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Sample Business Contracts

Stock Pledge Agreement - NovaStar FInancial Inc. and W. Lance Anderson

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                           STOCK PLEDGE AGREEMENT



          THIS STOCK PLEDGE AGREEMENT, ("Pledge Agreement") is made and entered
into this 9th day of December, of 1996 by and between W. Lance Anderson
("Pledgor") and NovaStar Financial, Inc. ("Pledgee").


                                    RECITALS
                                    --------


          A.   Pledgor is purchasing One Hundred Eight Thousand Three Hundred
Thirty-Three (108,333) Units (the "Shares") in Pledgee's Private Placement which
is closing on the date hereof.


          B.   In connection with that purchase, Pledgor has executed that
certain Promissory Note (the "Note") in the amount of One Million Six Hundred
Twenty-Four Thousand Nine Hundred Ninety-Five and 00/100 Dollars ($1,624,995) in
favor of Pledgee.


          C.   Pledgor desires to pledge the Shares as collateral to secure the
payment of Pledgor's obligations under the Note.


                                   AGREEMENT
                                   ---------


          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


          Section l.  Pledge of the Shares.  As collateral security for the
                      --------------------                                 
obligations of Pledgor under the Note, Pledgor hereby pledges and grants a
security interest to Pledgee in the Shares, together with any securities, issued
or received, in respect of, or in exchange or in substitution for the Shares,
including but not limited to those arising from a stock conversion, stock
dividend, or stock split (collectively referred to as the "Collateral").


          Section 2.  Delivery of Collateral.  Pledgor shall deliver the
                      ----------------------                            
Collateral to Pledgee with an assignment separate from the certificate duly
endorsed for transfer.  Upon the acquisition by Pledgor of any other security
included in the definition of Collateral prior to payment of the obligations in
full, Pledgor shall deliver such security to Escrow Holder with the appropriate
assignment separate from the certificate duly endorsed for transfer.


          Section 3.  Release of Collateral.  So long as there is no event of
                      ---------------------                                  
default under the Note, one-third of the Collateral pledged on the date hereof
shall be released as security upon forgiveness of each tranche of the
indebtedness pursuant to the terms of the Note.


          Section 4.  Voting and Distributions Prior to Default.
                      ----------------------------------------- 

          (a)  Prior to the occurrence of an event of default as defined herein,
Pledgor shall have the right to vote the shares constituting the Collateral
owned by Pledgor, and 

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to exercise any other consensual rights pertaining to the Collateral provided,
however, that Pledgor shall not vote such shares in a manner which would cause
or constitute an event of default under the Stock Pledge Agreement.


          (b)  Prior to the occurrence of an event of default, Pledgor shall be
entitled to receive directly from the Company all dividends (other than
dividends in the form of stock which shall become a part of the Collateral),
property and cash distributions with respect to, or in consequence of the
ownership of, the Collateral.


          Section 5.  Covenants of Pledgor.  Pledgor hereby agrees:
                      --------------------                         


          (a)  To do all acts that may be necessary to maintain, preserve and
protect, to produce, execute and deliver from time to time any endorsements,
assignments, financing statements or other writings deemed necessary or
appropriate by Pledgee to perfect, maintain and protect the security interest
created hereunder and the priority thereof; and


          (b)  To appear and defend any action or proceeding which may affect
title to or Pledgee's interest in the Collateral.


          Section 6.  Authorized Action by Pledgee.  Pledgor hereby irrevocably
                      ----------------------------                             
appoints Pledgee as attorney-in-fact to do (but Pledgee shall not be obligated
to do and shall incur no liability to Pledgor or any other party for failure so
to do) any act which Pledgor is obligated by this Pledge Agreement to do, and
exercise such any rights and powers as Pledgor might exercise with respect to
the Collateral, which Pledgee deems necessary or advisable.


          Section 7.  Event of Default.  The occurrence of the following events
                      ----------------                                         
shall constitute an event of default ("Event of Default"):


          (a)  Failure by Pledgor to perform any of Pledgor's obligations
pursuant to the Note and such failure is not cured within the time, if any, set
forth in the Note; and


          (b)  Failure of Pledgor to keep or perform any of the terms or
provisions of this Pledge Agreement.


          Section 8.  Remedies.  Upon the occurrence of an Event of Default,
                      --------                                              
Pledgee shall have the right to exercise of any of the following remedies:


          (a)  Enforce Pledgee's security interest in any manner permitted by
the applicable Uniform Commercial Code provisions and in any case where notice
is required thereunder and is not otherwise waived, fifteen (15) days notice
shall be deemed reasonable notice; or


          (b)  Sell or otherwise dispose of the Collateral at one or more public
or private sales, whether or not such Collateral is present at the place of
sale, for cash or credit or future delivery, on such terms and in such manner as
Pledgee may determine.

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          Section 9.  Conduct of Foreclosure Sale.  In connection with any sale
                      ---------------------------                              
or distribution of Collateral, Pledgee is authorized to comply with any
limitations or restrictions as Pledgee may be advised by its counsel that is
necessary or desirable to avoid any violation of applicable law including
federal and state securities laws or obtain any required approval of the
purchaser by any governmental regulatory body or officer.  It is hereby agreed
that any such actions taken to comply with such laws or regulations shall be
deemed to be necessary for the sale to be made in a commercially reasonable
manner.  Pledgee shall not be liable or accountable by reason of the fact that
the proceeds obtained in any such sale are less than might otherwise have been
obtained without such compliance.


          Section 10.  Notices.  All notices and communications to be given,
                       -------                                              
delivered or otherwise made to any parties pursuant to this Pledge Agreement
shall be delivered personally by overnight courier or messenger and shall be
deemed to have been made upon actual receipt of the delivery or refusal to
accept delivery by the intended recipient.  All notices, requests shall be
addressed as set forth below or at such other address as may be hereinafter
designated in writing by the addressee to each of the other parties.


          TO PLEDGOR:               W. Lance Anderson

                                    8699 Butterfield Avenue

                                    Richmond, VA  23229


          TO PLEDGEE:               NovaStar Financial, Inc.

                                    1900 West 47th Place

                                    Suite 205

                                    Westwood, KS  66205


          Section 11.  Binding Upon Successors.  All rights of Pledgee under
                       -----------------------                              
this Pledge Agreement shall inure to the benefit of its successors and assigns.
All the obligations of Pledgor shall bind Pledgor's heirs, executors,
administrators, successors and assigns.


          Section 12.  Severability.  If any provision of this Pledge Agreement
                       ------------                                            
shall be held invalid or unenforceable, this Pledge Agreement shall be construed
as if not containing the provisions and the rights and obligations of the
parties shall be construed and enforced accordingly.


          Section 13.  Expenses.  If any party institutes legal action to
                       --------                                          
enforce or interpret this Pledge Agreement, the prevailing party shall be
entitled to recover in addition to any other relief awarded its reasonable
attorneys fees and costs incurred in such legal action.

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          Section 14.  Amendment.  This Pledge Agreement may not be modified or
                       ---------                                               
amended except in writing signed by the parties hereto.


          IN WITNESS WHEREOF, this Pledge Agreement is executed as of the date
first written above.



PLEDGOR:                            ____________________________________

                                    W. Lance Anderson



PLEDGEE:                            NOVASTAR FINANCIAL, INC.



                                    By_________________________________

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