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EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
THIS IS A STOCK PLEDGE AGREEMENT (this "Agreement") by and between
Mongoose Investments, LLC and ▇▇▇▇ ▇▇▇▇▇ (collectively and individually
referred to as the "Pledgor"), and GCA Strategic Investment Fund Limited (the
"Pledgee"), and dated effective as of August 18, 1999, and by which the parties
to this Agreement, for good and valuable consideration, hereby agree as
follows:
1. Background Information. The Pledgor is the owner of shares of
stock described in Schedule I attached hereto and incorporated herein by
reference (the "Pledged Shares"). The Pledgor is a shareholder of Lahaina
Acquisitions, Inc. ("Lahaina") which has delivered Pledgee a convertible note
of even date herewith in the principal amount of $500,000.00 (the "Note").
Pledgor will benefit from the pledge of the Pledged Collateral (as defined
below) in order to induce Pledgor to purchase the Note from Lahaina.
2. Pledge. The Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee a security interest in, the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledge Shares and all proceeds
of any of the foregoing (collectively, the "Pledged Collateral").
3. Security for Obligations. The Pledgor's security interest in the
Pledged Collateral secures the payment and performance of all obligations of
Lahaina now or hereafter existing under the Note, whether for principal,
interest, fees, expenses or otherwise, and all obligations of the Pledgor now
or hereafter existing under this Agreement and any and all extensions or
renewals of the foregoing in whole or in part, whether direct or indirect,
absolute or contingent, individual, joint or several, now due or to become due,
and whether owed under the foregoing as a drawer, maker, endorser, guarantor,
surety or otherwise to the Pledgee by the Pledgor (all such obligations being
the "Obligations").
4. Delivery of Pledged Collateral; Further Assurances. All
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered to and held by or on behalf of the Pledgee pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to the Pledgee. The Pledgee shall have the right, at
any time in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Pledgee or any of its nominees any or all of the
Pledged Collateral, subject only to the revocable rights specified in section
5(a) of this Agreement. In addition, the Pledgee shall have the right at any
time to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.
The Pledgor agrees that at any time and from time to time, at the expense of
the Pledgor, the Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Pledgee may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
the Pledgee to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
5. Voting Rights; Dividends; Etc.
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(a) General. So long as no Event of Default (as defined below) or
event which, with the giving of notice or the lapse of time, or both, would
become an Event of Default shall have occurred and be continuing:
(i) Voting Rights. The Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Note; provided, however, that the Pledgor shall not
exercise or refrain from exercising any such right if, in the Pledgee's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof, and provided, further, that the Pledgor
shall give the Pledgee at least five (5) days' written notice of the manner in
which the Pledgor intends to exercise, or the reasons for refraining from
exercising, any such right.
(ii) Dividends. The Pledgor shall be entitled to receive and
retain any and all dividends and other payments in respect of the Pledged
Collateral; 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 of any Pledged
Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral 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 Pledged Collateral, shall be, and shall be forthwith delivered to the
Pledgee to hold as, Pledged 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).
(iii) Proxies and Other Instruments. The Pledgee shall execute
and deliver (or cause to be executed and delivered) to the Pledgor all such
proxies and other instruments as the Pledgor may reasonably request for the
purposes of enabling the Pledgor to exercise the voting and other rights which
it is entitled to exercise pursuant to section 5(a)(i) of this Agreement and to
receive the dividends or other payments which it is authorized to receive and
retain pursuant to section 5(a)(ii) of this Agreement.
(b) Upon Default. Upon the occurrence and during the continuance of
an Event of Default or an event which, with the giving of notice or the lapse
of time, or both, would become an Event of Default, all rights of the Pledgor
to exercise the voting and other consensual rights which the Pledgor would
otherwise be entitled to exercise pursuant to section 5(a)(i) of this Agreement
and to receive the dividends and interest payments which the Pledgor would
otherwise be authorized to receive and retain pursuant to section 5(a)(ii) of
this Agreement shall cease, and all such rights shall thereupon become vested
in the Pledgee who shall thereupon have the sole right to exercise such
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voting and other consensual rights and to receive and hold as Pledged
Collateral such dividends and interest payments.
6. No Transfers or Liens; Substitute Shares.
(a) No Transfer or Liens. The Pledgor agrees that the Pledgor
will not sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral, or create or permit to exist any lien, security
interest, or other charge or encumbrance upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement.
(b) Substitute Shares. The Pledgor agrees that it will (i)
cause the issuer of the Pledged Shares not to issue any stock or other
securities in substitution for the Pledged Shares issued by such issuer, except
to the Pledgor, and (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any such substitute shares of stock or other
securities of the issuer of the Pledged Shares.
7. Pledgee May Perform; Pledgee Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Pledgee as the Pledgor's attorney-in-fact, with
full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Pledgee's discretion to take any
action and to execute any instrument which the Pledgee deems necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable to the
Pledgor representing any dividend, interest payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full
discharge for the same. If the Pledgor fails to perform any agreement contained
herein, the Pledgee may itself perform, or cause performance of, such
agreement.
8. Reasonable Care. The Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in
its possession if the Pledged Collateral is accorded treatment substantially
equal to that which the Pledgee accords its own property, it being understood
that the Pledgee shall not have any responsibility for ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the Pledgee
has or is deemed to have knowledge of such matters, or taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral.
9. Events of Default; Remedies upon Default.
(a) Events of Default. The occurrence of any one or more of the
following events shall constitute a default (an "Event of Default") by the
Pledgor:
(i) the Pledgor fails to pay any Obligation when due and
payable or declared due and payable and such failure shall continue for five
(5) business days; or
(ii) the Pledgor fails or neglects to perform, keep or
observe any term, provision, condition, covenant or agreement contained in this
Agreement (other than those referred to in section 9(a)(i) of this Agreement)
or in any other instrument or document delivered pursuant hereto or in
connection herewith, including without limitation the Note of even date
herewith from Pledgor
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to Pledgee, and such failure or neglect shall have continued for a period of
ten (10) business days after receipt of written notice from the Pledgee of such
failure or neglect; or
(iii) the Pledgor makes or submits any false, untrue,
incomplete or misleading representation, warranty, schedule, report or other
communication to the Pledgee in connection with this Agreement or the Note or
any transaction relating hereto or thereto; or
(iv) the Pledgor becomes insolvent or generally fails to
pay, or admits in writing the Pledgor's inability to pay, the Pledgor's debts
as they mature; or
(v) there occurs an Event of Default under the Note; or
(vi) the Pledgor makes a general assignment for the
benefit of creditors, convenes or causes to be convened a meeting of the
Pledgor's creditors or the Pledgor's principal creditors, or takes advantage of
the insolvency laws of any state, or a petition in bankruptcy or an arrangement
or reorganization under the Federal Bankruptcy Code is filed by or against the
Pledgor.
(b) Remedies Upon Default. If any Event of Default shall have
occurred and be continuing:
(i) Sale. The Pledgee may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party on default under the applicable Uniform Commercial Code in effect at that
time, and the Pledgee may also, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Pledgee's
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Pledgee may deem commercially
reasonable. The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to the Pledgor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Pledgee shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. The Pledgee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(ii) Proceeds. Any cash held by the Pledgee as Pledged
Collateral and all cash proceeds received by the Pledgee in respect of any sale
of, collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Pledgee, be held by the Pledgee as
collateral for, or then or at any time thereafter applied (after payment of any
amounts payable to the Pledgee pursuant to section 10 of this Agreement) in
whole or in part by the Pledgee against, all or any part of the Obligations in
such order as the Pledgee shall elect. Any surplus of such cash or cash
proceeds held by the Pledgee and remaining after payment in full of all the
Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
10. Expenses. The Pledgor will upon demand pay to the Pledgee the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and
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agents, which the Pledgee may incur after the date hereof in connection with
the administration of this Agreement, the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, the exercise or enforcement of any of the rights of the Pledgee
hereunder, or the failure by the Pledgor to perform or observe any of the
provisions hereof.
11. Continuing Security Interest; Transfer of Note. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
remain in full force and effect until payment in full of the Obligations, be
binding upon the Pledgor, and the Pledgor's successors and assigns, and inure
to the benefit of the Pledgee and the Pledgee's successors, transferees and
assigns. Without limiting the generality of the foregoing, the Pledgee may
assign or otherwise transfer the Note to any other person or entity, and such
other person or entity shall thereupon become vested with all the benefits in
respect thereof granted to the Pledgee herein or otherwise. Upon the payment in
full of the Obligations, the Pledgor shall be entitled to the return, upon the
Pledgor's request and at the Pledgor's expense, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
12. Indemnification. The Pledgor hereby agrees that the Pledgor shall
indemnify and hold the Pledgee harmless from and against any and all costs,
expenses, claims, causes of action, damages, injury, or harm suffered by the
Pledgee or asserted against the Pledgee relating to Pledgee's performance under
this Agreement. In addition, the Pledgor hereby acknowledges and affirms that
the Pledgee shall not be obligated to incur any costs or expenses whatsoever in
connection with or arising out of or relating to the Pledgee's performance
under this Agreement, and the Pledgee, so long as it acts diligently in good
faith, shall not have any liability whatsoever to the Pledgor for any act,
failure, refusal or omission to act under this Agreement.
13. Termination. Upon the final payment of all Obligations, this
Agreement shall terminate and the Pledgee shall transfer and deliver the
Pledged Collateral and the accompanying stock transfer powers to the Pledgor or
to whosoever shall be lawfully entitled to the same marked
"Terminated--Underlying Obligations Satisfied" and dated and signed by the
Pledgee.
14. Miscellaneous.
(a) Survival. All representations, warranties, covenants and
agreements herein contained shall survive the execution and delivery of this
Agreement. The remedies of a party for breaches of representations, warranties,
covenants or agreements shall not be affected by any investigation by, or
knowledge of, the non-breaching party prior to the date of this Agreement. Each
party agrees to indemnify, defend and hold the other harmless for all losses,
costs and expenses (including without limitation reasonable attorney's fees)
arising out of its breach of any representation, warranty, covenant or
agreement made by him or it in this Agreement.
(b) Notices. All notices and other communications under this
Agreement shall be made in writing signed by the party making the same, and
shall be deemed given on the date of personal delivery or if mailed by
certified or registered United States mail, postage prepaid, on the date mailed
(and shall be deemed received on the date of personal delivery or, if so
mailed, on the third business day after so mailed), to:
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If to the Pledgor, to:
Lahaina Acquisitions, Inc.
ATTN:
Telecopy:
With a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Pledgee, to:
GCA Strategic Investment Fund Limited
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Global Capital Advisors, Ltd.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or at such other address as either party may specify by
written notice to the other party in accordance with this section 14(b).
(c) Further Assurances. Each party agrees to do such further
acts, and to execute and deliver such additional conveyances, assignments,
agreements and instruments as the other may at any time request in connection
with the administration and enforcement of this Agreement or relative to the
Pledged Collateral or any part thereof, or in order better to assure and
confirm to the requesting party his or its rights, powers and remedies under
this Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforce able under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining provisions.
(e) Time of the Essence. Time is of the essence of each and
every provision of this
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Agreement.
(f) Assignment; Successors in Interest.
(i) Assignment. 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.
(ii) Binding Nature. 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 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.
(g) Number; Gender. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
(h) Captions; Certain Definitions. Titles and captions of or
in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision of this Agreement.
(i) Controlling Law; Integration; Amendment; Waiver. This
Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of Georgia without regard to those relating to
conflicts of laws. This Agreement supersedes all prior negotiations, agreements
and understandings between the parties with respect to the subject matter
hereof, constitutes the entire agreement between the parties with respect to
the subject matter hereof, and may not be altered or amended except in writing
signed by the Pledgor and the Pledgee. The failure of either party to this
Agreement at any time or times to require performance of any provisions of this
Agreement shall in no manner affect the right to enforce the same. No waiver by
either party to this Agreement of any condition, or of the breach of any term,
provision, warranty, representation, agreement or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed or construed as a further or continuing waiver of any such condition
or breach or a waiver of any other condition or of the breach of any other
term, provision, warranty, representation, agreement or covenant contained in
this Agreement.
(j) Counterparts. This Agreement may be executed by each
party upon a separate copy, and in such case one counterpart of this Agreement
shall consist of enough of such copies to reflect the signatures of all of the
parties to this Agreement. This Agreement shall become effective when one or
more counterparts have been signed by each of the parties to this Agreement and
delivered to the other party to this Agreement. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement or the terms of this
Agreement to provide or account for more than one of such counterparts.
[EXECUTION PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed by their respective authorized officers, as of
the date first above written.
MONGOOSE INVESTMENTS, LLC
By:
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
Address:
--------------------------------
Fax:
-----------------------
Tel.:
-----------------------
▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇
GCA STRATEGIC INVESTMENT FUND, LIMITED
By:
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
Address: c/o ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
Tel.: ▇▇▇ ▇▇▇-▇▇▇▇
Pledge Agreement -- $500K
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SCHEDULE I
Four Hundred and Fifteen Thousand (415,000) shares of common stock, no par
value, of Lahaina Acquisitions, Inc., represented as of the date hereof by
Certificate No. _____.
