<PAGE>
(1)
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K/A
Amendment No. 1 to
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of earliest event reported: January 18, 2000
LAHAINA ACQUISITIONS, INC.
(Exact name of Registrant as specified in its Charter)
Commission File No. 0-27480
COLORADO 84-1325695
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5895 Windward Parkway, Suite 220
Alpharetta, Georgia 30005
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(Address of Principal Executive Office, including Zip Code)
(770) 754-6140
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Copies to:
Robert E. Altenbach, Esq.
Kutak Rock LLP
Suite 2100
225 Peachtree St., N.E.
Atlanta, Georgia 30303
(404) 222-4600
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<PAGE>
(2)
This is Amendment No. 1 to the Registrant's current report on Form 8-K that
was originally filed with the commission on January 18, 2000. The purpose of
this Amendment No. 1 is to clarify certain information regarding the sale by the
Registrant and its wholly-owned subsidiary, Accent Mortgage Services, Inc., of
all of the outstanding capital stock of Beachside Commons I, Inc. ("Beachside")
to NP Holding, Inc. (the "Buyer").
Item 2. Acquisition or Disposition of Assets.
On December 31, 1999, Lahaina Acquisitions, Inc. (the "Registrant") and
Accent Mortgage Services, Inc. ("Accent"), a wholly owned subsidiary of the
Registrant, sold all of the outstanding capital stock of Beachside Commons I,
Inc. ("Beachside") to NP Holding, Inc. (the "Buyer"). On December 14, 1998, the
Registrant originally acquired all of the issued and outstanding capital stock
of Beachside which was reported by the Registrant on Form 8-K dated December 28,
1998. Beachside is the owner of a commercial real estate development located in
Fernandina Beach, Florida in the resort area of Amelia Island located in
northeast Florida. The property owned by Beachside includes two (2) fully
developed ocean view structures and two ocean front sites for future
development. The net realizable value of the property owned by Beachside has
been determined by the Registrant at this time to be $3,650,000.
The sole member of the Buyer is Beachside Commons Holding, LLC, a
recently formed limited liability company. Beachside Commons Holding, LLC is
also the sole member of Beachside Holding, LLC which has pledged shares of the
Registrant under the Pledge Agreement (as defined below). Beachside Commons
Holding, LLC is comprised of eight members who received gifts of stock of the
Registrant from Mongoose Investments, LLC, which originally sold all of the
issued and outstanding capital stock of Beachside to the Registrant on December
14, 1998. Each of the members of Beachside Commons Holding, LLC contributed all
of their stock of the Registrant in exchange for a membership interest in
Beachside Commons Holding, LLC. On the date the Registrant originally acquired
all of the issued and outstanding capital stock of Beachside, Mongoose
Investments, LLC owned 89% of the issued and outstanding shares of common stock
of the Registrant. In addition, the manager of Mongoose Investments, LLC,
Richard P. Smyth, served as the Chief Executive Officer, Treasurer and Chairman
of the Board of Directors of the Registrant from December 14, 1998 until August
23, 1999. Neither Mongoose Investments, LLC nor Richard P. Smyth have any
ownership in the Buyer either directly or indirectly.
The purchase price for all of the issued and outstanding capital stock
of Beachside is $4,550,000 payable (i) by the delivery of a Non-Recourse
Promissory Note made payable to Accent in the outstanding principal amount of
$3,000,000 from Buyer which bears interest at a rate equal to six percent (6%)
per annum (the "Note") and (ii) by taking the property and assets owned by
Beachside subject to the First Mortgage granted by Beachside in favor of Pacific
Coast Investment Company in the original principal amount of $1,550,000. The
purchase price shall be allocated between the Registrant and Accent for the
adjustment, payment and settlement of certain expenses that the Registrant
previously incurred in connection with the original acquisition of Beachside or
its operating subsequent to the original acquisition. The Registrant and Accent
have also agreed to pay certain liabilities associated with the operation of
Beachside. In the event that such liabilities are not paid by Registrant and/or
Accent, Beachside Holding, LLC may exercise the right to sell shares pledged
under the Pledge Agreement (as defined below) to satisfy such unpaid
liabilities.
The outstanding principal and interest under the Note is due and payable
in a balloon payment on December 31, 2000. The repayment of the Note is secured
solely by the pledge of 660,000 shares of common stock of Registrant under the
terms of the Stock Pledge Agreement (the "Pledge Agreement") dated December 31,
1999 by and between Beachside Holding, LLC, an affiliate of the Buyer (the
"Pledgor") and Accent. If the outstanding principal and interest under the Note
is not paid in full on or before December 31, 2000, Registrant may only exercise
its rights to the common stock of the Registrant under the Pledge Agreement and
may not seek any recourse against the Buyer.
In addition, in connection with the sale of all of the issued and
outstanding capital stock of Beachside to the Buyer, the consulting agreement
entered into between the Registrant and Gator Glory, LLC, an affiliate of
Richard P. Smyth, has been terminated, except that the provision requiring
payment of a two percent (2%) fee to obtain certain financing on behalf of the
Registrant remains in effect. The Registrant has also terminated its Consulting
Agreement with Gerald F. Sullivan, except that the provision requiring a one
percent (1%) fee for the first $13,000,000 of transactions consummated by
Registrant as a finder's fee for identifying proposed acquisition candidates
with such fee based on the value of the gross assets of the target company
remains in effect.
<PAGE>
(3)
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of businesses acquired. Not applicable.
(b) Pro Forma Financial Information. To be filed by amendment within sixty
(60) days from the the date of the earliest event reported (January 18, 2000).
(c) Exhibits.
2.1 Stock Purchase Agreement dated December 31, 1999 among Lahaina
Acquisitions, Inc., Accent Mortgage Services, Inc. and NP Holding, LLC.
2.2 Stock Pledge Agreement dated December 31, 1999 by and between Beachside
Holding, LLC and Accent Mortgage Services, Inc.
2.3 Non-Recourse Purchase Money Note dated December 31, 1999 delivered by
NP Holding, LLC to Accent Mortgage Services, Inc. in the original principal
amount of $3,000,000.
<PAGE>
(4)
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LAHAINA ACQUISITIONS, INC.
February 10, 2000 /s/ L. Scott Demerau
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L. Scott Demerau, President and
Chief Executive Officer
STOCK PURCHASE AGREEMENT
Among
LAHAINA ACQUISITIONS, INC.
and
ACCENT MORTGAGE SERVICE, INC., the Sellers
and
NP HOLDING, LLC, the Buyer
Dated as of December 31, 1999
<PAGE>
TABLE OF CONTENTS
1. Definitions...........................................................1
2. Purchase and Sale of Target Shares....................................3
(a) Basic Transaction..............................................3
(b) Purchase Price.................................................3
(c) The Closing....................................................4
(d) Deliveries at the Closing......................................4
3. Representations and Warranties Concerning the Transaction.............4
(a) Representations and Warranties of the Sellers..................4
(b) Representations and Warranties of the Buyer....................5
4. Representations and Warranties Concerning the Target..................5
(a) Organization, Qualification, and Corporate Power...............6
(b) Capitalization.................................................6
(c) Noncontravention...............................................6
(d) Brokers' Fees..................................................6
(e) Title to Personal Property.....................................7
(f) Legal Compliance...............................................7
(g) Real Property..................................................7
(h) Intellectual Property..........................................7
(i) Powers of Attorney.............................................8
(j) Litigation.....................................................8
(k) Employees......................................................8
(l) Environmental Matters..........................................8
(m) Insurance......................................................8
(n) Permits and Licenses...........................................8
(o) Disclaimer of other Representations and Warranties ............9
5. Conveyance of Warranties and Representations..........................9
6. Post-Closing Covenants................................................9
(a) General........................................................9
(b) Litigation Support.............................................9
(c) Transition.....................................................9
(d) Assumed Liabilities...........................................10
7. Conditions to Obligation to Close....................................10
(a) Conditions to Obligation of the Buyer.........................10
(b) Conditions to Obligation of the Sellers.......................11
8. Remedies for Breaches of This Agreement..............................12
(a) Survival of Representations and Warranties....................12
(b) Indemnification Provisions for Benefit of the Buyer...........12
(c) Indemnification Provisions for Benefit of the Sellers.........12
(d) Matters Involving Third Parties...............................12
(e) Determination of Adverse Consequences.........................13
(f) Other Indemnification Provisions..............................13
9. Miscellaneous........................................................13
(a) Nature of Certain Obligations.................................13
(b) Press Releases and Public Announcements.......................13
(c) No Third-Party Beneficiaries..................................14
(d) Entire Agreement..............................................14
(e) Succession and Assignment.....................................14
(f) Counterparts..................................................14
(g) Headings......................................................14
(h) Notices.......................................................14
(i) Governing Law.................................................15
(j) Amendments and Waivers........................................15
(k) Severability .................................................15
(l) Expenses......................................................15
(m) Incorporation of Exhibits, Annexes, and Schedules.............15
Exhibit A......Non-Recourse Purchase Money Note
Exhibit B......Stock Pledge Agreement
Exhibit C......Assumed Liabilities
Exhibit D......Side Agreements
Schedule 1.....Disclosure Schedule
<PAGE>
(1)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into on the 31st day of December, 1999, by and among NP Holding, LLC, a Georgia
limited liability company (the "Buyer"), and LAHAINA ACQUISITIONS, INC., a
Colorado corporation, and ACCENT MORTGAGE SERVICES, INC., a Georgia corporation
(collectively the "Sellers"). The Buyer and the Sellers are referred to
collectively herein as the "Parties."
R E C I T A L S
WHEREAS, the Sellers in the aggregate own all of the outstanding capital
stock of Beachside Commons I, Inc., a Florida corporation (the "Target"); and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase from the Sellers, and the Sellers will sell to the Buyer, all of
the outstanding capital stock of the Target in return for the Buyer Note (as
defined below).
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs and
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Business" means the existing business operations of the Target which
consists primarily of owning and leasing (as lessor) certain improved real
property commonly known as Beachside Commons.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(b) below.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
<PAGE>
(2)
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target that is not already generally available to
the public.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an employee pension benefit plan, (b)
qualified defined contribution retirement plan or arrangement which is an
employee pension benefit plan, (c) qualified defined benefit retirement plan or
arrangement which is an employee pension benefit plan (including any
multiemployer plan), or (d) employee welfare benefit plan or material fringe
benefit plan or program.
"Environmental Claims" mean any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or civil or criminal penalties) arising out of or
resulting from the actual or alleged presence or release into the environment of
any Hazardous Materials on or about the Real Property by the Sellers.
"Environmental Laws" mean any federal, state and local law, rule,
regulation, ordinance, order, decree, judgment, injunction, notice or binding
agreement issued by the United States or of any state, municipality or other
subdivision thereof in effect as of the Closing Date relating in any way to the
environment, the management, release or threatened release of any Hazardous
Materials, the health effects of Hazardous Materials or the pollution of the
environment.
"First Mortgage" means the First Mortgage granted by the Target in favor
of Pacific Coast Investment Company in the original principal amount of
$1,550,000.
"Hazardous Materials" mean any contaminant, pollutant, waste, petroleum,
petroleum product, chemical or other substance defined, designated or classified
as hazardous, toxic, radioactive or dangerous under any Environmental Laws.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Knowledge" means actual knowledge without independent investigation.
"Liens" means any lien, claim, charge, encumbrance and any security
interest whatsoever, howsoever and wherever created or arising, including
without limitation liens for taxes.
<PAGE>
(3)
"Ordinary Course of Business" means the ordinary course of business
consistent with part custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Property" means the real property commonly known as "Beachside Commons"
which is located in Nassau County, Florida and is currently owned by the Target.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Sellers" has the meaning set forth in the preface above.
"Target" has the meaning set forth in the preface above.
"Target Shares" means all of the shares of capital stock of the Target
which is issued and outstanding at the Closing.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
2. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers agree
to sell to the Buyer, all of the Target Shares for the consideration specified
below in this Section 2.
(b) Purchase Price. The Buyer agrees to pay to the Sellers at the Closing
$4,550,000 (the "Purchase Price") by delivery of its non-recourse purchase money
promissory note (the "Buyer Note") in the form of Exhibit A attached hereto in
the aggregate principal amount of $3,000,000 secured by 660,000 shares of stock
(the "Collateral") of Lahaina Acquisitions, Inc. to be pledged by Beachside
Holding LLC, a Georgia limited liability company and by taking the Property
subject to the First Mortgage. The Stock Pledge Agreement for the Collateral
will be substantially in the form of Exhibit B attached hereto and incorporated
herein by reference. The Purchase Price shall be allocated between the Sellers
in proportion to their respective holdings of Target Shares as set forth in
Section 4(b) of the Disclosure Schedule (as defined below) and for the
reimbursement, payment and settlement of all expenses between the Buyer and the
Sellers previously incurred in connection with the acquisition of Target. The
Sellers acknowledge that the Buyer has not participated in the allocation
process.
<PAGE>
(4)
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Kutak Rock in
Atlanta, Georgia, commencing at 9:00 a.m. local time on December 30, 1999 or
such other date as the Buyer and the Sellers may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no later than
December 31, 1999.
(d) Deliveries at the Closing. At the Closing, (i) the Sellers will deliver
to the Buyer the various certificates, instruments, and documents referred to in
Section 7(a) below together with such documents, deeds, title certificates,
leases, appraisals, books and records and other written materials relating to
the Property or to the Target, (ii) the Buyer will deliver to the Sellers the
various certificates, instruments, and documents referred to in Section 7(b)
below, (iii) each of the Sellers will deliver to the Buyer stock certificates
representing all of the Target Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Sellers
the consideration specified in Section 2(b) above.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents, warrants and covenants to the Buyer that the statements contained in
this Section 3(a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)).
(i) Organization of the Sellers. Each Seller is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. Each Seller has full corporate
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of each Seller, enforceable in
accordance with its terms and conditions. Each Seller need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order
to consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
each Seller is subject or any provision of its charter or bylaws, or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which each Seller is a party or by which it is bound or
to which any of its assets is subject.
<PAGE>
(5)
(iv) Brokers' Fees. The Sellers have no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
(v) Target Shares. The Sellers hold of record and owns all legal and
beneficial right, title and interest in and to the number of Target
Shares set forth next to its name in Section 4(b) of the Disclosure
Schedule (as defined below), free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. The Sellers are
not a party to any option, warrant, purchase right, or other contract
or commitment that could require the Sellers to sell, transfer, or
otherwise dispose of any capital stock of the Target (other than this
Agreement). The Sellers are not a party to any voting trust, proxy, or
other agreement or understanding with respect to the ownership,
transfer or voting of any capital stock of the Target.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)).
(i) Organization of the Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its formation.
(ii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Buyer is subject, or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by
which it is bound.
(iii) Brokers' Fees. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which any of
the Sellers could become liable or obligated.
(iv) Investment. The Buyer is not acquiring the Target Shares with a
view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act.
<PAGE>
(6)
4. Representations and Warranties Concerning the Target. The Sellers represent
and warrant to the Buyer that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the disclosure schedule delivered by the Sellers to the
Buyer on the date hereof and initialed by the Parties (the "Disclosure
Schedule") and attached hereto as Schedule 1.
(a) Organization, Qualification, and Corporate Power. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the financial
condition of the Target taken as a whole. The Target has full corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it. Section 4(a) of the Disclosure Schedule
lists the directors and officers of the Target. There are no subsidiary
corporations of the Target.
(b) Capitalization. The entire authorized capital stock of the Target
consists of 500 Target Shares, of which 500 Target Shares are issued and
outstanding. All of the issued and outstanding Target Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the respective the Sellers as set forth in Section 4(b) of the
Disclosure Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Target to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target.
(c) Noncontravention. To the Knowledge of any of the Sellers, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Target
is subject or any provision of the charter or bylaws of any of the Target or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Target is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Lien upon any of its assets). To the Knowledge of any of the
Sellers, the Target does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
<PAGE>
(7)
(d) Brokers' Fees. The Target has not retained or employed any broker,
finder, investment banker or other person or has taken any action or entered
into any agreement or understanding that would give any broker, finder,
investment banker or other person any valid claim against the Buyer or the
Target for a commission, brokerage fee or other compensation.
(e) Title to Personal Property. The Target has good and marketable title to
all of the Target's personal property and other assets, free and clear of all
Liens. All such personal property will be in possession of the Target on the
Closing Date.
(f) Legal Compliance. During the Sellers' ownership of the Target Shares,
the Target has complied in all material respects with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings and charges thereunder) of federal, state, local and foreign
governments (and all agencies thereunder). During the Sellers' ownership of the
Target Shares, no action, suit, proceeding, hearing, investigation, charge,
compliant, claim, demand or notice has been filed or commenced against the
Target alleging any failure to so comply.
(g) Real Property.
(i) Section 4(g)(i) of the Disclosure Schedule lists all real property
that the Target owns (collectively, the "Real Property"). With respect
to each such parcel of owned real property:
(A) Target has good and marketable fee simple title to the
Property, free and clear of any Liens and any other matters other
than as set forth in the Disclosure Schedule;
(B) There are no outstanding options or rights of first refusal
to purchase any of the Real Property, or any portion thereof or
interest therein.
(C) No material changes have occurred to any of the Real Property
since Target was acquired by the Sellers.
(D) All payments of principle, interest, taxes and insurance
regarding the Real Property are current through the Closing Date.
(E) To Seller's knowledge, all books and records, correspondence
and other documents pertaining to the Real Property have been
delivered to Purchaser.
(ii) Section 4(g)(ii) of the Disclosure Schedule lists all real
property leased or subleased by the Target as lessor or sublessor. The
Sellers have delivered to the Buyer correct and complete copies of the
leases and subleases listed in Section 4(g)(ii) of the Disclosure
Schedule (as amended to date). To the Knowledge of any of the Sellers,
each lease and sublease listed in Section 4(g)(ii) of the Disclosure
Schedule is legal, valid, binding, enforceable, has not been modified
and is in full force and effect.
<PAGE>
(8)
(h) Intellectual Property. Section 4(h) of the Disclosure Schedule
identifies each patent or registration which has been issued to any of the
Target with respect to any of its intellectual property, identifies each
pending patent application or application for registration which any the
Target has made with respect to any of its intellectual property,
identifies all trademarks and service marks of the Target and identifies
each license, agreement, or other permission which the Target has granted
to any third party with respect to any of its intellectual property.
(i) Powers of Attorney. To the Knowledge of any of the Sellers, there are
no outstanding powers of attorney executed on behalf of the Target.
(j) Litigation. During the Sellers' ownership of the Target Shares, there
has been no suit, action, proceeding (legal, administrative or otherwise),
claim, investigation or inquiry (by an administrative agency, governmental
body or otherwise) pending or threatened by, against, or otherwise
affecting the Target or any its capital stock properties, assets or
business prospects or the transactions contemplated by this Agreement, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, agency, instrumentality,
arbitration tribunal, or other authority, domestic or foreign, or to which
the Target is or may become a party. During the Sellers' ownership of the
Target Shares, there has been no outstanding judgment, order, writ,
injunction or decree of any court, administrative agency, governmental body
or arbitration tribunal entered against or affecting the Target or any of
its capital stock, properties, assets or business prospects of the Target.
(k) Employees. The Target does not employ any employees in the operation of
the Business and, therefore, does not maintain any Employee Benefit Plans.
(l) Environmental Matters. During Sellers' ownership of the Target Shares:
(i) no Environmental Claims exist or are pending or threatened against
the Target; and
(ii) Hazardous Materials were not used, generated, emitted,
transported, stored, treated or disposed of by the Target in violation
of any Environmental Law or which may result in an Environmental
Claim.
(m) Insurance. During the Sellers' ownership of the Target Shares, the
Sellers have maintained all insurance policies (true and complete copies of
which have previously been delivered to the Buyer and are listed in Section
4(m) of the Disclosure Schedule) in full force, all premiums with respect
to such insurance policies are currently paid and all duties of the insured
under those policies have been fully discharged. There is no threatened
termination of, or premium increase with respect to any of those policies,
<PAGE>
(9)
and there is no claim by or on behalf of Target pending under any of those
policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies.
(n) Permits and Licenses. During the Sellers' ownership of the Target
Shares, the Sellers have maintained all permits, licenses, orders or
approvals necessary for the Target to carry on the Business as presently
conducted and all such permits and licenses are in full force and effect.
All fees and charges incident to those permits, licenses, orders and
approvals have been fully paid and are current, and no suspension or
cancellation of any such permit, license, order or approval has been
threatened.
(o) Disclaimer of other Representations and Warranties. Except as expressly
set forth in Section 3 and this Section 4, the Sellers make no
representation or warranty, express or implied, at law or in equity, in
respect of the Target, or any of its respective assets, liabilities or
operations, including, without limitation, with respect to merchantability
or fitness for any particular purpose, and any such other representations
or warranties are hereby expressly disclaimed.
5. Conveyance of Warranties and Representations. Sellers hereby transfer convey
and assign to Buyer the benefit of all warranties and representations of Lahaina
Acquisitions, Inc., a Colorado corporation, and LAHA No. 1, Inc., set forth in
the Merger Agreement. The Buyer hereby acknowledges that the Buyer full access
to all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to the Target. The Buyer hereby agrees
that the Buyer will treat and hold as such any Confidential Information it
receives from any of the Sellers and, the Target in the course of the reviews
contemplated by this Section 5(c), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, will return to the Sellers and the Target,
all tangible embodiments (and all copies) of the Confidential Information which
are in its possession.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless
the requesting Party is entitled to indemnification therefor under Section
8 below), including but not limited to Sellers directing its auditors to
release financial information pertaining to Target.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i)
any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior
<PAGE>
(10)
to the Closing Date involving the Target each of the other Parties shall
cooperate with it and its counsel in the defense or contest, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the defense or contest,
all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Section 8 below).
(c) Transition. None of the Sellers will take any action that is designed
or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Target from
maintaining the same business relationships with the Target after the
Closing as it maintained with the Target prior to the Closing.
(d) Assumed Liabilities. The Sellers, jointly and severally, agree to
perform and pay when owning all debts, liabilities and obligations that are
set forth on Exhibit C attached hereto and any liabilities associated with
the ownership or operation of the Target during the Seller's operation of
the Business prior to the Closing Date (the "Assumed Liabilities"). Upon
written notice from Buyer, Sellers agree to pay such liabilities within
thirty (30) days after the receipt of written demand from the Buyer for
payment. Any payments not made within thirty (30) days after receipt of
written demand from the Buyer for payment may be satisfied by the Buyer
pursuant to the terms of the Stock Pledge Agreement attached hereto as
Exhibit B. The Buyer hereby agrees that the Sellers shall be entitled to
sell any portion of the Collateral in accordance with the Stock Pledge
Agreement to satisfy any of the Assumed Liabilities and the principal
amount of the Buyer Note shall be reduced by the numbers of shares sold by
$4.00 per share regardless of the sales price of the Collateral sold in
order to satisfy payments on the First Mortgage due and payable prior to
the Closing Date, real property taxes due and owing on the Property for the
time period in which the Sellers' owned the Target Shares or the
liabilities set forth on Exhibit C attached hereto. In addition, Sellers
jointly and severally, hereby agree to pay all late fees and filing fees
described in the Letter Agreement dated as of December 31, 1999 among
Lahaina Acquisitions, Inc., Buyer and Beachside Holding, LLC. Any payments
of any such fees not made within one (1) business day after receipt by
Lahaina Acquisitions, Inc. of written demand from the Buyer and/or NP
Holding may be satisfied by Beachside Holding, LLC pursuant to the terms of
the Stock Pledge Agreement attached hereto as Exhibit B. In addition, with
respect to transfers of stock for the payment of such Assumed Liabilities,
Sellers agree, jointly and severally, at their cost to use commercially
reasonable efforts to cause legal counsel for Lahaina Acquisitions, Inc. to
execute and deliver to Lahaina Acquisitions, Inc.'s transfer agent a
written legal opinion confirming compliance with Rule 144 under the
Securities Act of 1933, provided that such sale of stock complies with the
requirements set forth in Rule 144, within two (2) business days after
receipt by such counsel of an appropriate seller's representation letter
and a broker's representation letter.
<PAGE>
(11)
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a) and
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the relevant parties shall have entered into side agreements
listed on Exhibit D;
(v) the Sellers will pay all payments due and payable prior to the
Closing Date under the First Mortgage with third party written
verification that all payments have been made and the outstanding
principle balance of the First Mortgage.
(vi) The Sellers shall have delivered third-party written verification
that (a) all insurance premiums, property taxes and utilities relating
to the Property and attributable to the period on or prior to the
Closing Date shall have been paid in full; (b) that the Target shall
have no liability under the second mortgage currently effecting the
Property
(vii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(b) above
shall be true and correct in all material respects at and as of the
Closing Date;
<PAGE>
(12)
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) the relevant parties shall have entered into side agreements
listed on Exhibit D; and
(v) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Sellers contained in Section 4 above shall survive
the Closing hereunder and continue in full force and effect for a period of
one (1) year thereafter, except with respect to any federal or state taxes
of Target, the representations and warranties of the Seller shall continue
until the applicable statute of limitations has expired. All of the
representations and warranties of the Parties contained in Section 3 above
shall survive the Closing (unless the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing)
and continue in full force and effect forever thereafter (subject to any
applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event any of the Sellers breaches any of their
representations, warranties, and covenants contained herein and if
there is an applicable survival period pursuant to Section 8(a) above,
provided that the Buyer makes a written claim for indemnification
against any of the Sellers within such survival period, then each of
the Sellers agrees to indemnify the Buyer from and against any Adverse
Consequences the Target shall suffer as a proximate cause of such
breach. Any claims for indemnification by Buyer against Seller shall
be satisfied within ten (10) days after written demand is made by
Buyer to Seller. If any claim for indemnification is not satisfied by
Seller within the required time limits, Buyer may proceed under the
terms of the Stock Pledge Agreement attached hereto as Exhibit B.
(c) Indemnification Provisions for Benefit of the Sellers. In the event the
Buyer breaches any of its representations, warranties, and covenants
contained herein, and, if
<PAGE>
(13)
there is an applicable survival period pursuant to Section 8(a) above,
provided that any of the Sellers makes a written claim for indemnification
against the Buyer within such survival period, then the Buyer agrees to
indemnify each of the Sellers from and against the entirety of any Adverse
Consequences the Sellers shall suffer through and after the date of the
claim for indemnification (but excluding any Adverse Consequences the
Sellers shall suffer after the end of any applicable survival period)
caused by the breach.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly (and in any event within five (5) business days after
receiving notice of the Third Party Claim) notify each Indemnifying
Party thereof in writing.
(ii) Any Indemnifying Party will have the right at any time to assume
and thereafter conduct the defense of the Third Party Claim with
counsel of its choice; provided, however, that the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only
the payment of money damages and does not impose an injunction or
other equitable relief upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section 8(d)(ii) above, however,
the Indemnified Party may defend against the Third Party Claim in any
manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of each of the
Indemnifying Parties.
(v) Notwithstanding anything to the contrary set forth in this Section
8(d), the rights of third parties to make a Third Party Claim shall
not apply to those liabilities set forth on Exhibit C attached hereto.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for insurance coverage in determining Adverse
Consequences for purposes of this Section 8.
(f) Other Indemnification Provisions. The indemnification provisions in
this Section 8 are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant, provided, however, that the Buyer's
obligations under the Buyer's Note shall be non-
<PAGE>
(14)
recourse and Buyer's recourse obligations hereunder shall be limited
exclusively to the warranties and representations set forth in Section 3(b)
hereof.
9. Miscellaneous.
(a) Nature of Certain Obligations. The covenants of each of the Sellers in
Section 3(a) above concerning the sale of the Target Shares to the Buyer,
the representations and warranties of each of the Sellers in Section 4(a)
above concerning the transaction and the indemnification obligations under
Section 8 are joint and several obligations.
(b) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of
the Buyer and the Sellers; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable best
efforts to advise the other Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. Other than the indemnification provisions
set forth in Section 8(a), (b), (c) and (d) of this Agreement, this
Agreement shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes
any prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they have related in any way to the
subject matter hereof. Notwithstanding anything to the contrary set forth
in this Agreement, this Agreement is not intended to supercede or affect
the Agreement and Plan of Merger Agreement dated July 21, 1999 by and
between Lahaina Acquisitions, Inc., LAHA No.1, Inc., The Accent Group,
Inc., Accent Mortgage Services, Inc. and Mongoose Investments, LLC.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and the Sellers; provided, however, that the
Buyer may (i) assign any or all of its rights and interests hereunder to
one or more of its Affiliates, and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the performance of
all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
<PAGE>
(15)
(g) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two (2) business days after) it is sent by overnight delivery,
registered or certified mail, return receipt requested, postage prepaid,
and addressed to the intended recipient as set forth below:
If to the Sellers: Lahaina Acquisitions, Inc.
Accent Mortgage Services, Inc.
Suite 220
5895 Windward Parkway
Alpharetta, GA 30005
If to the Buyer: NP Holding, LLC
Gerald F. Sullivan, Manager
5255 Porter Lane
Gainesville, GA 30516
With a copy to: Thomas J. Stalzer
Epstein Becker & Green
Suite 1400
3399 Peachtree Road
Atlanta, GA 30326
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Georgia without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Georgia or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Georgia.
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer
and the Sellers. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to
<PAGE>
(16)
any prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
(l) Expenses. Each of the Buyer, and the Sellers will bear their own costs
and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
BUYER:
NP HOLDING, LLC
By: /s/ Gerald F. Sullivan
-----------------------------
Name: Gerald F. Sullivan
-----------------------------
Title: Manager
-----------------------------
SELLERS:
LAHAINA ACQUISITIONS, INC.
By: /s/ L. Scott Demerau
-----------------------------
Name: L. Scott Demerau
-----------------------------
Title: President
-----------------------------
ACCENT MORTGAGE SERVICE, INC.
By: /s/ Betty M. Sullivan
-----------------------------
Name: Betty M. Sullivan
-----------------------------
Title: Executive V.P. & Secretary
-----------------------------
<PAGE>
(1)
EXHIBIT A
NON-RECOURSE
PURCHASE MONEY NOTE
$3,000,000 Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, NP HOLDING, LLC, a Georgia limited
liability company ("Maker"), with offices located at 6625 Highway 53 East, Suite
410-172, Dawsonville, GA 30534, on this 31st day of December, 1999 promises to
pay to the order of ACCENT MORTGAGE SERVICES, INC., a Georgia corporation
("Holder"), at 5895 Windward Parkway, Alpharetta, GA 30005, or any other
location designated by Holder, the sums specified below at the time or times
indicated below.
1. Principal and Interest. Maker promises to pay the entire principal
amount of THREE MILLION DOLLARS ($3,000,000), together with interest on the
outstanding principal balance until the Maturity Date (as hereinafter defined)
at the rate of six percent (6%) per annum, in lawful money of the United States
and in immediately available funds on or before December 31, 2000 (the "Maturity
Date"). If the Maturity Date occurs on a day other than a business day, the
Maturity Date shall be extended to the next succeeding business day, and
interest shall be payable thereon at the rate herein specified during such
extension.
2. Default. Each of the following events shall constitute an "Event of
Default" hereunder: (a) if the value of the Collateral (hereinafter defined) as
determined by the average closing price for thirty (30) consecutive days is less
than 102% of the principal amount of the Note; (b) Maker makes an assignment for
the benefit of creditors, or files a voluntary petition in bankruptcy,
receivership or insolvency, or files an answer in any involuntary proceedings of
that nature admitting the material allegations of the petition, or if a
proceeding or bankruptcy, receivership or insolvency, shall be instituted
against Maker and such proceeding shall not be dismissed within sixty (60) days,
or if a trustee or receiver shall be appointed for Maker and such proceeding
shall not be dismissed or such trustee or receiver shall not be discharged
within sixty (60) days (collectively subsections (a) and (b) referred to herein
as a "Default"), then a Default shall exist hereunder, and any sums advanced
hereunder, together will all unpaid interest accrued thereon, shall, at the
option of Holder, without further notice, at once shall, become due and payable
and may be collected immediately, regardless of the stipulated Maturity Date.
Notwithstanding anything to the contrary set forth in this Note, Holder hereby
agrees that Holder will not exercise its remedies under this Note in the event
of a default under Section 2(a) unless and until all obligations and liabilities
of the "Sellers" set forth in Section 6(d) of the Stock Purchase Agreement dated
December 31, 1999, between Maker, "Buyer" therein and Holder and Lahaina
Acquisitions, Inc., "Sellers" therein, have been paid and satisfied in full and
under no circumstances shall Holder sell more than eighty percent (80%) of the
shares pledged under the Pledge Agreement (as defined below) within the first
ninety (90) days after the date hereof.
<PAGE>
(2)
3. Collateral. Maker has caused to be delivered to Holder 660,000 shares of
common stock (the "Collateral") of Lahaina Acquisitions, Inc. a Colorado
corporation pursuant to the terms and conditions of a Stock Pledge Agreement of
even date herewith (the "Pledge Agreement").
4. Exculpation. Notwithstanding any other provisions of this Note, the sole
remedy for the repayment of the principal and interest and costs shall be
limited to the Collateral or any proceeds realized from the sale of the
Collateral. If the principal amount of this Note together with all accrued
interest is not paid by the Holder to the Maker on the Maturity Date, Holder
shall take possession of the Collateral free and clear of all liens and
encumbrances and satisfy all of the obligations of Maker hereunder.
It is expressly understood and agreed that the undertaking of the Maker to
pay this Note is included herein for the sole purpose of establishing the
existence of the indebtedness evidenced by this Note and the maturity of such
indebtedness. The Holder or Holders of this Note will not have any claim,
remedy, or right to proceed (at law or in equity) against Maker or the members
of Maker or their affiliates for the payment of any deficiency or any other sum
or performance of any obligation of any nature whatsoever under this Note or
under the Pledge Agreement or in connection therewith, from any source other
than the Collateral; provided, however, nothing herein contained will limit,
restrict, or impair the rights of the Holder of this Note to accelerate the
maturity of this Note during the continuance of an Event of Default under this
Note except as otherwise provided herein with respect to a default under Section
2(a).
5. Waiver of Notice and Remedies. Maker hereby (a) waives grace,
presentment and demand for payment, protest and notice of protest, and
non-payment, all other notice, including notice of intent to accelerate the
Maturity Date and notice of acceleration of the Maturity Date, filing of suit
and diligence in collecting this Note, (b) consents to any extension or
postponement of time of payment of this Note and in any other indulgence with
respect hereto without notice from Holder and (c) agrees that Holder shall not
be required first to institute suit or exhaust its remedies against Maker under
this Note.
6. Notices. Any and all other notices, elections, demands, requests and
responses thereto permitted or required to be given under this Note shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed properly given and effective upon being (a) personally delivered, (b)
deposited with an overnight courier service in time for and specifying overnight
delivery or (c) deposited in the United States mail, postage prepaid, certified
with return receipt requested to the other party at the address of such other
party set forth in the first paragraph hereof. All such notices shall be deemed
delivered on the date of delivery if sent by personal delivery, the next
business day by overnight courier service and five (5) days after being
deposited in the United States Mail if sent by registered or certified mail.
7. Usury Law. It is the intention of Maker and Holder to comply with any
applicable usury laws. In furtherance of this intention of Holder and Maker, all
agreements between Maker and Holder are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Holder for the use, forbearance or
<PAGE>
(3)
detention of money under this Note exceed the maximum rate permissible under
applicable law. If, from any circumstance whatsoever, fulfillment of any
provision hereof shall be prohibited by law, the obligation to be fulfilled
shall be reduced to the maximum not so prohibited, and if from any circumstances
Holder should ever receive as interest an amount which would exceed the highest
lawful rate, such amount as would be excessive interest shall, at Holder's
option, shall be applied to the reduction of the principal of the Note and not
to the payment of interest, or shall be refunded to Maker. This provision shall
control every other provision of all agreements between Maker and Holder.
8. Time of Essence. Time is of the essence of this Note.
9. Jurisdiction. Maker admits that this Note has been negotiated, executed
and delivered in Atlanta, Georgia, Fulton County, and that Maker (a) submits to
personal jurisdiction in Fulton County in the State of Georgia for the
enforcement of this Note, (b) waives any and all rights under the laws of any
state to object to jurisdiction within the State of Georgia for the purposes of
litigation to enforce this Note and (c) waives trial by jury.
10. Offset Rights. Holder and Maker acknowledge that the terms and
conditions relating to the offset right of Maker to this Note as set forth in
Section 6(d) of the Stock Purchase Agreement dated December 31, 1999 are
incorporated herein by reference.
11. Miscellaneous. Any payment received by Holder hereunder may, at
Holder's option, be applied first to interest or to reduce the principal
balance. A waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of any subsequent right,
remedy or recourse to any subsequent event. No failure or delay on the part of
Holder in exercising any right, power or remedy granted hereunder shall operate
as waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. Maker hereby consents to all
renewals and extensions of time at or after the maturity hereof and hereby
waives diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense and hereby agrees that no failure on the part of Holder to exercise
any power, right and privilege hereunder, or to insist upon prompt compliance
with the terms hereof, shall constitute a waiver thereof. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought. As
used herein, the terms, "Maker" and "Holder" shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law.
12. Prepayment. This Note may be prepaid in whole or in part prior to the
Maturity Date without premium or penalty.
13. Nontransferable Note. Holder shall not transfer, sell, assign or convey
this Note or any rights hereunder to any individual or other person or entity
unless the transferee or assignee thereof is a corporate affiliate of the
initial Holder on the date hereof and any transfer or purported transfer of this
Note in violation of this Section 13 shall be null and void.
<PAGE>
(4)
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned, by its officers duly appointed and
authorized, has executed this Note as of the day and year first above written.
MAKER:
NP HOLDING, LLC
By: /s/ Gerald F. Sullivan
-----------------------------
Name: Gerald F. Sullivan
-----------------------------
Title: Manager
-----------------------------
[SEAL]
<PAGE>
(1)
EXHIBIT B
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:
10. 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.
11. 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.
<PAGE>
(2)
12. 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.
13. 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.
14. Expenses. Each party shall be responsible for the payment of their
expenses incurred in connection with this Agreement.
15. 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.
16. 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.
<PAGE>
(3)
17. 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.
18. 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).
19. Release of Stock.
(a) Establishment of New Brokerage Account to Hold Stock.
(i) Pledgor shall on or before February 1, 2000, establish with Morgan
Stanley Dean Witter ("Morgan Stanley") 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 Morgan Stanley 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
<PAGE>
(4)
Morgan Stanley (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 Morgan Stanley 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 Morgan Stanley to the Bank (as defined below) for
immediate deposit to the Bank Account (as defined below).
(ii) Pledgor shall cause Morgan Stanley 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 Morgan Stanley pertaining to the Brokerage Account and
copies of trade confirmations received from Morgan Stanley 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 Gerald F. Sullivan and authorized
representative of Pledgee shall be Betty Sullivan. 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
Morgan Stanley 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
<PAGE>
(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 Morgan Stanley 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
<PAGE>
(6)
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 John McManus, 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.
20. 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: Mr. Gerald F. Sullivan
Beachside Holding, LLC
5255 Porter Lane
Gainesville, Georgia 30506
Facsimile Number: [PLEASE PROVIDE]
<PAGE>
(7)
with a copy to: Thomas J. Stalzer, Esq.
Epstein, Becker & Green
Suite 1400
The Lenox Building
3399 Peachtree Road
Atlanta, GA 30326
Facsimile Number: (404) 812-5699
If to the Pledgee: L. Scott Demerau
Lahaina Acquisitions, Inc.
Suite 220
5895 Windward Parkway
Alpharetta, GA 30005
Facsimile Number: [PLEASE PROVIDE]
with a copy to: Robert E. Altenbach, Esq.
Kutak Rock LLP
Suite 2100
Peachtree Center South Tower
225 Peachtree Street
Atlanta, GA 30303-1731
Facsimile Number: (404) 222-4654
21. 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.
22. 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.
23. 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
<PAGE>
(8)
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.
24. 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]
<PAGE>
(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/ Gerald F. Sullivan
-----------------------------
Name: Gerald F. Sullivan
-----------------------------
Title: Manager
-----------------------------
PLEDGEE:
LAHAINA ACQUISITIONS, INC.
By: /s/ L. Scott Demerau
-----------------------------
Name: L. Scott Demerau
-----------------------------
Title: President
-----------------------------
ACCENT MORTGAGE SERVICE, INC.
By: /s/ Betty M. Sullivan
-----------------------------
Name: Betty M. Sullivan
-----------------------------
Title: Executive V.P. & Secretary
-----------------------------
<PAGE>
(1)
EXHIBIT C
ASSUMED LIABILITIES
LAHAINA PAYABLES
Pre-Merger Merger Related
---------- --------------
AAA Advertising Agency 2,975 -
Allsafe 64 -
Amelia Green 1,200 -
Amelia Islander Magazine 8,649 -
Arm & Associates - 10,000
AT&T (Long Distance) 1,222 -
Boree Canvas 2,778 -
Brad's Glass 4,426 -
Cotner 22,342 -
FPU (Shops) 600 -
FPU (In dispute) 4,200 (1) -
Harbor Sound 1,049 -
Kenneth Walters (CPA) 12,000 -
Masons Refrigeration 402 -
Pacific Coast (August) 20,000 -
Nationwide Ins. 2,966 -
NewsLeader 1,578 -
The Chamber 235 -
Tribune-Georgian 957 -
Waycross Journal-Herald 3,784 -
WWRR-FM 100.7 579 -
Kres Real Estate (expenses) 2,116 -
Sherry Klein (termination costs) - 30,000
Signs & Frames 246 -
AT&T 200 -
Bearden & Smith 2,645 -
BellSouth 894 -
Bowne 10,000 5,000
Boy Scouts of America 1,000 -
Florida Times Union 49 -
Georgia Secretary of State 50 -
Milt's of Amelia 285 -
Milward & Co. 2,061 -
Paul Hastings 140,000 85,000 (2)
PR Newsake 4,200 -
Internet Stock Market 3,325 -
Nathan Sears 7,000 -
Corporate Stock Transfer 9,100 -
Smyth (Consulting) - 60,000
Sullivan (Consulting) - 50,000
Joe Powell 18,500 -
W. Ross (CFO Retirement) 12,500 -
Fernandina Bch Newsletter 1,500 -
----------------------------------------------------------------------
TOTAL 285,336 238,000
======================================================================
1) water and sewer dispute
2) including 25,000 for costs going forward
(A) Certain amounts on this Exhibit C have been paid by the Seller
subsequent to the Merger on August 23, 1999.
(B) Sellers acknowledge that they are responsible for paying those amounts
on this Exhibit C that have not been paid as of the Closing Date, together with
any interest or penalties associated with such amounts since August 23, 1999.
(C) Sellers acknowledge that they are responsible for the payment of debts
and liabilities as set forth in Section 6(d) of this Agreement.
<PAGE>
(1)
EXHIBIT D
SIDE AGREEMENTS
1. Termination of Consulting Agreement dated June 1, 1999 by and between
Gator Glory, LLC and Lahaina Acquisitions, Inc.
<PAGE>
(1)
SCHEDULE 1
DISCLOSURE SCHEDULE
o Section 4(a). Directors and Officers of the Target.
o Directors. Scott L. Demerau, Betty Sullivan, Sherry Sagemiller and Bart
Siegel.
o Officers. Scott L. Demerau, President; Betty Sullivan, Executive Vice
President and Secretary; Sherry Sagemiller, Assistant Secretary; and William A.
Thurber, Vice President of Finance.
o Section 4(b). Ownership of Target Shares.
o Lahaina Acquisitions, Inc. owns 500 shares of common stock of Beachside
Commons I, Inc.
o Accent Mortgage Services, Inc. does not own any shares of common stock of
Beachside Commons I, Inc.
o Section 4(g)(i). Owned Real Property.
o The real property commonly known as Beachside Commons located at 2900
Atlantic Avenue in Fernandina Beach, Florida.
o Section 4(g)(ii). Leased Real Property. The real property known as
Beachside Commons is leased by the Target pursuant to the following lease
agreements:
o Commercial Lease Agreement dated December 1, 1998 by and between
Beachside Commons I, Inc. and J.P. Concepts, Inc. and Brian Moon.
o Commercial Lease Agreement dated May 6, 1998 by and between Mongoose
Investments, LLC and Ridison South, Inc.
o Commercial Lease Agreement dated October 1, 1998 by and between Mongoose
Investments, LLC and William and Diana Hurst.
o Commercial Lease Agreement dated June 2, 1998 by and between Mongoose
Investments, LLC and William P. Hurst.
o Commercial Lease Agreement dated July 24, 1998 by and between Mongoose
Investments, LLC and Beachside Coffee and Wine.
o Commercial Lease Agreement dated March 5, 1999 by and between Beachside
Commons I, Inc. and Beachside Styles.
<PAGE>
(2)
o Commercial Lease Agreement dated July 21, 1998 by and between Mongoose
Investments, LLC and Blue Ridge Ventures.
o Commercial Lease Agreement dated March 23, 1999 by and between Beachside
Commons I, Inc. and RJM Communications, Inc. and Mike McClain
o Commercial Lease Agreement dated May 29, 1998 by and between Mongoose
Investments, LLC and Susan and David James
o Commercial Lease Agreement dated May 27, 1998 by and between Mongoose
Investments, LLC and Steve Benassayag.
o Commercial Lease Agreement dated June 5, 1998 by and between Mongoose
Investments, LLC and Jeff Steele.
o Section 4(h). Intellectual Property Registrations.
o Not Applicable
o Section 4(m). Insurance Policies.
o Copies available by request from Pacific Coast Investment Company.
<PAGE>
(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.
<PAGE>
(2)
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.
<PAGE>
(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
Morgan Stanley Dean Witter ("Morgan Stanley") 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 Morgan
Stanley 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
<PAGE>
(4)
Morgan Stanley (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 Morgan Stanley 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 Morgan Stanley to the Bank (as defined
below) for immediate deposit to the Bank Account (as defined
below).
(ii) Pledgor shall cause Morgan Stanley 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 Morgan Stanley pertaining to the
Brokerage Account and copies of trade confirmations received from
Morgan Stanley 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 Gerald F. Sullivan and authorized representative of Pledgee shall
be Betty Sullivan. 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 Morgan Stanley 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
<PAGE>
(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 Morgan Stanley 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
<PAGE>
(6)
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 John McManus, 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: Mr. Gerald F. Sullivan
Beachside Holding, LLC
5255 Porter Lane
Gainesville, Georgia 30506
Facsimile Number:
<PAGE>
(7)
with a copy to: Thomas J. Stalzer, Esq.
Epstein, Becker & Green
Suite 1400
The Lenox Building
3399 Peachtree Road
Atlanta, GA 30326
Facsimile Number: (404) 812-5699
If to the Pledgee: L. Scott Demerau
Lahaina Acquisitions, Inc.
Suite 220
5895 Windward Parkway
Alpharetta, GA 30005
Facsimile Number:
with a copy to: Robert E. Altenbach, Esq.
Kutak Rock LLP
Suite 2100
Peachtree Center South Tower
225 Peachtree Street
Atlanta, GA 30303-1731
Facsimile Number: (404) 222-4654
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
<PAGE>
(8)
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]
<PAGE>
(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/ Gerald F. Sullivan
-----------------------------
Name: Gerald F. Sullivan
-----------------------------
Title: Manager
-----------------------------
PLEDGEE:
LAHAINA ACQUISITIONS, INC.
By: /s/ L. Scott Demerau
-----------------------------
Name: L. Scott Demerau
-----------------------------
Title: President
-----------------------------
ACCENT MORTGAGE SERVICE, INC.
By: /s/ Betty M. Sullivan
-----------------------------
Name: Betty M. Sullivan
-----------------------------
Title: Executive V.P. & Secretary
-----------------------------
<PAGE>
(1)
NON-RECOURSE
PURCHASE MONEY NOTE
$3,000,000 Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, NP HOLDING, LLC, a Georgia limited
liability company ("Maker"), with offices located at 6625 Highway 53 East, Suite
410-172, Dawsonville, GA 30534, on this 31st day of December, 1999 promises to
pay to the order of ACCENT MORTGAGE SERVICES, INC., a Georgia corporation
("Holder"), at 5895 Windward Parkway, Alpharetta, GA 30005, or any other
location designated by Holder, the sums specified below at the time or times
indicated below.
1. Principal and Interest. Maker promises to pay the entire principal
amount of THREE MILLION DOLLARS ($3,000,000), together with interest on the
outstanding principal balance until the Maturity Date (as hereinafter defined)
at the rate of six percent (6%) per annum, in lawful money of the United States
and in immediately available funds on or before December 31, 2000 (the "Maturity
Date"). If the Maturity Date occurs on a day other than a business day, the
Maturity Date shall be extended to the next succeeding business day, and
interest shall be payable thereon at the rate herein specified during such
extension.
2. Default. Each of the following events shall constitute an "Event of
Default" hereunder: (a) if the value of the Collateral (hereinafter defined) as
determined by the average closing price for thirty (30) consecutive days is less
than 102% of the principal amount of the Note; (b) Maker makes an assignment for
the benefit of creditors, or files a voluntary petition in bankruptcy,
receivership or insolvency, or files an answer in any involuntary proceedings of
that nature admitting the material allegations of the petition, or if a
proceeding or bankruptcy, receivership or insolvency, shall be instituted
against Maker and such proceeding shall not be dismissed within sixty (60) days,
or if a trustee or receiver shall be appointed for Maker and such proceeding
shall not be dismissed or such trustee or receiver shall not be discharged
within sixty (60) days (collectively subsections (a) and (b) referred to herein
as a "Default"), then a Default shall exist hereunder, and any sums advanced
hereunder, together will all unpaid interest accrued thereon, shall, at the
option of Holder, without further notice, at once shall, become due and payable
and may be collected immediately, regardless of the stipulated Maturity Date.
Notwithstanding anything to the contrary set forth in this Note, Holder hereby
agrees that Holder will not exercise its remedies under this Note in the event
of a default under Section 2(a) unless and until all obligations and liabilities
of the "Sellers" set forth in Section 6(d) of the Stock Purchase Agreement dated
December 31, 1999, between Maker, "Buyer" therein and Holder and Lahaina
Acquisitions, Inc., "Sellers" therein, have been paid and satisfied in full and
under no circumstances shall Holder sell more than eighty percent (80%) of the
shares pledged under the Pledge Agreement (as defined below) within the first
ninety (90) days after the date hereof.
<PAGE>
(2)
3. Collateral. Maker has caused to be delivered to Holder 660,000 shares of
common stock (the "Collateral") of Lahaina Acquisitions, Inc. a Colorado
corporation pursuant to the terms and conditions of a Stock Pledge Agreement of
even date herewith (the "Pledge Agreement").
4. Exculpation. Notwithstanding any other provisions of this Note, the sole
remedy for the repayment of the principal and interest and costs shall be
limited to the Collateral or any proceeds realized from the sale of the
Collateral. If the principal amount of this Note together with all accrued
interest is not paid by the Holder to the Maker on the Maturity Date, Holder
shall take possession of the Collateral free and clear of all liens and
encumbrances and satisfy all of the obligations of Maker hereunder.
It is expressly understood and agreed that the undertaking of the Maker to
pay this Note is included herein for the sole purpose of establishing the
existence of the indebtedness evidenced by this Note and the maturity of such
indebtedness. The Holder or Holders of this Note will not have any claim,
remedy, or right to proceed (at law or in equity) against Maker or the members
of Maker or their affiliates for the payment of any deficiency or any other sum
or performance of any obligation of any nature whatsoever under this Note or
under the Pledge Agreement or in connection therewith, from any source other
than the Collateral; provided, however, nothing herein contained will limit,
restrict, or impair the rights of the Holder of this Note to accelerate the
maturity of this Note during the continuance of an Event of Default under this
Note except as otherwise provided herein with respect to a default under Section
2(a).
5. Waiver of Notice and Remedies. Maker hereby (a) waives grace,
presentment and demand for payment, protest and notice of protest, and
non-payment, all other notice, including notice of intent to accelerate the
Maturity Date and notice of acceleration of the Maturity Date, filing of suit
and diligence in collecting this Note, (b) consents to any extension or
postponement of time of payment of this Note and in any other indulgence with
respect hereto without notice from Holder and (c) agrees that Holder shall not
be required first to institute suit or exhaust its remedies against Maker under
this Note.
6. Notices. Any and all other notices, elections, demands, requests and
responses thereto permitted or required to be given under this Note shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed properly given and effective upon being (a) personally delivered, (b)
deposited with an overnight courier service in time for and specifying overnight
delivery or (c) deposited in the United States mail, postage prepaid, certified
with return receipt requested to the other party at the address of such other
party set forth in the first paragraph hereof. All such notices shall be deemed
delivered on the date of delivery if sent by personal delivery, the next
business day by overnight courier service and five (5) days after being
deposited in the United States Mail if sent by registered or certified mail.
7. Usury Law. It is the intention of Maker and Holder to comply with any
applicable usury laws. In furtherance of this intention of Holder and Maker, all
agreements between Maker and Holder are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid to
Holder for the use, forbearance or
<PAGE>
(3)
detention of money under this Note exceed the maximum rate permissible under
applicable law. If, from any circumstance whatsoever, fulfillment of any
provision hereof shall be prohibited by law, the obligation to be fulfilled
shall be reduced to the maximum not so prohibited, and if from any circumstances
Holder should ever receive as interest an amount which would exceed the highest
lawful rate, such amount as would be excessive interest shall, at Holder's
option, shall be applied to the reduction of the principal of the Note and not
to the payment of interest, or shall be refunded to Maker. This provision shall
control every other provision of all agreements between Maker and Holder.
8. Time of Essence. Time is of the essence of this Note.
9. Jurisdiction. Maker admits that this Note has been negotiated, executed
and delivered in Atlanta, Georgia, Fulton County, and that Maker (a) submits to
personal jurisdiction in Fulton County in the State of Georgia for the
enforcement of this Note, (b) waives any and all rights under the laws of any
state to object to jurisdiction within the State of Georgia for the purposes of
litigation to enforce this Note and (c) waives trial by jury.
10. Offset Rights. Holder and Maker acknowledge that the terms and
conditions relating to the offset right of Maker to this Note as set forth in
Section 6(d) of the Stock Purchase Agreement dated December 31, 1999 are
incorporated herein by reference.
11. Miscellaneous. Any payment received by Holder hereunder may, at
Holder's option, be applied first to interest or to reduce the principal
balance. A waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of any subsequent right,
remedy or recourse to any subsequent event. No failure or delay on the part of
Holder in exercising any right, power or remedy granted hereunder shall operate
as waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. Maker hereby consents to all
renewals and extensions of time at or after the maturity hereof and hereby
waives diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense and hereby agrees that no failure on the part of Holder to exercise
any power, right and privilege hereunder, or to insist upon prompt compliance
with the terms hereof, shall constitute a waiver thereof. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought. As
used herein, the terms, "Maker" and "Holder" shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law.
12. Prepayment. This Note may be prepaid in whole or in part prior to the
Maturity Date without premium or penalty.
13. Nontransferable Note. Holder shall not transfer, sell, assign or convey
this Note or any rights hereunder to any individual or other person or entity
unless the transferee or assignee thereof is a corporate affiliate of the
initial Holder on the date hereof and any transfer or purported transfer of this
Note in violation of this Section 13 shall be null and void.
<PAGE>
(4)
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA.
IN WITNESS WHEREOF, the undersigned, by its officers duly appointed and
authorized, has executed this Note as of the day and year first above written.
MAKER:
NP HOLDING, LLC
By: /s/ Gerald F. Sullivan
-----------------------------
Name: Gerald F. Sullivan
-----------------------------
Title: Manager
-----------------------------
[SEAL]
