Mr. Kluener was required to make a principal payment of $500,000
to Fifth Third, and his remaining debt of $11,700,000 was
consolidated into one note that required monthly interest
payments at the prime rate and principal payments of $500,000 on
each of December 31, 1990, and June 30, 1991, with the balance
due on September 30, 1991. APECO's debt was consolidated into
one $4,785,000 note requiring monthly interest payments at the
prime rate and was due on September 30, 1991. Mr. Kluener
guaranteed APECO's note.
Mr. Kluener pledged the assets in his agency account to
secure the renegotiated notes, and the pledge agreement provided
that Mr. Kluener could not withdraw more than $100,000 of
principal per year from the account without the bank's
permission, except that withdrawals for the purpose of paying the
bank interest or principal on his or APECO's notes were not
restricted. Prior to the execution of the pledge agreement,
there were no restrictions on Mr. Kluener's ability to use the
assets in the agency account. Additionally, Mr. Kluener pledged
his APECO stock and certain interests connected with his real
estate investments to secure the notes. Pursuant to the pledge
agreement, the net distributions that he received with respect to
his APECO stock were also to be applied to pay his obligations to
Fifth Third.
Effective June 25, 1990, Mr. Kluener, as sole shareholder of
APECO, reduced the number of directors of APECO to one, and
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