STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (the "Pledge Agreement") is made and entered
into as of November 22, 2002, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇").
▇. ▇▇▇▇▇ has purchased from ▇▇▇▇▇▇▇ 250,000 outstanding shares of Series A
Preferred Stock (the "Shares") of TMI Holdings, Inc., pursuant to a Stock
Purchase Agreement dated October 28, 2002 (the "Agreement"). Capitalized terms
used in the Pledge Agreement without definition shall have the respective
meanings given to them in the Agreement.
B. Pursuant to the Agreement, ▇▇▇▇▇ purchased the Shares from ▇▇▇▇▇▇▇
and delivered to ▇▇▇▇▇▇▇ a Promissory Note (the "Note") of even date herewith
payable to ▇▇▇▇▇▇▇ representing the purchase price for the Shares.
▇. ▇▇▇▇▇ is willing to pledge the marketable securities set forth on
Schedule A annexed hereto (the "Pledged Shares") subject to adjustment pursuant
to Section 1(b) hereof as security for payment of the Note on the terms and
conditions of this Pledge Agreement. The Pledged Shares shall be delivered to
the Escrow Agent and distributed pursuant to the Escrow Agreement attached
hereto as Exhibit ▇.
▇. ▇▇▇▇▇▇▇ is willing to accept the pledge of the Pledged Shares as receipt
on the terms and conditions of this Pledge Agreement.
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. PLEDGE AND DELIVERY OF THE SHARES.
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(a) ▇▇▇▇▇ hereby delivers, pledges, assigns and transfers the Pledged
Shares, along with appropriate stock powers executed in blank to the Escrow
Agent with signature pledged guaranteed. The Pledged Shares together with all
distributions in the form of common stock comprises the collateral subject to
this Pledge Agreement (the "Collateral"). ▇▇▇▇▇ grants ▇▇▇▇▇▇▇ a security
interest in the Collateral in order to secure the payment of the Note.
(b) ▇▇▇▇▇ acknowledges and agrees that the Pledged Shares shall at all
times have a fair market value at least equal to $200,000 (the "Minimum Value").
The Pledged Shares shall be valued initially at the Closing Price on the date
hereof. Thereafter, the Pledged Shares shall be valued at the end of each
successive ten day period (a "Valuation Period") using an average of the closing
bid prices for each day in the Valuation Period. In the event the value of the
Pledged Shares at the end of any Valuation Period is less than the Minimum
Value, then ▇▇▇▇▇ shall add marketable securities to the Pledged Shares so that
the value of the Pledged Shares is not less than the Minimum Value, and shall
deliver such additional shares to the Escrow Agent. ▇▇▇▇▇ shall have the sole
discretion to select which securities constitute the Pledged Securities, and may
add or delete securities at any time as long as the Minimum Value is maintained.
2. TERM. The Shares pledged hereunder shall remain so pledged until
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the Note is paid in full unless released pursuant to Section 1(b) hereof.
3. WARRANTY OF OWNERSHIP. ▇▇▇▇▇ represents and warrants to ▇▇▇▇▇▇▇
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that ▇▇▇▇▇ is the lawful owner of the Collateral, free of all claims and liens
with full right to deliver, hypothecate, pledge, assign and transfer the
interest of ▇▇▇▇▇ in the Collateral and that the Collateral is not subject to
any option or similar arrangement.
4. COVENANTS; VOTING RIGHTS; DIVIDENDS, ETC. So long as no Event of
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Default (as defined in Section 5 hereof) shall have occurred and be continuing
▇▇▇▇▇ shall be entitled to exercise his voting rights and other consensual
rights and to receive and retain any cash dividends, or other distributions of
property paid, payable or otherwise distributed in cash, in respect of the
Collateral.
5. DEFAULT.
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(a) EVENTS OF DEFAULT. The occurrence of any one or more of the following
events with respect to ▇▇▇▇▇ shall constitute an event of default hereunder
("Events of Default") with respect to ▇▇▇▇▇:
(i) ▇▇▇▇▇ shall assign, attempt to encumber, subject to further pledge
or security interest, sell, transfer or otherwise dispose of any of the
Collateral without the prior written consent of ▇▇▇▇▇▇▇;
(ii) ▇▇▇▇▇ shall fail to pay the principal of the Note when due in
accordance with the terms of the Note or otherwise default under this
Pledge Agreement;
(iii) ▇▇▇▇▇ shall fail to observe or perform in any material respect
any material covenant, condition or agreement required to be observed or
performed by ▇▇▇▇▇ hereunder or under the Note;
(iv) any material representation or warranty made by ▇▇▇▇▇ herein is
false or incorrect in any material respect;
(v) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "Bankruptcy Law"), ▇▇▇▇▇ shall (i) commence a
voluntary case or proceeding; (ii) consent to the entry of an order for
relief against him in an involuntary case; (iii) consent to the appointment
of a trustee, receiver, assignee, liquidator or similar official; (iv) make
an assignment for the benefit of his creditors; or (v) admit in writing his
inability to pay his debts as they become due.
(b) REMEDIES UPON DEFAULT. If any Event of Default shall have occurred and
be continuing:
(i) All rights of ▇▇▇▇▇ to exercise his voting and other consensual
rights which he would otherwise be entitled to exercise shall cease, and
all such rights shall thereupon become vested in ▇▇▇▇▇▇▇ who shall
thereupon have the sole right to exercise such voting and other consensual
rights.
(ii) All rights of ▇▇▇▇▇ to receive cash dividends or other
distributions in cash, which he would otherwise be authorized to receive
and retain pursuant to Section 4 shall cease and all rights to dividends
and other distributions shall thereupon be vested in ▇▇▇▇▇▇▇, who shall
thereupon have the sole right to receive and hold as Collateral such cash
dividends or other distributions. All dividends and other distributions
which are received by ▇▇▇▇▇ contrary to these provisions shall be received
in trust for the benefit of ▇▇▇▇▇▇▇, shall be segregated from other
property or funds of ▇▇▇▇▇ and shall be forthwith delivered to ▇▇▇▇▇▇▇ as
Collateral in the same form as so received (with any necessary
endorsement).
(iii) All rights of ▇▇▇▇▇ to sell all or any portion of the Collateral
which they would otherwise be entitled to exercise pursuant to Section 4
shall cease, and all such rights shall thereupon become vested in ▇▇▇▇▇▇▇
who shall thereupon have the sole right to sell the Collateral in
accordance with the provisions of this Pledge Agreement.
(iv) ▇▇▇▇▇▇▇ may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of Florida at that time, and ▇▇▇▇▇▇▇
may also, without notice except as specified below, sell the Collateral at
a public or private sale, for cash and at such price or prices and upon
such other terms as are commercially reasonable and in such manner as
necessary to comply with applicable federal and state securities laws.
▇▇▇▇▇▇▇ shall be authorized at any such sale (if it deems it advisable to
do so) to restrict the prospective bidders or purchasers to persons who
will represent and agree that they are purchasing the Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale ▇▇▇▇▇▇▇ shall have the
right to assign, transfer and deliver to the purchaser or purchasers at any
such sale and such purchasers shall hold the property sold absolutely, free
from any claim or right on the part of ▇▇▇▇▇. To the extent notice of sale
shall be required by law, ▇▇▇▇▇▇▇ shall give ▇▇▇▇▇ at least ten business
days notice of the time and place of any public sale or the time after
which any private sale is to be made, which Shareholder agrees shall
constitute reasonable notification. At any such sale, ▇▇▇▇▇▇▇ may bid
(which bid may be, in whole or in part, in the form of cancellation of the
Note) for and purchase the whole of the Collateral. ▇▇▇▇▇▇▇ shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. ▇▇▇▇▇▇▇ may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was
so adjourned. ▇▇▇▇▇ agrees that any sale of the Collateral conducted by
▇▇▇▇▇▇▇ in accordance with the foregoing provisions of this Section 6 shall
be deemed to be a commercially reasonable sale. As an alternative to
exercising the power of sale herein conferred upon it, ▇▇▇▇▇▇▇ may proceed
by a suit or suits at law or in equity to foreclose the security interest
granted under this Agreement and to sell the Collateral, or any portion
thereof, pursuant to a judgment or decree of a court or courts of competent
jurisdiction.
(v) All cash proceeds received by ▇▇▇▇▇▇▇ in respect of any sale of,
collection from, or other realization upon or any part of the Collateral
following the occurrence of an Event of Default must be applied first
against all reasonable costs and expenses incurred by or on behalf of
▇▇▇▇▇▇▇ in connection with ▇▇▇▇▇▇▇' exercise of any or all of its rights
and remedies under this Pledge Agreement, including without limitation,
reasonable attorneys' fees, and then against the Note upon receipt.
(vi) Any surplus of such cash or cash proceeds held by ▇▇▇▇▇▇▇ and
remaining after payment in full of the Note shall be paid over to ▇▇▇▇▇ or
to whomsoever may be lawfully entitled to receive such surplus.
6. MISCELLANEOUS.
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(a) NO THIRD PARTY BENEFICIARIES. This Pledge Agreement shall not confer
any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
(b) ENTIRE AGREEMENT. This Pledge Agreement constitutes the entire agree-
ment between the parties and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(c) SUCCESSION AND ASSIGNMENT. This Pledge 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 Pledge
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other party.
(d) COUNTERPARTS. This Pledge 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.
(e) HEADINGS. The section headings contained in this Pledge Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Pledge Agreement.
(f) NOTICES. All notices, requests, demands, claims, and other communi-
cations hereunder will be in writing. Any notice, request, demand, claim, or
other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to ▇▇▇▇▇:
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇▇:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 party
notice in the manner herein set forth.
(g) GOVERNING LAW. This Pledge Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Florida without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Florida or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Florida.
(h) AMENDMENTS AND WAIVERS. No amendment of any provision of this Pledge
Agreement shall be valid unless the same shall be in writing and signed by both
of the parties. 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 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.
(i) SEVERABILITY. Any term or provision of this Pledge 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.
(j) CONSTRUCTION. The parties have participated jointly in the negotiation
and drafting of this Pledge Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Pledge Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Pledge Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this Pledge
Agreement as of the date first written above.
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
SCHEDULE A
The Pledged Shares shall be 500,000 shares of common stock of Housing
Solutions Hawaii, Inc. (Pink Sheet trading symbol "HSHI").
