(1)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of this 31st
day of December, 1999, by and between BEACHSIDE HOLDING, LLC, a Georgia limited
liability company (the "Pledgor"), and Lahaina Acquisitions, Inc., a Colorado
corporation, and ACCENT MORTGAGE SERVICES, INC., a Georgia corporation
(collectively, the "Pledgee").
WITNESSETH
WHEREAS, NP Holding, LLC on even date herewith has delivered a Non-Recourse
Purchase Money Note payable to Pledgee in the original principal amount of
$3,000,000 (the "Note"); and
WHEREAS, to secure the payment and performance of all obligations of NP
Holding, LLC under the Note, the Pledgor wishes to pledge to the Pledgee all of
its right, title and interest in 660,000 shares of common stock of Lahaina
Acquisitions, Inc. currently owned by Pledgor (the "Stock");
NOW, THEREFORE, the parties hereby agree as follows:
1. Warranty. Pledgor hereby represents and warrants to the Pledgee that except
for the security interest created hereby, the Pledgor owns the stock free and
clear of all liens, charges and encumbrances, that the Stock is duly issued,
fully paid and nonassessable, and that Pledgor has the unencumbered right to
pledge its Stock.
2. Security Interest. Pledgor hereby unconditionally grants and assigns to the
Pledgee, its successors and assigns, a continuing security interest in and to
the Stock. The Pledgor has delivered to and deposited with the Pledgee herewith
all of its right, title and interest in and to the Stock as security for the
payment and performance of all obligations of Pledgor to the Pledgee under the
Note, or any extension, renewal, amendment or modification of the foregoing,
however created, acquired, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
Beneficial ownership of the Stock, including, without limitation, all voting,
consensual and dividend rights, shall remain in the Pledgor until the occurrence
of an Event of Default (as defined below) and until the Pledgee shall notify
Pledgor of the Pledgee's exercise of voting rights to the Stock pursuant to
Section 8 of this Agreement. The certificates representing the Stock and Stock
powers endorsed in blank by Pledgor shall be deposited by Pledgor to the
Brokerage Account (defined below) as provided in Section 10 hereof.
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3. Additional Shares. In the event that, during the term of this Agreement:
(a) any stock dividend, stock split, reclassification, readjustment or
other change is declared or made in the capital structure of Pledgee,
all new, substituted and additional shares, or other securities,
issued by reason of any such change and received by Pledgor or to
which Pledgor shall be entitled shall be immediately delivered to the
Pledgee, together with stock powers endorsed in blank by Pledgor, and
shall thereupon constitute Stock to be held by the Pledgee under the
terms of this Agreement; and
(b) subscriptions, warrants or any other rights or options shall be
issued in connection with the Stock, all new stock or other securities
acquired through such subscriptions, warrants, rights or options by
Pledgor shall be immediately delivered to the Pledgee and shall
thereupon constitute Stock to be held by the Pledgee under the terms
of this Agreement.
4. Default. In the event of a default under the terms of the Note or a default
under the terms of this Agreement (any of such occurrences being referred to as
an "Event of Default"), after ten (10) days' written notice to Pledgor, Pledgee
shall have the right to take title to the Stock and shall deposit the Stock as
treasury stock of Lahaina Acquisitions, Inc. The value of such Stock shall be
determined by the closing price of shares of common stock of Lahaina
Acquisitions, Inc. as quoted on the OTC Bulletin Board on the date the title of
such shares is transferred to Pledgee. In the event the value of shares is not
sufficient to pay such expenses, interest, principal, obligations and damages,
the Pledgor shall not be liable to the Pledgee for any such deficiency.
5. Expenses. Each party shall be responsible for the payment of their expenses
incurred in connection with this Agreement.
6. Return of Stock to Pledgor. Upon payment in full of all principal and
interest on the Note and full performance by the Pledgor of all covenants,
undertakings and obligations under the Note, the Pledgee shall immediately
return to the Pledgor all of the then remaining Stock and all rights received by
the Pledgee as agent for the Pledgor as a result of its possessory interest in
the Stock.
7. Pledgor's Obligations Absolute. The obligations of the Pledgor under this
Agreement shall be direct and immediate and not conditional or contingent upon
the pursuit of any remedies against any other person, nor against other security
or liens available to the Pledgee or its successors, assigns or agents. The
Pledgor hereby waives any right to require that an action be brought against any
other person or to require that resort be had to any security or to any balance
of any deposit account or credit on the books of the Pledgee in favor of any
other Person prior to any exercise of rights or remedies hereunder, or to
require resort to rights or remedies of the Pledgee in connection with the Note.
(3)
8. Voting Rights.
(a) For so long as the Note remains unpaid, after an Event of Default,
(i) the Pledgee may, upon five (5) days' prior written notice to the
Pledgor of its intention to do so, exercise all voting rights, and all
other ownership or consensual rights of the Stock, but under no
circumstances is the Pledgee obligated by the terms of this Agreement
to exercise such rights, and (ii) Pledgor hereby appoints the Pledgee,
which appointment shall be effective on the fifth day following the
giving of notice by the Pledgee as provided in the foregoing Section
8(a)(i), Pledgor's true and lawful attorney-in-fact and IRREVOCABLE
PROXY to vote the Stock in any manner the Pledgee deems advisable for
or against all matters submitted or which may be submitted to a vote
of shareholders. The power-of-attorney granted hereby is coupled with
an interest and shall be irrevocable.
(b) For so long as Pledgor shall have the right to vote the Stock,
Pledgor covenants and agrees that it will not, without the prior
written consent of the Pledgee vote or take any consensual action with
respect to the Stock which would constitute a default under this
Agreement.
9. Dividends. The Pledgor shall be entitled to receive and retain any and all
dividends and other payments in respect of the Stock provided, however, that any
and all:
(a) dividends paid or payable other than in cash, and instruments and
other property received or receivable in respect the Stock;
(b) dividends and other distributions paid or payable in cash in
respect of any Stock in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and
(c) cash paid or payable in redemption of, or in exchange for, any
Stock, shall be delivered to the Pledgee to hold as collateral and
shall, if received by the Pledgor, be received in trust for the
benefit of the Pledgee and be segregated from the other property or
funds of the Pledgor (with any necessary endorsement).
10. Release of Stock.
(a) Establishment of New Brokerage Account to Hold Stock.
(i) Pledgor shall on or before February 1, 2000, establish with
Xxxxxx Xxxxxxx Xxxx Xxxxxx ("Xxxxxx Xxxxxxx") a new brokerage in
the name of Pledgor (the "Brokerage Account"), to which Pledgor
shall deposit the Stock. Pledgor shall at all times prior to
December 31, 2000, have the right to authorize and direct Xxxxxx
Xxxxxxx to sell the Stock, or any part thereof, in accordance
with Section 10(c)(i) and/or (ii) below, without any prior notice
to, or prior consent or approval from, Pledgee or Lahaina
Acquisitions, Inc.; provided, however, that concurrently with the
opening of the Brokerage Account, Pledgor shall deliver to
(4)
Xxxxxx Xxxxxxx (with a copy to Pledgee) irrevocable written
instructions that all proceeds from the sale of the Stock or any
part thereof, less the commissions of Xxxxxx Xxxxxxx attributable
to such sale (the net amount of such sale or sales are
collectively referred to as the "Net Sales Proceeds"), shall be
delivered directly by Xxxxxx Xxxxxxx to the Bank (as defined
below) for immediate deposit to the Bank Account (as defined
below).
(ii) Pledgor shall cause Xxxxxx Xxxxxxx to deliver to Pledgee all
shares then on deposit in the Brokerage Account as follows: (A)
on December 31, 2000 (unless a Dispute (as defined below) has
occurred and is outstanding on such date), or (B) upon Pledgor's
receipt of written notice from Pledgee that an Event of Default
(as defined in the Note) has occurred and is continuing, so long
as Pledgee is entitled to exercise its remedies under the Note as
a consequence thereof under the provisions of Section 2 of the
Note.
(iii) Pledgor agrees to deliver promptly to Pledgee copies of all
monthly statements received from Xxxxxx Xxxxxxx pertaining to the
Brokerage Account and copies of trade confirmations received from
Xxxxxx Xxxxxxx pertaining to the Stock.
(b) Establishment of New Joint Bank Account to Receive Net Sale
Proceeds. Pledgor and Pledgee shall, concurrently with or prior to the
opening of the Brokerage Account, open a joint bank account (the "Bank
Account") with Bank of America (the "Bank"), to which shall be
deposited from time to time Net Sale Proceeds as contemplated under
Section 10(a) above. The parties hereto agree to disburse, or cause to
be disbursed, all funds deposited to the Bank Account as provided in
Section 10(d) below, in each instance within three (3) business days
after funds are deposited to Bank Account and Pledgor notifies Pledgee
of such deposit. All such disbursements of funds from the Bank Account
shall require the prior joint signatures of the authorized
representatives of Pledgor and Pledgee, it being specifically agreed
that, for the purpose, the authorized representative of Pledgor shall
be Xxxxxx X. Xxxxxxxx and authorized representative of Pledgee shall
be Xxxxx Xxxxxxxx. All costs and expenses incurred to open or maintain
the Bank Account shall be paid when due by Pledgee (from funds other
than Net Sale Proceeds).
(c) Conditions for the Sale of the Stock from the Brokerage Account.
Pledgor and Pledgee agree that Pledgor shall be entitled to authorize
and direct Xxxxxx Xxxxxxx to sell the Stock (or any part thereof) from
the Brokerage Account at any time and from time to time prior to
December 31, 2000, upon the occurrence of any of the following events:
(i) In the event that the liabilities set forth on Exhibit A
attached hereto are not paid by Pledgee or Lahaina Acquisitions,
Inc., in accordance with Section 6(d) and Exhibit C of the
Purchase Agreement, then Pledgor may sell that number of shares
of Stock from the Brokerage Account that will generate Net Sale
Proceeds up to an amount equal to the unpaid amount of such
liabilities plus
(5)
a fee to be retained by Pledgor equal to 40% of such liabilities,
provided that such Net Sale Proceeds (other than the 40% fee) are
used by Pledgor to pay any such unpaid liabilities (a "Section
10(c)(i) Sale"); or
(ii) In the event that the Net Sale Proceeds, calculated on a per
share basis, equals or exceeds $4.00 per share (a "Section
10(c)(ii) Sale").
In addition, Pledgor shall deliver instructions within three (3) business
days to Xxxxxx Xxxxxxx to release the Stock from the Brokerage Account and
deliver such shares of Stock to Pledgor upon the occurrence of an Event of
Default under the Note as described in Section 10(a)(ii)(B) of this Agreement.
Provided, however, that notwithstanding the foregoing provisions of this
Section 10(c), the parties agree that the sale of the Stock from the Brokerage
Account may only be made in increments of 1,000 shares and not more than 5,000
shares per day shall be sold for payment of the unpaid liabilities referenced in
Section 10(c)(i) above.
(d) Distribution of Net Sale Proceeds from the Bank Account.
(i) In the event of a Section 10(c)(ii) Sale, the parties agree
that the Net Sale Proceeds deposited to the Bank Account as a
result thereof shall be distributed to Pledgor, and Pledgor shall
use such proceeds to pay liabilities in accordance with Section
6(d) and/or Exhibit C of the Purchase Agreement and to cover the
40% fee to which Pledgor is entitled to receive under the
provisions of Section 10(c)(i) above.
(ii) In the event of a Section 10(c)(ii) Sale, the parties agree
that the Net Sale Proceeds deposited to the Bank Account as a
result thereof shall be distributed to Pledgee and Pledgor as
follows: Pledgee shall be entitled to receive the first four
dollars ($4.00) of Net Sale Proceeds derived from the sale of
each such share of Stock, and Pledgor shall be entitled to
receive the amount of Net Sale Proceeds in excess of four dollars
($4.00) for each share of Stock sold (and in connection
therewith, it is agreed that the amount so paid to Pledgee under
the terms of this Agreement shall constitute a partial payment by
NP Holding, LLC under the Note).
(iii) Pledgor shall furnish Pledgee within five (5) business days
from the receipt of proceeds as a result of a Section 10(c)(ii)
Sales with sufficient evidence of the payment in full of such
liabilities. Pledgor hereby agrees to indemnify, defend and hold
Pledgee harmless from and against any and all claims, losses,
liabilities, costs and expenses (including attorneys' fees and
expenses) arising out of a breach by Pledgor of its obligations
under the provisions of Section 10(d)(i).
(iv) Pledgee hereby agrees to indemnify, defend and hold Pledgor
harmless from and against any and all claims, losses,
liabilities, costs and
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expenses (including attorneys' fees and expenses) arising out of
a breach by Pledgee of its obligations under the provisions of
Section 10(d)(i).
(e) Claims. If either party disputes the occurrence of any of the
conditions set forth in Section 10(a)(ii) or (d) of this Agreement (a
"Dispute"), the disputing party shall deliver a written notice of a
Dispute (a "Notice of Dispute") to the other party within three (3)
business days of the deposit of funds from the sale of the Stock into
the Banks Account. Such Notice of Dispute shall specify the nature of
any Dispute, the claims of each party to the Dispute and shall specify
the amount and nature of any damages, if any, sought to be recovered
as a result of any alleged claim. The parties hereby agree and
acknowledge that all Disputes shall be resolved between the parties.
If the parties are unable to resolve such Dispute within one (1)
business day from the receipt of a Notice of Dispute then the parties
hereby agree that the Dispute shall be resolved by the decision of an
independent third party selected by the parties (the "Arbitrator") in
the Arbitrator's sole discretion within five (5) business days from
the date of the Notice of Dispute. In the event that the parties are
unable to agree upon an Arbitrator, Pledgor and Pledgee hereby agree
that Xxxx XxXxxxx, Esq. shall resolve the Dispute as the Arbitrator.
The parties hereby agree that the decision by the Arbitrator shall
final and binding on all parties hereto. Pledgor and the Pledgee may
enforce any final determination in any state or federal court located
in Atlanta, Georgia. The parties hereby agree to issue joint written
instructions to the Bank for the disbursement of Net Sale Proceeds
from the Bank Account in a dispute under Section 10(d) hereof,
promptly upon the resolution of any Dispute by the Arbitrator
hereunder. If there is no Dispute between the parties under this
Agreement with respect to the disbursement of Funds from the Bank
Account, the parties hereby agree to issue joint written instructions
to the Bank for the disbursement thereof within three (3) business
days after the date such funds are deposited to the Bank Account and
Pledgee receives notice thereof from Pledgor.
11. Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given when (a) delivered personally, (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, (c) one (1) business day
after delivery by a recognized express overnight courier service or (d) three
(3) days after being mailed by certified mail, return receipt requested, to the
parties at the following addresses:
If to the Pledgor: Xx. Xxxxxx X. Xxxxxxxx
Beachside Holding, LLC
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Facsimile Number:
(7)
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxxxx & Green
Suite 1400
The Lenox Building
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
If to the Pledgee: L. Xxxxx Xxxxxxx
Lahaina Acquisitions, Inc.
Suite 220
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile Number:
with a copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxx Xxxx LLP
Suite 2100
Peachtree Center South Tower
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
12. Binding Agreement. The provisions of this Agreement shall be construed and
interpreted, and all rights and obligations of the parties hereto determined, in
accordance with the laws of the State of Georgia. This Agreement, together with
all documents referred to herein including the Escrow Agreement, constitutes the
entire Agreement between the Pledgor and the Pledgee with respect to the matters
addressed herein and may not be modified except by a writing executed by the
Pledgee and delivered by the Pledgee to the Pledgor. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original but
all of which, taken together, shall constitute one and the same instrument.
13. Severability. If any paragraph or part thereof shall for any reason be held
or adjudged to be invalid, illegal or unenforceable by any court of competent
jurisdiction, such paragraph or part thereof so adjudicated invalid, illegal or
unenforceable shall be deemed separate, distinct and independent, and the
remainder of this Agreement shall remain in full force and effect and shall not
be affected by such holding or adjudication.
14. Assignment, Binding Effect. Except with the prior written consent of the
Pledgee, no assignment or transfer by the Pledgor of the Pledgor's rights and
obligations under this Agreement may be made. In addition, Pledgee may not
assign its rights under this Agreement to a third party except with the prior
written consent of the Pledgor, which shall not be unreasonably withheld. This
Agreement shall be binding upon the parties to this Agreement and their
respective successors and assigns, shall inure to the benefit of the parties to
this Agreement
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and their respective permitted successors and assigns and any reference to a
party to this Agreement shall also be a reference to a successor or assign.
15. Counterparts. This Agreement may be executed in one or more counterparts and
each counterpart shall be deemed to be an original.
[Remainder of page intentionally left blank]
(9)
IN WITNESS WHEREOF, the undersigned have executed this Stock Pledge
Agreement as of the day and year first above written.
PLEDGOR:
BEACHSIDE HOLDING, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: Manager
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PLEDGEE:
LAHAINA ACQUISITIONS, INC.
By: /s/ L. Xxxxx Xxxxxxx
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Name: L. Xxxxx Xxxxxxx
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Title: President
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ACCENT MORTGAGE SERVICE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Executive V.P. & Secretary
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