Exhibit 10.3
PLEDGE AGREEMENT
     THIS PLEDGE AGREEMENT (this “Agreement”) is made as of the 17th day of
July, 2009, by and between ASSURANCEAMERICA CORPORATION, a Georgia corporation
(the “Pledgor”) and WACHOVIA BANK, NATIONAL ASSOCIATION (the “Bank”). Unless
otherwise defined herein or if the context clearly requires to the contrary, any
capitalized term used herein but not defined shall have the meaning ascribed to
such term in that certain Loan Agreement dated as of even date herewith among
Bank and Pledgor, as Borrower therein (as amended from time to time, the “Loan
Agreement”).
     In consideration of the mutual covenants and agreements contained in this
Agreement and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Pledgor hereby agrees with Bank as follows:
     SECTION 1. Pledge. As collateral security for payment in full of the
Obligations, Pledgor hereby pledges, hypothecates, collaterally assigns and
delivers unto Bank, and grants to Bank a lien on, upon, and in all of the
following: (a) the securities, investment properties and general intangibles
listed on Exhibit A attached hereto (and as supplemented from time to time in
connection with a Permitted Acquisition (as defined in the Loan Agreement)), the
proceeds thereof and any earnings thereon, and (b) any cash, options,
instruments, shares or securities, dividends, distributions, rights or other
property at any time and from time to time receivable or otherwise distributable
in respect of, in exchange for, or in substitution of, any and all such
securities described in clause (a), together with the proceeds thereof (all of
the foregoing being hereinafter collectively called the “Pledged Collateral”).
Upon the execution hereof, (i) any securities, investment properties and general
intangibles now or hereafter included in the Pledged Collateral (hereinafter
called the “Pledged Securities”) shall be accompanied by duly executed transfer
powers, as applicable, in blank and by such other instruments or documents as
Bank or its counsel may reasonably request, and (ii) all other property
comprising part of the Pledged Collateral (so long as an LLC [defined in
Exhibit A] has not opted in to Article 8 of the Uniform Commercial Code in
effect from time to time in the state of Delaware, such property of such LLC
shall exclude certificates evidencing the Pledged Collateral) shall be delivered
to Bank and accompanied by proper instruments of assignment duly executed by
Pledgor and by such other instruments or documents as Bank or its counsel may
reasonably request. At any time after an Event of Default, Bank, at its option,
may have any and all Pledged Securities registered in its name or that of its
nominee, and Pledgor hereby covenants that, upon Bank’s request, Pledgor will
cause the issuer of the Pledged Securities to effect such registration. Each
schedule so delivered shall supersede any prior schedules so delivered.
     TO HAVE AND TO HOLD the Pledged Collateral, together with all rights,
titles, interests, powers, privileges and references pertaining or incidental
thereto, unto Bank, its successors and assigns, forever, subject, however, to
the terms, covenants and conditions hereinafter set forth.
     SECTION 2. Obligations Secured. This Agreement is made, and the security
interest created hereby is granted to Bank, to secure payment and performance in
full of the Obligations.
     SECTION 3. Representations and Warranties. Pledgor hereby represents and
warrants that, except for the lien granted to Bank and other liens permitted by
the terms of Section 5.3 of the Loan Agreement, Pledgor is the legal and
equitable owner of the Pledged Collateral, holds the same free and clear of all
liens, and will make no voluntary assignment, pledge, mortgage, hypothecation or
transfer of the Pledged Collateral during the term of this Agreement; that
Pledgor has good right and legal authority to pledge the Pledged Collateral in
the manner hereby done or contemplated and will defend its title thereto against
the claims of all persons whomsoever and that no consent or approval of any

 

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Governmental Authority, or of any securities exchange, was or is necessary to
the validity of such pledge which has not been obtained; and that the pledge of
the Pledged Collateral is effective to vest in Bank the rights of Pledgor in the
Pledged Collateral as set forth herein.
     SECTION 4. No Options or Rights. Pledgor agrees that, until the Obligations
(other than Cash Management Obligations that continue after the termination of
the Loan Facility) have been satisfied in full, no options or rights in respect
of the Pledged Collateral shall be granted by Pledgor without the prior approval
of Bank.
     SECTION 5. Voting Rights; Distributions; Etc.
     (a) So long as no Event of Default shall have occurred:
     (i) Pledgor shall be entitled to exercise any and all voting and/or
consensual rights and powers accruing to an owner of the Pledged Securities or
any part thereof for any purpose not inconsistent with the terms of this
Agreement or any Loan Document; provided, however, that Pledgor shall not
exercise, or refrain from exercising, any such right or power if any such action
would have a material adverse effect on the value of such Pledged Securities or
any part thereof or on the rights and interests of Bank hereunder with respect
to the Pledged Securities;
     (ii) Pledgor shall be entitled to retain and use any and all cash
distributions paid on Pledged Securities, but any and all stock and/or
liquidating distributions, other distributions in property, return of capital or
other distributions made on or in respect of Pledged Securities, whether
resulting from a subdivision, combination or reclassification of outstanding
capital stock of any corporation the capital stock of which is pledged hereunder
or received in exchange for Pledged Securities or any part thereof or as a
result of any merger, consolidation, acquisition or other exchange of assets or
on the liquidation, whether voluntary or involuntary, of any issuer of the
Pledged Securities, or otherwise, shall be and become part of the Pledged
Collateral pledged hereunder and, if received by Pledgor, shall forthwith be
delivered to Bank to be held as collateral subject to the terms of this
Agreement; and
     (iii) Bank shall execute and deliver to Pledgor, or cause to be executed
and delivered to Pledgor, as appropriate, all such proxies, powers of attorney,
distribution orders and other instruments as Pledgor may reasonably request for
the purpose of enabling Pledgor to exercise the voting and/or consensual rights
and powers which Pledgor is entitled to exercise pursuant to Subparagraph (a)(i)
above and/or to receive the distributions which Pledgor is authorized to retain
pursuant to Subparagraph (a)(ii) above.
     (b) Upon (i) the occurrence and during the continuance of an Event of
Default and (ii) five (5) days prior written notice to the Pledgor, all rights
of Pledgor to exercise the voting and/or consensual rights and powers which
Pledgor is entitled to exercise pursuant to Subparagraph (a)(i) above and/or to
receive the distributions which Pledgor is authorized to receive and retain
pursuant to Subparagraph (a)(ii) above shall cease, and all such rights
thereupon shall become vested in Bank, which shall have the sole and exclusive
right and authority to exercise such voting and/or consensual rights and powers
which Pledgor shall otherwise be entitled to exercise pursuant to Subparagraph
(a)(i) above and/or to receive and retain the distributions which Pledgor shall
otherwise be authorized to retain pursuant to Subparagraph (a)(ii) above. Any
and all money and other property paid over to or received by Bank pursuant to
the provisions of this Paragraph (b) shall be retained by Bank as additional
collateral hereunder and shall be applied in accordance with the provisions of
Section 9 hereof.

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     SECTION 6. Remedies upon Default. If an Event of Default shall have
occurred, Bank may continue to hold the Pledged Collateral for its own account
and may, with prior notice to Pledgor, sell, assign, transfer, endorse and
deliver the whole or, from time to time, any part of the Pledged Collateral at
public or private sale or on any securities exchange, for cash, upon credit or
for other property, for immediate or future delivery, and for such price or
prices and on such terms as Bank, in its sole discretion, shall deem
appropriate. Bank shall be authorized at any 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 Pledged Collateral for their
own account in compliance with the Securities Act of 1933, as amended, and upon
consummation of any such sale, Bank shall have the right to assign, transfer,
endorse and deliver to the purchaser or purchasers thereof the Pledged
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of redemption, stay
and/or appraisal which Pledgor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted. Bank shall
give Pledgor ten (10) days’ written notice (which Pledgor agrees is reasonable
notification within the meaning of Section 9-504(3) of the Uniform Commercial
Code) of Bank’s intention to make any such sale. Such notice, in case of public
sale, shall state the time and place for such sale, and, in the case of sale on
a securities exchange, shall state the exchange at which such sale is to be made
and the day on which the Pledged Collateral, or portion thereof, will first be
offered for sale at such exchange. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places at the
Bank may fix and shall state in the notice or publication (if any) of such sale.
At any such sale, the Pledged Collateral, or portion thereof to be sold, may be
sold in one lot as an entirety or in separate parcels, as Bank may (in its sole
and absolute discretion) determine. Bank shall not be obligated to make any sale
of the Pledged Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of the Pledged Collateral may have been given. Bank
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case sale of all or any part of
the Pledged Collateral is made on credit or for future delivery, the Pledged
Collateral so sold may be retained by Bank until the sale price is paid by the
purchaser or purchasers thereof, but Bank shall not incur any liability in case
any such purchaser or purchasers shall fail to take up and pay for the Pledged
Collateral so sold and, in case of any such failure, such Pledged Collateral may
be sold again upon like notice. At any public sale made pursuant to this
Agreement, Bank may bid for or purchase, free from any right of redemption, stay
and/or appraisal on the part of Pledgor (all said rights being also hereby
waived and released to the extent permitted by law), any part of or all the
Pledged Collateral offered for sale and may make payment on account thereof by
using any claim then due and payable to Bank from Pledgor as a credit against
the purchase price, and Bank may, in compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to Pledgor
thereof. As an alternative to exercising the power of sale herein conferred upon
it, Bank, at its option, may proceed by suit or suits at law or in equity to
foreclose this Agreement and sell the Pledged Collateral or any portion thereof
pursuant to judgment or decree of a court or courts of competent jurisdiction.
Any sale pursuant to this Section 6 shall conform to commercially reasonable
standards as provided in Section 9-504(3) of the Uniform Commercial Code.
     SECTION 7. Bank Appointed Attorney-in-Fact. Pledgor constitutes and
appoints Bank the attorney-in-fact for Pledgor for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which Bank may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest; provided,
that Bank shall only exercise its power pursuant to this Section 7 if, and only
if, an Event of Default has occurred and is continuing. Without limiting the
generality of the foregoing, Bank shall have the right, after the occurrence of
an Event of Default, with full power of substitution, either in Bank’s name or
in the name of Pledgor, to ask for, demand, sue for, collect, receive, receipt
and give acquittance for any and all moneys due or to become due under and by
virtue of any Pledged Collateral, to endorse checks, drafts, orders and

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other instruments for the payment of money payable to Pledgor, representing any
interest or dividend or other distribution payable in respect of the Pledged
Collateral or any part thereof or on account thereof, and to give full discharge
for the same, to settle, compromise, prosecute, or defend any action, claim or
proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer
and make any agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as requiring or
obligating Bank to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by it, or to present or file any claim or
notice, or to take any action with respect to the Pledged Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby, and no action taken by Bank or omitted to be taken with respect
to the Pledged Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of Pledgor or to any claim or action against
Bank.
     SECTION 8. Application of Proceeds of Sale and Cash. The proceeds of any
sale of the whole or any part of the Pledged Collateral, together with any other
moneys held by Bank under the provisions of this Agreement, shall be applied by
Bank as follows:
     First: to the payment of all costs and expenses incurred by Bank in
connection herewith, including but not limited to, all court costs and the fees
and disbursements of counsel for Bank in connection herewith, and to the
repayment of all advances made by Bank hereunder for the account of Pledgor, and
the payment of all costs and expenses paid or incurred by Bank in connection
with the exercise of any right or remedy hereunder; and
     Second: to the payment in full of all other Obligations.
Any amounts remaining after such application shall be promptly remitted to
Pledgor, Pledgor’s successors, legal representatives, or assigns, or as
otherwise provided by law. Bank shall have absolute discretion as to the time of
application of any proceeds in accordance with this Agreement.
     SECTION 9. Specific Performance; Injunctive Relief. Pledgor acknowledges
that a breach of any of the provisions contained in this Agreement may cause
irreparable injury to Bank; that Bank will have no adequate remedy at law with
respect to such breach; and that, as a consequence, Pledgor’s obligations
hereunder shall be specifically enforceable against Pledgor and that Bank shall
be entitled to injunctive relief as a remedy for such breach.
     SECTION 10. Additional Rights and Remedies. The rights and remedies
provided in this Agreement and in all other agreements, instructions or
documents delivered pursuant hereto are cumulative and are in addition to any
rights or remedies provided by law, including, without limitation, the rights
and remedies of a secured party under the Uniform Commercial Code.
     SECTION 11. Further Assurances. Pledgor covenants and agrees that, at
Pledgor’s cost and expense, upon request of Bank, Pledgor shall duly execute and
deliver, or cause to be duly executed and delivered, to Bank such further
instruments and do and cause to be done such further acts as may be reasonably
necessary or proper to carry out more effectively the provisions and purposes of
this Agreement.
     SECTION 12. Indemnity. Pledgor hereby agrees to indemnify Bank and its
officers, directors, agents, and attorneys (each, an “Indemnified Person”)
against, and to hold Bank and all such other Indemnified Persons harmless from
all losses resulting from any representation or warranty made by Pledgor or on
Pledgor’s behalf pursuant to this Agreement having been false when made, or
resulting from Pledgor’s breach of any of the covenants set forth in this
Agreement, which indemnification is in addition to, and not in derogation of,
any statutory, equitable, or common law right or remedy Bank may

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have for breach of representation, warranty, statement or covenant or otherwise
may have under any of the Loan Documents; provided, however, Pledgor shall have
no obligation hereunder to any Indemnified Person with respect to any losses to
the extent arising from the bad faith, gross negligence or willful misconduct of
such Indemnified Person, as determined by a court of competent jurisdiction in a
final, non-appealable judgment. This agreement of indemnity shall be a
continuing agreement and shall survive payment of the Obligations and
termination of this Agreement.
     SECTION 13. Enforcement and Waiver by Bank. Bank shall have the right at
all times to enforce the provisions of this Agreement in strict accordance with
the terms hereof, notwithstanding any conduct or custom on the part of Bank in
refraining from so doing at any time or times. The failure of Bank at any time
or times to enforce its rights under such provisions, strictly in accordance
with the same, shall not be construed as having created a custom in any way or
manner contrary to specific provisions of this Agreement or as having in any way
or manner modified or waived the same. All rights and remedies of Bank are
cumulative and concurrent and the exercise of one right or remedy shall not be
deemed a waiver or release of any other right or remedy.
     SECTION 14. Expenses of Bank. Pledgor will, on demand, reimburse Bank for
all actual and reasonable expenses incurred by Bank in connection with the
preparation, administration, amendment, modification or enforcement of this
Agreement and/or in the collection of any amounts owing from Pledgor or any
other person or entity to Bank under this Agreement and, until so paid, the
amount of such expenses shall be added to and become part of the amount of the
Obligations.
     SECTION 15. Attorneys’ Fees. If at any time or times hereafter Bank employs
counsel to advise or provide other representation with respect to this Agreement
or any other agreement, document or instrument heretofore, now or hereafter
executed by Pledgor and delivered to Bank with respect to the Obligations, or to
commence, defend or intervene, file a petition, complaint, answer, motion or
other pleadings or to take any other action in or with respect to any suit or
proceeding relating to this Agreement or any other agreement, instrument or
document heretofore, now or hereafter executed by Pledgor and delivered to Bank
with respect to the Obligations, or to represent Bank in any litigation with
respect to the affairs of Pledgor, or to enforce any rights of Bank or
obligations of Pledgor or any other Person which may be obligated to Bank by
virtue of this Agreement or any other agreement, document or instrument
heretofore, now or hereafter delivered to Bank by or for the benefit of Pledgor
with respect to the Obligations, or to collect from Pledgor any amounts owing
hereunder, then in any such event, all of the reasonable attorneys’ fees
actually incurred by Bank arising from such services and any actual expenses,
costs and charges relating thereto shall constitute additional obligations of
Pledgor payable on demand and, until so paid, shall be added to and become part
of the Obligations.
     SECTION 16. Notices. All notices and other communications from either party
to the other hereunder shall be given and deemed received when given in
accordance with the terms of the Loan Agreement, and at the addresses specified
in the Loan Agreement.
     SECTION 17. Governing Law. This Agreement shall be deemed a contract made
under the laws of the State of Georgia and shall be governed by and construed in
accordance with the laws of the State of Georgia (excluding its conflict of laws
provisions if such provisions would require application of the laws of another
jurisdiction).
     SECTION 19. BINDING ARBITRATION; PRESERVATION OF REMEDIES.
     (a) Binding Arbitration. Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or controversy
between parties hereto arising out of or relating to this Agreement shall be
resolved by binding arbitration conducted under and governed by the

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Commercial Financial Disputes Arbitration Rules (the “Arbitration Rules”) of the
American Arbitration Association (the “AAA”) and the Federal Arbitration Act.
Disputes may include, without limitation, tort claims, counterclaims, a dispute
as to whether a matter is subject to arbitration, claims brought as class
actions, or claims arising from documents executed in the future. A judgment
upon the award may be entered in any court having jurisdiction.
     (b) Special Rules. All arbitration hearings shall be conducted in the city
named in the address of Bank first stated above. A hearing shall begin within
90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein.
     (c) Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment.
     (d) Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY
TRIAL WITH REGARD TO A DISPUTE.
     SECTION 19. Binding Effect, Assignment. This Agreement shall inure to the
benefit of, and shall be binding upon, the respective successors and permitted
assigns of the parties hereto. Pledgor does not have any right to assign any of
its rights or obligations hereunder without the prior written consent of Bank.
     SECTION 20. Entire Agreement, Amendments. This Agreement and the documents
executed and delivered pursuant hereto, constitute the entire agreement between
the parties, and may be amended only by a writing signed on behalf of each
party.
     SECTION 21. Severability. If any provision of this Agreement shall be held
invalid under any applicable laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable
     SECTION 22. Headings. The section and paragraph headings hereof are
inserted for convenience of reference only, and shall not alter, define, or be
used in construing the text of such sections and paragraphs.
     SECTION 23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.

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     SECTION 24. Seal. This Agreement is intended to take effect as an
instrument under seal.
     SECTION 25. Termination. Upon indefeasible payment in full of all the
principal, interest and fees due with respect to the Loan Facility and
termination of the Loan Facility, this Agreement shall terminate and Bank agrees
to promptly return any and all stock or membership interest certificates in
Bank’s possession, as applicable, to Pledgor. Upon termination of this Agreement
in accordance with its terms, the Bank agrees to take such actions as any
Pledgor may reasonably request, and at the sole cost and expense of such
Pledgor, to evidence the termination of this Agreement.
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     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be executed effective as of the date first above written.

            ASSURANCEAMERICA CORPORATION
      By:   /s/ Mark H. Hain         Name:   MARK H. HAIN         Title:   EVP 
    [SEAL]
        WACHOVIA BANK, NATIONAL ASSOCIATION
      By:           Name:           Title:      

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     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be executed effective as of the date first above written.

            ASSURANCEAMERICA CORPORATION
      By:           Name:           Title:           [SEAL]
        WACHOVIA BANK, NATIONAL ASSOCIATION
      By:   /s/ Elaine Eaton         Name:   Elaine Eaton        Title:   SVP   

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EXHIBIT A
PLEDGED SECURITIES
One hundred percent (100%) of the Membership Interests of each of the following
(collectively, the “LLCs”): Trustway Insurance Agencies, LLC, a Delaware limited
liability company and AssuranceAmerica Managing General Agency LLC, a Delaware
limited liability company (including but not limited to all rights of Pledgor as
a member of the LLCs whether arising under applicable law or any agreement of
the LLCs with Pledgor as a member of the LLCs, including but not limited to the
Operating Agreement of the LLCs), the proceeds thereof and any earnings thereon,
and any cash, options, instruments, shares or securities, dividends,
distributions, rights or other property at any time and from time to time
receivable or otherwise distributable in respect of, in exchange for, or in
substitution of, any and all such securities, together with the proceeds
thereof.

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