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EXHIBIT 10.78
PLEDGE AGREEMENT
This AGREEMENT is made as of December 31, 1995, by and between on the one
hand TRANSCO SYNDICATE #1 LTD., an Illinois corporation, of 000 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, (hereinafter "Transco" or
"Pledgee"); and on the other hand JBW & Co. Inc., a California corporation
("JBW"), Concord General Corporation, a California corporation ("Concord"), and
Xxxxxxx X. Xxxxxxxxx-Xxxx, an individual ("Xxxxxxxxx-Xxxx"), all in care of
Concord General Corporation, X.X. Xxx 0000, Xxxxxxx, Xxxxxxxxxx, 00000-0000
(hereinafter collectively referred to as "Pledgors").
Recitals
At the time of the execution of this Agreement, JBW is indebted to Pledgee
in the amount of Twelve Million, Three Hundred Thirteen Thousand, Six Hundred
Twenty Five Dollars ($12,313,625) as a result of Pledgee's exercise of a
conversion option under a Secured Debt Conversion Agreement among Transco, JBW,
Concord, and Xxxxxxxxx-Xxxx, effective December 31, 1993, under which 1,100
shares of Series A Preferred Stock of JBW owned by Transco, whose stated value
is $10,000.00 per share, were converted to debt of JBW. The debt is evidenced
by the Promissory Note (the "Note") of JBW dated December 31, 1995.
Pursuant to the Note, Xxxxxxxxx-Xxxx, the ultimate owner of JBW, and
majority owner of Concord, a corporation wholly owned by Xxxxxxxxx-Xxxx, have
agreed to initially pledge to Transco a minimum of 81% of the outstanding shares
of common stock of Classic Fire & Marine Insurance Company ("CF&M"), an Indiana
insurance corporation wholly owned by Concord (the "CF&M Stock"), and other
assets as necessary to secure the obligations of JBW, Xxxxxxxxx-Xxxx and Concord
under the Note.
It is therefore agreed:
Pledge
1. (a) As security for the obligations of Pledgors under the Note,
Xxxxxxxxx-Xxxx and Concord hereby pledge, assign and grant to Transco a valid
and perfected first lien on the CF&M Stock and any other assets pledged by JBW,
Concord and/or Xxxxxxxxx-Xxxx hereunder. The CF&M Stock, together with any
and all other assets pledged by JBW, Concord and/or Xxxxxxxxx-Xxxx hereunder,
are hereinafter referred to collectively as the "Collateral." Concurrently with
its execution of this Agreement, Concord shall deliver to Transco the
certificates representing the Collateral, together with assignments separate
from certificate therefor, duly endorsed by Concord. At all times during which
any obligation to Transco under the Note remains unsatisfied, Pledgors agree
to pledge as security for the Note assets which they have available to give
sufficient value so as to maintain a value equal to at least 125% of the
outstanding principal balance owed under the Note. "Value" of the Collateral
shall be determined by combining Securities Valuation Office ("SVO") determined
value of any insurance company stock pledged as Collateral hereunder, together
with the SVO determined value of any non-
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insurance company stock pledged as Collateral hereunder, which shall be equal
to at least 125% of the outstanding principal balance owed under the Note.
(b) JBW, Xxxxxxxxx-Xxxx and Concord shall be entitled to
exchange items of Collateral for other Collateral reasonably acceptable to
Transco, provided that, as of the date of each such exchange, the value of the
replacement Collateral, as determined in Section 1.(a) above, is at least equal
to the value of the replaced Collateral.
(c) At all times during which any obligation to Transco under
the Note remains unsatisfied, Concord and Xxxxxxxxx-Xxxx agree to deliver to
Transco audited financial statements for the period ending the previous
December 31st (i) for CF&M by the following June 1st as long as CF&M Stock is
pledged; and (ii) for Concord by the following June 30th as long as any Concord
Stock is pledged. The initial delivery of such statements will be June 1, 1996
for the December 31, 1995 audited financial statements of CF&M.
Voting Rights
2. During the term of this pledge, and as long as JBW, Concord and
Xxxxxxxxx-Xxxx are not in default in the performance of any of the terms of
this Pledge Agreement or in the payment of the principal or interest or other
amounts due under the Note, Concord shall have the right to vote the CF&M Stock
and shall have the right to vote any other pledged shares owned by them on all
corporate questions.
Representations
3. Pledgors warrant and represent that there are no restrictions
on the transfer of any of the pledged shares of CF&M Stock, other than as may
appear on the faces of the certificates, and that Pledgors have the right to
transfer the CF&M Stock free of any encumbrances and without obtaining the
consents of the other shareholders or any other person, except as set forth in
the Indiana Insurance Code Holding Company Act. The Pledgors jointly and
severally further warrant and represent as follows:
(a) Concord is the sole, direct, legal and beneficial owner of the
Collateral, pledged hereunder and that it has been duly authorized
and is fully paid and nonassessable and is free and clear of any
lien thereon or affecting title thereto except for the security
interest created by this Pledge Agreement.
(b) The Pledgors have full power and authority to enter into this
Pledge Agreement, and this Pledge Agreement is binding upon them in
accordance with its terms.
(c) There are no restrictions upon the transfer of the Collateral,
nor will there be any such restriction on any other collateral
subsequently pledged hereunder, except as provided by (i) any law
applicable to the sale of securities generally or (ii) the Indiana
Insurance Holding Company Act.
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(d) No consent, approval, order, or authorization of, or
registration, qualification, designation or filing with, any
federal, regional, state or local governmental authority of the
United States on the part of Pledgors is required in connection with
the pledge of Collateral or consummation of the transactions
contemplated hereunder, except for filings/regulatory approvals,
if any, required pursuant to applicable federal and state insurance
and securities laws, which filings will be made within the required
statutory period.
(e) Pledgors, and each of them, specifically represent and warrant
to Pledgee that the pledge of the Collateral set forth herein shall
not constitute a fraudulent conveyance or a voidable preference
under any state and/or federal law, or any other impermissible
course of conduct, and that Pledgors and their successors and
assigns jointly and severally agree to indemnify and hold Pledgee
harmless from any and all costs, reasonable attorneys' fees and
expenses, and any judgment against Pledgee based upon fraudulent
conveyances or voidable preferences.
Warrants and Rights
4. Pledgors agree that they will not (i) sell, assign or otherwise
dispose of, or grant any option with respect to, the Collateral or any other
collateral pledged hereunder without the prior written consent of the Pledgee,
or (ii) create or permit to exist any lien upon or with respect to the
Collateral or any other collateral pledged hereunder, except for the security
interest granted hereunder.
Perfection of Security Interest in Collateral
5. Pledgors shall take all steps reasonably requested by the Pledgee to
perfect the Pledgee's first lien and security interest in the Collateral to be
delivered to Pledgee pursuant to this Agreement, including, but not limited to,
the execution and delivery of such financing statements as the Pledgee may
request.
Event of Default
6. The occurrence of an Event of Default under the Note or the untruth
or material inaccuracy of any warranty or representation made by any Pledgor
hereunder, shall constitute an Event of Default hereunder.
Remedies Upon Default
7. (a) If an Event of Default allowing foreclosure upon the Collateral
shall occur, Pledgee shall have, in addition to any other rights given under
this Pledge Agreement or by law, all of the rights and remedies with respect to
the pledged Collateral of a secured party under the Uniform Commercial Codes as
in effect in the States of California and Illinois. If the proceeds of any
sale of Collateral under applicable Uniform Commercial Code provisions are
insufficient to
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cover the principal and interest of the Note plus expenses of the sale,
Pledgors, and each of them, shall remain liable to Pledgee for any deficiency,
in accordance with the provisions set forth in the applicable Commercial Code
Sections.
(b) Upon the occurrence of any default of an Event of Default
allowing foreclosure upon the Collateral, Pledgors agree to use their best
efforts to obtain or to assist Pledgee in obtaining any required regulatory
approval for acquisition of title to all or any of the Collateral pursuant to
this Section 7, including any required request for approval to the Indiana
Department of Insurance.
INDEMNIFICATIONS
8. Pledgors agree to indemnify, defend and hold Pledgee harmless from
any claims, actions, causes of action, liabilities, obligations, losses, or
damages asserted against Pledgee based on or arising out of any acts,
omissions, facts, events, incidents, accident, mismanagement, breach of
fiduciary duty, negligence, or intentional conduct that occur or take place
relating to the collateral pledged hereunder prior to the completion of any
foreclosure proceedings under this Pledge Agreement, other than claims for
benefits under insurance policies issued in the normal course of the business
of CF&M.
IN WITNESS WHEREOF, Pledgors and Pledgees have caused this Pledge
Agreement to be executed as of the date first written above.
PLEDGOR: PLEDGEE:
JBW & CO., INC. TRANSRE SYNDICATE #1 LTD.
A CALIFORNIA CORPORATION AN ILLINOIS CORPORATION
BY: XXXXXX XXXX BY: [SIG]
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TITLE: PRESIDENT TITLE: SECRETARY/GENERAL COUNSEL
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CONCORD GENERAL CORPORATION
A CALIFORNIA CORPORATION
BY: XXX X. XXXX
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TITLE: C.E.O.
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XXXXXXX X. XXXXXXXXX-XXXX
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XXXXXXX X. XXXXXXXXX-XXXX
an individual
