Exhibit 10.8
STOCK PLEDGE AGREEMENT
(SUBSIDIARIES)
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of
December ___, 1998, is entered into among POSITIVE RESPONSE TELEVISION, INC., a
Delaware corporation, NATIONAL MEDIA HOLDINGS, INC., a Delaware corporation, and
XXXXXXX XXXX HOLDINGS PTY LIMITED, a company organized under the laws of
Australia (each a "Pledgor", and collectively "Pledgors"), and FOOTHILL CAPITAL
CORPORATION, a California corporation ("Secured Party"), with reference to the
following:
WHEREAS, each 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, Borrower and Secured Party are parties to that
certain Loan and Security Agreement (the "Loan Agreement"), of even date
herewith, pursuant to which Secured Party has agreed to make certain financial
accommodations to Borrower;
WHEREAS, to induce Secured Party to make the financial
accommodations provided to Borrower pursuant to the Loan Agreement, Pledgors
desire to pledge, grant, transfer, and assign to Secured Party a security
interest 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.
Definitions.All initially capitalized terms used herein
and not otherwise defined herein shall have the meaning ascribed thereto in the
Loan Agreement. As used in this Agreement:
"AGREEMENT" shall mean this Stock Pledge Agreement.
"BORROWER" shall mean Quantum North America, a Delaware
corporation.
"CHIEF EXECUTIVE OFFICE" shall mean where each Pledgor is
deemed located pursuant to Section 9103(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 any Pledgor's interest
therein, all shares of, all securities convertible or exchangeable into, and all
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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
Pledgor; 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.
"LIEN" shall mean any lien, mortgage, pledge, assignment
(including any assignment of rights to receive payments of money), security
interest, charge, or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, or any
agreement to give any security interest).
"LOAN AGREEMENT" shall have the meaning ascribed thereto
in the recitals to this Agreement.
"PERMITTED LIENS" means, with respect to each Pledgor,
(a) Liens held by Secured Party, (b) Liens for unpaid taxes that either (i) are
not yet due and payable or (ii) are the subject of Permitted Protests, (c) Liens
set forth on SCHEDULE P-1, (d) Liens arising from deposits made in connection
with obtaining worker's compensation or other unemployment insurance, (e) Liens
or deposits to secure performance of bids, tenders, or leases, incurred in the
ordinary course of business of such Pledgor and not in connection with the
borrowing of money, (f) Liens arising by reason of security for surety or appeal
bonds in the ordinary course of business of such Pledgor, and (g) Liens of or
resulting from any judgment or award that reasonably could not be expected to
result in a Material Adverse Change and as to which the time for the appeal or
petition for rehearing of which has not yet expired, or in respect of which such
Pledgor is in good faith prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding for
review has been secured.
"PLEDGED SHARES" shall mean all of the shares identified
as Pledged Shares on SCHEDULE A attached hereto (or any addendum thereto).
"PLEDGOR" and "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, contract rights, inventory,
equipment, general intangibles, deposit accounts, chattel paper, and other
property from time to time received, receivable, or 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
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thereof (including any cash, stock, or other securities or instruments issued
after any recapitalization, readjustment, reclassification, merger or
consolidation with respect to the Issuers and any claims against financial
intermediaries under Section 8313(2) of the Code or otherwise); (b)
"proceeds," as such term is used in Section 9306 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 any Pledgor 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 Obligations owing by
Borrower 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 or the other Loan Documents, 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 Borrower is 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.
(A) 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, modifications, renewals, or
supplements thereto or thereof, as applicable:
this Agreement, the Loan Agreement, or any of
the other Loan Documents.
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(ii) Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or
resolved against Secured Party or any Pledgor,
whether under any rule of construction or
otherwise. On the contrary, this Agreement has
been reviewed by all 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. PLEDGE.
(a) As security for the prompt payment and performance of
the Secured Obligations in full by Borrower 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), Pledgor hereby
pledges, grants, transfers, and assigns to Secured Party a security interest in
all of Pledgor's right, title, and interest in and to the Collateral.
(b) If any Person whose shares of stock are pledged by
any Pledgor pursuant hereto shall at any time have earnings and profits which,
because of such pledge, will result in taxable income to such Pledgor pursuant
to IRC Section 952, then Secured Party, upon written notice of the foregoing,
shall (i) release its liens in the shares of stock of such Person to the extent
necessary to avoid the recognition of income by such Pledgor pursuant to IRC
Section 952, and (ii) deliver to such Pledgor the pledged certificates
representing the number of shares of stock in which Secured Party has released
its lien; PROVIDED, HOWEVER, Secured Party shall have no obligation to deliver
such shares unless and until such Pledgor shall have delivered, or caused to be
delivered to Secured Party, certificates in such denominations as are necessary
(if any) for Secured Party to deliver such certificates while retaining
certificates representing the number of shares of stock in which Secured Party
has retained its liens.
(c) If any wholly owned Subsidiary of any Pledgor shall
at any time be merged into any other wholly owned Subsidiary of such Pledgor, or
shall be dissolved, then, in either case, upon delivery to Secured Party of
evidence, reasonably satisfactory to Secured Party, of such merger or
dissolution, Secured Party shall deliver to the applicable Pledgor the pledged
certificates representing the pledged shares of such wholly owned Subsidiary.
3. DELIVERY AND REGISTRATION OF COLLATERAL.
(a) All certificates or instruments representing or
evidencing the Collateral shall be promptly delivered by each Pledgor 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
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shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to Secured Party.
(b) Upon 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 any Pledgor, 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 nominees
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 any
Pledgor (a "Holder"), then the applicable Pledgor 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 interest 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 interest 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 any
Pledgor shall be so received or held in trust for Secured Party, shall be
segregated from other funds and property of such Pledgor 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 such Pledgor, if and to the extent they are not prohibited by the Loan
Agreement, may be retained by such Pledgor in accordance with SECTION 4 and used
in the ordinary course of Pledgor's 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
the applicable Pledgor shall immediately cause such Collateral to be registered
or entered, as the case may be, in the name of Secured Party, or otherwise cause
Secured Party's security interest 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, each Pledgor 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 each Pledgor to receive and retain cash
dividends or distributions that it
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would otherwise be entitled to receive and retain pursuant to SECTION 4(A),
shall cease, and all such rights shall thereupon become vested in Secured Party,
who shall thereupon have the sole right to receive and retain such cash
dividends and distributions. Each Pledgor 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 receive the dividends and distributions that it is entitled to
receive and retain pursuant to the preceding sentence.
(c) Upon the occurrence and during the continuance of an
Event of Default in respect of which Secured Party has accelerated the
Obligations, all rights of each Pledgor to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
SECTION 4(A) shall cease, and all such rights shall thereupon become vested in
Secured Party, who shall thereupon have the sole right to exercise such voting
or other consensual rights. Each Pledgor 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 pursuant to the preceding sentence.
5. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents,
warrants, and covenants, in each case, to the best of its knowledge,
information, and belief, as follows:
(a) such Pledgor has taken all steps it deems 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 such Pledgor agrees that Secured Party
shall have no responsibility or liability for informing such Pledgor 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 such Pledgor 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) such Pledgor is and will be the sole legal and
beneficial owner of the Collateral (including the Pledged Shares and all other
Collateral acquired by such Pledgor after the date hereof) free and clear of any
adverse claim, Lien, or other right, title, or interest of any Person other than
Permitted Liens;
(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
first priority security interest 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
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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, are
registered in the name of the applicable Pledgor; 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 Pledgor, 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) Each Pledgor agrees that from time to time, at the
expense of such Pledgor, such Pledgor 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, such Pledgor will: (i) at the request of Secured
Party, xxxx conspicuously each of its 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 interest 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 such Pledgor's title to or Secured Party's security interest in the
Collateral.
(b) Each Pledgor hereby authorizes 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 such
Pledgor 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) Each Pledgor will promptly furnish to Secured Party,
upon the request of Secured Party: (i) a certificate executed by an authorized
officer of such Pledgor, and dated as of 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 such
Pledgor 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.
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7. COVENANTS OF PLEDGORS. Each Pledgor shall:
(a) Perform each and every covenant in the Loan Documents
applicable to such Pledgor;
(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 such Pledgor; and
(d) Upon receipt by such 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 such Pledgor.
8. SECURED PARTY AS EACH PLEDGOR'S ATTORNEY-IN-FACT.
(a) Each Pledgor hereby irrevocably appoints Secured
Party as such Pledgor's attorney-in-fact, with full authority in the place and
stead of such Pledgor and in the name of such Pledgor, 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) upon
the occurrence and during the continuance of an Event of Default, to receive,
endorse, and collect all instruments made payable to such Pledgor 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.
(b) In addition to the designation of Secured Party as
such Pledgor's attorney-in-fact in SUBSECTION (A), each Pledgor hereby
irrevocably appoints Secured Party as such Pledgor's 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 such Pledgor 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. Upon the occurrence and during the
continuance of an Event of Default:
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(a) Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein, under
the Loan Agreement, 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 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 any
Pledgor, and each 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.
(b) Foothill shall give notice of the disposition of the
Collateral as follows: (i) Foothill shall give the applicable Pledgor and each
holder of a security interest in the Collateral who has filed with Foothill a
written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a
public sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made; (ii) the notice shall be
personally delivered or mailed, postage prepaid, to the applicable Pledgor at
the address of its Chief Executive Office, as set forth on SCHEDULE B, at least
5 days before the date fixed for the sale, or at least 5 days before the date on
or after which the private sale or other disposition is to be made; no notice
needs to be given prior to the disposition of any portion of the Collateral that
threatens to decline speedily in value or that is of a type customarily sold on
a recognized market. Notice to Persons other than the applicable Pledgor shall
be sent to such addresses as they have furnished to Foothill; if the sale is to
be a public sale, Foothill also shall give notice of the time and place by
publishing a notice one time at least 5 days before the date of the sale in a
newspaper of general circulation in the county in which the sale is to be held;
(c) 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, each Pledgor hereby waives 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.
(d) Each Pledgor hereby agrees 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.
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(e) Each Pledgor hereby acknowledges 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. Each Pledgor
acknowledges and agrees 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. No Pledgor has an 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, each Pledgor agrees 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.
(f) If Secured Party shall determine to exercise its
right to sell all or any portion of the Collateral pursuant to this Section,
each Pledgor agrees that, upon request of Secured Party, such 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;
(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;
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(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
such 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.
Each 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) EACH PLEDGOR EXPRESSLY WAIVES 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. Upon 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.
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
9207 of the Code, Secured Party shall have no duty
11
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
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 any Pledgor 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 to Secured Party, and to each Pledgor in
care of Borrower, in the manner set forth in the Loan Agreement.
15. CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing security interest in the Collateral and shall: (i) remain in full
force and effect until 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; (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
12
rights to the Collateral shall revert to the applicable Pledgor. Upon any such
termination, Secured Party will, at any Pledgor's expense, execute and deliver
to such Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination. Such documents shall be prepared by such Pledgor and
shall be in form and substance reasonably satisfactory to Secured Party.
16. SECURITY INTEREST ABSOLUTE. To the maximum extent
permitted by law, all rights of Secured Party, all security interests hereunder,
and all obligations of each Pledgor 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, such Pledgor.
To the maximum extent permitted by law, each Pledgor hereby waives any right to
require Secured Party to: (A) proceed against or exhaust any security held from
such Pledgor; 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.
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; TELEFACSIMILE EXECUTION. 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.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement
13
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. Each Pledgor and
Secured Party waive any right to require the marshaling of any of the
Collateral.
21. WAIVER OF JURY TRIAL.
EACH PLEDGOR 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. EACH PLEDGOR AND SECURED PARTY REPRESENTS 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, each Pledgor
hereby waives: (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 such 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 Borrower or of
any other fact that might increase such Pledgor's 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 such
Pledgor under this Agreement) and demands to which such Pledgor might otherwise
be entitled.
(b) To the fullest extent permitted by applicable law,
each Pledgor waives the right by statute or otherwise to require Secured Party
to institute suit against Borrower or to exhaust any rights and remedies which
Secured Party has or may have against Borrower. Each Pledgor further waives any
defense arising by reason of any disability or other defense (other than the
defense that the Secured Obligations shall have been fully and finally
indefeasibly paid) of Borrower or by reason of the cessation from any cause
(other than that the Secured Obligations shall have been fully and finally
indefeasibly paid) whatsoever of the liability of Borrower in respect thereof.
(c) To the maximum extent permitted by law, each Pledgor
hereby waives: (i) any rights to assert against Secured Party any defense (legal
or equitable), set-off,
14
counterclaim, or claim which such Pledgor may now or at any time hereafter have
against Borrower or any other party liable to Secured Party on account of or
with respect to the Secured 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
Secured 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 xx.xx. 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 such Pledgor's
liability hereunder or the enforcement thereof.
(d) To the maximum extent permitted by law, each Pledgor
hereby waives any right of subrogation such Pledgor has or may have as against
Borrower with respect to the Secured Obligations. In addition, each Pledgor
hereby waives any right to proceed against Borrower, now or hereafter, for
contribution, indemnity, reimbursement, or any other suretyship rights and
claims (irrespective of whether direct or indirect, liquidated or contingent),
with respect to the Secured Obligations. Each Pledgor also hereby waives any
right to proceed or to seek recourse against or with respect to any property or
asset of Borrower. Each Pledgor hereby agrees that, in light of the waivers
contained in this Section, such Pledgor shall not be deemed to be a "creditor"
(as that term is defined in the Bankruptcy Code or otherwise) of Borrower,
whether for purposes of the application of Sections 547 or 550 of the United
States Bankruptcy Code or otherwise.
(e) If any of the Secured Obligations at any time are
secured by a mortgage or deed of trust upon real property, Secured Party may
elect, in its sole discretion, upon the occurrence or during the continuance of
an Event of Default, to foreclose such mortgage or deed of trust judicially or
nonjudicially in any manner permitted by law, before or after enforcing this
Agreement, without diminishing or affecting the liability of each Pledgor
hereunder. Each Pledgor understands that (a) by virtue of the operation of
California's antideficiency law applicable to nonjudicial foreclosures, an
election by Secured Party nonjudicially to foreclose such a mortgage or deed of
trust probably would have the effect of impairing or destroying rights of
subrogation, reimbursement, contribution, or indemnity of such Pledgor against
Borrower or guarantors or sureties, and (b) absent the waiver given by such
Pledgor herein, such an election might estop Secured Party from enforcing this
Agreement against such Pledgor. Understanding the foregoing, and understanding
that such Pledgor is hereby relinquishing a defense to the enforceability of
this Agreement, each Pledgor hereby waives any right to assert against Secured
Party any defense to the enforcement of this Agreement, whether denominated
"estoppel" or otherwise, based on or arising from an election by Secured Party
nonjudicially to foreclose any such mortgage or deed of trust. Each Pledgor
understands that the effect of the foregoing waiver may be that such Pledgor may
have liability hereunder for amounts with respect to which such Pledgor may be
left without rights of subrogation, reimbursement, contribution, or indemnity
against Borrower or guarantors or sureties. Each Pledgor also agrees that the
"fair market value" provisions of Section 580a of the California Code of Civil
Procedure shall have no applicability with respect to the determination of such
Pledgor's liability under this Agreement.
23. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH PLEDGOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT SUCH WAIVER IS
15
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.
(A) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER
OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH PLEDGOR HEREBY WAIVES ALL
RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY SECURED PARTY,
EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH
RESPECT TO SECURITY FOR A SECURED OBLIGATION, HAS DESTROYED SUCH PLEDGOR'S
RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE PRINCIPAL BY THE OPERATION
OF SECTION 580D OF THE CODE OF CIVIL PROCEDURE OR OTHERWISE.
24. SUBORDINATION. If at any time, or from time to time, any
Subsidiary of any Pledgor shall enter into financing arrangements, then Secured
Party shall subordinate, on terms and conditions reasonably satisfactory to
Secured Party, its Liens on the Stock of such Subsidiary to the Liens of the
lender providing such financing.
[Remainder of page intentionally left blank]
16
IN WITNESS WHEREOF, the 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.
POSITIVE RESPONSE TELEVISION, INC.,
a Delaware corporation
By
----------------------------------------------
Title:
-------------------------------------------
NATIONAL MEDIA HOLDINGS, INC.,
a Delaware corporation
By
-----------------------------------------------
Title:
-------------------------------------------
XXXXXXX XXXX HOLDINGS PTY LIMITED,
a company organized under the laws of Australia
By
-----------------------------------------------
Title:
-------------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation
By
-----------------------------------------------
Title:
-------------------------------------------
S-1
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: POSITIVE RESPONSE TELEVISION, INC.
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
------ -------- ----- ----------- ------------------ ---------- ---------------
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: NATIONAL MEDIA HOLDINGS, INC.
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
------ -------- ----- ----------- ------------------ ---------- ---------------
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: XXXXXXX XXXX HOLDINGS PTY LIMITED,
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
------ -------- ----- ----------- ------------------ ---------- ---------------
SCHEDULE B
TO
STOCK PLEDGE AGREEMENT
Pledgor: POSITIVE RESPONSE TELEVISION, INC.,
a Delaware corporation
Address of Chief Executive Office:
00000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Pledgor: NATIONAL MEDIA HOLDINGS, INC.,
a Delaware corporation
Address of Chief Executive Office:
00000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Pledgor: XXXXXXX XXXX HOLDINGS PTY LIMITED,
a company organized under the laws of Australia
Address of Chief Executive Office:
00000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
SCHEDULE C
TO
STOCK PLEDGE AGREEMENT
Existing Future Rights and Proceeds: [None.]
