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EXHIBIT 10.18
STOCK PLEDGE AGREEMENT
(BORROWER)
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of May 29,
1998, is entered into between STORMEDIA INCORPORATED, a Delaware corporation and
AKASHIC MEMORIES CORPORATION, a California corporation (collectively
"Pledgors"), on the one hand, and, on the other hand, FOOTHILL CAPITAL
CORPORATION, a California corporation, as agent for the Lenders from time to
time party to the Loan Agreement (defined below), (in such capacity "Secured
Party"), with reference to the following:
WHEREAS, each undersigned Pledgor beneficially owns the specified number
of shares identified as Pledged Shares in the Persons identified as Issuers on
Schedule A attached hereto (or any addendum thereto);
WHEREAS, Pledgors and Secured Party are parties to that certain Loan and
Security Agreement (as amended and in effect from time to time, the "Loan
Agreement"), of even date herewith, pursuant to which Secured Party has agreed
to make certain financial accommodations to Pledgors;
WHEREAS, to induce Secured Party to make the financial accommodations
provided to Pledgor pursuant to the Loan Agreement, Pledgor desires to pledge,
grant, transfer, and assign to Secured Party security interests in the
Collateral (as hereinafter defined) to secure the Secured Obligations (as
hereinafter defined), as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
1. Definitions and Construction.
(a) Definitions. All initially capitalized terms used herein
and not otherwise defined herein shall have the meaning ascribed thereto in the
Loan Agreement and the rules of construction set forth in Section 1 of the Loan
Agreement shall likewise govern this Agreement. As used in this Agreement:
"Agreement" shall mean this Stock Pledge Agreement.
"Bridge Term Loan Secured Obligations" means that subset
of the Secured Obligations corresponding to the Bridge Term Loan Obligations.
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"Chief Executive Office" shall mean where Pledgor is
deemed located pursuant to Section 9-103(3)(d) of the Code.
"Collateral" shall mean the Pledged Shares, the Future
Rights, and the Proceeds, collectively.
"Future Rights" shall mean: (a) all shares of stock (other
than Pledged Shares) of the Issuers, and all securities convertible or
exchangeable into, and all warrants, options, or other rights to purchase,
shares of stock of the Issuers; (b) to the extent of Pledgor's interest therein,
all shares of, all securities convertible or exchangeable into, and all
warrants, options, or other rights to purchase shares of stock of any Person in
which any Pledgor, after the date of this Agreement, acquires a direct equity
interest, irrespective of whether such Person is or becomes a Subsidiary of
Pledgors; and (c) the certificates or instruments representing such additional
shares, convertible or exchangeable securities, warrants, and other rights and
all dividends, cash, options, warrants, rights, instruments, and other property
or proceeds from time to time received, receivable, or otherwise distributed in
respect of or in exchange for any or all of such shares.
"Holder" and "Holders" shall have the meanings ascribed
thereto in Section 3 of this Agreement.
"Issuers" shall mean each of the Persons identified as an
Issuer on Schedule A attached hereto (or any addendum thereto), and any
successors thereto, whether by merger or otherwise.
"Loan Agreement" shall have the meaning ascribed thereto
in the recitals to this Agreement.
"Other Secured Obligations" means the Secured Obligations
other than the Bridge Term Loan Secured Obligations.
"Pledged Shares" shall mean all of the shares identified
as Pledged Shares on Schedule A attached hereto (or any addendum thereto).
"Pledgors" shall have the meaning ascribed thereto in the
preamble to this Agreement.
"Proceeds" shall mean all proceeds (including proceeds of
proceeds) of the Pledged Shares and Future Rights including all: (a) rights,
benefits, distributions, premiums, profits, dividends, interest, cash,
instruments, documents of title, accounts, investment property, contract rights,
inventory, equipment, general intangibles, deposit accounts, chattel paper, and
other property from time to time received, receivable, or
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otherwise distributed in respect of or in exchange for, or as a replacement of
or a substitution for, any of the Pledged Shares, Future Rights, or proceeds
thereof (including any cash, stock, or other securities, investment property or
instruments issued after any recapitalization, readjustment, reclassification,
merger or consolidation with respect to the Issuers and any claims against
financial intermediaries under Section 8-313(2) of the Code or otherwise); (b)
"proceeds," as such term is used in Section 9-306 of the Code; (c) proceeds of
any insurance, indemnity, warranty, or guaranty (including guaranties of
delivery) payable from time to time with respect to any of the Pledged Shares,
Future Rights, or proceeds thereof; (d) payments (in any form whatsoever) made
or due and payable to Pledgors from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Shares, Future Rights, or proceeds thereof; and (e) other
amounts from time to time paid or payable under or in connection with any of the
Pledged Shares, Future Rights, or proceeds thereof.
"Secured Obligations" shall mean all liabilities,
obligations, or undertakings owing by Pledgor to Secured Party of any kind or
description arising out of or outstanding under, advanced or issued pursuant to,
or evidenced by the Loan Agreement, the other Loan Documents, or this Agreement,
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, voluntary or involuntary, whether
now existing or hereafter arising, and including all interest (including
interest that accrues after the filing of a case under the Bankruptcy Code) and
any and all costs, fees (including attorneys fees), and expenses which Pledgors
are required to pay pursuant to any of the foregoing, by law, or otherwise.
"Secured Party" shall have the meaning ascribed thereto in
the preamble to this Agreement, together with its successors or assigns.
"Securities Act" shall have the meaning ascribed thereto
in Section 9(c) of this Agreement.
(b) Construction.
(i) Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular and to the
singular include the plural, the part includes the whole, the term "including"
is not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and other similar terms in this Agreement refer
to this Agreement as a whole and not exclusively to any particular provision of
this Agreement. Article, section, subsection, exhibit, and schedule references
are to this Agreement unless otherwise specified. All of the exhibits or
schedules attached to this Agreement shall be deemed incorporated herein by
reference. Any reference to any of the following documents includes any and all
alterations, amendments, restatements, extensions,
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modifications, renewals, or supplements thereto or thereof, as applicable: this
Agreement, the Loan Agreement, or any of the other Loan Documents.
(ii) Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Secured Party or
Pledgors, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by both of the parties and their respective
counsel and shall be construed and interpreted according to the ordinary meaning
of the words used so as to fairly accomplish the purposes and intentions of the
parties hereto.
(iii) In the event of any direct conflict between the
express terms and provisions of this Agreement and of the Loan Agreement, the
terms and provisions of the Loan Agreement shall control.
2. Pledges.
(a) As security for the prompt payment and performance of the
Bridge Term Loan Secured Obligations in full by Pledgors when due, whether at
stated maturity, by acceleration or otherwise (including amounts that would
become due but for the operation of the provisions of the Bankruptcy Code),
Pledgors hereby pledge, grant, transfer, and assign to Secured Party a security
interest in all of Pledgors' right, title, and interest in and to the
Collateral.
(b) As security for the prompt payment and performance of the
Other Secured Obligations in full by Pledgors when due, whether at stated
maturity, by acceleration or otherwise (including amounts that would become due
but for the operation of the provisions of the Bankruptcy Code), Pledgors hereby
pledge, grant, transfer, and assign to Secured Party a security interest in all
of Pledgors' right, title, and interest in and to the Collateral.
3. Delivery and Registration of Collateral.
(a) All certificates or instruments representing or evidencing
the Collateral shall be promptly delivered by Pledgors to Secured Party or
Secured Party's designee pursuant hereto at a location designated by Secured
Party and shall be held by or on behalf of Secured Party pursuant hereto, and
shall be in suitable form for transfer by delivery, or shall be effectively
endorsed or accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Secured Party.
(b) After the occurrence and during the continuance of an
Event of Default, Secured Party shall have the right, at any time in its
discretion and without notice to Pledgors, to transfer to or to register on the
books of the Issuers (or of any other Person maintaining records with respect to
the Collateral) in the name of Secured Party or any of its
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nominees as registered owner of any or all of the Collateral. In addition,
Secured Party shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any Collateral
(including any certificate or instrument representing or evidencing any
Collateral) is in the possession of a Person other than Secured Party or
Pledgors (a "Holder"), then Pledgors shall immediately, at Secured Party's
option, either cause such Collateral to be delivered into Secured Party's
possession, or execute and deliver to such Holder a written
notification/instruction, and take all other steps necessary to perfect the
security interests of Secured Party in such Collateral, including obtaining from
such Holder a written acknowledgement that such Holder holds such Collateral for
Secured Party, all pursuant to Sections 9115 of the Code or other
applicable law governing the perfection of Secured Party's security interests in
the Collateral in the possession of such Holder. Each such
notification/instruction and acknowledgement shall be in form and substance
satisfactory to Secured Party.
(d) Any and all Collateral (including dividends, interest, and
other cash distributions) at any time received or held by Pledgors shall be so
received or held in trust for Secured Party, shall be segregated from other
funds and property of Pledgors and shall be forthwith delivered to Secured Party
in the same form as so received or held, with any necessary endorsements;
provided that cash dividends or distributions received by Pledgor, if and to the
extent they are not prohibited by the Loan Agreement, may be retained by
Pledgors in accordance with Section 4 and used in the ordinary course of
Pledgors' business.
(e) If at any time and from time to time any Collateral
consists of an uncertificated security or a security in book entry form, then
Pledgors shall immediately cause such Collateral to be registered or entered, as
the case may be, in the name of Secured Party as the registered owner of, or
otherwise cause Secured Party's security interests thereon to be perfected in
accordance with applicable law.
4. Voting Rights and Dividends.
(a) So long as no Event of Default shall have occurred and be
continuing, Pledgors shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of the Loan Documents and shall be
entitled to receive and retain any cash dividends or distributions paid in
respect of the Collateral.
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of Pledgor to exercise the voting and other consensual
rights or receive and retain cash dividends or distributions that it would
otherwise be entitled to exercise or receive and retain, as applicable pursuant
to Section 4(a), shall cease, and all such rights shall
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thereupon become vested in Secured Party, who shall thereupon have the sole
right to exercise such voting or other consensual rights and to receive and
retain such cash dividends and distributions. Pledgors shall execute and deliver
(or cause to be executed and delivered) to Secured Party all such proxies and
other instruments as Secured Party may reasonably request for the purpose of
enabling Secured Party to exercise the voting and other rights which it is
entitled to exercise and to receive the dividends and distributions that it is
entitled to receive and retain pursuant to the preceding sentence.
5. Representations and Warranties. Pledgors represent, warrant, and
covenant as follows:
(a) Pledgors have taken all steps they deem necessary or
appropriate to be informed on a continuing basis of changes or potential changes
affecting the Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers and voting rights), and Pledgors agree that Secured Party shall have no
responsibility or liability for informing Pledgors of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto;
(b) All information herein or hereafter supplied to Secured
Party by or on behalf of Pledgors in writing with respect to the Collateral is,
or in the case of information hereafter supplied will be, accurate and complete
in all material respects;
(c) Pledgors are and will be the sole legal and beneficial
owners of the Collateral (including the Pledged Shares and all other Collateral
acquired by Pledgors after the date hereof) free and clear of any adverse claim,
Lien, or other right, title, or interest of any party (other than the interests
of Secured Party hereunder and the interests of the Bank Group pursuant to the
Bank Group Financing Documents as contemplated by the Intercreditor Agreement);
(d) This Agreement, and the delivery to Secured Party of the
Pledged Shares representing Collateral (or the delivery to all Holders of the
Pledged Shares representing Collateral of the notification/instruction referred
to in Section 3 of this Agreement), creates a valid, perfected, and security
interests of the priority contemplated by the Intercreditor Agreement in one
hundred percent (100%) of the Pledged Shares in favor of Secured Party securing
payment of the Secured Obligations, and all actions necessary to achieve such
perfection have been duly taken;
(e) Schedule A to this Agreement is true and correct and
complete in all material respects; without limiting the generality of the
foregoing: (i) all the Pledged Shares are in certificated form, and, except to
the extent registered in the name of Secured Party or its nominee pursuant to
the provisions of this Agreement or in the name of the Bank
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Group Agent pursuant to the Bank Group Financing Documents as contemplated by
the Intercreditor Agreement, are registered in the name of Pledgors; and (ii)
the Pledged Shares as to each of the Issuers constitute at least the percentage
of all the fully diluted issued and outstanding shares of stock of such Issuer
as set forth in Schedule A to this Agreement;
(f) There are no presently existing Future Rights or Proceeds
owned by Pledgors, except as set forth in Schedule C hereto;
(g) The Pledged Shares have been duly authorized and validly
issued and are fully paid and nonassessable; and
(h) Neither the pledge of the Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
6. Further Assurances.
(a) Pledgors agree that from time to time, at the expense of
Pledgors, Pledgors will promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or reasonably
desirable, or that Secured Party may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Pledgors will: (i) at the request of Secured Party, xxxx conspicuously each of
their records pertaining to the Collateral with a legend, in form and substance
reasonably satisfactory to Secured Party, indicating that such Collateral is
subject to the security interests granted hereby; (ii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or reasonably desirable, or as
Secured Party may request, in order to perfect and preserve the security
interests granted or purported to be granted hereby; (iii) allow inspection of
the Collateral by Secured Party or Persons designated by Secured Party; and (iv)
appear in and defend any action or proceeding that may affect Pledgors' title to
or Secured Party's security interests in the Collateral.
(b) Pledgors hereby authorize Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Pledgors where
permitted by law. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Pledgors will furnish to Secured Party, upon the request
of Secured Party: (i) a certificate executed by an authorized officer of
Pledgors, and dated as of
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the date of delivery to Secured Party, itemizing in such detail as Secured Party
may request, the Collateral which, as of the date of such certificate, has been
delivered to Secured Party by Pledgors pursuant to the provisions of this
Agreement; and (ii) such statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Secured Party may request.
7. Covenants of Pledgors. Each Pledgor shall:
(a) Perform each and every covenant in the Loan Documents
applicable to Pledgors;
(b) At all times keep at least one complete set of its records
concerning substantially all of the Collateral at its Chief Executive Office as
set forth in Schedule B hereto, and not change the location of its Chief
Executive Office or such records without giving Secured Party at least thirty
(30) days prior written notice thereof;
(c) To the extent it may lawfully do so, use its best efforts
to prevent the Issuers from issuing Future Rights or Proceeds, except for cash
dividends and other distributions, if any, that are not prohibited by the terms
of the Loan Agreement to be paid by any Issuer to any Pledgor; and
(d) Upon receipt by any Pledgor of any material notice,
report, or other communication from any of the Issuers or any Holder relating to
all or any part of the Collateral, deliver such notice, report or other
communication to Secured Party as soon as possible, but in no event later than
five (5) days following the receipt thereof by any Pledgor.
8. Secured Party as Pledgors' Attorney-in-Fact.
(a) Pledgors hereby irrevocably appoint Secured Party as
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgors and in the name of Pledgors, Secured Party or otherwise, from time to
time at Secured Party's discretion, to take any action and to execute any
instrument that Secured Party may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including: (i) after the occurrence
and during the continuance of an Event of Default, to receive, endorse, and
collect all instruments made payable to Pledgors representing any dividend,
interest payment or other distribution in respect of the Collateral or any part
thereof to the extent permitted hereunder and to give full discharge for the
same and to execute and file governmental notifications and reporting forms;
(ii) to issue any notifications/instructions Secured Party deems necessary
pursuant to Section 3 of this Agreement; or (iii) to arrange for the transfer of
the Collateral on the books of any of the Issuers or any other Person to the
name of Secured Party or to the name of Secured Party's nominee.
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(b) In addition to the designation of Secured Party as
Pledgors' attorney-in-fact in subsection (a), Pledgors hereby irrevocably
appoint Secured Party as Pledgors' agent and attorney-in-fact to make, execute
and deliver any and all documents and writings which may be necessary or
appropriate for approval of, or be required by, any regulatory authority located
in any city, county, state or country where Pledgors or any of the Issuers
engage in business, in order to transfer or to more effectively transfer any of
the Pledged Shares or otherwise enforce Secured Party's rights hereunder.
9. Remedies upon Default. Subject to the Loan Agreement and the
Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default:
(a) Secured Party 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 Code (irrespective of whether the Code applies to the affected items of
Collateral), and Secured Party may also without notice (except as specified
below) sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Collateral. To the maximum extent permitted by
applicable law, Secured Party may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply all or any part of
the Secured Obligations as a credit on account of the purchase price of any
Collateral payable at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay, or appraisal that it now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
Pledgors agree that, to the extent notice of sale shall be required by law, at
least ten (10) calendar days notice to Pledgors of the time and place of any
public sale or the time after which a private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. Secured
Party 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. To the maximum
extent permitted by law, Pledgors hereby waive any claims against Secured Party
arising because the price at which any Collateral may have been sold at such a
private sale was less than the price that might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does not offer
such Collateral to more than one offeree.
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(b) Pledgors hereby agree that any sale or other disposition
of the Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, or other financial institutions in the City of
Los Angeles, California in disposing of property similar to the Collateral shall
be deemed to be commercially reasonable.
(c) Pledgors hereby acknowledge that the sale by Secured Party
of any Collateral pursuant to the terms hereof in compliance with the Securities
Act of 1933 as now in effect or as hereafter amended, or any similar statute
hereafter adopted with similar purpose or effect (the "Securities Act"), as well
as applicable "Blue Sky" or other state securities laws may require strict
limitations as to the manner in which Secured Party or any subsequent transferee
of the Collateral may dispose thereof. Pledgors acknowledge and agree that in
order to protect Secured Party's interest it may be necessary to sell the
Collateral at a price less than the maximum price attainable if a sale were
delayed or were made in another manner, such as a public offering under the
Securities Act. Pledgor has no objection to sale in such a manner and agrees
that Secured Party shall have no obligation to obtain the maximum possible price
for the Collateral. Without limiting the generality of the foregoing, Pledgors
agree that, upon the occurrence and during the continuation of an Event of
Default, Secured Party may, subject to applicable law, from time to time attempt
to sell all or any part of the Collateral by a private placement, restricting
the bidders and prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, Secured Party may solicit offers to buy the Collateral or any part
thereof for cash, from a limited number of investors deemed by Secured Party, in
its reasonable judgment, to be institutional investors or other responsible
parties who might be interested in purchasing the Collateral. If Secured Party
shall solicit such offers, then the acceptance by Secured Party of one of the
offers shall be deemed to be a commercially reasonable method of disposition of
the Collateral.
(d) If Secured Party shall determine to exercise its right to
sell all or any portion of the Collateral pursuant to this Section, Pledgors
agree that, upon request of Secured Party, each Pledgor will, at its own
expense:
(i) use its best efforts to execute and deliver, and
cause the Issuers and the directors and officers thereof to execute and deliver,
all such instruments and documents, and to do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of Secured Party,
advisable to register such Collateral under the provisions of the Securities
Act, and to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are required
by law to be furnished, and to make all amendments and supplements thereto and
to the related prospectuses which, in the opinion of Secured Party, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
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(ii) use its best efforts to qualify the Collateral
under the state securities laws or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by Secured
Party;
(iii) cause the Issuers to make available to their
respective security holders, as soon as practicable, an earnings statement which
will satisfy the provisions of Section 11(a) of the Securities Act;
(iv) execute and deliver, or cause the officers and
directors of the Issuers to execute and deliver, to any person, entity or
governmental authority as Secured Party may choose, any and all documents and
writings which, in Secured Party's reasonable judgment, may be necessary or
appropriate for approval, or be required by, any regulatory authority located in
any city, county, state or country where Pledgor or the Issuers engage in
business, in order to transfer or to more effectively transfer the Pledged
Shares or otherwise enforce Secured Party's rights hereunder; and
(v) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) PLEDGORS EXPRESSLY WAIVE TO THE MAXIMUM EXTENT PERMITTED
BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE
TIME SECURED PARTY DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN
THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS
OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW
EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a)
OF THIS SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
10. Application of Proceeds. After the occurrence and during the
continuance of an Event of Default, any cash held by Secured Party as Collateral
and all cash proceeds received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
pursuant to the exercise by Secured Party of its remedies as a secured creditor
as provided in Section 9 shall be applied from time to time by Secured Party as
provided in the Loan Agreement.
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11. Duties of Secured Party. The powers conferred on Secured Party
hereunder are solely to protect its interests in the Collateral and shall not
impose on it any duty to exercise such powers. Except as provided in Section
9-207 of the Code, Secured Party shall have no duty with respect to the
Collateral or any responsibility for taking any necessary steps to preserve
rights against any Persons with respect to any Collateral.
12. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY
OTHER COURT IN WHICH SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS
AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH
OF PLEDGOR AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 12.
13. Amendments; Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgors herefrom shall in any event
be effective unless the same shall be in writing and signed by Secured Party,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of Secured
Party to exercise, and no delay in exercising any right under this Agreement,
any other Loan Document, or otherwise with respect to any of the Secured
Obligations, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement, any other Loan Document, or
otherwise with respect to any of the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by law.
14. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered in the manner set forth in the Loan Agreement.
15. Continuing Security Interests. This Agreement shall create
continuing security interests in the Collateral and shall: (i) remain in full
force and effect until the
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indefeasible payment in full of the Secured Obligations, including the cash
collateralization, expiration, or cancellation of all Secured Obligations, if
any, consisting of letters of credit, and the full and final termination of any
commitment to extend any financial accommodations under the Loan Agreement; (ii)
be binding upon each Pledgor and its successors and assigns; and (iii) inure to
the benefit of Secured Party and its successors, transferees, and assigns. Upon
the indefeasible payment in full of the Secured Obligations, including the cash
collateralization, expiration, or cancellation of all Secured Obligations, if
any, consisting of letters of credit, and the full and final termination of any
commitment to extend any financial accommodations under the Loan Agreement, the
security interests granted herein shall automatically terminate and all rights
to the Collateral shall revert to Pledgors. Upon any such termination, Secured
Party will, at Pledgors' expense, execute and deliver to Pledgors such documents
as Pledgors shall reasonably request to evidence such termination. Such
documents shall be prepared by Pledgors and shall be in form and substance
reasonably satisfactory to Secured Party.
16. Security Interests Absolute. To the maximum extent permitted by
law, all rights of Secured Party, all security interests hereunder, and all
obligations of Pledgors hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any of the
Secured Obligations or any other agreement or instrument relating thereto,
including any of the Loan Documents;
(b) any change in the time, manner, or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any of the Loan
Documents, or any other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Secured Obligations; or
(d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, Pledgors.
To the maximum extent permitted by law, Pledgors hereby waive any
right to require Secured Party to: (A) proceed against or exhaust any security
held from Pledgors; or (B) pursue any other remedy in Secured Party's power
whatsoever.
17. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
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18. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
20. Waiver of Marshaling. Each Pledgor and Secured Party acknowledges
and agrees that in exercising any rights under or with respect to the
Collateral: (i) Secured Party is under no obligation to marshal any Collateral;
(ii) may, in its absolute discretion, realize upon the Collateral in any order
and in any manner it so elects; and (iii) may, in its absolute discretion, apply
the proceeds of any or all of the Collateral to the Secured Obligations in any
order and in any manner it so elects. Pledgors and Secured Party waive any right
to require the marshaling of any of the Collateral.
21. WAIVER OF JURY TRIAL. PLEDGORS AND SECURED PARTY HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. PLEDGORS AND SECURED PARTY REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
22. Waivers.
(a) To the maximum extent permitted by law, Pledgors hereby waive:
(i) notice of acceptance hereof; (ii) notice of any loans or other financial
accommodations made or extended under the Loan Agreement, or the creation or
existence of any Obligations; (iii) notice of the amount of the Obligations,
subject, however, to Pledgor's right to make inquiry of Secured Party to
ascertain the amount of the Obligations at any reasonable time; (iv) notice of
any adverse change in the financial condition of Pledgors or of any other fact
that might increase Pledgors' risk hereunder; (v) notice of presentment for
payment, demand, protest, and notice thereof as to any instrument among the Loan
Documents; (vi) notice of any unmatured Event of Default or Event of Default
under the Loan Agreement; and (vii) all other notices (except if such notice is
specifically required to be given to Pledgors under this Agreement) and demands
to which Pledgors might otherwise be entitled.
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(b) To the maximum extent permitted by law, Pledgors hereby waive:
(i) any rights to assert against Secured Party any defense (legal or equitable),
set-off, counterclaim, or claim which Pledgors may now or at any time hereafter
have against any other party liable to Secured Party on account of or with
respect to the Obligations; (ii) any defense, set-off, counterclaim, or claim,
of any kind or nature, arising directly or indirectly from the present or future
sufficiency, validity, or enforceability of the Obligations; (iii) any defense
arising by reason of any claim or defense based upon an election of remedies by
Secured Party including, to the extent applicable, the provisions of Sections
580d and 726 of the California Code of Civil Procedure, or any similar law of
California or any other jurisdiction; (iv) the benefit of any statute of
limitations affecting Pledgors' liability hereunder or the enforcement thereof.
(c) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS AGREEMENT, PLEDGORS HEREBY WAIVE, TO THE MAXIMUM
EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING DIRECTLY OR
INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2808, 2809,
2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND 2850, TO THE
EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580A, 580B, 580C,
580D, AND 726, AND, TO THE EXTENT APPLICABLE, CHAPTER 2 OF TITLE 14 OF THE
CALIFORNIA CIVIL CODE.
IN WITNESS WHEREOF, Pledgors and Secured Party have caused this
Agreement to be duly executed and delivered by their officers thereunto duly
authorized as of the date first written above.
STORMEDIA INCORPORATED,
a Delaware corporation
By: /s/
------------------------------------
Title:
---------------------------------
AKASHIC MEMORIES CORPORATION,
a California corporation
By: /s/
------------------------------------
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Title:
---------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/
------------------------------------
Title:
---------------------------------
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SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: _____________________
Pledged Shares
Former Name, if Pledgor's
Number of Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ------------------ --------- -------------
AAA 100%
BBB 100%
CCC 100%
DDD 100%
EEE 100%
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SCHEDULE B
TO
STOCK PLEDGE AGREEMENT
Pledgor: ____________________________, a ________ corporation
Address of Chief Executive Office:
19
SCHEDULE C
TO
STOCK PLEDGE AGREEMENT
Existing Future Rights and Proceeds: [None.]