be paid by Borrower under
this Loan Agreement after the same becomes due, such acceptance
shall not constitute a waiver of the right either to require
prompt payment, when due, of all other sums secured by the Loan
Documents or to declare an Event of Default with regard to
subsequent defaults. If Bank accepts any moneys required to be
paid by Borrower under this Loan Agreement in an amount less than
the sum then due, such acceptance shall be deemed an acceptance
on account only and on the condition that it shall not constitute
a waiver of the obligation of Borrower to pay the entire sum then
due, and Borrower's failure to pay the entire sum then due shall
be and continue to be an Event of Default notwithstanding
acceptance of amount on account.
8.5 Fees and Expenses. If any Event of Default shall occur
under this Loan Agreement or under any other Loan Document,
including the Note, the Borrower shall pay to the Bank, to the
extent allowable by applicable law, such amounts as shall be
sufficient to reimburse the Bank fully for all of its costs and
expenses incurred in enforcing its rights and remedies under the
Loan Documents, including without limitation the Bank's
reasonable attorney's fees and court costs. Such amounts shall
be deemed evidenced by the Note and secured by the Loan
Documents.
SECTION 9.0 NOTICES
9.1 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon
any party named herein shall be in writing and (except for
written confirmation of telephonic instructions, which may be
sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by a reputable courier
delivery service, or by telecopier, and shall be deemed to be
given for purposes of this Loan Agreement on the day that such
writing is personally delivered or two (2) business days after
mailing to the intended recipient thereof in accordance with the
provisions of this Section 9.1. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing
provisions of this Section 9.1, notices, demands, instructions
and other communications in writing shall be given to or made
upon the respective parties named herein at their respective
addresses indicated above.
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 Severability. In the event any one or more of the
provisions contained in this Loan Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall, at the
option of Bank, not affect any other provision of this Loan
Agreement, but this Loan Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been
contained herein or therein. The invalidity of any provision of
this Loan Agreement in any one jurisdiction shall not affect or
impair in any manner the validity of such provision in any other
jurisdiction.
10.2 Covenants to Bind Successors and Assigns. All of the
grants, covenants, terms, provisions and conditions in this Loan
Agreement shall apply to, bind and inure to the benefit of, the
successors and assigns of Borrower.
10.3 Captions; Gender and Number; Successors or Assigns.
The captions and section headings of this Loan Agreement are for
convenience only and are not to be used to interpret or define
the provision hereof. All terms contained herein shall be
construed, whenever the context of this Loan Agreement so
requires, so that the singular shall be construed as the plural
and so that the masculine shall be construed as the feminine.
10.4 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state
or federal, that are applicable to the respective Loan Documents.
All agreements between Borrower and Bank, whether now existing or
hereafter arising and whether oral or written, are hereby
expressly limited so that in no contingency or event whatsoever
shall the amount paid or agreed to be paid by Borrower for the
use, forbearance or detention of the money to be loaned under any
of the Loan Documents, or for the payment or performance of any
covenant or obligation contained herein, or in any Loan Document
exceed the maximum amount permissible under applicable federal or
state usury laws. If under any circumstances whatsoever
fulfillment of any provision hereof or of any Loan Document, at
the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law, then
the obligation to be fulfilled shall be reduced to the limit of
such validity. If under any circumstances Borrower shall have
paid an amount deemed interest by applicable law, which would
exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied
to the reduction of the principal amount owing in respect of any
Notes and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to Borrower.
10.5 Indemnification; Reimbursement. Borrower shall
reimburse Bank, upon demand, for all reasonable costs and
expenses incurred by Bank in connection with the administration
and enforcement of this Loan Agreement, and shall indemnify and
hold harmless Bank, upon demand, from and against any and all
losses, liability (including liabilities for penalties), actions,
suits, proceedings, judgments, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees and
the allocated costs of staff counsel) incurred by Bank hereunder
or in connection herewith, unless a court of competent
jurisdiction shall determine such liability is properly due to
the willful misconduct, gross negligence or bad faith of Bank. In
the event Borrower shall fail to perform any act or thing which
it has covenanted to do hereunder or any warranty on the part of
Borrower contained herein shall be breached, Bank may (but shall
not be under obligation to) do the same or cause it to be done or
remedy any such breach, and may expend its funds for such
purpose. Any and all amounts so expended by Bank shall be
repayable to it by Borrower upon demand therefor, with interest
at the rate set out in Section 2 of this Loan Agreement, and
shall be added to the Indebtedness and be payable on demand. If
any action or proceeding is commenced to which action or
proceeding Bank is made a party or in which it becomes necessary
to defend or uphold the security of the Stock Pledge Agreement,
Borrower shall, on demand, reimburse Bank for all reasonable
expenses (including, without limitation, reasonable attorneys'
fees) incurred by Bank in any such action or proceeding.
10.6 Choice of Law. It is agreed between Borrower and Bank
that the Loan evidenced by the Note or Notes and which are
secured by the Mortgage was negotiated in the Commonwealth of
Kentucky and that the laws of the Commonwealth of Kentucky shall
govern the construction and interpretation of the Loan Documents
and the rights and duties of the parties hereunder.
10.7 No Merger. The rights and estate created by this Loan
Agreement shall not, under any circumstances, be held to have
merged into any other estate or interest now owned or hereafter
acquired by Bank, unless Bank shall have consented to such merger
in writing.
10.8 Changes in Writing. This Loan Agreement may not be
modified, amended, discharged or waived in whole or in part
except by an instrument in writing or signed by (i) Borrower, to
the extent any modification, amendment, discharge or waiver is
sought to be enforced against Borrower, and (ii) Bank, to the
extent any modification, amendment, discharge or waiver is sought
to be enforced against Bank.
10.9 Waiver of Rights. Borrower acknowledged that Borrower
has read this Loan Agreement and any and all questions regarding
the legal effect of this Loan Agreement and its provisions have
been explained fully to Borrower and Borrower has consulted with
Counsel of Borrower's choice.
10.10 Time is of the Essence. Time shall be of the essence
in the performance of all of the Borrower's obligations under the
Loan Documents and other instruments related hereto.
10.11 Binding Effect. The provisions of this Loan Agreement
shall bind and benefit the Borrower and the Bank and their
respective successors, heirs, personal representatives and
assigns, including each subsequent holder, if any, of the Note.
10.12 Complete Agreement. This Loan Agreement and the other
instruments referred to herein contain the entire agreement of
the parties pertaining to its subject matter and supersede all
prior written and oral agreements pertaining hereto.
10.13 Assignments. The Borrower may not assign its rights
under this Loan Agreement to any other party without the express
written permission of the Bank.
10.14 No Agency. Bank is not the agent or representative of
Borrower and Borrower is not the agent or representative of Bank,
and nothing in this Loan Agreement shall be construed to make
Bank liable to anyone for goods delivered or services performed
upon the property or for debts or claims accruing against
Borrower. Nothing herein shall be deemed to create a contractual
relationship between the Bank and anyone supplying labor or
materials to the property. Bank's obligations are not for the
benefit of or enforceable by any successor or assignee of
Borrower.
10.15 No Partnership or Joint Venture. Nothing herein nor
the acts of the parties hereto shall be construed to create a
partnership or joint venture between the Bank and Borrower.
10.17 Conflict with Other Loan Documents. In the event of
any conflict between the terms of other Loan Documents and this
Loan Agreement, the terms of the Loan Agreement shall control and
govern in all respects. Whenever possible, the provisions of
this Loan Agreement shall be deemed supplemental to and not in
derogation of the other Loan Documents.
10.18 Survival of Covenants, Agreements, Warranties and
Representations. All covenants, warranties, agreements, and
representations made by the Borrower herein shall survive the
making of the Loan and the execution and delivery of this Loan
Agreement, the Note, the Stock Pledge Agreement and the other
Loan Documents, and shall be deemed to be continuing covenants,
agreements, representations, and warranties at all times while
any portion of the Note remains unpaid.
10.19 Waivers. No waiver or consent granted by the Bank in
respect to this Loan Agreement, the Note, the Stock Pledge
Agreement or any other Loan Document shall be binding upon the
Bank unless specifically granted in writing by a duly authorized
officer of the Bank, which writing shall be strictly construed.
IN WITNESS WHEREOF, the parties hereto have executed this
Loan Agreement as of the date first set forth above.
PIONEER BANK
DATE: 7/31/96 BY: /s/ Kenneth Kidd
KENNETH KIDD, VICE-PRESIDENT
FREEDOM FINANCIAL CORPORATION
DATE: 7/31/96 BY: /s/ W. Bennett Collett
W. BENNETT COLLETT, CEO
This instrument prepared by:
/s/ Linda Bouvette
LINDA S. BOUVETTE, ESQ.
P.O. Box 509
Taylorsville, KY 40071
502-477-6412
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is
made and entered into on this 31st day of July, 1996, by and
between (i) FREEDOM FINANCIAL CORPORATION, an Indiana
Corporation, the "Pledgor"; and (ii) PIONEER BANK, a Kentucky
Corporation, with principal office and place of business in
Munfordville, Kentucky (the "Bank").
PRELIMINARY STATEMENT
A. Pursuant to that certain Loan Agreement of even date
herewith, between the Pledgor and Pioneer Bank, the Bank has made
a loan to Freedom Financial Corporation (the "Borrower") in the
original principal amount of ONE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 DOLLARS ($1,800,000.00) (the "Loan"), which Loan is
evidenced by that certain Promissory Note of even date herewith,
made by the Borrower, payable to the order of the Bank and in the
face principal amount of ONE MILLION EIGHT HUNDRED THOUSAND AND
NO/100 DOLLARS ($1,800,000.00) (the "Note").
B. W. Bennett Collett has executed the Guaranty Agreement
(defined below), guaranteeing repayment of the Note.
C. The Pledgor has agreed and hereby agrees that the
Guaranty Agreement and the payment of the Note and the other
indebtedness referred to below shall be secured by this Pledge
Agreement.
NOW, THEREFORE, in consideration of the Loan made
contemporaneously herewith by the Bank to the Borrower, and for
other good and valuable consideration, the mutuality, receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the
Bank here by agree as follows:
1. Definitions. The capitalized terms and phrases not
otherwise defined herein shall have the meanings given them in
the Loan Agreement, and the following terms or phrases shall have
the following meanings:
1.1 "Collateral" means the Pledged Shares and all
other property described in Section 2 of this Pledge Agreement.
1.2 "Event of Default" shall have the meaning set
forth in Section 10 of this Pledge Agreement.
1.3 "Guarantor" means, W. Bennett Collett.
1.4 "Secured Obligations" means the obligations
secured by this Pledge Agreement as described in Section 3 of
this Pledge Agreement.
1.5 "Pledged Shares" means the 1,000,000 shares of
Florida Gaming Corporation common stock owned by Financial
Freedom Corporation, rerepresented by Certificate Nos. FGC0050,
FGC0051, FGC0052, FGC0053, FGC0421, FGC0422, FGC0423, FGC0424,
FGC0507, FGC0508.
2. Grant of Security Interest
2.1 The Pledgor hereby pledges and assigns to the
Bank, and hereby grants to the Bank a security interest in the
Pledged Shares owned by the Pledgor. Pledgor further assigns to
the Bank a security interest in any and all stock rights, rights
to subscribe, liquidating dividends, dividends paid in stock, new
securities or any other property to which the Pledgor is or may
hereafter become entitled to receive on account of the Pledged
Shares owned by the Pledgor. If the Pledgor receives additional
property of such nature, the Pledgor shall immediately deliver
such property the Bank, to be held by the Bank pursuant to this
Pledge Agreement.
2.2 The Pledgor hereby grants a security interest in
the Pledgor's share of all dividends and distributions declared
in respect to the Pledged Shares and the Pledgor's share of
proceeds of any sale or other disposition of the Pledged Shares.
3. Secured Obligations. The Pledgor has granted to the
Bank a security interest in the Collateral to secure (a) the
payment of the entire unpaid principal of, and all interest now
accrued or hereafter to accrue on, the Note and all costs and
expenses, including, without limitation, reasonable attorneys'
fees now or hereafter incurred by the Bank in enforcing the Loan
Agreement, the Note, the Guaranty Agreement and this Pledge
Agreement, and (b) the performance of all other covenants,
agreements and obligations of the Pledgor set forth herein and in
the Loan Agreement and the other Loan Documents.
4. Representations and Warranties. To induce the Bank to
enter into the Loan Agreement, and to make the Loan to the
Borrower, the Pledgor hereby represents and warrants to the Bank
as follows, which representations and warranties shall survive
the execution and delivery of this Pledge Agreement and the
delivery of the Pledged Shares to the Bank.
4.1 The Pledgor has the full right, power and
authority to enter into and perform this Pledge Agreement. This
Pledge Agreement has been duly entered into and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of
the Pledgor, enforceable in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally,
and by the application of usual equitable principles where
equitable principles are sought.
4.2 The Pledgor has good and marketable title to the
Pledged Shared represented to be owned by the Pledgor, and the
Pledged Shares are not subject to any lien, charge, pledge,
encumbrance, claim or security interest of any nature whatsoever,
other than the security interest created by this Pledge
Agreement.
4.3 The Pledged Shares are fully paid and
nonassessable.
4.4 The Pledgor has not entered into any stock
restriction or purchase agreement with respect to the Pledged
Shares owned by the Pledgor which would in any way restrict the
sale, pledge or other transfer of the Pledged Shares or of any
interest in or to the Pledged Shares.
5. Duration of Security Interest. The Bank shall hold the
Pledged Shares upon the terms and provision of this Pledge
Agreement and the security interest in the Collateral granted to
the Bank pursuant to this Pledge Agreement shall continue until
all of the Secured Obligations have been paid and performed in
full to the Bank.
6. Maintaining Freedom from Liens. The Pledgor shall keep
the Pledged Shares and the other Collateral owned by such Pledgor
free and clear of all liens and encumbrances and shall pay all
amounts, including taxes, assessments or charges, which might
result in a lien against the Pledged Shares or other Collateral
if left unpaid, unless the Pledgor, at the Pledgor's expense, is
contesting any such amount in good faith by an appropriate
proceeding timely instituted and which shall operate to prevent
the collection or satisfaction of the lien or amount so
contested. If the Pledgor fails to pay such amounts and is not
contesting the validity or amount thereof in accordance with the
preceding sentence, the Bank may, but is not obligated to pay
such amounts, and such payment shall be conclusive evidence of
the legality or validity thereof.
7. Certain Rights Respecting the Collateral.
7.1 The Pledgor shall continue to be the sole owner of
the Pledged Shares and the other Collateral represented to be
owned by such Pledgor, and may exercise all voting rights with
respect to the Pledged Shares owned by such Pledgor, so long as
no Event of Default has occurred and is continuing.
7.2 The Pledgor shall not sell, transfer or attempt to
sell or transfer the Pledged Shares or the other Collateral
represented to be owned by such Pledgor, or any part thereof or
interest therein, without the prior express written consent of
the Bank. Any such consent of the Bank shall not constitute the
release by the Bank of its security interest in the Pledged
Shares so sold or transferred, and any such sale or transfer
consented to the Bank shall transfer the Pledged Shares, subject
to the security interest therein of the Bank created pursuant to
this Pledge Agreement.
7.3 The Bank, at its option upon the occurrence of any
Event of Default, and so long as such event of Default exists,
may exercise all voting rights and privileges whatsoever with
respect to the Pledged Shares, and to that end the Pledgor hereby
constitutes any officer of the Bank as such Pledgor's proxy and
attorney-in-fact for all purposes of voting the Pledged Shares
represented to be owned by such Pledgor at any annual, regular or
special meeting of shareholders of Florida Gaming Corporation,
and this appointment shall be deemed coupled with an interest and
shall by irrevocable until all of the Secured obligations have
been fully paid and preformed to the Bank, and all Persons
whatsoever shall be conclusively entitled to rely upon any oral
or written certification of the Bank that it is entitled to vote
the Pledged Shares and other Collateral hereunder. The Pledgor
shall execute and deliver to the Bank any additional proxies and
powers of attorney that the Bank may desire in its own name to
effectuate the provisions of the Loan Agreement and this Pledge
Agreement.
7.4 All dividends or other distributions declared in
respect of the Pledged Shares shall be immediately remitted by
the Pledgor to the Bank, as applicable, to the applied by the
Bank to the payment of the unpaid principal balance of, and all
accrued and unpaid interest on, the Note, in such order as the
Bank shall elect in its sole and absolute discretion, and until
such dividends or other distributions are paid to the Bank, the
Pledgor receiving the same shall hold all of the same in trust
and as a fiduciary for the Bank.
8. Issuance or Acquisition of New Stock or Sale of
Treasury Shares; Mergers, Sales and Other Distribution of Assets.
Until the Secured Obligations have been paid and performed in
full to the Bank, Pledgor shall not vote in favor of permitting
Florida Gaming Corporation (a) to issue new shares of its capital
stock, or any options, subscription rights or warrants with
respect thereto, to merge into or with, or consolidate with, any
other entity, except as set out hereto below in Paragraph 8.1;
(b) to merge into or with or consolidate with, any other entity;
(c) to sell or otherwise transfer any material part of its
assets; or (d) to liquidate or dissolve or take any action with a
view towards liquidation or dissolution.
8.1 Issuance of New Stock. Pledgor may vote in favor of
permitting Florida Gaming Corporation to issue new shares of its
capital stock, or any options, subscription rights or warrants
with respect thereto as long as the stock price for the issuance
is equal to or greater than $5.00 per share. Further Pledgor
acknowledges and agrees that in the event the stock price for
Florida Gaming Corporation as quoted in the Wall Street Journal
at any time is quoted below $5.00 per share then the Bank may
demand the loan, make a call for additional collateral or demand
a principal payment to reduce the outstanding principal balance
in such an amount that the Bank will be fully secured with the
existing collateral, with the Bank determining if it is fully
secured, at the Bank's sole option and discretion.
9. Delivery of Certificates and Stock Powers. The Pledgor
shall deliver to the Bank, and the Bank shall be entitled to
possess, the share certificates evidencing the Pledged Shares
represented to be owned by the Pledgor and an executed blank
stock power with respect to each share certificate. Should the
Pledgor acquire any interest in any additional capital stock of
Florida Gaming Corporation not otherwise contemplated herein,
such Pledgor shall immediately deliver certificates representing
that stock and a blank stock power for those certificates to the
Bank, to be held by the Bank in the same manner as the Pledged
Shares, and that the stock shall be pledged under this Pledge
Agreement and shall constitute a part of the Collateral only in
the event that the stock price for Florida Gaming Corporation as
quoted in the Wall Street Journal at any time is quoted below
$5.00 per share and the Bank elects at its sole option and
discretion to call for additional collateral.
10. Event of Default. The following shall each constitute
an "Event of Default" hereunder:
10.1 If any principal or interest on the Note shall
not be paid in full punctually when due and payable and shall
remain unpaid for a period of ten (10) days after written notice
of such default has been given to the Pledgor.
10.2 If Pledgor breaches, violates or fails to perform
or observe any covenant, obligation, agreement, condition or
other provision contained in the Pledge Agreement or any other
Loan Document, and the same is not cured to the satisfaction of
the Bank within thirty (30) days after the Bank has specified
such default in a written notice delivered to the Pledgor.
10.3 If any representation or warranty or other
statement of fact contained herein or in any related writing
furnished to the Bank in connection with the transactions
contemplated hereby shall false or misleading in any material
respect as of the date of this Pledge Agreement and shall
continue to be false or misleading in any material respect, or
shall omit to state a material fact required to be stated therein
in order to make the statements contained there, in light of the
circumstances under which made, not misleading as of the date of
this Pledge Agreement, whether or not made with knowledge of the
same, and such omission to state a material fact shall not have
been corrected.
10.4 The occurrence of any other Event of Default
under, and defined in, the Loan Agreement or other Loan
Documents.
11. Remedies.
11.1 Upon the occurrence of any Event of Default, the
Bank may, at its option, declare any and all of the Secured
Obligations to be immediately due and payable, may exercise the
rights with respect to the Pledged Shares contemplated in Section
7 of this Pledge Agreement and, in addition to exercising all
other rights or remedies, proceed to exercise with respect to the
Pledged Shares all rights, options and remedies of a secured
party upon default as provided for under the Uniform Commercial
Code as enacted in the Commonwealth of Kentucky.
11.2 The rights of the Bank upon the occurrence of any
Event of Default shall include, without limitation, the
following:
(a) The right to the immediate possession of
Pledged Shares not then in the Bank's possession without
requirement of notice or demand or of any legal process.
(b) The right to sell the Pledged Shares or the
other Collateral at public or private sale and in one or more
lots. The Bank shall be entitled to apply the proceeds of any
such sale to the satisfaction of the Secured Obligations and to
expenses incurred in realizing upon the Pledged Shares or the
other Collateral in accordance with the Uniform Commercial Code
as enacted in the Commonwealth of Kentucky. Provided, the Bank
may, but shall not be obligated to, postpone the time of any
proposed sale of any of the Pledged Shares, or any part thereof,
and may change the time and/or place of such sale, subject to the
obligations of the Bank to give the Pledgor notice of such new
time and/or place of sale of the Pledged Shares, or any part
thereof, as applicable, as provided in Section 18.1 below. In
the event the Bank sells the Pledged Shares or any part thereof
on credit or for future delivery, which may be elected by the
Bank at its sole option, the Pledged Shares so sold may, at the
Bank's sole option, be transferred and/or delivered to the
purchaser thereof or retained by the Bank until the purchase
price thereof has been paid by the purchaser thereof.
(c) The right to recover the reasonable expenses
of the Bank in preparing for sale and selling the Pledged Shares
and other like expenses, together with court costs and reasonable
attorney's fees incurred by the Bank.
(d) The right to proceed by appropriate legal
process at law or in equity to enforce any provision of this
Pledge Agreement or in aid of the execution of any power of sale,
or for foreclosure of the security interest of the Bank in the
Pledged Shares, or for the sale of the Pledged Shares under the
judgment or decree of any court.
(e) In furtherance of the rights and remedies of
the Bank upon the occurrence of an Event of Default, the Pledgor
hereby constitutes any officer of the Bank as such Pledgor's
proxy and attorney-in-fact to complete, execute and file with the
Securities and Exchange Commission, if such filing be required by
law, one or more notices of proposed sale of securities pursuant
to Rule 144 under the Securities Act of 1933, as amended, and
this appointment shall be deemed coupled with an interest, and is
and shall be irrevocable, until all of the Secured Obligations
have been paid and performed in full to the Bank.
12. Exercise of Remedies. The rights and remedies of the
Bank shall be deemed to be cumulative, and any exercise of any
right or remedy shall not be deemed to be an election of that
right or remedy to the exclusion of any other right or remedy.
13. Waiver. The Pledgor hereby waives any claim arising
by reason of (a) the fact that the price or prices for which the
Pledged Shares or any part thereof is sold at any private sale or
sales is less than the price which would have been obtained at a
public sale or sales or is less than the amount of the Secured
Obligations; (b) any reasonable delay by the Bank in selling the
Pledged Shares following the occurrence of an Event of Default,
including, without limitation, any delays in selling the Pledged
Shares resulting from the compliance by the Bank with applicable
federal and state securities laws, even if the price of the
Pledged Shares thereafter declines; or (c) the immediate sale of
the Pledged Shares upon the occurrence of an Event of Default,
even if the price of the Pledged Shares should thereafter
increase. The Pledgor shall remain liable for any deficiency
remaining due, after the sale of the Pledged Shares, on the
Secured Obligations.
14. Payment of Costs, Attorney's Fees and Expenses. To
the extent not paid out of the proceeds of the sale of the
Pledged Shares, the Pledgor shall pay any and all reasonable
costs, attorney's fees and other expenses of whatever kind
incurred by the Bank in connection with (i) enforcing the Loan
Agreement, the Note, the other Loan Documents and/or this Pledge
Agreement (ii) obtaining possession of the Pledges Shares, (iii)
the protection and preservation of the Pledged Shares, (iv) the
collection of the Secured Obligations or any part thereof, and
(v) any litigation involving the Pledged Shares, any benefit
accruing by virtue of the provisions hereof or the rights of the
Bank hereunder.
15. Advances by Bank. The Pledgor shall reimburse the
Bank for all reasonable advances made by the Bank in performing
any actions on behalf of the Pledgor pursuant to this Pledge
Agreement, including, without limitation, all amounts paid by the
Bank (a) to discharge taxes, levies, liens and/or security
interest against the Collateral, and/or (b) in connection with
the exercise by the Bank of its rights and remedies hereunder.
All such advances made by the Bank shall bear interest at the
rate set forth in the Note as applicable to overdue principal
and/or accrued interest on the Note, and all such advances and
all interest thereon shall be secured by this Pledge Agreement
with the same priorities as the Note, to the fullest extent
permitted by applicable law, and shall be due and payable in full
to the Bank upon demand by the Bank at any time in its sole and
absolute discretion.
16. Irrevocable Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Bank as such Pledgor's attorney-in-fact
(a) to do all acts and things which the Bank may deem necessary
or appropriate in its sole and absolute discretion to perfect and
to continue the perfected status of the security interest in the
Collateral created in favor of the Bank pursuant to this Pledge
Agreement and to protect the Collateral, and (b) to perform such
other acts in connection with the Collateral as the Bank
determines in its reasonable discretion to be necessary or
appropriate to effectuate the purposes of this Pledge Agreement.
17. Return of Collateral. The Bank may, at any time,
deliver the Pledged Shares, the other Collateral, or any part
thereof, to the Pledgor. The receipt by the Pledgor of the
Pledged Shares, or any part thereof shall be a complete and full
discharge of the Bank, and the Bank shall be discharged from any
liability or responsibility with respect thereto.
18. Notice.
18.1 Any requirement of the Uniform Commercial Code of
reasonable notice of the intended sale or other disposition of
the Collateral shall be met if such notice is given to the
Pledgor at least ten (10) business days before the time of sale,
disposition or other event or thing giving rise to the
requirement of notice.
18.2 All notices or communications under this Pledge
Agreement shall be in writing and shall be personally delivered
or sent by express courier service or by registered or certified
United States mail, return receipt requested, postage prepaid,
addressed as follows (or to such other address as to which either
party shall have given the other party written notice):
If to the Pledgor: Freedom Financial Corporation
2669 Charlestown Road, Suite D
New Albany, Indiana 47150
If to the Bank Pioneer Bank
P.O. Box 669
Munfordville, Ky. 42765
All notices and other communications hereunder shall be
deemed given upon the earliest of (a) actual delivery in person,
(b) one (1) business day after having been delivered to an
express courier service, or (c) two (2) business days after
having been deposited in the United States mails, in accordance
with the foregoing, as applicable.
19. Further Assurances. The Pledgor shall execute any such
other documents or instruments, and take such other actions, as
the Bank may request to more fully create and maintain, or to
verify or perfect the security interest intended to be created in
this Pledge Agreement.
20. No Implied Waiver. All options and rights of the Bank
hereunder are continuing and the failure of the Bank to exercise
any such option or right of election in any instance shall not be
construed as waiving the right to exercise such option or right
at any subsequent time or be construed as waiving the right to
exercise any other option or right hereunder, at law or at
equity. Not exercise by the Bank of any of the options, rights
or powers provided herein and no delay or omission in the
exercise of such options, rights or powers provided herein shall
be construed to exhaust the same or be construed as a waiver
thereof, and each such option right and power may be exercised at
any time and from time to time.
21. Severability of Provisions. If any term or provision
of this Pledge Agreement is held to be invalid or unenforceable
in any jurisdiction, the other terms and provision hereof shall
remain in full force and effect in such jurisdiction and the
invalid or unenforceable provision shall remain in full force and
effect in all other jurisdictions.
22. Governing Law. This Pledge Agreement and the respective
rights, duties and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of the
Commonwealth of Kentucky.
23. Successors and Assigns. This Pledge Agreement shall
bind the Pledgor and their respective heirs, personal
representatives, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns, including,
without limitation, each subsequent holder of the Note.
24. Captions. The various section headings used in the
Pledge Agreement are inserted for convenience of reference only
and shall be ignored in construing the provisions hereof.
25. Time of the Essence. Time shall be of the essence
in the performance of all of the Pledgor' covenants, obligations
and agreements under this Pledge Agreement.
26. Entire Agreement. This Pledge Agreement constitutes
the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior understandings with
respect to the subject matter hereof. No change, modification,
addition or termination of this Pledge Agreement shall be
enforceable unless in writing and signed by the party against
whom enforcement is sought.
27. Joint and Several. All obligations of the Pledgor
under this Pledge Agreement shall be joint and several.
IN WITNESS WHEREOF, the Pledgor and the Bank have executed
this Pledge Agreement on the day, month and year first above
written.
FREEDOM FINANCIAL CORPORATION, "Pledgor"
BY:
W. BENNETT COLLETT, C.E.O.
PIONEER BANK "Bank"
BY:
KENNETH KIDD, Vice-President
This instrument prepared by:
LINDA S. BOUVETTE, ESQ.
P.O. Box 509
Taylorsville, KY 40071
502/477-6412
NOTE
DATE: July 31, 1996 Shepherdsville,
Kentucky
1. BORROWER'S PROMISE TO PAY
In return for a loan that I have received, I, FREEDOM
FINANCIAL CORPORATION, an Indiana corporation, (Borrower),
promise to pay U.S. ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS
AND NO/100 ($1,800,000.00) (this amount is called "principal"),
plus interest, to the order of the Lender. The Lender is PIONEER
BANK. I, understand that the Lender may transfer this Note. The
Lender or anyone who takes this Note by transfer and who is
entitled to receive payments under this Note is called the "Note
Holder."
2. INTEREST AND PAYMENTS
2.1 Repayment. The loan of ONE MILLION EIGHT HUNDRED
THOUSAND DOLLARS AND NO/100 ($1,800,000.00) shall be repaid as
follows:
2.1 Installments of Principal and Interest Under the Note
This loan provides a commercial loan in the amount of ONE MILLION
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) for a
term of one year, which term shall expire on the 31st day of
July, 1997, if not renewed or extended by the Bank, at the Bank's
sole option.
Interest on this Loan of ONE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 ($1,800,000.00), shall be paid to the Bank in
quarterly payments. The term of the Loan shall be a one (1) year
period, requiring quarterly payments of interest on the
outstanding balance of the principal borrowed and one final
payment of the outstanding balance of accrued interest and
principal borrowed due on the 31st day of July, 1997.
This is a variable interest rate Note. The interest rate
charged on the outstanding balance is a floating rate of one
percent (1%) per annum in excess of the New York prime rate as
quoted in the Wall Street Journal. On this date, the interest
rate is nine and one quarter percent (9.25%) per annum. This
interest rate may fluctuate on a daily basis. Any increase in
the interest rate will result in higher quarterly interest
payments.
Notice by the Bank to the Borrower of any increase, decrease
or no change, in the interest rate being charged shall be given
prior to a payment of interest being due.
In addition to the quarterly interest payments, Borrower
will also make quarterly principal payments of FIFTY THOUSAND
DOLLARS AND NO/100 ($50,000.00) each to be applied to the
outstanding principal balance.
The Loan may be renewed or extended at the sole discretion
of the Bank.
2.2 Application of Payments. All payments on the Note of
any nature whatsoever, whether received by the Bank by direct
remittance, set-off, foreclosure or other enforcement of security
or otherwise shall be applied first to interest accrued to date
of receipt, then against the principal in accordance with the
terms of the Note thereof, then to any expenses or charges
payable hereunder, finally to the balance -if any- against the
principal in accordance with the terms of the Note thereof.
All payments of principal and accrued interest shall be made
in legal tender of the United States of America in immediately
available funds at the Bank's principal office on the dated
specified herein.
2.3 Pre-payment Penalty. There is no prepayment penalty
associated with this loan. Borrower can prepay the loan in whole
or in part without penalty at any time during the term of the
loan.
I will make all payments at Pioneer Bank, P.O. Box 669,
Munfordville, Kentucky 42765, or at a different place if
required by Note Holder.
3. BORROWER'S RIGHT TO PREPAY
I have the right to make payments of principal at any time
before they are due. A payment of principal only is known as a
"prepayment". When I make a prepayment, I will tell the Note
Holder in writing that I am doing so. I may make a full
prepayment or partial prepayments without paying any prepayment
charge except as noted hereinabove. The Note Holder will use all
of my prepayments to reduce the amount of principal that I owe
under this Note. If I make a partial prepayment, there will no
changes in the due date or in the amount of my quarterly payments
unless the Note Holder agrees in writing to those changes.
4. LOAN CHARGES
If a law, which applies to this loan and which sets maximum
loan charges, is finally interpreted so that the interest or
other loan charges collected or to be collected in connection
with this loan exceed the permitted limits, then: (i) any such
loan charge will be reduced by the amount necessary to reduce the
charge to the permitted limit; and (ii) any sums already
collected from me which exceeded permitted limits will be
refunded to me. The Note Holder may choose to make this refund
by reducing the principal I owe under this Note or by making a
direct payment to me. If a refund reduces principal, the
reduction will be treated as a partial prepayment.
5. BORROWER'S FAILURE TO PAY AS REQUIRED
(A) Late Charge for Overdue Payments:
If the Note Holder has not received the full amount of any
payment by the end of 10 calendar days after the date it is due,
I will pay a late charge to the Note Holder. The amount of the
charge will be 5% of my overdue payment of principal and
interest. I will pay this late charge promptly but only once on
each late payment.
(B) Default
If I do not pay the full amount of each payment on the date
it is due, I will be in default.
(C) Notice of Default:
If I am in default, the Note Holder may send me a written
notice telling me that if I do not pay the overdue amount by a
certain date, the Note Holder may require me to pay immediately
the full amount of principal which has not been paid and all the
interest that I owe on that amount. That date must be at least
30 days after the date on which the notice is delivered or mailed
to me.
(D) No Waiver by Note Holder:
Even if, at a time when I am in default, the Note Holder
does not require me to pay immediately in full as described
above, the Note Holder will still have the right to do so if I am
in default at a later time.
(E) Payment of Note Holder's Cost and Expenses
If the Note Holder has required me to pay immediately in
full as described above, the Note Holder will have the right to
be paid back by me for its costs and expenses, including
reasonable attorney's fees in enforcing this Note (both pre- and
post-judgment costs and expenses).
6. GIVING OF NOTICES
Unless applicable law requires a different method, any
notice that must be given to me under this Note will be given by
delivering it or by mailing it by first class mail to me at 2669
Charlestown Road, Suite D, New Albany, IN 47150. Any notice that
must be given to the Note Holder under this Note will be given by
mailing it by first class mail to the Note Holder at the address
stated in Section 2 above or at a different address if I am given
a notice of that different address.
7. OBLIGATIONS OF PERSONS UNDER THIS NOTE
If more than one person signs this Note, each person is
fully and personally obligated to keep all the promises made in
this Note, including the promise to pay the full amount owed.
Any person who is a guarantor, surety or endorser of this Note is
also obligated to do these things. Any person who takes over
these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of
the promises made in this Note. The Note Holder may enforce its
rights under this Note against each person individually or
against all of us together. This means that any one of us may be
required to pay all of the amounts owed under this Note.
8. WAIVERS
I and any other person who has obligations under this Note
waive the rights of presentiment and notice of dishonor.
"Presentment" means the right to require the Note Holder to
demand payment of amounts due. "Notice of dishonor" means the
right to require the Note Holder to give notice to other persons
that amounts due have not been paid.
9. UNIFORM SECURED NOTE
This Note is a uniform instrument with limited variations in
some jurisdictions. In addition to the protections given to the
Note Holder under this Note, a Loan Agreement, Stock Pledge
Agreement and Guaranty Agreement (the "Security Instrument"),
dated the same date as this Note, protects the Note Holder from
possible losses which might result if I do not keep the promises
which I make in this Note. That Security Instrument described
how and under what conditions I may be required to make immediate
payment in full or all amounts I owe under this Note. Some of
those conditions are described as follows:
Transfer of the Property of a Beneficial Interest in
Borrower. If all or any part of the Property or any interest in
it is sold or transferred (or if a beneficial interest in
Borrower is sold or transferred and Borrower is not a natural
person) without Lender's prior written consent, Lender may, at
its option, require immediate payment in full or all sums secured
by this Security Instrument. However, this option will not be
exercised by Lender if exercise is prohibited by federal law as
of the date of this Security Instrument.
If Lender exercised this option, Lender will give Borrower
notice of acceleration. The notice will provide a period of not
less than 30 days from the date the notice is delivered or mailed
within which Borrower must pay all sums secured by this Security
Instrument. If Borrower fails to pay these sums prior to the
expiration of this period, Lender may invoke any remedies
permitted by this Security Instrument without further notice or
demand on Borrower.
FREEDOM FINANCIAL CORPORATION
BY: /s/ W. Bennett Collett
W. BENNETT COLLETT, CHAIRMAN & CEO
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, made and entered into this 31st day
of July, 1996, by and among W. BENNETT COLLETT, an individual,
(the "Guarantor"); and PIONEER BANK, A Kentucky corporation, (the
"Lender").
WHEREAS, FREEDOM FINANCIAL CORPORATION, having an address of
2669 Charlestown Road, Suite D, New Albany, IN 47150
("Borrower"), desires to transact business with and to obtain
credit from the PIONEER BANK, a Kentucky corporation, having an
address at P.O. Box 669, Munfordville, KY 42765, ("Lender"); and
WHEREAS, Lender is unwilling to extend credit to Borrower
unless the undersigned, W. BENNETT COLLETT ("Guarantor"), shall
guarantee payment to Lender of the obligations of Borrower, as
hereinafter defined;
NOW, THEREFORE, in consideration of the premises contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Guarantor,
and to induce Lender from time to time, in its discretion, to
extend credit to Borrower, and acknowledging that Lender in
extending such credit shall rely on this Guaranty, Guarantor for
himself, and his successors (including, without limitation, by
operation of law) and assigns, hereby unconditionally and
irrevocably guarantees to Lender, its successors and assigns,
including each and every holder or owner of any obligations of
Borrower which are guaranteed hereby (each reference to Lender
shall be construed to refer to each such holder or owner), the
prompt payment when due and at all times thereafter of:
(A) All principal advanced pursuant to and interest
(including but not limited to any interest due after
default, interest accruing after any insolvency of
Borrower or filing by Borrower of a petition for relief
under federal or state bankruptcy laws, and late charges)
due under the certain promissory note (the "Note") dated
the 31st day of July, 1996, made by Borrower to the order
of Lender totaling in face principal amount of ONE MILLION
EIGHT HUNDRED THOUSAND DOLLARS AND NO/CENTS
($1,800,000.00) and any renewals, extensions, or
amendments of the note, or any substitutions or
replacements for the note; and
(B) All fees, expenses, costs, and charges of any
nature whatsoever, including, without limitation,
reasonable attorney fees of Lender, required to be paid by
Lender in enforcing any of its rights and remedies under
the note, or the Stock Pledge Agreement by and among
Borrower and Lender (the "Stock Pledge Agreement") or the
Loan Agreement (the "Loan Agreement") entered into among
Lender and Borrower pursuant to which the note was issued,
or any other "Loan Documents" as defined in the Loan
Agreement, or any other document or instrument heretofore,
contemporaneously herewith, or hereafter given to secure
any of the obligations (collectively, the "Loan
Documents"); and
(C) The due and punctual performance and observance of
all other agreements, obligations, warranties and
representations of Borrower to Lender under any Loan
Document; and
(D) Any and all other debts, liabilities and obligations
of Borrower to Lender, whether created directly by
Borrower or acquired by assignment or otherwise, whether
joint or several, matured or unmatured, absolute or
contingent, and whether now existing or hereafter arising;
(all of which are hereinafter collectively referred to as the
"obligations"); provided, however, anything contained in this
Guaranty to the contrary notwithstanding, the maximum aggregate
liability of Guarantor hereunder shall not exceed at any one time
$1,800,000.00.
This guaranty is a continuing guaranty and shall remain in
full force and effect so long as any of the obligations have not
been fully paid or performed; provided, however, anything
contained in this guaranty to the contrary notwithstanding, this
guaranty shall terminate on the 31st day of July, 1998, (which is
one year following the maturity of the Note), except that such
termination shall not affect the liability of Guarantor with
respect to
(a) obligations created or incurred prior to such date, or
(b) extensions or renewals of, interest accruing on, or
fees, costs, or expenses, including reasonable attorney
fees, incurred with respect to, such obligations on or
after such date.
The liability of Guarantor under this Guaranty shall continue,
notwithstanding the payment in full of the obligations, if any
payments made on the obligations are subsequently recovered from
Lender under any federal, state, or other bankruptcy, insolvency,
or similar law. Lender shall have the right of immediate
recourse against Guarantor for full and immediate payment of the
obligations guaranteed at any time after the obligations, or any
part thereof, have not been paid in full according to the tenor
and under the terms of the instrument governing such obligations,
whether on demand, at fixed maturity, or maturity accelerated by
reason of a default.
This guaranty is a guaranty of payment, not of collection,
and the Guarantor therefore agrees that Lender shall not be
obligated prior to or as a condition to seeking recourse against
or receiving payment from Guarantor, to do any of the following
(although Lender may do so, in whole or in part, at its sole
option), all of which are hereby unconditionally waived by
Guarantor:
(A) Take any steps whatsoever to collect from Borrower or
to file a claim of any kind against Borrower; or
(B) Take any steps whatsoever to accept, perfect Lender's
security interest in, foreclose, realize on, or deal in any
manner with collateral security, if any, for the payment of the
obligations, or any other guaranty of the obligations; or
(C) In any other respect exercise any diligence whatever in
collecting or attempting to collect any of the obligations by any
means.
The liability of Guarantor for payment of the obligations
shall be absolute and unconditional, and nothing whatever except
actual full payment to the Lender of all the obligations
guaranteed by Guarantor hereunder and except as otherwise
provided herein shall operate to discharge Guarantor's liability.
Accordingly, Guarantor unconditionally and irrevocably waives
each and every defense which, under principles of guaranty or
suretyship law, would otherwise operate to impair or diminish the
liability of Guarantor. Without limiting the generality of the
foregoing, Guarantor agrees that none of the following shall
diminish or impair the liability of Guarantor in any respect (all
of which may be done without notice to Guarantor of any kind):
(A) Any extension, modification, indulgence, compromise,
settlement, or variation of the terms of any of the obligations,
or of any agreement entered into with Guarantor or any other
person liable for any part of the obligations;
(B) The voluntary or involuntary discharge or release of
any of the obligations, or of any person liable therefore, by
reason of bankruptcy or insolvency laws or otherwise;
(C) The acceptance or release, with or without
substitution, by Lender of any collateral security or other
guaranty, or collateral security for such other guaranty, or any
settlement, compromise, or extension with respect to any
collateral security, other guaranty, or collateral security for
such other guaranty;
(D) The application or allocation by Lender of payments,
collections, or credits on any portion of the obligations
regardless of what portion of the obligations remains unpaid;
(E) The creation of any new obligations covered by this
guaranty or renewal of any existing obligations.
(F) The extension of credit by Lender to Borrower in an
aggregate amount exceeding the maximum aggregate liability of
Guarantor hereunder; or
(G) The making of a demand, or absence of demand, for
payment of the obligations or giving, or failing to give, any
notice of dishonor to protest or any other notice.
Guarantor unconditionally waives:
(A) Any subrogation to the rights of Lender against
Borrower, until all of the obligations have been satisfied in
full;
(B) Any right of indemnity against Borrower, or right to
reimbursement from Borrower, if such rights would impair the
remedies of Lender against Guarantor under this guaranty or
against any collateral for any of the obligations, in connection
with the bankruptcy of Borrower or otherwise;
(C) Any acceptance or notice of acceptance of this
guaranty; and
(D) Any set-offs or counterclaims against Lender which
would otherwise impair Lender's rights against Guarantor
hereunder.
Guarantor represents and warrants to Lender that:
(A) The execution, delivery, and performance by Guarantor
of this guaranty (1) is authorized by all documents, agreements,
and stipulations limiting the activities of Guarantor, (2) does
not require approval of any governmental authority, (3) will not
violate any provision of law, any order of any court or any
governmental authority, or any indenture, agreement, or other
instrument to which Guarantor is a party or by which Guarantor or
any of Guarantor's property is bound, (4) will not be in conflict
with, result in a breach of, or constitute (with or without due
notice and/or lapse of time) a default under any such indenture,
agreement, or other instrument, or (5) will not result in the
creation or imposition of any lien, charge, or encumbrance of any
nature whatsoever upon any of Guarantor's property or assets.
This guaranty constitutes the legal, valid, and binding
obligation of Guarantor, enforceable in accordance with its
terms.
(B) There is no action, suit, or proceeding pending, or to
the knowledge of Guarantor threatened, against or affecting
Guarantor or involving the validity or enforceability of this
guaranty, including before or by any governmental authority, and
Guarantor is not in default with respect to any order, writ,
judgment, decree, or demand of any court or other governmental
authority.
(C) The financial statements of Guarantor most recently
delivered to Lender (1) are complete and correct in all material
respects, (2) accurately represent the financial condition of
Guarantor as of their date, and (3) disclose all of Guarantor's
liabilities, direct or contingent, as of such date. There has
been no adverse change in the financial condition of Guarantor
since the date of such financial statement. The term "adverse
change in financial condition" means a decrease of 20% or more in
aggregate net worth, insolvency, bankruptcy, or prospective
failure to meet current liabilities as they come due.
(D) All of the indebtedness and liabilities constituted by
the obligations, including but not limited to the indebtedness
evidenced by the note, shall be paid and performed strictly in
accordance with the terms thereof, regardless of any insolvency
or bankruptcy of the Borrower or any other person or entity.
(E) Neither this guaranty nor any certificate or other
document furnished to Lender by or on behalf of Guarantor
pursuant to the note or any of the other obligations contains or
will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There are
no facts known to Guarantor that, individually or in the
aggregate, materially adversely affect or involve any substantial
possibility of materially adversely affecting Guarantor's
business condition or affairs, properties, or assets considered
as an entirety.
The liability of each Guarantor (if more than one) as to the
obligations guaranteed hereby shall be joint and several with any
and each other Guarantor of all or any portion of the
obligations.
If Lender shall have exculpated Borrower or any other
Guarantor of the obligations from liability in whole or in part,
said exculpation or agreement shall not affect the obligations of
the Guarantor hereunder, Guarantor hereby acknowledging that the
obligations under this guaranty are independent of the
obligations of the Borrower and are to be construed as if no such
exculpation or agreement has been granted to the Borrower or such
other guarantor by the Lender.
This Guaranty shall inure to the benefit of Lender, its
successors and assigns, including each and every holder or owner
of any of the obligations guaranteed hereby and this guaranty
shall be deemed a separate contract with each such holder and
owner.
Notwithstanding the death or adjudication of incompetency of
any Guarantor, this Guaranty Agreement shall be binding on the
estate or committee of such Guarantor.
No invalidity, irregularity, or unenforceability of all or
any part of the obligations hereby guaranteed or of any security
therefor shall affect, impair, or be a defense to this guaranty,
and this guaranty is a primary obligation of Guarantor.
Lender shall have the right to set off at any time after
default by Borrower with respect to any of the obligations,
without notice to Guarantor, any and all deposits or other sums
at any time or times credited by or due from Lender to Guarantor,
whether or not held by Lender in a special account or other
account or represented by a certificate of deposit (whether or
not matured), which deposits and other sums shall at all times
constitute additional security for the obligations and the
obligations and warranties arising under this guaranty. Guarantor
hereby grants to Lender a lien on and a continuing security
interest in all instruments, documents, securities, cash, chattel
paper, general intangibles, deposits, certificates of deposit,
all other property, and the proceeds of any of the foregoing,
owned by Guarantor or in which Guarantor has an interest, which
now or hereafter are at any time in possession or control of
Lender, or in transit by mail or carrier to or from Lender or in
the possession of any third party on behalf of Lender, without
regard to whether lender received the same pledge, for
safekeeping, as agent for collection or transmission or
otherwise, or whether Lender had conditionally released the same,
all of which shall at all times constitute additional security
for the obligations and the obligations and warranties arising
under this guaranty, and all of which may be applied at any time
after default with respect to any of the obligations, without
notice to Borrower or to Guarantor to the obligations of Borrower
in such order as Lender may determine.
Guarantor shall furnish to Lender a personal financial
statement on or before the end of each fiscal year of the
Borrower, dated within thirty (30) days prior to such fiscal year
end while any portion of the Obligations are unpaid or
unperformed, detailing the assets, liabilities (including all
contingent liabilities), net worth and annual income of said
Guarantor, certified by Guarantor to be complete and accurate.
Guarantor shall further furnish to Lender prompt written notice
of any condition or event which has resulted or could reasonably
be expected to result in a material adverse change in the
financial condition or net worth of such Guarantor.
No amendment, modification, or waiver of this guaranty shall
be deemed to be made by Lender unless in a writing signed by a
duly authorized officer of Lender, and any such amendment,
modification, or waiver shall be strictly construed. No waiver by
Lender shall be construed or deemed to be a waiver of any other
provision or condition of this guaranty or a waiver of a
subsequent breach of the same provision or condition.
The invalidity or unenforceability of any one or more
provision of this guaranty shall not impair the validity and
enforceability of all of the other provisions of this guaranty.
Lender and Guarantor hereby acknowledge and agree that this
guaranty has been delivered in Bullitt County, Kentucky, and that
in the event Lender or Guarantor at any time shall institute any
action or proceeding against Guarantor or Lender or otherwise
pertaining to the obligations guaranteed hereby, Guarantor and
Lender shall be subject to (and hereby consent to) the
jurisdiction of all courts of the Commonwealth of Kentucky and to
the venue of any such action or proceeding in the courts of
Bullitt County, Kentucky.
Any notice given to Lender hereunder shall be given in
writing and either personally delivered, sent by a nationally
recognized courier service, or sent by registered or certified
mail, postage prepaid, to Lender, to the address set out above,
or to such other address as Lender shall have specified in a
notice to Guarantor given in accordance with the second sentence
of this paragraph. Any notice given to Guarantor hereunder shall
be sufficiently given if in writing and either personally
delivered, sent by a nationally recognized courier service, or
sent by registered or certified mail, postage prepaid, addressed
to Guarantor at the address for Guarantor set forth opposite
Guarantor's name at the end of this guaranty, or to such other
address as Guarantor shall have designated in a written notice to
Lender given in accordance with the first sentence of this
paragraph.
This guaranty, and all rights and obligations hereunder
including matters of construction, validity, and performance,
shall be governed by the laws of the Commonwealth of Kentucky,
and no defense given or allowed by the laws of any other state or
country shall be interposed in any action hereon unless such
defense is also given or allowed by the laws of the Commonwealth
of Kentucky.
This guaranty agreement supplements and is in addition to any
other guaranties given by Guarantor and other persons and
entities, respectively, to Lender of obligations, indebtedness,
and liabilities of Borrower to Lender, and shall not be deemed to
be in substitution for nor otherwise impair in any manner the
enforceability of such other guaranties against Guarantor or any
other person or entity which is a party to any such other
guaranties. The guaranty which is written on the Note is
intended to supplement this Guaranty, and in the event of any
conflict between the terms of the Guaranty which is written on
the Note and this Guaranty, this Guaranty shall control, except
that the unenforceability of this Guaranty, in whole or in part,
shall not affect the enforceability of the guaranty which is
written on the Note.
GUARANTOR (AND EACH OF THEM IF MORE THAN ONE) HEREBY
KNOWINGLY AND VOLUNTARILY WAIVES TRIAL BY JURY IN CONNECTION WITH
ANY ACTION, CLAIM, COUNTER-CLAIM, CROSS-CLAIM, OR OTHER
LITIGATION OR PROCEEDING, BY WHOMSOEVER COMMENCED, CONNECTED WITH
OR ARISING OUT OF THIS AGREEMENT OR THE OBLIGATIONS.
IN TESTIMONY WHEREOF, witness the signature of Guarantor as
of the date first above set forth.
GUARANTOR
BY: ADDRESS: 2669 Charlestown Road
W. BENNETT COLLETT Suite D
New Albany, IN 47150
PIONEER BANK, LENDER
BY:
KENNETH KIDD,
VICE-PRESIDENT
STATE OF KENTUCKY
COUNTY OF __________
The foregoing instrument was sworn and acknowledged before me
this ______ day of ____________, 1996, by W. BENNETT COLLETT, in
his individual capacity to be his true voluntary act and deed.
My commission expires: ___________.
NOTARY PUBLIC
STATE AT LARGE, KENTUCKY
STATE OF KENTUCKY
COUNTY OF __________
The foregoing instrument was sworn and acknowledged before me
this ____ day of ________, 1996, by KENNETH KIDD, VICE-PRESIDENT
OF PIONEER BANK, in his corporate capacity to be the true
voluntary act of the corporation.
My commission expires: ___________.
NOTARY PUBLIC
STATE AT LARGE, KENTUCKY
This instrument prepared by:
LINDA S. BOUVETTE
ATTORNEY AT LAW
J. CHESTER PORTER & ASSOCIATES
P.O. Box 509
Taylorsville, KY 40071
The Investor CreditLine Service Client Agreement
Note: CMA , CBA and WCMA clients who have already signed this
agreement need not return this form.
In consideration of your accepting and carrying one or more
accounts for the undersigned, the undersigned hereby consents and
agrees that:
Applicable Rules and Regulations
1. All transactions shall be subject to the constitution, rules,
regulations, customs and usages of the exchange or market and its
clearinghouse, if any, on which such transactions are executed by
you (Merrill Lynch, Pierce, Fenner & Smith Inc.) or your agents,
including your subsidiaries and affiliates.
Definitions
2. For purposes of this agreement, "securities and other
property" shall include, but not be limited to, money,
securities, financial instruments and commodities of every kind
and nature and all contracts and options relating thereto,
whether for present or future delivery.
Collateral Requirements and Credit Charges for the Investor
CreditLine Service
3. The undesigned will maintain such securities and other
property in the accounts of the undersigned for collateral
purposes as you shall require from time to time; and the monthly
debit balance of such accounts shall be charged, in accordance
with your usual custom, with interest at a rate permitted by the
laws of the State of New York. It is understood that the
interest charge made to the undersigned's account at the close of
a charge period will, unless paid, be added to the opening
balance for the next charge period and that interest will be
charged upon such opening balance, including all interest so
added.
Security Interest
4. All securities and other property now or hereafter held,
carried or maintained by you or by any of your affiliates in your
possession or control, or in the possession or control of any
such affiliate, for any purpose, in or for any account of the
undersigned now or hereafter opened, including any account in
which the undersigned may have an interest, shall be subject to a
lien for the discharge of all the indebtedness and other
obligations of the undersigned to you, and are to be held by you
as security for the payment of any liability or indebtedness of
the undersigned to you in any of said accounts. You shall have
the right to transfer securities and other property so held by
you from or to any other of the accounts of the undersigned
whenever in your judgement you consider such a transfer necessary
for your protection. In enforcing your lien, you shall have the
discretion to determine which securities and property are to be
sold and which contracts are to be closed.
Representations as to Beneficial Ownership and Control
5. The undersigned represents that, with respect to securities
against which credit is or may be extended by you: (a) the
undersigned is not the beneficial owner of more than three
percent (3%) of the number of outstanding shares of any class of
equity securities, and (b) does not control, is not controlled
by, and is not under common control with, the issuer of any such
securities. In the event that any of the foregoing
representations are inaccurate or become inaccurate, the
undersigned will promptly so advise you in writing.
Calls for Additional Collateral -- Liquidation Rights
6. (a) You shall have the right to require additional
collateral:
(1) in accordance with your general policies for the
Investor CreditLine service maintenance requirements,
as such may be modified, amended or supplemented from
time to time; or
(2) if in your discretion you consider it necessary for
your protection at an earlier or later point in time
than called for by said general policies; or
(3) in the event that a petition in bankruptcy or for
appointment of a receiver is filed by or against the
undersigned; or
(4) if an attachment is levied against the accounts of the
undersigned; or
(5) in the event of the death of the undersigned.
(b) If the undersigned does not provide you with additional
collaterals as you may require in accordance with (a)
(1) or (2), or should an event described in (a) (3),
(4) or (5) occur (whether or not you elect to require
additional collateral), you shall have the right:
(1) to sell any or all securities and other property in the
accounts of the undersigned with you or with any of
your affiliates, whether carried individually or
jointly with others;
(2) to buy any or all securities and other property which
may be short in such accounts; and
(3) to cancel any open orders and to close any or all
outstanding contracts.
You may exercise any or all of your rights under (b) (1), (2) or
(3) without further demand for additional collateral, or notice
of sale or purchase, or other notice or advertisement. Any such
sales or purchases may be made at your discretion on any exchange
or other market where such business is usually transacted, or at
public auction or private sale; and you may be the purchaser for
your own account. It is understood that your giving of any prior
demand or call or prior notice of the time and place of such
sale or purchase shall not be considered a waiver of your right
to sell or buy without any such demand, call or notice as herein
provided.
Payment of Indebtedness Upon Demand
7. The undersigned shall at all times be liable for the payment
upon demand of any debit balance or other obligations owing in
any of the accounts of the undersigned with you, and the
undersigned shall be liable to you for any deficiency remaining
in any such accounts in the event of the liquidation thereof, in
whole or in part, by you or by the undersigned; and the
undersigned shall make payment of such obligations and
indebtedness upon demand.
Liability for Costs of Collection
8. To the extent permitted by the laws of the State of New York,
the reasonable costs and expenses of collection of the debit
balance and any unpaid deficiency in the accounts of the
undersigned with you, including but not limited to attorney's
fees incurred and payable or paid by you, shall be payable to you
by the undersigned.
Pledge of Securities and Other Property
9. All securities and other property now or hereafter held,
carried or maintained by you in your possession or control in any
of the accounts of the undersigned may be pledged and repledged
by you from time to time, without notice to the undersigned,
either separately or in common with other such securities and
other property, for any amount due in the accounts of the
undersigned, or for any greater amount, and you may do so without
retaining in your possession or under your control for delivery a
like amount of similar securities or other property.
Lending Agreement
10. In return for the extension or maintenance of any credit by
you, the undersigned acknowledges and agrees that the securities
in the undersigned's account, together with all attendant rights
of ownership, may be lent to you or lent out to others to the
extent not prohibited by applicable laws, rules and regulations.
In connection with such securities loans, you may receive and
retain certain benefits to which the undersigned will not be
entitled. The undersigned understands that, in certain
circumstances, such loans could limit the undersigned's ability
to exercise voting rights, in whole or part, with respect to the
securities lent.
Presumption of Receipt of Communications
11. Communications may be sent to the undersigned at the address
of the undersigned or at such other address as the undersigned
may hereafter give you in writing. All communications so sent,
whether by mail, telegraph, messenger or otherwise, shall be
deemed given to the undersigned personally, whether actually
received or not.
Accounts Carried as Clearing Broker
12. If you are carrying the amount of the undersigned as
clearing broker by arrangement with another broker through whose
courtesy the account of the undersigned has been introduced to
you, then until receipt from the undersigned of written notice to
the contrary, you may accept from such other broker, without
inquiry or investigation by you (a) orders for the purchase or
sale in said account of securities and other property on credit
or otherwise, and (b) any other instructions concerning said
account. You shall not be responsible or liable for any acts or
omissions of such other broker or its employees.
Agreement to Arbitrate Controversies
13. Arbitration is final and binding on the parties.
The parties are waiving their right to seek remedies in
court, including the right to jury trial.
Prearbitration discovery is generally more limited than
and different from court proceedings.
The arbitrators' award is not required to include factual
findings or legal reasoning and any party's right to
appeal or to seek modification of rulings by the
arbitrators is strictly limited.
The panel of arbitrators will typically include a minority
of arbitrators who were or are affiliated with the
securities industry.
The undersigned agrees that all controversies which may arise
between us, including but not limited to those involving any
transaction or the construction, performance or breach of this or
any other agreement between us, whether entered into prior, on or
subsequent to the date hereof, shall be determined by
arbitration. Any arbitration under this agreement shall be
conducted only before the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or arbitration facility provided by
any other exchange of which you are a member, the National
Association of Securities Dealers, Inc. or the Municipal
Securities Rulemaking Board, and in accordance with its
arbitration rules then in force. The undersigned may elect in
the first instance whether arbitration shall be conducted before
the New York Stock Exchange, Inc., the American Stock Exchange,
Inc., other exchanges of which you are a member, the National
Association of Securities Dealers, Inc. or the Municipal
Securities Rulemaking Board, but if the undersigned fails to make
such election, by registered letter or telegram addressed to you
at the office where the undersigned maintains the account, before
the expiration of five days after receipt of a written request
from you to make such election, then you may make such election.
Judgment upon the award of arbitrators may be entered in any
court, state or federal, having jurisdiction.
No person shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration
agreement against any person who has initiated in court a
putative class action, or who is a member of a putative class who
has not opted out of the class with respect to any claims
encompassed by the putative class action until: (i) the class
certification is denied; (ii) the class is decertified; or (iii)
the customer is excluded from the class by the court. Such
forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this agreement except to
the extent stated herein.
Joint and Several Liability
14. If the undersigned shall consist of more than one person,
their obligations under this agreement shall be joint and
several.
Representation as to Capacity to Enter Into Agreement
15. The undersigned represents that no one except the
undersigned has an interest in the account or accounts of the
undersigned with you. If a natural person, the undersigned
represents that he undersigned is of full age, is not an employee
of any exchange, nor of any corporation of which any exchange
owns a majority of the capital stock, nor of a member of any
exchange, nor of a member firm or member corporation registered
on any exchange, nor of a bank, trust company, insurance company
or any corporation, firm or individual engaged in the business of
dealing either as broker or as principal in securities, bills of
exchange, acceptances or other forms of commercial paper. If any
of the foregoing representations is inaccurate or becomes
inaccurate, the undersigned will promptly so advise you in
writing.
Extraordinary Events
16. You shall not be liable for loss caused directly or
indirectly by government restrictions, exchange or market
rulings, suspension of trading, war, strikes or other conditions
beyond your control.
The Laws of the State of New York Govern
17. This agreement and its enforcement shall be governed by the
laws of the State of New York; and shall cover individually and
collectively all accounts which the undersigned may open or
reopen with you; shall inure to the benefit of your successors,
whether by merger, consolidation or otherwise, and assigns, and
you may transfer the accounts of the undersigned to your
successors and assigns; and this agreement shall be binding upon
the heirs, executors, administrators, successors and assigns of
the undersigned.
Amendments
18. The undersigned agrees that you shall have the right to
amend this Agreement, by modifying or rescinding any of its
existing provisions or by adding any new provision. Any such
amendment shall be effective as of a date to be established by
you, which shall not be earlier than thirty days after you send
notification of any such amendment to the undersigned.
Separability
19. If any provision or condition of this agreement shall be
held to be invalid or unenforceable by any court, or regulatory
or self-regulatory agency or body, such invalidity or
unenforceability shall attach only to such provision or
condition. The validity of the remaining provisions and
conditions shall not be affected thereby and this agreement shall
be carried out as if any such invalid or unenforceable provision
or condition were not contained herein.
Headings are Descriptive
20. The heading of each provision hereof is for descriptive
purposes only and shall not be deemed to modify or qualify any of
the rights or obligations set forth in each such provision.
CMA, CBA, and WCMA clients may have already signed and returned
this agreement. If so, please disregard.
BY SIGNING THIS AGREEMENT, THE UNDERSIGNED ACKNOWLEDGES (1) THAT,
IN ACCORDANCE WITH PARAGRAPH 13, THE UNDERSIGNED IS AGREEING IN
ADVANCE TO ARBITRATE ANY CONTROVERSIES THAT MAY ARISE WITH YOU;
(2) THAT, PURSUANT TO PARAGRAPH 10 ABOVE, CERTAIN OF THE
UNDERSIGNED'S SECURITIES MAY BE LOANED TO YOU OR LOANED OUT TO
OTHERS; AND (3) RECEIPT OF A COPY OF THIS AGREEMENT.
Signature ___________________________________
Date____________________
Title_______________________________________
(For special accounts, example: Trustee)
Signature____________________________________Date______________
(Second party if joint account; Co-Trustee)
Title_______________________________________
(For special accounts, example: Co-Trustee)
Account No.:_______________________________________
Copyright 1995.
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Printed in U.S.A. All rights reserved. April 1995.
Member, Securities Investor Protection Corporation (SIPC).
"CMA," "CBA" and "WCMA" are registered service marks of Merrill
Lynch & Co., Inc.
"Investor CreditLine" is a service mark of Merrill Lynch & Co.,
Inc.
Merrill Lynch (Account Number ___________________)
CORPORATION AUTHORIZATION TO SELL AND ENDORSE SECURITIES
RESOLVED THAT
THE CEO W.B. Collett
(NAME)
VICE-PRESIDENT
(NAME)
THE TREASURER Timothy L. Hensley
(NAME)
OR ANY OF THEM, BE AND THEY ARE HEREBY AUTHORIZED TO SELL,
ASSIGN, ENDORSE FOR TRANSFER, AND DO ALL OTHER THINGS NECESSARY
TO SECURE THE TRANSFER OF CERTIFICATES REPRESENTING STOCKS, BONDS
OR OTHER SECURITIES NOW REGISTERED OR HEREAFTER REGISTERED IN THE
NAME OF THIS CORPORATION.
I, W.B. COLLETT, JR., SECRETARY OF FREEDOM FINANCIAL
CORPORATION, INCORPORATED UNDER THE LAWS OF THE STATE OF INDIANA
HEREBY CERTIFY THAT THE FOREGOING IS A TRUE COPY OF A RESOLUTION
DULY ADOPTED BY THE BOARD OF DIRECTORS OF SAID CORPORATION AT A
MEETING DULY HELD THE 24th DAY OF DECEMBER, 1996, AT WHICH A
QUORUM WAS PRESENT AND VOTING, AND THAT THE SAME HAS NOT BEEN
REPEALED OR AMENDED AND REMAINS IN FULL FORCE AND EFFECT AND DOES
NOT CONFLICT WITH THE BY-LAWS OF SAID CORPORATION.
DATED 12/24/96
/s/ W.B. Collett, Jr.
SECRETARY
(OFFICERS NAMED IN ABOVE RESOLUTION SHOULD NOT SIGN HERE)
CORPORATE
SEAL
CODE 97 REV. 7/74
PRINTED IN U.S.A.
CORPORATION AUTHORIZATION TO TRADE
MERRILL LYNCH PIERCE FENNER & SMITH INC.
NEW YORK, N.Y.
BE IT RESOLVED: That this corporation, FREEDOM FINANCIAL
CORPORATION, be, and it hereby is, authorized and empowered to
open and maintain an account with MERRILL LYNCH PIERCE FENNER &
SMITH INC., and its successors, by merger, consolidation or
otherwise, and assigns, hereinafter called the brokers, for the
purchase and sale (including short sales) of stocks, bonds,
options, or securities, commodities and commodity futures, on
margin or otherwise, on exchanges of which the brokers are
members or otherwise, and that any of the officers hereinafter
named be, and he hereby is, authorized to give written or verbal
instructions by telephone, or telegraph, or otherwise, to the
brokers to buy or sell (including short sales) stocks, bonds,
options, or securities, commodities and commodity futures, either
for immediate or future delivery, and to borrow money from or
through the brokers and, if he deems proper to secure payment
therefore with property of this corporation; and he shall at all
times have authority in every way to bind and obligate this
corporation for the carrying out of any contract, arrangement or
transaction which shall, for or on behalf of this corporation, be
entered into or made with or through the brokers; and that the
brokers are authorized to receive from this corporation, checks
and drafts drawn upon the funds of this corporation by any
officer or employee of this corporation, and to apply the same to
the credit of this corporation or to its account with said
brokers and the said brokers are authorized to receive from said
officer(s) or from any other officer or employee of this
corporation, stocks, bonds, options, or securities as collateral
or margin upon the account of this corporation with said brokers;
said brokers are further authorized to accept instructions from
any officer herein named as to the delivery of stocks, bonds,
options or securities from the account of this corporation and at
his direction to cause certificates of stocks, bonds, options, or
securities held in said account to be transferred to the name of
any officer hereinafter named or of this corporation in the
discretion of said officer; and delivery to any such officer of
such stocks, bonds, options, or securities, issued as directed by
him, shall be deemed delivery to this corporation; and any such
officer shall have the fullest authority at all times with
reference to any transaction deemed by him to be proper to make
or enter into for or on behalf of this corporation with the
brokers or others. All confirmations, notices and demands upon
this corporation may be delivered by the brokers verbally or in
writing, or by telegraph, or by telephone to any such officer and
he is authorized to empower any person, or persons, that he deems
proper, at any time, or times, to do any and all things that he
is hereinbefore authorized to do. That this resolution shall be
and remain in full force and effect until written notice of the
revocation hereof shall be delivered to the brokers. The
officer(s) herein referred to are named as follows, to wit:
(1) W.B. Collett
(2) Timothy L. Hensley
I, W.B. COLLETT, JR., Secretary of FREEDOM FINANCIAL CORPORATION,
hereby certify that the foregoing is a full, true and correct
copy of a resolution duly and regularly passed and adopted by the
unanimous vote of the Board of Directors of said company at a
meeting thereof duly called and held at the office of said
company on the 24th day of December, 1996 at which meeting all
directors were present and voting; that said resolution appears
in the minutes of said meeting, and that the same has not been
rescinded or modified and is now in full force and effect.
I further certify that said corporation is duly organized and
existing, and has the power to take the action called for by the
foregoing resolution.
Secretary
SEAL
FIFTH AMENDMENT
TO
DEBT ASSUMPTION, LOAN AND STOCK PLEDGE AGREEMENT
(FREEDOM HOLDING, INC.)
This is a Fifth Amendment to Debt Assumption, Loan and Stock
Pledge Agreement (this "Fifth Amendment") dated as of June 30,
1997, among FREEDOM HOLDING, INC. ("Holding"), W. BENNETT COLLETT
and HILDA M. COLLETT (collectively, the "Colletts"), and PNC
BANK, KENTUCKY, INC. f/k/a Citizens Fidelity Bank and Trust
Company (the "Lender").
Recitals
A. Holding, the Colletts and Lender are parties to a Debt
Assumption, Loan and Stock Pledge Agreement (the "Debt Assumption
Agreement") dated as of January 1, 1993, and certain other
documents referred to therein, whereby the Lender agreed to
permit the Colletts to transfer the Freedom Shares to Holding and
Holding to assume the Term Loan, and the Colletts agreed to (i)
cause Holding to assume the Term Loan and pledge the Freedom
Shares to the Lender to secure repayment of the Assumed Term
Loan, and (ii) jointly and severally personally guarantee
Holding's repayment of the Assumed Term Loan (as those terms are
defined in the Debt Assumption Agreement).
B. On June 30, 1993, the maturity date of the Assumed Term
Loan, with the understanding that the parties would later agree
to a formal modification and extension of the Debt Assumption
Agreement and the Assumed Term Loan, Holding executed and
delivered to Lender a promissory note (the "Interim Note") in the
original principal amount of $1,700,000.00 replacing in all
respects the Term Note (as defined in the Debt Assumption
Agreement), and the Colletts executed and delivered to the Lender
Continuing Guaranty Agreements dated June 30, 1993, personally
guaranteeing the payment in full of the Interim Note and any
other indebtedness of Holding to the Lender.
C. On June 30, 1993, the parties executed a First
Amendment to Debt Assumption, Loan and Stock Pledge Agreement
(the "First Amendment"), which, among other things, provided for
the extension of the Assumed Term Loan through June 30, 1994 and
the addition of an additional financial covenant, and replaced
the Interim Note with a replacement note in the principal amount
of $1,700,000 (the "Renewal Note"), subject to the terms and
conditions of the First Amendment.
D. On June 30, 1994, the parties further amended the Debt
Assumption Agreement, which among other things, provided for the
extension of the Assumed Term Loan through June 30, 1995 and the
amendment of several terms, and replaced the Renewal Note with a
First Amended and Restated Secured Promissory Note in the
principal amount of $1,500,000 (the "Amended and Restated Note"),
subject to the terms and conditions of the Second Amendment.
E. On June 30, 1995, the parties executed an Extension
Agreement by which the Bank extended the maturity of the Term
Note to and including August 31, 1995.
F. On September 30, 1995, the parties executed a Third
Amendment to Debt Assumption, Loan and Stock Pledge Agreement
(the "Third Amendment"), which, among other things, provided for
the extension of the Assumed Term Loan through September 30, 1996
and the amendment of several terms, and replaced the First
Amended and Restated Secured Promissory Note with a Second
Amended and Restated Secured Promissory Note in the principal
amount of $1,250,000, subject to the terms and conditions of the
Third Amendment.
G. On September 30, 1996, the parties executed a Fourth
Amendment to Debt Assumption, Loan and Stock Pledge Agreement
(the "Fourth Amendment"), which , among other things, provided
for the extension of the Assumed Term Loan through September 30,
1996 and the amendment of several terms, and replaced the Second
Amended and Restated Secured Promissory Note with a Third Amended
and Restated Secured Promissory Note in the principal amount of
$1,050,000, subject to the terms and conditions of the Fourth
Amendment.
H. The parties now desire to further amend the Debt
Assumption Agreement to, among other things, provide for the
extension of the Assumed Term Loan through June 30, 1998 and the
replacement of the Third Amended and Restated Secured Promissory
Note in the principal amount of $1,050,000.00 with the Fourth
Amended and Restated Secured Promissory Note in the form attached
hereto as Annex A (the "Fourth Amended and Restated Note"),
subject to the terms and conditions of this Fifth Amendment.
Terms and Conditions
1. Definitions. Unless otherwise defined herein, all
capitalized terms used in this Fifth Amendment shall have the
meanings given them in the Debt Assumption Agreement.
2. Amendments to Debt Assumption Agreement. The Debt
Assumption Agreement as amended by the First Amendment (the
"Amended Debt Assumption Agreement") is hereby further
modified and amended as follows:
a. The second sentence of Section 1(a) of the Debt
Assumption Agreement is hereby amended and restated so
that it shall read in its entirety as follows:
The unpaid principal balance of the Assumed Term
Loan shall bear interest at an annual rate equal to
the "Prime Rate" plus three-quarters of one percent
( %), as that Prime Rate may change from time to
time, from the date of the Fourth Amended and
Restated Secured Promissory Note dated June 30,
1997, by Holding in the face principal amount of
$900,000 delivered in extension and renewal of the
Amended and Restated Note (as defined below) and
substantially in the form attached hereto as Annex
A, and any note or other instrument delivered in
renewal, replacement, substitution, extension and/or
novation thereof (the "Term Note"), until the entire
principal balance of the Assumed Term Loan has been
repaid.
b. Section 1(c) of the Amended Debt Assumption
Agreement is hereby amended and restated so that it
shall read in its entirety as follows:
(c) Cancellation of the Renewal Note. Upon (i)
the delivery to Lender by Holding of the Term Note,
(ii) the delivery to Lender by the Colletts and the
Company of their personal guaranties of Holding's
Obligations under the Term Note and this Agreement,
and (iii) Holding's compliance with Section 3 of
this Agreement, the Lender will mark the promissory
note dated June 30, 1996, by Holding in the original
principal amount of $1,050,000 (the "Third "Amended
and Restated Note") "paid by renewal." The Third
Amended and Restated Note replaced in all respects
the promissory note dated June 30, 1995, by Holding
in the original principal amount of $1,250,000.(the
"Second Amended and Restated Note")
c. Section 2(a) of the Amended Debt Assumption
Agreement is hereby amended and restated so that it
shall read in its entirety as follows:
(a) Term Loan Principal and Interest Payments.
On September 30, 1997, December 31, 1997, March 31,
1998, Holding shall pay to the Lender a principal
payment in an amount equal to $50,000.00, plus all
accrued but unpaid interest on the outstanding
principal balance of the Assumed Term Loan. On June
30, 1998, Holding shall pay to the Lender the entire
outstanding principal balance of, and all accrued
but unpaid interest on, the Assumed Term Loan.
3. Execution of Amended and Restated Note and Guaranty
Agreement. Concurrently with the execution and delivery of
this Fifth Amendment, (a) Holding shall execute and deliver
to the Lender the Third Amended and Restated Note, (b) Hilda
M. Collett and Lender shall enter into a new Continuing
Guaranty Agreement of even date herewith, substantially in
the form attached hereto as Annex B, to replace the
Continuing Guaranty Agreement dated June 30, 1995 between
Hilda M. Collett and the Lender, (c) W. Bennett Collett and
the Lender shall enter into a Continuing Guaranty Agreement
of even date herewith, substantially in the form attached
hereto as Annex C, to replace the Continuing Guaranty
Agreement dated September 30, 1996, between W. Bennett
Collett and the Lender, and (d) the Company and the Lender
shall enter into a New Continuing Guaranty Agreement (the
"FFC Guaranty") of even date herewith, substantially in the
form attached hereto as Annex D, to replace the Continuing
Guaranty Agreement dated September 30, 1996, between the
Company and the Lender.
4. Conditions Precedent. The Lender's obligation to enter
into this Fifth Amendment shall be conditioned upon the
fulfillment of all the following conditions:
(a) Resolutions. Holding shall have furnished the
Lender with certified copies of the resolutions of (i) Holding's
Board of Directors (A) authorizing the execution and delivery of
this Fifth Amendment and the Third Amended and Restated Note, (B)
ratifying and reaffirming the Debt Assumption Agreement, as
modified by the First Amendment, the Second Amendment, the Third
Amendment, the Fourth Amendment, and this Fifth Amendment and (C)
authorizing consummation of the actions contemplated by this
Fifth Amendment; and (ii) the Company's Board of Directors
authorizing the execution and delivery of the FFC Guaranty.
(b) Representations and Warranties. Except as set
forth on Schedule 1 attached to and made a part of this Fifth
Amendment, each and every representation and warranty made by or
on behalf of Holding relating to the Debt Assumption Agreement
and the transactions contemplated thereby, as modified and
amended by the First Amendment, the Second Amendment, the Third
Amendment, the Fourth Amendment and this Fifth Amendment are
hereby restated and reaffirmed, and shall be true, complete and
correct on or as of the date of this Fifth Amendment.
5. Further Assurances. Holding and the Colletts shall
execute and deliver such other documents or other instruments
as the Lender may request from time to time more fully to
create, perfect, continue, maintain or terminate the rights
and security interests intended to be granted or created
pursuant to this Fifth Amendment and the Amended Debt
Assumption Agreement.
6. Benefit. This Fifth Amendment shall inure to the benefit
of the Lender, its successors and assigns, and all
obligations of Holding and/or the Colletts shall bind, as
appropriate, its or their successors, heirs, personal
representatives, administrators and, if and to the extent
assignment is otherwise permitted by the Amended Debt
Assumption Agreement, its or their assigns.
7. Entire Agreement. This Fifth Amendment and all schedules,
agreements and instruments referred to herein, constitute the
entire agreement among the parties with respect to the
subject matter hereof, supersede all prior understandings
with respect to the subject matter thereof and hereof, and no
other oral or written representations shall apply. No
additional change, modification, addition or termination of
the Amended Debt Assumption Agreement, the other documents
referred to therein or this Fifth Amendment shall be
enforceable unless in writing and signed by the party against
whom enforcement is sought.
8. Ratification/Conflict. Except as specifically amended by
this Fifth Amendment, all of the terms and conditions of the
Amended Debt Assumption Agreement shall remain in full force
and effect. If there is any term or provision of the Amended
Debt Assumption Agreement that conflicts with this Fifth
Amendment, the term or provision of this Fifth Amendment
shall govern and prevail.
9. Governing Law. This Fifth Amendment shall be governed and
construed in accordance with the laws (without reference to
the conflict of laws rules) of the Commonwealth of Kentucky.
10. Counterparts. This Fifth Amendment shall be executed
in any number of counterparts, each of which so executed
shall be deemed an original, and such counterparts
together shall constitute but one and the same contract,
which shall be sufficiently evidenced by any such original
counterpart.
IN WITNESS WHEREOF, the parties have signed this Fifth
Amendment as of the date set forth above, but actually on the
dates set forth below.
PNC BANK, KENTUCKY, INC.
By
James B. Williams, Vice President
Date:
FREEDOM HOLDING, INC.
By
W. Bennett Collett, President
Date:
W. Bennett Collett
Date:
Hilda M. Collett
Date:
STATE OF _______________ )
)
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me on
______________, 1997, by Hilda M. Collett, on her own behalf.
___________________________________
Notary Public
Commission Expires:________________
STATE OF _______________ )
)
COUNTY OF ______________ )
The foregoing instrument was sworn to and acknowledged before
me on ________________, 1997, by W. Bennett Collett, on his own
behalf and as President of Freedom Holding, Inc.
___________________________________
Notary Public
Commission Expires:________________
SCHEDULE 1
No changes.
ANNEX A
Amended and Restated Note
ANNEX B
Continuing Guaranty Agreement -- Hilda M. Collett
ANNEX C
Continuing Guaranty Agreement--W. Bennett Collett
ANNEX D
Continuing Guaranty Agreement--Freedom Financial Corporation
Pledge Agreement
(Stocks, Bonds and Commercial Paper)
THIS PLEDGE AGREEMENT, dated as of this 30th day of June,
1997, is made by FREEDOM FINANCIAL CORPORATION (the "Pledgor"),
with an address at P.O. Box 3027, Louisville, Kentucky 40201, in
favor of PNC BANK (the "Secured Party"), with an address at
Citizens Plaza, Louisville, Kentucky 40296.
1. Pledge. In order to induce the Secured Party to extend
the Obligations (as defined below), the Pledgor hereby grants a
security interest in and pledges to the Secured Party all of the
pledgor's right, title and interest in and to the collateral
described in Exhibit A attached hereto and made a part hereof,
whether now owned or hereafter acquired, together with all
additions, submissions, replacement and proceeds and all income,
interest, dividends and other distributions thereof (the
"Collateral"). If the Collateral includes certificated
securities, documents or instruments, such certificates are
herewith delivered to the Secured Party accompanied by duly
executed blank stock or bond powers or assignments as applicable.
The Pledgor hereby authorized the transfer of possession of all
certificates, instruments, documents and other evidence of the
Collateral to the Secured Party.
2. Obligations Secured. The Collateral secures payment to
the Secured Party of all loans, advances, debts, liabilities,
obligations, covenants and duties owing to the Secured Party from
the Pledgor and from FREEDOM HOLDING, INC. (the "Borrower"), of
any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under
any agreement, instrument or document, whether or not for the
payment of money, whether arising by reason of an extension of
credit, opening of a letter of credit, loan or guarantee or in
any other manner, whether arising out of overdrafts on deposit or
other accounts or electronic funds transfers (whether through
automatic clearing houses or otherwise) or out of the Secured
Party's non-receipt of or inability to collect funds or otherwise
not being made whole in connection with depository transfer check
or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation),
absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, and any amendments,
exceptions, renewals or increase, and all costs and expenses of
the Secured Party incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection
with any of the foregoing, including reasonable attorneys' fees
and expenses (collectively, the "Obligations").
3. Representations and Warranties. The Pledgor represents
and warrants to the Secured Party as follows:
3.1 There are no restrictions on the pledge or
transfer of any of the Collateral, other than restrictions
referenced on the face of any certificates evidencing the
Collateral.
3.2 The Pledgor is the legal owner of the Collateral,
which is registered in the name of the Pledgor, the Custodian (as
hereinafter defined) or a nominee.
3.3 The Collateral is free and clear of any security
interests, pledges, liens, encumbrances, charges, agreements,
claims or other arrangements or restrictions of any kind, except
as referenced in Section 3.1 above, and the Pledgor will not
incur, create, assume or permit to exist any pledge, security
interest, lien, charge or other encumbrance of any nature
whatsoever on any of the Collateral or assign, pledge or
otherwise encumber any right to receive income from the
Collateral.
3.4 The Pledgor has the right to transfer the
Collateral free of any encumbrances and the Pledgor will defend
the Pledgor's title to the Collateral against the claims of all
persons, and any registration with, or consent or approval of, or
other action by, any federal, state or other governmental
authority or regulatory body which was or is necessary for the
validity of the pledge of and grant of the security interest in
the Collateral has been obtained.
3.5 The pledge of and grant of the security interest
in the Collateral is effective to vest in the Secured Party a
valid and perfected first priority security interest, superior to
the rights of any other person, in and to the Collateral as set
forth herein.
4. Covenants.
4.1 Unless otherwise agreed in writing between the
Pledgor and the Secured Party, the Pledgor agrees to maintain
Collateral having a Minimum Margin Value of at least $700,000.00
or the outstanding amount of the Obligations, whichever is
higher, and to provide additional Collateral to the Secured Party
immediately upon the Secured Party's request if the Minimum
Margin Value is not maintained. "Minimum Margin Value" shall be
calculated by multiplying the market value of the Collateral
times the Secured Party's margin requirements for the type of
Collateral as set forth on Exhibit A or as otherwise agreed in
writing.
4.2 If all or part of the Collateral constitutes
"margin stock" within the meaning of Regulation U of the Federal
Reserve Board, the Pledgor agrees to execute and deliver Form U-1
to the Secured Party and, unless otherwise agreed in writing
between the Pledgor and the Secured Party, no part of the
proceeds of the Obligations may be used to purchase or carry
margin stock.
5. Default.
5.1 If any of the following occur (each an "Event of
Default"): (i) any Event of Default (as defined in any of the
Obligations), (ii) any default under any of the Obligations that
does not have a defined set of "Events of Default" and the lapse
of any notice or cure period provided in such Obligations with
respect to such default, (iii) demand by the Secured Party under
any of the Obligations that have a demand feature, (iv) the
failure by the Pledgor to perform any of its obligations
hereunder, (v) the Falsity, inaccuracy or material breach by the
Pledgor of any written warranty, representation or statement made
or furnished to the Secured Party by or on behalf of the Pledgor,
(vi) the failure of the Secured Party to have a perfected first
priority security interest in the Collateral, or (vii) the
termination or breach of the notification and consent agreement
referred to in Section 8 below, then the Secured Party is
authorized in its discretion to declare any or all of the
Obligations to be immediately due and payable without demand or
notice, which are expressly waived, and may exercise any one or
more of the rights and remedies granted pursuant to this Pledge
Agreement or given to a secured party under the Uniform
Commercial Code of the applicable state, as it may be amended
from time to time or otherwise at law or in equity, including the
right to sell or otherwise dispose of the Collateral.
5.2 (a) At any bona fide public sale the Secured
Party shall be free to purchase all or any part of the
Collateral. Any such sale may be on cash or credit. The Secured
Party shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are
purchasing the Collateral for their own account in compliance
with Regulation D of the Securities Act of 1933 or any other
applicable exemption available under such Act. The Secured Party
will not be obligated to make any sale if it determines not to do
so, regardless of the fact that notice of the sale may have been
given. The Secured Party may adjourn any sale and sell at the
time and place to which the sale is adjourned. If the Collateral
is customarily sold on a recognized market or threatens to
decline speedily in value, the Secured Party may sell such
Collateral at any time without giving prior notice to the
Pledgor. Whenever notice is otherwise required by law to be sent
by the Secured Party to the Pledgor of any sale or other
disposition of the Collateral, five days written notice sent to
the Pledgor at the notice address specified below will be
reasonable.
(b) The Pledgor recognizes that the Secured Party may
be unable to effect or cause to be effected a public sale of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Act"), so that the
Secured Party may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the Collateral for their
own account, for investment and without a view to the
distribution or resale thereof. The Pledgor understands that
private sales so made may be at prices and on other terms less
favorable to the seller than if the Collateral were sold at
public sales, and agrees that the Secured Party has no obligation
to delay or agree to delay the sale of any of the Collateral for
the period of time necessary to permit the issuer of the
securities which are part of the Collateral (even if the issuer
would agree), to register such securities for sale under the Act.
The Pledgor agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially
reasonable manner.
5.3. The net proceeds arising from the disposition of
the Collateral after deducting expenses incurred by the Secured
Party will be applied to the Obligations in the order determined
by the Secured Party. If any excess remains after the discharge
of all of the Obligations, the same will be paid to the Pledgor.
If after exhausting all of the Collateral there is a deficiency,
the Pledgor or, if the Pledgor is not borrowing from the Secured
Party or providing a guaranty of the Borrower's obligations, the
Borrower will be liable therefor to the Secured Party; provided,
however, that nothing contained herein will obligate the Secured
Party to proceed against the Borrower or any other party
obligated under the Obligations or against any other collateral
for the Obligations prior to proceeding against the Collateral.
5.4. If any demand is made at any time upon the Secured
Party for the repayment or recovery of any amount received by it
in payment or on account of any of the Obligations from the
disposition of the Collateral and if the Secured Party repays all
or any part of such amount, the Pledgor or, if the Pledgor is not
borrowing from the Secured Party or providing a guaranty of the
Borrower's obligations, the Borrower will be and remain liable
for the amounts so repaid or recovered to the same extent as if
never originally received by the Secured Party.
6. Voting Rights and Transfer. Prior to the occurrence of
an Event of Default, the Pledgor will have the right to exercise
all voting rights with respect to the Collateral. At any time
after the occurrence of an Event of Default, the Secured Party
may transfer any or all of the Collateral into its name or that
of its nominee and may exercise all voting rights with respect to
the Collateral, but no such transfer shall constitute a taking of
such Collateral in satisfaction of any or all of the Obligations
unless the Secured Party expressly so indicates by written notice
to the Pledgor.
7. Dividends, Interest and Premiums. The Pledgor will
have the right to receive all cash dividends, interest and
premiums declared and paid on the Collateral prior to the
occurrence of any Event of Default. In the event any additional
shares are issued to the Pledgor as a stock dividend or in lieu
of interest on any of the Collateral, as a result of any split of
any of the Collateral, by reclassification or otherwise, any
certificates evidencing any such additional shares will be
immediately delivered to the Secured Party and such shares will
be subject to this Pledge Agreement and a part of the Collateral
to the same extent as the original Collateral. At any time after
the occurrence of an Event of Default, the Secured Party shall be
entitled to receive all cash or stock dividends, interest and
premiums declared or paid on the Collateral, all of which shall
be subject to the Secured Party's rights under Section 5 above.
8. Uncertificated Securities. If the Collateral includes
uncertificated securities, then the Pledgor agrees to cause the
financial intermediary on whose books and records the ownership
interest of the Pledgor in the Collateral appears (the
"Custodian") to execute and deliver a notification and consent
agreement satisfactory to the Secured Party in order to perfect
and protect the Secured Party's security interest in the
Collateral.
9. Further Assurances. At any time and from time to time,
upon demand of the Secured Party, the Pledgor will give, execute,
file and record any notice, financing statement, continuation
statement, instrument, document or agreement that the Secured
Party may consider necessary or desirable to create, preserve
continue, perfect or validate any security interest granted
hereunder or to enable the Secured Party to exercise or enforce
its rights hereunder with respect to such security interest.
Without limiting the generality of the foregoing, the Pledgor
hereby irrevocably appoints the Secured Party as the Pledgor's
attorney-in-fact to do all acts and things in the Pledgor's name
that the Secured Party may deem necessary or desirable. The
Secured Party is authorized to file financing statements,
continuation statements and other documents under the Uniform
Commercial Code relating to the Collateral without the Pledgor's
signature, naming the Pledgor as debtor and the Secured Party as
secured party.
10. Notices. All notices, demands, requests,
consents, approvals and other communications required or
permitted hereunder must be in writing and will be effective upon
receipt if delivered personally to the Pledgor or the Secured
Party, or if sent by facsimile transmission with confirmation of
delivery, or by nationally recognized overnight courier service,
to the address set forth above or to such other address as either
the Pledgor or the Secured Party may give to the other in writing
for such purpose.
11. Preservation of Rights. No delay or omission on
the Secured Party's part to exercise any right or power arising
hereunder will impair any such right or power or be considered a
waiver of any such right or power, nor will the Secured Party's
action or inaction impair any such right or power. The Secured
Party's rights and remedies hereunder are cumulative and not
exclusive of any other rights or remedies which the Secured Party
may have under other agreements, at law or in equity.
12. Illegality. In case any one or more of the
provisions contained in the Pledge Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
13. Changes in Writing. No modification, amendment or
waiver of any provision of this Pledge Agreement nor consent to
any departure by the Pledgor therefrom will be effective unless
made in a writing signed by the Secured Party, and then such
waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or
demand on the Pledgor in any case will entitle the Pledgor to any
other or further notice or demand in the same, similar or other
circumstance.
14. Entire Agreement. This Pledge Agreement
(including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the
Pledgor and the Secured Party with respect to the subject matter
hereof.
15. Successors and Assigns. This Pledge Agreement
will be binding upon and inure to the benefit of the Pledgor and
the Secured Party and their respective heirs, executors,
administrators, successors and assigns; provided, however, that
the Pledgor may not assign this Pledge Agreement in whole or in
part without the Secured Party's prior written consent and the
Secured Party at any time may assign this Pledge Agreement in
whole or in part.
16. Interpretation. In this Pledge Agreement, unless
the Secured Party and the Pledgor otherwise agree in writing, the
singular includes the plural and the plural the singular;
references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the
statute referred to; the word "or" shall be deemed to include
"and/or", the words "including", "includes" and "include" shall
be deemed to be followed by the words "without limitation."
Section headings in this Pledge Agreement are included for
convenience of reference only and shall not constitute a part of
this Pledge Agreement for any other purpose. If this Pledge
Agreement is executed by more than one party as Pledgor, the
obligations of such persons or entities will be joint and
several.
17. Indemnity. The Pledgor agrees to indemnify each
of the Secured Party, its directors, officers and employees and
each legal entity, if any, who controls the Secured Party
(the "Indemnified Parties") and to hold each Indemnified Party
harmless from and against any and all claims, damages, losses,
liabilities and expenses (including all fees of counsel with whom
any Indemnified Party may consult and all expenses of litigation
or preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party as a result
of the execution of or performance under this Pledge Agreement;
provided, however, that the foregoing indemnity agreement shall
not apply to claims, damages, losses, liabilities and expenses
solely attributable to an Indemnified Party's gross negligence or
willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Pledge Agreement.
The Pledgor may participate at its expense in the defense of any
such claim.
18. Governing Laws and Jurisdiction. This Pledge
Agreement has been delivered to and accepted by the Secured Party
and will be deemed to be made in the State where the Secured
Party's office indicated above is located. THIS PLEDGE AGREEMENT
WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PLEDGOR
AND THE SECURED PARTY DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE STATE WHERE THE SECURED PARTY'S OFFICE INDICATED ABOVE IS
LOCATED EXCLUDING ITS CONFLICT OF LAWS RULES. The Pledgor hereby
irrevocably consents to the exclusive jurisdiction of any state
or federal court for the county or judicial district where the
Secured Party's office indicated above is located, and consents
that all service of process be sent by nationally recognized
overnight courier service directed to the Pledgor at the
Pledgor's address set forth herein and service so made will be
deemed to be completed on the business day after deposit with
such courier, provided that nothing contained in this Pledge
Agreement will prevent the Secured Party from bringing any
action, enforcing any award or judgment or exercising any rights
against the Pledgor individually, against any security or against
any property of the Pledgor within any other county, state or
other foreign or domestic jurisdiction. The Pledgor acknowledges
and agrees that the venue provided above is the most convenient
forum for both the Secured Party and the Pledgor. The Pledgor
waives any objection to venue and any objection based on a more
convenient forum in any action insinuated under this Pledge
Agreement.
19. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY
WAIVES ANY AND ALL RIGHT THE PLEDGOR MAY HAVE TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS
PLEDGE AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
PLEDGE AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY.
The Pledgor acknowledges that it has read and understood all the
provisions of this Pledge Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or
appropriate.
WITNESS the due execution hereof as a document under seal, as of
the date first written above.
WITNESS/ATTEST: FREEDOM FINANCIAL CORPORATION
(Corporation, Partnership or
other Entity)
/s/ J.B. Williams By:/s/ W.B. Collett
Print Name: J.B. Williams Print Name: W.B. Collett
Title: Chairman & CEO
______________________________ ______________________________
(Individual) (SEAL)
Print Name: __________________ Print Name:___________________
______________________________ ______________________________
(Individual) (SEAL)
Print Name: __________________ Print Name: __________________
EXHIBIT A TO PLEDGE AGREEMENT
(CERTIFICATED SECURITIES)
The specific assets listed below are pledge as collateral and are
restricted from trading and withdrawals. The Secured Party's
written approval is required prior to any trading or withdrawals
of such assets.
Quantity Description of Securities Certificate Number(s)
200,000 shares Florida Gaming, Inc. FGC2160, FGC2188,
FGC2154
EXTENSION AND AMENDMENT TO PROMISSORY NOTE
Borrower:
Freedom Financial Corporation, and Indiana Corporation
2669 Charlestown Road, Suite D
New Albany, IN 47150
NOTE INTEREST PRINCIPAL FUNDING MATURITY CUSTOMER LOAN
INFORMATION RATE AMOUNT DATE DATE NUMBER NUMBER
Variable $1,800,000.00 07/31/96 7/31/97 351634756 1456571
KPK/kmd
EXTENSION AND AMENDMENT TO NOTE
Effective August 22, 1997 , Borrower and Lender agree
that the Note, identified above, (the "Note") shall be amended as
follows:
[X] EXTENSION: The Maturity Date of the Note is extended to
January 31, 1998.
[ ]INTEREST RATE: The interest rate on the Note shall be changed
to:
[ ] A fixed rate of _________% per annum.
[ ] A variable rate of _________% per annum _______________
The Index Rate indicated below. Any change in the
interest rate resulting from a change in the Index Rate
will be effective on:
The Index Rate used for the Note shall be:
If the Index Rate is redefined or becomes unavailable,
then Lender may select another index which is
substantially similar. The initial interest rate on the
Note, as amended shall be _______________% per annum.
MINIMUM RATE/MAXIMUM RATE: Subject to applicable law, the
minimum interest rate on the Note, as amended, shall be
______________% per annum. The maximum interest rate on the
Note, as amended, shall not exceed ____________% per annum,
or if less, or if a maximum rate is not indicated, the
maximum interest rate Lender is permitted to charge by law.
RATE ADJUSTMENT LIMITATIONS: The maximum interest rate
increase at any one time will be _____________%. The
maximum rate decrease at any one time will be ____________%.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest
on the Note according to the following schedule:
ON DEMAND, BUT UNTIL DEMAND IS DUE, THEN:
Quarterly payments of principal in the amount of $50,000.00
plus accrued interest beginning October 31, 1997 and
continuing thereafter. A final payment of the outstanding
principal balance plus accrued interest is due and payable
on January 31, 1998.
ADDITIONAL TERMS:
Collateral for this loan is 1,100,000 shares of Florida
Gaming Corporation Stock represented by 100,000 shares each
of FGC0052, FGC0053, FGC2003, FGC2004, FGC2005, FGC00421,
FGC00422, FGC00423, FGC00424, FGC00508, FGC507. THIS IS A
RATIFICATION OF LOAN AGREEMENT AND STOCK PLEDGE AGREEMENT
DATED 7-31-96 AND AS AMENDED 11-22-96 and 8-22-97.
Collateral also consists of the personal guarantee of W.
Bennett Collett by Guaranty Agreement dated 7/31/96 and
reaffirmed 8/22/97.
INSURANCE: If Borrower has purchased credit life or credit
accident and health insurance, this insurance may only cover
payments made under the Note.
ADDITIONAL DOCUMENTS: Borrower agrees to execute any additional
documents that Lender may request in connection with this
extension/amendment of the Note.
RATIFICATION AND INCORPORATION: The terms, definitions, and
conditions of the Note are fully ratified and incorporated into
this Agreement by this reference. The terms and conditions of
the Note shall remain in full force and effect except as
specifically extended/amended by this Agreement. The Note and
all other loan documents, as extended and amended, are hereby
adopted, ratified, confirmed and acknowledged to be in full force
and effect and binding upon Borrower, with all of the collateral
being pledged remaining as security for Lender.
RESERVATION OF RIGHTS: If a Borrower under the Note does not
sign this Agreement, such Borrower will remain liable under the
terms and conditions continued in the Note, if not released from
those obligations in a writing signed by Lender.
AMENDED
NOTE INTEREST PRINCIPAL MATURITY CUSTOMER LOAN
INFORMATION RATE AMOUNT DATE NUMBER NUMBER
Variable $1,550,000.00 01/31/98 351634756 1456571
BORROWER WAIVES ALL KNOWN AND UNKNOWN, ABSOLUTE AND CONTINGENT,
CLAIMS, DEFENSES, SETOFFS OR COUNTERCLAIMS AGAINST LENDER OR ITS
SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS AS OF THE
DATE OF THIS AGREEMENT. BORROWER ACKNOWLEDGES THAT BORROWER HAS
READ, UNDERSTANDS AND AGREES TO THE TERMS OF THIS AGREEMENT.
BORROWER ACKNOWLEDGES RECEIPT OF ANY EXACT COPY OF THIS
AGREEMENT.
Dated: August 22, 1997
BORROWER: Freedom Financial BORROWER:
Corporation
By: s/ W.B. Collett By:
W. Bennett Collett, Chairman & CEO
BORROWER: BORROWER:
By: By:
BORROWER: BORROWER:
By: By:
BORROWER: BORROWER:
By: By:
LENDER: Pioneer Bank
By: /s/ Kenneth Kidd
Kenneth Kidd, Senior Vice
President
